[000:00:00;00] the i'm action or time, so you're welcome back to going underground, broadcasting all around the world from the u. a. i had it scheduled 1st january full membership, a bricks alongside the arabian already run egypt hodge and senior in ethiopia. a good move ahead to full cost economic collapse or a mistake to incur the anger of washington. someone who doesn't hold back from telling you with any money you have should be is economist an investment. advisor jim regard sees the best selling economics that also full of offensive giving us intelligence advised that in current editor of the financial news as a strategic intelligence, he joins me from portsmouth, new hampshire, in the usa. thank you so much, jim for being on the show. you know, the, the global in back to the war through ukraine became clear, pretty quickly arguably,

guys are less. so you've testified in congress on the financial modeling itself. i mean, before we get to actually the, your forecasts. why is it being you'd be wanting a full gusts from institutions for, for decades? maybe about why is it go to even was the i m f, the banks, governments g 7. all these people who work in those offices, what, why they become even more terrible about forecasting the economy as well. the reason i mean, obviously forecasting is difficult. no one does a 100 percent and you're dealing and probably ability. so all that sort of the given, but the question is why so, so bad? why are they, you know, if you were, you know, just kind of drawing a blindfolded throwing darts on binary choices. you'd be right? half the time you know is if you knew nothing, you'd be right half the time just on a random outcome. but the official institutions are what are some that they're, they're almost always wrong. why is that? the question is, you can do some pretty good forecasting if you have good models. in other words, the forecasting is based on the models,

which obviously arizona approximation of the economy. and they have inputs. the inputs are all the same. we all look at the same data and you get outputs, so your forecasting is only as good as your model. so the question is, how good is the model and the official models, the predominant models, the ones that mastery and economists use are badly flawed. and i can give you some very specific examples. so what is, was stock market going to do tomorrow? and the next day and the next day, is that what we don't really know day today, but the mainstream economists have um a what's called a bell curve or a normal curve. and they're like, you know, it'll be kind of 5050. and then the extreme of us are very, very aware of this for the bell curve. looks like it hits the x axis pretty quickly . but that for dentist, that redistribute, that, does not reflect reality. if you actually look at empirical results, you look at the tequila crisis and 1994. the long term capital russian crisis in 1998. the 2008 global financial crisis. what happened in 2020?

these things are happening every or 67 or 8 years. that's because of the, it's actually a different curve or something called the power curve. the power curve has fewer small events and more cataclysmic events then the bell curve. so the 1st thing that have to do is move to the power curve, but what is the power to really represent? it represents complexities, theory and complexity theory without getting, you know, to, in the ways it has what are called immersion properties. meaning, things that come out of nowhere you, she had perfect knowledge and she had all the data and perfect knowledge. things was still surprise you. well, if you know that, then don't be surprised. that was, you should tell the viewers or listeners or your clients, etc, that the shocks happen with much greater frequency. so the short answer is your, um, your forecasting is only as good as your model. and the mainstream miles are badly flawed because they assume a normal distribution of the best. but that does not line up with reality. do we have an insight into that to fluid modeling by the fact that they look at full

employment and say, hey, things are getting really good. and then, you know, anyone in uh, western europe right now, what were the entities of the united states is going to tell you, life is tougher than it's ever being, regardless of the latest quarterly sophistic. and that's a very good example. uh, actually because the label 1st of all the what there's a low unemployment numbers don't solution united states. so on a plan is about 3.8 percent give or take, which is so low as since the 1960 some yeah. right. where they were, they don't tell you, is that there's a very large cohort, 8 to 10000000 americans who are not working there. you know, between 25 and 54 subprime working age. they're not working, but they're not counted as unemployed because they're not looking for jobs. they're, you know, watching sports or reading advertisers or something or what. but the point is if you include that group in the unemployed, the unemployment rate would actually be more like 10 percent, which is depression level unemployment. so that's the 1st thing. the 2nd thing,

they don't say. you have a job, this great, the number of part time jobs as opposed to a full time jobs is, is very high relative to, to baseline. so you, you can barely get by in the united states on a full time salary. we forget about a part time salary and lots you have to part time jobs in the labor department house. so there's 2 people working was only one person, but they're working 2 jobs. so they get county. so do you and you seriously saying they don't get these people with the i am a friend that the treasure us treasury deposited? i think you're expecting to encourage you to wireless. celebrate. i'm loading the financial generalist, who celebrate by a regular lo unemployment as well. they might as well handle palm palms and the college sweaters because they're like cheerleaders. i mean their job, the what the job of wall street is to sell you stocks the job to the central banks of the i math is to engage and happy to. are they? do you ever hear the fed? have you ever heard the fed? i've been following for 40 years,

