Dan opens up this week’s episode with a rant about why he’s turned back to bearish. Could another correction be on the horizon?
Then, Dan brings a very special guest, former U.S. Presidential candidate and 22-term Congressional veteran, Dr. Ron Paul onto the show for this week’s interview.
Dan and Ron start off by discussing Ron’s background as a doctor and how that shaped who he is today. Ron shares what made him eventually switch gears to politics, ultimately leading to long successful career in Congress and a highly influential Presidential run.
The pair also cover topics like drug prohibition, out of control government spending, and the future of the younger generation. Ron even shares his controversial stance on the Coronavirus with Dan. Then he shares what he thinks people should do with their money today. You won’t want to miss what he says.
Then Dan answers questions from listeners during this week’s Mailbag. Given all of the money printing going on, would it make sense to invest in currencies in other countries? And what would happen to the price of gold and gold stocks if a debt jubilee were to happen?
Dan answers these questions and more here on this week’s episode.
Dr. Ron Paul
Former U.S. Representative
NOTES & LINKS
2:24 – Dan explains why he sees more risk in the stock market… “I think we’re about to see another correction.”
10:55 – Dan shares some advice from Stansberry editor Austin Root… “You need to be holding a lot of cash right now because there is no precedent for this. And when there’s no precedent, a wide range of outcomes, lots of risk, you don’t want to try and get cute.”
13:00 – On today’s interview, Dan invites 22-term Congressmen and former Presidential candidate, Dr. Ron Paul onto the show. Ron is the author of New York Times #1 bestselling author of The Revolution and End the Fed.
17:35 – Dan asks Ron to clarify his stance on drug prohibition and the wider attempt of the government to control us. “…personal responsibility is what is necessary for things to work well in a society, not having the government tell you what you can do with your life… that’s when government gets out of control.”
23:45 – Dan asks Ron about his controversial stance on Coronavirus, “You’re a man on a mission, a man with a message about Coronavirus… and when I saw your message about it, I wasn’t surprised at all. You’re 180 degrees from the popular mainstream narrative, are you not?”
29:46 – Ron shares his disgust about the recent monetary policy… “They can’t keep passing this money out. What are they doing? They’ve sent out checks from this market crash and they’re pumping in TRILLIONS of dollars…”
34:03 – Dan asks Ron about the younger generation… “I know you’re concerned about the younger generation of voters and the sort of president they’d elect and the sort of politics they support…”
37:31 – “You only have two main spenders in Washington, conservatives and liberals, and they’re both after your liberties.”
43:29 – Ron leaves Dan and the listeners with one final thought… “I don’t look to the Republicans and Democrats getting better candidates and solving our problems because that’s not the issue. It’s the issue of the use of violence and the principles of liberty.”
46:00 – Dan answers questions from listeners in the mailbag… Given all the money printing going on, would it make sense to look at other currencies of other countries? Are long dated puts still a good idea today? What would happen to the price of gold and gold stocks during a debt jubilee?
Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I’m your host Dan Ferris. I’m also the editor of Extreme Value, published by Stansberry Research. Today we’ll talk with former presidential candidate and 22-term Congressman Dr. Ron Paul. Dr. Paul is a man with a very specific message. He’ll tell us what that message is today. If the effects of the COVID-19 lockdown are on your mind, you want to stick around for Dr. Paul’s comments. In the mailbag, listener John A. thanks us for a 232% profit on call options. Listener Mark S. wants to know about put options and listener Romeo asks about foreign currencies. And as always, my rant. This week I’ll show you why I’m as bearish as I was before the big 34% market crash, but with a twist, and I’ll tell you what that twist is in a minute. That and more right now on the Stansberry Investor Hour.
That was fast. I was bearish as hell. Then I was excited to buy stuff, and now I’m bearish again. And I’ll tell you why. First, you've got to remember something. You've got to remember how we talk about risk around here, right. It’s the range of probable outcomes. So a narrow range of outcomes is low risk, like with a T-bill or something you know. You’re not going to lose money and you’re just going to make a narrow bit – that’s a narrow range. Medium range of outcomes is like the S&P 500. You might lose some money. You might lose 40 or 50%, but over time you could make hundreds of percent, right? Wide range of outcomes is high risk. That would be like just holding a naked options position. Could go to zero, could make you 50 times your money like that. Wide range, high stock. So right now it feels to me like it’s reasonable to prepare yourself for a pretty wide range of outcomes, and specifically I’ll talk about the stock market.
So look, on the one hand, I think we’re about to see another correction at some point here. And even if we don’t see a correction in the short term, I think there’s a lot of risk in the stock market. I started saying that the first time around in May of 2017, and I said it for three years. Then I stopped saying it for about a month in April when stocks got cheap and some really interesting longs came up on our screens, and now I’m worried again. And I’ll quote John Hussmann from a May 17 market comment that he wrote on his website, hussmannfunds.com. We’ve talked about John before – he does great work on the valuation of the S&P 500, and I don’t necessarily follow everything he publishes but I’m particularly interested in that work that he does.
So he said on May 17, “In recent weeks, despite employment economic dislocations that now have the Great Depression as their only precedent, the S&P 500 has advanced to valuations that are within 13% of the most extreme levels in history, including 1929 when measures best correlated with actual subsequent 10- to 12-year market returns. Meanwhile the total returns of the largest junk-debt ETFs have rebounded within 6% of record extremes. Emboldened by years of buy-the-dip reflex and despite underlying risk aversion, investors have found it impossible to resist taking one more bite of the apple. This enthusiasm reflects peak ‘the Fed has my back’ confidence and valuations that, again, imply negative 10-year returns.”
