Episodes

 Dan Ferris:                 Hello, and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLauglin, editor of the Stansberry Daily Digest. Today we talk with Bob Murphy, chief economist at infineo.

Dan Ferris:                 Bob Murphy is an Austrian school economist. I learned of his work many years ago, I think 15 years ago, something like that, through his book, The Politically Incorrect Guide to the Great Depression and the New Deal. Which is a short kind of fun analysis of why the Great Depression happened, and what the real causes of the Great Depression were. I won't spoil it for you, but it kind of helped in my development, as someone who is very skeptical of getting the government too deeply involved in the economy.

That is a topic that we should best leave for the interview. We covered a lot of that in this interview, in fact, so let's just get right into it. Let's do it. Let's talk with Bob Murphy. Let's do it right now.

[Music playing]

Bob Murphy, welcome to the show, really glad you could make it.

Bob Murphy:               Thanks for having me. Glad to be here.

Dan Ferris:                 So, I actually was inspired by your Twitter feed, and I was going back through, today, and I was trying to figure out what was the one. Because I don't even think I had been following you on Twitter. I mean, I've had your Great Depression-New Deal book for years now, I don't even know how long I've had that thing, but I found you on Twitter, recently, and I thought, "Hey, we need to get this guy on there." And I noticed that you are now with a company called infineo, is that correct? Is that how you say that?

Bob Murphy:               Yeah, infineo, mm-hmm.

Dan Ferris:                 Infineo. So, maybe before we get to your roots as an economist and a passionate advocate of free markets, to say the least, I just want to find out what you're doing in infineo these days. And sort of get myself, as well as our listeners, up to date on what you're doing.

Bob Murphy:               OK, sure thing, thanks, yeah. And again, thanks for having me, guys.

Yeah, so I'm the chief economist at infineo. We are a tech company in the financial sector, and what we're doing right now is taking life insurance and tokenizing it, putting it on the blockchain. So we're opening up life insurance as an asset class to investors around the world. So that's the quick version of what we're doing.

Dan Ferris:                 Yes, so, I went and I tried to learn about this, but I have to say, tokenizing, as soon as someone starts talking about tokenizing, I don't quite yet completely get it, I must admit. I hate to, because I'm afraid it makes me look kind of dumb, but I don't know, I'm 60-plus, maybe I can get away with it. What does it mean to tokenize life insurance, and then, that makes it into an investment? I don't understand.

Bob Murphy:               OK, sure. So, I'm sure your listeners are familiar with bitcoin, and so there – one way of thinking of what that is, it's like a digital token, but it's kind of an abstract thing. It doesn't point to something else – it's its own thing, it's not a representative. So, once that was established, and ultimately, the technology was blockchain technology, like, "Oh, there's these public ledgers, there's no one entity that's 'in charge' of bitcoin." It's these public ledgers, anybody can download the protocol, and there's rules about how somebody can send bitcoins from one address to another. And it's all decentralized and so forth, peer-to-peer.

So then, that basic technology, people then realized, "Oh, OK, you can apply that elsewhere." And so, what if we sort of have a hybrid between our conventional analog system right now of property titles and, "Oh, you got a piece of real estate there and there's a deed and you go down to the county clerk if you want to buy it and that sort of thing, with this blockchain technology." And so, what it means to tokenize something, it's called RWA, or real-world assets.

That's kind of the general space of this, what we're focusing on is life insurance, we're the first company to do that in this space, is to say, "OK, you're using a blockchain." So it's not bitcoin, it's a different blockchain, typically, and there's tokens that you're moving around through the same basic procedure as how you do it with bitcoin. Except, what the token means in this context is it's saying, "This person who has this –" the legal system recognizes and the regulatory framework, the SEC, if you're in the U.S. and everything – "recognizes that this is legally equivalent to saying you have a fractional share in whatever this underlying asset is.

So that's what the token is doing. So, by saying we're tokenizing life insurance, we acquire, legally speaking, life insurance policies in the secondary market, we put them into a special-purpose vehicle and then we issue tokens. And again, this is all, like, other companies have done this for different types of assets, so this isn't anything novel. And then, people can move those tokens around, if they have a wallet that has bitcoin and Ethereum and you can have these types of tokens in them. But what it means is, "Oh, it's pointing to real-world life insurance policies."

Dan Ferris:                 I see, so the token is just a digital of your ownership of whatever it is.

Bob Murphy:               Right, and say, well, what's the point of doing that? Well, there's lots of convenience and other reasons in terms of the economics underlying it, that if you want to get into that, I would be happy to do so. But, yeah, that's the basic thing, that's what it means to say that in this context.

Dan Ferris:                 So once I buy a life insurance token, I have invested in this life insurance policy. How does my return come to me? In what form?

Bob Murphy:               Right, so, I should be more specific, here. So let's just take what's, we're calling it the sound token. So what that is, it's a fractional claim on a pool, on the aggregate cash surrender value of a pool of whole life insurance policies. So that's what its claim is. We have a whole pool of policies, each one of which, at any given time, has what's called a cash surrender value. So that's saying you could turn that back into the carrier and get a spot payment.

It's lower than the face death benefit, it's sort of like, in anticipation of that future death benefit that would occur at some unknown time. So it's how much the carrier pays you to walk away from a policy, and so that's the underlying value of these things. It's a floor, they can't go lower than that, 'cause you could just always turn it back into the carrier. So you add all that up, we've got 50, a hundred, whatever-it-is policies in the pool, and then the tokens are fractional claims on that aggregate cash surrender value.

So, every year as we make the premium payments, if needed contractually, the cash surrender value of each policy in the pool goes up. And so, the aggregate of those all goes up, and then you as the fractional owner, you're seeing that implicit rate of return in terms of the NAV on your token. So, one way of putting is, we would buy it back from you, like, we have a standing pledge that we would buy it back from you as that NAV marches up.

So you would get that, but also, you can borrow against it, that's the other nice feature of this. So in case your audience isn't familiar or some of them aren't familiar, this has been a standard thing, like, there's certain niche community in the life insurance sector, of agents telling, especially medium-size businessowners, we have a lot of cashflow, that if you have one or more of these well-capitalized whole life policies, forget the blockchain stuff, just doing it in the analog way, it's a great way to manage cashflows. There's tax advantages and stuff like that, too.

So we're just making it easier to get into that, without having to take out a life insurance policy from scratch, and improving insurable interest, and peeing in a cup, and so forth, right. This is just an easier way, if you like the economics of it, to just hop right in. One other advantage is, if you were to do it the old-fashioned way and just take out actual policies yourself, to get to a decent rate of return, how much does the cash value go up relative to the premium payment, depending on the specifics and what time period you're looking at, it could take anywhere up to seven or eight years, just to break even in terms of how much premium dollars you've put in to what the cash value is on some of these things, depending on how they're structured.

Whereas, the policies that we're acquiring in the secondary market, to then put into the pool, we're only going to get them if they're already in that sweet spot of their lifecycle. So that's another advantage that, if you like life insurance as an asset class, doing it this way, you leapfrog over those first seven or eight years when the annual rate of return isn't attractive.