so do we think it is going to be recession next year? they never say that we've had 10 recessions by the way, since 1974, but or 69 rather. but they'll never say that. so. so 1st of all, there is a lot of happy talk. secondly, they do have a 4 miles. we talked about that, but just to pile on a little that unemployment is a lagging indicator, meaning that it will go up in the recession, but not until you're already in the recession. if you're using unemployment to forecast the recession, you're never going to see are coming because the employers or companies are entrepreneurs. if they're, you know, their sales are going down or, you know, volume just going down cetera. they'll do everything else 1st before they fire people told, you know, try and have a life. so negotiate is cheaper, right? so you know, car cost, wherever they can use paper napkins instead of cloth of the laundry fire and people's, the last thing they do when they get around because people are valuable and hard to recruit. when they get around the fire and people you're already in the recession.

so if you see unemployment us, for example, or you're going up to 4 or 4 and a half, 5 it's, it's too late. so there's no forecasting benefit from unemployment numbers because they are a lagging indicator. but again, the fed as marriage is something called a phillips curve, which says, you know, unemployment and inflation are inversely related. so if i'm fine is low inflation is high. if unemployment is high, inflation is low, that's their model right now, unemployment is low, so they think inflation is going to be high. there is no evidence for them all the in the empirical data just as supported. and 1977. we had very high unemployment. and very high inflation and, you know, i remember 787980 inflation was 15 percent. that plan was 10 percent a so soft curve that's those and those things are not inverse simulated. they both went up. and by the same token, you can have periods of low unemployment and low inflation. that seems to be the one that's terrifying. the low unemployment in low inflation as to uh,

i don't know whether they're using the potato chips cuz as you mentioned that some of those people, you know, it's, that's just laid capitalism, making them depressed. that's why they're on the sofa. give me that. i mean, it's freaking all of the low inflation, low unemployment then. i mean, if that's happening to economies, especially in western europe and, and the united states could what happens in the middle east to be enough to tip it over. because it's being bubbling along like this could something, uh, chip it over and what was going to happen any way i do want to get onto optimism because you are optimistic as well and to what people should do to navigate these things. but could, could what's happening in the middle east, tip it over? absolutely. there's no question about, let's hope it doesn't, but the potential is there. so, you know, i don't need to kind of go through what's going on the battlefield. i mean, we all, we get plenty of information on that, but we really don't want to, i mean things are happening, hour by hour on this, the overall allow a lot of it in terms of g of politics is, i mean, famously this,

out of the saudis said no to the by the ministration department, oil right before before the oil, this car and flare up of activity there in the us right now the us has moved to aircraft carrier battle groups into these, to mediterranean and put a nuclear attack somewhere in the red sea now they're, they're all in the us only has 11 of these battle goose by the way. it's not just an aircraft carrier. they come with cruisers, destroyers, submarines, supply ships, a wash, and a lot of those. we have 11 of those and they're in their entire please. and then the given time for them are in for repair and maintenance. are dry, dock or whatever. so 7 are kind of online and i've 7 in the world. we've moved to, to the eastern mediterranean, that is a huge commitment. by the way, china only has warranty with us as a lab, and china is one rush. it has one or 2 buses, your system license plate. so why,

and they've got f 35 fighters and no sixteens and the cruisers have christmas. this is why the share prices of these companies making all of this stuff has been going and performing very well. it's cage in new jersey or wherever ready? on lockheed martin. i mean, they're all on our recommended list. i sent him in the oil company, chevron, excel mobile, etc. they're, they're gonna be big, you know, the worst tragic, but financially they're going to be big winner. some of this, so what the, why is the us put that much power in the eastern mediterranean is not surprising. moss is to fight around if it comes to that. but, but it ran has a lot of options as well, including closing, closing the uh, the, the golf clothes industry. so for most, if any of those things even get close to happening and there are dangerously close today, the price of oil will go to $200.00 a barrel. let's see, let's just get, i mean, away from the politics in the tragedy in the united states. isn't that ex border of well, so will that immediately re dividends for the united states and oil costs that much as well?

