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Joe Rogan Experience #1145 - Peter Schiff

Peter Schiff is an American businessman, investment broker, author and financial commentator. Schiff is CEO and chief global strategist of Euro Pacific Capital Inc. He also hosts his own podcast called “The Peter Schiff Podcast” available on iTunes and at SchiffRadio.com

Joe RoganhostPeter Schiffguest
Jul 17, 20182h 46mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:03 – 2:48

    Occupy Wall Street throwback: debating the “1%” and converting socialists

    1. JR

      The countdown.

    2. PS

      Just make it short. So you just-

    3. JR

      Three, two, one. (snaps fingers) Hello, Peter Schiff.

    4. PS

      Hello, Joe Rogan.

    5. JR

      So you just what? Were you gonna, were you gonna ask?

    6. PS

      (laughs) No, you just did a whole other show before this one.

    7. JR

      Yeah, I did.

    8. PS

      Three hours?

    9. JR

      No, two hours.

    10. PS

      Oh, all right, so-

    11. JR

      It wasn't that hard.

    12. PS

      Oh, okay, well-

    13. JR

      It was with a comedian. Those are the easy ones.

    14. PS

      Oh, all right.

    15. JR

      They're just, it's just basically talking to a friend.

    16. PS

      Okay. Well, I'm a friend.

    17. JR

      You are a friend.

    18. PS

      That's right.

    19. JR

      Yeah. Uh, I remember when I first saw you, when you were doing that Occu- well, well, is Occupy Wall Street a thing anymore?

    20. PS

      You-

    21. JR

      Did they give up? They stop occupying?

    22. PS

      Yeah, they did. But you know, we just f- maybe you sh- saw that on my YouTube channel. I know we just reposted the Occupy Wall Street video. I never actually had it on my channel.

    23. JR

      Oh, really?

    24. PS

      But, 'cause it was originally done by Reason.

    25. JR

      Oh.

    26. PS

      And this was about five years ago or so.

    27. JR

      Yeah.

    28. PS

      Five, six years ago. And so Reason TV did it, and so I let them promote it on their site. I didn't copy it. And they got millions and millions of views, and there were some other, uh, sites that, that, that went with it.

    29. JR

      It was Ask a One-Percenter, right? Wasn't that what you called it?

    30. PS

      Well, I w- I went down-

  2. 2:48 – 8:09

    Why socialism sells: emotional blame, “redistribution,” and misunderstandings about wealth

    1. JR

      (smacks lips) Yeah, well, it was enlightening. It's, it was, it was good, it's good the peop- to see people that are so involved in something that they'll go and they'll protest, they'll hang out in the park, but they really can't articulate their feelings or their thoughts in a, a well-reasoned debate. They really don't have the facts, but yet they're dedicating their entire life to protesting something. It's really interesting that people will spend so much energy and effort on something that they're really not even educated in.

    2. PS

      Yeah, and it's a lot easier just to talk about something just emotionally-

    3. JR

      Yes.

    4. PS

      ... instead of actually taking the time to learn about economics and to understand, you know, the, the source of the problems. 'Cause anybody can just blame it on some rich person who's hoarding money and discriminating against them.

    5. JR

      People love that. They love doing that.

    6. PS

      Yeah. And then just say, "Oh, the solution ..." See, if you blame the problems on some rich person, well the solution is easy. Just take his money, right? Have the government come in-

    7. JR

      Right.

    8. PS

      ... and, and redistribute the wealth, wh- wh- which is another word for steal. Take money from somebody who earned it and give it to somebody who didn't. But if you actually take a little bit of time and use your head instead of your, your, your, your, y- your heart, your feelings, uh, you'll learn that, you know, that the, the, the source of the problems is government interference in, in, in the, in the economy, and that the protests should be directed at government, at their regulations and their subsidies and their taxes and all the things that government does to stifle economic growth and deny opportunities to people.

    9. JR

      D- w- I, I think there would be a really funny documentary, if you could do, like, a documentary on the last occupier. Like, the last person to occupy Wall Street, 'cause it, they had to be, like, stragglers, right?

    10. PS

      (laughs)

    11. JR

      It, it eventually must have gotten to the point-

    12. PS

      Yeah.

    13. JR

      ... where there was, like, 30 people left-

    14. PS

      (laughs)

    15. JR

      ... 20 people left, then one guy, "No, fuck these people, man."

    16. PS

      Well, y- you know, they started occupying different areas, right? 'Cause it caught on and it was all over the world. They were occupying here and occupying there.

    17. JR

      And they were setting up camps, right? They were essentially living there.

    18. PS

      Yeah, yeah. And, um, who knows what else they were doing there. But, um, but now the Occupy mor- uh, movement kind of morphed into the Bernie Sanders movement, right? 'Cause that's where all those guys are now. They were volunteering for the Sanders campaign. And, and socialism is really kind of going mainstream now, because they put the word Democrat in front of it-

    19. JR

      Yes.

    20. PS

      ... as if somehow that changes the meaning, right? "Well, I'm not a socialist. I'm a democratic socialist," meaning, "I want to vote for socialism, as opposed to just have, you know, an armed revolution." But the end is still the same, right? It's still socialism, and it's, it doesn't work.

    21. JR

      Yeah, I was watching an interview with Tucker Carlson-

    22. PS

      Yeah.

    23. JR

      ... and some guy who's a professor at Harvard, and, uh, he said, "I'll give you the last word." The guy said, "Socialism's gonna win."

    24. PS

      (laughs)

    25. JR

      He, he made the piece. I'm like, "What is that?"

