Views:3936|Rating:4.67|View Time:31:27Minutes|Likes:128|Dislikes:9 Just when you thought it was safe to go outside, there’s major rioting in Paris and other European cities. Is this a case of they’re mad as hell and not gonna take it any more or have we reached a tipping point. Elections seem to produce the most unlikely of candidates who say many things but do the same old stuff once they arrive in office. What’s an Austrian Economist to do? And what about Trump and Xi, a match made in Hades. It’s okay because as a charming economist once said, somewhat seriously, In the long run we’re all dead.
FS in radio it's all about what's next go to financial survival network comm and sign up for your free weekly newsletter you'll also get three free reports the financial survival network it's all about what's next this episode of the financial survival Network is brought to you in part by sandstorm gold royalties sandstorm gold royalties is a different kind of gold company they purchase royalties on select mining operations and receive a percentage of the revenue and return sandstorm now has a portfolio of over 185 gold royalties around the world see how gold royalties differ from other gold mining investments at sandstorm gold calm that sandstorm gold calm sandstorm gold royalties trades on the tsx as ssl and on new york stock exchange american as sa ND welcome and you are listening to the financial survival network it is can't believe it December 3rd 2018 you know that means there are 28 days left to December that means the new year will soon be upon us well this has been quite a doozy and it keeps going and going and going is Trump a man at the Times or The Times demand a man like Trump I don't know the answer to it but I do know these markets are insane hey as always we love when you participate in the show when you email us we're a few emails behind next week we will answer questions with John we have such amazing news for this week that we're gonna forego the questions the email address though is KL at Carey let's calm I've got four or five questions from you for John well cover them next week promise so John without further ado happy Monday hey Kerry I think we might need to cancel our Paris vacations this year what do you face well if you go make sure you bring a couple of bags of marshmallows there she's gonna need them you know like God can you believe what's happening I mean yeah it's shocking isn't it you shocked I'm shocked well I mean it's it's not hard to believe that France has troubles you know you well start with the fact that they they almost doubled their government debt as a percent of GDP since 2008 which which right there tells you that that's a problem system not that they doubled their debt but they doubled it well to GDP which is an even bigger increase and when you take on way too much debt it gets harder to get anything done for a government because you've already used up a lot of the ammo that you would have in other circumstances used to buy off your voting blocs right to keep your constituents satisfied so what I am about interestingly well everybody else was was electing populist s' like donald trump or you know the guy in brazil or the guy in italy you know who we're gonna tear out the existing system by the roots and replace it with something else france in 2017 elected an extremely moderate guy even though he wasn't from the main political parties but he was every step of the way middle-of-the-road you know imagine he'll matt Crone he was a a you know well-spoken nice-looking young guy who came from the banking industry and who was gonna modernize france without unduly threatening the elites or the welfare state or any other aspect of french society that was very important to a large group of people and he came in and made some very modest changes he modernized their labor laws a little bit they're still really restrictive by american standards like if you want to lay people off you're running a company in france you got to go before a judge and justify it and it used to be that you you had to justify it in terms of your entire global footprint in other words if you're doing well in australia but not in france you still can't lay people off in france well they change that law so that the judge just looks at your french operations but you still have to go before a judge you know that's that's the kind of thing that makes you wonder why any company would hire anybody ever in the system why would you open to get rid of the people if they turn out not to work out yeah why would you open an office there you know if you ever really put in an office you wouldn't do it you'd be insane to do it right yeah and and then he raised diesel fuel prices slightly not very much but anyhow that set you know the French people are on the one hand they're so coddled you're Europe in general basically made a decision to coast on their accumulated capital 20 or 30 years ago and they're they're basically just living very nice cushy lives with short work weeks and phenomenal retirement benefits etc etc on borrowed money you know everybody's borrowing insane amounts of money in that system not and as an American I have to qualify that by saying that doesn't mean I'm saying any good things about the US system but we're doing the same thing we're talking about Europe now and that's what Europe is doing they have absolutely massive unfunded liabilities for their versions of Social Security and Medicare so they're going broke at an accelerating