Dan Ferris:                 The next question, it's a bit sensitive, I'm not even sure how to ask it. But if I do this, I mean, does the government know I'm doing this? [Laughs] Maybe that's the way to ask it.

Bob Murphy:               Oh, yeah, I don't know if this is what you're – so, yeah, I mean, this is all above – yeah, we're making this – so to be clear, we're on the cusp of launching this particular element. We have another thing called the policy ledger which already is up and running, where people can just register their life policies on a blockchain, to be able to notify beneficiaries if a mortality occurs and things like that. So that's already up and running. If people go to infineo.ai, they can see we've got 140 million in death benefit on-chain.

But what I'm talking about now, this is not yet up and running, yet. We're still filling out the paperwork and whatnot. But, yes, we are pitching this to institutional investors, so, yeah, this is all in the daylight, we have exemptions with the SEC and everything. This is all aboveboard stuff, if that's what you're asking.

Dan Ferris:                 Is it a security?

Bob Murphy:               Yeah, so life insurance itself is not a security, but these tokens that are fractional claims on a pool of such policies, that is a security. And so, yeah, we just – there's lots of tokenization companies that are trying to thread the needle and it's a grey area. But with us, we thought we don't want to be just hoping on interpretations that some lawyer writes in a memo. So, yes, to answer your question, this is a security, we're saying it's a security, and we're registering it as such.

Dan Ferris:                 All right, and I guess if we want to know more, we can go to infineo.ai.

Bob Murphy:               Yeah, there's explainer videos and whitepapers, yeah, so infineo.ai is our website.

Dan Ferris:                 Right, which Dan will have to do a second or third time [laughs] before it –

Corey McLaughlin:    Dan you're going to get up to speed, yeah.

Dan Ferris:                 – penetrates his cranium, because I did not get it the first time, I want to tell you. So, the way I really first heard of you, Bob, is by your book, The Politically Incorrect Guide to the Great Depression and the New Deal. Which explains how FDR and Hoover, not necessarily the hero that everyone makes him out to be, and puts the blame for the Great Depression in a different place than the conventional sort of arguments. And I think it's, and I honestly do, if anybody's wondering, I think we do need to talk about this now in the year 2024. I do.

Because I think that same extraordinarily heavy hand of government has a lot of potential to create maybe not a Great Depression 2.0, but tough times, let's just leave it at that maybe for now. As an economist, what do you think of what I just said? Am I in the ballpark? Am I right to be concerned about this at this time or no?

Bob Murphy:               Well, I think so, and the context of this particular book is, I had had a previous installment in this politically incorrect guide series that [inaudible] put out, just The Politically Incorrect Guide to Capitalism. I think that was 2006 or something that came out. And so then when Obama, I can't remember if he had actually gotten elected at this point or if they – but they approached me, because everyone was comparing, there was the financial crisis and people were comparing our situation then to "Oh, it's like the repeat of the '30s."

And the conventional wisdom was saying, "Yeah, let's not make the mistake that Herbert Hoover made," how he was a tightfisted conservative right-winger who just said, "No, the constitution doesn't allow me to help starving people, sorry." And then thank goodness FDR finally came in and gave us the New Deal, and the government opened up the spigots and got us out of the Depression. So that's kind of the conventional narrative that people were batting around when Obama was coming in, to contrast it with the tightfisted George W. Bush.

And just like there, what happened in the '30s – the point I was making in the book, that, as you say, Herbert Hoover was actually the biggest spender in peacetime history, to that point in U.S. history. And in his memoirs after the fact, Hoover was trying to say, "I don't know why I'm getting this bad rap that I didn't do anything. Look at all the stuff I did." And he wasn't lying." Like he was saying, "Look, I ramped up deficit spending, I did this, I did that."

And then, in the '32 campaign when FDR was running against Hoover, FDR was railing against Hoover's reckless deficit spending, just to give people an example of, that's where the debate was at the time. So it's kind of ironic that [inaudible]. And I even have quotes in the book like some of FDR's advisors, years later, well into the New Deal in the late '30s, admitted, "Yeah, everything we did when we first came in was just what Hoover had done, but more so."

In other words, he had the New Deal Lite, and they just ramped it up. Anyway, so the conventional wisdom is totally wrong on that element, and, yeah, I think you're right that, I'm sure if you want to talk about this as well, that I think the Federal Reserve set us up for a big crash, that we may be entering it as we're recording this, seeing the insipient beginnings of that. And so, is it going to be the next Great Depression? Not necessarily, but certainly the disturbances are there.

And with a lot of this stuff, this is the last point I'll make here, in my view, and what I say in the book, the loose monetary policy of the '20s is what gave us the 1929 crash. Had the government reacted the same way that it had historically, there would've been a really bad 18 months and then it would've been fine. But the difference was, what Herbert Hoover did, in particular, telling businesses, "Don't cut wages," so that's what caused the Great Depression, and then FDR came in.

So that's why it lasted for a decade. So likewise, this time, there's going to be a big crash no matter what, but it depends what the people in power do in response to that, to see is this going to just be, "Oh, yeah, that was a bad recession for 18 months." Or is it going to go down in history as one of the worst things since the '30s.

Dan Ferris:                 Yeah, it's funny, because, "Don't cut wages," and FDR also supported prices. They both went out of their way to make everything more expensive, it seemed like. But Kamala Harris is suggesting what I would expect, which is an attempt to keep everything from getting too expensive, by fighting what she has comically referred to as price gauging, and we all know she means price gouging.

Bob Murphy:               Oh, I didn't catch that, she called it gauging? [Laughs] That's great.

Dan Ferris:                 Yeah, people have been making fun of her for several days here, because she just can't even get the word right. Apparently, completely oblivious to the fact that, in the past 40 centuries, this has been tried a few dozen times, and it never ever works. It always creates shortages. And then, once you get the price fix out of the way, then you get, oftentimes, a huge resurge in rising prices, to kind of fix it.

I just, I find it very odd that politicians today just – I guess maybe, you think they're feeling out – FDR and Hoover, they were feeling out the time that they lived in. They said, "Well, let's not let wages go down. Hey, that'll go over big." And, "Let's not let the price of certain commodity items go down," that'll go over big amongst certain groups, farmers or whoever. And now, people are wincing, still, they're having trouble because, on average, prices have gone up 20-odd percent, and a lot of them have gone up a lot more, for basic items.

So maybe she's just sort of feeling out the time and she's a product of her time, so she says, "Well, price controls – no more price gouging," I suppose.

Bob Murphy:               Yeah, I think, just politically on her part, I think what happened is, or part of this story, is that during the Biden term, prices started rising pretty rapidly, 2021 then 2022. And all on the way up, guys like Paul Krugman and so forth, even Stephanie Kelton, the MMTer, were saying, "Oh, this is transitory, it's supply-side shock, you know, supply-side bottlenecks, don't worry. We don't want the Fed to tighten prematurely. It's going to tip us into recession for no reason. Hang on. Don't listen to Fox News, they're exaggerating."