    26. PS

      Mm-hmm.

    27. JR

      What does that even mean?

    28. PS

      Yeah.

    29. JR

      Like, "Socialism is going to win."

    30. PS

      Well-

  3. 8:09 – 10:00

    Defining socialism, fascism, and why ‘democratic socialism’ still worries Schiff

    1. JR

      Have you ever had a debate with a Democratic Socialist?

    2. PS

      Well, I mean, m- most Democrats are socialists, they just don't know it, or they don't want to admit it. Uh, and a lot of people don't even understand what socialism is. Because, you know, you'll have... The left, they'll always consider somebody, like even Donald Trump, they'll say, "Oh, he's a fascist," right? They don't even realize that fascism is part of socialism. Socialism is a broad concept that includes things like communism and fascism. So, if you're a communist, you are a socialist. But by... But it doesn't mean that if you're a socialist, you're a communist, because you could be a fascist. You could be for a lot of things. But fascism is a form of socialism where the government doesn't just steal all the property, like the communists want to nationalize everything and take legal ownership of the means of production, right? The government just owns all the capital. Under, under fascism, the government is a little bit smarter. They, they realize that people will work harder if they think they're working for themselves. So, the fascist doesn't want to nationalize businesses, they just want to control it through regulation and taxes. And that's pretty much what the Democrats want to do. They want to control everything by taxing it heavily and regulating it, and those, that's an important aspect of fascists. I mean, a lot of people associate fascism with racism, just because the Nazis were, were racist, but you don't have to be racist. I mean, fascism started in Italy, and that... There, there wasn't any racism there. And if you go back to, uh, the Nazi Party, it's the National Socialist Party of Germany. That's what the Nazis are. It's socialist. So fascism is a form of socialism. That's why the communists and the fascists, you know, argue so much, because they're really, they're fighting over the same turf. It's which brand of socialism is better, fascism or communism? But they're not at opposite ends of the political spectrum, they're on the same end.

  4. 10:00 – 14:55

    Trump’s election as anti-establishment signal—and Schiff’s recession prediction

    1. JR

      So, do you think that people are frustrated with the current system, and so they see someone like Bernie Sanders come along that offers this radical change of pace? He's saying, "You know, uh, we need to end income inequality and redistribute wealth," and all these different things, and it just sparks a, a, an emotional reaction in people that they know that the current system, the way it's in place, especially the way it was under Obama, they didn't like how things were, they didn't like how things were under Bush. They think, "We need someone who's not a career politician, or someone who has got a radical new approach. Oh, look at this Bernie Sanders guy, he wants to do some stuff with money. Let's, let's vote for him."

    2. PS

      Yeah. Look, people, you know, are grasping for straws when they're looking for a solution. That... Look, that's why Trump is president. I mean, a lot of people think that Trump's election maybe shows that the ec- the US electorate has moved right, right? That we're more Republican or more free market, but that's not what that election was about. It was about the fact that we had a lousy economy and Trump was honest about that to the voters. Trump told people that, "The numbers are phony. Don't believe these unemployment numbers, 4-5%. It's a lie. It's fraud. It's fiction." And he was right, because the way they calculate it today, they don't calculate that millions and millions of people who have given up looking for work, right? They don't count the people who just have a part-time job and they're still looking for a full-time job. So, the real unemployment number is much, much higher and, and Trump talked about that and, and he called out, you know, all the politicians from both sides, right? Not just the Democrats, the Republicans. And he said, "Look, I'm gonna clean house. I'm not a politician. Vote for me," right? "I'm gonna make America great again. I'm gonna drain the swamp." You know, and he appealed to people's, uh, you know, their, their, their fears about immigrants. "I'm gonna build this wall," as if the reason that things are bad is because we have too many immigrants taking away the jobs. And so people decided, "You know what? What the hell? Let me, let me give this guy a chance, because things are bad. The media's lying to me. Wall Street's lying to me." And so, you know, Trump, Trump won. But unfortunately, now Trump is part of the establishment, uh, and now all of a sudden the fake-... economic numbers are legit. Now, every time there's an unemployment number out, he tweets about how it's the lowest it's ever been. So, I, I think that when we get this next recession, which is going to happen while Trump is president, during, during this first term, which I think will be the only term. But when all the-

    3. JR

      Really? Why do you think those two things?

    4. PS

      Well, because I think the economy is going to fall into a severe recession.

    5. JR

      What makes you say that?

    6. PS

      Well, A, you know, it's, we're overdue, right? I mean, you don't normally have an expansion that lasts as long as this one. I think we're, we're the second-longest in history, and if, if we go for another year, it'll be the longest expansion in history.

    7. JR

      So 2008 is when it started to turn around, or '9?

    8. PS

      2009.

    9. JR

      2009.

    10. PS

      Yeah, kind of the end of 2009.

    11. JR

      So we're nine years in now?

    12. PS

      Yeah, exactly.

    13. JR

      And what is a usual expansion and compression?

    14. PS

      I don't know, five, six years?

    15. JR

      So, hmm. Interesting.

