this is the wealth ability Show with Tom
wheelwright way more money way less
taxes
welcome to the wealth ability show where
we're always discovering how to make way
more money and pay way less tax this is
Tom wheelwright your host founder and
CEO of wealth ability so we are in this
10-year boom and bust cycle and here we
are again in the bust side of the cycle
and this is something I've been looking
at for many many years how do you you
know how do you anticipate these booms
and busts what do you do during these
booms and busts so today we have two of
the experts Alex Pollock and Howard
Adler and uh we have two of the best
um that there are on this topic they've
written a book called surprised again
the covid crisis and the new market
bubble and now 10 years from now you can
write a new one guys so uh if you would
uh let's start with you uh Howard gets a
little bit of your background and why
you guys are talking about this and then
Alex uh same for you
sure thank you very very much Tom and
thank you for having us on your show I'm
a lawyer by training for uh over 30
years I was a partner at Gibson Dunn and
Crutcher LLP where I um I was co-headed
of their corporate transactional
practice before that I've been uh
Executive Vice President general counsel
of the Riggs National Bank in Washington
DC uh from 2019 to 2021 I served as
Deputy assistant Secretary of the
Treasury for the financial stability
oversight Council and one of the jobs of
the council is to uh to uh find risk in
the financial system and remediate it
and obviously nobody uh foresaw this
particular crisis as our book says we we
have had a crisis about once every 10
years uh it's just that nobody can tell
exactly where it's coming from because
of the very nature of financial
uncertainty be and generally nobody
foresees these crises nobody foresaw the
Great Depression in in
1929 nobody really foresaw the the Great
Recession in 2008 2009 and certainly
nobody put together the idea that a
Health crisis through political action
would morph into an entire shutdown for
the first time in history of an economy
and lead to uh another staggering
financial crisis followed by uh the
government pumping in liquidity building
up the economy building up above a
bubble and now that bubble was deflating
again let me turn it over to Alex
thanks Howard I I am Alex Pollock I'm a
senior fellow at The mises Institute a
pre-market Think Tank uh before that uh
Howard and I worked together in in the
treasury I was the number two in the
office of financial research which uh
like uh Howard's staff at the financial
uh stability oversight Council tries to
look ahead and see what we
or what may be coming Howard and I
worked very closely together on that
when the administration changed he said
to me why don't we write a book about
this that's a great idea so here's the
book surprised again I I have a previous
book called finance and philosophy why
we're always surprised so this one is
surprised again
yeah there were a number of surprises uh
in this one as Howard said uh while it
was very clear scientifically that um a
some new pandemic there's some mutated
virus uh would go around the world that
was probable or maybe even certain over
time uh nobody including unfortunately
Howard and me
linked the fact that that happened you
would then get political actions which
closed down a big part of the of the
economy not only in this country but in
others and that in turn would trigger uh
a a a an economic contraction of amazing
proportions and thinking about that that
would Panic Marcus so we got a we got a
financial Market panic in the uh in the
spring of uh 2020 the Panic at 2020
where every Financial Market was
dropping uh like a rock and one of the
things we do in this book is this the
history of that flow
uh and try to remind people it's sort of
even Financial memories are so short as
you know it's sort of hard to remember
already
how bad it was that we try to get people
to to remember the intense uncertainty
and how it seemed like there would be no
bottom and maybe there'd be a depression
and all of the all of the things that
were governing markets at that point
primarily fear of different kinds so so
that's part of the history in my own
history I have been working in
Washington think tanks on problems of
political Finance uh for uh more than 15
years before that I ran the federal Home
Loan Bank of Chicago for about 13 years
and and I have been in in banking and
finance uh all the time since I finished
studying philosophy hence hence
philosophy and finance there you go so
um let's start if we can let's start
with this crisis and then let's go back
and and look at historically and go to
that 10-year cycle because that's
actually something I've been looking at
for many many years
um this this 10-year cyclone and how to
predict it and how to how to deal with
it but if you look at this crisis so you
know when we look when we look at
inflation inflation simply too much
money chasing too few goods right it's a
pretty simple uh computation and so we
knew we had
um too few goods right because of the
pandemic so we had had all the supply
chain disruption and now all of a sudden
you put in huge amounts of money so how
is it that um
so we had a big we we get the big