rate and their citizens don't completely get it because they've been so coddled by their governments so let you know the French government for instance imposed just a little bit more rigor marketplace rigor on French people and they freaked out and that's what's happening right now so you've got these massive street demonstrations in which people are overwhelming the police burning cars and and this isn't the rich part of Paris by the way so they're they're not just burning down their their own working-class neighborhoods like rioters tend to do in the u.s. they're they're going to the rich parts of Paris and smashing stores and setting expensive cars on fire etc etc so it's a really big deal it's a real threat to the government and they're thinking about declaring a state of emergency which is their version of martial law which would give the police a lot of leeway to clear the streets even if they have to use force so we'll see where this goes but it's a very big deal or the European Union and for the euro zone because France is the second biggest economy next to Germany and let them have civil unrest which leads to regime change which which leads to an election between the far right and the far left which is kind of what would happen if the macron got kicked out of office because of these riots you'd have marine lepen and whoever it is on the far left you know presidential runoff which means whoever won from in that election would end up running the country and and both are you know so far out of the mainstream by French standards that you would have a really serious change of direction for the French economy and the French political system that would threaten the eurozone and the euro is a very important currency trillions of dollars of bonds are denominated in Euros so you get the the potential for a global financial crisis starting with France here so we'll see how it goes but that's that's the stakes and they're very high and that makes us an interesting story besides just for the spectacle of cars on fire in the middle of Paris yeah we've been watching it and at first I thought it was Islamic induced violence but then I realized no this is the real deal these are the middle class and they're upset over the global warming tax nonsense so they're paying more money way more money at the pump than they should be paying anyway and they're just not happy they're they're just like pissed it's it's interesting to see a European country raising their gas taxes because they're they already pay as you said a lot in taxes on fuel which i think is a good idea let less that about the whole global warming thing then about the transition to better technologies you know solar power wind power and electric cars are just vastly cooler technology then you know our way of getting and using energy whether it's for transportation or for home heating or whatever yeah so anything that speeds up that process I think is but there's a problem fairly defensible thing don't want the government dictating this stuff yeah these guys are wrong winners these guys are already so far down that path yeah that amazing is on energy in Europe to Americanize seems like an extreme activity because you know they've already done it they've already raised taxes dramatically in the past few decades on energy so the incentives are already there it's already an idea that is subsidized by the government if you want to set up a solar plant or if you want to buy an electric car something like that so I you know doesn't seem like it would really accomplish much at the margin you get diminishing marginal utility when you raise taxes on something beyond a certain point it's very effective early on and then less effective as the taxes go up yeah and their whole system is just a freakin mess here let's face it Rick it's just a mess and and then you've got Brussels wanting to dictate everything and you know they want to be in charge the pointy-headed bureaucrats they've got an unworkable system here Rick I mean you've said it many a time you know you've got a new a new one out on why we run governor ball and boy if there is ever a reason why we run governor ball this is it isn't it yeah the basic premise of that series is that when a country borrows too much money it loses the ability to keep political constituencies happy in a way that gives you a stable ruling coalition or one government or one party in charge of the government or long enough to actually show results that can be judged instead what happens is you every election is to throw the bums out event and you get a series of new governments each of which come in with all these big reform ideas and and each of which fails miserably because they don't have the money to do any of the things they want to do even if those things were good ideas in the first place and so you get political chaos and that's the nature of the world now pretty much every election is this terrifying prospect for the establishment because you don't know if the you know if Bernie Sanders is gonna win or if Donald Trump is gonna win or if somebody who's more extreme than either of those guys is gonna win you just don't know because things are so up in the air and that's really the situation in France you know the last election in France was between macron who was wasn't a member of the two leading political parties and marine lepen who was the leader of the far-right party and the two main political parties in France weren't even in the runoff that's how crazy