Tom Luongo: We’re Now Deep In The Bifurcation Of The Global Financial System

#TomLuongo: We’re Now Deep In The Bifurcation Of The Global Financial System

We’re seeing the sanctions heat up again, while rates have risen in the US, which has led to a new level of pressure on global financial system.

So it’s a great time to check in with Tom Luongo of Gold, Goats, ‘n Guns, who shares how the geopolitics fit in with the finances, and where the world is headed from here.

Tom talks about why we’re now deep into the bifurcation of the global financial system, how the Fed is really planning to navigate the delicate balance between more inflation and higher rates, and how the world is responding to the concerns about the US treasury as a store of energy value.

To find out more with a great recap of where it all stands, click to watch the video now!

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so where we are today is we are definitely deep in the throws of that that bifurcation that split within the Global Financial system well hello there my friends Chris Marcus here with you for arcade economics and quite excited today as we have one of our most popular guests who comes on the show from time to time and certainly one of my teachers these days as he has quite an incredible understanding of not just the economics and the finances but also a lot of the geopolitical things that are going on in the world that obviously as unfortunately we’re well aware have been escalating over these past couple years and perhaps not unconnected entirely to what we’re seeing happening in the medals and fortunately to dig through all that today I am joined by Tom loango of gold goats and guns and Tom uh I guess it’s a boring season in the geopolitical and Financial we nothing happening so we’ll we’ll just say hello and wrap this one up but hey man you know so so how’s your guitar playing going like what’s going on there ain’t nothing going on in this freaking world right this is here we are on here we are on Martin Armstrong’s big May 7th Day the turn of the the quote unquote economic competence model and all that and like and it’s not disappointing like I can I I’ve already like feel the questions from the the patrons over on our private slack server and um oh yeah is Marty I’m like really you can’t see what’s happening like you know the Russians threatening to Nuke the freaking Brits like that’s not you know I’ve always found it interesting like Mar Martin’s work just to to to U just to clarify it for people like I find Martin work interesting I find Socrates to be an interesting tool I don’t necessarily take a lot of stock in it I have to Salt it to my own personal taste and you know and Marty’s you know himself has said look I never got into this to be a geopolitical analyst you know but I did it to augment my trading and and and whatnot I’m like and that’s and and it’s fair like he you know I I’ve noted over the years that you know Martin might zeroing a on on a date and think it’s a the that this that particular BR is going to be the big thing and it’s not it turns out to be something completely different but the dates are interesting they want up being turning points whether they’re self-fulfilling prophecies or not because we now have a quote unquote model of how to you know how you know human U Behavior Works which I get to roll my eyes out a little bit it is I think tapped into something real whether it’s you know wholly correct or not like I don’t you know I don’t think Martin Armstrong is har Seldon from the foundation novels but I do think that he’s tapped into something interesting in the same way astrology Taps into something interesting or eschatology you know of various religions Taps into something very interesting I think if you use all of those things as springboards for idea generation then they become very valuable but always it’s always about filtering things through your own experience and your own um uh you know your own intuition and that’s all I really do is I just filter all this thing all this stuff through that along with bouncing ideas off of you know the patrons and the world and blah blah blah blah and we see what we come up with and sometimes you come up with a really accurate quote unquote model of the the world and you gota you know I don’t know so where we are today is um yeah like that happened the Russians you know told the the UK that if you that if your missiles are used to attack you know strategic uh um positions or any positions inside the borders of Russia you’re we’re going to consider you an enemy combatant we’re at war with you that’s not a that’s not a thing like really like that’s nothing that’s just nothing it’s just a little nothing it’s just little nothing burer it’s a huge thing and it’s I think um indicative of just where Putin has had has been pushed by these people to the point of because they need this war they need this kind of um millu in which to do what they want to do which is to default on all the debt and burn down the old Financial system which is broke which is why you which is why you do what you do and I do what I do right we’re all you know we’re all waiting for the thing to go broke and then figure out how they can do so and justify and still stay in power that’s the plan now the question is whether they’re going to be able to pull that plan off and of course you know Putin’s job is to act like you know the modern incarnation of Adolf Hitler that they can blame all their ills on or the Kaiser or anybody else like just keep going back through history with these people they keep doing it over and over and over again so it’s the same people over and over you know what you know as well as I do that I where I where I think most of these ideas gestated from where they come from and and uh you know and I don’t think it’s a euphemism for another group of people I think they’re all using each other I think Old Dutch money old Jewish money old Italian money old British money old US money blah blah I think they’re all using each other at this point and I also think that they’re fighting amongst themselves as who’s going to be in charge on who thinks they’re going to wind up being in charge on the other side and you know look at the the end of the day it’s not a it’s not a dinner Club at the top of the world it’s Thunderdome and they used to be the ones in charge of Thunderdome and they don’t realize that we erected another one around them and they’re having to fight amongst themselves now and which one of the factions are going to be it’s a shark tank actually probably a better you know um you know as long as there are plenty of other fish for the the Sharks to eat they don’t need to eat each other they’ve run out of they’ve run out of money right they’re all broke they’re their central banks their balance sheets are