And then, when it became obvious that, like, "Oh, no, this really is," then the line shifted to, "Well, actually, if you look at it the median income workers, their wages have risen faster. It's actually the rich people that are getting hurt in this," you know what I mean? Whereas, if Trump had still been in office, I'm pretty sure rising grocery prices would not have been spun too good for the poor people. So they did that, but I think Kamala's campaign staff knew you cannot run on, "Yeah, inflation, either it didn't happen or it's good for you, don't worry, it's reducing the real value of your credit-card debt."

Which is kind of like what some of the democratic economists had been arguing in 2022 or something. So I think they realized, "We can't ignore this, well, we're not going to blame the Fed, we're not going to blame our stimulus checks. OK, corporate greed. What else can we – " you know what I mean? So I think they realized they had to do something, because otherwise this was giving Trump an issue on a silver platter. So they had to also acknowledge the pain at the grocery stores, but since they were the ones in office, they couldn't blame that. So they had to, "Oh, corporate all of a sudden spiked in 2022, for some reason."

Dan Ferris:                 That's right. [Laughs]

Corey McLaughlin:    Yeah, exactly. [Crosstalk] so much nonsense, it's frustrating beyond belief, the messaging from just all around that whole issue. And then, as soon as it's floated, the snapback, the criticism to it was I think so strong that it hasn't – I think the message has gotten through, but probably not.

Bob Murphy:               Yeah, I don't know how you guys feel, but I was surprised, pleasantly, like, there were pieces in the New York Times and stuff saying, like, "This is not a good idea." So I don't know if this is just her corporate donors or something behind the scenes were, like, "No, this doesn't actually make sense," and certainly with the taxing. "Don't tax our unrealized gains." I don't know. I think there was a lot going on behind the scenes. But, yes, to your point, Corey, it was not just uniform, everybody lined up, that you would've expected behind Kamala on this. I saw a lot of people questioning saying, "Yeah, I don't know if we want to be doing this."

Dan Ferris:                 Right, so, I wonder, this brings up something else I was wondering about. Is it sheer narrative, to get us to accept Kamala, that they finally caved in and said, "Well, Joe Biden's debate performance was so bad we can't look away"? So I just think, well, that's part of the story they're telling. But then, we get so much pushback on something like unrealized capital gains I think, "Hey, fingers crossed, maybe people are actually just waking up a tiny bit."

I don't get too optimistic about these things, but maybe there is a real pushback somewhere in our economy. Somewhere in our country, enough people are kind of fed up with the, "I'm going to fix everything by coming down on the economy in a very heavy-handed way." Unrealized capital gains would be absolutely the most heavy-handed thing, right. As soon as you tried to grab them, they'd disappear, because you would have to sell the asset, and people would be selling like crazy to pay it.

I'm torn. I want to be hopeful, but I'm torn.

Bob Murphy:               OK, well, I'll give you a way that you can theorize or hypothesize about what happened that is not too optimistic, if that helps. [Laughter]

Dan Ferris:                 OK.

Bob Murphy:               And so, yeah, again, not that I have any [crosstalk].

Corey McLaughlin:    Sounds appropriate for the time, yeah.

Bob Murphy:               Yeah, not that I have any special insight or information or anything. But my take on what may have happened is, so, yes, you know, for a while it was clear that Biden was not doing well, and more and more videos were surfacing, and they were, for a while, trying to say, "Oh, these are doctored, this is AI, or this is taken out of context. He's great, you know, he's a spry man. He's really sharp behind closed doors."

And then, you know, with that debate performance, they couldn't say that anymore. I think they just realized that the jig is up. And so then, you know, there was a sort of like open house, open audition night, or something and, "Who's going to – is it going to be Gavin Newsom? Is it going to –" and people were not even talking about Kamala Harris. It was just kind of a given – It's hard to remember, this was fairly recent. But the national discussion at that point, she was just a nobody, you know what I mean?

She had done so poorly in the previous cycle, she didn't even make it through one primary, I believe, she had to drop out. So this time around, nobody was talking about her at all – it was the Michigan governor and so forth. And even people were floating stuff, like, "What about Michelle Obama?" There were just crazy ideas that they were floating around and there was not – and then I think it was – and Kamala Harris, too, she was in an awkward position. Because until Biden officially moved out of the way, she kind of had to officially say, "No, he's still good. He's the best person for the job."

Because otherwise, it would look unseemly if she were to stab him in the back while she was technically his subordinate. And then, guys like Van Jones and stuff were going out publicly and just saying, "You can't skip over her." And I think she and her allies told the rest of the democratic party, through back channels, "If you just try to skip over her, we're not going to let that go. We're going to say she was a woman of color, the VP, what are you talking about? You can't do that."

And so I think they realized they didn't want to have that fight, so they went with her. And so, if my story is correct and that's kind of what was going on behind the scenes, then if she starts coming out talking about taxing unrealized gains, there are a lot of multimillionaire and billionaires funding the democratic machine right now – Democrat with a capital D. And so, a lot of those people would not want unrealized gains to get taxed.

And so, I could see them being the ones, like, "OK, well, we're going to have the New York Times run some op eds as to why this is a stupid idea. Are you sure you want to fight us on this?" you know. That's kind of what I think may be going on, I don't know.

Dan Ferris:                 And looking at all this from a little higher up, this is an investment show after all. Does it bother you as much as it bothers me that I have been absolutely, after years – and I continue to say I don't care if Trump or Harris gets elected, because it doesn't matter. They all grow the government, they all spend, they all borrow a ton. It doesn't really matter. And, you know, feel free to disagree with that, too. But I can't help, though, I get sucked in.

It's the Michael Corleone moment, just when I think I'm out, they pull me back in. I watched the whole freaking debate, and I didn't want to, but I felt like I kind of had to. I don't know, I'm not even sure if there's a question. Maybe I think Bob is like my libertarian economist therapist or something, that's why I invited him on the show, just so I can complain about all this stuff that I have to pay attention to.

Bob Murphy:               [Crosstalk] [Laughter] Is the fiat money in the room with us right now?

Dan Ferris:                 [Laughter] Yeah, that's right. Anyway, it drives me a little nuts.

Bob Murphy:               Yeah, just to respond to that. So, certainly, I understand the cynicism and I think part of the magic, if that's the word, of this two-party system is just, yeah, how there's really, historically, not been that much difference between the Republican and Democratic nominees. But it gives this illusion of these fierce debates – I don't just mean the literal TV debate, but just in general, like, the policy debate and, "Oh, wow, I want to raise capital gains to this amount and you want to do it this."

And, "How much should we escalate the war in this country over here? Should it be 8% or 12%?" and that's what we fight over. So, I think that's generally true. On this, with the Trump – I think there is something else going on, though. And not because, oh, he's such a great guy standing up to the forces of darkness, but just, I don't think he's in their club. So, the analogy I [crosstalk] to somebody else, the other day, is – because somebody –

It's more like, if you want to say that Kamala Harris is Darth Vader, it's not that Trump is Luke Skywalker. He's like Jabba the Hutt or something, you know what I mean? So they're not good people, but they're not technically a part of the same apparatus, and so there's turf squabbles, at the very least. So, that's kind of my take on it, and I think specifically with Trump is, he's just so unpredictable, that if you've got this Deep State, or whatever term you want to use, apparatus of people who, people that are career bureaucrats and they kind of run the show, "Oh we're the analysts at the CIA and we're these people over here.