So you get the point there. The guy who I think has the best bead on subsequent 10- to 12-year returns based on current valuation is just sounding the alarm, again. And me, for example, like my sort of rule-of-thumb valuation is just price to sales of S&P 500. It was 2.4 in February, highest ever. Then it plummeted at the bottom there in March to 1.6 – that’s a nice number. You want to be looking for stocks to buy at that number. Then of course we’re back to like 2.1 now, so we’re in expensive territory. So the market has gone up and up for 10 years, and investors learn to buy every dip. And in retrospect, looking backward it’s like, "Oh, man, it was so easy to make money." Just buy every dip – it’s easy, right? Overall though, you may have seen it frequently reported that the smallest investors weren’t participating so much over the last 10 years. That has finally changed. It would after 10 years, right? That has finally changed. All it took was like a massive global lockdown to create an instant 34% dip, and then all this volatility and you can see people making money week after week. And that looks sexy to people. And they’re locked down at home. They can’t do anything. And it’s just like kind of a perfect storm for the small-time speculator.
A guy named Jason Goepfert that we had on Episode 125 last October... great episode. If you haven’t listened to it, you should. He watches numbers, important numbers. And he recently tweeted, he said, “The number of accounts, trading activity, and options speculation has never been higher among the bored-at-home-wearing-sweatpants crowd.” On May 21, he tweeted, “Over the past three days, options traders have bought or sold, just traded, right, twice as many equity calls as puts. S&P 500 is still below it’s 200-day average. This kind of optimism during a downtrend hasn’t happened since November 2002.” And of course, he’s not the only one. There is an article recently in the Bloomberg dated May 19 that basically just said, “Extreme behavior is on display everywhere in the stock market,” right. Small traders have opened up a lot of bullish options contracts, and they quoted Jason in there. He said, “There is no data we follow that is more worrying than this.”
So the little guy finally now he wants to get in. We’re approaching record all-time highs not only in price but in valuation, again, and now he’s excited about making tons of money in the short term in stocks. And that little guy he always wants to make money in the short term. He wants to speculate. He wants to buy naked options positions and make a lot of money real fast. And of course, over time the average know-nothing investor is stupid to do that, because you’re going to lose most of the time. And look, I have my reasons for being bullish, OK. I lean heavily on valuation at extremes, only at the extremes, right. We’ve talked about this before. Most of the time, valuation of the overall market is totally meaningless. But when it gets at an extreme, and I say 2.1-times sales in the S&P 500 is a meaningful extreme and if you just get a sales chart of S&P 500 going back any length of time you'll see that’s pretty much irrefutably true. That really just kind of makes the hair on the back of my neck stand up and makes me worried about risk in the stock market.
But it’s weird because we’re in a time of crisis as well, so I’m not like I was back in January or February. We’re finding interesting situations and not just in gold or gold-related equities, although we’ve got like – in precious metals we’ve got like four or five bets now in Extreme Value. Quite a bit. Really four and then the fifth is other mining-related non-precious metals. So it’s weird. It’s weird because there are things to do in equities other than precious metals that are really attractive and really value priced. But as I said, for the overall stock market, like another 15% down in the near term wouldn’t surprise me at all. However, remember I talk about a wide range of outcomes, and I’ve only made the bearish case. But on the same data, there is a bullish case to be made, right? Finally, the little guy is in, and it looks like he’s all in – he’s got nothing else to do.
And when he gets back to work, a lot of people won’t get back to work immediately – they’ll still be at home. And that tells me we could finally get what my colleague Dr. Steve Sjuggerud calls the
Melt Up, and he’s been talking about this for a while now. And I think now that we’ve had this 34% absolute, you know one-month 34% straight down and then we get half of it back in a blistering two-month rally, I think that 34% drop kind of washed out some bullishness, washed out enough bullishness. And now the market is coming back, and the bullishness is kind of returning in an ugly way, frankly, in an ugly way with all options traders. And by small we mean people who trade like 10 contracts or less. In the Bloomberg article I just mentioned, that’s how they define small, and that’s a good definition, right?
So like I say, what happens in the near term, I think it’s a wide range of outcomes. We could see Steve Sjuggerud’s Melt Up just continuing off of that March bottom. I have no feeling. The VIX is high... I don’t want to buy puts. So I’m just Mister, you know, Buy-Value-When-You-Find-It, by all means. There’s some value-priced equities around, but Mister Cash-and-Gold-and-Bitcoin. And I saw Austin Root at Stansberry, I mean he worked for, like, Steve Cohen and Julian Robertson. He’s been around the block – he knows what he’s doing. And he recently put out a message to our subscribers that said, “You need to be holding a lot of cash right now, because there is no precedent for this. And when there’s no precedent, wide range of outcomes, lots of risk.” You don’t want to try to get cute. Getting cute is a mistake. And all those guys wearing sweatpants trading options, they’re getting cute... They’re making a big mistake.
So I've got to leave you there. I've got to leave you at wide range of outcomes, lots of risk. I don’t want to buy puts, I sure as hell don’t want to buy calls. And I just want to buy value and hold plenty of cash, plenty of gold, and some bitcoin. And that’s where I am – I think I’m going to be stuck there for as long as the market is in excess of two-times sales, certainly. And who knows, maybe longer – you don’t know what the future holds. We’ll see, and we’ll revisit and you will be among the first to hear what I think. All right. Right now let’s talk to Dr. Ron Paul.