all aever to the tits right blah blah blah blah like there’s no money left systems broke now they start turning on each other and that’s what’s going on and that’s the hardest part for people to grasp because we’ve gotten so inculcated and we’ve gotten so used to the framework that it’s all one big club and we ain’t in it quote George Carlin that it’s really hard to shift that mindset look dude it took me years like I’m not sitting here because say oh I’m so insucient and wise and blah I saw this No Nonsense I’m I saw it before everybody else but doesn’t mean that I wasn’t blindsided when it hit me like a of Pricks and honestly back in 2021 and there were other people out there screaming about this stuff well before I ever did so you know I’m not you know I’m not I’m not anything special here I’m just you know depending on your frame of view and your point of view I could be late to the party right so well I hear what you’re saying and I guess that would be a great place to start in terms of whether we’re late or early where where you think we stand right now you had a great column that you put out recently and it’s about the end of Foreign Exchange reserves digging into the sanctions uh Congress facilitating so that the president could go ahead and seize some of the frozen assets time since then we’ve seen Russia who said they vowed a mirr response when and froze 440 million of JB Morgan assets and then a week later we see the US sanction China and Russia certainly seems like it’s escalating getting to a bit of a scary point for the regular just trying to do their thing and get by so curious uh you mentioned that we’re getting to the point where they’re out of money it obviously has seemed like that for a long time although uh perhaps you could start there and maybe put some specifics on where we are in this cycle I think what I think a lot of us in the you know austr libertarian goldbug hard precious metals Community missed and coming out of 2008 was that there was plenty of room on the central bank balance sheets to take on another like round of Levering up right and so we all were I don’t remember I don’t know about you but I I know I was sitting there in 2008 going this is it I was like right there next to Jim Sinclair going this is it it’s all done we we’re gonna this is the big this is the big Guna and then they and then Baki came in and levered up the balance sheet and so did ECB and so did the boj even further and the SNB and the bank you know all of them they all did it right the bank of France the this Bank blah blah blah BL blah and then they ran out and they coordinated a central bank policy for a long long time oh the bank of England let’s never forget the M um and then they ran out of balance sheet room predictable as the day is long that once they ran out of room on the balance sheets and interest rates then started to rise because now inflation is coming and then they tried to break the world with covid in order to try and Implement their new bait and switch to a digital currency and all the rest of it and the problem is is that over the course of that time the Russians and the Chinese and to a lesser extent the Iranians you know and whatnot they all started to see the pro see what the game was and they were making very very strategic moves to um counter this by divesting themselves and and separating themselves from the existing system such that when the system failed they wouldn’t be caught in the vortex now is not out of this vortex in no way manap perform they’re still too too integr link with the United States economy but the Russians no the Iranians were were cut out of the Global Financial system by Obama in 2011 they were forced 2011 2012 they were forced into this move no one expected Iran to survive they survived when they did it they they provided the blueprint for how the Russians did it in 2015 getting China on their side to give them a hand and now we’re here in 2024 and China’s doing the exact same thing now that they did for Russia back in 2015 which is they’re taking their dollar reserves handing that off to their Asian trade Partners like Indonesia or Vietnam or or Thailand or whomever that are that have a lot of dollar denominated liabilities and they’re saying look we’ll loan you the money in dollars but you pay us back and you want this is exactly what the Russians did and the Russians were able to do this because they have a huge the energy because they built this huge Trade Network um or trade you know turnover over Russian energy so the three things to when you go back over that you think okay so what did the Russians do to Stave off the rubal crisis of 2014 2015 they um moved they liberalized the economy right they they removed certain old Soviet restrictions that were still latent in the economy they changed the way the the rubble was um being distributed their Trade Surplus was being distributed amongst the Russian Society they they shipped from subsidizing oil and gas to subsidizing food production and Industrial and domestic industrial production that was the first thing the second thing they did was they opened up Ru Yan swap lines with the Chinese and the third thing they did was raise interest rates to you know AA and um the and divest and then pay off the old dollar and Euro denominated debt and um sign the big Power of Siberia uh package with the Chinese which I think they did before all this happened they did that in early in 2014 so they were already laying the groundwork for because they already knew at the United States and the West were going to cut Russia out we’re going to take make an attack on the on the price of oil that’s why the big um pipeline deal that 400 Mega billion dollar Mega deal that we all remember from that year um that all happened in preparation for what was coming next so now the Chinese would have a flow of you know the Russians would have a flow of Yuan coming into the country to pay for their oil and then they you know and they use those to pay back their dollar denominated loans back to China and that’s how they paid off the corporate all the corporate debt and everything else well same thing is happening across Asia right now um same thing is happening and this is what the denization stuff is is is is all really about I think the FED is hip to this I think that’s why the the Powell has done what he’s done and he’s and he’s made abundantly clear that we have to keep this going we have to keep on this path for as long as possible because for the dollar to survive and for the FED to survive the FED has to get control of its own monetary policy meaning it has to break the back of the euro dollar system that was put in place mostly through city of London starting in 1956 which Jeff Snyder know for years accurately described where Jeff is wrong now is that the game has changed and you