stimulus in May of 2020 the cares act
totally understand that one
um you know that that seemed to have
worked
um then we have another one though then
we have two more in 2020 and a third one
in 2021. here's my question so why this
third and I mean sorry the third and
fourth one why a third and fourth
stimulus
um when the economy seemed to be already
on its way and do you think that it's
those because that's my theory is that
it's the December and the March stimulus
that really pushed the inflation button
and really triggered this
Howard I bet you want to start or I I do
and and and this it's one of the but I
knew you would too this is one of the
main themes of our book uh a thing that
Alex has wrote about in his earlier book
that we call the Cincinnatus principle
after the uh uh the famous Roman
Cincinnatus who was called from his farm
uh by the Roman senate to save the
Republic from an invasion uh did it and
uh became addicted assumed dictatorial
Powers uh won the war in 16 days and
immediately went back to his farm you
gotta know when to quit after an
emergency is over you have to walk away
from the punch bowl which is the
metaphora was used for the Federal
Reserve and we failed to do it in
December secretary mnuchin was saying
that basically all of the 22 Treasury
and 14 Federal Reserve lending programs
that were initially
established under both the cares Act and
the Federal Reserve Act
ought to be wound down but uh in in 2021
uh uh you had the uh American Rescue
plan which was another 1.9 trillion an
enormous amount I I can't really tell we
probably would have had some inflation
had we stopped pumping money into the
economy and you're absolutely right Tom
that's what causes inflation
uh in uh December of uh of 2020 but it
would certainly never have been as bad
as it got in 2022 had people stopped and
gone back to the farm uh in early 2021.
we have this little line in the book is
uh in effect when the FED has become the
biggest investor in mortgages and bonds
and the dominant investor in the world
how do we get them to go back to their
Farm uh
it's very hard yeah and that we call as
Howard said there's the principle and
then there's the Cincinnati and problem
and the problem is how do you get the
interventions to stop uh especially in a
pure fiat currency or pure paper money
system where there's no inherent
constraint uh on the financing of the
Central Bank and the government so it
runs no one other thing I'd add is we we
are talking about goods and services
inflation but there's also especially
for this show another kind of really
important inflation which is asset price
inflation right right so the printing
all along and the suppression of
interest rates down to zero nominal and
negative real interest rates set off a
an amazing uh inflation in asset prices
which we also discussed in the book and
that makes the bubble and asset prices
so you got these two things going on uh
at uh at once and those assets of course
include houses right you know Ron mobile
one and house prices Ron Paul said years
and years ago uh Ron Paul in his book
said that the low interest rates uh were
the enemy of the poor in the middle
class that that's who they really they
were they went after the poor middle
class the the low interest rates and
that's certainly what we've seen in um
in in prices of rent and prices of
Housing and in prices of energy so and
in expropriating their savings exactly
eight percent inflation is taking away
eight percent of your savings every year
Well if if you if you look at it and I'm
a tax guy and if you look at this uh the
worst tax you know people complain about
a forty percent income tax but in if
you're earning two percent and your pain
and your inflation is eight percent
that's a four hundred percent inflation
rate so I mean a tax rate so that's a
way worse tax rate and that's a that's a
tax rate on the poor in the middle class
that's not a tax on the rich because the
rich can afford to deal with that and
they can have Investments that make more
than eight percent whereas the poor in
the middle class they they struggle to
do so but if we can let's go back a
little ways I want to go back to uh
Reagan volcker because
um there's so many parallels being drawn
right now between this High inflation
and the high inflation of the late 70s
and the early 80s and what was done and
I want to just postulate a uh my theory
here and and I'd like your feedback on
this if you would so
what we have right now is we have the
Fed so the Feds all they can do is they
can only reduce the supply of money
right they they can't do anything about
uh the supply of goods so they can
reduce demand they cannot reduce Supply
and so they're they're trying here to
push down demand uh take money out of
the market they're doing it through the
interest rates they're doing it through
um quantitative diseasing and uh which I
think is funny because it's uh you know
to see disease right and quantitative
diseasing and but when you go back to
sales no sales of their portfolio only
letting them run off exactly exactly but
but they're doing that they're doing
that okay and they say okay well volcker
did that he raised interest rates and
everybody's comparing uh volcker and pal
and what they're doing what I don't see
