I'm wondering how you see it and how you think this all plays out.

Well, I, I can think of a handful of reasons why Treasury yields are rising, and I'll try to go through them 'cause it's very important to understand.

Yeah, I mean, we do have some growth in the United States.

I w- I'm not gonna call it runaway growth.

It's very bifurcated growth, meaning, you know, it's only the 20% of American consumers are really still on their feet.

The bottom 80% have been wiped out.

The US economy is growing very, very slowly outside of AI investment, so it's cap- it's CapEx.

Do you think we're at the point where that's no longer the case, or, or would you say there's some wisdom to, to that sort of strategy?

So I guess my next question is, where do you see all of this headed? How do you see this kind of spilling over and impacting the broader economy?

Well, know your audience is probably very familiar with my uh naming of the triumvirate of bubbles that we have so we have a massive equity bubble a massive real estate bubble a massive credit bubble all existing concurrently for the first time in history and the pin to that bubble all bubbles would would pop the internet bubble would pop the housing bubble In 2000, March of 2000, the NASDAQ bubble popped because the Fed was hiking interest rates.

And the higher debt service costs popped the investment in Cisco Systems, ETL.

In 2007, when interest rates hit 5.25% on the Fed funds rate, that popped the real estate bubble And that brought the GDP down and it brought in the unemployment rate went to 10%.

And the S&P lost 50% just like it did in 2000, 2000, 2002.

And now you have this triumvirate of bubbles.

So all bubbles are always burst by the credit market when the credit market falters.

Can I ask you, I don't know if you're someone who does this, but are you sensing a timeline for this that's becoming more clear?

So if the Fed does have to keep tightening in response to what's going on there, do you think that they can bring inflation down and could this trigger the crash that you've been warning about?

Yeah.

So I can spend a half an hour just on that first question.

So, yeah, I've been warning about crashes, and they've happened.

We've had many crashes since I started to warn about crashes, many crashes.

But what I call the great reconciliation of asset prices is still ahead of us.

And we're talking about what I say, great reconciliation of asset prices, just to put the home price to income ratio back where it belongs and the total market cap of GDP back where it belongs.

but anecdotally if you use ai software it is incredibly useful isn't it it can automate tasks that would have taken hours in the past so that surely must filter through into productivity at some point

Let's first talk about the lost decade you see coming for any stock m-market or bond market investors who are following a buy and hold stock and bond portfolio strategy and why that, we believe that will be disastrous for late career stage and, uh, investors and, uh, retirees.

I think I have to disabuse investors of the notion that stocks only go up.

You know, ever since Alan Greenspan in '87, uh, and he was an Ayn Randian, a hard money central banker before he, [laughs] before he found out that y- that doesn't work here in the United States too well.

Um, w- you know, we had series of depressions, recessions, and bear markets, and you just, you just, you just dealt with them.

You lived with them 'cause it was part of the cathartic process of clearing out the excess.

You know, um, excess prices, e- misallocations of capital, the housing bubbles, real estate bubbles, you w- credit bubbles, you have it.

But s- especially after the year 2000, we, we came up with this new idea, since we have a complete 100% fiat currency, we could just monetize everything away.

Help us understand that.

Do you think this is a cyclical downturn in a longer term bull market, or is some caution warranted here when it comes to gold?

Yeah.

Well, the caution was warranted on, you know, on, um, February 28th, which is when I gave the caution, which I, when I sold off a lot of my gold.

Um, and I recently went back into the gold and the miners 'cause we have what I believe was a memorandum of understanding.

It's so much is...

See, my model measures the business cycle and meas- measures the second derivative of inflation and growth, which is normally a function that lasts in duration, say, uh, months and years.

But because now we're at, at the whims of the, uh, mood, mood swings of the president and the IRGC, who seem to change their mind, you know, almost on a daily basis to utter annihilation to we're, "Hey, we're about to sign a deal," it's, it's comical actually.

[laughs]

... oil's priced in dollars, so if you have yen, you wanna get oil, you gotta sell your yen to buy dollars, then sell those dollars to buy oil.

And selling more yen to buy dollars because the price of oil's going up means you have to dump more yen, which means your yen is weakening faster, which then causes the Bank of Japan to sell treasuries, the largest holder of, of treasuries, which sends yields even higher here in the United States.

So you can see the intense amount of pressure heading into the midterms for our administration to figure out how to get oil prices down and how to get bond yields down, because, you know, the, the enemy of a bubble in equities and a bubble in credit and a bubble in real estate is what? Higher borrowing costs.

And so today we have, you know, oil, oil prices are crashing because of this latest round of, of kumbaya and, uh, and everything seems fine.