know I I’m on record is saying this multiple times Jeff hasn’t updated his model of how the universe works this was not a free market system this was a system designed B from the ground up for city of London to have complete still have complete Colonial control over the US Financial system our you know our feckless you know bankers and on Wall Street went along with it because they were making money off of it why wouldn’t they and that’s all they care about is making money these people are immoral they’re not you know they’re not moral actors here they’re not nationalists maybe of all of them I think the only one who is anything close to being an American Sovereign this is Jamie Diamond over JP Morgan yeah know I think it’s very clear that diamond is but at the same time I don’t think that diamond is is any kind of you know I don’t think he’s any kind of you know moral standard Bearer or anything let’s let’s not get ourselves like it’s not let’s not overstate the truth let’s not overstate the obvious all right overate the argument as it were so I I don’t know um so where we are today is we are definitely deep in the throws of that that bifurcation that’s split within the Global Financial system and everybody’s going to and money is going to ground over the sanctions and over the seizing of the the foreign exchange reserves and everything else all these threats are coming from the the split is happening now okay and it’s been but the groundwork for this split has been being laid for like 15 years yeah okay so now everybody’s buying gold hand over fist now the central banks are 15 what 15 20% of the global demand like do you need to know anything else every time gold sells off 50 or $75 the central banks are coming in and buying it with both fists the United States is putting soft Capital controls on physical gold leaving the country right they’re gonna Chris they’re gonna get rid of the comx it’s already happening comx is being drained same way you know the way you another fofa talked about 25 years ago right so which I know for people who are long suffering gold bugs gold and silver bugs you know exactly the reference I’m making here you know the newbies don’t have this is swah to you guys but by the way that’s your clue go back and realize that this has a has much much much deeper roots and that these that what’s happening now was foreseen then what they missed what the guy at that point missed then was the the Euro the size and scope of the euro dollar system that was built after the balance sheets of the central banks were then mobilized to keep the system alive for another 15 years end game was always going to be the same they just staved it off for 15 years but now because of this everybody is retreating back within their borders um and now gold then to a lesser extent silver are the important assets here so and and they’re only important because they’re the ultimately in the end going to be the things that collateralize or that are going to be used as unit of the account to pay for oil and energy in the future yeah that’s just that simple it ain’t really that freaking hard folks it’s that Elemental well I’ll I’ll follow that up with perhaps an unfair unanswerable question yet everybody sits around not everybody but a lot of people in the gold and silver Community sit around saying all right this seems elogical we’ve seen it building for years we had a bit of a scare last year when a couple banks went down then we have btfp do you think we’re reaching that point where it can’t be pushed off and prolonged anymore and that we’re getting closer to a break point or could we be here two years from now in a similar environment Gold’s 2600 bucks Silver’s 35 and prices of things have gone up yet Perhaps some sort of break point hasn’t occurred yet any thoughts on that I I you know is is that a non-zero probability what you just laid out of course of course is it a high probability no I think we’re much closer to that moment than we have ever been um I think the SNB uh lowering interest rates in April was a big tell because the stories were finally starting to get out there my dog agrees with me if she you hear her off in the background that’s you know she always agrees with me she she’s a good girl um and um but I think the stories we’re getting out there that the German banking system was in serious trouble because the american commercial real estate markets are now finally starting to break we’re starting finally starting to see some movement in commercial real estate liquidations right as we’ve expected for the last couple of years as pal raised rates this quickly everybody’s got hols in their balance sheets that need to be papered over meanwhile the pension systems and the insurance companies are all licking their lips and like like like lions just just seeing a whole bunch of wounded zebra out there like oh my God this is going to be a morgus board where they can go out and they can pick up these buildings that are immense and young and new and you know unoccupied and pick them up for 20 cents on the freaking dollar and then rent them out with 50% occupancy and make more money than the original B business plan would have called for in the first place and they’ve got massive money sitting on their balance sheets to do this I was talking about with with my life insurance um guy over Northwestern neutral the other day and this is exactly the thing I laid out to them I’m like you and and he’s like and by the way the board agrees with you like they can’t wait to go out and make these deals because they know they’re GNA outperform like I’m not you know you know I’m not pimping Northwestern mutal or anything but I’m just saying like I had this Con this very conversation with my insurance agent not like last Thursday and and I said you know hey oh by the way my speaking Fe is very reasonable if you want me to speak to the board to you know give them a strategy on this um you know draw my business where you can right so um seriously I did that I I part of me is like did I did you just do that yeah you just did that um but it it’s you know we’re staring at that going back to the bundesbank that we know that German real estate is heavily invested in american commercial real estate because they were at the near the negative Bound for so long that in order for them to pay out their 8% pension guarantees and everything else they had to go into the leverage loan market right and and now we also know that the SNB is basically a wholly owned subsidiary of the bundes bank and so was it any shock that when you know there was a there was the beginnings of a rumbling that the bundes bank was in trouble that the German uh land dis spanks were in trouble that the SNB came in and rapidly rapidly devalued the the the the Swiss frank versus the dollar rapidly came in it was trading