This is a free preview of a paid episode. To hear more, visit www.bonnerprivateresearch.comTuesday, May 6th, 2025Laramie, WyomingWell this is awkward. Yesterday, on short-notice, I had a 45-minute Private Briefing with BPR stalwart Rick Rule. It was, by popular demand, almost entirely about silver (we did talk about the gold/oil ratio at the very end). Why awkward?Because Barron’s published an article this morning on the very first question I…

Tuesday, February 18th, 2025Laramie, WyomingEarlier today I hosted a live call with Matt Smith from Doug Casey’s Crisis Investing. During the chat, the gold price made an intra-day high of over $2,950/oz. Later in the chat, Matt made the case for why gold could go as high as $21k/oz.Why? How? When? What should you do next?All good questions!You can click on the video above to watch (I’m having a transcript made as well, but wanted to send you this as soon as possible). Here’s a breakdown of the key topics we covered, with timestamps so you can jump to what matters most to you.Timestamps & Major Topics[00:00:00] Kicking things off – Matt and I set the stage for the conversation.[00:01:00] A little about Matt – If you don’t know his background, here’s a quick rundown: entrepreneur-turned-regenerative cattle farmer in Uruguay, working with Doug Casey, and a big believer in getting geographically unlinked from centralized systems.[00:02:00] What is regenerative farming? – How Matt runs 250 head of cattle with zero external inputs, and why this model matters in today’s world.[00:04:00] The Mar-a-Lago Accords – Trump’s team has a real plan to reset the monetary system. It’s not just talk. We break down what’s coming and what it means for you.[00:07:00] Why they want to devalue the dollar – Trump’s people think the dollar is way too strong, making U.S. exports uncompetitive. Their solution? Drive it lower. Here’s how they’re doing it.[00:11:00] Will this actually work? – Whether they pull it off or not, the fact that they’re even trying is a game-changer.[00:13:00] Gold’s role in the reset – Trump’s team isn’t stupid. They know gold is key to restoring faith in the financial system. We go deep into how they might use it.[00:16:00] What’s really in Fort Knox? – Elon Musk and Rand Paul want an audit of U.S. gold reserves. If it turns out the gold isn’t there (or if there’s way more than expected), what happens next?[00:18:00] Gold’s breakout – Is this rally the start of something huge, or just another head fake? Spoiler: this one looks real.[00:21:00] Infrastructure & energy – Trump wants to rip out the regulatory roadblocks and supercharge energy and AI. This could be the biggest infrastructure buildout since the 1950s.[00:26:00] Mining stocks – They’ve been dirt cheap and ignored for years. That’s starting to change. Here’s why it’s a massive opportunity.[00:28:00] The final gold bull market? – Doug Casey has called this the last great gold boom before gold gets re-monetized. If he’s right, this is your last chance to play it.[00:33:00] The risks no one talks about – Even if Trump’s team pulls this off, does it just lead to an even bigger, more centralized government? We dig into it.[00:38:00] Redeemability – Will this new system actually let people redeem dollars for gold, or is it just another illusion?[00:41:00] The China model? – Trump’s approach has a lot in common with China’s industrial strategy. Is that where we’re heading?[00:45:00] Wrapping up – Everything’s about to change. Are you ready for it?Bottom LineGold’s on the move. There are reasons why. But there are a lot of dots to connect. And the picture they make isn’t entirely clear. This call with Matt helped us understand some of what’s happening, what to expect next, and most importantly, what you should do with your money now. Enjoy!DanPS Matt and Doug Casey collaborate on Crisis Investing. As a courtesy to Bonner Private Research subscribers—and because Bill and Doug go way back as friends—they’ve set up a special offer for BPR readers who want to subscribe. You can do so here. And if you enjoyed the video, let me know. We’ll do more in the future. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

Welcome to Episode #78 of the Fatal Conceits Podcast…They’re sometimes called “California refugees.” But they hail from New York and Illinois, too… You’ll find them in sleepy little towns in Florida… Texas… Arizona… Nevada… and across the sunbelt… basically anywhere that doesn’t suffer oppressive taxation, creeping government, woke school curriculums, high crime, homelessness, drug epidemics…The pandemic didn’t birth this trend, but it sure did accelerate it. Presently, California is losing about 370,000 people per year, a record rate. In today’s program we’re joined by MN Gordon, editor and publisher of the Economic Prism newsletter and former California native. Earlier this year, Mr Gordon packed up his family and headed east to find his own American Bolt Hole. We begin today’s discussion with his fascinating story… then talk about Opendoor - as both an idea and a company - and what’s next for real estate in the US. Please enjoy our discussion and leave your own comments and ideas regarding the best places in the US to live below…Cheers,Joel BowmanP.S. For those inclined to read rather than listen, please find a lightly edited (for clarity) transcript below…Thank you for reading Bonner Private Research. This post is public so feel free to share it.TRANSCRIPT:Joel Bowman:All right. Well, welcome back, dear listeners, to the Fatal Conceits Podcast. As you know, by now, it's a show about money, markets, mobs, and manias, not necessarily in that order. If you've not already done so, please head over to the Bonner Private Research substack page. You can find us at bonnerprivateresearch.substack.com, where there are now hundreds of articles on everything from high finance to lowly politics and everything in between. There's plenty of research reports there, of course, by our macro analyst, Dan Denning and investment director, Tom Dyson, as well as plenty of Bill Bonner's daily musings. You won't find them anywhere else.And in addition, of course, there are many more conversations just like this on the Fatal Conceits Podcast. Grab that at the tab on the top of the page. And speaking of which, I'm delighted today to welcome a newcomer to the show. Mr. MN Gordon is the Editorial Director and Publisher of the Economic Prism Newsletter. I'll provide a link in the transcript to this, so you can head on over there. In particular, check out the library. You'll find plenty of usual suspects from Messrs. Hayek to Hazlitt to Mises, and all the rest of those free market oriented kind of gentleman. So, without further ado, Mr. MN Gordon, welcome to the program.MN Gordon:Hey, Joel. Morning. Thanks for having me on.Joel Bowman:Yeah, not a problem. Not a problem. Now, we've got so much to talk about, as is the case whenever we sit down these days. We had the remarks from Mr. Powell yesterday. There's real estate to discuss, credit markets, the dollar, on and on. But one thing I wanted to start with here is a story I read over on your Economic Prism website, and I think it's really instructive. I think a lot of people in America are thinking along these lines at the moment, and that is your exodus story from California. Why don't you just kick us off by telling us a little bit about how you got out of the Sunshine Tax State?MN Gordon:Yeah, you bet. Yeah, I'm a native of Southern California, born and raised there and worked for many years there in my career. And over the years, it just became more and more intolerable of a place to be. Certainly, the high taxes and wacky politics have always been a part of California, but it really turned ugly or just more and more intolerable during the COVID lockdown that had taken place.And my wife and my kids, we were just eager to get out and try something else and look for a place that maybe has a lighter touch from the government, more favorable tax policies, lower cost of living. So, we certainly found that in Knoxville, Tennessee. We moved out here in July, so we've been here for several months and we're really enjoying it so far. Really, really liking the green and wet conditions, not being in perpetual drought...Joel Bowman:Must be a nice change.MN Gordon:It is a nice change, for sure. And yeah, certainly more of a freedom feel here, no state tax, and lower cost of living, so it's turning out to be a really great move for us.Joel Bowman:Fantastic. Yeah, my wife and I were just in Austin, Texas a couple of months back and ran randomly into a group of people who referred to themselves as "California refugees." There are these pockets of similar people, it seems like, all around the country, in Austin, in other states. You guys looked at a few other places, Arizona, Nevada, Texas, Florida, but none of them floated your boat for various reasons. What was your criteria?MN Gordon:Yeah. That's right. I think for us, it was really finding that lower cost of living, finding somewhere that had very good access to nature. I grew up at the beach and really connected with the beach in my youth and into my early adulthood. And the older I got, the more appealing the mountains became for me. California certainly has mountains that you can go to, but they're kind of tinder boxes. You don't really want to spend much time in them, and certainly wouldn't want to live there.And all the mountains in East Tennessee, we've got quick access to the Smoky Mountains here, and while they're certainly more subtle, the peaks are lower and what have you, they really are livable and very beautiful and enjoyable to spend time in. So, that was certainly something that attracted us to this area.Joel Bowman:And you mentioned your wife and kids, obviously it was a more appealing environment for a family in addition to just the great outdoors and having easy access to the lush Smoky Mountains. What about things like schooling? I'm interested in this, in particular as a father of a young daughter, what were the kinds of, I don't want to call them grievances, but complaints that you had pre-COVID, did you find those exacerbated with lockdowns and that kind of thing? Was that prevalent where you were in Southern California?MN Gordon:Yeah. Yeah, so that was also a big part of it. So, my son is 15, he'll be 16 next month or later this month actually. And so, he's in high school and the school he was going to, the local public school in Long Beach, has about 4,000 kids there, and they shut it down, of course during COVID. And when they reopened it, it really seemed like that the kids just went back and were really wild or what have you.Anyhow, it just turned into a rough situation. There was an incident where the school safety officer ended up shooting and killing a woman that was fighting one of the students right in the street, in front of the school.Joel Bowman:Wow. Oh my goodness.MN Gordon:Yeah. So, it was really crazy. And then, just during COVID and this prevalence of this woke ideology that had seemed to come into the school. Several years ago, the state of California created a third alternative when you apply for a driver's license. So, you can be male, female, or X, right?Joel Bowman:Oh, right, okay. Yep.MN Gordon:Yeah. And so, all of a sudden then my son's got a teacher that is clearly a mister, but he goes by Mx, because that's what's on his driver's license, and just a lot of that kind of nonsense.Joel Bowman:That teacher didn't happen to be the biology teacher, did they?MN Gordon:Right, yeah.Joel Bowman:Creates a little conflict.MN Gordon:Yeah. So, we were eager to get out of there for those reasons, and certainly don't want to be too negative on it here, but that was also certainly part of the factors in our decision to leave.Joel Bowman:So, how have you found it then in Tennessee? Because one of the things that you mentioned in the article, and actually one of the things that this group of "California refugees" impressed upon me when we met them in Texas, was exactly what you would said, which is, "Don't California our Tennessee." Or, "Don't California our Wyoming." Or whatever it is.We think of places like Tennessee and like Texas as brimming with Southern hospitality and very warm and welcoming, but I can see that there would be a little reticence when you see this brigade of California number plates just teeming over the hills. How have you found the welcome there in East Tennessee?MN Gordon:Right. Yeah, I mean, overall the welcome's been great. The people are very friendly and accommodating. We certainly have gotten some odd reactions from people when we say we're from Long Beach, California, and just moved here. And we have gotten some, very few, but some people that seem visibly outraged or what have you, that we moved here. We had one experience where we stopped by the lake marina and were talking to the lady at the boathouse, and she found out we were from Long Beach, and she really started questioning why we would move there and so on. And I think that's what it is, they're protective of the Tennessee that they have. Right?Joel Bowman:Right.MN Gordon:They don't want liberal policies coming in and taking over the schools or the government, whether that's limiting freedoms or increasing taxes, or creating these massive social programs that you have in California. So, I think that's what it comes down to. And they'll warm up to you pretty quickly once you start talking with them.Joel Bowman:Yeah. One of the things I liked that you mentioned in your article, is that a lot of times people think that those who are coming from California or maybe Illinois, or New York, or wherever else, and seeking refuge elsewhere, they think maybe they do want to bring their woke policies or what have you to the school boards there. But actually, it's people like yourself who know full well, have been on the front lines of this, who see it for what it is. It's really gotten to a fever pitch just in the past few years, and you see exactly what has happened upfront, whether it's at the school, or with taxes, or real estate prices, crime, homelessness, drug problems...MN Gordon:True.Joel Bowman:So, I find actually a lot of the people who have moved away from those places, they may have been very progressive to begin with. They moved to the Bay Area and then all of a sudden they see the end game of those policies and they think, "Oh, I've got to get out of here. Even if I'm centrist or if I vote a little left, this has just gotten out of hand here."MN Gordon:Right. Yeah. I think that's certainly accurate. I think people that are looking to leave California or other liberal dominated cities are looking to get to places that have greater freedom and are not wanting to recreate the situation that they're escaping from.Joel Bowman:Right. So, then let's talk about the nuts and bolts of your exodus with regards to selling your home. You mentioned that you had a story with regards to Opendoor. And for those readers listeners who are perhaps unfamiliar, I actually wrote something similar about Zillow a couple of weeks ago, one of these online real estate market makers. They wear various hats, I guess. But what was your experience with unloading California real estate and getting into the Tennessee market?MN Gordon:So, I used Opendoor. They refer to themselves as an iBuyer, I guess that's the buzz word, but essentially they use their digital pricing models to make offers on houses, cash offers, and then they make light touch-ups to the houses and then flip them back onto the market.And so, it was about June of this year when we were looking to sell our house, and I'd heard a bunch of commercials on the radio about how easy it is to sell your house with Opendoor. So, I reached out to them and got a price quote, and it was a price quote that I was certainly happy with and was ready to take. However, I wanted to just see what sort of price I could get, perhaps I could get a better price if I went with the traditional approach.And so, I got an agent and they staged the house and took a bunch of nice pictures and had open houses over a series of two weekends. And this was early June, so it's right when the mortgage rates had spiked up above 6% for the first time. And while we got a lot of traffic, we didn't get any offers. So, it was, "We really need to get out of California. We want to get into Tennessee before the next school year starts."And so, I went back to Opendoor, and this was maybe three weeks after my initial offer and spoke to the same person there who had given me the initial offer. And so, he came back with a new offer that was actually higher than the first one that they had given me. Clearly they weren't recognizing what was going on with the market. And so, certainly I jumped at that offer and took it.Joel Bowman:Yeah. Congratulations.MN Gordon:Their process was really simple. I got all my stuff moved out, took some pictures, uploaded it to the website, put the keys in a lockbox that they had mailed me on the door, and I left. Right? And then they wired the money to my account and it was really smooth and simple.But then after that, I've been following what's been going on with that house, my former house. And so, about two weeks after I had sold it to Opendoor, they had put it back on the market. They had gone through and really just done some interior painting on the walls, nothing major. We had some more colorful paints, and so perhaps they just wanted something more neutral, who knows? And so, they put it back on the market for 60,000 less than they bought it from us for. So it was-Joel Bowman:Wow. What was the timeframe there? That was just a few weeks?MN Gordon:Yeah. It was literally two weeks after they'd bought it from us. So, I don't know why they didn't recognize that before they bought it from us, but after they bought it, clearly they realized that they'd paid too much. They put it on for 60,000 less, and then it still hasn't sold. They've been dropping the price every several weeks. And so, we're going on 110 days and it's over $110,000 less than what they bought it from us for.Joel Bowman:My goodness.MN Gordon:Yeah. So, it was pretty wild. And so, that got me into really looking at Opendoor as a company and what's going on. And I wrote an article a couple weeks ago about it, and it seems like there's countless examples out there of my experience. In my article, I cited one in Colorado where Opendoor had paid close to $780,000 for a house in April, and then listed it for 870,000 and it didn't sell until October. So, about six months later. And when they sold it, it was for a $154,000 loss.Joel Bowman:Oh, wow.MN Gordon:Yeah. So, I'm not quite sure how the company expects them to make money that way...Joel Bowman:It's difficult to make up losses on volume.MN Gordon:Right. Right. So, from what I can gather, they have these digital pricing models or these algorithms that they use, and somehow they just missed it. That when interest rates rise, that it's ultimately going to cause the prices to drop, right? And interest rates or the price of credit really is fundamental to the markets, and especially those that rely on large quantities of debt.So, the housing market's a prime example of a market that's really sensitive to interest rates. And so, as the rates rise, the house prices eventually must adjust downward to balance out the monthly mortgage payments that people have. And so from what I can gather, Opendoor was projecting this trend outward that they had seen over the last several years. And when the inflection hit, they just missed that, missed what was happening with the rising rates, and continued to load up on houses that they would eventually have to sell for a loss. So, a wild ride going on there at Opendoor.Joel Bowman:Yeah. It's amazing too, that this happened, as you say, in the summer months of this year, because Opendoor had a forward example in Zillow. I may have to double check the years here, but I think it was in 2019, 2020, Zillow did something similar, where it used one of these AI algorithms to extrapolate straight lines into the future, which is never a good undertaking when you're dealing with human behavior and all of the complexities of something like a real estate market, which can be hit by things like pandemics, or economic downturns, or rapid interest rate hikes, all of which we've seen in the past couple of years.And Zillow really got caught out as well, where they had just onboarded, almost automatically, this huge inventory of houses and properties that the algorithms had weighed and decided were worth X amount and hadn't factored in or adjusted for reality, let's say. And all of a sudden, they were left with this enormous inventory, which of course, has a carrying cost. And then, if they can't rent out, they have to sell into a falling market, which can exacerbate the problem that in some ways they kind of caused in the first place. But it's interesting that Opendoor wouldn't have seen that as an example and maybe tweaked their own machine learning a little bit in anticipation of exactly this.MN Gordon:Yeah. Right. Who knows? That seems like a good example that they could have learned from. Perhaps they thought they were smarter. I don't know.Joel Bowman:So, what's happened with the price of Opendoor, the share price of Opendoor you mentioned had cratered. What's going on there?MN Gordon:Yeah. So, the share price is really circling the toilet bowl here. I think it peaked at around $35 per share in early 2021, and now it's down to somewhere around $1.80 or so.Joel Bowman:Wow.MN Gordon:That's a loss of over 95%. And meanwhile, the company recently laid off 20% of their staff. So, a ugly situation for the company. Perhaps that's an opportunity for, I wouldn't call it investing, maybe speculating, but when I was doing research for that article on Opendoor, I came across some writing from an analyst named Luke Lango, who writes for InvestorPlace. And so, he made the statement that, "Opendoor today could be like buying Amazon in 1997." And that seemed like a bold claim to me, but who wouldn't want to have bought Amazon in 1997?Joel Bowman:Right. Another company that, of course, was cut in half any number of times on its way to what it would eventually become and has, along with the rest of the tech sector, come off considerably since its highs, at whatever it was a year ago or something like that. But yeah, you do see these ... I mean, 95%, it would be maybe generous to call it a dip. That's pretty much a hatchet job.MN Gordon:Right.Joel Bowman:But at some point, somewhere, assuming there's not bankruptcy and insolvency, there's going to be an attractive discount, 95%. What was your experience like with Opendoor? It seemed like it was pretty open and shut, right?MN Gordon:Yeah. Yeah, I mean, as far as the company, their user interface was really simple and entering my info into the website and then contacting the actual staff person there, who we did a walkthrough on Zoom and what have you. As far as going through the close and getting the money credited to my account. I mean, they certainly operated like a professional business, so they weren't winging it, I guess, as they were going. So, in that sense, they seem to operate like a good business. Who knows if they can survive these losses that they're taking? And their share prices is reflecting that.Joel Bowman:Yeah. I wonder what these big, mass buyers, whether they be the BlackRocks or the big funds of the world, but also outfits like Redfin, like Opendoor, like Zillow, that are just automatically vacuuming up these thousands or tens of thousands of residences. I wonder what that does for that old adage that real estate's about "location, location, location."If the buying and selling is going to be done by artificial "intelligence" that just algorithmically determines what entire regions are worth and then comes in with enough capital, enough muscle to move markets, if we're not going to have severe aberrations like this more in the future. It's interesting to think about.MN Gordon:Yeah, that is an interesting idea. And I don't know if they ultimately end up owning a lot of these houses that they can't sell, without taking a major loss, if they end up just becoming these large scale renters or what have you, until the market bounces back. I don't know. That's certainly a interesting idea to think about.Joel Bowman:All right. So, mate, what's on the future for you guys now that you've made the exodus, now that you're out in Tennessee, what have you and the family got programmed for the next couple of years? You've got a bit more schooling for the kiddos and then?MN Gordon:Yeah. My son's wrapping up high school here over the next few years. I've got a daughter who's 10, she's in fourth grade, and we homeschool her through a co-op, where she goes to school two days a week. And that was something that we started back in California. She was in first grade when the pandemic hit and we just couldn't have her on Zoom calls seven hours a day, trying to learn that way. So, that's when we switched to homeschooling. And it's turned out to be a really good thing for her.But yeah, as far as long-term plans, I mean, we're trying to settle in and make this our home and become connected to the community here, and getting out and exploring the city and the surrounding areas. And so yeah, I guess that's our short-term and long-term plans are to get connected here.Joel Bowman:That's fantastic. We've got our macro analyst, Mr. Dan Denning up there freezing on the high plains of Laramie at the moment. A couple of years ago, he did a bolthole project, where he drove thousands of miles around the country looking for the best spots with his particular checklist of what he wanted in various places.But it does seem like there are a lot of people who are peering over their own fence and thinking, "Hey, maybe there's not a better life for me somewhere else." So congratulations, mate. Best of luck with you and the family out there in East Tennessee. It's a place I haven't visited, so I'll maybe put that on the to-visit list in the future.MN Gordon, thank you so much for your time today, mate. And I'll include a link to Economic Prism and please, readers, listeners, viewers, what have you, head over there and check out Mr. Gordon's work. And of course, check out our own substack page. Again, that's bonnerprivateresearch.substack.com. And we'll catch you again next week.MN Gordon:Great. Thanks, Joel.Thank you for reading Bonner Private Research. This post is public so feel free to share it with Californians and refugees alike.... This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