    16. PS

      So this one is long, but also, this one required more government stimulus than any other, you know, uh, uh, recovery. And I don't think we actually recovered. I think the government simply, you know, injected a, a bunch of cheap money into the economy and exacerbated the real problems, but, you know, reflated the bubbles in the stock market and, and the housing market. But, you know, everybody talks about how the economy is doing so great, but it's really not much better than it was under Obama, if it's any better at all. And we've... GDP growth for Trump's, uh, first year in office, last year, was 2.3%. That mean nothing great. First quarter was 2%. Um, this quarter might be better than three, maybe, maybe not, but, I mean, I think it's gonna be... The second quarter will probably be, uh, the best quarter of the year. Maybe we're probably gonna go downhill. But, you know, last year was, I think, the, the weakest year of job growth since 2011. So people wanna talk about how great everything is, but it's more a function of people are hoping things are gonna turn around. There's a lot of optimism now that things are gonna get better. But I think that the people who are so optimistic, a lot of them are gonna be disappointed, because what we're gonna end up with is a weaker economy. The only thing that's really strengthening is inflation. Uh, inflation is gonna pick up, so the cost of living is really gonna be rising as the economy is falling into recession, so we get stagflation, uh, which is probably the worst possible, uh, economic scenario. And, you know, I think that the, uh, the left, and even the Fed, is gonna be able to blame it on Trump, because Trump has come in and, you know, claimed credit for this great economy that he believes we have, and he's claimed credit for the record in the stock market. But he's basically put his name on a bubble, and when it pops, you know, it's gonna be hard for him to try to blame the next recession on Obama when he's already said, "Hey this is my economy. I created it." And so people are gonna be disappointed, and they're gonna vote, I think, for, uh, s- another person whose promises change. And unfortunately, that's gonna come from the left.

    17. JR

      So you think this is gonna happen within the next three years?

    18. PS

      Well, yeah. I mean, you know-

  5. 14:55 – 24:23

    Tax cuts, exploding deficits, and ‘treating symptoms’ like trade deficits with tariffs

    1. JR

      Well, when is, what is the bubble? Like, what, what do you think is gonna cause it to crash? Commercial real estate? Is it credit? What is it?

    2. PS

      Well, I mean, commercial real estate is expensive, meaning it's in a bubble, but that, you know, that's not gonna cause it. I mean, air's gonna come out of the bubble. I think we would already be in a pretty severe recession now had it not been for Trump winning. Had Hillary won, I think we would already be there. But I think the-

    3. JR

      What makes you say that?

    4. PS

      Well, we got a lot of false optimism as a result of, of Trump, and we did get the tax cuts. And the tax cuts, you know, just like, you know, any kinda artificial drug, you know, you can inject yourself and, and, and get a little bit of a phony high. Uh, because remember, the tax cuts were paid for, uh, with debt. We didn't shrink government, right? If you, if you make government smaller, that's great. Then you can cut taxes, 'cause now government doesn't need as much money, and you can, you know, you can relieve the taxpayer of the burden of paying for it, and that's great. But if you just cut taxes but you don't cut government spending, and of course what the Trump administration did was the, was even worse. They increased government spending. We increased welfare spending. We inf- increased warfare spending. Uh, and so spending is more, but they reduced their tax revenue, so the deficits are just exploding outta control. And those deficits are gonna do l- more damage to the economy than the tax cuts or benefit, except you get the benefit first, maybe for the first year, and then you start to deal with the pain after that. And so I think that's gonna set in, uh, you know, long before the end of Trump's term.

    5. JR

      So you think that th- this is what is causing the economy to be in a really, uh, at least, uh, to, to look like it's in a really healthy state right now?

    6. PS

      Well, some of the numbers, right? Some of the numbers look better. Um, but beneath the surface, again, it's not improving, just like, just like it wasn't improving under Obama. That's what laid the foundation for Trump's victory, was because Obama and everybody kept talking about how great the recovery was. But the average voter knew that that was all a bunch of nonsense because he wasn't living in, in, in that reality.

    7. JR

      So if you were the financial advisor to the president, what would you tell him?

    8. PS

      (laughs)

    9. JR

      Well, how would you... (laughs) You're laughing now. What would you do to try to keep the economy moving in the same direction? Is it possible to ward off-

    10. PS

      Well-

    11. JR

      ... any kind of a crash right now?

    12. PS

      We don't wanna keep it moving in the same direction. I mean, it's in the same direction it was going in before Trump came in, and that's towards the edge of a cliff. I mean, so what we do, we need is, is, is an about-face. And Trump is not doing that. I mean, the-

    13. JR

      An about-face, what's, so like for the people that are listening to this that don't understand, like they, they're saying, "Okay, the economy's supposed to be doing well. Uh, black unemployment's the lowest it's ever been. Un- unemployment is down. Uh, all these jobs have been created."

    14. PS

      Yeah, well remember, again, the unemployment rate is mainly down because so many people that are unemployed are no longer counted as part of the statistics. So, you know, that, that's... If you look at the labor force participation rate, near a record low. I mean, certainly for men, uh, it's the lowest it's been in the history of the republic. Um, but, and look at the, you know, workers to population, so fewer and fewer people are actually working, and more and more of the people who aren't working are not included in the unemployment statistic. So if you backed all those people in, right, able-bodied people who don't have jobs but should be working, then the unemployment rate is much, much higher.

    15. JR

      Hm.

    16. PS

      So that, that doesn't really paint a good picture. And then, you know, you look at the fact that so many Americans are s- unqualified, right? There's a lot of jobs out there that go unfilled because American workers aren't qualified to fill those positions because, you know, we, we take a lot of our kids and we keep them in high school until they're 18, 19 years old. Many of these kids should, uh-... drop out of high school and learn a trade. I mean, a lot of people, you know, they don't have the aptitude for, you know, academics. There's no point in just being in high school. A lot of times, they're glorified, uh, daycare centers. But they should be out learning trades, and of course, we make it harder for employers to train people on the job with occupational licensing laws and minimum wage laws, so we destroy a lot of the opportunities for younger kids to get skills. And then, the ones that we send to college, they waste their time, you know, majoring in liberal arts, so they spend four, five, six years in college, learning nothing of any real value in the market. They accumulate a massive amount of debt in the process, and so, you know, we have a labor force that's highly educated in that they've got a bunch of degrees, maybe they didn't learn anything, but they got a piece of paper, but then what they have is a lot of debt. And so we don't have a lot of people qualified to do a lot of the things that need to be done.

