1825: Euro Dollar, Jeff Snider, Hidden Monetary System Running The World

This show is produced by the Hartman Media Company.

For more information and links to all.

Our great podcasts, visit hartmanmedia.com.

Five out of five for the Jason Hatman Podcast. Thanks to his teachings, I have no worries about my future. My future is bright and that for my family. I recommend the Jason Hartman team to anybody who is interested in financial freedom by way of real estate investing.

5 out of 5.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to episode 18251825 and hope you're doing well. Thanks for joining us. So today we have Jeff Snyder with Alhambra Investments and Eurodollar University as our guest. And I just want to show you a couple of the things that you might want to think about as you are listening to the interview with Jeff. He has a truly unique take on the way the international monetary system works and the way money works. And it is so, so important to understand this. And I'll go into a couple things before we have Jeff and he'll be here again on the next episod as well. So you'll have Jeff twice. Not once, but twice. So the Eurodollar, how many of you have heard of the Eurodollar? You've probably heard that phrase here or there and not really understood what it is. What is the Euro dollar? You've heard of, of course, the US Dollar, the petrodollar, the Eurodollar. Okay, so today we are going to focus with Jeff on talking about the Eurodollar and its huge significance in the economy. So just a couple of things on this chart that you see on the screen and if you're not watching on video, let me just go over a few of these points here before we get to Jeff. And I got a couple things to cover before we get to Jeff as well. So it is widely perceived now, now this is the way most people think about the economy at least most people in the know think about the economy, right? They think, well, you hear about the Fed, right? The Fed is the US's central bank and it is not an arm of the federal government. It's, as they like to say, it's about as federal as Federal Express, which is obviously a private company. So it is a private company, but it is affiliated in this unholy alliance with the US government. But that's just our central bank. Other central banks around the world would be the ecb, the European Central bank, the bank of Japan. So there's all of these different central banks and all. Almost every country has a central bank that participates in this system that was set up a long, long, long time ago. Now, of course, our central bank is just over 100 years old, the Federal Reserve, but we had a couple of central banks before we had the Fed. And so this concept of central banking is a very old concept. And if you want to learn more about it, I highly suggest that, that you duck, duck, go. Well, I don't even know if I like DuckDuckGo that much anymore, but we had the founder of DuckDuckGo on the show previously. You may have heard his interview. And I would not use the G word because we know how evil that company is. So maybe you want to duck, duck, go. Rothschild family. Okay, Rothschild family, they're the famous or infamous banking family, right? So just check them out. Or go to Jason hartman.com and type in Rothschilds or central bank in into our. We have a really good search engine on the website@jason hartman.com so you can find out all of the old podcast episodes, the last 18, 24 of them. You can search them, you can find all sorts of great content. Of course, on the YouTube channel you can do the same. But most people perceive the central bank as the central thing. But what Jeff says is that the euro dollar system is really the central thing. This is a credit based, offshore kind of informal banking system. So you're going to hear them talk about that. You've heard me talk many times about the multiplier effect of our banking system and fractional reserve banking or fractional reserve lending. Well, it's widely perceived that, you know, we use this multiplier system. The system is deposit based, but the Eurodollar system, in contrast, is reserveless and currency less. It's just a ledger, basically. It doesn't even use a currency. There is no euro dollar per se. Right. And then our traditional system, our fractional reserve system, is a pyramid scheme, of course, in essence, and the euro dollar system, though, is a wholesale interbank system with dynamic bank liabilities. And he'll explain that it's a little hard to get your head around this, but as Jeff talks about it, it'll make sense. Or as we talk about it together, the widely perceived notion is that individual economies are these closed systems. But what's really true is there's this globalized economy that is inextricably linked. Right. Or intricately linked, as he says in the chart. But you'd say that while, yes, as it amounts to free trade and so forth, but the Eurodollar system is really a shadow banking system and gold exchange, we'll talk about that in the US dollar versus the euro. And then, of course, the Bretton woods system, which Nixon put an end to boom in 1971. Right. And so the Bretton woods system was set up just in like the last year of World War II. And then it continued with some variation over the years, obviously, until really it's in essence, its demise in 1971. Now, not exactly. I mean, that's a complicated discussion, which we won't go down the rabbit hole because I would have to say tangent alert if we did that one. And you got to give me credit because I didn't go down the rabbit hole when talking about the Rothschild family or central banking in general. Okay. But a couple of things before we get to Jeff. Number one, we had a fantastic event over the weekend, JHU Live and Virtual. It was a live virtual event on Zoom and fantastic. Thank you for all of you who attended that event and for all of you who didn't get a chance to attend and you want to get the recordings, you can go to Jason hartman.com and get those. If they're not up there, reach out through any of the web forms on our website@jason hartman.com and. And we'll send you a link where you can get the recordings of that fantastic event. But we talked about a whole bunch of things, but we didn't talk about all, all of this stuff. But I just want to touch on a couple of things I didn't get to talk about over the weekend and maybe one that I did. And so, number one, this is an interesting chart. If you are a landlord or a renter, you know, this is just a phenomenal thing. It's absolutely incredible what has happened to rents in the United States. They have absolutely skyrocketed. Skyrocketed. Now, landlords love it, renters hate it, but what do you think's going to happen, Brandon when you print trillions of new dollars, you know you're going to have inflation the following year, right? Obviously. And so that inflation is just everywhere we look. We've all seen it, we've all experienced it. If you've purchased anything lately, you know that inflation is just running rampant, but it's definitely happening in the rental market. And that inflation is far more severe than not only the manipulated down consumer price index, the cpi, which is massively understated. How? Through three major