Welcome to Episode #77 of the Fatal Conceits Podcast... In today’s conversation, I’m joined by author, value investor, student of life and editor of the popular ContrarianEdge newsletter, Mr. Vitaliy Katsenelson. I’ve been reading Vitaliy’s work, on and off, for over a decade now. In fact, we used to publish his columns and market insights occasionally in The Daily Reckoning, a publication I managed for Bill Bonner back in the 2000s, in what seems like another lifetime...Vitaliy describes himself as “Born in Russia, Made in America,” a distinction we talk about during our conversation. He’s also a professor of finance, CEO of Investment Management Associates and a keen world traveler. Over the course of an hour or so, I asked Vitaliy about his insights into the beleaguered American housing market, what the Fed hath wrought for the US economy at large, the challenges facing bottom up value investors like himself and where to for stock markets over the short and medium term. We also talk about his newly published book, Soul in the Game - The Art and Meaning of Life.Please enjoy - and share! - my conversation with Vitaliy Katsenelson, below...Cheers,Joel BowmanTRANSCRIPT:Joel Bowman:All right, well, welcome back to another episode of the Fatal Conceits podcast, dear listener. If you've not already done so, please head over to our Substack page. You can find us at BonnerPrivateResearch.Substack.com, where we have hundreds of articles, research reports, and many more conversations just like this on the Fatal Conceits podcast tab at the top of the page, where we talk about everything from high finance to lowly politics and everything in between.It is my pleasure today to welcome a gentleman to the show whose work I've been reading on and off for years, and as we were just talking about before we pressed record here, our email correspondence has gone back over a decade, so it'll be great to connect again. Vitaliy Katsenelson is the author of Contrarian Edge. Head over to his website there. He's got plenty of excellent material, mostly about investing, but a few life lessons in there, some political musings, lots of travel stuff. He's also the author of two investing books, Active Value Investing, and the Little Book of Sideways Markets, and most recently, a book that I hope we get to chat about today, Soul in the Game: The Art of a Meaningful Life.So, first of all, Vitaliy, welcome to the Fatal Conceits podcast. I feel like it's long overdue.Vitaliy Katsenelson:I know, Joel, it's a pleasure. Thank you. We're looking forward to it.Joel Bowman:Outstanding. And as we were also just mentioning, if this background looks familiar, you were recently on a podcast with Anya Leonard, who runs the Classical Wisdom website. We sit about 10 feet away from each other. Being husband and wife, we share a home office, so if this is a little bit of deja vu...Vitaliy Katsenelson:Absolutely. Yeah. No, that's still there.Joel Bowman:All right, so there's lots of stuff I want to get to, Vitaliy. You covered such a wide breadth of subject matter in your musings, and again, people should head over to Contrarian Edge to check out your work there. But for readers who are just coming upon your work for the first time, I think they might be interested just in a bit of a Vitaliy origin story, because it's a very interesting one. You put it as “Born in Russia, Made in America,” which I thought was a very entertaining juxtaposition. How did you make that journey and come to that distinction?Vitaliy Katsenelson:Yeah, so today I live in Denver, and I have a wife and three kids, and I run a value investment firm, IMA, and I also write, and I wrote several books, but I write articles all the time. And by the way, we have a Substack as well, so you can just look for my name on Substack. You can subscribe to the articles.Joel Bowman:I'll put all the links to these links in the transcript.Vitaliy Katsenelson:Perfect. Yeah. But I was born in Russia and I moved, my whole family moved to the United States in December, 1991. What's interesting about this, actually, I was not living in Russia. I was living in the Soviet Union, and then literally a month later it stopped, it ceased to exist. The reason we moved to Denver, because my father's youngest sister left Moscow in 1979, and she moved to Brighton Beach. If you watch Moscow on the Hudson, that movie basically describes her life.Joel Bowman:Wow. Okay.Vitaliy Katsenelson:And then she married the Rabbi, and Rabbi had a synagogue in Cheyenne, Wyoming, out of all places, which is, I don't know if there are any Jewish people there, but yeah, that's a different conversation. But anyway, she invited us over. There was an organization that does a lot of good things, actually, not just for Jewish people, called Jewish Family Services. They were in Denver. So my aunt decided that it was better for us to move to Denver than to Cheyenne, Wyoming, and I keep thanking my aunt every day just for that decision alone.Joel Bowman:And so, I believe you were first studying and then lecturing at, was it the University of Denver?Vitaliy Katsenelson:Yeah. Yes. I studied, I got my undergraduate degree and a graduate degree at University of Colorado at Denver. And then I taught finance as an adjunct, which is a fancy word for part-time. So if you are a professor, and if you say part-time professor or part-time lecturer, it doesn't sound as interesting.Joel Bowman:It sounds a little casual. Yeah.Vitaliy Katsenelson:But adjunct, because most people have no idea what it is.Joel Bowman:Right.Vitaliy Katsenelson:And so suddenly, you sound important. So I taught finance for about seven years, and the reason I actually quit, because two reasons. Number one, I absolutely hated the part where I had to give out grades. I loved giving out As. I hated giving out Ds and Fs. And so, I hated that. But the second part is that after you teach the same class over and over again, it gets old.And I realized when I write, I can teach, because every article would teach something, but I don't have to repeat every article. I don't have to repeat this semester after semester, so I can get to learn new things all the time. And so, I quit in 2007, so I haven't taught in 15 years.Joel Bowman:And also, I guess as you mentioned with your Substack and with your Contrarian Edge page, you get to reach a much wider audience than just how many people can fit in the auditorium, right?Vitaliy Katsenelson:Oh, absolutely. Yeah. I can help a lot more people with my writings than just in a classroom. Yes.Joel Bowman:Excellent. We were back and forthing a little bit email-wise, and I'd been reading some of your work recently on the housing market, the US real estate market, and I wanted to kind of get into that, because I think that's, to use a popular phrase, “top of mind” for most people at the moment, with obviously the Fed having met recently. You and I are talking on November the 7th, for our readers' edification, here.But it's been five days since the widely expected rate hike of 75 basis points that I think most people were paying attention to, most people had kind of expected that, but they were paying more attention to the tenor of Mr. Powell's remarks afterwards. He seems to be speaking fairly directly in his remarks, saying that the job of the Fed is not done at present. We're not looking to pause. "Talk of a pause is premature," I think were his exact words.I wanted to get your take on how you think that shakes out in the housing market, because obviously there's a lot of Americans, in particular the middle class, with wealth tied up in that asset class, and you've written that you think it's quite worse than people think. Why is that?Vitaliy Katsenelson:All right. If you look at the housing prices from 1999 to today, they basically went up about 40%. In less than four years, they went up 40%. Most of that increase happened actually over a three-year period. So, the median house today in the United States is about $440,000, probably a little bit less than that, but that's what it was at the beginning of the year.The problem is, those prices were fine from an affordability perspective when interest rates were around a 30-year mortgage at 3%. But when inflation is at 7-9%, interest rates had to go up. Even if the Federal Reserve did not raise them, they would have still gone up, I would argue, because who would've wanted to buy this paper when inflation is 9% and pay 1% or 2%. So interest rates, I think, would've gone up anyway.So, today when the mortgage rate is over 7%, basically if you are a new buyer and you want to put 20% down and you want to buy a house, it's basically going to cost you almost twice as much. Let me just give you a couple numbers. If you bought a house in 2019, or even in 2021, it would've cost you roughly $420,000. Interest rate was 3%, so it would've cost you roughly about $15,000 a year in mortgage payments.When rates go up from 3% to 7.6%, as they are today, now the mortgage payment goes up to $30,000. This is, what's important to understand is that the median American household makes about $75,000 a year. $75,000 a year, or about $60,000 after tax, roughly. So in other words, when interest rates were 3%, it used to consume 25% of someone's income. Today it would consume, if you were to buy a house at today's prices, at these interest rates, would consume half of someone's income.So, housing today is unaffordable. So, what has to happen is that, for the housing market to return to the prices, to return to the affordability of 2019, of 2020, of 2021, they basically have to decline like 30 or 40%.Joel Bowman:Yeah, I saw those numbers, 30 or 40%. I've read those numbers in your write up, and I think for a lot of people that's difficult to conceptualize, because they've been living high on the hog with cheap and abundant credit for so long that they think, “Hey, it's been so good for so long, how could this possibly come to an end?” But you tap into the emotion of owning a house, how it's different from stocks, it takes a lot longer to come down, but prices can run up pretty quickly. But there's an emotional component to owning a home that counts, too...Vitaliy Katsenelson:Yeah. In the American Constitution, there is a guarantee of pursuit of happiness, but there is no guarantee of rising housing prices every year. But over the last 30 years, we are basically, because interest rates actually declined for most of our adult life, right? So therefore, we've been conditioned that housing prices only go up. But they can decline. Joel Bowman:That'll come as a shock to some people, I imagine. I'm Australian, you can probably hear from my accent, but there’s a very similar macro setup in Australia, where they've had access to just an exorbitantly large amount of cheap willing credit for so long that they've been led to believe that this is just sort of par of the course.But one of the things that I read in your full letter, that I thought was very interesting, and I think it's an important point for people to grasp, is that a lot of people will sort of trot out the argument, where they'll say, “Hey, look, we already had interest rates during the Paul Volcker years, or during the '70s and '80s, when they were 14, 16, 18%. And we had a lot of other similar macro setups as well. We had high inflation, we had high unemployment, we had an oil embargo from a major producer of the world, the Nixon price shocks, all of this kind of very pessimistic, sour macro setup. But we were able to muddle through, and then we were kind of off to the races after we got through the hard part. But this time's different. I agree with you, but explain to us why, in your mind, this is not just the '70s and '80s redux.Vitaliy Katsenelson:Because in the '70s and '80s, if you look at the ratio of housing prices to median income, it was half of where it is today. In other words, yes, the interest rates went up a lot, but the housing prices were much, much cheaper in relation to what people made. By the way, we still had a recession, don't get me wrong. We still had a recession. People forget about it. But I think this time, the impact will be greater.Also, this is very important to understand. When we are in an economy that has very low interest rates for a long period of time, our behavior changes. When I say “our,” that includes individuals, corporations, and government. Let's say, let's start with the government. That's the most obvious one. We have our debt to GDP at the highest probably in the country's history. We may have to go back to the World War II era to see what it was then. It's much higher than it was in the '80s. If you look at just how we get used to finance everything. If you bought a new car, you could get 0% financing. That is gone. I mean, well, 0% financing is basically gone, and therefore what you're going to start seeing that now, everything is going to become a lot more expensive.So, what's important to understand is where we're coming from. We're coming from, it's almost like 0% interest rates to meaningfully high interest rates, and therefore the cost of everything will go up. And it's going to slip into every single corner of the economy, and it's impossible for high interest rates not to cause a recession at this point.Let me give you one other important element about the housing market. Most Americans today basically have a mortgage, a fixed rate mortgage. 90% of Americans have fixed rate mortgages, where they probably pay from two and a half to three and a half or 4%, because people refinance and the industry has declined.So, here's what happened. Let's say you bought a house for $300,000 and let's say you have a mortgage. Actually, let me give you actual numbers. The average American has a mortgage of about $260,000 if you put together the first mortgage, second mortgage, okay? So in other words, the average American as of right now has $180,000 home equity.Joel Bowman:Okay, right.Vitaliy Katsenelson:Now, let's say housing prices stay where they are. Let's say they don't decline. If you want to move, if you want to sell your house today and move into another house a few blocks away, you're going to sell your house for $440,000. Hypothetically, you take $180,000 of equity, you put it in your house. So, new house is going to cost you for $440 minus $180, so $260. Your mortgage is not going to change except one thing. Now you'll be paying, instead of 3% interest rate, you're going to pay 7.6. And so, suddenly that move where you still buy the same four walls, same picket fences, now it's going to cost you $10 to $15,000 more a year.Joel Bowman:Right.Vitaliy Katsenelson:And that's a lot of money. So therefore, I think what's going to happen, what's important in the sense is this, when the housing prices go up, when the stock prices go up, people feel wealthier, because they feel like the house is worth more, they have more home equity. People feel wealthier, and therefore, if you feel wealthier, you are more certain about the future, you go out and spend money.The opposite happens when they decline, when assets decline, from stocks to housing prices. And when that happens, when housing prices have declined, people are going to have less home equity, but also they're going to feel less wealthy and therefore they're going to spend with less confidence. And that in itself is also going to help to weaken the economy.So again, I'm not an economist. I'm a guy who analyzes, I'm a kind of bottom up guy who analyzes stocks. But I look at this. It took me about 20 minutes to go through all this data, and just to see that it's basically impossible for us not to go into recession.Joel Bowman:Yeah, and even a technical recession this time. I know in the old fashioned days, it used to be two consecutive quarters of negative GDP growth. I'm sure the government has defined that out of existence. But yeah, I think most people are expecting them to even have to admit that we are in a recessionary environment at this point.Vitaliy Katsenelson:Yeah. Let me tell you, I'm going to define recession this way here: when unemployment will start going up. The reason the government got away with saying we are not really in recession, and they could get away with it because it was supply chain issues, et cetera. A lot of one-time stuff. Fine. And we had 3.3% unemployment, so that's how they could get away with it. But when unemployment goes from 3% to 6%, it's going to be very difficult to say that we are not a recession. And I don't know where unemployment is going to go, but I'll tell you this, if you are in California, if you are in Silicon Valley, I think the recession there is going to be even more significant than in other parts of the country.Joel Bowman:Yeah. Well, let's talk about that then. You mentioned, of course, your work as a value investor, and we were just powwowing about our mutual acquaintance, Chris Mayer before. I wanted to just sort of pivot from the real estate market to the work that you do with investing, because obviously this is one of the other big asset classes, stocks, so-called risk assets, that are impacted by Fed policy.As Chris and I were just saying a couple of weeks ago, it would be lovely to live in a world where we could just do fundamental, bottom up health of a business research and due diligence and invest in the best companies, but the Fed can muddy the waters sometimes. So, explain to me and explain to our listeners how the kind of deep value investing that you're doing, that Chris is doing, which is driven more by, let's say, fundamentals than fad, or price over promise. How is that impacted now, even after we've had, with the exception of October, which I think was maybe the best month ever, we've had a very tumultuous year, to put it mildly.Vitaliy Katsenelson:Yeah. To paraphrase our ex-president, high interest rates made value investing great again.Joel Bowman:Right.Vitaliy Katsenelson:So, what is value investing in general? Basically what Chris and I are doing, we are analyzing companies as if they were, even though they're publicly traded, they don't have to be. Our analysis would not be much different if they were not publicly traded. Say I'm analyzing Apple, I'm analyzing Apple as if I was buying the whole company. I say, would I want to be in this business? Do I understand it? Do I like the management? What do I think the cash flow is going to be over the next 10 years? Okay, what do I think the company is worth? And then, once I figure this out, I say, well, how much discount do I need to its fair value for that to be an attractive investment? And you just keep doing it over and over again over different companies.And what's important to understand, is the instant liquidity that the stock market provides you, it's both a feature and a bug. It's a feature because it allows you to buy and to sell something. Like if you want to sell a house, first of all, it takes you a long time to find a buyer, and transaction costs are very high. If I want to sell a stock, like an average stock, I can sell it in seconds, and the difference between the bid and ask spread is going to be a tiny, tiny, tiny number. Okay, so that's a feature.The bug is that, because you can sell it so instantaneously, your analysis changes, and a lot of times what happens, people get tricked. Let me give you this analogy. When you go to Las Vegas to gamble...Joel Bowman:When somebody else goes to Vegas. I would never.Vitaliy Katsenelson:Yeah, let's... Yeah.Joel Bowman:You and I would never do that, Vitaliy. We're responsible adults, here.Vitaliy Katsenelson:Especially, your wife is 10 feet apart, so totally.Joel Bowman:Exactly.Vitaliy Katsenelson:Okay, when somebody else in Vegas goes, yeah, that person is not going to be thinking that he's investing or she's investing, because when you're in the main casino, you know they're gambling. And if you don't, then you have a much bigger problem.Now, because you are buying stocks and selling stocks, a lot of people get tricked that they're investing. But the thing is, what I described as value investing, when you analyze businesses, that's investing. When you buy in full stocks and you treat them basically as if you were renting them for a day and selling them, you're not investing, you're trading. Or it's both.Joel Bowman:Or speculating. Yeah.Vitaliy Katsenelson:Speculate, exactly. Gambling. Yes. I was kind of, Joel, I was on a... This is six months ago. I was on an AMC GameStop call in one of the Twitter spaces. I just wanted to understand what people are thinking. Oh, and at some point, I tried to explain to them that guys, you're all going to lose money, because this company is worth 95% less than what you're paying for it, and just went through the math. They didn't care.But there was one thing that one woman said that really stuck with me. She said... At this point, GameStop already declined maybe 20, 30%. And she said, "I bought the stock. I go to the movies all the time. I talk about the stock all the time, and it's still declining. Why is investing so difficult?" See, that person thought she was investing, but she wasn't.And so, what I do is investing because I'm treating companies as if I'm buying as businesses. And I think that's the biggest distinction. And I have a long term time horizon.Joel Bowman:I was just about to mention the time horizon too, because again, I've spoken to Chris many times about this, but the idea that if the money that you're investing in the market, you need it in five years, you need to pay for the kids' college or whatever, you may want to question whether that money should be in that particular investment. A longer time horizon, where you can insulate yourself against emotional overreactions that we all tend to have. We panic if things aren't going our way, or we get greedy at the upside, or whatever. But if you have a long enough time horizon and you do the due diligence and study the fundamentals in the beginning, even significant drawdowns or bear markets that we're seeing right now, if you've sitting on companies that you would want to own, whether they were publicly traded or not, certainly that contributes to a fitful night's rest.Vitaliy Katsenelson:Joel, let me give you this insight. If you have a shortened time horizon, volatility becomes your risk, right? In other words, you want a stock, and it declines, and you need the money at this point in time to pay for kids' education, then you have to liquidate the stock. And now the decline that could have been temporary becomes permanent, because you had to sell, because your time horizon was small.When you have a long term time horizon, volatility is really not the risk. A lot of times in opportunity, the risk is a permanent loss of capital. So when it declines, when the company, when stock declines and fundamental reason, the value of the company has declined as well, and that's a permanent loss of capital. When the company's earnings power gets demolished, or when you bought something, like let's say you bought those dotcom stocks that just crashed 70%. I bet if you bought almost any technology company, I'm generalizing, like last October, you're probably going to have a semi-permanent loss of capital. In other words, it's going to take you 10, 15 years to get your money back.Joel Bowman:Right. It takes a lot longer to build up percentages than it does to see them back down.Vitaliy Katsenelson:Absolutely. Absolutely. Yeah. Absolutely. Absolutely. But yeah, so a long time horizon becomes extremely important.Joel Bowman:Yeah. Okay. Let's sort of step back a little bit. I've got so many questions here that I want to get your take on, Vitaliy, and it's been 10 years since we caught up, so I've got a backlog. But I wanted to run something by you that we've been writing about at Bonner Private Research of late, and it ties into what we're talking about here, and this is the end, or at least a pause in the gushing of cheap and abundant credit. This may be, for the first time in multiple decades, or the first time in many young investors' or homeowners' or stock owners' lifetimes, the first time they're seeing persistent hikes like this, which we think may remain higher for longer.But there are a couple of other drivers that have led to this, in our worldview, that have led to this moment of plenty, this age of abundance that we find ourselves in, where if we want any food delivered from any style of restaurant around the world, we can call up, it'll be on our plate in minutes. We fly around the world using cheap jet fuel and travel in a way that kings wouldn't have been able to travel just going back a hundred years. And we take this all for granted.So, along with cheap and abundant credit, which is looking a little shaky, we also have cheap and abundant labor that was essentially because half a billion Chinese entered the marketplace and provided us with cheap goods. This is maybe another one of those “one time” events. And then, of course, cheap and abundant energy to power both the manufacturing and the distribution of all of those things.But we're seeing now, because of various geopolitical concerns, that each of those drivers is, in its own way, kind of breaking down. Whether it's, some would argue, weaponization of the dollar, or let's just say higher interest rates and a contraction in the credit markets there. Maybe we can go through those other ones, and just get your general take on that.Vitaliy Katsenelson:Let me go through them in the reverse order. If you look at the energy, right before the pandemic, we started to buy – unfortunately, I did not see the pandemic coming – we started to buy energy companies. Why? Because energy prices were so low, so low for so long, that we sold the supply. There was just this disbalance between supply and demand, just because low oil prices lead to decline in supply. So, even before the pandemic, you already had a shortage of supply, long term supply.Pandemic made it a lot worse. Then the war in Russia, I'm sorry, in Ukraine, makes it even worse because, number one, the Russian gas is most likely going to be out of the market for a very, very long time.Joel Bowman:Looks like.Vitaliy Katsenelson:Yeah. Yes. And it's going to be very difficult, and it's going to take years before Russia is going to be able to get it out of Russia to other countries. It takes years to build a pipeline to China, whatever, so it's going to be a while. It's very difficult to say exactly how it's going to play out, but also most likely, the production of Russian oil will decline as well.And the problem is, number one, the Western companies left Russia. So, they didn't just provide capital, they provided the knowhow, how to get that oil out of the ground, in very difficult places. And once production declines in the cold climates, it is difficult to restart it. Again, very general statements, but I would argue that it's safe to bet that production of oil out of Russia is going to be lower. And it's the third-largest producer in the world. So, low supply before the pandemic, after pandemic at war, it's very likely the supply will be constrained.On the demand side, you could argue that recession will reduce the demand. However, historically, the demand hasn't declined. Just a tiny bit during the recession, but not a lot. Okay, so I would argue we are probably going to see that decline. Oh, and by the way, I did not even mention ESG. I promise not to make it political, and if we had a different president from a different party in the White House, and one day he said, "Oil companies have to drill," and then next day he says, "Oil companies should not drill, and if you are..."Joel Bowman:It's a disaster. And the messaging is a disaster.Vitaliy Katsenelson:But if you are Exxon or any of those companies that have been villainized for doing what people need, then do you invest billions of dollars in new field developments, if tomorrow the government comes in and says, "You know that ‘excess money’ you're making in the high oil prices? Yeah, we want some of that."Joel Bowman:It's windfall tax time. It's nationalization time. Yeah.Vitaliy Katsenelson:Yeah. My point is, it makes it very, actually, those things make things even more problematic, that we're going to see low oil prices. Okay, so that's oil.You mentioned that we had a globalization over previous 20 years basically, right?Joel Bowman:Yep.Vitaliy Katsenelson:Globalization was deflationary. Today, we are going through selective deglobalization. The reason it's selective, because it's not like we are saying, let's say, if there's a factory in Mexico, we're going to take it out. No, we're going to say, we are going to now divide our trading partners in two groups, the ones that we can trust long term and the ones we can't. Ones that have a democratic political regime and the ones that don't.And so, I think what's going to be happening is that we're going to bring a lot more manufacturing from China to countries that are more politically stable, and some of that is already coming to the United States. I mean, we are investing tens of billions of dollars in building some of the data plants in the United States, and they do it for geopolitical reasons. But that means also, most likely, semiconductors will be more expensive to manufacture here than in Taiwan.So, deglobalization, selective deglobalization is inflationary. By the way, China has its own issues. China has a significant demographic problem. In addition to everything else, they have a zero Covid policy, which has been hurting them and their reputation...Joel Bowman:And their supply chains.Vitaliy Katsenelson:Exactly. Apple now is looking at China and says, “do I really want to have my factories in China, or all my factories there? Maybe I should move some of them into the United States, some between, just some move to other places.”Joel Bowman:Or do we want to have our chip manufacturers or our chip suppliers in Taiwan if Taiwan is going to become a dragon snack, to put it bluntly? I used to live in Taiwan about 12 years ago, and they were talking about it then as “not an if, but a when” proposition. And yeah, that was 12 long years ago, so it seems more of an inevitability.Vitaliy Katsenelson:Yeah, and I tell you this, very few people talk about this, but I would argue the restrictions we just put on China in the semiconductor sector, that is the first shot, a significant shot of a cold war with China. We basically told China that... actually told American and Western European companies, you cannot sell them advanced microchips. You cannot sell them equipment that helps them to manufacture those advanced microchips. And this is the interesting one. If you find yourself an employee in China, working for one of those factories that manufactures advanced semiconductor chips, you're going to lose your citizenship. So, our relationship with China is not getting better, it’s just getting worse. Anyway, another reason why more and more companies will be taking out their production out of China.By the way, there is some positive here as well, because that means we're going to manufacture more in the United States, which actually helps our labor, but it's also going to make our labor more expensive as well, by the way. So, it's a more nuanced discussion, here.But anyway, you look at this, from that perspective, everything, what you and I discussed so far is inflationary. Now, if you look at the United States, at higher interest rates, and when I say higher, they don't need to be at this level, they can just be higher than they were a year ago, are incredibly inflationary for the United States. Why? We have a... Sorry, I forget how much debt we have. $31 trillion, right?Joel Bowman:$31 trillion. Just passed last month.Vitaliy Katsenelson:Yeah. So, just think about 1% increase in interest rates for the federal government. That's $310 billion. If you look about, that's how much, roughly how much we spend on education. A 2% increase, that's roughly how much we spend on defense. A 3% increase, that's roughly how much we spend on social security. So again, I promise you one thing, I'm quite sure of this, none of those things will get canceled or reduced, because that's not what politicians do. This is how you lose your job as a politician. But what's going to happen, you just going to print more money reaches inflationary.So I think, if you and I talked a couple years ago, I would've sounded a lot more wishy-washy, like inflation versus deflation, and basically I would've said, I don't know, and here's the argument for both sides, and I'm going to invest as if both are going to happen. Today, I think the probabilities have shifted more towards inflation, long-term inflation, than deflation, even though in the short term, if you go into recession, a recession is deflationary.Joel Bowman:And it's not as if we're starting from anywhere near the Fed's acceptable range of when it claims to desired inflation at, around that sort of 2% sweet spot, as if it knows what the perfect number ought to be. But I mean, we're already at whatever it is, eight-plus percent. We're going to get another read this week, I think, so we'll keep our eyes on that. But we're a long way, in real terms, in real interest rate terms, we're still a long way behind the curve, as they say. So, there's a lot of catch-up still to do, and a lot of things can break in the interim before they get to that terminal rate, as they say.Vitaliy Katsenelson:Joel, I want to, just one topic, it just really bothered me. When Ben Bernanke received Nobel Prize...Joel Bowman:Ooh!Vitaliy Katsenelson:I actually have a perfect analogy to explain it. Actually, this makes so much sense actually, if you think about it. Because you have to look for the reasons why they gave it to him. They basically said they've given it to him because he understood the relationship between the financial system and interest rates, or something.Joel Bowman:I thought it was because he had the “courage to act,” Vitaliy. Wasn't that the name of his book, right?Vitaliy Katsenelson:That's right. The Courage to Act. But then I realized, here's my analogy for this: It's almost like giving a prize to a person who starts the fire, then puts it out, and then writes a book about it.Joel Bowman:Right. And my Courage to Act, Joel "the Arsonist" Bowman.Vitaliy Katsenelson:Yeah. It's like really giving the prize to an arsonist who also put out the fire. But here's the thing, this is a very important point. What's going on today in our economy is the direct consequence of what's been happening over the last 15, 