Ron Paul: Hi. Ron Paul here. Today I have an urgent message for every American who is retired or thinking about retiring soon. You see, our own government’s disastrous policies have now put you, me, and everyone over the age of 50 at great risk. Sometime in the near future we’re going to have yet another financial crisis. This one won’t be solved with bailouts, and it will hit seniors the hardest. I fear there will be civil unrest, a drop in stock prices, pension-fund collapses, big changes not Social Security and Medicare. The erosion of personal liberties, bank and brokerage closings, and ultimately a major crisis as the U.S. dollar is rejected for almost any non-paper alternative.
Male: Don’t let this happen to your retirement. Dr. Ron Paul strongly believes when the next crisis hits there will be no warning and the government won’t save you. Go to www.ronpaulwarning5.com where you’ll learn simple steps you can take to protect your retirement. Go online to www.ronpaulwarning5.com.
Dan Ferris: All right. Today’s interview is one I’ve been looking forward to. We’re going to talk with Dr. Ron Paul, the 22-term Congressman, former presidential candidate, New York Times number-one bestselling author of The Revolution and End the Fed. I’ve read them both... They’re excellent. Welcome to the program, Dr. Ron Paul.
Ron Paul: Thank you, Dan. Nice to be with you.
Dan Ferris: Really an honor to have you here, sir. I’ve been waiting to talk to you for some time. So before we get going, I am just curious about one little thing about your career. Now you’ve been a medical doctor for almost 60 years, and you are of course also a 22-term former congressman. At what point in your life did you say I need to run for Congress? Did someone tell you that they thought you should do that, or was it your idea?
Ron Paul: Well, let me say that those 60 years doesn’t mean I was in full practice, full-time. But you know I started off in medicine, delivered a lot of babies, delivered 4,000 babies. I got fascinated with Austrian economics in the 1960s and reading all about the monetary system and that the Bretton Woods system would break down. So that’s how I got introduced to the idea. But I never set a goal. Some people said, “Why did you quite medicine or why did you run for Congress?” Well I ran for Congress because in 1971, I was very impressed with the breakdown of Bretton Woods and what I thought would happen. Back then, gold was $35 an ounce and I said gold is going to go up in price, so I started buying gold back then, which a lot of people thought was silly. But that was what motivated me to speak out. The monetary system, what I expected to come, the inflation that would come, the business cycle and all the things we’re experiencing now.
And I can recall very vividly when I told my wife Carol that I was going to run, she said, “What would you want to do that for?” I said, “I just want to talk about these things because I find them fascinating,” and back then it would be unheard of for anybody to bring up the subject of the Federal Reserve system. So I want to speak out, but I guaranteed her not to worry. I’ll be here in Texas and practicing medicine, because I can’t possibly get elected, you know I don’t think you have to worry about that. She said, “Some people are going to figure out that at least you’re leveling with them. At least you’re telling them the truth, and you’re going to end up getting elected.” So she wasn’t all that enthused but she supported it.
And low and behold, the political career came in spite of my reluctance. I was there for four terms, and I was first elected in ’76 and left in ’84. And I just wasn’t enthralled. I was on the banking committee, but I was missing medicine and still raising kids, a bunch of kids in college and other things. So I said, “I think I’m getting out of here,” so I did. I left and practiced medicine for 12 more years. But then there was this gnawing interest in talking about the issues. The issues didn’t go away by the 1990s and I was still anticipating a lot of problems as I do now. So in 1996, because I had been in and I had kept up with the markets and had a newsletter and dealt with the gold issue, there were a lot of supporters saying, “You need to run, you need to run,” so I got talked into running again.
And I had associated myself with the Libertarian Party, so I told them it’s not going to be very easy. I said, “A lot of people don’t like libertarians, they want too much freedom. So it might not work out.” And low and behold, the first press conference I held when I decided to run again for Congress, the first question came up about drugs. Lo and behold, my position was very libertarian, do what you want but I don’t like drugs. I teach my kids not to use them. And it became a non-issue, which very impressed me that people were further ahead than the government, because the government thought – they don’t do it out of principle – they do it out of politics. And they thought the people just thought the drug war was perfect, but people had suffered a whole lot. So that was the big issue then. But I got to talk about monetary policy, and I was a big surprised once again that I was reelected in ’96.
Dan Ferris: Wow. You know I’m glad you brought up the topic of drug prohibition. It’s something that has begun to concern me more and more over time, and specifically that issue but then also the wider issue. You mentioned libertarians think people have too much freedom. And I feel like the drug prohibition issue specifically is such an obvious attempt of the government to get control of a particular segment of the population. And I know a lot of people say, “Well, that’s OK with me because I have kids, so I don’t want people to have that freedom. I want these people to be targeted.” And if you do have kids, you worry about this stuff. What is your answer specifically to that issue? I’m really curious about this.
Ron Paul: Well, it had come up a lot and still does on occasion. But my answer was you’re for legalizing marijuana, a very negative comment to me. And I said, “Well, it’s not exactly that way. I want to liberalize freedom of choice and explain that personal responsibility is necessary for things to work well in a society and not have the government tell you what you can do with your life and make you safe and secure, because that’s when government gets out of control.” So I always stepped one step away from legalizing marijuana or whatever – I legalize freedom. And as long as it’s something that you’re doing as an adult and you're not out killing people, I said, “Well more people get killed with the drug war. I’m in opposition to the drug dealers because they want the drugs illegal.” And that still goes on of course, sort of like prohibition of alcohol.