    17. JR

      So, what would you tell the president? If you were, if you, he said, "Look, Peter Schiff, uh, I don't know shit about the economy."

    18. PS

      Right.

    19. JR

      "You obviously do." Help me out. How, how do we stop this bubble?

    20. PS

      Well, I, you know, first of all, you can't stop it, you gotta let it deflate. But the question is, how does it deflate, and then what do you propose is the solution? See, the problem that Trump already made, was when he first got elected, he should not have changed, uh, his perspective. He shouldn't have said, "Hey, everything is great." Right now, he's planning on running ... his next campaign is Keep America Great, right? When Trump ran for office, he said America was in economic wasteland, that it was a disaster. He's been president for a little over a year, all of a sudden it's the greatest economy in the history of the country, which is not even close to being true. But if he's gonna try to run for re-election on, I've already made America great, and now we just wanna keep it great, that's not gonna resonate. So what he should have done from day one is leveled with the American public, again, this is how bad the problem is, and this is what it's gonna take to solve it. Because there's a lot of, you know, um, uh, pain, short-term pain that we're gonna need to go through in order to come to the other side, in order to get rid of all these problems. Like, right now, look at the trade, right? Trump is making a big deal about the trade deficits and he's launching tariffs and he's gonna have this trade war that he's convinced that we could win, and this is very misguided. The trade deficits are not the problem. They are the consequence of the problem. The problem is that we have bad monetary policy, bad fiscal policy, too much regulation. That's why we have a trade deficit, because the American industry is not productive enough. We don't save enough, we don't make the right capital investment. That's because interest rates have been kept too low. You know, our tax code, uh, favors debt, you know, and we have a lot of regulations that make American businesses less competitive. And so the result is that we import a lot of products rather than making them ourselves. And it's not because the other countries aren't fair, or because they have tariffs. Tariffs are very low around the world. I mean, there's, tariffs are not the problem. And so if Trump is simply gonna erect tariffs, all that's gonna do is tax the American public, 'cause the American public has to pay the tariffs whenever they buy imported products. So this is not going to, um, gonna turn the economy around. But, you know, and Trump is right, he points out that, well, you know, at one point in time America ran on tariffs. Which is true. (clears throat) During the 19th century, the government, you know, raised money pre- predominantly by tariffs. But we didn't have an income tax, you know? And so, it, this is the irony of it. The reason we have an income tax today is because the populist politicians of the day told the American voter, "If we can tax the rich with an income tax, then we can get rid of tariffs that the average person is paying." So the average person understood that tariffs cost them money, and the politicians said let's get rid of these tariffs and let's just tax the rich. And the income tax that was originally proposed really was a tax on the very rich. I mean, even doctors and lawyers didn't pay it. I mean, you had to be super rich before you paid the tax, and then it was like, you know, 1% to 4%, so it was a small tax, and it, and it wasn't taken from your paycheck, right? I mean, first of all if you, if you, if you got a paycheck you didn't pay the tax, but we didn't have withholding until 1943. That was part of the, the victory tax to pay for the Second World War. But Americans were told, "Let's tax the rich, and you won't have to, uh, pay tariffs anymore." Well, uh, s- the minute the, you know, the government got the nose under the tent, right, all of a sudden now the income tax affects everybody, right? People pay a lot more in income taxes today than they used to pay in tariffs. But now, now the president wants to bring the tariffs back on top of the income tax. I mean, if Trump wants to repeal the income tax and get rid of it entirely, and then have some tariffs, I'd be okay with that. But you can't do that unless you dramatically shrink the size of government, which is the most important thing that Trump needs to do, but what he's not doing. He has to make the military smaller, not bigger. I mean, he's talking about a Space Force. I mean, we, we can't even afford the Air Force, Navy, Marines that we got now. We don't have any money for a Space Force. But we have to cut everything. We gotta cut entitlements, right? He-

    21. JR

      But don't you think we should be the first people to have a Space Force?

    22. PS

      (laughs)

    23. JR

      What if the Russians come up with a space force?

    24. PS

      Yeah. No one's gonna come up with a ...

    25. JR

      They're outta, outta luck.

    26. PS

      What are, what are they, what are they gonna do with a Space Force? Who we, who we gonna fight in space?

    27. JR

      Maybe we fight the Russians in space.

    28. PS

      We won't ... well, why would we fight 'em in space? They're down on Earth.

    29. JR

      Well, maybe they wanna fight in space. It's more novel.

    30. PS

      (laughs) Yeah, I don't think, I don't think anybody wants to fight.

  6. 24:23 – 33:20

    Letting the bubble deflate: higher rates, more saving, less debt—and asset price pain

    1. JR

      So when, when you say let the bubble crash, like, what ... what would that entail?