anybody doing is comparing what Reagan
and Biden are doing because I think
that's an important comparison because
I'm a tax guy and I was actually in
Washington DC in the 80s
in a national tax office for one of the
big big accounting firms and what I saw
in the 80s was the very first bill that
Reagan presented in 1981 was an tax bill
that would encourage investment not
spending investment so it was
encouraging investment real estate
encourage investment in other things so
at the same time we had he's trying to
increase Supply basically while the FED
is bringing down demand and this time
around what well I think we see like
with the inflation reduction act with
the
um more so than the the semiconductor
act which I think actually was more of
an investment site but with a inflation
reduction act which I call the inflation
enhancement Act
um what he did was he actually put more
money in right he's actually encouraging
and there seems to be more sugar if you
will going into the economy and less
less protein going into the economy so
I'd like your take on that because I've
been I've been thinking about this for
years and years and years uh especially
for the last couple of years when we see
this High inflation is there a
correlation between investment
um and increasing Supply and not not
pushing against uh investment like the
Biden Administration seems to be doing
with energy in particular pushing
against investment in um in in the in
the energy sector and instead really
just feeding the sugar into the economy
Alex do you want to go first or Okay
um
clearly the interplay between uh between
the financial policy and the monetary
policy is very profound uh in in indeed
essential uh if the government wants to
run big deficits
without driving interest rates
extremely high it has to have a
complacent fit to print the money to buy
the government debt uh and um
when you compare a volcker with the pole
no and in terms of comparison
I wrote something recently that said if
the interest rates now
uh feel high but they only feel high
because we were at zero right
they're actually very moderate these
interest rates are average the average
bid funds rate from the 1950s to now is
4.6 percent
it's a little slightly above where we
are but they feel high because we had a
monetary policy suppressing rates to
make the government Finance cheaper uh
to facilitate the deficit spending uh
that you talked about and so then you
get you build up a lot of financial
structures dependent on the continuation
of those low rates to succeed so right
so you get a real deflation in asset
prices when they go back to normal but
uh the point I'm trying to get to is
there is nothing vocaresque about
today's rates
today's rates are still
short-term rates extremely negative in
real terms
so if the inflation is seven and the
rate is four and a half that's a
negative two and a half real interest
rate there's nothing vulgar asking about
that and what volcker did was push
interest rates up until they were
positive real interest rates got it and
then you finally and then you got a
really deep and Steep and painful
recession
uh in 81 actually the double dip right
in those days uh which was very painful
and made him extremely uh controversial
in political uh terms but then after
that you got the big rebound and and the
Reagan and the Reagan boom was on so uh
in some I guess it's it's tempting uh
but you definitely see as you were
suggesting of very big differences
between the what was going on in the 80s
with Volker Reagan
and and what is going now on in the
2020s uh with Powell and and Biden yeah
so so Howard how how do you you know
there seemed to be a a greater level of
coordination
between what Reagan was doing and
Congress was doing and what volcker was
doing then we're seeing right now which
seems to be that actually the Biden
Administration seems to actually be at
odds
um completely at odds with what
um the Federal Reserves doing so how do
you see that playing out well first of
all I completely agree with you
um remember
um we hadn't seen anything yet the Biden
Administration basically proposed the
so-called buildback better plan which
would have poured another 3.5 trillion
into the economy and God knows where our
inflation would be now had that been
done I think the country owes a lot to
Senators mansion and Cinema for putting
agreed for putting the kibosh on that
and yet when he can't get legislative
backing President Biden is doing it
administratively yes this is a key point
the bailout let's do it anyway the two
things in the news the bailout of the
Central States Pension Plan uh a
multi-employer plan we write about those
a lot uh in the book again was another
uh uh Pro uh inflationary action that he
took by administrative action last week
and um the student loan uh program in
utterly failed lending program uh uh by
doing what he wants what he would what
he tried to do and and made it's in the
courts and uh maybe the courts will
return it but by administrative Fiat by
uh for giving uh ten thousand dollars in
student loans per person uh and twenty
thousand to those with uh with Pell
Grants this Congressional budget office
uh costed that at another 400 billion
added to the cost of these uh emergency
moratoria that basically stopped