"And it doesn't matter who the president is, we kind of just keep the machinery of state going. We've got these longstanding arrangements with people, with our counterparts in other governments around the world, and we kind of run Planet Earth as far as the day-to-day stuff." That somebody like Trump coming and you have no idea what he's going to say at the next press conference, they don't like that. They want it to be very predictable, I think. And so, I think that's part of the issue and why they recoiled so strongly from him, when he first came in.

Dan Ferris:                 I agree, if there's anything good you could say about him, it's that it seems – and I'm an outsider, I'm just looking in from the outsider. But it does seem that he puts a genuine sort of fear for one's job into many government bureaucrats.

Bob Murphy:               Right.

Dan Ferris:                 A lot of people might fear for their job, they might, "Oh, jeez –" you know, [crosstalk].

Bob Murphy:               Yeah, just to give a – I haven't been with them for a while, but I used to be the chief accountant at the Institute for Energy Research, which was a free market-oriented energy thinktank. And so that was my beat, for a while. And so, when Trump came in ad pulled out of those Paris Accords, I cannot express to you just what a big deal that was. That was so inconceivable in terms of the rhetoric.

That's not something that George W. Bush would've – Bush actually expanded subsidies for renewables and things like that, and a lot of the green targets and stuff that's built into our energy codes and things, that all happened under the Bush Administration. So, even though he's the oil man from Texas and everything. So I'm just saying how "radical" Trump was on certain things when it came to, like, the EPA and whatnot, and the climate change stuff, he really lived up to the reputation of, "Oh, my gosh, this guy is just coming in and flipping tables over. This guy's a nutjob," as far as the left's rhetoric.

So, yes, I'm just agreeing with you, Dan, that, yeah, he could just say, "Well, why don't we just cut the corporate income tax rate and put tariffs in place." You know what I mean, just start throwing out pretty big ideas instead of just tweaking stuff that anybody else would do.

Dan Ferris:                 But in the end, I've noticed, over time, conservatives are never fiscal conservatives, are they? Nobody seems to be able to make any headway with the idea that the government spends way too much and is probably way too big. It just, it's leviathan with a huge [crosstalk].

Bob Murphy:               Yeah, that's one of the great missed opportunities, I don't what you want to call it, but – so I'm late-40s, at this point. So when I was first getting politically active and interested in these economic things, I used to go and get the budget data from the '80s, and I would just sit there and study those. And tax revenue went way up under Ronald Reagan, and yet, what's the lesson? They went, "Oh, Reagan's tax cuts for the rich is what mushroomed the debt," you know what I mean?

So if they had just, not even cut spending, but just limited the rate of growth to a lower number, then it could've worked. But instead, they kind of – and I get, "Well, we're going to stand up to the Soviets, so we have to spend the –" So, anyway, yeah, it's too bad that they can't – and you could understand why, because spending is popular, the Republicans like to spend on some programs rather than others, and the Democrats have their mix of things to spend money on. But, yeah, you're a popular guy if you're handing out money and bringing it back to your district.

Dan Ferris:                 All right, now I want to ask you a question there's no way you can answer, but it'll be fun to think about it for a minute. Speaking of all the money that these folks spend and the record amount of debt, over $35 trillion, now, that they have racked up, at some point, Bob, doesn't that chicken come home to roost? I feel like – you have to give it to the can kickers. They have kicked this can – they have successfully kicked this can down the road.

They've just belted this thing, and it has taken off out of sight down the road. Does it ever matter? Will it ever matter? It's an honest question, because at this point, I would've thought, $35 trillion, we spend so much more than they bring in every year, it's just – when does it blow up? And I don't want it to blow up, I love my life, but –

Corey McLaughlin:    And how does it blow up, yeah.

Dan Ferris:                 Yeah, that's the other thing. Well, we think inflation is a big part of how it blows up, but – but even that, you're right, Corey, no, even that is an honest question, at this point, when does it blow up?

Bob Murphy:               So, yeah, my sentiments are exactly like what you guys are expressing here, because, yeah, that's what's holding me back from saying, "Well, clearly, what's going to –" is because, when the rounds of QE were happening amidst – I think there were four years in a row when the Obama Administration had a trillion-dollar-plus deficit. And now that seems quaint, that doesn't seem like a big deal, but at the time it was, like, "What? The deficit's above a trillion dollars?" Like it was crazy.

And it did it four years – and it was, like, because we were in the midst of World War III, or fighting alien invaders or something, you know, which, OK. But, so, to answer your question, yeah, just to give two examples of things that, when I was younger and just getting into this stuff, people were warning, "If we don't reform entitlements, at some point –" They would give some date that was well into the future. "The amount of FICA payments coming out workers' payroll taxes is going to be lower than how much they're having to pay out to social security beneficiaries in that year. At some point, that's going to happen, if we don't change."

And that just seemed, like, "Woah, that would be a bad situation to be in. Well, surely, the adults in the room will take –" We passed that years ago. I think that happened after the financial crisis that that happened, OK. And then, another milestone would've been, "If we don't change our ways, CBO is showing by x year, that the federal debt is going to surpass 100% of GDP." And, well, that sounds like a bad thing, right? And it was, like, 30% in W. Bush years, and then we blew –

So, that's what I'm saying, all these things that would have been – or another one was, "Well, yeah, if the Federal Reserve ever added to its balance sheet that year's deficit, you could argue it was monetizing the debt, and then the dollar would crash, because – but that wouldn't happen." That happened at least once during the rounds of QE, just the way the numbers worked out, that the Fed added to its balance sheet exactly what the Treasury issued in new debt that cycle.

You know, the dollar didn't crash and everybody, "Oh, no, it's because quantitatively –" So anyway, I'm just saying a lot of things that were hypothetical when I was younger getting into this stuff have now happened, and, yeah, the world hasn't collapsed and the dollar is still strong, and so, it does make you wonder. But, yeah, I still think that, no, this couldn't continue indefinitely.

In February, I was on a ZeroHedge debate, Jim Rickards was on my side, we were arguing against two other guys that – talking about the fate of the dollar. And we were saying that we do think the U.S. dollar is not going to be the world's reserve currency in the not-too-distant future, I do think that's coming. And you can see just the share of the dollar in 4x reserves has trended down since 2000. So if you just extrapolate that trend forward, it falls below 50% I think in 2042 or something like that.

And I think it's going to be sooner than that, just because I think things are going to accelerate. But, so I'm just saying it's not – like, you can see these trends in motion already, and I think the world is shifting away, but, yeah, there's a lot of inertia. And I do think if there's a panic in the next year, probably a lot of investors will rush to treasuries, thinking that's the safest place to go, so that will give a temporary boost to the dollar. But at some point, yeah, I think the Fed may bail out Europe in the next big go-around.