But I think the advantage of being a doctor helped me, because I remember they did some vicious, vicious ads, both Republicans and Democrats against me, that I would be giving drugs to babies and everybody would be addicted. But it was over the top. And I just did an ad – this was a long time ago. I did an ad holding a little baby in a white coat in my office, and I just talked about drugs, not much about drugs, just talking about freedom. But I had delivered a lot of babies to a lot of people, and I think it came across as they didn’t believe it, and I guess if they did believe it they didn’t care because it became a non-issue. And I think that is one place where the libertarian ideas won a little bit, because right now you don’t throw people into prison for smoking a joint. And they were doing that when I moved to Texas – that would be in the ‘60s. They were putting kids in prisons, and it was total crazy what they were doing. But that is not the case now. We still have other problems. I think that was a sort of a victory, even though the motivation of some people who wanted legalization, wanted to legalize marijuana, that sort of thing, which I always tried to take one step away.
And I always told people I think drugs are very, very dangerous. And I think it was convincing enough where they didn’t worry about it, and I was able to get by without it hurting me politically. And I lived in the Bible Belt, and at that time nobody would say get rid of the drug wars. But behind quietly they would tell me, “You’re on the right track,” because they knew somebody in their family someplace suffered severe consequences from being arrested with these drugs, thrown out of school and all these things. It was just horrible. So I don't know who’s motivated behind it. I think it’s this idea that people have to protect us and therefore the parents go along with it. But also, I think there’s people who don’t want the competition of marijuana with alcohol and some other things, so there’s monetary interest involved too. But I approached it, and I think it was the right way for me, as strictly a freedom issue and responsibility. You don’t hurt people. Do what you want. Do it as an adult but don’t dare hurt anybody else, and your job is to take care of yourself and your family.
Dan Ferris: Yeah. And really there’s no need to punish a drug user, because the more they use the more they suffer. So what’s the point? It’s ridiculous.
Ron Paul: Yeah, you’d think they’d figure that out. The whole thing is I remember the first time I left Congress, which would’ve been in ’84, I talked about this a little bit and I brought up the subject of drugs and marijuana. And I brought up the subject that I saw a lot more abuse of drugs in this place and people who were drinking a lot of alcohol. [Laughs] So I don’t think that went over all that well, but that is the truth, alcohol is the deadly drug. And it’s socially acceptable, and I guess their lobbyists are very firm. But I just want to legalize liberty... That’s all I want to do. And I think there’s other ways to deal with the problems that we have, and we have to deal with it whether it’s medical or what not.
I just don’t think we’d be in the kind of trouble today with the monetary system, with this coronavirus and all the things going on today if we lived in a libertarian society. Everybody would say, “Well, it would be much worse. There would be no rules and no laws.” I say, “Do you think there are any rules or laws now that are beneficial? The rules and laws just benefit the special interest.” Look at the justice department, the FBI. You think they’re protecting us and protecting freedom? No, they’re in the business of politicizing and the struggle for power.
Dan Ferris: Yeah, I think everybody who makes those comments should follow a DEA agent around when they’re kicking in doors and shooting innocent people for doing whatever they want. It’s crazy. But I start off with just some thoughts about a particular health issue and wanting to know about your career as a physician, because I know today you are a much a man on a mission, a man with a message about coronavirus. And I have to say when I saw your message about it, I wasn’t surprised at all. You’re 180 degrees from the popular mainstream narrative on coronavirus, are you not?
Ron Paul: Well, but I think the world is coming our way, the way of freedom of choice, because even today the CDC has admitted that all the figures that they have been passing out are distorted and overblown, it wasn’t nearly as much danger, and the scheme to control things, control drugs and control people is the real reason that this is happening. But I think as time goes on, I would agree with you, the majority of the American people are still scared to death. But what we need is the epidemic of hysteria is now more dangerous than the drug, much more dangerous than the drugs. I mean there’s more suicides, and people are having a tough time at home – it’s just insane. So people are starting to wake up. What we talk about on the Liberty Report all the time is any time there’s a positive thing – you know this weekend there were a lot of positive things. We put pictures of people at the beaches and the police coming on, “Hey, you’re getting too close to each other.” It’s so crazy that people buy into that thing, but a lot of people still do. They say, “We have to be safe. We have to be secure.” Yeah, we do, but it’s not the government’s responsibility to keep us safe.
That is one of the reasons we get into so much trouble is there is an assumption, and you'll hear it constantly on television, whether it’s to make us safe and secure financially or safe and secure by bad habits and things. But the government should never be that – that should not be the government’s responsibility in a free society. That’s the responsibility in a totalitarian society. In a free society, the purpose of the government, if you’re going to have one, is to protect liberty. And the rules are very strict. You and I can live in a libertarian society, but we can’t kill each other. There has to be some way of emphasizing that the violence, the nonaggression principle. And I believe so strongly in that, but it’s never been truly tested.
We had a test in this country in our early history, and yet I see and I know I’m idealistic about it but so are the authoritarians, so are the fascists and the communists and the people who want to run our lives and the Kaizen economists and the people who believe in the Fed and printing money. They’re all authoritarians. Everything they do is backed up by a gun. So when I talk to many crowds, I’ll say, “You know I hate to tell you this but I believe in strict gun control of the government, of all the bureaucrats.” They got 110,000 people carrying guns to try to enforce these laws to make us safe. They don’t make us safe. They make us unfree, and they cause the trouble.
So I think this whole principle of who’s responsibility to make us safe, it should be us. I mean the police can’t make us safe. How many houses are there? They going to have a guard outside every house? I tell them in Texas the Second Amendment keeps people safe – it is not the policemen. Police can’t make us safe, and they can’t make us healthy. Look at the insanities they’re promoting with coronavirus. They’ve had people do the wrong thing, and the society has gotten sicker. And then they say, “Well, they could make a mistake.” Yeah you could. You have to be responsible – some people make mistakes. But when you put a Fauci in the office and run the show and he makes the mistake, look at what we get. So you don’t want people making mistakes that are authoritarian and it affects everybody. What we want to do is let people do it, because they’re going to do a better job. It’s in their own self-interest to take care of themselves and not look for a fight. And that’s all we seem to do, whether it’s socially here, whether it’s monetarily here and financial.