methods that I've taught you about over the years. Waiting, substitution and hedonic indexing. Want to know more about that? Go to Jason Hartman.com, use the search engine and you'll have a fantastic opportunity to get all of those great podcasts or videos on that topic. And also, I don't want to forget to mention, for those of you who are interested in a really high level involvement with not only me, but also George Gammon and Rich dad author Ken McElroy, we've got our third just blowout. Awesome top notch bucket list once in a lifetime experience event coming up in Dallas in just about a month from now. If you're interested in joining a mastermind group with radio really, really high level people and having once in a lifetime bucket list experiences, check out the Collective. It is really just a phenomenal, phenomenal group. And if you are interested in doing bigger things in doing syndications, in raising money and hobnobbing with people that are doing amazing, amazing things and hanging out with with big name speakers and celebrities, that's what we do. And by the way, in Dallas we're going shooting. That should be really fun. I can't wait. And we just got a great event coming up, so check that out@thecollectivemastermind.com thecollectivemastermind.com check out that group. But yeah, rents per the graph on the screen have just totally skyrocketed. By the way, if you didn't catch that domain name and you're watching the video, it's at the bottom of your screen. Thecollectivemastermind.com okay, so we know rents are skyrocketing. But my prediction, and that's the important part, is that you ain't seen nothing yet. At the beginning of the year, I predicted we would see massive rent growth continue this year. And we will. Because remember, rents always lag prices. And that's why investors right now, they're struggling because they're saying, hey, I can't get the cash flow that I used to get. And I used to expect. Don't worry. Like I always say, every deal is a great deal in the rearview mirror. So you buy the property, you probably see some more appreciation. I think there is still quite a bit of juice to go in terms of appreciation. Ultimately, of course, there will be a correction. There always is. There's always a business cycle, there's always a market cycle, there's always a real estate cycle. But for the next couple of years, I think this market is looking pretty darn strong. And rents will continue to increase, as will in most markets. Prices continue to increase. That's my prediction. If you want to know my full list of predictions, just check out the other the prediction video on the YouTube channel or go to Jason Hartman dot com. You can find the podcast episodes on that. But here's something from John Burns that I think is pretty interesting. Investors get this. Investors now buy 33% of all the homes in the country. Okay? And here's how they define it. We define an investment to include any property where the property tax bill is sent to another address. We also call these absentee owners, absentee owners, that's another way to call it. Or non owner occupied homes. Because the property tax bill is not being sent to the house like it usually might, it's being sent to another address. So that's an investment property. And look at this. I mean, look at the investor growth over the years now for the last 10 years it's definitely been an investor market, no question about it. And you see here, 2012 we had about 26% of the properties being purchased by investors. 2014, even more, 28%. But it's just gone up, up, up, up, up over the last 10 years. Now it's the highest, it's been at 33%. Of course you've heard the saying smart money, right? Follow the smart money. They'll say, well, I think it's a fair, a fair thesis that investors would be considered the smart money. Now listen, of course we all know investors get it wrong all the time. But compared to home buyers, owner occupant home buyers who are buying more out of life, necessity or emotion or pride or just because they moved to a new area. That's necessity, of course, or something else. Investors are making a decision based on what kind of return on investment can I get, what kind of ROI can I get? And one third of our entire housing market is the smart money. And then you take the part of that that is the big giant institutional investors like American Homes for Rent or Invitation Homes or all of the others. There's countless institutional investors right now and think about just the massive flows of money that they are putting into single family homes right now. The single family income property is the most historically proven asset class in the entire world and it's the most tax favored asset class in America. So go where the smart money goes. They are still in buying mode. All right, last thing for today and then we'll get to our guest, Jeff Snyder. That is the construction cost index. All of those waiting for the big market correction. Don't hold your breath. Here's another reason not to hold your breath. Look at this from Wolf Street. The construction costs have absolutely skyrocketed. Now Jerome Powell, our Federal Reserve chair, will say, well, Jason, this is transitory because you know the supply chains, yada, yada, yada. Well, sure, he's not all wrong about that. But the problem is he's mostly wrong about it and definitely not all right about it when he says that there is a massive amount of inflation in the system. So remember, you know, I teach this strategy called packaged commodities investing or assembled commodities investing. When we buy a property, we're really commodities investors because we buy in markets with low land value and high improvement value in terms of what I call the LTI ratio, the land to improvement ratio. So what are we mostly buying? Well, maybe 80% of the equation when we buy a property is improvement value. What does it consist of? It consists of labor, it consists of petroleum products, it consists of energy, copper wire, glass, steel, lumber, concrete and a whole host of other ingredients that are required to build a house. And guess what? We get to tie those Commodities up on 30 year fixed rate mortgages. Absolutely phenomenal opportunity. Even now, as we see higher rates, you are literally borrowing money at below the rate of the official inflation rate and probably at less than one third of the real inflation rate. That is a phenomenal, phenomenal opportunity. That is so good. That opportunity is so good it actually requires a sound effect. There you go. All right, check out jasonhartman.com for more on anything, whatever you need. Check out thecollectivemastermind.com if you're interested in a high level mastermind group. And let's get to our guest today and let's talk to Jeff Snyder about the importance of the Euro dollar. Here we go with Jeff. It is my pleasure to welcome Jeff Snyder to the show. I've been asking him to come on for a while and it's good to have him here. He is the head of global research for Alhambra Investments and you've probably Seen him around or heard his name. He is a specialist in teaching people about the euro dollar. So we're going to learn all about the euro dollar today. And Jeff, welcome. How are you doing?