the problem with the oil is it really does have a world price you write to us, isn't that ice border? so the reason is your explorer, they sell the world in china, you a, uh, etc. but uh, is world price. yeah. brand new at west texas intermediate and they tre, futures. so i, i, the christ just because you're an ex border, that's probably a comfortable place to be. but the, any destruction of the time we're talking about was send the global price skyrocketing. now that happens to be a winful for exxon share. ron and other a, a pioneer, other companies in the permian basin and in texas. but it, but it's a burden on developing economies as this and burden on europe, which is an oil importer to burn on china, which is an oil important. so we don't grossly slow the global economy. okay, i now get the west and you are going to 2nd, but isn't it good for the united states? i mean, i still don't understand. maybe you can explain why it desperately needed to help them

a doro and venezuela to cub short term shortages of oil when it's and then an oil export. but you've got to madison keynesian reconstruction because of each me style being fired to kill children, it has to be replaced each uh and you're sending the aircraft carriers. there are these parts, so obviously need refurbishment billions of dollars of u. s. federal aid. well, federal spending into military technology, you have all of those levels, which can be mitigated by government subsidy of some kind of manufacturing, perhaps in the united states, perhaps via future us government. if we leave western europe to one side, we surely in the united states isn't such a bad prospect. a $200.00 barrel or a $150.00 barrel. i only get, i'm not saying it's going to have to i'm saying that could happen in this in certain geo political scenarios. i guess i have the pump and go from the $4.00 a gallon to $10.00 a gallon overnight with this happened before this happened and 1973 when they are

loyal and barbara was imposed as a result of the um, the the uh the, the the option for war. uh right, so uh uh, oil went from 4 dollars to 12 dollars, 1212 hours. that was pretty cheap, but it was a 300 percent increase and the economy, us economy went into the worst recession since the great depression. in 1974 on the stock market crash. 50 percent. so yeah, i'm is your went for, for oil companies. yes. and if your owners only feel good for you, but that does not translate into benefits for consumers. and the u. s. will not socialize, and by the way, there's a large cohort in us politics that would like to put the price of gasoline to double because they ran on the screen to scan. and they actually want, they want to get rid of internal combustion engines. they want to get rid of the so called fossil fuels. they want, you know, a solar panels and windows and all that which don't work by the way, but they're, they're pushing now. so for, for many of them, for the general grantham, our secretary of energy, they think $10.00 a young guessing is a good thing. that's,

that is why do we get here just economy in him over time to visit by to you can write goods, i'll stop you there more from the best selling economics. it was a former pedagogue advisor, an editor of strategic intelligence. after this break, the, in the year of 1954, the united states of them, erica, engaged in warfare against the people of vietnam. the white house of boarded the corrupt about the government of southern vietnam. key in 1965 americans began their invasion following the aim to defeat the forces of vietnamese patriots. defend the

gun was confident that the victory would be on the american side due to its military superiority. however, the enemies during this war into total health for the occupants. unable to cope with the guerrillas, the american army started blanket bombing alongside using chemical weapons and naples, which burns all a live village of miles away. where in 1969 american soldiers killed 500 for civilians, including 210 children, became a tragic symbol of this war. all involved during the whole period of this conflict, the usa dropped on vietnam more than $6000000.00 tons of bonds, which is 2 and a half times as much as on germany during the 2nd world war. in 1973, the american army under the pressure of the rebels, withdrew from vietnam,

and only 2 years later did the pop and regime. and so i got involved. however, the vietnamese paid a high price for their freedom. more than 1000000 vietnamese people became the victims of america in aggressors. the welcome back to going underground. i'm still with the best selling economics. we have a full that pending and advisor, an editor of strategic intelligence. james reco regards jim. uh you, we were talking about the yeah, your environmental uh, ideas of, uh, different uh, blocks within power in the united states as to 5th are as of the higher fuel prices . i know that the, the same groups are very good at predicting the outcome of the ukraine crisis. clearly, i think, i mean, it's now going through recent history. i suppose. why did they think that the

sanctions on russia would as a work, as well? uh, you know, she, you said, as you said, they wouldn't, i should say you said they would, wouldn't even when they were being implemented, i said they wouldn't were before they were being able to manage all dependent on that. and by the way, i said former adviser to take the compliment for life, so you choose financial welfare of the are some of the work hours and i had a class and april 2022. so just a couple of months after the special and military operations started and you crank uh and seminar, southwest 13 handpick officials, but just all the rest of the military plus intelligence and est department. actually this is a mid mid career future. big brain structure, 3 star generals, national security advisers, etc. and so in 2022 right after the war and ukraine started, i said the sanctions and are going to work. in fact, they'll be worse than ineffective. they will actually backfire and hurt the united states. more than not hurt russia,