But internationally, a foreign policy is just atrocious, what we have done in the last hundred years. How many people have died as a cause of our aggressive intervention as foreign policy? In all the wars since World War II never even been declared. Governments and presidents, Republicans and Democrats, they started war when they’re pleased and sometimes they brag about it. So that to me is very disturbing, and we have a little bit of work left to do to convince people that they should accept the principles of liberty and they would be better off.
Dan Ferris: You’d think it wouldn’t be such a hard sell, but so many people look at the government now and they feel like, “Well the government is my only chance to have a little more. If I can get something from the government, maybe I’d be a little bit better off.” I feel like more and more people have come to think that way, so we’ve created this system where people look to the government to just get stuff. And when politicians promise them things, they get elected and they pass bills. And I wonder, I mean have we gone too far? Have we reached the point of no return?
Ron Paul: No. I think what you’re describing should be expected because that’s human nature. And right now more so than ever, people who stay at home and get a check from the government, they lose money if they take their old job back. So they do what’s in their self-interest, and it’s not unusual. It’s just characteristic of any society based on wealth redistribution. And as long as the politicians promise it, there’s always going to be the takers there. But the exciting that’s happening right now is the fact that it inevitably leads to a crisis of bankruptcy. And that’s what I talk about and write a lot about, and I’m most interested in the bankruptcy of this country, the moral bankruptcy of the country, the bankruptcy of our foreign policy. But the monetary bankruptcy, the bankruptcy of this country, because they can’t keep passing this money out. What are they doing? They’ve sent out checks already since the market crashed, and they pump in trillions of dollars and it’s brought the stock market up a little bit. But how many jobs out there are being productive? No. People aren’t going back to work because.
But the reason why I think this is good is the politicians and the system can’t keep buying the votes because they’re failing. People get disgusted with the wars when all they see are the body bags, and it took a long time in the ‘60s for our country to get disgusted with Vietnam but finally they did. And I think people right now are going to realize once all these trillions and trillions of dollars, more checks going out and when the Social Security is challenged, not because they’ve run out of money – they’ll never run out of money. But they’ll run out of value. So when that happens, then there’s going to be a political crisis, and I would say it’s an opportunity. It’s in a token way sort of like the marijuana thing was totally out of control, and finally people woke up and said, “Hey, maybe we ought to just legalize it.” And I think that is going to happen here, but the threat is if we don’t win this argument and reintroduce the principles of liberty, the authoritarians who cling to power they’re going to be loud and strong and they band together. The two groups in Washington out of the worst for this, the conservatives and the liberals, they spend more money and yet they fight about who gets to write the checks.
But one thing is when all these crises are going on when the Constitutional crisis was going on, they all took a suspension under the impeachment thing. And the leaders of both parties went over and voted for the bailouts and passed budgets. So but that’s going to end because they cannot maintain the value of the currency, so therefore I think what’s going to happen, the printing presses have all been running for a long time, and although they did that for the past 10 years, most of the money went into the stock market and the bond market. Pushed the price of a bond up, pushed the price of stocks up, and they’re back doing it again. But now I think you're going to see the cost of living going up, and I think you’ve already seen it. Cost of food is going up, and it’s probably not going to be exactly like the ‘70s, but the people’s standard of living will go down. They’ve lost their jobs. They’re totally dependent on the government. That won’t work because the dollar will finally lose its ability to pretend the honest world reserve currency, because you shouldn’t have the reserve currency. And although it’s still functioning because everybody else is a failure, eventually it’s going to be recognized and this thing is going to come down.
And hopefully we can get the debate out there about why and what do we need for it, and it’s the fact that we’ve accepted this and what you said the people say, “Well, the government promised this to me, how can we quit,” because the people are very tempted and they do. But when they can’t fulfill their promises, then the people better wake up and say, “Have a job.” That’s what our early history was all about. All they needed to do was get here and get a plot of land, and they went to work and they produced something. And of course, for a good many years they did a pretty good job of having a definition of the currency in defined by the weight of silver or gold.
And right now there is no definition so the money printing is endless. And most of the time the big bucks aren’t even appropriated by government... this is just passed out by the Federal Reserve to prop up the special interest. And that’s why the banks and big corporations get the money first, and it takes somebody like Trump and other legislators to say, “Hey, we've got to send some checks to the poor people.” And that’s the helicopter money, and it’s alive and well and they’re going to continue. But about a year from now that might not be the case. I think the people will be waking up and saying, “I have all this money but it doesn’t buy anything.”
Dan Ferris: I love your sense of optimism that it will only take a year for folks to wake up. I’m not sure I share it, but I love it. But you’re concerned though. I know you’re concerned about the younger generation of voters and the sort of president they’re going to elect next and the sort of politics that they currently support. So I mean you're not completely optimistic here – I know you’re worried.
Ron Paul: When I said in a year I think they’re going to know something big is going on and going to look for it, I don’t think in a year now we can correct the problem. It’s going to take a while – it takes an awakening of course. And I spoke to a lot of young people in the presidential campaigns, and I enjoyed it because the young people aren’t quite like they’re painted to be with they’re all with their hands out and all this kind of stuff. And I imagine the majority still are, but I came across a lot of people that were enthusiastic about the message of liberty and the idea of responsibility, it’s your life, you own your life, you can do what you want, if you don’t hurt somebody and don’t have an income tax and all this. And they responded very favorably that way.