But then the one after that I think will be the dollar itself will the referendum and people will say, "No, I think I want gold," or bitcoin or some mix of commodities.

Dan Ferris:                 Right, I do believe, in the end, gold becomes a last man standing, at some point. Maybe not even during my lifetime. But I also have come to feel like there are so many dollars outside the U.S., most folks don't realize, and there is so much demand in terms of, like, the BIS, Bank of International Settlements, puts out data on the amount of "X U.S. dollar-denominated debt." And it's trillions, it's, like, $12 trillion I believe was the last time I looked at it.

I went to look for the numbers, recently, and they weren't in the same spot, so I'm not quite up to date. But call it $12 trillion, that's a lot of demand for dollars. And I've always felt like, well – I haven't always felt, I've come to feel like, before we see a big problem in the U.S. dollar, we'll probably see it in all the stuff I tend to think of it priced in, like euros and yen and – which has had some volatility, lately – and pounds and the other things in the dollar index. But really, euro and pound.

And every now and then, we see a little blip in one of those currencies. But again, it's all holding together, and the U.S. economy holds together and the dollar holds together. And years ago, I went to the FreedomFest in Las Vegas, and I thought we're all complaining a lot about the government, but maybe we don't really truly appreciate how utterly absolutely powerful and really hard to screw up the market is. Even if it's where it is right now, nobody would call this, like, a free market.

People would call it a mixed economy, we used to have that expression, or whatever you want to call it, incipient socialism, whatever you want to call it, that's what we have. But even that, with all the momentum of the past behind it, maybe it's just so powerful, maybe we – do I worry too much? Are we worrying too much about this stuff? Am I too worried about the debts and the deficits and inflation and the absolute sh-tshow, I'm sorry, in D.C., every four years?

Am I really not appreciative enough of the absolute power of markets? Is that what I'm hearing here?

Bob Murphy:               I don't think that's what you're doing. So, yeah, there are – my standard of living right now I wouldn't want to swap with somebody in 1975 to be clear. Yeah, right, so there is that element.

Dan Ferris:                 Or any time, yeah.

Bob Murphy:               But what I do think, though, so the danger, I don't know if this is answering your question, to me, the danger over the next 20 years, I'm not worried that the U.S. is going to install top-down central planning like Marxism. I think it's moving more towards a technocratic Big Brother state kind of like – I think the U.S. and China are both trending towards the same – they're kind of meeting in the middle of the same apparatus. Like, China is better now than it was under Mao, but they're not moving toward a Thomas Jefferson-type vision of how the country should look.

And so, yeah, I think with the U.S., too, that you're just going to get more and more surveillance, sort of like the merging of big business and the government, drones policing the streets and whatnot, I think that stuff is all coming, social credit scores and – like, ways that they can cleverly get around, like, "Oh, you can have constitutional protection, it's just, if you speak out against D.C., you can't rent a hotel room anywhere and no one will rent a car to you."

That's kind of how they do it in China, where technically the government doesn't even have to do anything to you, but they've got this interlocking hierarchical system of social credit scores where the hotel won't rent to you if you speak out online against the government. And why not? Because then somebody else will punish the hotel, you know what I mean? So it's like a list of potential threats, and the government only really has to sit at the top and – so anyway, it's kind of an interesting dynamic.

But, yeah, that's, to me, what's coming. It's not so much that people aren't going to be able to get food in the long term, even though I am worried about short-term disruptions in the power grid and stuff like that. So, the people who are "prepping," I don't think they're nutjobs. I think, like, "No, you may be glad you did that."

Dan Ferris:                 Yeah, my own wife started buying all this – there's all this stuff in the pantry, it's freeze-dried whatever, and she –

Corey McLaughlin:    Yeah, no, I bought this power station that can [crosstalk] solar, in case the power grid goes out for a while, stuff like that. I have kids, family – who knows what's going to happen. To Dan's point, I feel like I was a lot less worried when I had no clue about any of this stuff. Not saying I have a clue at all now, but when I was really outside of finance at all, I'm thinking back to that time, I was just kind of bouncing along, oblivious.

But there's good and bad of that, but now you're in it and you wonder about all these effects and how it will go, not sure it matter. But it does, you know? I don't know, it's an interesting though, yeah.

Dan Ferris:                 So, yeah, here's what I'm thinking, though. We have a lot of listeners and we have lots of subscribers and we give them a lot of advice about buying stocks and bonds and options and things. And it really, really helps if you can sort of be that – or it has helped, to be quite precise, it has helped, up to this time, throughout my lifetime, born in 1961 – if you could just be a perpetual optimist and get really greedy when the market and the economy look really bad.

And so, the dilemma is, it's like Corey was suggesting, when you're looking at it from a distance, when you're young, maybe, it looks one way. But when you're in it and you're working and you're allocating your capital and you're me and you're talking to people about allocating your capital. And on the one hand you say, "My god, stocks have never been this expensive, by some measures." And a couple years ago, we had bonds.

In the 5,000-year history, right, according to the yield book, they never were that expensive, right? Interest rates were never that low – it was insane. And this is the backdrop that I'm faced with today, and I want to be that optimist, because that guy has just gotten rich over time. If you can really do that and be that long-term-oriented guy, all Dan's worries, all this stuff about debts and politicians, you just brush it right off.

Up to this moment, that's been the way to go. And yet, I can't quite get there, I don't know. Maybe, are you not the guy to try to get me there, maybe, I don't know. [Laughs]

Bob Murphy:               I do see your dilemma.

Dan Ferris:                 Well, you see my dilemma, as an investor.

Bob Murphy:               And, yes, so again, just to reiterate, I do think those structural forces are there. Maybe part of what happened in terms of why you're doubting your instincts and whatnot is, when the rounds of QE came in – and again, the Obama Administration had four years of trillion-dollar-plus deficits or whatever – I wasn't using the term hyperinflation. But I did think inflation was going to break double digits – I even bet one of my colleagues to that effect.

And I lost that bet and Paul Krugman was running victory laps, "Bahaha! This guy Murphy, he doesn't know what he's talking about." And so, I think that kind of told people that, "Oh, yeah, maybe it used to be the case that printing boatloads of money would make the currency fall, but apparently that's not true for the U.S. dollar." And then the more recent stuff like what happened after COVID, I think that that may have recalibrated people, like, "No, it does look like, at least in some cases, the U.S. government's not omnipotent. If they print boatloads of money –"

Well, the Fed does, and they just mail checks to people, and especially if they tell people not to go in to work, that makes prices go up. OK, so maybe they can't just do whatever they want by dictating – there still is some underlying economic reality. So I think there's that element. And, yeah, all the stuff you're talking about, like the euro-dollar market and all these many, many trillions of dollars of dollar-denominated liabilities and assets that foreigners hold, that's a complication that I think does show why there's so much inertia and why they can get away with running such reckless policies.