they will not so russia down at all. now the class has already gone. how and a, you know, ladies use a battalion commander and their tillery, of navy commander, i, and they're 16 part of the side of the road. and they were giving me a lot push, it was just fine. i you're welcome that and the seminar format. but i explain why they wouldn't work on why why she's just selling oil. you're going to sell to china and india, which they've done, why they could gear up, put their economy in a were funding which they've done by the way, 4th quarter of 2023. we kind of, you know, a very recent data looks like the, what the russian economy is going to grow about 5 percent is eve and on an annualized basis as overheating. and the us economy may be 1.2 percent. so as such as rush, it hasn't been crush, remember, we're buying it, we're going across the room, but we're not destroying the ruble. guess what? the ruble, you know what it did for about a minute and then went back to the pre war level, a 70 roubles to the dollar. there's a little weaker is about 90 with most of the dollar with us, not

a huge change the roubles doing fine on the watches. they have the best central banker in the world of year, and that'd be elena. what she did, she's worked, been working on this for 10 years and i've filed it for over 10 years. she put 25 percent of brushes, reserves in goal physical, gold, housing, custody in russia. you can't freeze gold, you can see that it's not digital is, doesn't realize swift. so all these prohibitions had no impact on russia's, a large percentage of rushes reserves cause was and physical bully and, you know, in, in, in uh, in russia. so uh they, they thought it had the russians, you know, the chest as their national sport. how they think 3 moves ahead of us can barely think one move ahead. but so me what was happening in the us economy. we're, we're, we may be in the recession, we're certainly heading for one to we may actually be in one growth for the, for in the 4th quarter. looks really weak. and one of the reasons people say inflation is coming down. there's not a victory. well, you have to ask yourself,

why is inflation coming down? is coming down because the consumers checked out, credit cards are tapped out. they've used other savings. it knows when you, when to a recession. yeah, inflation comes down a lot, but it's not a good thing. because you're in a recession, i don't know what their arguments were against your statements at this hammond, unless you are seriously saying they're a chinese spies were russian agents in the war college because clearly to the benefit of a multi polarity of countries in the global south in the arabian peninsula, it's being amazing, be self sanctioning by the united states and nato countries. why? what were their arguments against yours with sanctions? would rebound and boot around as well? they didn't have strong economic big anomaly, gardner. so i think it really just the beginning of the war, emotional america is going to support is for your credit, i think was mostly here, but my job is as a seminar leaders to, to some of now i,

i did the course again in the spring of 2023 i know about uh you know in um, in, in may actually. and i sat in front of the class. i was 2023. so let me tell you what i told last year's class. i said it was saying she's going to fail. you're going to go right, here's why i always back it up with specific. and i said to them, everything i said was right. everything i said a year ago is right, and we don't to debate it because it's played out and you can see it in the day that they were much more town with a very interesting experience. i have a lot of information channels that are, is very, very hard to know what's going on. ukraine's really difficult because the new york times the washington post international times economists, they all live basically says, read them the way i used to be proud of doing the co workers or all lives. but it's always interesting to know what your opponents are lying about. because that inferentially tells you what they actually care about. so you can use that. you can lose, you can use lives through the media using inferential method and base their own to actually figure out what they're thinking as an intelligence technique. by saying

that they're all lying, but it, but you know, answers to the lie about. so how do you get good sourcing from ukraine, from, from the battlefield and economically as well as out there. you have to, you know, you have to cultivate and i spent most doing that. so i was, i'm describing this a so one of the breaks, very smart, very nice lady from the state department. took me side. and she said, jim, could you give me those sources? i said the court and i sent her an email i. i gave her all the lice. but in my i thought to myself, wait a 2nd. you have that top secret security clearance. you're a senior at the state department and there's stuff you know, beyond subsidy really can't even talk about. so i said, why are you coming to me for sourcing it? but what it tells you is that she was getting a diet of, you know, lives with us intelligence community or certainly from the us media. but i give her credit for reaching out and saying what back and i guess some great information and as a really distorted, that's

a very disturbing story in the context of how many of been killed daily and the how many lives center live. we're going to have been lost. i know you're critical of not trying these economy. i don't go too much into that, but i would say, and we will get on to what people should be putting the money in. i mean, how careful community they were encouraged developing nations by what's happened post ukraine. how careful do countries have to be about unwinding boned positions, treasury bond positions in the united states, which is always being affair. but how careful do they have to be diner, especially guys here, and that is the fear and very few people really a handful actually understand what's going on, but i can, i can explain it so. so the us treasury publishes day is called the tech report and it shows who owns us treasury securities. you know, china, japan, taiwan, you know, and others, lots of european countries. we actually, i mean,