I'm great, Jason. Thanks for having me. I know we had, we had exchanged messages and I missed a few of those along the way, but it's great to finally be able to connect with you.

Well, we're glad to have you on and especially since we are neighbors, you're right here in West Palm beach, not too far from me, so it's great to have you.

Lovely Palm beach county, right?

Yep, yep. Good stuff. So, Jeff, you know, you talk a lot about the euro dollar and the importance of the euro dollar. And, you know, maybe we can start by just having you tell the listeners what is the euro dollar?

Oh, boy, you're going to open the can of worms right away, right? It's a complex topic because it's really the global reserve monetary system. Even though most people have probably never heard the term eurodollar, it has undertaken the functions of the global reserve currency, and it did so a very long time ago. The specific term eurodollar, once upon a time, we're talking about back in the 1950s and early 1960s, refer to US dollars that were on deposited banks all over the world. So these were dollars that were outside the U.S. in fact, that's really what the term Eurodollar actually means. Eurodollar doesn't relate to the European common currency. It has nothing to do with the euro. Again, the term euro in the name Eurodollar means offshore US Dollar. So there's this offshore currency market. It offshore is really the key distinction here. And it's not just in Europe. There's offshore US Dollar market. They're in the Caribbean, across Europe. There was even a major one in Montreal, Canada at one point. So essentially US Dollars floating around all over the world doing the functions that we want the reserve currency to actually do for merchandise trade, globalization, financial flows. The reserve currency intermediates between various different systems so they can all work together in essentially a seamless fashion. Now, the real quirk here, in addition to being offshore, is that these aren't actually physical US Dollars. These are not physical Federal Reserve notes. There's no $100 bills floating around outside the United States in this vast multi trillion dollar space. Instead, this is what's called ledger money or money of account, where banks trade assets and liabilities back and forth based upon various financial or merchandise or global payment needs. And therefore, basically it's a system of Keeping track of who owes what where. In terms of the digital currency revolution we're currently experiencing, it's a distributed ledger, except the distributed ledger is maintained by these large global banks that operate all over the world. So essentially, offshore ledger money, US Dollar denominated, but not really US Dollars. And it's run by the banking system, the global banking system.