interest accrual on these loans and also
um stopped uh interest payments uh the
um uh the cost of that I think the Wall
Street Journal wrote in January 2022
that cost of that to that date was
another 100 billion with an ongoing cost
of uh Ford of four to five billion a
month because of the moratoria on
interests and interest accruals and
that's still continuing uh this day
under the um you know increasingly looks
more like a big leaf excuse that uh
we're still going through a covet crisis
and presumably most of that money is
just being spent into the economy that's
right
and it's and it's uh extremely
pro-inflationary and as I completely
agree with you there and it's as though
the administration the FED kind of gets
it and they're trying now and the
administration doesn't and I agree with
you that they do appear to be working
across purposes interesting so
um how do you how do you I mean let's
let's go to energy because energy is the
most obvious one where they seem to be
working at Cross purposes uh Biden says
on the one hand you need to you know you
need to refine more oil you need to
produce more oil and on the other hand
it says but we're not going to give you
any more leases so
what's gonna what's gonna happen there I
mean is that what we're seeing gonna see
for the first foreseeable future at
least through 2024
well he's in a by President Biden's in a
political uh uh bind because it is
obviously uh his uh a large portion of
his political
um support are people who believe that
we should uh never do anything with
fossil fuel even though uh gas is
reasonably clean uh and uh we were
certainly energy sufficient uh we're now
moving in the wrong direction but I
think he's really uh constrained uh by
his uh base and uh and whether people
understand it or not they don't seem to
be willing or able to do uh anything
about it and of course it works in
exactly the wrong direction it uh
encourages and support uh supports
countries like Russia that are certainly
not our friends and the folks in the
Middle East who have
who knows if that sometimes they're our
friends and sometimes they're not but
it's certainly doesn't do anything to um
to support the strength of the American
economy well I'd say the uh the current
administration's energy policy will if
persisted and will ultimately run up
against reality uh and and be a failure
but as Howard says it's got deep
ideological problems and and the ability
of human beings to stick with what they
want to believe as opposed to what is
true is amazing
so thank you so let's talk about let's
turn to this 10-year cycle here
um because I think this is fascinating
because we obviously had a crisis in
1979 80 81 we had another crisis in 1989
1991 as that was the that was the RTC
real estate bubble then we had the uh
the.com bubble in 99 2000 then we had it
you left out the Russian collapse in the
Southeast Asian collapse in the 1990s
and the Mexican collapse in 1994. right
you know I'm just looking at you I'm
just looking at us
[Laughter]
my mind's not big enough to handle those
other ones so I'm gonna I'm gonna stick
with the us but then we had it in 2008 9
10.
um but then we seem to have it wasn't 10
years so you know there's a lot of
prediction in 2018 10 years again we
would have this next Crisis and one of
my questions is when you talk about that
10-year cycle
um which we're going to continue to I
mean it seems to me like we're just
going to continue to have them we've had
them for 50 years why won't we have them
for another 50 years my question is is
it when you're looking at because part
of the goal for an investor is to
predict it right so if you're looking at
this are you going is it 10 years does
it tend to be 10 years from the end of
the last cycle and and then that would
be about right because that would be
2012 to 2022
or is or or is it just a 10 to 15 year
cycle it's it's approximately 10 years
about every 10 years it's by no means
mechanical
um and um let me say 2012 was was not
only the end of the house price collapse
here where the house prices finally
bottomed and it was also the European
sovereign debt crisis which was very
deep going on at the same time so that's
2011 2012. of course in the 20 teens we
had the two biggest Municipal
bankruptcies in history which were a
generalized crisis but we're very
important financial crisis so it's about
it's about 10 years and it it applies to
this country but also to the world as
I've been interjecting into your
Excellence uh here uh it's interesting
Walter badgett who is the intellectual
father of the central bank bailouts of
financial crises lend freely in the
financial crisis you put a bunch of
other restrictions on lending freely but
the lesson that's been taken by central
banks everywhere in the world is Lynn
freely in the crisis you know Howard and
I call that Central Banking to the max
which is chapter 12 of the book and we
look not only at The fed's
Lending to the max but also five other
major central banks and they all did it
together and they all are in it together
which which means you really have to
think about it as an investor in a
global sense because you are up against
a club of central banks who tend who are
in very tight with each other and very
tightly in communication
and they tend to talk each other into