But if I had an hour with them, probably 50 minutes would be solidly giving them the bad news. We’re going broke and it’s not going to work and you’re going to lose your jobs and describe what the problems are, endless wars, invasion of our privacy. And the last 10 minutes I would describe the optimistic view. It’s not a big deal, it’s not hard to understand. I think I put the blame on people who try to promote this message that we’re not good enough at presenting this case, because it’s so wonderful because if we did it. But it’s not complicated. If you went and did a poll and you talked to people and they didn’t know anything about politics and Republicans and Democrats, just average people out there, and you ask them do you think the government should be in our bedrooms telling us what to do and be involved in our sexual lives? No, they don’t. Do you think if you earn a living and you have a couple bucks in your pocket, it’s your money to spend and you don’t need the government to tell you how to spend it?
Do you think the people should just obey and be encouraging and accept the fact that our presidents now start wars any time they want and hundreds of thousands of Americans have died and millions of other people died at the hand of our government? Do you think that’s a good system? They say no it isn’t. And then they have a sense of hope. And the answer is very easy. We were on the right track a while ago. It’s just emphasizing the personal liberty aspect. They own their own life, and they should own the right and responsibility. And I always put that on. You have to be responsible. You can’t say you’ve tried it and you get into trouble, and then you come to the government and say bail me out. You can’t do that. That wouldn’t be permissible.
Dan Ferris: I still have to say I worry a lot because I have this viewpoint, and maybe you can help talk me out of it, I just think at this point in our history I almost feel like it doesn’t even matter who gets elected to the White House, because our choices – we’re presented with a false set of choices. We’re presented as though they’re extreme left and extreme right, and that’s part of the narrative today. But I think in the end they’re all extreme supporters of bigger and bigger government.
Ron Paul: It’s irrelevant. And like I already said, you only have two main spenders in Washington, conservatives and liberals, and they’re both after your liberties. So that’s irrelevant. The ideas that are important, let’s say in the negative sense, what happened in the ‘30s it was the age that Kaizenism came into – all our professors taught interventionism, inflationism, Federal Reserve spending, Welfareism, and warfareism. And it was taught in the schools and still is, and the people I knew in Washington still believe this to a large degree. I met one or two or three or four that would be close to being a libertarian and a few more that would be interested in talking to me about it. But that is I think very good. I don’t think it has anything to do with politics. Politics should be a reflection of an ideology. The prevailing attitude of the people make the difference.
We had this horrible Vietnam War. People went into it based on a lie, Tonkin Resolution, and we fought for all those years and lost 60,000 people. What a horror because the people were complacent and allowed the government to do it. But finally, in the late ‘60s/early ‘70s, the people had demonstrated we’re in this country. And it was the demonstration of this country. The people were fed up with it, so the war ended. My argument, and I argued this on the program, is we would like to prevent the pain and suffering 'til you wake up. You've got to wake up before they start. But it’s not Republican... it’s not Democrat. It’s not a political thing as much as an ideological problem, and it’s the idea of liberty the people have to endorse.
Once they do that, they don’t say you know we had our last election. I said we have a choice between the two worst people in the world. [Laughs] And this time it’s not going to be much better. And now we’re going to be between the two most hated people in the world. But it’s not between liberty and authoritarianism, and if we don’t get over into that and change their mindset, no you’ll have to go look someplace. But there’s no place to look. There are other people – they escape this place and they do all right. But I’ve never had the temptation, because I live here, my family is here, and I have businesses here. And I’m surprised that anybody ever listened to what I had to say. So when I did this – so I was encouraged. I think the 8,000 people I had at Berkeley campus that were very, very much engaged, I said, “What’s going on here?” And I’d say, “I didn't give that great a speech.” And I don't give that great of speeches. But I have a great message about liberty, and I think it’s acceptable.
And I think, what I also see are more numbers there, where that you and others might not be able to see. I see the cream of the crop. And you don't need 50% of the people. Eventually, the majority has to support it. But the people who work on ideas, the people like – the people at the Meese’s Institute. I help support get that started. And they have created many, many thousands of people who are professors who are teaching young people. And there’s a lot of people out there, but they're generally not well-known people. But I’m amazed that when I go around the country now, I’ll meet young people and they’ll have their own websites and doing all kinds of things. And I’m really, really impressed with it. I’d say, “How’d you get started?” And they said, “Well, I was at one of your speeches.” And somebody would raise their hand and say alright, great. But what do we do? And my answer is, do whatever you want to do but just do something. And everybody has a thing to do.
Here we're on a talk show. You're doing something. It may be commercial. It may not. But the thing of it is, there’s – right now, we're talking about a message. So, that any way you can distribute it. So, it’s just so it’s not a government-financed message. That’s why – that’s why I think it would be bad. But for people to be involved in movie making and writing and teaching. I have a homeschooling program... I think that’s very important. But that’s not going to be done in a year or two. But it took a long time that Kaizen philosophy to become so dominant. It’s on the ropes. Central Banking is on the ropes. And there’s a lot of lost confidence in what they do.
So, if we don't wake the people up, or if they hear it and they refuse to do it, then it’s not the fault of the authoritarians. It’s the fault of the people didn't understand enough to stand up to the authoritarians. And it’s a human nature thing. I mean people like to be taken care of. Authoritarians like to be authoritarian. But I think it’s the non-aggressive society, non-aggression principle that makes the difference. Just think of what would happen if everybody accepted. You know, that sounds like a pretty good principle. I don't have to steal from anybody. I don't have to kill anybody. I don't have to rob. I don't – you know, no lying, cheating, stealing or murder. You know what? That sounds like that’s not so difficult. Just think if the world was like that.