that election was and now the guy that got elected is failing on a biblical scale just about here which means the next election will be even crazier and that that's just how it works when you're broke so we knew he was going to fail before he even took the oath of office right I mean we knew he was gonna fail because you can't solve it with more what got you into it unsound economic proposes you can't lose not only that you can't solve it at all there there's no way to fix a heavily indebted system without some kind of a crisis yeah so crisis has to happen you know we could elect Ron Paul here in the US right now who you and I blink as mostly good ideas and he would still film this I mean well he would still preside over a huge crisis just because the damage has already been done yeah let's fan I couldn't agree with you more it's can't true and Europe is in much worse shape than us in a lot of ways because they they have extreme restrictions on the workings of free markets and in some areas of most of their economies they have even more debt if you include unfunded liabilities they have to have incredibly generous versions of Social Security and Medicare over there which they don't they don't put any money aside for it they they're on a pay-as-you-go basis which means their finances looked pretty good ten years ago when there were a whole bunch of people working and paying for a relatively low of retirees now that baby boomers retiring the cost of all of their pension plans and basically their social safety net in general is mushrooming so their finances are getting worse and worse at an accelerating rate and they there's nothing they can do about it because if they try to cut benefits or raise taxes to cover benefits you get France you know you get Paris is burning and and the same thing would happen in Germany if Germany tried it although Germany is the the least likely cook to go this route in the short term yeah but that's Italy Spain countries like that have absolutely no solutions for any of this that that don't involve massive civil unrest in the state of emergency and regime change so eventually the endgame here is a big currency reset right where they seems like it yeah they announced on a Sunday night Oh from now on the the euro is gold backed but at a price of ten thousand euros gold back but you can't buy it you can't buy gold yeah yeah maybe you can't go anyone who has it it's gold back but if you don't then you're plumb out of luck and that's so where we're heading someplace some variation even I don't believe it will truly be gold back though you know it'll be fake gold backed they'll say it's gold back but it won't be well yeah I'm talking ideal currency reset when I use that as an example but there are all kinds of variations a lot of which could be outright fraud right mm-hmm and one kind of currency reset is just continuing inflation where they lower the value of the currency year after year after year the danger of that of course is that people from Iran it you know we figure out that's what they're gonna do and we assume they're gonna do it forever and we just bail on the currency that's the the Austrian School of Economics crack up boom brain correct governments will want to avoid that because the endgame of a hyperinflation is definitely regime change you know the guys in charge who preside over the hyperinflation don't get to preside over the fix afterwards they get tossed out of office somewhere a long way and they don't want that to happen and they might even get hung by their phones right they yes you know you see how violent the French people are when when you raise their gas taxes by a little bit wait wait you completely destroy their currency so their savings evaporate and see what they do then so yeah and any kind of civil unrest that you can imagine is completely possible in a system that is surprised by it and it's already volatile it'll start with so it's basically running amok yeah right I mean that's overlooked so the the sunday-night currency reset is by far the the least dangerous option and if these guys see that then maybe they'll get us out of this mess with just one burst of inflation so on Monday morning milk costs $10 a gallon and bread is $12 a loaf but it doesn't increase from that point forward so your your savings in your bank account get a lot less valuable but your future savings are protected by a sound money regime which is was imposed on Sunday night and and that's got at least the possibility of succeeding in a non chaotic way it still might be a mess cuz the people whose savings evaporated are gonna be really mad but you can make the case that look we had to do this and now the system is fixed and we learned our lessons yeah yeah and you know maybe you've got a chance of getting through that with the current political system intact but none of the other options really make it look likely that will avoid some kind of chaos and the fact that we're seeing it out there on our TV screens now happening in France which is definite one of the more stable European countries means that you can have anywhere used to be one of the more stable systems you know I don't know so much anymore how stable is it right well well yeah today it's not one of the more stable European countries but up until last week it was France and Germany were the core of the European Union they were the ones calling the shots they were the ones who had a stake in continuity they were the status quo powers in Europe and under