the same thing and so they do all the
same thing together so you get something
interesting which is the
the one of the most important Financial
factors in the world are the ideas
which are in fashion because these are
fashions the ideas which are in fashions
in fashion with the international Club
of central bankers and you have to think
about that as an investor I should say
on the 10-year cycle uh there's two
quick things that one Walter Walter
badges great book Lombard Street was
published in 1873 and he was talking
about a 10-year cycle in 1873 crises in
the in the British wow Financial system
in the 1820s 1830s 1840s 50s and 60s and
he's fighting in the 1870s so there is
something odd you know
uh is it just long enough to forget uh
is it is it long enough for the new
riskier structures to feel like they're
okay and uh uh is it long enough for for
new people who didn't live through the
last one to come in and take a swing for
the fences
in this one I think there are all of
these things but we certainly do observe
it I'm sure you know the book of mania's
panics and crashes uh by Charles
kindleberger which was published uh in
1978 where he talks about the 10-year on
average he says I've looked at four
centuries of financial history wow and I
see a four about about you know
approximately a 10-year cycle he wrote
that book in 1978 and we had as you were
and I were saying crises in the 80s the
90s the 2000s the 2010s and now a real
big Panic uh in 2020 uh you definitely
have to think about this the problem is
you don't know the timing and you don't
know
uh where it's coming from if I can just
make one more point the the book starts
off relating how Howard and I were
sitting I wrote this line in the book
and what we described is Howard's
spacious office in the U.S treasury
building
uh trying to see what would happen next
in December 2019.
and uh we went through a whole list of
risk factors and so on
but didn't think any were big enough to
cause a crisis and finally said well in
fact it looks pretty good and I said to
Howard yes but when the next Crisis
comes we won't see it coming
and
the next races was three months away and
nobody saw this coming because nobody
saw this link from virus and politics to
close down to financial collapse but
there's the challenge for all of your
viewers let me make up if I may let me
make two points let me ask you if you
would address also why are you going to
do this Howard would you dress also
depth and breadth of of crises at this
while you're while you're talking
in in in in what in what sense uh well
so you know you look at the depth and
breadth of the 2008 crisis it was way
broader than than the two than the 1999
or that even the even the even the 19
um 89 crisis
so first let me make the two points I
wanted to make and I was going to
mention our meeting uh in 2009 in 2019
in December and the economy had never
been go we knew that uh by the 10-year
rule we were due for a problem but the
economy had never been going better and
you really have to be a pretty gutsy
looking at it from the point of the
investor you really have a to be a
pretty gutsy investor to say well it's
been about 10 years uh maybe I should
sell uh in in the short term because you
think that you're gonna things look
great you don't see any big problems and
you think you're going to miss out on
this enormous upside which is a real
problem of human psychology the other
thing let me just add a note of optimism
here uh the other point is that um we
have gone through this boom and bust
cycle and but at at and and in each of
the bus
um people lose a lot of money and
markets go down but they come back
stronger so if you have a fortitude to
stay invested through the crisis uh and
and of course this is terrible if you
happen to be retiring or being a
transition point in your life during the
crisis but if you have the fortitude to
stay with the program
historically you wind up fine and
ultimately then participate in the uh uh
in the next boom and each time it gets a
it gets a little better the um uh
there's a difference in the types of
crises if you go back to 2007 and 2008
you had a crisis that originated in
certain asset sectors of the market
housing and banking assets and That's a
classic
jotany and uh financial crisis if you
have the ability to land on those assets
and keep them uh keep them funded you
have some confidence in advance
eventually those assets will reflect and
that's what ultimately happened the tarp
program which was set up to invest in
those assets ultimately although not all
of the sectors were profitable but on
the whole the tarp program made a profit
which had uh in terms of death and
breath the scary thing that we faced in
the government in 2019 was we never
really had a shutdown in every sector of
the economy people were out of work
small businesses were failing
restaurants were closed people couldn't
pay their rent it was uh it was very
very different I think than earlier
crises the the only two Health crises
that I can major health crises the Black
Death there were no shutdowns because
there was no economy uh in medieval
Europe uh and uh in the flu of uh 1918
uh the economy didn't shut down people
people kept working uh and uh here you
see you really had something that had