Okay, so the vast majority of our audience, of course, knows that the US Dollar is the world's reserve currency. But you call this a slightly different name, a reserve currency system, right? Is that what you said?

Yeah. And it's the US Dollar denomination. That's what we use here. It's sort of disingenuous because, again, this is not US Dollars. This is not Federal Reserve notes. This is not treasury currency. It's ledger money that's denominated in US Dollars. But it's what's called a fictional currency or an ideal currency or ghost money, as it's typically been called in the past. So.

And some would call the way the whole system works all of those things, but we won't go down that rabbit hole. But, yeah, I see what you mean. So basically, it's people and really companies, financial institutions, keeping an accounting system denominated in dollars, but there's no dollars.

Yeah, it's not convertible, it's reserveless. It's not like you have a US Dollar liability or a US Dollar asset with the, say, a bank in the Cayman Islands, if you're another bank somewhere along the system, theoretically you could convert into physical Federal Reserve notes, because that's really what we're trading here. But nobody ever does that, because physical Federal Reserve notes are physical currency, let alone gold bullion or something like that. Those are just. They're very cumbersome to use, they're expensive, and they don't settle right away. Part of the Eurodollar story is a technological and communications revolution that developed over the last half of the 20th century. If you're in Asia somewhere and you want to import goods from, say, Europe, do you really want to wait for physical US Dollars to transit the entire globe? Even if you could put the currency on an airplane, it still takes some time. And you have to have, you know, you have to arrange for the settlement to take place in the physical space where it's much easier to just pick up the phone and say, hey, I owe you $100 million. It's on deposit. It's a book entry at a bank near you. Or better yet, I'll just send you a telex message so we can develop Essentially a communication system that creates all of these book entries. So we don't actually have to settle in physical cash. We can just settle when your receiving bank says, yes, I got the message from the sending bank in Europe. We're all set. I credited your account, whatever you need, and you can use it however you want. And we can do things at the pace of a modern globalized economy without having physical currency. We can use fax machines and telexes and eventually the Internet and electronic communication as a much quicker way to settle financial flows or merchandise flows.

Okay, so why does the Euro dollar matter in your teachings? It's a huge deal, right? Why does it matter? And, you know, some people might be surprised that it's so significant when many people haven't even heard of it.

Yeah, that's. That's. I mean, that starts from the very beginning, because the Eurodollar sort of developed on its own. There was no government effort. There was no even individual private effort that said, let's build an entire currency system, entire virtual currency system in the 1950s and do it outside of every country's regulatory regime. It just kind of happened. And so because it kind of happened, and because it was solving a very real, very big problem, the inherent flaw in Bretton woods called Triffin's Paradox, governments were content to just say, let's keep our hands off of this thing. It's called benign neglect. Let this thing develop because it's creating a elegant solution to what was a very big problem at the time, which was the gold exchange standard in Bretton woods was not suitable for a globalized economy. That required a dynamic money marketplace to match the demand for money with the supply of money. So that's really what the Eurodollar did. And it did it in these shadows so that practically nobody heard about it. And because it was undertaking these roles of the reserve currency system, it had to be pretty substantial, it had to be enormous. And eventually, over time, it grew to be bigger than the US Domestic currency system. And we don't really know when that happened. Probably sometime in the 70s and 80s, but for a very long time, this Eurodollar system is an order of magnitude larger, more important, more substantial than the domestic US Dollar, credit and money system. In order to undertake the roles of a global reserve currency, it had to grow quantitatively as well as qualitatively, all of it outside the United States. So we've heard about the Federal Reserve. We're taught the Federal Reserve is the central of everything but the Federal Reserve, even if you consider it a Central bank, its regulatory authority stops at the US border. So if we have this monetary system, this global reserve currency system, even though it's denominated in US Dollars, it is outside the jurisdiction of the Federal Reserve, which is one of the primary reasons you've never heard about it. We have this global US dollar system that operates in these vast blank spaces outside the United States.

Sure. And Jeff, you've got a chart of interest rates on the screen. Now, some people will be listening on audio only, so let's make sure we verbalize things here. But what is this showing us? Is this showing us the influence of the Eurodollar?