well the the current French government would love to maintain that they want to stay status quo but the revolutionary powers in the French system which is the far right and the far left are gaining votes with every misstep on the part of the central government so we really could see the National Front under marine lepen in charge of France in a year and there's six months and three weeks there's no way to know now the way things are going that's death for the EU so she's total death I mean she's anti Europe what she would yeah we go back to the French franc I don't think she will but because I think everybody has a great idea you know Mike Tyson plan the plan is great until you get hit in the head and I'm just thinking you know like John it's like you and I both knew this guy was a total lightweight when they hired him okay elect elections basically they hire you right and they hire you and guess what they can fire you and and they fire you ingloriously it's like they look one minute they love Churchill he won World War two for England not really I mean the u.s. wanted for them but it's kind of irrelevant and the next minute guess what not so much right they don't like them so much anymore and he's out of on his behind and the what's that alt saying John the electorate is fickle right boy I don't know if that's saying carry but it's definitely true people will change their minds in a hurry especially when they're under stress and seeing in a world of too much debt everybody's under stress correct oh that's that's how we got Donald Trump there were there were so many frustrated people out there in the US that they were willing to take a flyer on a guy who had never held public office and who had a lot of ideas that were way out of the mainstream but that seemed to be addressing the sources of the stress for a lot of people mm-hmm very total when the guys in charge aren't addressing the sources of your stress you look around for somebody else to do it and that's why all these elections are so crazy year after year month after month and that's why they will continue to be crazy because the source of stress can't be dealt with it can't be fixed if you've already borrowed it's on the money there's really nothing you can do about it short of the big crisis that gets the debt what you know if you're an individual you need to declare bankruptcy yes or you need to scale your life back to such a point that you know you've sold your house you've sold your SUVs you've sold your big-screen TV and you're living really small now just to get by and even that doesn't fix anything it just delays the inevitability of your bankruptcy in most cases yeah and that's where most countries in the world are right now most major countries they've borrowed so much money that the repo man is driving towards their house now and they really don't have a solution for it bad freaking analogy but boy is at the truth John you know there's just once it happens once it starts there's just no stopping it it is a conflagration and it's you know just like you know what I liken it to John the political scene is exactly like the economic scene it spread from one country to the net to the next and when it starts going crazy there is no stopping at John I mean that's what we're seeing a contagion happen here in the US happened in Brazil happened in Mexico it's happened numerous times over the past ten years Trump being the worst then we had Briggs it that they're trying to screw the English people on now you think there's a revolution in in France wait till the English show up with pitchforks in the square because their situation contrary to what they are expecting by if by approving Briggs it actually is far worse than it ever was hey we got to cover one other thing and that is the Trump g20 summit hey I didn't know it but I blinked my eyes and all of the the problems are solved John yeah this is happening pretty much according to script basically the we knew it the systems to spin out of control in October yes and when something like that happens governments go through stages of addressing it first they talk and see if saying the right words will fix the problem and that's what they did this time the Fed came out and said you know what maybe we won't raise interest rates so much anymore and that helped the markets a little bit and then Trump came out and said we've declared a truce in the us-china trade war and that helped the markets a lot today but you notice no neither one of those things were in action of any kind they just said soothing words and hoped that that will take care of the turmoil in the financial markets now normally the way it works is the the first thing doesn't help at all or it helps for just a very short while and then things start spinning out of control again so the usual script plays out we got another few days that in the market when people are optimistic and then you know reality starts to reassert itself the bear market returns and equities interest rates start going up again at the long end of the and the markets start flaking out again and after that the government has to do something but it'll do some really minor thing like that the Fed might raise interest rates in December and then announced they're done okay so one one and done no more interest rates going forward that's that's a quarter point change and it's very minor and not a big deal but it changes the trajectory which they hope might fix things and then China and the u.s. might actually cut