The other thing I would say, as far as optimism, Powell is not, "Money printer go brrr." If you go look, they jacked up rates pretty aggressively, and the Fed's balance sheet has been trending downward and, too, has come down. That's unusually. Normally in these cycles, during the contractionary austerity type phase, M2's rate of growth just declines, but the whole thing doesn't just start turning around and coming down. That's been happening, recently, or it may have stabilized at this point, but –

So I'm just saying that there is a sense in which Powell really did come in and kind of maybe not slam on the brakes, but certainly push down the brake fairly quickly. And so, I do think there's that element that, at least he thought, or the people that are backing him or whatever, that coalition, saying, "OK, we have to kind of – we can't be too reckless, here, otherwise, the dollar might crash." So I do think there's that element involved, as well.

Dan Ferris:                 Right, yeah, I wonder about him. I wonder about Powell and the actions of the Federal Reserve quite a bit. That's another thing, it's like I wonder about it, I feel like I wonder about it too much. That's one of those things that for decades you really didn't care. If you were paying attention, you just stick to your guns, buy your stocks, hold them for a long time, and you were fine. But now, we had that 40-year from 20% Fed funds down to zero, then we're back up to 5%, right?

I have to believe that that long trend has a lot of momentum behind it, and that it's really, really hard. I mean, the fact that he got to 5%, I thought, "OK, wow, all right, this is serious." But I have to believe that, at some point, dovishness still rules the day. And that the support – they say they're in the business of doing price stability and full employment, but I think they're really in the business of supporting asset price.

Bob Murphy:               Oh, yeah, absolutely, I agree [crosstalk] just to be clear, I'm not saying, "Oh, thank goodness J. Powell is in there, because he's a great monetary economist," or something. Yeah, I think it's in there, like, realizing if we just kept things ripping the way right after COVID, then that would hurt the big banks and the financial sector or whatever. So I think that's what he was coming in to shore up was just some of the heavy-hitters in the U.S. financial sector.

So there's that element. I think, too, partly, what happened is, and I don't know if this is something you guys have been covering, but for a while, I have been pointing at the inverted yield curve, saying, "Hey, historically, that is a good indicator and it dovetails with my own views about the Austrian school, what causes the boom-bust." And so, I have been thinking we were on the cusp of a bad recession, for a while, and the yield, at least looking at the 10 versus the T-Bill, that's been inverted for longer than is normal.

And I think that's partly what happened is I think the reason Powell could raise rates that aggressively is because the unemployment rate wasn't spiking. I think in previous cycles, if they had slammed the brakes as hard as they did, you would have seen the economy tip more quickly than it has. So I think that's part of it, they kept raising and, like, "OK, unemployment's still, at least the official numbers –" and I don't know if you guys want to get into it, like, I think there is something screwy with the labor market.

But in terms of the headline number, the unemployment rate was not zooming up, and so, "OK, let's –" and CPI was still way above target. So I think they kind of had – the Fed could not have started cutting six months ago, just because how could they have justified that.

Dan Ferris:                 Right. And core CPI, as we speak today, 3.2. We're still, north of [crosstalk].

Corey McLaughlin:    I think another thing people forget with that inverted yield curve observation reminded me, because we're getting close to the end of the typical range of when that's an indicator of a recession. I think it's 24 months on the high end where recession typically follows, after the yield curve first inverts. But I think this time, I forget this too, too often, the amount of stimulus that was in the economy at the time only really started to wear off in the middle of – much later than you would've thought.

I can't give you the exact date, but I feel like to the point where the tightening was actually tight. And so, that's something to the point about just government intervention in general, the way that distorts things, it's pretty incredible.

Bob Murphy:               There's that, and also, again, we're kind of ex post trying to understand what's going – if things had just gone the textbook way, I would not have gone back and looked at all these other possible things as to why is it different. But they shut down the whole economy – or not the whole – they shut down a big section of the economy and then opened it up, so that's unusual, you know what I mean?

So I can see how maybe there was a confluence of factors where, by letting people go back to work, that was so healthy for the economy, that that did give it some legs that that's why, even though when they turned off the monetary spigots, that didn't cause the real economy to tip into a recession as quickly as it would have in a prior cycle. Because in prior cycles, it's not that they first shut down the economy and then said, "OK, now you can go to work again."

Dan Ferris:                 Right. Yeah, I mean, the S&P 500 corrected 25%, then it's back to new all-time highs and away we go. And, "Hey, that was unpleasant, but, hey, it's behind us. We're cool." And yet, at this moment, you can point to all kinds of weakness. One of my favorite ones is the Sahm rule that says that unemployment has risen at a rate that has meant, since 1970, that we're already in a recession. And yet, here we are, like, the market is within I think 3% or 4% [crosstalk].

Bob Murphy:               Well, I confess I didn't click through to read her actual comments, but I saw headlines when that official happened where Claudia Sahm herself said, "No, this time's different." Like, I don't know, my indicator's wrong [laughs], and was she just saying that bcause she doesn't want to give people [crosstalk] two months before the election. I don't know. But I'll put it this way, she blocked me on Twitter. I'll just get that out, so maybe I'm just mad. But, yeah, over the – yeah.

Corey McLaughlin:    You said something true then, yeah.

Dan Ferris:                 Well, I think she did it 'cause she works for an asset manager [crosstalk], right? So, you're not going to tell your clients, "There's a recession. Look the hell out."

Bob Murphy:               Yeah, it could be that, yes, but she seemed very political on Twitter, and I was kind of trolling her on and she blocked me. But, yeah, so I think she definitely did not like it when right-winger types were using her indicator to try to argue that, "Oh, yeah, this Biden economy is supposed to be so good? Well, look at the Sahm rule." And she was saying, "Oh, no, no, no, don't rush to conclusions, here."

Dan Ferris:                 Yeah, to be quite fair, I have to say, "OK," because who knows what indicators could go wrong at what point, right? But it was just, it was too perfect. It was too perfect that this person who no longer works for the Fed now works for an asset manager says, "Whoa, whoa, whoa –" [Laughter] It was kind of funny.

Bob Murphy:               Well, there's a similar thing, too, where Ben Bernanke had a bunch of academic papers about what the bank of Japan should have done, back I think in the early-2000s or something. And then when he became head of the Fed and then 2008 happened and he started paying interest on reserves, a lot of my colleagues who in my view are more trusting of Federal Reserve officials and academic economists, they were kind of mystified, like, "Well, why is Bernanke paying banks to not make loans? That's contraction? Why would he do that?"

And to me it was, like, because now, there's a difference between when you're a tenured academic professor versus you're working and able to hand out free money to banks. That it's not a matter of what changed in his mind intellectually, necessarily. It might just be the different position he's in at the moment.

Dan Ferris:                 Yeah, they respond to incentives, I'm convinced of that. Ever since I looked into the history of Arthur Burns and Richard Nixon, I've abandoned all notions that the Fed is anything, that the Fed is independent. That it's anything but politically captured. It absolutely is. We mentioned T-Bills a little while ago, and I have to say, that's been – when T-Bills got back to 5%, I thought, "Well, you know what, things kind of suck right now, but I have to say, investing is back."