20 years, or probably longer than that. And so, yes, our economy did not go to the Stone Age in 2008, 2009, so thanks Ben Bernanke for that. But number one, you did start that fire to begin with, and then you put it out. But arguably, the fire we have today has been caused by the Federal Reserve's policy over the last many, many years, as well.Joel Bowman:Right. That's a good point to raise, too. I think a lot of people, 12 or 10 years is a long time in the memory of a 30-year-old investor or a 25-year-old investor, so we're going back into ancient history for a lot of people who are just around the traps now. But Mr. Bernanke's career was one distinguished without, I think, a single success, where he failed to call pretty much every meaningful and significant moment of his time, including the mortgage backed security crisis, which grew up underneath his nose, which brings us full tilt back to the housing market.But I realize as we're speaking just here, and we've covered a little bit of ground here, but I don't want to sound just pessimistic, that we're sort of identifying these negative things around the world. Certainly we have to be mindful of them, but I want to talk a little bit about your latest book, because in addition to investing in turbulent times and keeping abreast of the latest geopolitical fracas, such as it is, we still have to get up and put our pants on one leg at a time and enjoy our family and make the most of the day. So, tell us a little bit about why you wrote your latest, which is called Soul in the Game. I'm assuming that's somewhat influenced by Mr. Taleb's Skin in the Game. Is that?Vitaliy Katsenelson:Absolutely. Absolutely.Joel Bowman:Okay, very good.Vitaliy Katsenelson:Yeah. And he actually endorsed, actually, this book too, so it's good.Joel Bowman:I saw that. Yeah, that was a nice feather in your cap. Congratulations.Vitaliy Katsenelson:That's right. But Joel, let me, I'm going to ask you a question, but let me, I want to end the investment part on the positive note, as well.Joel Bowman:Please.Vitaliy Katsenelson:As a value investor, I've never been more excited in my life, because it's suddenly, stock picking is back again. Being a rational investor, making rational decisions. When interest rates are very low, the bigger the story... The greater part of your imagination the story can capture, the more money you're going to make as a public company. This is why you had all these companies trading these insane valuations, right? Because there were not trading fundamentals. They were, because it didn't matter, because they can say, Listen, in 2040, we're going to make this much money. And since the interest rate's at zero, it might as well be today, because of the discounted 0% interest rate.Now today, what high interest rates did, they deflated a lot of bubbles, and they brought back common sense. So as an investor today, I'm more optimistic about investing than I've been in years. So, that's from one perspective.Now, let's go to the book. I've been writing about investing for a long time, and then at some point, I had this realization that, and I'm going to quote Freddie Mercury, who said, "There must be more to life than this."Joel Bowman:Oh, I thought you were going to say, "We will rock you." Okay.Vitaliy Katsenelson:And we will rock you. No, that's my next book. That's my next book.Joel Bowman:Okay. A geology textbook. Great.Vitaliy Katsenelson:That's right. Yeah. No, and this is when I realized that, this is when I start writing about topics that are outside of investing, so to write about parenting, Stoic philosophy, classical music, which I'm a huge fan of. And over time, that became a very big part, today maybe 40% of my writing actually focuses on other topics other than investing. And it's very dear to me.So this book, let me try to put it this way. When I help clients at IMA, I just help 300-something families. So, my impact is significant on a small number of people. When I write investment articles, I help a larger group of people, but again, it's still limited to people who just care about investing.With my articles that talk about parenting or classical music... Maybe classical music is not the case here, because it's usually a much smaller segment, but my articles about parenting have a significant audience. My articles about parenting or Stoics can help a lot more people. And this is why I wanted to write this book, because I wanted to help more people. This book is a completely altruistic endeavor. I just really want people to read the book and have a net positive impact on them. That's it.Joel Bowman:And I know my wife, Anya Leonard, again at Classical Wisdom, read the book. I have it on my list here. And she was interested in the Stoic aspect of it, of course, writing about classics herself. And so, it's not hard to understand, I think, why we are enjoying this recrudescence of Stoicism, given everything that's going on around the world. But in a kind of nutshell, how have you found the philosophy, some say the art, of practicing Stoicism in your own life, especially during moments of uncertainty such as we experience?Vitaliy Katsenelson:I feel, I tell you this, I feel somewhat conflicted about what I'm about to say, and here's why. Because I'm a contrarian at nature, and I usually don't like kind of... When I find that everybody agrees with me, that I find kind of a little bit... What's a good word for this? A little bit uneasy.Joel Bowman:Unsettled. Yeah.Vitaliy Katsenelson:Unsettled, yes. But over the last three years, I picked up three different things that became like three biggest facts. I'll give you all three. Chess, pickleball, and Stoic philosophy.Joel Bowman:Okay, I don't know what pickleball is, but I'm down with the others. I think the Queen's Gambit had a lot to do with chess.Vitaliy Katsenelson:Yeah, absolutely. By the way-Joel Bowman:Philosophy's off to the races. But what is pickleball?Vitaliy Katsenelson:You don't know pickleball?Joel Bowman:I'm either terminally uncool, or just late to the game. Or both.Vitaliy Katsenelson:No, it's a huge sport in the United States now. It's, imagine if you're playing kind of, it's like a miniature version of tennis with a different ball. They play it a lot in Paris. And I go play with a buddy of mine who is about my age, and you play against people who are 70 years old and they kick our butt. So it's a very, very popular sport.Joel Bowman:Good for some humility while you're on the court.Vitaliy Katsenelson:There's a lot of humility, yes. But anyway, Stoic philosophy... what happened was, I read this quote by Epictetus, and the quote said, it talked about the dichotomy of control. And it said, "Some things are up to us. Some things aren't."Joel, this is probably the most obvious quote you're ever going to read. But then he goes to explain, what are things that are up to us? And then you find out that there are so few of them. It's basically your values and how you act. Everything else is not up to you. Nothing else is up to you. Once you realize that, that is actually incredibly liberating.So, I went back and started to read more about Stoic philosophy, and I was blown away by that. Why? Well, it started 2000 years ago in Greece. And what's interesting about this, is how little people have changed over the last 2000 years. It's a blink. It's a blink. You read Epictetus or Marcus Aurelius or Seneca, those are the kind of three main Stoics whose writings live through the day. You find that they're talking about things that we're talking about, debating about today.I'll give you one example, which is where Seneca has this expanse, this whole paragraph talking about how people are wasting their time, how they're constantly distracted by frivolous things, and it goes on and on and on about things like this. You would think he's talking about iPhone, Facebook, and Snapchat. Joel Bowman:This is from his piece On the Shortness of Life.Vitaliy Katsenelson:Yes, I think so. Yes. And this is when you realize that... I think if I was a marketing agent for Stoic philosophy, I would call it Stoic practice. The word philosophy, which actually means just love of wisdom, is somewhat intimidating, because we think about kind of skinny, weak white guys, old white guys with beards, who philosophized about things we don't understand, right?Joel Bowman:Sure.Vitaliy Katsenelson:But Stoic philosophy is really Stoic practice, and all it's trying to do is minimize negative emotions in your life. Just trying to bring more tranquility to your life by removing negative stuff. And so, when I realized this, I was completely smitten by that, because what happens, the way I look at it, it's basically an operating system for life.When we are born, our parents basically tell us, kind of help us to navigate through life little by little. Then our friends, then the books, then things happen to us, and we try to adjust. It's a Frankenstein kind of operating system based on now a whole bunch of random factors. Stoic philosophy is, I think, I would argue, or Stoic practice, is lot more organized. It provides a very well-structured operating system. That's what really attracted me to Stoic philosophy.Joel Bowman:Excellent. Well, Vitaliy, I think you've put enough on the table to whet people's appetite if they haven't already checked it out, both in your book, and I'll link to this again in the transcript of this podcast, but Soul in the Game is the name of the book. Vitaliy, thank you so much for spending an hour of your afternoon with me. I really appreciate it. I'm sure our listeners will appreciate it too, and we hope to have you back on again sometime soon.Vitaliy Katsenelson:Joel, thank you very much. Thank you.Thank you for reading Bonner Private Research. This post is public so feel free to share it. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…Welcome to Episode #76 of the Fatal Conceits Podcast, dear listener, a show about money, markets, mobs and manias. All eyes were on the Jay Powell’s Fed this week, specifically the chairman’s remarks following the much-expected 75-basis point rate hike. Word was that the central bank will “continue to do what needs to be done to get the job done." Actually, they were JP’s exact words. “The job” to which Mr. Powell refers is, of course, to get inflation back to the 2% range. What does that mean for stocks and the dollar in the near term? What does it spell for America’s already-toppy housing market, the pillar of middle-class wealth? And how will gold respond? The Midas Metal popped more than $50 on Friday. (Silver was up even more, doubling gold’s advance in percentage terms.) For answers and insights, I spoke with Bonner Private Research’s macro man, up in Laramie, Wyoming, Mr. Dan Denning. Over 45 mins or so, we covered all of the above, plus BPRs Trade of the Decade, the coming Winter Catastrophe, 2022 Redux, and why you should panic now (in an orderly fashion, of course) and beat the rush. Please enjoy our conversation and, as always, like, comment and share our work with friends and family far and wide. Cheers,Joel BowmanThank you for reading Bonner Private Research. This post is public so feel free to share it.TRANSCRIPT: Joel Bowman:All right, well welcome back to another Fatal Conceits podcast, dear listener, a show about money markets, mobs and manias. If you have not already done so, please head over to our Substack page. You can find us at bonnerprivateresearch.substack.com with hundreds of daily articles now on everything from high finance to lowly politics and a ton of in-depth research reports, many of which were authored by none other than my guest today, Bonner Private Research's, macro man up in Laramie, Wyoming, Dan Denning. Dan, welcome to the show. How do you do, mate?Dan Denning:I'm doing all right. It's dark and cold and gloomy here in Laramie as winter approaches, but that's kind of how it feels like in markets right now, so I suppose that's appropriate.Joel Bowman:Yeah, exactly. We're talking off camera just now and you were firing off emails this morning at around 5:00 AM. I'm imagining it was still well below freezing at that point up there?Dan Denning:Yeah, it was supposed to snow this week, but it hasn't, which is good and it's been nice and sunny, but it has been something we've been paying attention to both behind the scenes and when we're writing to the readers, because as it gets colder in the US, we're dealing with this 32% drawdown in the strategic petroleum reserve and then these reports of impending or possible diesel shortages so you're kind of trying to separate what's fact from fake, I suppose, and go beyond what's in the news reports to see if it's actually impacting truckers and travel prices and things like that. So we, Bill, last year, penned a winter catastrophe and we had bad winter last year, but I think it could be worse this year and as you know, because you're organizing it, we're going to address that in early December.Joel Bowman:Yeah, that's December 13 for our readers, listeners and viewers, I guess now that we're doing this on YouTube, but I'll pop a link down below where you can get some more information about registering for that event. As you mentioned, Dan, we're doing a bit of behind the scenes work just to get that all organized. It's going to be the 2022 Winter Catastrophe Redux, which will be more well attended than our first one, given that it was the inaugural event and we had just a few hundred readers on that very first call with Byron King and Rick Rule, but yeah, as you mentioned, the second one looks to be shaping up to be quite the event. Of course, it's the kind of thing that you don't want to be right about, a coming winter catastrophe, but that looks like what's on the plate anyway.So let's start at the beginning, Dan, because we're talking on Thursday the 3rd of November, and of course the big news this week was yesterday's Federal Reserve meeting where Powell & Co. hiked rates by the expected 75 basis points, but I guess it was what followed that hike that kind of got markets a little spooked. We saw a 500 or so point drop in the Dow after Mr. Powell's remarks yesterday. I'm just going to read a quick quote here from the Fed Chairman in which he says "The question of when to moderate the pace of increases is much less important than the question of how high and how long to keep monetary policy restrictive." He said, adding that "It was very premature to discuss when the Fed might pause its increases." Was this more or less in line with what you and Tom had expected and what does it mean for both stocks and the dollar in the near term in your view?Dan Denning:Yeah, I think the answer to the first question is definitely. The market, whether you use the future's market for interest rate expectations or you listen to the people that are quoted in mainstream media as analysts for the major banks or Wall Street firms, at the beginning of the year, they thought that the highest the Fed would go this year was 3.75% and we've been saying since the beginning of the year that it has to be much higher than that in order to bring inflation down from 8% to even 4%. A chart that we've shown repeatedly reveals that rate real interest rates, so interest rates adjusted for inflation, are still negative... and they're negative by a long way. So that would change if inflation halved from here, so the Fed wouldn't have to raise as high, but we've said that people consistently underestimate how high interest rates will have to go before inflation is under control and they probably underestimate the Fed's willingness to raise them that high.So what you get is this mistake that we saw in the summer, and again, this mistake we've seen in the fall, where the market thinks the Fed is done raising interest rates, or will pivot to either raising them less fast or even cutting them, as some people had hoped, and so they bid up the price of especially growth stocks, risk assets as they say, and everybody gets super excited because they think the end is near. But as Powell said yesterday, it doesn't appear the end is anywhere close to being near. He said inflation hasn't come down since last year; that there will be no pause and that the so-called terminal rate or neutral rate, is at least 5%. So all that could change if the Fed issues a press release and has another press conference, but in terms of talking to the markets about where interest rates are headed, the message couldn't have been any clearer yesterday and I just don't know why people aren't listening to the Fed, so I think that's one reason Powell spoke so forcefully.Joel Bowman:It's a strange situation, isn't it, when we get strong inflation prints, for example, or when things in the market seem to be breaking, and investors take that as of reason to bid up stocks because they think then, okay, the Fed is now going to have to ease off because things are starting to break. Powell said yesterday that he is going to "continue to do what needs to be done to get the job done" and by getting the job done, he explicitly mentioned bringing the rate of inflation back to around the 2% range. You've written about this before and so have both of Bill and Tom, but what does that imply for a real rate? And in other words, how far does the Fed have to keep raising before it can get, as they say, ahead of the curve, do you think?Dan Denning:Well, if you look back to the '70s in a similar situation, where I think Powell is studying his playbook, you saw that the Fed prematurely cut interest rates when inflation began to come down and then inflation came roaring back, so from that point of view, they probably want to see whatever inflation target they have, whether it's 2% or 4%, which I think... I think it's more likely they'll raise their inflation target because it'll be harder to get it to 2%, but they'll want to see it there for a while and it appears now that the only way to do that, at least according to the Fed, is to sort of crush the economy into a recession, to destroy demand at the retail level because people don't have money, which means higher unemployment, none of which are great, but as long as the Fed sees that there's no disorderly action in the stock market...and more importantly, I think, in the credit markets, where higher interest rates don't precipitate a bankruptcy at the corporate level, like a high profile bank or a brokerage or a really highly leveraged financial player who could then spread contagion into the rest of the market. If that doesn't happen, the Fed is happy to either to continue to raise rates or, a possibility that people haven't considered, is just leave them at a high rate for much longer than expected, until they see inflation figures come down.And a lot of people say, well, if there's a ceasefire in Ukraine, then the oil price will come down and energy is a huge component of the CPI... or if X happens, then inflation will come down... but I think what Powell has made clear, and the market isn't listening, is that they're going to wait to see that number come down and stay down before they decide to sound the all clear signal. And stocks just weren't priced for that. They were priced as if interest rates were at or near their peak. And that's just clearly not the case yet.Joel Bowman:What does this spell for the greenback, which is already at multi-decade highs in some cases against foreign currencies? What can we expect going forward there?Dan Denning:Well, it should get stronger, shouldn't it? I mean, the wider the interest rate differential between the US bond market and the Japanese bond market or the European bond market or other markets like Australia, then you'd expect the dollar to remain strong. I guess what that means is this weird feedback loop that, and it's what we saw this summer, is that the higher interest rates create big problems for leveraged borrowers, especially those in emerging markets, that have borrowed in dollars because now it's getting more expensive for them to pay back their dollar denominated debt. So it creates a demand for dollars to pay that debt back before it gets more expensive and also it creates a demand for other so-called safe dollar denominated assets. So if you look at, for example, the one year and two year US treasuries, a year ago, the yield on the one year US Treasury was barely above 1%. Now it's just below 5%.So for foreign investors or large institutions and central banks looking to park cash in a strong currency that actually now has a respectable interest rate, that creates a demand for dollar denominated assets, which further distresses the price action in emerging markets and currencies that are under pressure so, not great, but I think what Powell has said as an echo of what US Treasury secretary John Connally said in the '70s, that the dollar is America's currency, but everybody else's problem.This is a really important point Tom has made, which I think not a lot of people, I haven't really seen it made elsewhere, and it's underappreciated, is that in the context of everything that's happening in the world right now, geopolitically, if you view Russia and Saudi Arabia and OPEC using oil and energy as a weapon against the United States, and perhaps China too, using COVID lockdowns as a way to keep prices high for Chinese exports, the US counterpart to that is the dollar, the stronger the dollar is the more it mutes the effects of inflation on energy and imported products in the United States.So Tom believes that the Fed is using the dollar as a financial weapon to counteract energy as a commodity weapon and in that sense, if Powell is acting both to bring inflation down, but to use the dollar as an economic weapon, then it could stay higher for longer than people expect. For US investors, the other implication, which we can talk about if you want, is what that means for gold because there's been some interesting things that happened this week in the gold market that we need to pay attention to.Joel Bowman:Well, let's talk about that then, because a lot of people, particularly our readers, most of whom I would say are in the US, they've been adhering to what was Richard Russell's old mantra was, and one that both you and Tom have echoed of late, which is "cash now gold later" and they've been looking at the price action in gold, which has been more or less range bound in dollar terms but as we've been talking about, the dollar is of course at historic highs right now, but viewed in terms of other currencies, Aussie dollar, pound, euro, et cetera, we see slightly different story. Where do you see us as on the "now-to-later" curve with regards to cash now gold later?Dan Denning:Yeah, that's a great question and we take it up. In fact, we decided to change the format a little bit for the subscribers, the paid subscribers. We had intended, at the beginning of the year, to review them quarterly because that's about the appropriate amount of time to review the performance and then decide if a change needs to be made, but because we've got so many new readers who are not familiar with that strategy, or only read about it in February, we've decided to revisit that every month in the monthly strategy report. So for paying subscribers, they can take some comfort that this discussion is now a more regular discussion because it needs to be a more regular discussion.But with respect to what we said at the beginning of the year, we said, no bonds, lots of cash, lots of gold, less real estate and that turned out to be pretty spot on, which is great, but the question is, what now? So I think what you're seeing with the higher government bond interest rates one year, two year, 10 year, really most of the US yield curve is now above 4%. That makes annuities and fixed income products slightly more interesting to investors than they were a year ago, and certainly more interesting relative to stocks because if stocks look like they could go down another 20% or 30%, then putting short term cash in a money market fund or a CD or a Treasury I bond that has a respectable yield is now a lot more attractive to people. We think gold is doing exactly what it's supposed to do, which is preserve your purchasing power, so if you look on a year-to-date basis, gold's down 11%, which is about the same as the Dow, but that's after the Dow rallied almost 15% from its lows in October.So now that this Fed pivot is not going to materialize, I would expect probably the Dow, the S&P 500 and certainly the Nasdaq to close or to go lower, whereas gold is pretty much staying where it's at. So on a relative basis, we think gold is doing what it should do for you in your asset allocation strategy, which is do better than everything else. And of course, the Nasdaq's down actually 32% and the S&P's down about 20% so I wouldn't be surprised to see gold outperform at least this month and probably through the end of the year. And you see that two interesting things have happened in the price action with gold. One, retail investors have kind of gotten frustrated because gold hasn't gone up and inflation's 8% and they're like, what good is gold if inflation's 8% and I'm not making more money?And our answer is you're not trying to make money in dollar terms with gold, you're trying not to lose money, and we'd like to be doing better, but it's better alternative than sticking money in the bond market or increasing our allocation to stocks. The interesting thing that happened in the third quarter is that according to the World Gold Council, which keeps track of these things, central banks added more gold than they ever have before in any quarter in the history of data from that organization. They had a 399 tons of gold and don't know exactly who the buyers were, but we think it's probably the usual suspects so China, which doesn't always report, Russia, which has an obvious interest in diversifying its currency service, and then some of the oil and gas exporters who've been making money hand over fist have been converting it to gold.So on the one hand, retail investors kind of sitting on their hands lamenting the price action, and on the other hand, this huge quarterly surge in central bank gold buying and in fact, the year-to-date buying by central banks through the first three quarters is already greater than any year in the last 20 years so you can see that this financial war about hard assets versus the dollar, you can see what's going on in the background. So I like that price, I like that piece of data because it confirms to me that at the bottom of this leveraged pyramid of financial assets sits gold, and in any private portfolio, you ought to have some portion of your wealth safely stored in that and for the long term, just ignore the week-to-week, day-to-day price fluctuations because they really shouldn't matter that much.Joel Bowman:Yeah, interesting. It's almost like what our good friend Chris Mayer talks about, having skin in the game and inside knowledge into the operations of a particular company. One wonders, do central banks know something that the rest of the world or the rest of the investors don't know when they're, as you say, hoarding record amounts of gold at this moment? But with respect to stocks, which you mentioned just then, and of course they are still down considerably for the year, but not as much as they were just a month ago, October was, if I'm not mistaken, I think the best month ever for stocks, or certainly for a very, very long time, you'll have the exact stat there.When you and Tom and Bill talk about a significant drawdown in stock markets, you toss around some pretty big numbers. We saw, obviously last week, a lot of earnings reports between Amazon, Meta and Microsoft, something like 350 billion worth of market cap was wiped out after some pretty shoddy reports and grim forecast for the rest of the year. I think only Apple is the last man standing there in the Dow. For how long can we expect this to hold up and what's our outlook for Q4 for stocks?Dan Denning:Yeah, that's a great question. I mean, Bill Bonner, our founder and patron saint, during his sabbatical he made a great point which he's been making for a long time, that the last 20 years and really since 1982, if you want to go all the way back that far, since 1982, the stock market's been underpinned by three pro-growth, structural features, cheap energy, low interest rates, and the lower and cheaper cost of global labor, which is really China since it came into the world economy in 2000 when it entered formally into the World Trade Organization. All have been really favorable for high GDP growth but what hasn't happened is you haven't seen high productivity growth. What you have seen happen is high growth in the multiples, people are willing to pay for growth stocks and at the forefront of growth stocks were the technology stocks from 2000 to now.And the earnings numbers weren't terrible in terms of the amount of revenue generated by these companies, it's an impressive amount, but what's notable in all other cases is the rate of growth has slowed markedly, particularly in advertising for Facebook or Meta and for Google, but also in the cloud. Cloud computing, which for Amazon is particularly important because the cloud is the only business segment that runs at an operating profit. It pays for the rest of the retail business and if the cloud business is growing less quickly, then it supports the thesis that the leading sector of the market for the last 10 years, the tech sector, will not be the leading sector of the market for the next 10 years because the growth phase underpinned by those three things is over. That's not a cyclical change in the market. That's what we call a secular change, a long term change.And that's why our forecasts for the indexes are not a 20 to 25% bear market and then back to business as usual, it's a 40 to 50% decline in the indexes with a 60 to 80% decline in the most leveraged and aggressive growth investments, which we've already kind of seen with Arrk Innovation Fund and Spotify and Netflix and Snap and some of these other tech companies. So our whole premise since we started last year, as you know, is to prevent a big draw down and loss in your retirement savings during this transition from the high growth phase to whatever comes next.So everyone's like, great, great, yep, it's over now though, right? So 25% down we can get back to business. And what we've said is this is not business as usual, this is a new era, as they used to say in the early 2000s, but it's an era where all the fundamental pillars that uphold the stock markets prices are