a trade deal in desperation that is a really minor trade deal that doesn't actually fix much of anything but both sides get something they can point to and and then they can say okay we we improve things for our constituencies for our people and and then go from there that will also be a very minor thing that didn't change the reality of virtually anything and then they'll see if that fixes things and that probably won't either and then the real stuff starts happening then the Fed has to cut interest rates then the government has to radically increase spending in some way so you you've got to liquefy the economy in a way that stops the decline in asset prices and that see that's 2008 over again you know when the system is really starting to spin out of control then you go to QE then you go to negative interest rates and that's ultimately where we're headed so it's just a question of the progression what happens between now and the reinstitution of quantitative easing and the reinstitution of zerp and NERP and and all the other monetary games because that's the 2019 2020 2021 reality mm-hmm so what we're seeing right now is just the very early steps in that direction by the US government and the fifth mm-hmm so we got more fun to look forward to huh so old bugs short sellers or no we're near at the end of this thing is what you're saying right I mean it's got a ways to go because they got to try everything right they're gonna try everything they can to keep it going and but eventually it's not going to work and then then we get to that point that you and I have been waiting for for 10 years now and because unlike most we believe that that man is is very fallible and really I was gonna say can't get out of his own way is really just you know just this mistake making machine effectively well human nature leads to the same mistakes being made over and over again and each generation forgets the mistakes of the previous generation or the previous two generations you know the grandkids don't remember what grandpa went through and so they do the same thing over again and then their grandkids forget what they went through so you know we're in the the kids forgetting about what happened to Grandpa back during the Great Depression and making those same mistakes against age yes so it shouldn't be a surprise it's a repeating part of human history and the only difference this time around is that we've set up a system that's global instead of local everybody has unlimited fiat currency printing presses everybody has the ability to create new forms of exotic financial instruments that have never been seen before and that are potentially dangerous in unforeseen ways so when the reckoning comes for this one it's gonna be bigger than anything we've ever seen before just because the mistakes are global mmhmm yeah I think you are right and it's scary as can be but really what else can we do what else can you do we can protect ourselves that's all we can do oh you do that with precious metals and you do that maybe by shorting some overvalued stocks and and generally going debt-free and extremely liquid and extremely conservative with your finances yep I think that's the winning trade here John and we're gonna see a lot more of this madness it's gonna spread to other countries all over the world I think it's just the beginning here we're at some kind of cycle of real political instability and there's kind of like good no backing away from it right no getting away from it I don't think so I don't think there's anything we can do about it and just kind of find your bunker yes what else can you really do here I mean like we you and I've been talking about this for years what are your alternatives and really yo buy gold for sure I mean let's face it we've been talking about that but but you know that I don't think that that's the end of the equation I think I think there's a lot more you're gonna have to be thinking of and that's a question that somebody asked that we are going to cover next time John because they asked what do you do when the whole thing comes tumbling down how do you prepare for it and we both have our own individual take on this but you really you just need to get ready because it's becoming more and more obvious that no matter what happens you know this is gonna happen and well anyway I don't want I don't want to belabor the point we got to get going make sure you go take a look at John's work he's printing out articles on this all the time the site is dollar collapse com sign up for his newsletter sign up for ours financial survival Network mom and John we will catch a next week oh hey email us too we're still gonna answer your questions promise KL at carry lifts comm Twitter feed Kerry Lutz fake foot page financial survival network YouTube if you're listening on YouTube please subscribe like and share I think I got that right and let the word out and if you're listening any place share it information is at a premium accurate information even if it were not right you need to think outside the box and that's what Jon and I have basically rested our careers on thinking outside the box anyways guys hey we're gonna be done with this year soon and then 2009 whatever it will bring get ready John we'll talk to you next week see you Carrie FS in radio it's all about life's next go to financial survival Network calm and sign up for your free weekly newsletter you'll also get three free reports the financial survival network it's all about what's next you