Because if you can roll T-Bills at 5%, you have this hurdle rate in your portfolio. And instead of absolutely having to speculate on expensive tech stocks or whatever you feel like you had to do otherwise, you can sit back, get a decent return, and then look at the market and say, "Show me." You know, you don't feel so – you know, when you're getting 5% in T Bills, you're not throwing money at the Ark fund and NFTs and whatever else, you know what I'm saying?

But again, again, if they keep cranking them out this way, and most of the funding for the past couple of years here have been T-Bills, they keep cranking them out, at some point – and Ray Dalio says we have reached the point where people are starting to not want the bonds anymore. He puts everything in a very simple basic way and I'm, like, "God damn, man, I hope they still want the T-Bills." Because that's, I have to admit, it's my foundation right now, T-Bills and government-guaranteed recent-issue MBS, right?

Because if you could get 6% in those and they're guaranteed and they've got 30-year mortgages behind them, that's a great foundation for a portfolio. But I don't know, I worry about the T-Bills. Do you own T-Bills, Bob?

Bob Murphy:               I don't, but that should not be construed one way or the other in terms of the grand scheme. But let me just say, though, that I agree with your sentiment. So a lot of my academic work has been on – my dissertation was on capital and interest theory. And so, yes, to me, what's insane is just how – I guess I would blame Keynesian economics for convincing people that low interest rates are a boon to the economy, it's like a gift that the central bank gives the economy. And that the only downside is, oh, price inflation might be too high and that might bother some people.

But in and of itself, low interest rates are helpful, it's like giving them an energy drink or something, and I think that's wrong. And your remarks there, were kind of overlapping with my own view that, even the Walter Bagehot – his name looks like "bagohot" – his famous dictum he would say in a time of liquidity crisis, he wanted the central bank to lend freely, but he said but at a discount rate – or but at a penalty rate, excuse me – he wanted the discount rate to be at a penalty.

So his point was, yes, if there's institutions that are illiquid but solvent, their underlying fundamentals are sound, but they just, they have a cash crunch, go ahead and you can "bail them out," if you want – well, that's not even the right word, but give them a loan for liquidity purposes, but at a high rate. Because he didn't want, like, if a firm needs interest rates to be 0.5% to make things work, they should go under. You don't want them surviving because of cheap money.

And so, that's kind of the insight, and I think that's been largely lost. And so, yeah, to me, that seven years we had when interest rates were basically 0%, I think that's spawned a lot of male investments and kind of the underlying structure of the economy is all screwed up. And a lot of more – economists that are not the Austrian school, their models are too crude to even capture that sort of possibility. Whereas, in the Austrian view, it's like a long-term structure of production and you need to start building stuff now, to be able to finish the thing 10 years from now, that kind of stuff.

And so, yeah, if interest rates are all out of whack, that causes problems besides just, "Oh, CPI is higher than we would've liked." No, there's real stuff going on, it's not just dollars buying widgets.

Dan Ferris:                 Right, yeah, I worry about the fact that – this is another thing I worry about where I wonder am I worrying too much. Forty years of declining interest rates, and then from December 2008 to March of 2022, zero, a lot of the time. To me, as someone who – I can't even call myself an Austrian, because I probably haven't studied it closely enough, but that's where my heart is anyway, if my head isn't informed enough to say that I'm an Austrian. The potential for malinvestment had to be greatest, almost by definition, during that period.

And yet, it's, like, "Well, 25% correction on the S&P [makes popping sound], we're good," and we're off to new highs. I wonder, where was it all. Was that low inflation real during that time? Is that the point? I just, so much of what has happened economically just confuses the hell out of me, I have to admit. So I wind up, like, I don't try to predict anything. I just try to prepare the portfolio for various risks. What do you say?

Shouldn't that period have produced, like – and I do think we're still in a huge financial mega bubble. And shouldn't it have produced such a thing? And shouldn't the thing have started bursting by now? Has it? Can you help? Can you help me out, here, [crosstalk] economist therapist? [Laughs]

Bob Murphy:               Yeah, so I agree with you that, the fundamentals are horrible. And again just, you would think treasury yields would be a lot higher now than they – we're talking about how the T-Bill, it seems high to us now, because it was basically zero for so long. But historically, the T-Bill right now, given how much government debt has been issued, if you had asked us, in 1990, "Suppose in the year 2024, government debt-to-GDP is 100%," or whatever the number is, "What do you think the 10-year yield's going to be?" I think we would've said a higher number than what it is right now.

And so, yeah, right. So, that's [crosstalk] that would've [crosstalk] even more –

Dan Ferris:                 A lot – we would've said double-digits all day long.

Bob Murphy:               Oh, yeah, "Then the 10-year yield must be," whatever, "Twelve percent." So, there is that element. Now, I have heard some people, kind of to your earlier point, Dan, about, is the economy just better than we realize and we're just taking it for granted? 'Cause I've heard people, like, there was a boom in natural gas, with fracking and everything, and so, we kind of take it for granted, now that the U.S. again is, like, the world's leader in oil and gas production. Whereas, that wasn't the case in 1998 or something.

So it was a pretty quick thing, if you look at certain elements like that. And then I know a lot of people are pointing to AI and, is that doing something, is it – could there have been, or just even in general – there's been a lot of innovations right now. If you get laid off and you want to get a new job, especially if you're willing to move, there's a lot more at your fingertips now than there would have been 30 years ago. And so, I think it is possible that a lot of these innovations are being mashed, and that if we had sound money and sensible interest rates and so forth, over the last 40 years, that would be more apparent.

It would be easier to see all those innovations and what they gave to us. Whereas, those were occurring while the government was swamping us with all this other stuff. And that the two on net largely canceled out, and so it just looks like we're kind of just treading water for 20 years.

Corey McLaughlin:    Yeah, and Bob, what do you think of the idea that maybe a lot of the government statistics, a lot of statistics, that conventional economists follow just are measuring the wrong things or following the wrong things, in terms of – it's something I've thought about for a while, just from the manufacturing economy to this service-based economy, I just wonder what are the things that are actually worth looking at to know if things are going well or not.

Bob Murphy:               Yeah, so there's different things cutting both ways. So on the one hand, conventional measures of the Consumer Price Index, I think, have understated what people – I think just colloquially, like, according to the CPI, the food at home index is only up something like 27% over the last five years. I feel like grocery store prices are up more than 27% over the last five years, just my own personal recollection.

And so, I think that they do understand – and even beyond just, like, are they fudging the numbers or are they not adequately accounting for shrinkflation and things, there's lots of stuff like, when I go into a Walmart now, if I find an employee, that's like, "Where's Waldo?" And they phased it over time, like, now it's self-checkout and everything, whereas, before, that was a novelty, but there were still eight registers going with people working them, and they phased it. So there's lots of ways that the stores are cutting, or, containing costs, I should say, that technically, in a sense, is making it more "expensive" to get a gallon of milk.