changing. So it's not all bad news because for example, we think energy is going to be the big winner in the next 10 years, which is why we made it the trade of the decade and if you look at some of the best performing stocks this year in the Dow, one of them is Chevron. Exxon would be, but it's not in the Dow anymore because-Joel Bowman:It got booted.Dan Denning:... right, for Salesforce. So there are these little pillars of light, a thousand points of light or a dozen points of light as George Bush might say. So we're still looking, but I think Tom's strategy is the correct one that you have to be really opportunistic and tactical and to echo Chris Mayer's point, you take your chances when you see a good business opportunity or a good trading opportunity, but from a strategic point of view, when it's a bear market, you don't want to own too many stocks and so we continue to be underweight stocks compared to what you would get in a more mainstream, institutional portfolio and that won't change anytime soon.Joel Bowman:So let's then I guess move on from the last 10 years of growth, growth, growth and which, as you said, seems to be coming to a fairly cataclysmic end and something that you mentioned just there, our trade of the decade, which is essentially long conventional oil and gas, we have a specific proxy trade for that, but the convergence of those three enormous macro trends that Bill has underlined for us, the end of cheap and abundant energy, the end of cheap and abundant credit, and the end of cheap and abundant labor, all for various reasons, including the weaponization of all three by various geopolitical players around the world right now, really sets a kind of perfect storm to use an overused metaphor for energy going forward.When I spoke to our mutual friend, Doug Casey on this podcast just a few weeks ago, maybe a month or so ago, he brought up the oft overlooked statistic that if you go back to the seventies, which a lot of people are talking about now for very obvious reasons, high inflation, et cetera, et cetera, the oil and gas producers and explorers made up something like 30% of the market cap of the S&P 500, that's down to about 3% last year, it may have inched up with some strong performance in that sector and of obvious selloffs in others this year so maybe up around 5%, but it's a long way from its historic high and it's a long way from the kind of CapEx and R&D investments that you would expect to power a 21st century economy, which is largely or if not entirely built on the fossil fuel revolution.So do you maybe just want to catch us up on where we are on the trade of the decade thus far, and any catalysts that you see in the near to medium term that might be getting us to where we think we're going to be headed?Dan Denning:Yeah, great question. We're still really early in a decade which is an arbitrary time so it's not like we think that it'll be exactly 10 years, but Bill has made a couple of these trades since the millennium, since 2000. And some of it's based on just sector performance. So it's a little bit like The Dogs of the Dow strategy that you buy the worst performing Dow stocks at the end of the year, they're going to be the best performing stocks and not everybody, the data backs that up mostly, although some people say that in a bull market you just keep buying the best performing stocks, that you buy momentum, you don't try to buy value or a beaten down value because then you get caught into value trap. But what we'd looked at when we went into the trade was that energy was historically small as a percentage of the S&P market cap.It had its worst 10 years of any of the 11 sectors in the S&P and that because of regulation and the energy transition and the anti-fossil fuel narrative from both Wall Street and Washington, that the companies had decided, okay, fine, we won't invest in oil and gas if you're coming after our business, it doesn't make sense to. So all of those had set up for a big, big turnaround in the performance of the oil and gas sector. That's only just started to happen. I mean, on a financial basis it's definitely started to happen because of high oil and gas prices but in terms of investment flows, institutional money going into oil and gas, that's still complicated by the ESG policies of a lot of the pension funds and other funds like BlackRock and Vanguard about whether they're going to commit to investing in companies that might bring oil and gas online.So we don't really care about any of that because we think at the end of the day, 82% of the world's energy still comes from fossil fuels. It's unchanged in the last 30 years despite the growth of renewables. It's exactly the same really so we think that it'll be that way for a while and that even if there is an energy transition toward more electric vehicles or toward maybe more natural gas fired plants rather than coal, that it's going to take a lot of fossil fuels to fuel that transition, to manufacture everything you need to have an energy economy that's based on electricity. And we see stories about, well, there's going to be an OPEC of lithium and electric car battery technologies getting better and better. Great, no problem. Maybe that's true. But in the meantime, just look at the free cash flows being generated by major oil and gas producers.They're great. And the big risk to us right now is that the rate hikes by the Fed trigger not just the mild recession, but a massive recession which destroys demand for energy and brings prices down, which would lead to a correction in the stock prices of those producers, but over 10 years, not something we're too worried about given the other trends so if you're entering the trade and we write about this on a weekly basis, you just look for weakness in the particular investment that we recommended. And by weakness, I mean it trades below a moving average or it's relative strength indicator, which is a technical indicator under 30.That's not happening right now, but it is something we update readers on who are new to the research, who like the idea, who believe in the thesis and who want to enter the trade so we may have another opportunity to enter the trade before the end of the year, but again, over the 10 years, we think the big factors that are pushing oil and gas prices higher should be very favorable to the free cash flows of those producers and it should trounce any of that other crap in the EV space. That's what we think.Joel Bowman:I'll have to get that last sentence as a pullout quote for the transcript here, Dan. This I guess brings us full circle to the winter catastrophe that we opened the conversation with at the top, and something that you and I have been looking at in particular lately. You mentioned the diesel or distillate shortage in the United States. I had a look at a couple of figures the other day writing under a guest column by our good friend Byron King and I think the situation is, I mean, as you said, it's difficult to sort the wheat from the chaff with regards to what's a little overblown and what is cause for concern but a report out by the Energy Information Agency has the US reserves at something like a 50 year low. Actually, it was even further than that, it went back to I think 1951 when the population of the United States was a mere 150 million beating hearts.It's obviously more than double that now. Officially, it's something like 332 million and obviously probably a lot higher than that. Added to that, not just a more than doubling of the population, but we obviously have a more modernized economy. We have ACs in every other room, we have, you know, if you plug in your Tesla in, that doesn't go to a windmill or a solar farm, that's going to an electrical grid that demands real fuel and I think one other point, just to add very quickly, is the other parts of the supply chains that tend to break down when you have an industrial fuel like diesel that is in short supply.So the number of commercial vehicles, this is trucks that freight your goods, your medical supplies, that stock your shelves at your local grocery store. 76% of these commercial vehicles operate on diesel fuel and they deliver 70% of the freight tonnage around the country from sea to shining sea. So is this something that people should be particularly concerned about? I mean is it going to be an acute problem in the near future, or is there's something that's just going to see a bit of a price spike and hopefully we'll have some mild weather and we'll see you on the other side?Dan Denning:Yeah, it's an important question because it's not simply a financial question, it's what level of preparation is it reasonable for you to take given the risk that there's an interruption to our supply of diesel fuel, which translates into things not being on the shelves in the store, whether that's medicine or food, or whether it's fuel at the pump for your own vehicles. So we don't want to be blase about what the risk is, or we don't want to exaggerate it either. The truth is, the refining capacity of US refineries has been pretty much maxed out all year so even if we were releasing more oil or could release more oil from the strategic petroleum reserve, we couldn't turn it all into distillate fuels and we couldn't get it all into the pumps and that's assuming we're not exporting some of it, which we are, whether it's crude oil or whether it's distillate fuels.So the refining bottleneck is a major issue and part of the problem when you run your refineries at 90% of capacity or 95% of capacity for months on end, as things start to break down and when they do, then you have even less product coming online so that's a real thing to keep your eye on and it's already started to happen. But as to the level of preparation you need to take, I'd be prudent. I think if you, like I grew up in a big family and we always had extra food even though people were eating it all the time, it was hard to keep extra food ready to go but we don't associate life in... Most Americans, or most people watching this probably don't associate life in the 21st century with the idea of having to prepare for much higher food prices or an actual shortage of food.I mean, you can call DoorDash or Uber right now, and they will deliver cheap calories to your door running on fuel so we don't have bread rights yet but I think one thing we've learned in the last two years from COVID, and really from the response to COVID by shutting down the global supply chain, is how short and fragile the just in time supply chain is, and how long it takes to recover once government has mangled it up. So you'd be foolish to look at what's happened in the last two years and not take some sensible level of preparation for both your food and fuel supplies. And I think that's as an important investment decision as you can make this winter as whether you buy the Dow or whether Apple is going to hold up. By the way, you asked about that, and I didn't mention it, but I will finish with that.Apple has held up really well. It hasn't made its lows from June, I think, which was around 139 and I think it's a great litmus test for how long this market can hold up because anybody who manages money has to own Apple for whatever reason, because it's a great company, because it's performed so well and to me, it's like a fortress stock that everyone flees behind the gates and they lower the drawbridge or they raise the drawbridge and everyone hides in Apple because of its liquidity, because it's widely owned, because it's a quality stock. So when Apple gives up the ghost and makes a new low, then we'll start talking about whether the market has made a low. But until that happens, I think you shouldn't try to time the bottom of the market. You should probably try to fill up the bottom of your freezer with some frozen beef and chicken and things that you can cook later and then step away.The trends we're talking about, we think will take years. And so from week-to-week and month-to-month, they don't require a lot of buying and selling. You just have to get the strategy right and I think right now we feel pretty comfortable with where it's at, but things can change quickly. As we saw with the Fed's announcement. If the Fed came out and pivoted because of data, then you could see another, you know, you could see a lot of volatility in stock prices but we don't think that changes the overall primary trend in markets.Joel Bowman:All right, thanks, Dan. You guys are doing a great job there. Just once again, please head over to bonnerprivateresearch.substack.com. Readers, listeners, and viewers will be able to get all of Dan, Tom and Bill's writings on all of the above subjects and plenty more and I guess the takeaway here is panic, but in an orderly fashion and see if you can't beat the rush.Dan, thanks for joining us from your fortress of solitude up there in Laramie. We'll catch you again soon.Dan Denning:Okay. Thanks, Joel.Thank you for reading Bonner Private Research. This post is public so feel free to share it with investors, traders and speculators alike.... This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…“I mean, look, you seriously couldn't make this stuff up and it really is banana republic stuff, frankly. It's embarrassing and they just need to get a grip.” ~ Robert Marstrand on the sorry state of British politics.Welcome to another episode of the Fatal Conceits podcast, dear listener. In this conversation, Episode #75, we catch up with UK-born investor and fellow Argentine resident, Robert Marstrand. Following his career as an investment banker at UBS, where he worked out of London, Zürich and Hong Kong, Robert joined forces with Nigel Farage to create UK Independent Wealth, a financial research service aimed at helping folks in the UK reclaim their financial independence. (Find out more about his work here.)Over the course of a half hour or so, Rob takes us through the Shakespearean tragi-comedy that has been the past few months in UK politics… from the ousting of Boris Johnson… to Liz Truss’s spell as the shortest serving Prime Minister in the nation’s history… to the unelected appointment of Rishi Sunak… (or is it, as President Biden has it, “Rashi Sanuk”?)Thrills and SpillsAs with all such soap operas, there’s plenty of betrayals, backstabbing and upsets along the way… from the death of a monarch to generation-high inflation to plenty of turmoil in the markets, including a near catastrophe in the UK bond market… and a very embarrassing situation for the Bank of England itself…As always, feel free to leave your comments below and to share this episode with friends on both side of The Pond. Cheers,Joel BowmanThank you for reading Bonner Private Research. This post is public, so feel free to share it with Kings and Queens alike... This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…“I think those people at the Nobel Committee must have a sense of humor,” quipped Bill Bonner, in response to the questionable judgement that resulted in Ben Shalom Bernanke being awarded the Nobel Prize for economics earlier this week. “They're either very dumb or very cynical,” Bill continued. “And I'm not sure which it is because, if you remember that time, Ben Bernanke was wrong about everything. And no major issue came to him that he was not wrong about.”Alas, 14 years after Mr. Bernanke’s preposterous “we may not have an economy on Monday morning” speech, in which he presented one of the most galling false dichotomies of the modern era (pass this unprecedented – and lately unread – stimulus bill… or the sky will fall), and we are now reaping the whirlwind of his profligacy.Over the course of a half hour or so, Bill shared with us his thoughts on the end of the Age of Abundance, the reason our current financial predicament differs greatly from what Volcker faced in the ‘70s (Hint: It begins with D and rhymes with “regret”) and why those born after 1980 cannot know, first hand, what a return to the “Old Normal” will entail…All that and plenty more on Ep #74 of the Fatal Conceits podcast. Please enjoy and, if you have a moment, share with a friend…Also, if you’re interested in purchasing some of Bill’s wine, which we talk about towards the end of the episode, their Tacana 2020 vintage is now available to select buyers. The first half of the allotment (reserved for the Bonner Wine Partnership’s private Tacana buyer’s list) sold out in a day. The rest probably won’t be around for long, so if you want to grab a few bottles… for the cellar or the bunker… don’t dilly-dally. More information here: And for those of you who are less audio-inclined, you’ll also find a full transcript of today’s interview, below. Until next time…Cheers,Joel BowmanThank you for reading Bonner Private Research. This post is public so feel free to share it.TRANSCRIPT:Joel Bowman:Welcome back to another episode of the Fatal Conceits Podcast dear listener. It's the show, as you know, about money markets, mobs and manias. If you have not already done so, please head on over to our Substack page. You can find us at bonnerprivateresearch.substack.com. On that page, you'll be able to find hundreds now of essays authored by today's guest, Bill Bonner, in the daily section. We've got plenty of research reports from Dan Denning and Tom Dyson. And of course, many more conversations like this under the Fatal Conceits Podcast tab at the top of the page. So without further ado, I think you can probably see in your screen there, framed by gilted cornices, remnants of a bygone era of abundance, Mr. Bill Bonner, welcome to the show. How do you do sir?Bill Bonner:Thank you Joel. It's a pleasure to be with you.Joel Bowman:You're up there in Baltimore at the moment, that's correct?Bill Bonner:In Baltimore. And you're right, it is the bygone remnants of an ancient civilization. Baltimore was by the way, the richest city in America in say the early 19th century because it had such a great harbor. And it was also connected, through the Cumberland Gap, it was connected to the whole Ohio Valley and all that area over there on the other side of the Appalachian Mountains. So it was a big important port for people coming from Europe and a big important port for people making mostly food things that they exported it to Europe. And people got rich. And movies from say the 1920s or so, maybe a little bit later, they will frequently have a rich person as somebody from Baltimore. And that all seems so unlikely now. It's hard to even imagine.Joel Bowman:To be rich like a Baltimorean is like to be rich like an Argentine.Bill Bonner:Same thing.Joel Bowman:Exactly. And I'm racking my brain here, but how on earth were they able to get rich without ESG governance and diversity boards and equity programs…?Bill Bonner:That was before the foundation of the Federal Reserve. I mean, how did they know what interest rates to charge? They were building in the early 19th century here in Baltimore. They had huge factories. They made things, made things that they exported out of profit. How did they know how to do that without the feds showing them what interest rates to charge and so on, without the Fed printing money to stimulate them? Nobody stimulated them at all. They were stimulated by the desire to make money I guess. And they did quite well with it in that. But now we have, thank God, we have the Fed to stimulate the economy when it's needed to support the stock market when it seems to be falling and to provide us with the interest rates that we need. How they know what interest rates we need has never been clarified. But that's one of mysteries of the Fed.Joel Bowman:Yes, we certainly couldn't rely on the market for any, shall we say, “self stimulation”?Bill Bonner:NoJoel Bowman:Top down only. Speaking of which, that dovetails into news this week of, I don't know whether you would call him our colleague, but another economic luminary, Mr. Ben Bernanke, who was awarded the Nobel Prize in economics earlier this week. This of course is the man who had the “courage to act," at least according to himself, and who saved us from “not having an economy on Monday” as he warned us with such certainty...Bill Bonner:October the fifth, 2008. He went before Congress and he said, Look, if you guys don't pass this act, which I think was what was known as the TALF Act, it was a lot of spending to try to stimulate the economy, that if you don't pass this, we may not have an economy on Monday. He was talking on Friday. And thank God he rose to the challenge and showed that courage to act because otherwise we still wouldn't have an economy.Joel Bowman:Incredible. It does seem so "through the looking glass," the up is down back is forwards, when we see that not only did the man who failed to foresee the bubbles that had been created during the Greenspan era and that had led to these enormous imbalances and malinvestments, in particular the housing market. I remember yourself writing about huge irregularities in the mortgage back securities markets and Eric Fry writing about that. Our colleague Dan Denning was on the case of course. So it seemed like everybody except Federal Reserve economists were on the case. What does it say that 14 years later, having stimulated, it seems now, an even a larger bubble, that we not only look back and have not learned our lesson, we're gifting the guy the highest prize there is in the dismal science?Bill Bonner:Well, I think those people at the Nobel Committee must have a sense of humor. That's all I can think of.Joel Bowman:That's big sense of humor.Bill Bonner:They're either very dumb or very cynical. And I'm not sure which it is because Ben Bernanke, if you remember that time, he was wrong about everything. And no major issue came to him that he was not wrong about it. He was the one who said the subprime problem before the crisis of 2008, the subprime problem crisis was "contained." Of course it wasn't contained at all. He had all these things that were idiotic, like zero rates. He came up with that QE, he didn't invent it, it was the Japanese who developed it. But a lot of these things which now we see clearly are the cause, the proximate cause, not the only cause, but the proximate cause of our inflation and our economy, which is now melting down in order to try to contain inflation, those stemmed from policies put in place by Ben Bernanke. And not the only one because Janet Yellen kept doing the same thing and Powell came along and followed right in their footsteps.But for the Nobel Committee to award him a Nobel Prize is really quite remarkable. And it calls into question our whole elite process. Why do they think that he should get a prize for that? And then to have the hubris, the conceit, the unmitigated gall to write a book called The Courage to Act. I thought it was a joke when I first heard about it. I said, no sensible person would do that. Even if he believed that he had the courage to act, even if he believed that he had saved the economy, you still wouldn't put it out there. That makes you sound like an utter fool. What it does is it invites the wrath of the gods. There's someone way up there they must be after him. Now I don't know what they're going to do, but they're going to be after him.Joel Bowman:Pride before the fall. And for a man with a legacy unblemished by, as you said, a single success in the real world. So it does beg a lot of questions. But let's fast forward then 14 years after that fateful October Friday to where we are presently. And as you look across the landscape, I know you spent a lot of time down here in Argentina and then split between both sides of the Atlantic. When you look forward to what has happened in Argentina, they've been at the forefront of every boneheaded economic and financial policy known to man, real pioneers in the dismal art. When you look from here to where you are now in the United States, you look over to what's happening with the Bank of England or in the Japanese bond market. It does seem that there are enough signs that sort of point to this time maybe actually being different and this time maybe being the end of what you and Dan and our colleague Tom Dyson have called the Greatest Financial Experiment in History?Bill Bonner:Well, I think that's exactly right and I think people are having a very hard time coming to grips with it. Even people in the financial industry, they're so used to what they think as 'normal.' I was just speaking to some of my colleagues here in Baltimore about it and trying to explain it from my standpoint. And I realized that everybody I was talking to was born after 1980. I mean they were literally not born in any time other than the boom that we have known for the last 40 years. In 1980, of course then Paul Volker got control of inflation. Interest rates came down ever since. And there were a lot of things going on. Most important was the entry of like 500 million Chinese people into the market. And those people produced things at a low price.But for these people, I'm talking about people who were born after 1980, it's very hard to get to understand that the whole circumstance of your life, the whole circumstance of your life has been phony. Faith been synced up by the Federal Reserve to give the impression that everything is always up. The stocks and financial advisors will tell you this to these young financial advisors say, Well yeah, stocks go down, but they always go back up. And so what you have to do is buy the dip. Now they're all out there looking for the bottom. The bottom is the point in which they don't go down anymore. Now they're going to go up, so you got to buy. And they have these charts and graphs that show that you buy it every dip, it always goes up.But it's not that simple at all. If you had bought stocks in 1966, which was a good year for a stock market, you would've held them for the next 16 years until 1982 really. And the prices would've been about the same. But because inflation was happening, you would've lost 75% of your money. That was a long time to lose 75% of your money. And to talk to somebody and say, Well, you just hold on, they'll go back up. Well maybe they'll go back up, but it could be after you're dead. You're not going to have an infinite amount of time here.And so there are times in history, and I think this is the key point, that if you look at anybody who is telling you they have a good track record, and of course that's everybody. And in the financial industry, they boast about what they've done and so on. All of that happened during a very special time which no longer exists. Now that's a hard thing to under for anybody to understand. And it's not that I'm saying, by the way, I'm not saying this is a new era. I'm saying this is the old era. What we've been through in mostly the last 10 years. But you could stretch it and explain that whole 40 year period was a grotesque and unusual series of things that came together, mostly including federal money printing by the Fed and QE and all the other things that they were doing. And that era is over and it ended in 2021. It ended when the bond market turned around, when actually it was 2020, it's the end of 2020. The bond market turned. When that happened, that was the end.And since then nothing has worked very well because the fundamental aspect of our financial lives is altered. And it no longer is a market with falling interest rates. It's no longer a market that the Fed can support by driving interest rates lower. It's a different world in which now the Fed is battling inflation. And once it decides not to battle inflation anymore, which I think it will, then you're going to see worse inflation. So that won't be like the period from 1980 to 2020. Not at all. It's going to be a whole different world with a different battle going on that'll be very hard to understand. And people say, Well, your stocks are going to go up. Well, they probably are going to go up, but they're going to go up like they did in Zimbabwe. They're going to go up like they did in Venezuela and like they did in Argentina. All of those markets were once the world's top performers. But when you adjust for the inflation, they were going down, it gets more complicated.And by the way, you have the advantage of being in the most complicated place in the world financially. And the Argentines learned to do these calculations. They have the blue dollar and they have the black dollar and they have the white dollar and they have the soy dollar. I'm not sure what that is. But now they have a new dollar. Did you know this as of yesterday, the Qatar dollar?Joel Bowman:Oh, I haven't heard about the Qatar dollar...Bill Bonner:The World Cup is taking place in Qatar and for Argentines who want to go, they have a special exchange rate.Joel Bowman:That's very interesting because I know I was aware, of course having lived here over the last dozen or so years, that we do have a dollar for every color of the rainbow and every gender you can imagine and pesos down here, they self-identify as all kinds of things. But I was made sort of brutally aware when I was on vacation just a couple of weeks ago to Brazil, I had forgotten that there is a clawback tax. This is part of the capital controls that happen here when you use an Argentine credit card abroad. I made the mistake of just handing it over for a hotel payment and then getting home to see my receipt and realizing that I'd had it sort of an extra 40 or 50% clawed back out of my account by the state. But this is the kind of shenanigans that happens when inflation gets out of hand.Bill Bonner:People, they find ways to try to obscure it, try to disguise it, try to eliminate it, but in doing everything but the one thing that really will work, right? They want to control prices. Now they're talking about controlling gas prices and states are providing people with extra money. There are all kinds of things and people find to try to overcome the fundamental reality of rising prices. And as in Argentina, they don't work, they never work.Joel Bowman:But it doesn't stop them from trying.So let's go back a little further then, because I was speaking to somebody just yesterday about this, it's a common kind of rejoinder to this narrative that we present in at Bonnet Rrivate Research, and that is where people say, Well, we've seen this before. It was the 1970s. Look, we had an oil embargo where a major oil producing block took supply off the global markets. We had the Nixon shocks, we had double digit inflation, it was runaway. And then we got Volker, and he marched in and whipped everyone into shape. And then as you said, then we're