never happened before and so in depth
and breadth the original actions and I I
think you as you I think mentioned at
the beginning uh uh before we started
taking it too far were great actions um
uh the economy got saved people were
safe uh putting in the money uh the
budget approach in 2019 was absolutely
uh
it worked and then it went on too far
and we got we got what we call the
everything bubble and then the
subsequent inflation and now the
deflation I do want to say one thing
though that's really important about
this idea of the longer term that works
providing you don't go broke
in the in the meantime right and as John
Maynard Keynes famously uh said the
market can stay irrational longer than
you can stay solvent
uh and one of The Temptations of course
in the book in the bull market is always
to lever up and but Levering up will
make you uh if you're not careful so
that you don't survive the bust right
so so let's look at um what's coming all
right so uh We've a lot of predictions
uh headed to a recession uh fed says
they can create a soft Landing the stock
market is not believing that the we're
going to have a big crash that they've
it's been pretty soft for in in the
market the Market's not taking huge hits
um like you might might have expected
from this and so what do you see coming
for the next year two years how how
broad will this crisis be and how deep
will it be
well that's a uh asking us for another
prediction and of course uh absolutely I
want your crystal ball pal I want your
crystals predicting is hard especially
the future but I say predicting is easy
it's just predicting correctly this
that's all right let me start off with
the fact we still have negative real
negative real interest rates
which is not so contracted at dictionary
so my own guess is we're going to have
more inflation problems in in goods and
services inflation than we think and and
we have the whole
uh uh Advanced world doing this together
which also there's your breath Point uh
this is going on in all over the world
we they do have a
a real estate complete debacle in China
which will certainly weigh on the
international economy and needless to
say we have a war and a pretty sizable
War
uh one of the things we discuss in the
book is is what are the most important
Financial factors in history uh and it's
clear that Wars are the biggest
Financial factor in history because it's
really expensive to carry out
destruction and and killing and they
always end up printing so you have
because all this leads me to believe the
inflation problem may be tougher than
you think
uh and it may uh take
so you you have a choice another another
thing we stress in the book is nothing
is free whatever you do it as the
fundamental
principle of Economics nothing is free
whatever you do has a cost whatever you
do as Freight trade-offs and if you if
you uh if you carry out the Walter
budget salvation of the the market uh in
the crisis you will pay for it later on
in terms of inflation and if you keep it
up you'll really pay for it
so uh with the war on and and still make
it real interest rates and all central
banks uh in the world in on this game my
own uh intuition
which is no more than a guess which is
all anybody has is a guess is the
inflationary problem will be tougher uh
than we think and then you'll get a
choice let the inflation run or have a
harder
a harder language per Landing than you
think
I want to jump in I uh I agree with Alex
and obviously uh all Financial uh
finances surrounded by so much
uncertainty a theme of our book and so
all the predictions have to be taken
with massive um amounts of salt I too
think uh the bond market has
underestimated the inflation problem I
think that uh if the political forces
and this Administration are to Prevail
then we will live with inflation and
interest rates will come down I think
that if uh the Jay Powell is a a very
very conscientious person and sees the
risk of inflation and I think he is uh
committed uh to um to uh following the
volcker
um uh volcker formula and uh and trying
to to to fix it but what I what I really
worry about is uh every time we one of
these crises has hit in recent years and
the FED uh jumps in we sort of start
from a worse point we have less dry
powder for the next Crisis and I'm work
I worry about what's going to happen the
next time
um what happens we're very rich country
we got we were able to get through the
crisis so far uh by deficit funding uh
and who bought the debt I mean the the
fed the central banks stood by and
bought about 5.7 trillion of U.S
government debt uh along with the 2.7
trillion of mortgage Securities uh it
bought which has led to the uh housing
price uh the housing price bubble but um
the feds balance you just in turn has
gone to 8.9 trillion in uh before the
crisis of 2007 and 2008 and 2009 it was
about 900 billion after that crisis
Bernanke again bought government debt um
when he was chairman and he said it
would all be temporary the fed's balance
sheet got up to 3 3.88 trillion and that
was pretty much it wasn't temporary that
was pretty much where the fed's balance
sheet was when we began this crisis of
2020 and it grew another uh another five
another five trillion and that's because
as Alex said you can't really sell this