i think the biggest certainly luxemburg and island so well, this is the luxembourg and belgium. actually belgium is that there, there are intermediaries for china. when you see belgium data or came in the analyst day, that's really chinese data. right. and you have to know which is they're just using fronts and cutouts to during the statistics, use a white as belgium own so much of us debt. it was shot a shot. there's a front bridge on it, that's the answer. but getting back to china, so you put all that together. so chinese solar is of us government securities are declining. that's the fact. and the same with your pants and people go or seeing they're jumping their treasury, they're losing faith and the dollars are not true. there is, they are desperate for dollars that the csc opposite. there's a global dollar shortages behind the curtain. you're less than your dollar marketing ongoing. what's, what's going on behind the card? it's not the central banks are not in control. the commercial banks are in control . jp morgan city, barclays, hsbc deutscher bank. you're gonna credit bunkers on time. they're,

they're the ones who actually run the system and create, they create, they bring their own money by making laws. so there's a dollars shortage and you need cuz all the banking houses in the world combine are in the are in the trillion strains of dollars. but the notion of the rivers which are off balance. she is one quadrillion dollars. and then for people who don't know that you were a quadrillion, is a 1000 trillion a so much you haven't driven, is there extremely high leverage and you have to put up collateral to support your positions? well, what's the best collateral? 3 months, treasury bills, 6 months, treasury bill, they don't even want to your treasury notes or 500 treasury notes they want. there's really short term treasury bills. well, if you're in georgia back or you raise just be say, and you want to get treasury bills as collateral. you need dollars to buy the bills . and so one of the reasons the dollar has been so strong has a diff, a little bit. and recently, for the dollar has been very strong for a year and a half is because there's far from getting dump in the door. there's been a mess,

scramble to get dollars to buy a treasury bills to support your dream dispositions. when you see chinese, us treasury positions declining what's going on as they're selling, the treasury is to get dollars to prop up their own backs a path. so really we just, it's not the 3rd from the strength and the a slowness, and then you bricks will. okay? well, very quickly, we're running out of time really quickly. why is your favorite uh, precious mental, not performing as well as it might. i'll i know you've got a new wants to analysis of the gold for so so many years explain why it hasn't belonged as magically as perhaps some would have wished it for if they had put money in and how eventually it will well 1st. so i would say it has, i would ask you different questions. when interest rates and short term interest rates went from 0 to $5.00 and

a half percent in less than 2 years. and 10 year treasury now yield maturity went from 2 percent to 5 percent in 2 years. why the goal not go down? that's the point of fact. it is. the fact is kind of a level around 1950 uh, you know, between nice to buy to every $1000.00. now, in other words, when with interest rates, sky rocketing, that's usually a killer for goldstein's gold crashing. but the fact that gold has held up in the face of extreme interest rate increases is actually side of strength because it should've been it usually interest rates and go probably the dollar 1st of all the move inversely. but here, the exercise of one of the goals is how the so the reason for that there are buyers, but they're not, not retail americans have given up. and they, they don't really understand, go to the central banks, the russian central bank, the people who will very quickly the retail will kaylee. i understand that then that and the resilience fact and, but didn't very quickly where should the retail investor? i put a gold still worthwhile in the face of uh you can only catastrophe in western europe

in the united states. absolutely. and, and just to be clear, i recommend a 10 percent allocation of goal and you know, seasons a chase, if you're more comfortable 5 percent or you want little bit more of this up to you don't put 50 percent in goal. don't put a 100 percent goal that's. that's just bad investing. no matter what the hours the classes. ok time percent. yes. well we're not giving investment advice. we have to say of course and, but i'll put a, you know, my $0.10 which is 10 percent from my assets, definitely in the gym regards. thank you so much. i a nice that's over the show. remember, we're bringing you new episodes every sunday and monday until then. you can keep in touch by all law social media if it's not sensitive in your country and had to channel the grantee on mobile, don't come to it. you even though the episodes going undergrad,

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the, the, the for the 5 and give us people anywhere in the world. i didn't guess the un ahead. so the law move uh, how long does this off the mean baffled policy didn't own play while of choosing is well starting with distribution, military and a also a heavy nancy pollution with people that are leaving, you know, with the crowd is facing school is that we can't show to mean that and a few in south days he's on the throne was probably like the wind fire. i would call some questions. official tells onto the goals are facing an epidemic of highly infectious diseases without access to large savings treatments.