Absolutely. And you know, I think most people are taught, I know if you have any exposure to economics in college and then afterwards through the financial media, that the Federal Reserve is at the center of everything. The name is a central bank for a reason. And so we believe that the Federal Reserve, as this all powerful omniscient central bank, is the ultimate setter of interest rates, including mortgage rates, which is, I assume, very important, very topical for your audience, Jason, and for what you do. Right. I mean, mortgage rates are absolutely important, absolutely crucial to the real estate market. And yet this myth persists that when the Fed raises rates, for example, that it's going to be raising rates on mortgages too. And the reason that that myth persists is because of what we've been taught about the Fed as this omniscient central bank that prints money if it has to, it does open market operations, it sets interest rates all across the curve, when in fact that's not what happens in the interest rate market at all, whether it be mortgage rates or other rates. And it's because the Fed doesn't actually do much as far as money. It may create bank reserves in programs like quantitative easing, but that's not the same. The Eurodollar system is the monetary system. And by and large what happens is that you can see that it's the treasury market that actually sets most credit rates around the world. And even something like three month Libor, which is short term money rate, is set by something called Eurodollar futures and Eurodollar market in London. So the Fed doesn't actually control interest rates because the Eurodollar system is the money in the entire global credit and global credit system and therefore the global economy and Treasuries are the basis of it all. And treasury prices and yields are reflective of those monetary conditions in the Eurodollar system, not the Federal Reserve, not what the Fed's doing in the Eurodollar system most of all. And then the implications, whether that leads to growth and inflation or deflation. If we have problems in the Eurodollar system, that's going to be reflected in treasury yields. Therefore it's going to be reflected in things like mortgage rates. So treasury yield, that sets the basis for all the interest rates that come after it.

Okay, great. And so what is the chart showing us exactly? Just unpack this a little bit for us. The black line is the 30 year mortgage rate, right?

Yeah, that's the average American 30 year domestic 30 year mortgage rate. I mean it's going to vary in different parts of the country, but by and large that's a pretty representative benchmark for what's going on in the mortgage market. The gray shaded area is the fed. That's before 2008, the Fed had a single target for the federal funds rate, which is how it communicated what it was doing to the public. So for example, in 2004, Alan Greenspan at the Fed said, I think the economy is doing really well, maybe in danger of becoming so well we need to tighten things up. And everybody associates higher interest rates with tightening. So the Fed began a campaign of raising the federal Funds target rate 17 times a quarter basis or quarter a quarter point every time. So that by 2006 the federal funds target had gone from a low 1% upwards of 5.25%. And so we're taught to believe that the Fed hiked rates that much in that sort of that couple year period of time, that the mortgage rates and all interest rates probably should have gone along with it. But as you can see clearly on the chart here, and for people listening, I'll describe how they didn't at all. And In February of 2005, Alan Greenspan got in front of Congress and called this a conundrum. He said, hey, we're raising rates, but the mortgage rates were not rising all that much. They did a little bit, but not nearly as much as the Fed was hiking rates because the treasury market didn't raise long term bond yields anywhere close to the amount of the Fed's rate hikes. So we have two different things going on here. The treasury market is reflecting something else. While the Federal Reserve under Alan Greenspan said we're fearful of inflation, we need to hike rates, those did not get transmitted into the treasury market. Therefore they didn't get transmitted into the mortgage markets or any other parts of the credit system either.

Okay, so what should people be watching to try and understand what's going to happen next?