stuff if you sold the 2.7 trillion in uh
in uh low interest Mortgage Debt for a
huge loss now you'd also Bank the uh uh
uh the housing market so you can let it
run off it runs off slowly nobody's
refining those mortgages now when
interest rates are uh are high it runs
off slowly and is there some point when
uh demand for U.S government debt will
dry up and how high can the feds uh
balance sheet uh go before we have uh we
have hyperinflation so the point I'm
trying to make is that uh each time we
do one of these things we start off with
um last less dry powder to fight off the
uh economic assaults then we had uh
before
thank you
um very very well both of you so let's
just let's wrap up with this so what do
people do so give us a couple of
practical ideas some practical things
everybody's wondering okay so do I hold
on to cash which has a cost because of
inflation do I you know I do I put into
precious metals which has transaction
costs do I
um you know do I do I leave it in the
mark do I put it in the market and just
say well if the market goes down so what
it'll come back up
what's what's your what's your solution
what what are your suggestions
well I'm the world's worst investor so
uh I I start with that with that caveat
my my personal uh philosophy now is uh I
am going I've got what I've got in the
stock market I'm not adding to it right
now because I think in the short term
it's going to go down further but I'm uh
going to stay put and uh and hopefully
weather the storm I see uh I think as I
said the bond market has it wrong and I
think long-term interest rates will be
going much higher uh in the uh in the
next year uh that's my own personal view
but it could be wrong and I've no degree
or no study of being an investor but I
think that there are going to be
um opportunities uh in the uh in the
bond markets including uh uh even in in
in in treasuries and also in uh in uh in
municipal bonds uh of course uh uh I I
would I would personally only stick to
the highest rated municipal bonds but I
think that their tax advantage I think
that long-term interest rates will go up
and people will have uh an opportunity
to invest at higher interest rates that
will for a period of seven to ten years
that will eventually uh uh come down and
uh towards the end of that period
they'll be very happy with those Bond
Investments that's my thought anyway
I'll show my classic conservatism and
the answer to your question uh Tom be
Diversified uh
I would be light now on equities but own
some of all of the above
watch your debt
keep the keep the debt down in times of
uncertainty
uh and I think in addition a very old
lesson is you you should especially as
you get older uh think of your of your
wealth not only in terms of asset prices
but in terms of income
in the uh absolutely read all British
novels you say well how rich is he and
they something like they say something
like well he has two thousand pounds a
year well the present value of two
thousand pounds a year moves up and down
all over the place but the two thousand
pounds is is still there and you should
simultaneously in addition to thinking
about the prices of your portfolio which
is the present value of all of those
future flows think about what your
future flow of income actually is and
and how that compares to what you need
and the and the the better it compares
to what you need the more staying power
you have
I think that's a perfect way to all
about cash flow uh we talk about that a
lot
um it is about cash flow it's uh of
course all asset prices eventually come
down to cash flow like you said it's the
present value of the future stream of
cash flow right so it doesn't matter if
it's real estate stocks uh energy
doesn't matter it's always a stream of
cash flow and uh cash flow cash flow is
always the king and which is what makes
in you know inflation resistant uh or uh
recession resistant businesses so strong
because they're producing cash flow so
with that um again the book is surprised
again the covet crisis the new market
bubble Alex Pollock and Howard Adler
great absolutely terrific
um interview thank you so much uh any
besides the book any place people can go
to get more information
they can for me I do have a website that
has all my writing about five or six
years it's Alex J pawlik.com my lxj
publicwritten together.com
um
and that's that's one spot if they have
an interest in pursuing this
awesome thank you Howard
thank you very much
all right um if you want more of
Howard's ideas you gotta email it all
right that's that's right I'm a I'm a
religious reader of the Wall Street
Journal Financial Times there you go
there you go all right thank you so much
oh thank you this has been terrific
um we'll let you go but just remember
you know the reason we look at
macroeconomic
um stuff like this and and really look
at the economy is because it does impact
everything you do it impacts everything
you invest in it impacts your taxes and
the reality is the more you want the the
better you understand it uh the more
money you're gonna make and the less tax
you're going to pay we'll see y'all next
time
have been listening to the wealth
ability Show with Tom wheelwright way
more money way less taxes to learn more
go to wealthability.com
[Music]