at 92 cents now it’s trading under under 8 for in like six weeks it’s a huge move in the in the in the Swiss front but it makes perfect sense if you understand who works for whom and who’s you know subordinate to him so clearly the SNB is not an an open actor so that’s just one of those big tells that Europe is cracking hard which is why they’re so desperate to Jin up a bigger and wider War because there’s a moment here where they need to be able to Def get the United States to yell at China and then default on their debt and get the United States to go first everything that’s happening right now is a in between Europe and the United States is a game of you go first no no you go first no you go first you sees Russia’s foreign exchange asses no you do it first if you do it I’ll do it right so when you read the text of the bill that was signed by that that was put in in front of Biden it was Biden is authorized to seize Russia’s foreign exchange reserves if it is part of coordinated action by the rest of the G7 yeah that’s another way of saying no you go first right feel and froggy take that leap to quote Dennis Miller um so and then the same thing is happening with you know the French like tow dipping in you know just just putting in the tip you know that’s just the tip we’re just putting French Foreign Legion in Odessa it’s just a tip or you know but then the minute they get really get to the moment they’re going to like throw a whole bunch of German troops in there yeah that ain’t happening like they keep trying to get someone to do the thing and it’s really it’s sad and it’s pathetic and as always guess who’s out there stirring the pot to the point of trying to get us past the point of no return same damn people who started World War I same damn people who started World War II same damn people who have been pulling the strings of our financial system for years same damn people that I’ve been screaming about Non-Stop for the last three years and I take more I take more black for being over the target about city of London and the freaking British than I have ever taken any Flack on any single issue in my entire life and I got news for you that’s the tell and now everybody wants to turn around to become a newly minted uh uh um expert on Zionism because you know most people couldn’t even spell the word the other day last week where they like they couldn’t find Ukraine on a map with you know you know like most of these people can’t find can’t find their ass with a map in both hands as my dad would say and know they couldn’t find Ukraine on a map to save their lives but all of a sudden they were experts on Ukraine just like we had newly mitted biologists during covid just like we had you know like it’s it’s all it’s all folks it’s all nonsense and I’m not you know this is not to absolve anybody of their complicity in this and it’s I’m not running a cover story for like I’ve May been accused to being a Zionist like 18 ways from Sunday and I’m like this is this the dumbest thing imaginable uh it’s just the dumbest thing imaginable but you know whatever like if that’s what you want to believe you go right ahead and you know live in The Matrix that’s fine with me I don’t care your model of the universe is wrong and models aren’t you know maps maps are no more the world than Martin Armstrong’s model of the fin of the financial system is a map of human beh is you know what we actually how we actually behave the same way the technical analysis is not markets which is why I don’t draw you know for example it’s why I don’t draw lines on charts right need I I I only found this morning folks that Chris is a patron so I’m like oh my God so you actually like he knows what I’m talking about like I don’t draw lines on charts I don’t do any of this other other rotten nonsense I don’t do any statistical interpretive interpretive dances around the data of the markets why because it’s all a model that’s based on you know a kind of a kind of soft back test but really it’s just a reification of reality it’s not reality it’s a representation of reality that your mind has overlaid a pattern on not necessarily saying that that pattern is wrong but it’s not necessarily predictive and that’s what’s really important it’s a very subtle point about all of this it doesn’t matter if we’re talking about geopolitics or we’re talking about markets we’re talking about you know you know the box office receipts for a movie or anything it’s all the same thing and the model is not the world um absolutely everybody who’s like telling me that I’m who’s who’s listening to this and going Tom’s full and blah blah sit down and listen to igil Chris talk for about an hour about this about the left brain right brain the model you know and ask yourself whether you see yourself as a machine or an animal I’m an animal yeah I’m not a machine okay and if you do that you’ll you’ll start to snap yourself out of this kind of false binary thinking and um which is what we need to do because they’re clearly driving us mad with all of it all right so I don’t know if that was the answer you wanted Chris it’s the answer you got no it makes a lot of sense and I would say one part of the model that you got quite right I know you took a lot of heat on it for the two years while we were watching You’ be correct um I don’t know many other people who were saying the Fed was not going to Pivot as quickly as most were expecting obviously even going back to the beginning of this year quite I mean what what around May 7th today so that was only four months and a week ago when it was six seven rate cuts priced in certainly you’ve been correct about that would love to know what do you see them doing in this situation uh I I’ve been surprised to see the stock market soaring to all-time highs even in the face of the higher interest rates and that we haven’t seen more chaos yet again you had the btfp which probably helped things last year but what do you see them doing now and then maybe if you want to work in along with this if there’s anything that you would advise differently than what you see them actually ultimately doing okay yeah that’s a great question and I’ll see if I can try and stay on point yes I I know you know anybody who was following the the bi-weekly market reports that I do for the patrons you know that I I said flat out firmly multiple times these markets are mispriced this is a fantasy that is it’s almost like it was a blackmail attempt it was a massive um there was a massive scop pushed into the markets during Q4 of last year to break the momentum to the downside on bond prices in the United States and therefore stopped interest rates from rising and then we had everything else was an attendant thing on that and they spent billions hundreds of billions of dollarss in foreign exchange reserves to get this done you can