off to the races for the next 20, 40 odd years, rather. So what about today is different fundamentally than that seventies landscape that people think will just kind of, well, we'll muddle through and then we'll be off for another to a moonshot again?Bill Bonner:Well, the fundamental difference is 30 trillion dollars. The federal debt in 1980 was one trillion. Actually, it was below, it was actually 900 billion, below a trillion. Now it's 31 trillion, 30 times as much. That's the fundamental difference. And it's added to, it's not just the federal debt, it's also private debt, household debt, corporate debt, all at record levels. So they take them together and the whole sum of debt in America now is about 90 trillion. And what happens is, in this process of rates going up to bring things back to normal, the cost of all that debt goes up. And you soon realize that you can't pay it. That is not going to work.And that's what happened just two weeks ago in England when the traders saw what was happening and they were bidding up the yields, which is to say they're bidding down the prices on UK government bonds. And pretty soon all those big institutions, the pension funds, they rely on the price of those bonds to make their numbers work. And then suddenly it became clear they weren't going to work. And so the bank had to intervene. The Bank of England intervened with support stimulation, whatever you call it. They were buying bonds in order to save them from bankruptcy.And so what I suspect, I expect, this is what you call a high probability hunch, that the US is in the same situation, really even a worse situation in some ways. And as the Fed stays the course raises rates to try to get ahead of inflation, as they do so, we're going to see some things like what we just saw in England that certain institutions, could be Goldman Sachs, it could be JP Morgan, it could be a state pension fund like CalPERS in California. They've got billions of dollars. And they have done the same thing because this theory was pitched to them by Goldman Sachs of what they call LDI, which was matching your liabilities to some long-term goal. But what it really meant was they were ratcheting up the risk in order to try to improve the results. You can do that if you're a young speculator. But if you're managing the pension funds for a lot of retirees, that is practically criminal.So what's going to happen is somebody's going to get in big trouble and suddenly there's going to be that meltdown crisis on Wall Street in which the Powell and his fellow bankers, they really are part of a banking cartel in order to save themselves and their clients and their members Wall Street itself, they're going to say, Well, okay, that was a good idea. We need to get control of inflation, but not right now. Now we have to save the system because otherwise it'll go totally bad. I would say again, a high probability hunch is that that's going to happen and we're going to see a pivot from the central bank because they just owe too much.So your question was what's the difference now than from 1980? Well, the difference is all of that debt that they didn't have. Volker could raise rates to 20%. He could do that. He was condemned. He practically had to have an armed guard. People were threatening his life. But he could do that because America could afford it. Also, by the way, in 1980, it might have been 1979, stocks had already been squeezed so hard by inflation that they were already very, very cheap. They're not yet very, very cheap here. So we have a lot to lose. Trillions of dollars still to lose till we get there.By the way, we like to measure things in terms of gold, and in terms of gold, for a brief time you could buy the entire 30 Dow Jones industrial stocks for one single ounce of gold. And today, what is it? 18. What we're looking at is a totally different situation in which we have high deficit. The deficit was announced just yesterday for the current year of 1.4 trillion dollars. And this is at a year without really a crisis. A crisis hasn't appeared yet. They're running huge deficits. The debt is multiplying even without them. And we're in a situation where we can no longer continue on this course of action.And so what will happen, I believe is we'll see something will come up, some Lehman Brothers moment as they say on Wall Street will happen. And then the Federal Reserve will be forced to change towards inflation. And once that happens, it'll be the next stage. The stage we're in now is deflation. We're deflating all of those, a lot of those promises, obligations, debts and so on from the bubble era. That will go on until it becomes really painful and then they'll start inflating it again.Joel Bowman:And so this is what sets the backdrop for something that Richard Russell wrote about maybe 10 or 12 years ago. But it's the idea, and Tom Dyson of course has written about it over on our Substack page as well, and that is the idea of "cash now gold later." So gold after the pivot when hyperinflation, is off to the races...Bill Bonner:And we see so far that advice has been very, very good. Nobody really took it totally because it just felt awkward. We saw inflation running at 8%. So who wants to hold cash when inflation is running at 8%? But in fact dollars have ended up being the best investment so far this year. As long as we're in the deflation stage, you want cash and after the deflation stage you want something else. Probably gold, maybe stocks, stocks go up too. But you have to adjust that price by inflation, which is then out of control for the foreseeable future. That is going to be a different world. And that's a world that you probably know better than anyone because the inflation of Argentina is about 90%.Joel Bowman:Officially 90%. I tell my friends down here that Americans and Brits and Australians are worrying about 9% inflation. And they asked me to repeat myself, Sorry, did you say nine? We would kill for a 9% inflation. That would be a day in the sun for them.And so from then, from the past and the setup to where we think we are right now, I was speaking with our colleague last week, Mr. Byron King, and he and I spoke a little bit about the end of these three cheap abundant stimulants of this modern world that we've all come to just take for granted. Certainly in the last 40 years, and you've alluded to a couple of them already. But we've coming to the end, through various geopolitical kerfuffles and conflicts, of cheap energy. And we've outlined this over at Bonner Private Research. This feeds into our trade of the decade, which is long conventional energy. But that whole era of cheap, reliable local gas from various places seems to be coming to an end. This era of mass produced manufactured goods and tight supply chains unruffled by policies or global lockdowns, that seems now to be coming to an end. And of course as you've spoken about, we have potentially the end, at least for the foreseeable future, of cheap and available funny money, cheap and available discounted credit.Where do we go exactly from here? And I mean is it time to just build a bunker and buy gold and do nothing? I mean, how does the average person live through this if they're in that state of mind?Bill Bonner:One thing that we learned from the Argentine example is that you can live with inflation at a fairly high level. And this is not the first time they've done it in Argentina. You can live, but you can't live very well. The economy falls apart and you need to have protection from the local currency, which of course is what you do and what foreigners in Buenos Ares do because they operate on dollars rather than pesos, not prisoners of the local peso economy. And in a larger scale, when the economy turns around with the pivot on the Fed and more inflation in the US, that will be a similar reality in America, which you will not want to be dependent on the dollar completely, which is why you'll probably want to move assets into things which are not dollar dependent like gold, minerals, real things, timber. I'd like to be in the timber business. It looks good to me. Farming, a lot of things which are real and don't depend entirely on the value of the dollar. So I think that's where you're going to end up.It's not the end of the world by the way, no, it is not the end of the world if things go on, but they get more confusing. And they get a lot more confusing and people don't know what to do or what to make of them. And that's where you get the real problems because they feel cheated, and they are cheated. The whole idea of inflation is to cheat people. And so the guy who's worked all of his life, he's expecting his pension and his pension comes in and he realizes it's only worth half what he thought it was going to be worth. That guy gets pretty mad and he justifiably he gets angry and next thing you know he's out on the street or voting for somebody that he probably shouldn't vote for or whatever. People look for solutions. They want solutions. That's when they turn to the guy who has the easy solution. And that guy is almost always a fraudster.So it's a problem. And you get a big breakdown in society. Argentina, they had that inflation of, I'm not sure if it was the eighties, which ended up in the generals taking charge and military dictatorship was very common. In Venezuela you have that puppet government. I don't know what the world they are doing, but the guy Madura said that he had a crow or something on his shoulder who was whispering in his ear channeling the Chavez who was dead.Joel Bowman:Sounds as reasonable. Maybe we should get the Nobel Committee to give that guy a prize for telepathy from the great beyond or something.So speaking of the end of world and real assets, I promised our friend and our colleague Diego Samper that we would mention the solution to all of life's problems, all of the above. And that is your latest harvest of Tacana wine from your ranch down here up in the northern reaches of Argentina. I don't know how many people have looked at this on a map, but it's way up there in the north, right up close to the Bolivian border and it's really extreme country. We've been up there, we've been up there a few times.Bill Bonner:As you say, the solution begins with that popping of the cork.Joel Bowman:Around 6:00 PMBill Bonner:That's the most pleasant sound of the day. You pour yourself a drink and here in the autumn, here in Maryland, in the autumn, recently it's been chilly enough. So I just had a little fire in the fireplace, and at six o'clock I sit in front of the fire with a glass of Malbec and for a while it doesn't seem too bad.Joel Bowman:Yeah, it's palliative. So tell readers who haven't maybe experienced it yet the difference between, and I've spoken to Will, your son Will Bonner about this, the difference between what you can expect from a high altitude Malbec grown in really unique and extreme conditions and the watery diluted over sugared dyed stuff you might pick up at the supermarket.Bill Bonner:You stole my thunder there. But that is the difference that the high altitude, what it's doing is it the extremes between day and night. And the extremes between day and night require a thick skin to survive. And so the grapes grown at that elevation, they tend to have these very thick skins, and in the skins is all the flavor. So when you get that, the high altitude, not just our place, but any place in the valley, because we're in the valley which is the highest in the world for wine. You get wine that is very strong. And some people don't like it because it's too strong, but you get used to it soon enough and then everything else seems weak. When I drink my own Malbec, I feel like, well, there's real wine and everything else seems to be an imitation.Joel Bowman:Well I think “having a thick skin to last one through” is probably a good point to end our powwow today, Bill. I'm not sure where we're going to catch up next, but I hope there's a glass of high altitude Malbec involved in it and we can get a front row seat to whatever it is about to happen next in this passing parade.Bill Bonner:Well thank you Joel. It's been a pleasure.Joel Bowman:Yeah, thank you Bill. Cheers.P.S. Readers and or listeners wishing to grab a few bottles of high altitude Malbec will want to be nimble. Bill doesn’t sell his Tacana bottles to supermarkets or restaurants, but instead directly to his dear readers… like you! But they typically sell out pretty quickly. If there’s any left by the time you read this, you be able to secure your supplies here. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…When the Nord Stream pipelines were sabotaged last week (Sept. 26), we immediately fired off an email to energy and resource investor, geopolitical expert and all round man of letters, Byron King. Regular listeners (and readers) will recognize Byron as the man who called out “Germany’s Energy Stalingrad” during our Winter Catastrophe summit. That was back in December of 2021, when European technocrats were still guffawing over suggestions that their green pipe dreams and over-reliance on Russian gas might present some problems in the near future…Fast forward to… well, the near future… and lo! Energy prices have gone parabolic on the continent as nations scramble to “weaponize” every strategic advantage they have, be they cubic feet of gas, global supply chains or greenbacks…Byron responded almost immediately… despite the fact that he was at the time kicking rocks deep in the heart of Mexico’s Sierra Madre mountain range on a mining expedition. We caught up with Byron as soon as he landed back in the US to get his take on what’s happening over in Europe, and what it could mean for folks on both sides of the Atlantic as ol’ General Winter enters the fray.We hope you enjoy the conversation…Cheers,Joel BowmanHost of the Fatal Conceits PodcastThank you for reading Bonner Private Research. This post is public, so feel free to share it with comrades and compatriots alike...Joel Bowman:Well, welcome back to another episode of the Fatal Conceits Podcast, dear listener, a show about money, markets, mobs and manias, not necessarily and certainly not always in that order. If you haven't already done so, please head over to the Substack page, at BonnerPrivateResearch.substack.com. There, you can sign up for plenty of daily articles from Bill Bonner. We also have lots of research reports courtesy of Dan Denning and Tom Dyson, and of course, many more episodes and conversations just like this under the Fatal Conceits podcast tab at the top of the page.It's my pleasure to welcome back to the show today a long-time friend. Mr. Byron King is an energy and resource expert, the editor of the Lifetime Income Report, and all-round man of letters. Mr. King, welcome back to the show, sir. How do you do?Byron King:I'm doing very well. Greetings, thank you. And thank you, everyone out there who's watching, listening, reading the transcript, whatever. Appreciate it.Joel Bowman:Always a pleasure to have you on, Byron. I always feel like you've probably forgotten more about whatever our given subject is than I may ever know. So, thanks again for taking the time. You and I were catching up on the state of the world recently while you were on tour down in a rock-and-mineral-kicking expedition of some sort, down in the heart of Mexico. How was your trip and what did you find?Byron King:Oh, well, thank you for even bringing it up. Yeah, I went to the legendary Sierra Madre of Central Mexico. Most people, when they think of Sierra Madre, they think, “Oh yeah, the Humphrey Bogart movie, The Treasure of the Sierra Madre, where these desperados are out there and they're fighting over gold and whatever, and in the end, everybody kills everybody else and the gold dust blows away in the wind.” It's a real morality tale there. But there really is a Sierra Madre, and it is a really, really rugged range of mountains in Central Mexico, pretty much just south of Texas. And it extends, oh, I don't know, 800, 900 miles south. There's the Gulf Coast of Mexico, then there's the Pacific Coast of Mexico, and then there's this big mountain range in the middle, and that's the Sierra Madre.And it is an extension of the Rocky Mountains, and it is filled with minerals, and people have been mining great stuff there for literally 500 years. And I visited a company, I'll just name the name because it's a publicly-traded company. It's a nice company, Avino, A-V-I-N-O, silver and gold. And they are, I think, the oldest mine, you might say, in possibly the Western Hemisphere. The mine was found by the Spanish, Portuguese. I mean, the Native Americans, they were digging ore even before that. I mean, that's how the Incas got their gold and all that.But in 1558, Cortés, who burned his ships, and his conquistadors were making their way across the Sierra Madre. No maps, no nothing, just native guides, looking for whatever is over the next hill. And one night, they were camped out and somebody literally spilled the wine. I mean, they'd knocked over a bucket of wine or whatever. And everybody was mad because, "Hey, dude, you spilled the wine, man."Joel Bowman:Party foul.Byron King:Yeah, terrible. The next morning, they wake up, the sun is coming up, and they look where the wine had spilled, and there's elemental native silver just sort of cropping out from the ground there. And it was like, "Whoa. We spilled the wine, and God graced us with silver." So, they named the place Avino, as in vino being wine. But then Avino in Spanish means “it comes.” So, it's kind of a play on words, it comes from the wine. We've spilled the wine, and God gave us the silver. They started mining silver there in the 1560s. 1560s, think about that. Do the math. And they mined there for several hundred years, as much as they could. They didn't have the high explosives, they didn't have modern techniques or anything else. They were just chasing veins. Pulled a lot of silver, gold, lead, other minerals out of there.And then after the Mexican Revolution, nothing happened for decades and decades. And then in the late 1900s, well, yeah, from about 1968 on, some people started the mine back up. There's a group called Avino which is running the operation now. They deal with everything. You got your labor issues, you got your Mexican jurisdiction issues, you got logistical issues, everything else, but it's an up and running mine. And even in a low metals price market, they're making money. What I like about them is first, we got there, we suited up, we went 2,000 feet down to the rock face of the mine, down this spiral decline. It was a total gas. And they've got beautiful ore. It's copper, zinc, lead, silver, gold. And it's the gift that keeps on giving. I look at Avino as sort of a call on future higher metal prices in that regard.There's a little plug, but it was fascinating geology. It's great geology. It was incredible history. And that was just one part of the trip. Another part of the trip, we went way into the outback of the Sierra Madre and saw this silver exploration site, tiny, little Canadian company that's working there, but gorgeous, gorgeous geology. I mean, it's just this granodiorite that intruded into this limestone. And the contact edge is what's called a skarn, and just unbelievable mineralization. It's destined to be one of those multi-hundred million ounce plays, if not multi-billion ounce plays. I mean, the Sierra Madre, like I said, is the gift that has been giving for 500 years. That's what I do in my spare time, is travel around and look at rocks.Joel Bowman:Yeah, yeah, kicking rocks, collecting stories. That's fantastic. Just as you were speaking, and with the enthusiasm that you're speaking with and the depth of knowledge that you have, I'm just recalling one of our recent conversations in which you were lamenting the dearth of expertise graduating from the US in the hard sciences right now. It's not sufficient to just have these gifts that keep giving. You've got to have the human capital and the knowledge to be able to go in, do the drilling, do all that work that you know so well.Byron King:Oh my goodness, since you brought it up. I mean, I'm giving a talk in the not-too-distant future in Las Vegas with our good friend and colleague, Jim Rickards. There's an event in Las Vegas, and they asked me what's the topic of my talk, and I said, "Well, I think the title is going to be, What Would Admiral Rickover say?" Hyman Rickover, the father of the Nuclear Navy. He wrote a book in 1959, do the math, 63 years ago, Education and Freedom. It's out of print, you got to buy it on eBay or whatever, Education and Freedom.Joel Bowman:Ironic, it's out of print.Byron King:Yep. This is 1959. It's all about how bad the US education system is or was back then. And then he actually had a set of congressional hearings on the subject, American Education, A National Failure. This is about almost 400 pages of congressional hearings on how bad the US education system was back then. This is in the post-Sputnik days of late '50s. Rickover, if people don't know the story, you should. He graduated from the Naval Academy in the 1920s. He served in the Navy through World War II. At the end of World War II, he went down to Oak Ridge, Tennessee, and said, "Teach me about this nuclear stuff that you guys are doing." And so he became an expert on nuclear power. He said, "Hey, we could take this nuclear energy and run submarines on it and run ships on it."But what he found early on in his efforts was that there just weren't enough people who understood the math and the physics and the chemistry and the engineering to do what he needed to do. And so, in addition to being an admiral who promoted the Nuclear Navy and what have you for many, many years. I think he finally left in about 1982. I think they finally kind of showed him the door. He was quite elderly, but he was very, very sharp all along the way. But he was a champion of improving the American education system. We need more math, we need more physics, we need more just general rigor in our curriculum. We need to teach foreign languages. We need to study real history. We need to teach people to write. And he was lamenting these things.And in this book, in Education and Freedom, 1959, again, this is about a 300-page book, 275-page book, just talking about how bad the education system was in the US. School districts everywhere, I mean, nobody escaped the sting of his lash. I mean, the elementary schools, the high schools, the colleges, the grad schools. We were not doing a good enough job. And arguably, 63 years later, we still aren't. And which brings us around to why we're talking here...There's not enough things we need to run the world, is there? Because again, there's not enough people out there who understand what's going on, understand what we need, why we need it, where it comes from, how to get it, where you have to go, what do you have to do to make it all work? Perhaps with that introduction, we can-Joel Bowman:Yeah. Well, let's connect some dots there, because you've put a lot on the table, Byron. And one of the things that occurred while you were around on the trails in the deep heart of Mexico, of course, and something that you and I exchanged some emails about at the time, speaking of energy and getting it from one place to another, was of course the September 26th explosion, sabotage, what-have-you, on the Nord Stream pipelines up there in the Baltic Sea. You were jumping on trains and planes and in airport lounges, but we still managed to fire off some communiqués. First of all, what was your read on that when you got the news across the wires? And I want to just set the scene here by saying, we, up here in the cheap seats, me a lot further up in the peanut gallery than yourself, Byron, we may never know what really went down there. But it's worth at least some investigation and some kind of clearheaded analysis, because I think that there are certainly going to be knock-on effects.Byron King:Oh, it is a matter of a historical pivot, you might say. I would put it up there with assassinating the Archduke in Sarajevo in June of 1914. I would put it up there with the sinking of the Lusitania. I would put it up there with the Gulf of Tonkin. Really, if you want to get historical, back to where we began, I would put it there with Cortés burning his ships.Joel Bowman:Cortés' ships, yeah.Byron King:When Cortés burned his ships as if to say, guys, we're going into the mountains and there's no turning back. We're not going back to Spain.Joel Bowman:It's one way from here.Byron King:Does not work that way, fellas. Cortés was lucky. He managed to keep his head on his shoulders for a good while longer. But yeah, there I was in the Sierra Madre with very intermittent cell service, and we'd be up over a hill and down in a valley and up over a hill. And you're at the top of the hill and it's like, "Oh, quick, maybe I'll just see if I can get a signal. Oh, good, Yeah, yeah." I'm downloading emails or whatever. And then down you go. I was like, "Oh, what the heck? Somebody blew up the Nord Stream? Are you kidding? What's going on here? What happened?"Well, like you said, it's one of those things that we may never know the true, real, absolute story. Who killed JFK? Where is Jimmy Hoffa? One of those mysteries of everything. The instant was, "Oh, Putin did it. Putin, Putin, Putin, Putin, Russia. Russia." And it's like, I mean, well, why would the Russians blow up their own pipeline? I mean, I suppose you can have that supposition. You can think that. But, they already had the valves closed. So, now what? "Well, we're going to blow up the pipeline just to make sure." Well, okay, that's one idea.But getting back to that burn the ships thing, what have we really done here? Well, we've definitely made sure that Germany is not going to get any Russian gas, not this winter. If Germany and Russia were having real quiet, sub rosa, under the radar discussions about, "Hey guys, come on, maybe we can work something out here," well, that's foreclosed.I mean, the pipes are blown up and full of sea water. You're not going to pump much natural gas this winter. And who knows how long it'll take to fix? If maybe they have to replace five miles or 10 miles or 100 miles of pipe, I don't know. I don't think the entire pipeline is destroyed, because they have these shutoff valves along the way. But it's not good. If you're Russia, if you're Putin, if you're the general staff, you've got two things that you're balancing. You've got your military power on the one side, I've got my tanks, got my jets, got my troops, got my rockets. And over here, it's like this is my peaceful side here. If we can trade, we can have energy. I can sell you natural gas and nice, clean-burning fuel and all this.It's a trade-off. For a couple of months, we're going to be very aggressive. We're going to roll the tanks, shoot the artillery, blast away at the battlefront. But then, every now and then, we'll say, "But if you want, we can work something out and here's your gas." Well, somehow or another, this whole option for the Russians just went away. Who would want to do something like that? Would the Russians want to do that to themselves? Well, I mean some people are crazy, but I don't think the Russians are that crazy. Would the Americans do it? Well, the US military came out and officially denied that they did it. They go, "We didn't do that." Well, okay, I'll kind of take your word for that. I mean, it's not that generals and admirals never lie, but I mean, okay, I hear you.Well, I mean if the US military didn't, whose military did? I mean, this was not some fishing trawler that caught the anchor or whatever. You had at least three, maybe four explosions. It's a crime scene, when you think it through, beginning with just the radar tracks of what airplanes were around, what helicopters, what ships were on the surface. And not just right then, I mean within the past weeks or even months, because you can make things happen even months after you set the charge.Joel Bowman:And this is international waters too, it should be pointed out. This isn't in an area that's a declared war zone or even an undeclared war zone.Byron King:Well technically, it was Swedish environment, Swedish economic zone, and Danish economic zone. So, Sweden and Denmark are involved, just because it was in their exclusive economic zone under the law of the sea.Joel Bowman:And they were the two that first registered the seismic activity, I think. And then it was subsequently Germany, the line operators, that noticed the 94% plummet in gas pressure in the lines.Byron King:Sure, so things explode. Well, there are some other clues there. Just the acoustics of what's going on, because the Baltic Sea is wired for sound. They've got sound listening systems all over the place because people are always listening for submarines and what have you. There's a whole acoustic library. You can tell a lot just from the waveform of the explosion through the water. I mean, you can tell whether it’s a fast burning, high power explosive or a slower burning explosive. I mean, you can tell a lot about that. The seismographs in Sweden measured it. You can tell a lot from what are called the P waves and the S waves on that. There's a lot of geophysics involved in that. Then eventually, I mean once the water clears and it's safe for divers to go down, it's a couple hundred feet of water, 200 and something feet of water.You get down, you look around and you take pieces of the steel. The steel will record what blew up. There's ways of taking that steel and making it talk to you. If it was a cutting type of a charge, a shape charge that cut in, that leaves evidence. There's explosive residue, then there's whatever was the package of the explosion. Was it just a charge? Was it a timer? Was it a torpedo? Was it something? It's going to leave debris all over the place. It's going to be all over the ocean floor. So, the guys will be out there, picking it up and finding it. There's a definite crime scene and a lot of forensics to do there. The people who did it know who they are, they did it. They're not talking. The people who didn't do it, they know who they are too. But how do you trust everybody else? They're all, "I deny it. Well, I know I didn't do it, but I don't know that you didn't do it, even though you're denying that you did do it." You're in one of those war game scenarios.Joel Bowman:I was just going to say, just to speak to that exact point, there are a lot of people who put their hand up very shortly afterwards, and