    2. PS

      Well basically, look. The problem, the basic problems with the US economy, and this is because of monetary policy and fiscal policy, is we don't save anything, right? And because we don't save enough, we don't invest enough, we don't produce enough, we don't make enough real things, right? I mean, when Trump wants to say that foreigners are taking advantage of us by running these huge trade surpluses...... he's got it backwards. We're taking advantage of them. The, like, the Chinese are sending us all these products that they worked hard to produce, (can clicks) and they had to use real resources, land, labor, capital, to make these products. And they send them here, and what do we give them? We give them IOUs. We give them a piece of paper, and they buy our Treasury bonds. So in the short run, Americans are just putting everything on a credit card, right? We're living a higher standard of living because we can consume what we didn't make. But when you do that, you become poorer. See, America used to be the richest creditor nation in the world, right? The world owed us a lot of money. Today, we're the world's biggest debtor nation. How did we go from being the biggest creditor to the biggest debtor? It was trade deficits. Every year, we keep borrowing money to consume. And what this has done is this has turned a rich nation into a poor nation, but we just don't live like a poor nation yet because we're still borrowing. Yeah, and you can be a rich individual yet maintain a rich lifestyle on debt, but eventually, you know, the debt's gonna catch up with you, and then your lifestyle's gonna come crashing down. And this is what's gonna happen, but what we should do instead of having a crisis imposed on us globally with a crisis in the dollar and a crisis in our bond market, we should do it ourselves. We should set these forces in motion ourselves. So what we have to do is shrink government, right? We have to, you know, cut a lot of government spending, get rid of a lot of government agencies and departments to get government out of the way so we can lower taxes legitimately, and then we have to allow the Federal Reserve to let the market set interest rates. Interest rates have to be much higher than they are now, right? That, 'cause that's gonna encourage people to save. If interest rates are high, you'll put your money in the bank to earn that high rate of interest. When money goes into a bank, it can get loaned out to businesses. Right now, all that money is going to government or it's in the corporate, you know, bond market where it's not growing the economy, or, you know, the money is being used to finance stock buybacks. We need money on Main Street financing capital formation, uh, entrepreneurship, you know, new businesses, new jobs. So we get higher interest rates, we'll get that, and we need people to stop buying things they can't afford. You know, you buy something if you have the money to pay for it. You don't just put it on a credit card. But if, and if credit card interest rates went up, and if credit was contracted so that credit card companies were not giving out as much credit, they're, they're giving out a lot of credit now because the government is misdirecting it, but if we slow down our consumption, we increase our savings and investment, then the economy can actually grow. But if interest rates go up, asset prices have to come down. The stock market has to come down a lot. Real estate prices have to come down a lot. Now that means people are gonna lose money. They're not gonna be happy about that.

    3. JR

      Yeah, this sounds counterintuitive to everything that I've always heard about how to boost up the economy. The idea would be that spending and people buying things is great for the economy.

    4. PS

      (laughs)

    5. JR

      We need more of that.

    6. PS

      No.

    7. JR

      No?

    8. PS

      That's, that's putting the cart before the horse. You can't buy something that doesn't exist. Something has to be produced before it can be consumed, so it's the production that drives the economic train, not consumption. See, right now, we're just consuming what the Chinese produce.

    9. JR

      Right.

    10. PS

      But, but the consumption doesn't mean anything unless you produce something first. So you drive an economy by creating supply. It's supply that creates demand. If you just try to create demand without the supply, it's just inflation.

    11. JR

      It's weird too that w- we're, we keep hearing things about Chinese telecommunications companies, like Huawei in particular. They're always telling you to not buy their stuff. Wasn't there, there was something about, there was something in the paper today about Huawei. It was about, uh, I think another country saying no to these, uh, I guess Huawei in particular is the third-largest cell phone manufacturer in the world, and they, they have a close tie with the Communist government, and they believe that there's, there might be some shenanigans going on with their, their electronics.

    12. PS

      I don't know. I, I mean, I'm not familiar with that. I mean, I know that the, the, there's, there's constant talk about trying to, oh, you know, just don't buy, uh, certain products or-

    13. JR

      Well, Huawei, they were actually, the, the State Department told people to stop buying them. They-

    14. PS

      Was it a national security threat or something or-

    15. JR

      Something along the lines of, um, s- uh, third-party spying. They're, they're, they're concerned... What does it say here? Australia to ban Huawei from 5G Rollout Amid Security Concerns. This is-

    16. PS

      Yeah, I think it's-

    17. JR

      ... but US had an issue, and I think the US issue was slightly different. US was, um, it was the State Department that was saying for security concerns to, to not-

    18. PS

      Yeah, I don't know, but you, I, you know, whenever they talk, look, they're talking about these, the, the auto tariffs as this, from, and they say it's national security, as if somehow my buying a foreign car is, you know, somehow jeopardizing-

    19. JR

      What is that?

    20. PS

      ... national sc- I don't know. I mean, they, you, they, you know, the, the, the Canadians have called Trump out on it, said, "What do you mean? We, we, you know, we've fought as allies in every single war. How are you saying that you have to put tariffs on, uh, on Canadian products?"