But surely, that's not showing up in the official statistics of how much does milk cost now versus 10 years ago. But on the other hand, I saw this survey, I forget when this came out, I think it was in the late 2000s, where some researcher asked a bunch of college kids, "Right now, if you could have a million-dollar payment or never use Facebook again, which would you take?" and very few kids took the million dollars. And so the point was, there was a sense in which they had this thing, this service that they valued at a million dollars in presented discounted value, and yet, it was basically free. Or they were giving their personal information, in a sense, to pay for it and watching ads.

So, anyway, I'm just saying there's a lot of stuff like that where, yeah, a lot of what we're getting is not coming into the conventional GDP statistics, and yet, there is a sense in which – and it's not just frivolous things like, oh, the entertainment I'm getting from Twitter or whatever. But also, like I say, LinkedIn job connections and things like that, or, "Oh, I want to rent my house, so I'll put it up on Airbnb." It's just a lot easier now for commerce to proceed, supply-chain management and whatnot, given just computers in general, but even now AI, and specifically I think probably is not showing up in the conventional GDP statistics.

Corey McLaughlin:    Right, and I guess even kind of the work you're doing now, right, with tokenization of different things, how does that show up in an economy and where is that measured?

Bob Murphy:               Yeah, so I guess the way it would show up is, like, other measures of productivity all of a sudden would start rising, like, "Oh, it seems like a given combination of land and copper and human labor is yielding more output than it did before." But really, it's partly because, oh, yeah, all the logistical stuff behind the scenes is more efficient now, because the computers are doing or the blockchain stuff is making the financial transfers. Just another example, like, Dan, you were talking about these foreigners that right now they're relying on dollar-denominated assets, and, jeez, you'd think they'd want to move away from that, but there's sort of lock-in.

Let's say they wanted to move to a gold-backed currency, I think it's difficult for a bricks kind of negotiation for all the reasons it's hard for governments to agree on splitting the spoils or whatnot. But this RWA technology, besides having tokens that are claims to life insurance, you can now, there are tokens that are claims to gold bars in very safe vaults in Switzerland or something, and so people can trade those things. So I think, over time, it's just going to be a lot easier for people to, as finance becomes more decentralized, I think a lot of this stuff right now is going to get easier.

And that may cause certain markets to crash. But I think in general, for the standard of living for the average human being on Planet Earth, yeah, a lot of these innovations are raising the bar and it's not showing up in the official statistics.

Dan Ferris:                 Yeah, I was just saying before, I think we could probably do a "things that don't show up in the official statistics" show, someday. It would take a long time to get through all that. But actually, it's time for our final question, and it's been great fun talking with you. It's the same final question for every guest, no matter what the topic, even if it's a nonfinancial topic, which it occasionally is. If you have already said the answer to the final question, feel free to repeat it.

And the final question is simply this. If you could leave our listeners with a single thought today, what would you like that thought to be?

Bob Murphy:               I guess I would tell the listeners that they should, especially if they're on the younger side, besides simply focusing on, "How do I allocate my portfolio?" but to also think, "How can I bring in more streams of income?" I think a lot of times people focus so much on preserving what they have, instead of thinking, "I need to come up with ways to bring in more." And so that's, I guess, the thought I would leave.

Dan Ferris:                 Ah, excellent, right in a nutshell, focus on more streams of income, not necessarily preservation. That's good. I like that. Thanks. And thanks for being here, Bob, I really enjoyed talking with you.

[Music playing]

Well, that went by quick, and it was longer than usual, and I think that's really cool. I'm going to call that the "Bob Murphy Effect," from now on [laughs], because it was just so much fun, there's so much to talk about, and the time just flew by.

Corey McLaughlin:    Yes, and an endless topic, right? [Laughs] Government interference in our lives and the economy.

Dan Ferris:                 Right, right. And endless – it's interesting, it's like an endless source of worry, for me. But like I said in there, if I had just kind of ignored it for the last 40, 50 years, and invested every penny in stocks, I'd be super-duper-duper rich, right? [Laughs] My worries cost me money, basically.

Corey McLaughlin:    Well, and maybe that's the problem and that's why, how we're here in this – because a lot of other people felt the same way, I suppose.

Dan Ferris:                 Yeah, but Warren Buffett wasn't worried. [Laughs] He just kept going, man, so.

Corey McLaughlin:    Yeah, yeah. Well, that's the thing, you can either worry about it or try to learn and understand it and be aware of the risks involved. Don't be stupid about, like, the government is literally going to bail you out every single time. It's not, I mean, they'll try, but people are going to get hurt along the way, and you don't want to get caught up in it.

Dan Ferris:                 Absolutely, man, you need to be prepared for whatever is coming. I'm not saying that one should ignore all the stuff that I'm telling them to be concerned with, at all. Be concerned but prepare, don't predict. Don't leverage your whole portfolio on some prediction that everything's going to go to hell in a hand basket, and you should be able to compound very nicely over the long term. And avoid a lot of headache, too, if you're well prepared, so. But, yeah, I think – we'll have to get Bob back in here, in the next six or 12 months, as we normally try to do.

Because I just, I had no intention of hiring him as my libertarian economist therapist, but that thought just came to me, I was, like, "God, I just want to pour out my economic worries on this poor guy." [Laughs] So I just went ahead and did it, and I think it turned out OK, right? I mean, it wasn't so bad.

Corey McLaughlin:    Yes, I'm glad you did. It's funny you used that term, specifically, because as I was writing the Digest today – well, this morning, and I was wondering, full disclosure, this is the day after the debate between Trump and Harris. I was, like, "What do I write to an audience where there's a lot of libertarians in our audience, about this debate, last night? [Laughter] How do I phrase this at all?"

Dan Ferris:                 Good question.

Corey McLaughlin:    So, I'm right there with you, tried to do it, we'll see.

Dan Ferris:                 Looking forward to reading that one, by the way, yeah.

Corey McLaughlin:    Basically, ends up where we're at, more spending, more inflation. We've been running trillion-dollar deficits since 2019, every year.

Dan Ferris:                 Wow, how about that.

Corey McLaughlin:    No signs of stopping, and only getting worse, so I don't know. In the end, I worry about all of these things, and just more inflation. And I think Bob's point about creating more income streams for yourself, especially on the younger end right there on the end, is a good one. I mean, I think that's the only way to try to do this and stay ahead, at this point.

Dan Ferris:                 And he didn't get too deep into it, but it's a great thought to plant in someone's head, just start letting that thought work on you and you'll see the world differently, and probably do things differently, eventually. Yeah, it was a good answer. That was a lot of fun, it was a great talk, it was, I thought, I mean, in my own biased viewpoint, a great fun interview. [Laughs]

And another great fun episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we really absolutely did. We do provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, scroll all the way down, click on the word "Transcript" and enjoy.

If you liked this episode and know anybody else who might like it, tell them to check it out on their podcast app or at investorhour.com, please. And also, do me a favor, subscribe to this show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram; our handle is @investorhour. On Twitter, our handle is @investor_hour.

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For my co-host, Corey McLaughlin, till next week, I'm Dan Ferris. Thanks for listening.

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