see it’s the Fingerprints of it are all over the the treasury International Capital cour but I said flat out there’s no freaking way the FED is going to cut interest rates seven times which is what we priced in to Perfection by the way uh at at your end it was insane and I’m like that’s not going to happen at best the fed’s going to cut three three times at best and I can see that being maybe starting in June you know I don’t know when it’s going to start but let’s say June let’s pick a date that’s all I did I just picked the date out of the back of my head now I’m like they ain’t going to cut until now they may still cut in June I don’t think they will I think they’re more likely if they have to cut because things are deteriorating too quickly you know the fed’s not going to cut until something breaks and just to be clear here because you’ve invoked this a couple of times now I don’t believe that the market broke last March I believe the FED executed a whole bunch of for of onshore euro dollar banks that were being used to undermine fed policy and that this was actually a war between the San Francisco fed and the New York fed and the New York fed won every freaking battle okay it’s a very subtle point I talked about it in the newsletter at great our newsletter to to Great extent I talked about it in multiple interviews I was I still feel I am absolutely correct about this so I don’t think that the btfp was anything more than a means by which to slowly begin removing the stigma of American Banks having to go to the discount window if they get into trouble the goal here is to get the American Banks to use the tools that are at their disposal and not and not be so scared because they’re the how is like psychologically prepping them for the day when they are going to have to go to the discount window now he’s mandating it everybody has to go to the discount window once a year right that’s like you know clear as day this is what his policy is because he wants them to utilize the tools that are at their disposal in order to save the American banking system during what is going to be an epic credit contraction it’s or that credit contraction is already happening so we’re going to have Banks fail we’re gonna have things happen We’re not gonna we’re all going to get our hair musk to quote you know George C Scott from um uh Doctor Strange Love this is happening it’s not going to be it’s not gonna be easy it’s not gonna be fun it’s G to be ugly we’re not going to like it we’re all gonna piss whne and moan about it and that’s just the way it is that’s what recessions do right that’s what stagflation brings but the but so but don’t think that this is not part of the plan and don’t listen to anybody gaslighting into thinking that this is the Fed now going to eily you know turn the tables on everybody and then there’s going to be this big massive great taking and all that’s nonsense it’s gonna happen in Europe folks they’re like setting it up to take all your private property away from you they’re not doing it here I don’t see I don’t see mortgage rates at 7% as apocalyptic I just don’t like like dude we’re just going back to like 1994 like my First Mortgage was 8% like Get over yourself it’s not it’s not the apocalypse you know mortgage rates at 30% talk to the Turks that’s that’s apocalyptic eight% no that’s kind of what a 30-year rate kind of should be don’t you think like and everybody is so gastate and so used to the idea that interest that you know long-term interest rate should be you know 2 3% they just they’ve lost their minds it’s not the way risk Capital works that’s your model based on your experience talking that’s not the model of that’s not what reality is reality is is that you know a 30-year mortgage always carried an 8% risk premum or 9% risk premum that’s the truth and anything else was subsidized through government spending that’s the truth so now let’s remove some of that now there’s no balance sheet room for the government to to you know you know lever that up and to take that on and take that idea to take those those bad debts honestly onto the balance sheet of the nation can’t do it anymore so what I think is H what I think is going to come next well I I hate to be dis I hate to disappoint people but Janet Ellen is going to continue to do yield curve control out of the treasury trying to undermine what F’s doing they’re trying to run out the clock they’re trying to save the EB and the European Central Bank and they’re trying to limp along until the European parliamentary elections in June um and then you know they’re just trying to limp from thing to thing to thing and hope that they can get an escal an escalation of congrations in either the Middle East Andor Ukraine in order to then Force to try and force Powell to monetize a whole bunch of debt that they want to issue to fight a war that no one wants okay that’s the goal so what’s Powell going to do I don’t know is Powell strong enough to stand up to these guys I think Mike Johnson stood up to them over Ukraine but think for four months I think he did the OM man’s work I think in the end you know his own inherent weakness or you know compromised position or whatever it is I think finally got the best of him you know and he finally succumbed but he did hold it off for as long as he could but notice that the closer we got to Congressional recess around the political or on the presidential election where everybody in Congress has to go back and start campaigning to for re-election the more they um uh the pressure ramped up like they had to do something the Russians were breaking through all the all the Ukrainian defenses and uh in the donbass like it was getting bad everything was collapsing so they had to do something and so they called in every marker they could every freaking marker and yet still what did the FED do what’s the big thing the FED did oh they cut back back on QT shrinking their balance sheet by $5 billion a month more than the market had priced in but he has he cut R yet is he gonna cut rates now between now and the election no he’s not trying to get Biden reelected Trump is all fre Trump is completely you know off his rocker on this but Trump likes low interest rates because he’s americanist right so you know protection tariffs weak currency that you know low interest rates that’s Trump’s model for the future it’s bum when the reality is is we need a strong currency a strong banking system encouraging savings and allow the pool of real savings to expand so that we can reindustrialize and re and and onshore all this foreign these foreign dollars back into a an economy that is better capable of handling it and go for fiscal um uh rationality on Capitol Hill which of course all the globalists are fighting tooth and nail what a shock so now I think Powell’s going to try and hold off