    21. JR

      So why is Can- why is Trump doing this? Like, wh-

    22. PS

      Look, again, he's going after the symptom. Trade deficits are the consequence of a problem. Most politicians ignore the trade deficits, right? At least Donald Trump is putting them on the spotlight and saying, "Look, this is a problem." It is a problem, but not for the reason that Trump believes. In the short run, in the here and now, the trade deficits benefit America because the world is subsidizing our standard of living. We're getting to buy things that we otherwise wouldn't be able to have. I mean, without these trade deficits, we wouldn't have all these consumer goods on all these shelves. I mean, people would not be able to buy stuff. Prices would be much higher if we had to make stuff ourselves. By having the Chinese make it, you know, it's a lot cheaper, and plus, you know, it's great for our environment because, you know, we don't have to pollute our own air because the factories are over there. Uh, but in, he, so he's right that it's a problem, but in that...... it's a reflection of the fact that the economy is inefficient, and that's what needs to be addressed. It's like, you know, we have cancer, but you just can't put Band-Aids on the blemishes or something to cover it up. You gotta actually get to the, to the source of those blemishes, which is the, the Federal Reserve and their bad monetary policy, and our government policy, our, our fiscal policy, our regulatory policy. We need to have that type of change, and then the trade deficits will go away. But if we simply try to, uh, put tariffs on, it's just gonna make our own problems worse. All that's gonna do is make prices higher. It's just gonna mean that Americans are gonna have to spend more money buying stuff, and it also actually undermines a lot of American businesses that export into countries that are retaliating. And also, a lot of US businesses, uh, import components and then they assemble the components here, but now those imported parts are gonna be more expensive, and so their net exports are more expensive, and so they become less efficient.

    23. JR

      The people that are supporting Trump, the people that are happy with the way things are going have be- have said that him lowering taxes for corporations encourages growth.

    24. PS

      Well-

    25. JR

      And it encourages ... it, it gets more jobs, and there's, there's more economic activity. Does that make sense?

    26. PS

      Well, look, if we eliminate taxes, yeah, that'd be great. I mean, the lower taxes are, the better it's gonna be. But not if you borrow the money to pay for the tax cuts. So, the idea is if the government now has to go into the bu- market and borrow money that it no longer collects in taxes, that's gonna have an impact on the economy. That's going to further deplete our savings pool. That's gonna put real upward pressure on interest rates, and obviously the Fed is trying to counteract that. But, you know, the, what they did with the tax code though, they dramatically complicated it. I mean, there's a lot of ... there's a lot more complexity in the code now than there was before. Not like it wasn't complex before. So initially, they talked about simplifying the code. They didn't do that. They, they, they made the, the, the code a lot more complex, and they certainly, you know, they lowered ... they raised ... lowered taxes for some people, but they raised taxes for other people. I mean, depending on what state you in, there are a lot of people now that are gonna pay higher taxes.

    27. JR

      What ki- What people are doing?

    28. PS

      Well, people in California, where you got a, you know, you got a 13% income tax in California that's no longer deductible on your state income ta- on your federal income tax. So that's a-

    29. JR

      Oh, so that, that's a new thing?

    30. PS

      Well, yeah. I mean, uh, up, up until this year, you, you could deduct your state income tax from your federal income tax, so, you know, you ... the, the, the effective tax rate was, you know, maybe 40% less, because it was just money you would've sent to Washington, so instead you sent it to Sacramento. But basically, the state tax rates are almost double now what they were last year, uh, in i- the, the way it impacts the payer. So there's a big increase in state taxes for individuals.

  7. 33:20 – 43:17

    Puerto Rico, crypto migration, hurricane recovery—and a detour into ‘outrage culture’

    1. PS

      Yeah, you know, you oughta ... You know, you oughta move to Puerto Rico with me.

    2. JR

      I know, but I hear you guys don't have any power.

    3. PS

      Well, uh, we got power now.

    4. JR

      Now.

    5. PS

      But, you know-

    6. JR

      How many months did it take?

    7. PS

      Well, it don't ... I have a generator. (laughs)

    8. JR

      Yeah, but you're the only one. You're like Mad Max out there.

    9. PS

      No, no, no. No, I'm not.

    10. JR

      Do you have armed guards?

    11. PS

      No, no.

    12. JR

      Standing outside making sure nobody steals your water?

    13. PS

      No, it's not. It's, you know ... In fact, (laughs) e- eh, we were laughing about it, but you know, w- s- w- ... I was on your show a year ago, right? We talked, we talked a lot about Puerto Rico.

    14. JR

      It was post-Trump, right? Trump had already won.

    15. PS

      Yeah, Trump was ... Trump had won.

    16. JR

      Right.

    17. PS

      But it was before Maria.

    18. JR

      Right.

    19. PS

      But ... And so I was on the show, and we were talking about Puerto Rico.

    20. JR

      Yeah.

    21. PS

      And we also talked about cryptocurrencies and Bitcoin and stuff like that. But since then, hundreds and hundreds of crypto guys have moved to Puerto Rico. I mean, like, some of my neighbors now are these crypto millionaires. They're living on ... I've seen now on the beach. They all ... They, they weren't there a year ago. They're, they're there now. They're, they, they kind of ... They call it a Portopia. They all want to come there because there's no capital gains tax, but I gotta, you know, kinda credit you, 'cause I think a lot of these guys didn't know about it until they heard about it on this podcast. And they said, "Wait a minute, there's no taxes down there in Puerto Rico," and, uh, now they're all there.

    22. JR

      And they moved, uh, just in time for the hurricane?

    23. PS

      No, they moved after the hurricane.

    24. JR

      (laughs)

    25. PS

      I, I moved before the hurricane.

    26. JR

      Is moving after the hurricane a better move financially? It's probably cheaper land.

    27. PS

      I ... You know, I d- you know, I, I ...

    28. JR

      Can you buy easier?

    29. PS

      No, it's ... You know, I can't even tell. Some of the real estate has actually gone up. Um-

    30. JR

      Really?

  8. 43:17 – 52:32

    Rights, discrimination, and the wedding-cake case: coerced service vs. free association

    1. PS

      Right? So like, you'll have all these groups that demand, you know, women's rights or gay rights. Women or gays, they don't have rights because they're women, right? We all have individual rights. And so, men and women have rights because they're individuals. They don't get a separate right because they fit into a group.

    2. JR

      Right.