But most of society is all like that way in that we have certain groups of people that even live in our country today that follow those rules within their own community. They don't lie, cheat, steal and kill. And that happens to be endorsed by all the major religions. That is a principle. It’s been around a long time. But it’s only been in recent history, in the 20th century where it’s actually been put into a political atmosphere and saying this is what the politics ought to be. So, I don't look to the Republicans or the Democrats getting better candidates and solving our problems because that’s not the issue. It’s the issue of the use of violence and the principles of liberty.
Dan Ferris: Well, Dr. Paul, I usually – we're getting short on time already, believe it or not. And I usually ask my guests, at the end of an interview, if they could leave our listener with just one thought, what would that be? I feel like you may have just delivered it. Did you, do you think?
Ron Paul: Yeah, that’s the message and that’s the tail-end of a lot of speeches. And it’s very simple, that we have a lot of problems. It’s a consequence of sacrificing our liberties, depending on governments. It’s dependency. And not understanding what liberty is all about and that it’s not something that government can give you. It comes in a much different fashion, and that it’s alive and well. And that we could have a lot more peaceful world. My little Foundation is the – for Peace and Prosperity. Foundation for Peace and Prosperity. You know, Institute for Peace and Prosperity. And that’s my goal is to promote peace and prosperity. But it’s so simple. I don't have to create wealth. I don't have to tell people how to live. I don't have to tell people how to run the economy. I used to say in the campaign, “Yes, I’d like to be your president but it’s not because of what I’m going to do for you. It’s because of what I don't want to do for you.
And the things I don't want to do, is I don't want to run your life. I can’t run the economy. And I don't want to get into a war.” And I think that’s – so, you're all negative. Yeah. That’s negative. But that’s what liberty is all about. Let the individual do it. But if you violate that non-aggression principle, you have to face up to the consequences.
Dan Ferris: Well put, sir. We've talked a lot about negative definitions on this program, so we are right behind you on that.
Ron Paul: Great.
Dan Ferris: Alright, Dr. Paul. Thanks very much and be well, Sir.
Ron Paul: Alright. Bye-bye.
Dan Ferris: Dr. Paul has become very concerned about the government’s response to the coronavirus pandemic. And he thinks you should take very specific actions to protect yourself. And I completely agree with him. I've listened to a presentation he did recently. I enjoyed every minute of it. I think you will too. And to listen to it, just go to Ronpaulwarning5.com. Ronpaulwarning5.com.
Dan Ferris: In the mailbag each week, you and I get to have an honest conversation about investing, or whatever else is on your mind. Just send your questions, comments and politely worded criticisms, please, to [email protected] I read every word of every e-mail you send me. And I respond to as many as I can. There were lots of good ones this week.
The first one is from Romeo, as in “Romeo, Romeo, Wherefore art thou, Romeo?” First, he’s made a very nice compliment. He says, “I have recently discovered the show and find it very valuable. My question relates to government debts and currencies. Given all the money printing that’s going on, would it make sense to look at currencies like the Aussie dollar since Australia has a more healthy level of debt than other countries such as the U.S.? I am interested to hear your perspective on this and how one might fit foreign currencies in a portfolio that already includes gold and silver. Many thanks. Romeo.”
Well, Romeo. My view is, no. That’s my view. My view is that you need U.S. dollars. You need gold and silver. And you need some bitcoin, and you're covered. I think most currencies are going to suffer against the U.S. dollar. I think most people simply don't understand how hard it is to sell any asset in this world without getting paid in dollars, especially financial assets the world over. Maybe 60% of foreign exchange is U.S. dollars. And much of the rest is euros and yen. So, if you really want to buy another currency, maybe euros and yen.
And you're going to see headlines. I've seen some recently, about countries getting into trouble because they've borrowed in another currency. And most of those are U.S. dollars, and then there’s some euro and some yen. And so, that creates a big demand for – they need dollars desperately. Or maybe a few of them need euros desperately, and very few of them need yen desperately. But the Aussie dollar is not – people in Australia borrow in Aussie dollars, but outside the country, not so much.
Next is Mark S., long-time listener, and I think we follow each other on Twitter. We interact there. So, Mark says, “Hi Dan. I continue to enjoy the podcast and have learned a great deal from your thoughts on the state of the world and investing. I’m very happy that I followed your and Doc and Porter and John Doody’s advice to hold a decent amount of gold in my portfolio over the past year. My portfolio is up year-to-date and up quite a bit over the past 12 months. And this has to do with my investments in gold, gold stocks which have more than offset the loss in equities.”
First of all, Mark, wow. You're awesome. Mark continues, “I've been thinking recently that having an allocation to long-dated LEAPS puts on indexes like SPY (the S&P 500 ETF), may also be wise since they would increase in value quickly during a market meltdown like we had last March. And that could help to offset losses in your equity positions. I’m wondering if you could possibly discuss this idea in a general way. I believe you have mentioned that you do this yourself and would love to hear your thoughts on how one could set this up. Or if you have any book suggestions that may discuss how to implement a workable hedging strategy with puts. Thanks, take care. Mark S.”
Mark, no book. Sorry. Don't have any advice there. But it’s hard for me to do this now. I’m more interested in just holding the cash and the gold and the bitcoin because I was interested in puts because they were so cheap. And nobody was bearish. Back in February and, really, like last December and January, February, that’s when I bought puts because I thought, well, this is so dirt-stinking cheap. Like how can I go wrong? I lose a little if it goes to zero. And I make a heck of a lot if we get what we got in March. So with the VIX in the – the last time I looked at it it was 30ish. I’m less interested in puts because higher VIX means higher put premiums, generally speaking, and that makes them less attractive to me. I hope that helps. That’s all I've got for you.