until the election I think he’s going to hold try and hold off until after I was the September meeting after Jackson Hall I think that’s what he’s going to do and then if we get one or two R cuts and by the way one or two rate Cuts is not a pivot folks it’s just a course correction we’re two and a half years into this R height cycle does he does he get to be called uh weak because he Shrunk the balance sheet by only a trillion and a half and was able to he interest rates at 5 a half% for you know two years does that that makes him a weak fed share I don’t know but you know if inflation keeps coming back he ain’t going to cut rates at all and then we’re talking about raid hikes and we just stay at five and a half percent and then we go and the and the analogy here is the 1970s and I’ll I’ll I’ll relinquish the mic in just a second everybody’s trying to turn him into Arthur Burns I’ve been saying for a while I think he’s a mixture of Burns and vulker he’s not going to make vul’s mistake of raising interest rate of continuing along with Burns plan of raising interest rates and then cutting sharply and then having to go to 20% Which is what vulker did and valker admitted that that was a mistake what he’s going to do is he’s gonna you know Burns raised rates then held him steady and then vulker came in raised rates and then had the cut and then raise and everybody only remembers vulker raising rates to 20% but everybody forgets that he cut rates to 8% before where he went to 20 I think what Powell wants Powell’s plan is to hold rates as high as possible for as long as possible get rid of the fed put under the markets allow them the allow foreign Capital to figure out where they want to be invested and you know whether or not they want to be invested in US dollars or they want to get rid of them and if so then that money has to come home and it has to find um it has to find a willing and good investment environment i e five and a half% on three Monon money that’s a pretty good investment environment in US dollars pretty good and then hold it there for as long as possible and then when the second round of commodity cost push inflation comes back he starts raising rates again so he doesn’t have to cut before he goes higher that’s what he that’s his goal is but if he has to cut one or two times maybe maybe as many as three before he has to go higher fine but I don’t see Powell cutting to 2% and then going to 9% what I would I think what we’re more likely to see is pow go from five and a half% back to F to five 4.75 with the intent of having that mean we wind up at 7% and not having to go to 9 or 10% later on that’s what I think his plan is and I think that that’s a far better plan than what we in the golden hard money Community want to believe because we want the FED to fail but you really don’t want the FED to fail folks you want all the other crappy central banks to fail and you want the FED to fail last yeah because that’s the least eruptive to the global economy to human suffering to the possibility of of war and conflict and all the other things that are Downstream of this and I’m sorry if you have to you know have your big mixed emotions moment which I Define as your mother-in-law driving over the cliff and your brand new Lamborghini but it’s all a big sandwich we all have to take a bite and we all have to figure out how to get through this so I keep invoking Stanley kuri here because I can’t help myself so yeah I hear you it’s uh quite a bit happening at the same time I’m curious if we have that environment where we do see further interest rate hikes what do you see as an inevitability in the next five to 10 years what has changed by then how has I mean I I think a lot about about the growing debt loads and seeing the interest expense grow and seems like at some point are we headed towards a debt restructure some sort of default what what is it that has to eventually happen under that scenario so I so I’ve already pissed off I’ve probably already got every every gold bug’s last nerve or silver bug’s last nerve with all of this so far here’s the good news right if you’re still listening the good news is that it’s going to be a negotiated settlement folks it’s all about the balance sheets okay gold has to be remonetized at some point goody Shelton came out the other day and somebody said hey tweeted at goody Shelton said hey we we demonetized gold 1971 isn’t it about time we remonetized it and she’s like not for 2024 more like 2026 period That’s All She Said So let’s let’s use Shelton as a a very important voice in all of this and actually Tom one second before you do that did you happen to see that the Philadelphia fed actually published a study in January on the effect of stability on long-term prices under a gold standard no I didn’t see that but that’s hilarious I’ll send that over to you and yeah please do man that interesting part they came to the conclusion that it does stabilize prices over the long term of course it does of course it does so it’s now isn’t it nice that we have that now so now we can use that as we can we can point to that to change the culture inside the Federal Reserve blah blah blah blah blah right okay so I think that what I what I see happening is the following we have central banks levered up relative to their tangible assets I.E in this case their gold reserves at to levels that we’ve never seen before to Leman Brothers levels of Leverage right we have the ECB with 85% of its balance sheet subject to an interest rate shock and they have no Reserve currency status to fall back on they have no ability to even print their own currency the memb central banks print the freaking Euros the ECB doesn’t print Euros okay and they need a higher gold price they want the bosel 3 rules to disadvantage American Banks versus European banks in order to keep Capital Frozen in Europe and with the money staying within the European banking system as opposed to moving to the American banking system that’s what bosel 3 is all about So Jamie Diamond’s not wrong about complaining about bosel 3 did you read his end of the year uh note the shareholders I read the whole freaking thing all 65 pages of it okay and he was very spot-on and very clear about how this was designed as a disadv a disadvantageous position for American Banks but at the same time there are Provisions within bosel 3 to ensure that gold isn’t reh hypothecated to a point where it’s use as a suppression tool right so that’s also part of what’s got to go away under bosel 3 and Diamond didn’t complain about that part of bosel 3 he complained about the reserve requirements for US Banks as opposed to everybody else with the Europeans BAS basically saying well you’re more efficient than us so we need to kill your banking system so that we can all have a Level Playing Field like shut up you egalitarian