    3. PS

      All that is about privilege. And y- you don't have special privileges granted to you by the Constitution. We all have rights. And when people try to, um, pretend that a privilege or c- a, a group privilege and try to give that the status of a right, I know, uh, you talked about it- (sniffs) on your, on your podcast. We had the Supreme Court ruling recently regarding the gay couple that wanted a wedding cake. And they, you know, they sued because the baker wouldn't make them a, a wedding cake with, you know, a couple of guys on the top and, and decorate it in a way that it was obviously for a gay wedding, right?

    4. JR

      I had, I, uh, there's a bottom misunderstanding about that, and I read something recently that not only did they not do that, but they weren't making custom cakes.

    5. PS

      Mm-hmm.

    6. JR

      So they didn't make custom cakes for weddings. So when these, the, the gay couple came in and said they wanted a custom cake and they said, "No, we don't make that."

    7. PS

      Mm-hmm.

    8. JR

      Like, that was also part of the problem-

    9. PS

      Yeah.

    10. JR

      ... was they don't ... That's not something they even do.

    11. PS

      Well, but-

    12. JR

      They could've, would've sold them a cake they already had.

    13. PS

      Yeah, well, the bigger-

    14. JR

      But they didn't have one with two dudes holding hands.

    15. PS

      Well, the bigger problem is, first of all, they ... It's not like you have this gay couple that just went into a bakery and then they were denied, you know, the, the ability to buy a cake.

    16. JR

      Right.

    17. PS

      Right? They probably went to 100 bakeries to find the one that wouldn't bake them a cake. So-

    18. JR

      They did specifically do that.

    19. PS

      So that was-

    20. JR

      That was part of the story, was that they wanted someone to deny them.

    21. PS

      Yes. And-

    22. JR

      So they had a story.

    23. PS

      Right. And of course, you know, if you're a baker, right? I, I, I don't know what the margins are on wedding cakes, but wedding cakes are probably like the holy grail of cakes, right? I mean, yours- if you're sitting there in the small bakery shop, you're waiting for somebody to call for a wedding cake.

    24. JR

      Mm-hmm.

    25. PS

      'Cause those are the biggest cakes you could make, very expensive cakes, so everybody wants to do a wedding cake. Nobody cares whether there's two guys or a guy and a girl on the top of it. You just want to make the money that you're gonna get from baking wedding cake. Now, you come across a guy who just has a strong religious conviction. He just, you know, w- doesn't want to bake a cake for a gay wedding. Okay. I mean, he's the one that's losing. He's losing out on the, the, the, the commission to bake h- the cake. I mean, the gay couple isn't hurt by that. They ... There's so many bakeries that would bake them that cake.

    26. JR

      But wa- was this couple d- were they denied because of religious reasons? Is that why the people said they weren't, wouldn't make the cake? Like, wh-

    27. PS

      They, th- yes. They said it was religious reasons, and that's what the Supreme Court, I think, went on religious freedom. But as far as I'm concerned, it doesn't matter what their religion is. Nobody is required to perform a service for somebody else if they don't want to. That's slavery, right?

    28. JR

      Okay. What if it was, what if it was a Black couple?

    29. PS

      Yes. I-

    30. JR

      And what if these people were racist, and what if they said, "We don't wanna bake a cake for a Black couple."

  9. 52:32 – 1:05:35

    Labor rules under fire: overtime laws, minimum wage, and the ‘unintended consequences’ case

    1. PS

      And now I gotta prove that I didn't do something for what I was thinking when I did something. I mean, i- none of that sh- you know, all of that too makes it so much harder for employers. I mean, look at what just happened. This isn't race, but it's part of it. Did you see that story, um, uh, the other day about Trump's driver is suing him for overtime?

    2. JR

      Yes, I did see that.

    3. PS

      Yeah, so this guy worked for the Trump Organization for, like, 25 years, driving, he was a personal driver for Donald Trump. And he's now suing him because he claims that he worked more than 40 hours a week and so he wants more money.

    4. JR

      Right.

    5. PS

      Now, of course, he worked for 25 years, why didn't he ask for a raise, like, during those 25 years, right? But apparently his job, he had to be on-call for maybe, I don't know, 10 hours a day. Right? And, and on-call doesn't mean he was actually driving. He just had to be available to Trump if Trump needed him. But that, you know, he could, you know, be on the internet, he could be watching a movie, he could be reading a book, sending emails, you know, trading stocks, whatever he wants to do. So it's not like it was that, like he was really working, but he had to be available so he couldn't, you know, go out of town, right? Um, but he's going back and he says that, "Well, I had to be available for more than 40 hours a week." Well, maybe it was 50 hours a week or 55 hours a week, and now he wants back pay, time and a half, right? Because overtime laws say you gotta get time and a half. But first of all, he wasn't even an hourly worker. The guy collected a salary, something like, I don't know, $65,000, $70,000 a year was his salary. And, you know, he knew what the salary was when he took the job. He knew what the hours were. If he didn't like it, he could have said something to Trump, he could have demanded higher pay, or he could have quit, right? But instead, he works without complaint, and then 25 years later files a big lawsuit. Now, the point-

    6. JR

      So he's out of work? This is what happened?

    7. PS

      No, he's still working there. He's still working there.

    8. JR

      He is?

    9. PS

      Yeah.

    10. JR

      And he's suing while he's working there?

    11. PS

      Yeah, which, you know, and, and then of course if you fire them when they sue you, it's like, oh, it's retaliation, then it makes it worse.

    12. JR

      Right.