Roger M. is next. He says, “Just listened to your very good interview with Chris MacIntosh. He was so laid back he made even me sound dynamic.” That meaning Roger. Roger continues, “I was particularly interested in his comment that there may be some sort of debt jubilee in the future. My question is, if there were to be a debt jubilee, what, in your opinion, would that do to the price of gold and gold stocks, if anything? Many thanks, Roger M.” Great question. I can’t say with certainty, but it would be bad for financial assets, and I think it would be good for gold. When you're holding debt or any financial asset and somebody comes along and says, hey guess what? That’s worth zero now, that’s probably a bad thing. So, probably good for gold because that would be a chaotic moment.
And Cial C.Z. is next with a question. He says, “Why not?” And he or she is talking about bitcoin here. “So, why not? They don't have to break the code. All they have to do is figure out if you're doing any bitcoin transactions through your electronic device.” So you see, Cial is saying that, you know, I was saying maybe bitcoin is a pretty secure way to hold some currency. And he’s just pushing back a little bit here. And Cial continues, “Doesn’t the NSA already have the ability to monitor all electronic transmissions its wants to? I’m not convinced the government can’t track and crack down on bitcoin users already if they want to?” Well, I’m not as paranoid as that, but maybe they could. I don't worry about it though because I think it’s outside the financial system, you know, the same way gold is somewhat outside the financial system. And I say somewhat, because there again, they are regulations, right? If they find your gold and know you have to gold and know you've transacted in gold, they'll treat it like a collectible and tax it at 28%. But they've got to find you out first, right? This is not advice, OK? I’m just speaking in general terms. Not advice.
So, next is John A., and John A. says – actually, he’s got a really good story. I can’t read it all. But he discovered Episode 141 where we talked about all these minerals, and he’s up 41% in two months with that. Then he saw Episode 137 with Harris Kupperman talking about a company called Altisource Portfolio... Harris Kupperman talking about a company called Altisource Portfolio. And John A. says he made 232% on October $7.50 calls. “Wish I invested more,” he said, “but look forward to getting multiples on this long term. I look forward to the new episodes every Thursday now.” And then he’s asking about this system that he saw somewhere for buying gold. And I’m sorry, John, I don't know where that system is.
Let’s see here. Caleb B. Now, Caleb B., I just – I can’t read his whole e-mail. But he is apparently very experienced in the video production world. And he was just kind of reinforcing the idea that we discussed in the relation to the film The Magnitsky Act, which was very hostile toward our interview guest Bill Browder. And basically, what Caleb is saying is that it’s so easy to manipulate things on film and to edit a certain way, and to – he’s talking about using telephoto lenses to make beaches look like they're more crowded than they are. That kind of stuff. And he told me about this term “deep faking.” He says, “Deep faking is broadly known to be a problem. Thoughtful individuals and investors must think twice before reaching a hasty conclusion about a controversial matter.” And he’s implying, if that controversy is represented on film, it’s really difficult to parse things out. You don't want to react too soon. You've got to think about it. Thank you for that, Caleb.
And last but not least is Peter W. He says, “For your comparison to have meaning,” and he’s talking about last week when I said you need to study the period 1929 to 1945. He said, “For your comparison to have meaning, it is not sufficient to just compare 1929 to 1945 to the present era from 2000 to whenever. Rather, you must compare other periods to the present to see if the features in those periods are more or less probable than those only in the periods you have selected. Only by comparing other periods with the period you're interested in can you possibly conclude the period you're interested in is as an outlier. Yours truly, Peter W.”
You couldn't be more wrong, but you're implying that I’m not using good statistical method here. And you're right. And I don't care. I’m using my gut. When you sign up for the Investor Hour podcast, you get a certain amount of Dan’s gut. And that’s what it is. I just have a gut period that you better study the period 1929 to 1945 to get a lot of good insights about what comes next. And by all means, do study other periods. So I agree with him there, but your method is wrong too. And this is a standard thing. Like it reminds me of that book The Millionaire Next Door where they said, you know, we studied all the people with a net worth of a million dollars, and we gleaned these principles from them. And you can’t do that. You have to say, we're going to study all the people who followed this one principle. All the people who spent less than they earned or whatever it is, and that’s a lot more difficult. What you're suggesting is a lot easier. And what I’m doing is easier. And that’s part of the reason why we do it. So, if my gut is wrong, then my whole exercise of studying 1929 to 1945 is not going to be fruitful. I think it’s already been fruitful, but that’s another discussion.
What we would really have to do is say, we’d have to glean very specific trends. For example, the build-up of debt relative to GDP, just let’s say, as one data point. And you’d have to study that over time and study the consequences of it over time. Or the purported consequences. You could probably establish correlation, but establishing causation would be more difficult. So, Peter, I’m sorry. I don't completely agree with you, but you are right in spirit, and I hope to be right in spirit by studying 1929 to 1945. I disagree about the method, but you're spot-on on two major points. So thank you for that.
And that’s all the mailbag we have for today. And that’s another episode of the Stansberry Investor Hour. Hope you enjoyed it as much as I did. Do me a favor. Subscribe to the 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.
You can also follow us on Facebook and Instagram. Our handle is @InvestorHour. Also, follow us on Twitter where our handle is @Investor_Hour. And if you have a guest you want me to interview, drop us a note at [email protected] Until next week, I’m Dan Ferris. Thanks for listening.
Moderator: Thank you for listening to this episode of the Stansberry Investor Hour. To access today’s notes and receive notice of upcoming episodes, go to investorhour.com and enter your e-mail. Have a question for Dan? Send him an e-mail. [email protected]
This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research. It is copyrighted by the Stansberry Radio Network.
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