you’re a trash commi bastards off like serious like I’m done like I’m not listening to this crap anymore like that’s exactly what bosel 3 is saying okay just like to put it in bald face terms so you want you wanted you wanted you wanted Tom There’s Tom that’s what I really think about this so what we have to have is a restatement of the ratio of the reserve ratio of gold and tangible asset reserves to the central banks relative to the size of the balance sheet Martin Armstrong’s this is where I absolutely agree with Martin’s analysis for years and been trying to tell the gold bugs we’re not going to $80,000 gold that’s crazy if we do that means that all the central banks collapsed that means that all the currencies collapsed and the government’s all collapsed and it’s Mad Max and you better have your ham radio and tins of sardines and your ability to Project Lead at a high velocity towards anybody walking on to your property is going to be more important than your gold your gold stash just that simple and he’s not wrong so let’s now talk about the the the scenario that we’d all prefer to live through which is that the F that we that what we’re seeing with the FED is actually the model we want to see the FED is shrinking its balance sheet while tacitly allowing the gold price to rise in a controlled manner that doesn’t do too much damage to everybody’s confidence that keeps everything kind of you know moving in the right you know un trying to unwind slowly all of this you know misesian esque Ma malinvestment but it’s going to happen over time as the euro dollar system is drained as the United States goes back to as the Empire pulls back and all of this stuff and what’s being and what’s and and and what the confusing part for so many people is to watch the political leadership of the United States act against this some like yeah that’s because they’re traitors that they’re not imperialists folks they’re just Traders for different imperialists pick your poison as to who you think those imperialists are the Chinese the zionists the the the old Colonial powers of Europe I don’t care pick one just work with that framework and you’re 90% correct I don’t care who’s who the who the imperialists are I just know that that’s who they are I just know that they’re happening I have my opinion on it you have your opinion on it hey let’s let’s fight about it on Twitter and but not call each other nasty names how how about we do that but we’re agreed on the basic framework once you understand that you realize that gold is going that the balance sheets are going to be delevered to the point where we as a society as a global Society in effect and really within each country we’re going to decide well our faith in our government is capable of handling a 2X leverage of the balance sheet relative to the gold reserves and other people are going to be like no no one to one and other people are going to be like No 5 to one and and that’s where it’s going to and that’s where it’s going to end and I don’t know where that number is because I don’t know where people’s heads are which is part of the reason why I also try to do some kind of you know cheap psychological analysis and cultural analysis as to what’s happening to try and get a sense of where I think that negotiated settlement is going to be so conservatively or not even conservatively my basic case which you know I’m willing to and I’m I’m going to be willing to um change I reserve the right to change at a moment’s notice is that’s going to be somewhere between $7 to $110,000 gold and about a 3 to one you know and a three to one leverage on the US balance sheet I mean we got to shrink the balance sheet another trillion dollars or so and or2 trillion and we got to let the gold price rise from you know I don’t know whatever the I think the gold reserves worth $800 billion do or 600 700 billion they got go to two two and a half trillion we get the balance sheet down to to six and we got to get the gold reserves up to two and I think if you have something like that I think that’s a good move on I think the United States if we don’t enter into Political clown world where external forces try to break us up as a country and invalidate our bond market I think that’s a very reasonable eventual outcome and if not then we’re headed towards breakup Civil War a a reputation of the American bond market defaulting everybody starts defaulting on their debt and the United States breaks up and wherever you see the hard collateral assets of oil reserves gas reserves gold and silver reserves uranium reserves potash blah all fertilizer reserves those are the states that are going to have all the assets and all the other ones are going to be allowed to leave and that means I wouldn’t belong Municipal Bond debt in New York for example or San Diego or San Francisco or Philadelphia or Boston or Seattle but I probably if I needed you know some decent you know uni Bond debt to to balance out my portfolio I might buy Miami or Tampa or Dallas I won’t put Atlanta in that mix because Georgia’s political scene is an absolute Quagmire okay so I Boise Idaho for example is issuing Municipal debt I’m thinking yeah I just saw a report about a massive massive truly massive oil report of reserves underneath that area of the of the country underneath Idaho Utah parts of Montana that whole area like enough to double the reserves of the entire world so the peak oil guys you’re all full of we’re about to double the recoverable um supply of oil in the world okay that’s why and that’s why Europe and that’s why and that’s and Chris that’s why Europe wants us to get off oil because they don’t have it yeah and it’s interesting obviously we’re seeing it globally but also like you point out that we’re seeing some of the divergences between states you and I are both here in Florida and I’m sure you’ve you see the New Yorkers I don’t know if they come as far up north as you but certainly you you see the flow of people and perhaps more so than any other time that I remember where we’re we’re seeing some of these policies really shift and also do find it interesting how a growing number of states are are enacting legislation about gold and silver often citing the same reasons as we hear out of the bricks so certainly uh a daunting time ahead they’re getting ready interestingly enough uh this on your point about what I see up here in North Florida which I still still think is in a bull market I think South Florida is now overv Valu and I think the money is going to rotate out of South Florida North Florida as much as it’s still rotating out of New York and California and Washington and other places around the country um I can tell you you know there’s that there’s that line from the movie Civil War I haven’t seen it yet but I saw the the trailer where it’s like uh well we’re all