    13. PS

      But the problem is, you know, Trump, he's got a lot of money. I mean, he can deal with this. But your average small businessman, you know, this kind of stuff kills you when people start suing you.

    14. JR

      Yeah.

    15. PS

      It costs a lot of money and a lot of that happens too with, um, you know, the, the, the discrimination laws, I mean, because, uh, small business owners are so concerned about getting sued-... that they, they try to hire people that they think are less likely to sue them, and then it ends up backfiring 'cause it works against all the people who are protected classes, who are now able to sue you. You know?

    16. JR

      Mm-hmm.

    17. PS

      But I also wanted to, wanted to point out on, on, you know, the overtime laws, 'cause so many people think, "Oh, this is terrible, right? I mean, he should pay overtime." You know, overtime is ... those laws are probably some of the worst laws out there, because they don't protect workers, right? Because what happens is, let's say you got a job and you're working 40 hours a week and you're an hourly worker, and you wanna, you want more hours. You want more money, right, maybe you're, you know, maybe you want to, you know, you, you, you're trying to attract a higher caliber of girl, so you're trying to get more money. You wanna work more hours. So you-

    18. JR

      Sexist.

    19. PS

      Yeah. (laughs)

    20. JR

      That's sexist, what you just said.

    21. PS

      (laughs) So, so you-

    22. JR

      I'm writing a blog.

    23. PS

      So you tell, you tell your boss, "Hey, can I, you know, can I work an extra 10 hours a week?" Right? "I wanna get some, I wanna get some-"

    24. JR

      Pay up.

    25. PS

      "... I wanna make some more money." Right? Well, your boss says, "Well, I'm sorry. I'd like to let you work an extra 10 hours, but I have to pay you time and a half." Right? And the guy says, "Well, I don't need time and a half. I'll just work 10 hours for the same pay." Well, that's illegal. "Sorry, I, I, I would like to do it, but I can't." And if the, if that boss needs extra workers, he has to go bring on a part-time worker. So now, let's say if I wanna get an extra 10 hours work, I gotta find another job someplace else where I can work part-time, where the, the, the time and a half law doesn't apply. But now, I gotta get from my, my full-time job to my part-time job. How long does that take me? Maybe-

    26. JR

      How common is this, though, that people are n- denying people extra work-

    27. PS

      Oh, it's very common.

    28. JR

      ... even though they need it, because they don't wanna pay the time and a half?

    29. PS

      Oh. Oh, it happens all the time. I mean, that's, that, that's where moonlighting came from. That's the whole ... I mean, obviously, people, you're gonna have, you're gonna have people that work for two employers, and then other people working, and they're, they're going back and forth between the same companies, because-

    30. JR

      So what you're saying is it's weird if someone has to work extra hours, why are you paying them double the money?

  10. 1:05:35 – 1:12:12

    Democratic socialism’s resurgence: AOC, Bernie’s promises, and ‘free’ college as a government-made problem

    1. JR

      Now, democratic socialism is the thing right now. This is the, you're hearing it all the time. You're hearing it constantly in the news. What, to what do you attribute that? Do you, do you think it's a frustration with, uh-

    2. PS

      Yup.

    3. JR

      ... just the lifelong politicians? Like, what, what do you think it is that's causing this uprise and upswing? Like the woman, what is her name that won in, uh, New York?

    4. PS

      Yeah, you know, she's actually half Puerto Rican.

    5. JR

      Yeah.

    6. PS

      One of my, uh, my countrymen. But yeah, I forget her name (laughs) and-

    7. JR

      One of her countrymen. Isn't Puerto Rico in the United States?

    8. PS

      No, actually, you know, I, I found this out as I'm traveling now, you know, I still have an American passport. But when I, when I mention what country I'm from, and I look, "W- where you live," I always have to select Puerto Rico as a country. Even though it's part of America, it's, it's still considered its own country, even though you still are American citizens when you live there and you travel on a, on a US passport. It, it, it's listed as a separate country from-

    9. JR

      Yeah.

    10. PS

      ... uh, from the United States.

    11. JR

      I was just gonna read her name, uh, from the tweet.

    12. PS

      Yeah, that's her.

    13. JR

      Alexandria Ocasio-

    14. PS

      Yeah, and you know-

    15. JR

      ... Cortez.

    16. PS

      And-

    17. JR

      28 years old, damn.

    18. PS

      Yeah, well, she beat, she beat a, a ten-term-

    19. JR

      Incumbent, yeah.

    20. PS

      ... incumbent, and of course, he was a white guy. That's a, that's a negative for him.

    21. JR

      Mm. She's-

    22. PS

      But, uh-

    23. JR

      A woman of color.

    24. PS

      Yeah, you know-

    25. JR

      Latina.

    26. PS

      Nice-looking woman, too, actually.

    27. JR

      Beautiful.

    28. PS

      Yeah, so, but, but, but, but the thing is people, I think, in that community are just voting out of frustration. In fact, I, I looked at her commercial, you know, and it's a very powerful commercial. You know, kind of like, you know, about, you know, "Um, women like me are not supposed to run for office. We're not supposed to..." Of course, I mean, you're not, that's all a bunch of nonsense, but it, it's a story that, that, you know, I think resonated with a lot of people, like, "Hey, let's stick it to the man."

    29. JR

      Yeah.

    30. PS

      Right? You know, and, uh, and that's what they did. But-I think that this, this, uh, wave is gonna be bigger than people think. I think people are underestimating. They're saying, "Oh, this is unique," because, you know, she, um, she's in a, you know, a heavily minority community and so that message worked better. But look, Bernie Sanders-

Episode duration: 2:46:57

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