also some months before, as you mentioned, one might have deployed ships or subs or delivered the package sometime previous, if we're going sequentially. I just want to read you a couple of quotes that people are focusing on, and we can just discuss them after. But I'll take you back to January 27. I'm sure you've read this, but just for the interests of our listeners, this is the Under Secretary of State for Political Affairs, Victoria Nuland, January 27th of this year. She said, and I quote, "With regards to Nord Stream 2, we continue to have very strong and clear conversations with our German allies. And I want to be clear with you today, if Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward."And then, if she was rattling sabers or maybe talking above her pay grade, it was 10 days later when the big guy, Joe Biden, was on hand to clear up any ambiguity. This is reported in ABC and elsewhere. But I'll quote here, President Biden, "If Russia invades, there will be no longer a Nord Stream 2. We will bring an end to it." And then the reporter follows up with, "But how will you do that, exactly, since the project is in Germany's control?" Biden responds, "I promise you, we will be able to do that."Now, that's not to say that maybe Mr. Biden did not follow through on his promise, but it was a day after, that is to say, September the 27th, that the day after these explosions, when the former Polish foreign minister, Radek Sikorski, tweeted, "Thank you, USA." This was one day after the attack. And if listeners want to bone up on Mr Sikorski's political platform, you can go and check him out on Twitter. There's a banner picture of him sharing a happy moment with President Biden. He's the Chairman of the EU-USA delegation for the European Parliament. All of which is to say, there's a lot of sort of scuttlebutt around this, and a lot of finger pointing. What do you make of all that?Byron King:If the US had no role in it, between Nuland and President Biden, they sure as hell painted the country into an evidentiary corner with their collective big mouth. And I think any police officer will tell you when the husband dies, the first suspect is the wife. When the wife dies, your first suspect is the husband. And when somebody says they're going to do something and then it happens, one of the first suspects is the person who said that they're going to do something.I mean, this is big mouth diplomacy. Diplomacy by tough talk, talking all this macho stuff, all this President Corn Pop and all this kind of thing that Biden's so famous for. He always has a story for everything. He has always been involved in everything. He got arrested with Nelson Mandela in Robben Island, and he was in the Civil Rights Movement way back when. And the other day, he was talking about how he grew up around Puerto Ricans, as he's down in Puerto Rico visiting. Yeah, come on. You're a white boy from Scranton who grew up in Delaware. "I grew up down from those oil refineries there, and everybody I knew had cancer." Really? Oh yeah.Him and his big mouth. I mean, if he didn't do it or if he didn't sign off on it, or if his people didn't sign off on it, not that President Biden knows everything that goes on in the US government, if you get my drift. He sure did paint himself, paint the country into a nice corner on that. The group that is really affected immediately is Germany, because there is no way that Germany is going to get Russian gas any time soon, period, the end, full stop. And Germany is shutting down its industry. It's shutting down its steel industry, aluminum industry, glass industry, and chemicals industry. BASF is the largest chemicals company in Europe, and pretty much if you shut down BASF, you have shut down all of the downstream things, all the paints, all the resins, all the chemicals, all the everything.I mean, you can barely bake bread in Europe without using something that came from some chemical factory of BASF. And if they don't have natural gas to run their hundreds of different operations, an awful lot of chemistry doesn't happen, and a lot of other cascading effects don't happen. Germany is already talking about ... I mean, it's one thing to talk about the cold winter and how we're going to keep people warm. And I should mention that this trip that I was on last week in Mexico, ee had a couple of German guys with us who had come from Germany. They were investors in the company that we were visiting. And they were saying that from Frankfurt, from Munich and from another small town, I think near Leipzig, they were already being told by their municipalities, "Okay guys, you have to take fewer showers. You have to turn down your thermostat, you're going to take sponge baths. You really only need to take a shower about every week or 10 days because you can just wash your face and you'll be okay."This is what they're being told in Germany. And these are fairly upper level investors. I mean, these aren't the huddled masses yearning to breathe free or anything like that. These guys can afford to come to Mexico on a nice trip and visit their investment in the copper mine, the gold mine. This is what they're being told over there. Germany is immediately affected. No gas for you, and you're not going to get any gas, and don't think that you can negotiate a backdoor deal with the Russians to get that gas. Like I said, this is the Lusitania moment or the Gulf of Tonkin moment, except it is Germany that's being screwed. When they say, "Well, Russia is not going to make any money selling gas," they're making plenty of money. Russia is making more money selling oil and gas right now than they were making before the war.I mean, they're selling their product at a higher price than before the war. "Well, the Russians have to sell it at a discount." Yeah, so what? That discount is a higher price than they were getting 10 months ago. And then the people who they sell it to, they turn around, the Chinese, the Indians, they turn around to either refine it, or maybe they don't refine it and they just send it off to somebody else. And then they get that nice little plus up, that nice delta. They buy the $85 oil from Russia and then they sell it for $105 to some refinery in California, which is why Californians are paying almost seven bucks a gallon for gas. For motor fuel gas, not natural gas.Yeah, everything is connected to everything else. And when you blow up a pipeline like that, you've destroyed German industry, plus much else in Europe, you're putting multi, multi billion, $100 billion companies literally out of business. We're not just winding down gently. We're just going to take a little bit off the top here, just little off the top, Ernie, that kind of thing. No, no, no, no. We're throwing a switch. We're pulling the switch.Joel Bowman:It's the buzz cut, yeah.Byron King:We're closing the gates and putting a big padlock on the factory gates. "Sorry guys, you got to go home." We have no energy to melt the steel. We have no energy to run the machines. Can't bend anything.Joel Bowman:What does that look like then, Byron? Because I think readers with a sense of European history will know that going back to, I think it was probably the late '60s, early '70s, we had German Chancellor Willy Brandt's “Ostpolitik,” this idea that you would have Russia providing an increasing supply of energy sources to the continent. And that this was going to be the common interest bridge that would help promote peace, et cetera, et cetera. This seems like, as you said, this is a ship-burning pivot, or pivot away from that. And not only if we look toward the continent, where we see all of the cascading effects that you've just outlined, but also if we look further east, we see now that, as that bridge has been detonated, or the connection has been severed, they'll pivot to other customers. This will foster a growing alliance between China and Russia. There are projects underway. There's talk underway of increased commercial dealings there. What do you see looking on both sides of that geopolitical coin?Byron King:Well, you're absolutely right that Russia has, for several years now, been moving closer and closer in many, many ways with China. There's already a major pipeline called Power of Siberia 1, which moves massive amounts of energy from Russia into China. They have a crash program right now to build Power of Siberia 2, which is going to be more gas out of the Russian pipeline system and into the Chinese pipeline system. And the Chinese are a bottomless pit for all intents and purposes in terms of their ability to absorb the energy. And that's just in natural gas. In the northern part of Russia, there's the Yamal project, which is an LNG project. They pull the natural gas out, they liquefy it into liquified natural gas, and they send it all over the place, including the United States. I mean, a couple of times a year, a Russian ship or a ship carrying Russian Yamal gas pulls into Boston Harbor.And I mean, here's New England, which they won't allow about oh, maybe 100 miles' worth of pipeline. The New England liberals, they won't allow about 100 miles' worth of pipeline to be built from Pennsylvania across New York into Connecticut, Massachusetts. They won't allow those pipelines, which would bring a lot of that Marcellus, Pennsylvania gas, Ohio gas, West Virginia, bring that straight up into New England. No, no, no, no, no. We have to bring a whole sailing ship, a whole LNG carrier into Boston Harbor and unload it in the LNG storage so that we can keep Boston warm in the winter time.And I assure you that when that LNG carrier pulls into Boston Harbor, it's a major military operation. I mean, the Coast Guard is out there, the National Guard is out there, the helicopters are flying around, they got jets in the sky and everything else. That is a big thing, not because it's Russian gas, just because it's gas. It's a big, huge thermos ship, you might say, full of LNG. You don't want to bump into anything. You don't want anything bad to happen to that ship.I mean you can look it up, it's in the news accounts: Russian Gas Boston. Google it, you'll find article after article after article, year after year after year, of that. Russia is exporting gas, LNG. They're exporting it at terrific prices. I saw something this morning that made just an eye-popping statistic. When we had that energy crash, I guess it was in about March of 2020. Remember when everything crashed because of the early days of the COVID? Stock market sold off everything. And I mean, March, April that year, I think oil sold for negative $39 a barrel.Joel Bowman:That's right.Byron King:Which was a trading thing. It just had to do with clearing the papers and stuff like that. At any rate, at that particular point, 1,000 cubic feet of LNG was selling for $1.90, a buck 90. Today in Europe, that same MCF, that same 1,000 foot of gas, going for almost 60 dollars. So, times 30 in a matter of a little over two years. And it's the crazy economics of what has been going on in order to clear the market. And for all the listeners, readers, viewers, et cetera here in the United States, who don't think it's all happening, "Oh, it's over there. It's all in Europe. I don't have to worry about that stuff because it's all European." No, no, no, because here in the United States, when we're exporting all of this marginal natural gas off the top, we are raising our natural gas prices to a global level.Not that we're going to be a European level, but I mean if you were paying, pick a number, three or $4 an MCF a year or two ago to heat your house, for example, to turn the burners on on your stove or something like that, you're going to be paying seven or eight or nine bucks. It's going to cost you twice as much, and maybe three to heat your house this winter as last year, I assure you. Look in your filing cabinet for all your paid bills from the last year or two from the gas company, and look and see how much they were charging you per MCF, and you just wait until December, January, February. I mean, people are talking about the upcoming election. What are the big issues there? One that nobody's talking about, not very many people are talking about, is how Americans are going to have a hell of a hard time heating their house this winter.I mean, maybe not these Americans at the top of the income pyramid, but pretty much everybody else, the other 75 or 80% of the population, some people are just not going to be able to afford it at all. Fortunately, we have laws about you can't turn off the gas in the middle of winter and freeze people to death, in most places. But a lot of people are going to come out of this situation very broke, very indebted. They're not going to be spending their income on other things because between heating your house and buying those expensive groceries at the grocery store, you're not going to have any money left over for anything. People are saying, "Well, the economy is going to recover." I'm thinking, which economy is going to recover? Which economy would you be talking about? I don't see that happening, because it's all connected to energy.Joel Bowman:I was just about to say, as you mentioned earlier, that everything is connected to everything else. A couple of statistics that we've published in the last week or so, we saw last Monday, the Case-Shiller home price index dipped negative. It was the steepest one-month decline on their books. Maybe that's just the kind of teetering at the top. But another cousin statistic to that was, with rates rising for the first time in a long time, the average monthly mortgage repayment for the medium-income American family has just tipped 50% of their net income, which is not a trivial portion of one's budget. Then you add into that 40-year high inflation of course, and falling stock valuations, it's of course not a very good outlook going forward. Now, you mentioned US gas may be going off to fill some of that market gap over on the European continent. What does that do immediately for American gas prices? I noticed just in the last couple of weeks, a chart that I saw on Twitter, I'll put it up in our transcript. [Joel’s Note: h/t to @ericnuttall with Ninepoint Energy Fund]It showed the big three distillate inventory in the United States. It has been in very sharp decline for the past, well, basically since back in early 2020. We're at multi-year lows there. What do you see as a kind of price outlook for Americans who are going to be watching that? Byron King:Oh, I think it will, yes. When you talk about housing prices, I mean it’s all location, location, location. I suppose if you've got the right location, you're still going to be able to sell your house at the price you think you ought to get for it. But I mean, if somebody wants to buy a house for, pick a number, half a million dollars, and their mortgage rate is 3%. Okay, well, they can swing it. But if the mortgage rate is now 6%, well, 7% actually, from what I've heard, that puts a whole different pricing mechanism on your ability to finance the house. What can you pay for that half million dollar house? Maybe that half million dollar house is now a $350,000 house. I mean, everybody's different. Every house is different, location, location, of course. The froth is off the beer on the housing market.You also see it in the automobile market, just as more and more of those missing chips, those computer chips that they needed to build the cars, more and more of those things are starting to flood into the market, and the car makers are starting to make all the cars they want. They're finding that people can't afford them. And that has also trickled down into the used car market. A lot of people have these used cars on the lot, which they paid too much for two months, three months, five, six months ago. And they don't want to sell them at a loss. To which some people might say, "If you don't sell it at a loss today, you're going to sell it at a bigger loss in a month or two or three months." I'm not telling anybody how to run their used car business. I've never been a used car salesman, although a good used car salesman, probably worth her weight in gold about now.Going forward, I mean when energy costs more, when we're shipping it overseas, big whacks of it, entire tankers of LNG going overseas, it's going to raise prices here in the US. It's going to cost more to heat your house. It's going to cost more for your utility company that uses natural gas to spin a turbine and generate electricity, so your electric bill is going up too. If your electric bill is going up, well, that means that it costs more to run the supermarket, costs more to just keep the coolers on, to keep the frozen foods frozen and the fresh produce fresh, so that it doesn't all deteriorate into mulch on the stacks there.And meanwhile, it cost more to run an oil refinery. It costs more to refine your oil because it takes energy to refine oil. So, your refined product prices go up, your diesel fuel prices go up. We already have shortages around the country in all sorts of things, lubricants, things like hydraulic fluid, things like kerosene. People think, oh, diesel trucks, they run on diesel. Yeah, they run on diesel but in the wintertime, but you add kerosene to the diesel to keep it from gelling up in the cold. I mean, there's not enough kerosene out there.Kerosene, what's another word for kerosene? Jet fuel. Oh, yeah. When you have these kinds of shortages that are just permeating all through the economy, it screws things up big time. I mean, one of the problems with, for example, airline travel, and especially in the smaller airports, if you're flying in or out of JFK or Chicago O'Hare or Atlanta or something like that, Atlanta has an entire pipeline that comes from refineries in Texas and Louisiana to Atlanta. They have plenty of jet fuel in Atlanta. But if you're flying to some of these smaller places where they have to haul the jet fuel in on a truck, they might not have enough fuel. I mean, the jets have to fly in with enough gas to fly out, or you fly in and you think, "Well, we'll fuel up overnight." They might not have the fuel. So, that 6:00 AM flight out in the morning doesn't happen.This was one of the problems that we saw all summer with all the airlines canceling flights and all that. They weren't canceling flights just because they felt like canceling flights. They were canceling flights because they didn't have fuel for the jet, they didn't have lubricants for the jet because the air crew couldn't get to the airport on the inbound flight where they were deadheading so that they can fly the airplane out the next morning. These things just ripple through the economy in a very, very turbulent sort of way. And it's all reflected in really the disruptions that you see everywhere across the economy.Joel Bowman:Yeah, I remember Mr. Henry Hazlitt. I think he was writing for The New York Times, if I'm not mistaken, back in the '50s or '60s. I imagine having a Henry Hazlitt on the editorial board at one of the mainstream papers today, it's almost unthinkable. But one of his main lessons was not just to look at the immediate consequences of one or any given policy, but to look at the secondary and tertiary knock-on effects of those policies, and not just for one particular focus group, but across the broader economy. And that seems to be a lesson that has been often lost. So, just as we're wrapping up here, Byron, I wanted to get back to these pipelines. Whether Mr. Putin did it, whether some coalition of the West, NATO, et cetera, did it, again, we may never know. But in any case, the taps have been decisively blown up, up there in the Baltic. Whatever the ripple on effects are now going to be, what happens for a continent of people who were getting cheap, relatively local, that is Russian gas, what happens to all the people who are concerned about CO2 emissions and so forth, who are now going to be shipping liquified natural gas thousands and thousands of miles further? And I've even seen some reports of potentially LNG shipments coming from Australia. I mean, that is a long supply line, and it's not a supply line that doesn't require energy inputs in and of itself.Byron King:Yeah. Well, ocean shipping is a relatively efficient way of moving product from anywhere to anywhere. Although, yeah, you're burning up fuel in the ship to move it. Right now, the price is super high in Europe and they are desperately looking for gas. I mean, you probably saw just last week or so, in the last few days, the new Prime Minister of Italy, Giorgia Meloni, she takes office and the next thing you know, the word is that, oh, Russia's not sending gas to Italy. That's not what Russia is saying. Russia is saying, "We're sending gas through Austria to Italy, but the Austrians are not letting it go into Italy because the Austrians don't have enough gas. They're using it."There's one school of thought in the mainstream media that somehow or another, the Russians are shutting off Italy. There's another school of thought in terms of a different story. The Russians say that they're shipping their gas to Italy, but the Austrians are pirating it in Austria. What does that story tell you? Well, what that story tells you is that the European Union is disunionizing, so to speak, to make up a word here. Put on my Alexander Haig hat and make up words as we go along. But no, when it's every nation having to figure out what they're going to do ... I mean, France has a big nuclear industry, but it's sort of throttled back right now for maintenance, and because of drought, they can't cool the power plants as much. Well, France isn't exporting nuclear electricity anymore. The Czech Republic has nuclear power, but they've got their problems too. They're not exporting.The Netherlands has the Groningen gas field, which could help quite a bit to alleviate the natural gas shortage in Europe. But for local political reasons, because earthquakes are shaking the china in some people's houses, we're shutting the Groningen gas field in the Netherlands. Britain has plenty of frackable real estate. I mean, if you do your plate tectonics and put everything back together again, a big whack of England, in fact, looks an awful lot like Pennsylvania and Ohio if you do the geology, except that Britain didn't want to frack. But one of the first things that Liz Truss has done now is said, "Well, maybe we are going to do some fracking." Joel Bowman:It's amazing what people will revert to when the lights don't come on at the flick of a switch, and the bread isn't ready in the morning at the bakery, and you can't get the candlestick maker to get his chemicals and his waxes in order. Let's go with your word of disunionization here for a second. The disunionization of the European Union. It was just a couple of weeks ago that it was Ursula von der Leyen, I think I'm pronouncing that correctly, who sent out a not so veiled threat ahead of the Italian elections and said essentially they were monitoring the election results in Italy. They will see the results of the vote and, “If things go in a different direction, we have tools, as was the case in Poland and Hungary, at our disposal.”Yeah, this was essentially, “We have a European Union way of doing things, and any nation therein that deviates from that may expect consequences.” I'm not sure if that is filed under conspiracy theory, but it just kind of jogged my memory there. And it does seem like the European Union is under duress ahead of this coming winter. And as we see those supply chains breaking down, it does not look like the harmonious, peaceful continent that those who set out to build the European Union ostensibly or allegedly had in mind at the outset.Byron King:Well, it's hard to have a European Union, and it's hard to have a unified currency as in the euro when the entire foundation of your economy has begun to crumble. And the foundation of any advanced economy is energy. We have had this discussion before. In fact, one of the first times that you and I ever met was, I think, back around 2005, you came up to Western Pennsylvania and we took a field trip into the oil fields, the original oil fields around Oil City, Pennsylvania, Titusville, the Colonel Drake Well. And if I remember, we actually had it fracked, except that it was a different kind of explosive charge. But we watched somebody frack an old oil well and increase the production.Joel Bowman:I remember it well.Byron King:That was a long time ago. And energy is the economy. When people say, "Oh, the economy, the economy, the economy," yes, but energy is the economy because try running the rest of your economy without the energy. You and I wouldn't be talking. We'd have no electricity for our computers and for the wires and for the sound system and the people out there, everybody who is watching this, without the energy, you would not be watching this. Energy is the economy. Drill that into your head.And so what Europe has said, or what the green side of Europe has been saying, we're going to take a low density, low energy density concept. We're going to do solar and wind and whatever. And we're going to take these low density, intermittent, unreliable, because the wind doesn't always blow and the sun goes down every night. We're going to take these low-density energy systems and we're going to try to run a high-energy density economy on it. An economy that's built around lots of mass transportation, that's built around using vast amounts of metals and materials and vast amounts of food. People eat this food that has to be transported from all over the place and kept frozen or kept cool in the coolers, and we take it home, put it in the refrigerators, all those sorts of things. You're trying to run an advanced, high energy density economy on a low energy density gathering system. And there is a disconnect.And what we're watching now is the disconnect just explode in everybody's face. I mean, in between the war in Ukraine, military operation in Ukraine, whatever you want to call it, and now with literally the analogy of Cortés' ships getting burned. Maybe it wasn't Cortés who burned the ship, but somebody burned Cortés' ship by blowing up those pipelines. In any case, Germany's not getting the gas.Joel Bowman:Yeah, there's only one way from here.Byron King:And they're in trouble.Joel Bowman:I think that's a great analogy. And of course we're watching, I think, the end or the decline of three simultaneous buoying agents that have lifted us into this modern cornucopia of prosperity, being cheap and abundant energy, which we've through various means kind of slammed the brakes on or blown up the pipelines, cheap and abundant manufacturing through the weaponization of supply chains from China, and cheap and abundant credit, which had us all living high on the hog in the future. These things all, for various reasons and through various complex dynamics, in and of themselves are coming to a very abrupt end. And yeah, it feels like there's not many places to hide.Byron, I know I've taken up a bunch of your time here, mate, and I really do, as always, appreciate your insights on a broad array of topics. But before I let you go, tell our good listeners where they can find your work, where they can find your latest thinking, and what it is you are telling your readers in general to look at over the back half or back quarter, I should say, of the year and beyond.Byron King:Well, I am still with what we used to call Agora Financial, but it is broken into different stovepipes with different names. But I'm with a group called Paradigm Publishing, P-A-R-A-D-I-G-M (readers can learn more right here). I am writing for a newsletter called Lifetime Income with Zachary Scheidt. And I'm also writing in Jim Rickards' newsletter. And you'll find me in different versions of his newsletter, but Strategic Intelligence, the Gold Speculator, things like that. And if you aren't subscribed, I suggest you go to Paradigm, take a look, see what you see, what you think. And Lifetime Income or the Jim Rickards franchise has me writing things. I've been writing about energy, I've been writing about mines and minerals, been writing about military matters. I mean, Jim said, "Write something about the war in Ukraine." So, I wrote an essay about a month or so ago on the origins of the American approach to air power.I went back to a Russian guy, in fact, named de Seversky. He was a Russian émigré to the United States who founded the Republic Aircraft Corporation, Republic being a great old name in aviation. But he wrote a book called Victory through Air Power, which came out in 1942, and truly changed the thinking of the United States towards the use of air power. And it was absolutely critical to the whole philosophy behind building a massive Air Corps in the Second World War, and to the foundation of the US Air Force and aerospace power. I wrote about that about a month or so ago. That's in the archives. And yeah, I get all over the place. And then every now and then, I take these fun field trips, like down to Mexico and to the legendary Sierra Madre, and go kick rocks.Joel Bowman:Outstanding.Byron King:Go visit the silver mine that Hernando Cortés discovered when he spilled the wine.Joel Bowman:And there we go. There we go. In vino veritas, as we've since discovered. Byron, we'll have to get you back on again soon, mate, when you're not out on expedition, kicking rocks and minerals somewhere. It's always such a pleasure to talk to you, and I really do appreciate all your insights as always. Just for our listeners out there, I'll put some links down below to all of the many ways that you can get and follow Byron's latest thoughts and musings. And of course, you can find more conversations with Byron and plenty of other analysts, experts and friends of Bonner Private Research on our Substack page. Head over to BonnerPrivateResearch.substack.com for all that and plenty more. Byron, thanks again, mate. Let's catch up again soon. And readers, listeners, viewers, I'll see you all next week.Byron King:Thank you so much. Thank you.Thank you for reading Bonner Private Research. This post is public so feel free to share it. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…“Let me take this opportunity to antagonize those of our listeners that I haven’t already antagonized…”There are some people who go out of their way to appease others, to say what they think the majority wants to hear, to mollycoddle their audience and make nice with anyone they meet so as not to ruffle any feathers. Doug Casey is not that person. Whether on the prospect of civil war at home… “It seems that Americans have broken into two groups; the red people and the blue people. And they don’t like each other. In fact, they actually hate each other.”The war in eastern Europe… “A border conflict between two sh!thole countries…”Central banking…“An idiotic institution which should be abolished…”College education…“Worthless degrees of indoctrination…”The fate of the US Dollar as the world’s reserve currency…“I think that half or three-quarters of the world’s countries are going to find alternatives to the dollar and the Swift payment system. And this is going to devastate America.”Western European leaders…“The people running these western European countries are all died-in-the-wool, dogmatic socialists; they’re nothing nobodies.”Or discussing what he calls the “Greater Depression,” in which he expects the average American is in “for a very rude awakening”… “You’re going to have a lot more people living in their cars and under bridges. This is serious.”Doug doesn’t waste time mincing words. Listen in as we discuss all of the above, including what Doug’s doing with his own money and practical ways he sees to minimize what’s coming down the pike. Thank you for reading Bonner Private Research. This post is public so feel free to share it, especially with the easily offended...We also spoke at length about Doug’s novels, the High Ground Series, which he co-writes with Dr. John Hunt. With Speculator, Drug Lord and Assassin behind them, the pair are gearing up for the next (and possibly most provocative) title: Terrorist. Catch up on the series here. We hope you enjoy the conversation…Cheers,Joel BowmanHost of the Fatal Conceits PodcastTRANSCRIPT:Joel Bowman All right, welcome back listener to another episode of the Fatal Conceits podcast, the show about money, markets, mobs and manias. If you haven't already done so, please head over to our substack page. You can find us at bonnerprivateresearch.substack.com.There you'll find hundreds of articles and everything from high finance to lowly politics, plenty of research reports, and of course more conversations just like this under the "Fatal Conceits Podcast" tab at the top of the page.I'm delighted today to welcome to the show, I think for the first time, although we've spoken many times in private and all around the world, my friend Mr. Doug Casey. For those few of you who are not familiar with his work, Doug is the original International Man having written the book on the subject. He writes over at internationalman.com. He is also the author along with John Hunt of "The High Ground" series books including "Speculator," "Drug Lord," and "Assassin" which I hope we get to talk about in due course. And every Friday he has the "Doug Casey's Take" podcast. So, that's another avenue for Doug to vent his many opinions, and we're happy to have him on the show today. Doug, welcome to the Fatal Conceits podcast.Doug Casey It is a pleasure to be here with your Joel. It's unfortunately all too rare to have an intelligent conversation these days. Certainly not with the locals in any area. I think that's one of the problems that a lot of the people that listen to your podcast, and mine, have is that they don't have anybody intelligent locally to talk to, who they can disclose their philosophical and political views to without starting an argument. And I think that's where a lot of our listeners come from.Joel Bowman Yeah, that's a really good place to start, I think. I know that you're holed up stateside at, we'll call it an "undisclosed location" at the moment, but I'm wondering if your current experience is resonant with the last time I spent in the U.S, which was just a couple of months ago. I don't think, after having been back and forth to the United States for twenty years, and having lived there for some years in the interim period, I've experienced a more on edge kind of political climate where everybody, and this is running the gamut of the political spectrum, both on the right and the left, seemed to be just at a hair trigger on any given subject, rushing to be offended in any way possible. Is that similar to your experience at present?Doug Casey Yes, exactly. It seems that Americans have broken into two groups, they red people and the blue people, and they don't like each other. In fact, they actually hate each other. That rant that Biden gave on, I think it was September 1st, where he had a black background with heavy red overlay and the two Marines in the background. All of this is unprecedented for a political speech in the U.S. Especially that red and black background, which is a semi psychotic. And then his speech, which was actually mildly psychotic. By giving a speech, talking about how hateful, and awful, and unpatriotic, and dangerous the MAGA people were, who as far as I can tell, are basically just salt of the earth, middle class people that are disturbed with the direction of the U.S. But the direction of the U.S. is accelerating.And Biden's speech was almost a declaration of civil war and it was very dangerous. Not only not the raid on Trump's house, but then the arrest and perp walking of something like 40 or 50 prominent Republicans for no reason other than they are Republicans. Lots of anecdotal stuff out there. And the hiring of 87,000 new IRS agents. The type of person that will join the IRS voluntarily is the same type that will join the Gestapo. And I am afraid that these new people are going to be used like the Gestapo. I'm sorry, I'm going on Joel, but I'm just...Joel Bowman No. It's very important. I think a lot of these things are kind of rattling around somewhere deep in the craniums of the general population. But I think that it's difficult to put these things to words because, as you said, the actions are so unprecedented and this comes from both sides, no doubt that there are the worst of the body politic expressed at the extremes of both ends.Doug Casey We are approaching genuine civil war actually. And maybe that's not as far off as we might think, because the U.S. has changed radically in my lifetime from a country where people shared a culture. They shared generally a religious orientation, certainly a language, traditions. It was actually a real country. But, now the U.S. has devolved into genuinely a multicultural domestic empire where you have large numbers of migrants from a totally different culture, different language, different traditions, different everything. And yes, the U.S. has always had migrants, Italians, and Irish, and God knows what else. But, the new people are very different. And I think great numbers of them are coming for different reasons than those past immigrants did. There was no welfare in those days of past migrations. But, now migrants come here and they're immediately put on welfare.So, it's actually changing the character of the U.S. where traditions are being washed away, and where individuals are actually all living in bubbles where they're not connected with other warm-blooded people, they're connected with their electronic devices. And there's a recent book that came out by a Belgian professor at the University of Ghent, and I'm normally suspicious of European professors. They're all hardcore leftists, all Marxist. This guy is not, his name is Mattias Desmet. And he points out that we're getting a psychological mass formation, especially in the U.S. but around the world where people, when everything's washed away and people aren't believing in things they used to believe in, they're looking for something new to believe in. And this is very dangerous.This is how the great cultural revolution of China formed similar circumstances. And it could happen here in the U.S. So, I'm quite pessimistic in many ways. And especially since if the U.S, and what's left of the U.S. Constitution is washed away, which it is. It's being interpreted out of existence over many years. There will be nothing left in the world, no place you can run and hide, in other words. This is happening worldwide. Really disturbing.Joel Bowman And you think it does seem, at least since you and I have spoken down here in Argentina about this at great length over many an unhurried lunch, but it does seem in the past few years that this trend is accelerating. Is that kind of your read from the ground there in the U.S?Doug Casey No question about it, because whether or not the Democrats stole the election in 2020 - and I think they did. I don't have any proof of that personally. I don't monitor these things boots on the ground. But yes, I think they did. Although, they accused the Trumpers of having stolen it in 2016 also - But, let's admit it, the people that control the apparatus of the state now in Washington DC, these people are exactly the same psychological profile with the same political beliefs as the Jacobins were in 1793. They're the same damned people, just updated, or for that matter, the Bolsheviks in 1917, which means they're radical, they want to overturn the basic structure of society.They're really very dangerous. And now that they've been in control for two years, they're doing the best they can to overturn traditional America. And, I think, that come to the elections in November, I think they're going to do anything they can to stay in power and not let the Republicans, which are pretty worthless, but they're much better than the Democrats, take control. And so, I'm actually anxious to get back to peaceful and friendly Uruguay and Argentina before the elections. Because, this isn't a prediction, but I think there's a distinct possibility that things could get wild and wooly in this country real quickly around the time of the elections early November.Joel Bowman Yeah. Before we go take a little look around the world at obviously many inflection points and flash points of geopolitical unrest that I'd like to get your take on. It's obviously no secret and you've written extensively about the rise decline of empire. Most recently, I think I saw an article of yours comparing the decline of the American empire to that of the Roman Empire for many reasons, which could probably fill a whole other discussion.But, I'm wondering, if you think that we are in that sort of terminal inexorable decay, and if we're very close to that, what people who are living in the United States, who don't necessarily want to move down to Uruguay where you are, or Argentina, or some other part of the world for any one of a million reasons, they want to stay in the United States, they want to stay and fight for the country that they grew up with, and that they enjoy, and that they love, and to be close to their families. Are there practical things, however small though they may be, that individuals can do to kind of avoid getting caught in the crossfire if indeed the situation does deteriorate to a kind of civil war like episode in history?Doug Casey Yeah. What can you do today? It's kind of reminiscent of Lenin's phrase, "What is to be done?" Which is a little bit different.Joel Bowman The passive voice.Doug Casey Right, exactly. So, what should an American who's concerned at this point do? I'm of the opinion that notwithstanding, or perhaps abetted by, it could be either one, the efforts of our idiotic central bank, which should be abolished, that I think all the markets could melt down. It would be chaos if it happens, because the only thing that would remain is the debt in the country. And, of course, these fools are working now to wash away a lot of the student debt so that the people that have foolishly borrowed a lot of money to get worthless degrees and be indoctrinated. And generally they're the more leftist oriented, because they've been indoctrinated, they're going to get our free ride to go to college so that their incomes will be higher, and the average guy's got to pay for it. But, the problem is, that trillion and a half of debt out there has got to be dealt with.And if the stock market melts down, truly melts down, and I can speculate as to how low it could go, and the bond market melts down, because I think that eventually we're going to see interest rates in the U.S. on government paper, not just at 5% or 10%. It'll go back to the levels it was in the early 1980s, 15 or 20%. At which point it'll just about correspond to inflation. So, you still won't be getting a real return on your money. But, that's where it's going to go. It's going to overthrow the financial fabric of the U.S. And that is, especially with everybody indebted the way they are, their car loans, their mortgage loans, their student loans, their consumer loans. It could be a real upset. You're going to have a lot more people living under bridges, losing their houses. This is serious.Joel Bowman So, I've heard people say, "Look, this happened in the seventies. We had an oil embargo in the seventies. We had the Nixon economic shocks, we had the final severing of the dollar from gold. And it was kind of off to the races since, but we also had 40 year high inflation at the time." And so, for people who map the current situation onto the seventies and arrive at the conclusion that, "It was kind of tough then, but we pulled up our breeches and we managed to model our way through it, and we came out on the other side with this big explosive growth for the next 20, 30, 40 years." What to you is different between now and then? Is it that we have now an exponentially larger debt harness that is strapping us down. And what might be done about that? Short of a jubilee and a sort of hitting the reset button, which is not something, incidentally, that people aren't talking about.Doug Casey Yes, they are talking about it. The big problem with debt is that, other than that some people owe it to some other people, so somebody's going to wind up unhappy if they don't get their money back. But, it's that when you have debt, it means that you're living above your means. That's what high debt means anywhere, somebody's been living above their means. Just as if you have high savings, it means that you've been producing more than you've been consuming, and you've saved the difference. That's how you get wealthy. So, debt is the mirror image of that. And the U.S. has looked good for the last 30, 40 years, because of all this debt. It's like if I went out and I borrowed a million dollars tomorrow morning, I could live really high off the hog, cars, and restaurants, and trips for the next year, or two years, or however long.But, I'd be in a fool's paradise, because after I spent that money, the debt's still there, and my standard living is going to drop by more than it... In other words, debt brings on an artificially high standard living, but then when you pay it back, it brings back a very real lower standard living, because you've got to pay it back with interest. And, of course, the fact that it's being inflated out of existence is even worse, because the only way the bottom of society gets better is by putting aside some dollars and building capital. But, if it's being inflated away faster than you can save it, what you are is you're igniting the fuse on a time bomb. So, it's even worse than this, Joel. Think it can't get any worse. I'll tell you what's worse. It used to be the U.S. was investing all around the world, and people were investing in the U.S, but our main export in the U.S. for 40 years, more than 40 years now, has been not Boeings, and wheat, and manufacturers.Our main export has been dollars. So, now there are tens of trillions of dollars that are outside the U.S. owned by non Americans, that don't have to own those dollars. And when they get scared enough of those dollars, they will dump them. And when they can't dump them to each other anymore at lower values, those dollars will come back to the U.S. where they'll buy stuff that Americans now own. Like titles to stocks and real estate and so forth. So, the average American is in for a very rude awakening in the next few years. Our main export is now dollars, it's paper. And we're going to have lots of foreigners that are not going to want to get stuck holding dollars, because it's the only currency that's worth holding that's liquid. And when that falls apart, this whole problem is going to go international.Joel Bowman Right.Doug Casey Am I being gloomy enough?Joel Bowman No.Doug Casey I can get more gloomy.Joel Bowman We can probably get gloomier. Let's broaden the horizons a little bit, segueing from debt and civil war to the internationalization of both. And as you were speaking just then about the ebb and flow of these dollars, which have been spirited off around the world to bag holders in Russia for example, or in China, or in other countries that have kept their Forex reserves, or some portion thereof, in dollars. Many of those countries are now finding themselves on the other end of dollar weaponization since the beginning of the conflict in the Eurasian steppe early in this year. Just to back up a little bit for some context, were you first of all surprised that Mr. Putin would respond contra NATO's advancement as he did? Is that your read on it? And afterwards we can get into what the relevant sanctions on Russia and its allies have wrought for days and months to come?Doug Casey Let me take this opportunity to antagonize those of our listeners that I haven't already antagonized by saying that if you were a martian looking at the situation today, I think you'd have to support Russia, not the Ukraine. Which is one of the world's most corrupt countries. In fact, I don't call it Ukraine, it used to always be called "The Ukraine," which means borderland. It's always been an area, it's never been a country actually, until Lenin made it a country after the Russian Revolution. But, I call it "The Ukraine," even though most people now call it Ukraine. So, what am I saying here? It's that I think it was a mistake, a real error for Putin to invade The Ukraine. It's a pity he did that. But, he was massively provoked where he almost had no alternative. What we have here is what amounts to a border war between two shithole countries.That's what it amounts to. And this is an area of the world that's had border wars where the colors of the map on the wall have been flowing for the last 1,000 years. And this is just a continuation of that. So, there's absolutely zero reason for the U.S. or western Europe to get involved in a border war between two nothing nowhere countries. But, they can't leave well enough alone. And Putin was provoked, because after the 2014 Maidan Revolution, a Russian puppet was replaced by a U.S. puppet, and now a very aggressive and dangerous and stupid U.S. puppet in the form of Zelenskyy. People don't realize that Crimea has always been part of Russia, or always, nothing's always, but for the last 300 years has been part of Russia. And it only became part of the Ukraine when, for totally domestic political reasons, and when he was drunk, which he often was, Khrushchev gave it to the Ukrainian SSR.Now Russia wants it back for lots of perfectly good reasons. And the average American doesn't realize that starting with 2014, the Ukrainian Army, which has been trained by NATO, attacked those two provinces, the Donbas, which are full of Russians, which seceded from the Ukraine. So yeah, Putin had plenty of reasons to attack the Ukraine, but he didn't want to destroy the country. He just wanted those two things back. It's reasonable enough, and show the Ukraine cannot become part of NATO, which was a violation of things that were agreed on before. But, this could get truly out of control at this point. It's taken on a life of its own where I think the Russians realize that we have to destroy the Ukrainian Army, and now what are the Americans going to do?Joel Bowman Yeah, it does seem like an escalating game of chicken, where neither a side is willing to lose face, even though both sides have probably made some regrettable errors, which they certainly wouldn't admit in their own respective, though non-respectable media outlets. The propaganda on one side and on the other side. But, were you taken aback at all by the weight of the sanctions from NATO and her allies? In particular I'm talking about the seizing of private citizens property, the weaponization of the U.S. dollar in the forms of confiscated or suspended reserves, which may eventually result in a bifurcation of the global financial payment system into SWIFT and whatever other non SWIFT entity comes to take the other side of the ledger there.Doug Casey These Jacobins that control the west government are really quite stupid on a basic level. Stupidity has several definitions. But, one definition is, it's not just the inability to determine the immediate and direct consequences of what you do, but the indirect and delayed consequences of what you do. And stealing the assets of Russian citizens, whether they're good guys or bad guys or not. Sure, most of the oligarch are bad guys, I suppose, but that's not an excuse if you believe in the rule of law to steal a country's assets, and that of its private citizens. This is incredibly provocative. They're just asking for trouble. And if you back the Russians into a corner, I don't know where it's going to end. And in an addition, like you said Joel, now the Chinese, and the Indians, and other countries are saying, "You know what, these Americans are totally unreliable. They're destroying their currency, their banking system is unreliable. We can't be so stupid that we have to continue you using the SWIFT system where we have to trade in dollars that all go through New York, which is dangerous."So yeah, I think that half of the world's countries, or more, three quarters of the world's countries, are going to find alternatives to the dollar, and to the SWIFT system, and using American banks, and this is going to devastate America. Of course, just like natural gas supplies being cut off are going to devastate Europe. I don't know. Or is this natural gas going to start flowing magic? I don't think it will. I think there's going to be some cold Europeans. And, of course, natural gas is important for the manufacturer of fertilizer. And it's not just that, but it's potash and phosphorus have been cut off. And you're going to have some cold and hungry people in poor countries. This is the start of something big here. This is equivalent to the start of World War III.Joel Bowman Yeah, as we saw, it was food protests in the form, I think, of self immolation of a man in Tunisia that kicked off that the whole Arab spring. It's one thing to have a slight delay on your iGadget for a week, but when you can't feed your family and when the price of grains, or fertilizers, or fuel to heat your home goes beyond reach, then desperate people do desperate things. And I think that can have a kind of cascading effect.Incidentally, I think it probably bears mentioning that there is so much nuance that really needs to be sorted through in these highly complex geopolitical questions, that I think as you started off the conversation by addressing, just seems to be beyond the general conversational capabilities of most people to have that discussion and not have their heads explode with some kind of reactionary madness.But, it is possible to believe, for example, that Mr. Putin might be an whatever monster, whatever pejorative we choose to invoke, and also believe that the NATO powers have been provocative, and stupid, and shot themself in the foot. Those two things can coexist. It doesn't need to be one guy in the devil's horns and another riding in on a white horse...Doug Casey You're absolutely right, Joel. Because, the people that are running all these western European countries, they're all dyed in the wool, dogmatic socialists. They're nothing nobody's that have somehow gotten elevated to the point where they can boss around all of their countrymen. And I would actually say that if you compare what Putin has done since he took over Russia, he's reduced the national income tax rate to, what is it, 10 or 13%, about the lowest on the continent. So, that's a positive thing. He's actually done a lot of things. It's not like it's been a free market revolution in Russia, but under Putin, the place is just vastly improved and vastly better than it was in Soviet days. And is he a nice guy? I'd say he is a much more intelligent guy. And judging by what he says, he's much less duplicitous than the nothing nobodies running western Europe at this point.Joel Bowman And it does seem like those, nothing nobodies, as you say in on the continent, are going to be shivering this winter. You mentioned our mutual friend Rick Rule before we jumped on our recording here. And I spoke to Rick at the end of 2021, beginning of 2022. And he was absolutely adamant that energy prices would continue to rise. And this was before a single shot had been fired in the Russo Ukrainian conflict. But, he was absolutely spot on with that. And he had predicted that in the event that we had was called the "Winter Catastrophe."It looks like now general winter is entering the fray, not only in the conflict, but is also going to be exerting his influence across the new lean, green acres of Germany and beyond. How does this play out in energy markets? And what does this say of the prescience of the political elites in Europe, and those of course who are spreading their green agenda to Australia, and across the United States, and in Canada? What does it say about either inability to predict the future, or their malice and mendacity in bringing it about such as it will undoubtedly occur this coming winter for a lot of shivering people?Doug Casey You're right. I think these people are both stupid, and ignorant, and evil. All three actually. Look, nothing wrong with green stuff, a windmill, or some solar. Sometimes in some places it can make sense. But, it's not the basis for mass power generation for an industrial society, at least not yet. These things should not be centrally directed by government to start with. It's not going to work, and it's going to be a total and complete disaster. If they wanted to do anything, it would be build lots of nuclear power plants. And nuclear power, even though it's been promoted as the enemy of everything, is actually the cleanest, and the cheapest, and the safest form of mass power generation by far. But, that's not happening. It'll start happening, but it's going to take years to start building these nuclear power plants. And then they'll be generation four.We should already, or would already be, at the stage, where they're small. And by small I mean the size of a large room. Nuclear power plants are buried to be dug up 10 years later and replaced for every town in the country. But, that is not going to happen because of political reasons. So what should you do? I guess we're getting back to this subject that you brought up earlier. What should the average guy do at this point? And I think that now continues to be, even though the price of oil stocks and natural gas stocks have doubled in the last year I'd say, they're still real cheap. Why do I say that? If you go back to 1980 when oil was the big thing, 30% of the value of the S&P was oil stocks and oil related stocks. As of last year, it was only 3%.It had dropped 90%. Now it's gone up to maybe 5% now, but they're still really cheap. And oil is much more important now than it has been in the past. And I'd throw coal and nuclear into this mix, those four things. So, I'd say that there things are still real cheap and a lot of these things have good dividend yields or low price earnings ratios. Like Petrobras, the Brazilian national oil company, selling at four times earnings last year, it kicked off a dividend of 25%. That's pretty good. That shows how cheap these things are. So, I think, people should be looking to buy these stocks. Why are they so cheap? Because the institutions are all into ESG, environmental social governence, and DIE, diversity... It's all destructive, stupid nonsense. So, BlackRock, and Vanguard, and all these big mutual funds and hedge funds, they all talk to each other, they all have the same background, they go to the same clubs, they all want to be invited to the World Economic Forum.So, they don't own any of these oil stocks. And the oil companies have been thoroughly intimidated at this point. They're not going to invest in something in this political environment. So, oil's going to stay here and go higher. Natural gas is going to stay here and go higher. You should buy those stocks, I think. I've been doing it for years and selling... selling naked puts against them actually is what I've been doing more than anything else. So, that's one thing you should be doing for sure, investment wise. Most other stuff, even with the stock market coming down, I think we're heading for a long term bear market. I don't want to own Amazon, or Google, or any of that crap. I really don't. These are just ephemeral digits quite frankly. I like the idea of owning real stuff.Joel Bowman And hard to power all those ephemeral digits without real stuff burning in a furnace somewhere, keeping the lights on, keeping the heat on. Real quick-Doug Casey That's in the "you'll find out department."Joel Bowman Yeah, right. Doug, real quick, because I know we're butting up against a solid hour here, and I do appreciate your time. Before we leave, letg's get to your books, I believe you're working on your fourth. And for listeners who are not keeping abreast of the series, we have "Speculator," "Drug Lord" and "Assassin" I think was the last one if I have those in correct order. What's coming down the pipes? When do we get to "Terrorists." That's what I think everybody wants to know...Doug Casey Yes, "Terrorists" is the next one. And John and are getting ready to put pen to paper on it. Basically, this series of books, it's, let's say from one point of view, it's Atlas Shrugged in a more readable form, and for a new era. And it takes our hero, Charles Knight from youth, where he gets lucky on a gold mining stock in Africa and makes a million dollars, comes from nothing to this is possible with these crappy little mining stocks, which in a bull market they'll go 100 to 1, they can go a 1,000 to 1. I've personally own a couple that have gone a 1,000 to 1. Although, I didn't hold them all the way up. That would've been too good to be true.Joel Bowman That's a rough ride.Doug Casey They were very good to me. So, Charles in "Speculator" goes to Africa, gets involved in a bush war, and boy soldiers and all this type of thing, makes money has its stolen from by the government, but he keeps some and he becomes a drug lord. I'm trying to reform the reputations of unjustly besmirched occupations. And we talk about the drug industry, both the FDA type drugs and the DEA type drugs. And Charles gets into more trouble now developing a marvelous new drug that instead of confusing your mind, makes your mind clear. So, of course, they want to outlaw that. So, now he is put in jail, and after he gets out of jail, he becomes an assassin because he figures there are some people that just need killing. Now, I can't say that in a non-fiction book, but in a fiction book you can say whatever you want.So, that was "Assassin." And that's a very good book. That's the most recent. But "Terrorist" is going to be more daring yet, because I have a lot of viewers and opinions on terrorism, after which he becomes in the next book. He becomes a war lord, where he goes back to Africa and becomes a war lord that transforms a backward shithole country into Singapore on steroids. And there are two more books after that that get really radical. But, anyway, don't fall behind. And I urge all of our listeners to call up Amazon and get those books. You'll be glad you did.Joel Bowman Yeah, outstanding. All right. I'll include some links to all of these books and your various other outlets, websites and podcasts. Of course, Doug, it's always a pleasure to speak with you, and I look forward to enjoying another unhurried lunch when you're back down at the other end of the Americas down here at the Fin Del Mundo, on one side other of the Rio de la Plata.Doug Casey I'll see you down there in less than two months. And maybe when we do this again, say next year at this time, we can see how right or wrong I've been on these things, and whether the world still exists in anything resembling its current form.Joel Bowman Yeah. If anything it may be a "teachable moment" as the kids say horribly these days. Okay, Doug, I look forward to talking to you again. Cheers.Doug Casey Thanks, Joel. You too.Ed. Note: You can follow Doug’s YouTube channel over at Doug Casey’s Take and read his columns at International Man. Thank you for reading Bonner Private Research. This post is public so feel free to share it. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe

And now for some more Fatal Conceits…In today’s episode, we welcome serial entrepreneur, investor, author and founder and CEO of Inversor Global , Sr. Federico Tessore. Over the past two decades, Fede has built his financial research business into one of the most successful in the Spanish speaking world (don’t worry… the conversation is in English), with hundreds of thousands of readers across multiple countries up and down Latin America and in Europe. His massively popular #FedeTessoShow channel on Youtube has almost a quarter of a million subscribers, whom Fede guides through the ins and outs of investing in complex markets around the world. We sat down in person with Fede at his office here in Buenos Aires to discuss investing during hyperinflation and political uncertainty, something he knows up close and personally, as well as his excellent book, Argentine Power: How to Return to being the Richest Country in the World (Spanish language). You can find Fede’s writings here on Substack where he writes Pasaporte Inversor or follow him here on Twitter.So please, pull up a chair and enjoy our conversation with Sr. Tessore today… and don’t forget to share our show with friends in both the English and Spanish speaking worlds.Saludos!Joel BowmanHost, the Fatal Conceits PodcastThank you for reading Bonner Private Research. This post is public so feel free to share it.TRANSCRIPT:Joel BowmanWelcome back to another episode of The Fatal Conceits Podcast, dear listener, it's a show about money, markets, mobs and manias. Not necessarily and not always in that order. If you haven't already done so, please head over to our Substack page. You can find us at bonnerprivateresearch.substack.com, and there you'll find hundreds of articles on everything from high finance to lowly politics, plenty of research reports, and of course, more conversations like this under The Fatal Conceits Podcast tab at the top of the page. It's my pleasure today to welcome, in person actually, down here in Argentina's Capital of Buenos Aires, a good friend of mine, a serial entrepreneur, renowned investor, an author, a podcaster, a communicator, a man who wears many hats, Mr. Federico Tessore. Welcome to the show, mate. How are you doing?Federico TessoreThank you. Thank you, Joel. Nice to be here.Joel BowmanI thought we might start out, just for listeners who maybe are unfamiliar with your work in the English-speaking world, how it was that you got started in investment research, in opening up these businesses in multiple jurisdictions, multiple countries, as we were just speaking about off camera, and how you got to know Bill Bonner in the first place.Federico TessoreYeah, well, it's a long story but I will try to make it short and fun. When I was a kid, my father was a businessman here in Argentina and he was a very risky businessman and his businesses went up and down very, very quickly. So I grew up in a very financially unstable home. So sometimes we have two houses and we go on vacations to Punta del Este, that you know that's a very nice place here. And some other years we didn't have vacations and we only have one house and one car. So a lot of volatility in my early life. So from when I finished school, I decided to study economics and business and started to work in investments in a local brokerage firm. Then I used to work at Citibank, the local branch of Citibank, when the crisis of 2002 came here in Argentina. That was totally crazy.People lost all their savings suddenly. People have money in their banks and suddenly that money was disappeared or didn't have value. So I was there working at the local bank and it was a terrible, terrible experience. But at the same time, I discovered that there were a lot of people here in Argentina that were very successful in their businesses and they knew how to make money but they didn't know anything about investments. And the banks in general with all the research that they produced it was very difficult, very technical. So a lawyer or a small businessman, it was impossible to understand. So in 2002, I decided to leave the bank because suddenly Citibank decided to close their sector that helped Argentinians to invest abroad. I think I was 25, 26 and there I rented an office in Plaza San Martin, that you know is in downtown Buenos Aires, used to be a very nice area and I decided to help my former customers of Citibank to invest their money abroad. In the US and Europe mainly.And I launched in 2002 a newsletter by email. The email was very new at that stage, 2002. It was called Global Investor. Inversor Global, in Spanish, as a marketing tool to try to have more customers and give a better service. And in 2004, I decided to leave that business because I thought that I didn't have a very good competitive edge in comparison with banks that were returning to the country after the crisis. And I decided to create a magazine, like a print magazine, with real paper at that moment, that was sold in the Kioskos, I don't know how to say, in the streets.Joel BowmanNewsstands.Federico TessoreYeah. So with that traditional model of advertising. That was 2004 that I launched the magazine. Always with the same mission, trying to help first Argentinians to manage their money in an efficient way. I think that to try to live in Argentina and be successful it is very important to know how to manage your money. Maybe if you live in the US or in Europe, maybe you can have a chance without being so good at managing your money, but here it is like life or death. So the magazine started to grow, we started to make education courses all over the country, but the business was average. It was not a good business. And in 2008 Will Bonner, Bill's son, started to live here in Buenos Aires for a couple of years I think, and he discovered my magazine in the newsstands. And he called me, “Hey, hello, how are you? I have a company in the US that makes more or less the same. What do you think if we talk?” And eventually we tried to do business.I remember that Will told me that they have been trying to make business here in Argentina for a while and it was very difficult for them. So he thought that it was a good idea to think about a partnership between the two of us. It was before the crisis of 2008. So then the global crisis came and our plans to try to partner went away. But I remember that I visited Baltimore in 2009, I think, and Bill invited me and I started to discover what Agora was at the moment. I didn't understand very well the difference between a traditional publishing company and a publishing company as Agora is, and started to understand the model that Bill created. And I was totally surprised. At the moment there was nothing like Agora in Latin America. I was the only one that was trying to do something similar. So I learned a lot about the business with Bill and all the stuff and finally in 2012 we reached an agreement.I had partners in the past, so it was like a mess to try to figure out all the ideas. But in 2012, we started to work together with Agora with Bill, and with the main goal of not only making the company grow in Argentina, but also in all the Spanish speaking world, which is huge. Spain and all Latin America. So then I moved to Miami to try to be near Delray Beach, where Agora had a big office at that moment and I started to learn the business and we started to grow. We used to have, before the pandemic, offices in Miami, in Madrid and in Chile. Now we have our main office in Buenos Aires, here and we have people working all over the continent, but we have more than 150,000 customers all over the Spanish speaking world. And the business is growing fast.I think that Latin Americans are having the necessity more and more of understanding how to manage their money and all the internet and the globalization gave Latin Americans more tools to try to invest their money in a more professional way. So that's more or less a quick story of how we started and I knew Bill.Joel BowmanYeah, it's very interesting too because, it's not like you began these businesses in say Singapore or Hong Kong or some jurisdiction in the United States that was very business friendly. Argentina, if it's known for anything, on the business front or the economic or the political front is, uncertainty, huge inflation. Before we get into all that, I want to just put your book up here. This is essentially how Argentina got to where we are right now.Federico TessoreAbsolutely.Joel BowmanFacing political uncertainties, civil unrest potentially, maybe some opportunities, but you're explaining it to me just before, Argentine Power, how the 70 year journey basically took Argentina from one of the richest countries in the world to where we are now. Do you want to fill us in a little background there?Federico TessoreYeah, What I tried to do in that book is to try to analyze why Argentina in 1950 was one of the most powerful countries in the world or one of the most economic powers in the world. There are different statistics, but there are some statistics that show that Argentina was even more, how do you say, richer than the US in I think it's 1947, 1948. There are some other statistics that say that it was number three or number four, but it was top five for a while and it was top 10 for more than 15 years. And what I tried to do is try to pick some countries that in 1950 were poorer than Argentina. I compare Argentina with Chile, a country that is here in the neighborhood, but also with Norway, Ireland and Germany that were in 1950, poorer than Argentina, and also China and South Korea.And I started to analyze how those countries started to grow and how Argentina started to go down. So each country has their own rules or their own particular facts. But in general, I think that the main difference is whether the country is organized in a manner that they want to produce services and goods or not. In 1950, Argentina was rich and the main problem was that they say that only 20% of the people were rich and 80% of the people were poor. So they started to try to share all the wealth with all the people, but this automatically meant that it was impossible to have a company because taxes go up, regulations go up. It was like a socialist economy. Now we are in a socialist economy in Argentina. If you have money in the bank, you can't send that money to another country.You can't do whatever, the level of freedom that we have in Argentina, if you are in the formal system, it's very low in comparison with the US or with our countries. So having a company in Argentina and trying to export, for example, if you sell soy in Argentina, that is one of our main products, you have to pay taxes because you export, only for the export. And it's crazy. So there are so many restrictions, so many taxes, and there are a lot of people that live very well without working and without producing anything that makes sense. I think that we have 6 million people that work in Argentina for a real job, but we have 14 million people that live without working, between handouts and...Joel BowmanIt’s just welfare or...?Federico TessoreWelfare, yeah. Public labor. You go to a public office and it's full of people doing nothing. And there are some provinces, some states here in Argentina that 50% or 60% of the employment is from the government, from the local government. So the country and the economy is not willing to produce more and better. The only idea it's that this world is zero-sum game. Joel BowmanIf you have money, it’s because you took it from someine. Yeah.Federico TessoreIt's the only possibility. So when that's the mindset, I think that's the main problem in Argentina and in many countries now, but we are the “best” ones I think, in that.Joel BowmanIt's a dubious honor to be sure.Federico TessoreYeah, yeah. So it's like a battle. Everything is a battle, I don't have money because you have money and I don't have money because you are going to Miami and when you go to Miami you go to expensive restaurants and you buy an iPhone. So that's why I can't send my kids to school or that's why I can't eat. So I think that's the main problem that we have in Argentina and we can't get out of. Peron, he was the founder of this system, was so good at persuading people that this was true, that until now, 70 years afterwards, we can't go out of that trap.Joel BowmanIt seems very much like an ideological mentality.Federico Tessore100%.Joel BowmanHow does it make you feel when you see, for example, usually around election times in the United States for example, where a good deal of our readers and listeners are from, people espousing some of the exact same ideas that have brought Argentina from up here down to here, this idea of that the world is a zero-sum game, rooted very much in Marxist ideology that there's a power hierarchy and the only way that you're getting things is because you've deprived me of them, hugely progressive tax rates, eat the rich, that whole kinds of thing. You must just be extremely frustrated when you see that it hasn't worked here and yet people espouse it there...Federico TessoreAbsolutely. No, it's incredible. It's incredible that they don't see the experiences of countries like Argentina and many other countries in the world that tried the same path. And the problem is that you want to solve a problem and when you try to solve the problem, you destroy the things that are okay. So it doesn't make sense. On the other hand, I understand that through social media, there are a lot of people that are influenced by social media and by words, five words. So it's very easy to reach people with this idea of fighting, having enemies, of having very simple enemies. So I understand that with social media and all this globalization, having an easy enemy, it pays out because maybe you can win elections with this speech.Joel BowmanPolitical marketing slogans.Federico TessoreYeah, so it's a big problem. I don't know how to solve it for me, the US has some protections that maybe it helps the US not to go through the same process like the country of Argentina. One of the big problems that I think Argentina has and Brazil does not, is that businessmen and people that know how the system works, at one stage they decided to close their mouths. And they didn't fight for these ideas and they didn't go to the TV or to the social media or whatever, and they didn't take the time to try to explain why those ideas generate poor people all over the country. In Brazil, it's different. For example, Brazil has a very powerful business environment where the business people, they are not afraid of speaking out and telling the people that if you go to a 60 or 70% tax rate, companies are not going to work and you are not going to have employment and salaries are going to go away.So I think that, you are going to have the fight and we see that fight in the US and in many countries in Europe, but you need that some people, maybe in spite of being a small percentage, they need to speak out and they need to fight and to try to put a limit. So that's why I think that maybe countries like the US, where you have a lot of business people with an entrepreneurial mindset, maybe you can try to mitigate that problem, but you never know.Joel BowmanI guess one of the litmus tests will be the midterm elections this year in the US, which are obviously very contentious. But I'm wondering just as far as practical advice for people who are in the US or who are in the UK. I was just in London a couple of months ago and right there at the front of every tube station on the front page of every newspaper is 11, 12% inflation, which I know here would be a dream here. But I presume it was 7% inflation and 17% inflation here before it was 70% inflation. So if these people are now just maybe looking down the barrel of that sometime in the future, what advice do you have as far as investments, as far as starting companies, as far as being the kind of entrepreneurs that have a platform to speak out against the mission creep of socialism?Federico TessoreYeah, I think that you have to, first, you don't have to trust the government and you don't have to trust the banks and you don't have to trust your local currency. I think that in Argentina we already know that we don't trust our banks, we don't trust our currency and we don't trust the government. But sometimes when I speak with people from developed countries, they don't even think about that. Say, oh, my money is in my bank so it's safe, I have dollars, I have Euros, or I have whatever and I'm safe. So the first thing that I would say is that, be careful because that which was safe for many decades, maybe in a couple of years is no longer safe. As a matter of fact, if you have dollars and you didn't invest in the last year, you lost 9, 10% of the purchasing power.So the first thing I would say is that you have to be a little bit of a rebel to try to survive. That's why in Argentina and countries like Argentina, cryptocurrencies are so popular because we value a lot this decentralized future. The issue, the possibility of not trusting a centralized entity in order to have more safety. So I would say that, that's one of the main changes that maybe people in the US and Europe have to do. The other thing is to diversify. Since I created my business, I tried not to have all my customers in Argentina. We have customers all over Latin America and Spain. So that gives you an edge, because if Argentina and Chile, for example, are doing bad, maybe Spain or Mexico are doing better. So in my case, I have a more stable company that can balance the sales and revenues, that's the other thing.And then real assets. I'm not inventing anything, but I think that real assets, even real estate in Argentina, well the last couple of years real estate went up, but the economy went up much, much more than real estate. So even real estate in countries like Argentina can protect you against inflation and against economic mess in there. So I think that's a good idea, a good set of tools that you can use to try to survive.Joel BowmanAnd I'm wondering, you mentioned working in the bank before in 2002, I'm wondering just as a real time experience as far as a warning for people who are perhaps listening to us sitting here, where there is huge inflation and where people don't trust the banks, they don't trust the government, they don't trust their politicians. I'm wondering if there are some signposts along the way, where people can say, when that happens, we're on the road to ruin. I'm wondering if you could talk us through, for example, what happened in 2002 just as a cautionary tale for people who think, “Well that happens in Argentina. It can't possibly happen in wherever I am... in Germany or the UK or the US.Federico TessoreWell, in the case of Argentina, during the nineties, Argentina, the local currency was backed to the dollar. So one Argentina peso represented one dollar. So there were a lot of people who deposited Argentinian pesos in the banks, and they thought those Argentinian pesos represented one dollar. So for example, they put in a savings account $10,000 pesos, and they thought they were $10,000. And at the same time, there were a lot of people that were buying houses with borrowing dollars. So they bought a house here in Buenos Aires and they were owing $100,000. Suddenly the economy collapsed. Why? Because the deficit was huge and suddenly nobody started to lend to Argentina, as a country. In the past, we used to pay that fiscal deficit with debt from abroad, the US and Europe. And suddenly the debtors from outside decided not to loan more money to Argentina. So they decided to destroy that pact, where “one peso, one dollar,” disappeared. And suddenly one peso was, I don't know, was three to one or four to one.Joel BowmanAnd this happened overnight? Or Did this happen...Federico TessoreOvernight.Joel BowmanWow.Federico TessoreThat's the problem.Joel BowmanSo they woke up. So depositors woke up one night, they thought they had $10,000 equivalent, and then they discover that when they go to the ATM in the morning, if it's not a bank holiday, that although they still have 10,000 pesos, it's only worth $3,000 or $2,000.Federico TessoreAnd not only that, they couldn't take that money out of the bank because the problem was that Argentina didn't have dollars. The reserves went out, disappeared, from paying all these fiscal deficits that the government had. So you only could take the equivalent of $200 per week. So it was totally messed up. Many people were crying. I was in the bank, in the branch and on the streets, and people were hysterical. The streets were full of police. People thought that I was stealing the money. I was an employee of the bank, but people were angry against the banks and it was impossible to take the money. One of the alerts that the people had before this happened was huge government fiscal deficits, huge money printing, many things.Joel BowmanI was going to say, this is like a checklist of things that are happening in both Europe and in the United States right now, when you were talking about foreign creditors cutting Argentina off from the punch ball, the proverbial punch ball, so to speak. We see obviously what's happening around the world today on the geopolitical stage where countries that have witnessed the weaponization of the US dollar against the state of Russia, for example, are saying, well actually maybe our dollar reserves aren't so safe after all, maybe we don't want to show up at the next bond auction. Maybe we don't want to extend any more credit here. Then there are large and persistent fiscal deficits, money printing.Federico TessoreHuge. And the other part that was a big alert, I think that you don't have this situation in the US and Europe yet, is banks start to pay a lot of money to try to convince the people to lend the money in the bank. So suddenly the inflation was, I don't know, 5% at that moment, and they started to offer 15, 20% trying to convince people to leave the money in their banks. And suddenly people were convinced and they left the money in the banks, but suddenly they didn't have the money. And from one day to the other, they make this big announcement and the money disappeared. So I think that those are some of the factors that you need to take into account.Joel BowmanYeah, it's interesting too that you mentioned before about financial literacy, or an investment literacy, and this obviously is something that had an impression on you when you were young, seeing these things. We see people on the street, for example, they may be 70 years old, they had saved for retirement and they would've been in their fifties when their retirement savings got cut by three quarters or what have you.Federico TessoreLet me add something, Joel, regarding the United States situation when the big crisis can explode. There's another item that happened in 2002 in Argentina that I think was very important: the political factor. I think that the economy can be a mess, but if people trust the economy, if people trust the currency, it can be a mess for many years, maybe decades, but suddenly when there a big political fight in Argentina, which normally happens when the President fights with the Vice President and the Vice President leaves the government and there's a coalition and then coalitions disappear...That big political crisis combined with a big imbalance in all the other corners, with the fiscal deficit and all that mess, that provokes the inflation. I think that if you have big economic problems, but you don't have the political problems, maybe you can get along. But if you have the political problem with the economical problem, and when I see the US and the mess with Trump, and when Trump decided to fight when he lost the election a couple of years ago, I don't remember, one year and a half ago, I'm afraid about that because, trust can be lost very, very, very quickly. And it felt that when that happens, it's impossible to stop it.Joel BowmanI think from both sides it seems too. Obviously you've spent a lot of time in the US and my wife has family in the US so we usually spend a month or two there every year. And I don't think, in my having visited the country for 20 odd years, this last visit, this summer, I said to my wife, I don't think I've seen the country as divided as it has been. So this is perhaps another warning sign along the road. Okay, Fede, we're bumping up against our half hour mark here for today's show, but for our readers, listeners and viewers who maybe want to get a bit more of your insight, they want to follow you. I know, I just checked you've up to almost a quarter of a million followers on your Fede Tesso show, so readers should check that out on YouTube. But where else can we find your work?Federico TessoreI have a newsletter in Substack also, by my name or Pasaporte Inversor, it’s like Investor Passport, where I speak about investments in Argentina and all over the world. And the social media, Twitter and Instagram, all the social media. (See Below…)Joel BowmanExcellent. All right. I'm going to put links to all this stuff down below and Fede, just before we say goodbye here, despite all of the, we've painted kind of a negative picture here, but you are a man who has opened businesses all around Latin America, over in Spain, as you were mentioning, any opportunities for American or European investors that are sifting through the markets down here in Latin America that have piqued your interest of late?Federico TessoreYeah, well, I have been very negative about Argentina for many, many years, but now I'm changing. I think that it's a huge opportunity here in Argentina, regarding real estate and stocks. If you compare the value of the Argentina stocks, not with American or Arabian companies, but if you compare banks, the value of banks in Argentina with the value of banks in Chile or Brazil or Colombia, the price of Argentina’s banks it's like 25% of a similar bank in another Latin American country. Makes sense because actually the currency, sorry, the country is a mess. But I think that next year we have elections here in Argentina and it'll be very difficult not to have a very big change in the political landscape. And I think that a more market friendly government is going to come. I'm not saying that Argentina is going to transform suddenly into Switzerland.But I think that we can be a more Latin American country. So if that happens, if the government changes, I think that stocks are going to go up very, very quickly. And also real estate, I think that real estate in Buenos Aires, for example, lost 30% of the value during the last few years. And at that moment, real estate in the US increased 100% or 150% in some. So the differential, I think that is big. So I think that you might have a good opportunity, it's not a short-term opportunity because I think that this increasing prices could happen at the end of next year or at the beginning of 2024, but I think that you have a period of time for the next six months, 10 months, that there are going to be a great opportunities in Argentina. And also living in Argentina well, it's very nice and now it's very cheap, so you can eat and drink very well for a very few dollars. So it's a good idea to have some time here in Buenos Aires.Joel BowmanAll right, well we're going to track those opportunities down here with you, Fede for the next couple of months, couple years. The elections here, I think are next October, November?Federico TessoreIn October of 2023. And the President starts the term in December, but it's October, yeah.Joel BowmanOkay, well let's follow that along. I'd love to have you back on the show. We'll keep up to date with how we're going here and tune in again please, and go and check out our Substack, bonnerprivateresearch.substack.com. We'll have Fede on again as soon as we can, and tune in again next week. Thanks very much.Thank you for reading Bonner Private Research. This post is public so feel free to share it.Follow Federico Tessore Here:Substack: Twitter: https://twitter.com/fedetessoYouTube: https://www.youtube.com/c/FedericoTessoreShowBuy His Book, Argentina Power: https://www.amazon.com/-/es/Federico-Tessore-ebook/dp/B08YGM7VRT This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.bonnerprivateresearch.com/subscribe