Americans here well what kind of Americans are you well I got news for you every Californian that buys a five acre parcel of land up here with with a double Wi on it or with a small Brick House an old you know old cracker house on it and it’s going to bre they The Neighbors come come down the road you know metaphorically speaking with the you know cup of sugar in their hand and some brownies and the whole nine yards to Welcome to the neighborhood say you’re from California you’re not one of them kind of Californians are you okay like it’s real folks it’s real it’s here and they won’t be and they’re not going to come to North Florida and turn it into you know Austin Texas they already did that with Gainesville and even Gainesville is not going to be Gainesville real soon now because the University of Florida I saw I was talking to my wife yesterday uh about this we were talking about the protests on the I campuses and what I think about that and I put I wrote a big post for you guys don’t know yday I wrote a big post for the the patrons on Sunday um which is going to get reworked and I’ll put it out in public about what I think is going on with the protests and how that ties into the Civil Rights Act and title six and all this other stuff but um one of the interesting things about it is that we’re already seeing big endowments to the idy league schools go away right we we see Bill acman pulled his money I saw something else this morning that um you know that like Mi MIT isn’t you know using diversity as a as a as an admission requirement anymore there’s another there was another one I saw this morning as well and uh um the IB league is being the IB league right and my wife turned to me and said oh by the way the University of Florida is now placing more people in you know major positions around the country than the IDE schools are it’s a big deal this is why dantis deifying the entire uh education system and legal system in the United in the State of Florida at the at the state level is so significant so he’s clearly setting Florida up as a Bastion of or the the beginnings of the new you know power centers in in in North America whatever that winds up being be it be it that they lead the you know Sunshine Republic of Florida out of the old United States or they just take we just take over the United States and you know box up DC and New York and la and turn them into John Carpenter movies and you know be done with them and turn them into museums which I which is what’s happening to them by the way um I don’t know we’ll see po but the power shift is happening demograph graphic shift has been happening and it’s clear as day you’re down in you’re you’re closer to it than I am where you settled I’m not I’m not going to tell you where you know where Chris settled but I know where he is and I know that that’s like the epicenter of all this that whole corridor and by the way it’s also happening on both coasts of Florida it’s not just happening on either the East Coast or the West Coast happening everywhere south of the Okala National Forest it’s just massive and those of you who haven’t been in Florida haven’t lived in Florida like I have for 37 years you just don’t you don’t understand the change you just don’t understand the change so well it’s somewhat reflective of what you mentioned in your column that I pulled up earlier about how Capital goes where it’s treated the best we’re seeing thaten globally we’re seeing it happen on the states and Tom I really appreciate everything you laid out here and perhaps just wrapping up you can let folks know I’ll pull up the website in the background and just let them know a bit about what you do there and how they can sign up or just read some of the things there because I think it’s certainly an important time and you’re providing a lot of great information and if you could just touch on that sure I can and I know part of part of my biggest regret at this point is that I don’t have as as much time to write public as I would like I have I have so many requirements now for my paid subscribers both here both the gold goats and guns and the Newsmax that it’s it’s it’s actually really putting a damper on how much I can actually put out publicly so I do my best um I actually try to use media like this and I appreciate you you know let me on this morning Chris to have this conversation um to try and work through a lot of these ideas but you know we do it on the blog we do we do it in the podcast U when I can you know remember to to book a guest frankly and uh and we do it in within the the confines of the the patreon service which you know for you know anywhere either from4 or12 a month for you to you know just sit and and get a download of what’s happening what I think is happening in the world I don’t know if that’s worth if it’s worth it to you great there’s there’s Quinny she’s telling you to become a patron and uh you know just ping on that and do the thing and you know pick your pick your poison and uh it’s not uh I I think I think it’s worth it I have enough people telling that you know you don’t charge nearly enough money and um you know I don’t know I think that’s usually a good sign when people telling you you’re not chargeing enough money you probably got probably got a price right so we’ll go from there well that was what was popping into my head as well and and again uh I think the important part is that you’re sharing a lot of information that is important at this time not easy to dig through so you can find that at tomongo domme I will also have the link in the description field below and Tom with that said we’ll uh we’ll wrap up this call but pleasure to see you as always and uh just appreciate that we have folks out there like you that are able to make sense out of a lot of these things that are going on and you take good care of yourself and uh we’ll be in touch and we’ll have to do this again soon absolutely Chris anytime anytime you want and uh and as we talked about before we got on the air I’m gonna hold you to it publicly so one of these days you need to come on come on come on up to the great the greatness that is Redneck and in the north northern part of the state now you’re part of the now you’re part of the the Florida Community and uh you know see what it looks like up here and uh get away from you know where you are down there and just have a we’ll have a great time up here I’ll be you’re you’re more than welcome to my home whenever you want we’ll do the thing sure appreciate that and we’ll be looking forward to that and uh yeah it’d be fun to play some music too as oh that would be that would be an absolute blast my my drum room is nearly finished I’m like and you know drum room slman cave nearly finished so we’ll get the place cleaned up and we’ll do the thing all right man talk soon [Music] [Applause]