But if you had invested on Friday geared for World War III, [laughs] the potentiality of World War III, and spiking yields and you shorted the bond market, you would've been destroyed.

I've learned my lesson months ago.

Remember, this is k- this, the, the, the start of this war was February 28th.

Right

What is going on here and what do you think is going to happen?

Well, I run a model called the inflation-deflation economic cycle model.

And it's very easy to, I think it's relatively easy to model the economy if you're just looking at the macroeconomic conditions, looking at the Federal Reserve.

But when you have to model a president's mood swings, it's very difficult.

I got to be honest with you.

Yeah.

Hey, one day the war is going to be over in a couple of days.

So what other opportunities are out there? If they start cutting rates, the stock market should be going up again, right?

Yeah.

You could do nothing and watch interest rates surge 'cause there's just no savings there to, to supply all that debt without having interest rates going much higher, or you monetize it all.

And the danger in monetizing debt this time around...

See, this is unique.

We have a uni- unique condition.

US debt to GDP is now 123%, Daniela.

It was 60%.

Why did he do that?

So the Federal Reserve is supposed to be

a lender of last resort to institutions.

In other words, the primary dealers who need to have cash because their balance sheets are a little bit... shaky they will lend treasuries not corporate debt not junk bonds not whatever treasuries at a discount to the federal reserve and they will they will lend them money overnight so it's like it's like a little bit of a lifeblood line for for those very few institutions that might need it but like i said it's morphed into hey every word is parsed like we're reading scripture from the fomc a And these individuals have inserted themselves into the economy to such a great degree that we've priced out the middle class from buying a house.

The purchasing power has been eviscerated.

And we have the most trenchant wealth gap we've ever seen in the history of the United States and even across the developed world where we now see a record 58% of all consumption is now coming from the top 20%.

the top quintile of consumers.

This is not normal.

Okay.

What do you make of the jobs market right now, Michael? Let's start there.

Well, when you have the labor force growth pretty much near zero, I mean, it doesn't really surprise me.

that you have very low non-farm payroll growth numbers.

So you don't really need a lot of labor force growth to satisfy the natural growth of the economy.

Plus you've closed the border too, which is a good thing in my view.

You want to know who's coming into your country.

We need legal immigration.

So the question is, are we seeing a soft landing or are we really going down the recession slash depression road here?

And

the CRB index in itself skyrocketed.

So what did that do? So when everybody was on one side of the boat, significant number of rate cuts later, starting in June of this year, President Trump's man comes in, and everybody was on one side of the boat.

Everybody was long precious metals.

And that turned out to be a really, really bad move because, you know, gold was down, fell 36%.

The miners, 36%.

Gold, physical gold was down 25%.

So

Mm-hmm.

Not many.

As, and if you're retired, your income hasn't gone up.

If you're underemployed or unemployed, your income hasn't gone up.

That's why there's a gigantic trenchant chasm developing in this country between the have and have-nots, between that, you know, that, that I, that dot on the I of the top maybe 20%, 10% of, um, of wage earners, and then the rest is a lowercase I that's got headed right into the dirt.

Really, really, that's why the sentiment is so low in this country because we've destroyed the middle class.

You know, it, you know, we've gotten very wealthy, people who have houses and they've had nice stock accounts, and they derive their wealth from assets, they're doing fine.

Mm-hmm

Yeah

Yeah.

Thank God.

Let's all just say a prayer on that, that he's leaving.

Um, he, at, at his, at, at the pinnacle of his horrific tenure, he printed $4.5 trillion.

He expanded his balance sheet by $4.5 trillion.

I believe his tenure started in 2016.

What are your expectations there? What, what change are you most looking forward to from him?

Um, I think we might have a little bit of a lively discussion here then, because, um, I could be wrong, but Michael Pento, I'm pretty sure that maybe you have a different opinion, at least in terms of the impact of, of this on the general economy.

Well, yeah.

Let, let's look at where we're starting from.

First of all, the bottom four quintiles of consumers have been in a recession since COVID ended.

Uh, it's only really the top 20% that are keeping the economy going.

And if you look at the stock market, it's really concentrated in tech companies, semiconductors, that are doing the best.

And like Adam said, just like the, the, uh, consumer staples are, are lagging pretty, pretty sharply here.

This is awesome.

Mm-hmm.

We're a debt disabled economy.

We have as much debt as a percentage of GDP today as we had entering to the global financial crisis.

Um, we have a, we have a demographic problem, a big demographic problem in this country.

We're only barely growing, um, population growth, um, after a very robust time since World War II.

The population is not only growing very slowly, but we have immigration reform.

And most people will say thank God, but it's still half of the input to GDP.

Yep