Well, here's the thing we have to unpack, what is it that treasury yields are reflecting? What is it they're trading on? Because again, it's the risk free rate upon which all the credit markets build up. We start with treasury yields and we build spreads off of those because that's really how finance works on a nitty gritty granular level. So it makes sense that we should understand what's going on in treasury markets that may, you know, whether or not it's agreeing with the Fed or disagreeing with the Fed, what is it that treasury yields are actually telling us? And if you go back to Irving Fisher in the early 20th century, he said, and history has validated repeatedly, long term treasury yields from the middle of the curve on out are always some kind of combination between growth and inflation expectations. Set aside the Fed, set aside the financial media. A Treasury yield is a market reflection of growth and inflation expectations over the intermediate and longer run. And remember, the treasury market isn't just some niche market. It's the biggest, deepest, most sophisticated market in the world. And more than that, the participants in that market who are trading US Treasuries who are making these yields come out, they're the same banks that keep the ledger in the Eurodollar system. So even though we can't directly observe what's going on in the monetary system because it's offshore, because officially nobody's ever kept track of it, we have a decent idea of what's going on anyway because we can look at something like the yield curve, the treasury curve, or other various money curves that tell us what the participants in the money markets in the shadow money markets globally are actually thinking. What are the risks they perceiving, Are they thinking inflation? If they're thinking inflation, what we would expect to see is that long term bond yield would rise and rise rapidly again. Irving Fisher said, if you're fearful of inflation, the last thing you want is to hold a safe and liquid asset. You're going to sell that thing and go after nominal opportunities elsewhere. If long term treasury yields are not rising. That presents the opposite sort of set of circumstances where it looks like the monetary system itself is willing to demand and hold safe and liquid assets. So what does that tell us if safe and liquid assets are in high demand? Regardless of what the Federal Reserve is doing, it tells us something very specific about inflation and growth and none of it is very good. So putting this in terms of the middle 2000s, Alan Greenspan's conundrum, he said the economy is doing really well. Growth and inflation are Going to be good, maybe even too good. I need to start hiking short term interest rates to tap on the brakes a little bit. The treasury market said, we don't agree with you, Alan. We don't think that inflation's a problem. In fact, we're really fearful of this whole housing bubble credit thing. It might blow up and lead to deflationary circumstances at some point down the road. So Greenspan did one thing. The treasury market, reflecting what was going on excessively in the Eurodollar system, did another thing. And as it turned out, short term rates collided with long term rates and what's called the yield curve inversion, which I'm sure people have probably heard a lot about. When short term rates reach long term rates and they go upside down, it's usually a recession signal. For these reasons that I'm laying out now, it's the market saying we disagree with what's going on in the short end of the curve, which is influenced by the Fed. Instead, we're more fearful about low growth, low inflation, maybe even disinflation and deflation. And that's what keeps bond yields low. And that's what eventually leads to a fall flattening and then inverted yield curve. So in the middle 2000s, the treasury market got it right, Alan Greenspan got it wrong. The treasury market was fearful of the housing bubble coming apart, which obviously it did. And eventually that led to the global financial crisis and Great Recession.

Yeah. So I'm curious. You've got me curious about. And maybe you know, and maybe you have this off the top of your head, but what year did Alan Greenspan make the famous statement irrational exuberance? Was it before or after that? I'd be curious.

I am so glad you brought that up because that goes into the Eurodollar story too, believe it or not. That was December of 1996. He made.

Oh wow. It was much earlier.

Yeah. People remember it. People our age obviously remember it because of the dot com bubble. Stock bubble and people.

Well, and Schiller wrote a book on it too. Or two books. Yeah.

And they got it all wrong. That's not what Alan Greenspan was referring to at all. He was referring to the Euro Doll. Not specifically. What Alan Greenspan was saying in December of 1996 was money supply trends had veered off paths years ago. That's an exact quote. What he meant was just what I said at the outset. The monetary system had evolved into this Eurodollar system, which meant all of these traditional monetary definitions and statistics like M1, M2 and M3 those had been obsolete for decades. So by the early 1970s, M1 and M2 were just, they were no longer reliable. And so what he was saying in 1996 was, we don't keep track of money. We can't keep track of money. So how would we know if the stock market is behaving rationally or irrationally? That's what he was actually saying. We don't do money. We can't. It's too complicated. It's offshore, it's in the shadows. So we don't know if asset markets are actually behaving rationally or irrationally.

It's very interesting.

So you put that in the middle 2000s context, Jason. It's the same thing. How do we know if the credit bubble is behaving rationally or rationally? Well, let's look at treasury yields. They are a perfect signal that something was not right. Alan Greenspan and Ben Bernanke and all those people were, hey, there's no, you know, housing never goes wrong, don't worry about it. When the treasury market was very clearly worried about something, which is why growth and inflation expectations, therefore low bond yields intersected with short term rates and created a flat and then inverted curve.

So do you agree with his statement about M1 and M2 being unreliable? And then I want to ask ask you about M3 and getting rid of that, but what do you think about that?

Oh yeah, M1 and M2 were basically M1 became obsolete way back in the 1960s. And M2, there was an original M2 that wasn't as comprehensive. It sort of evolved. But even then M2 was probably obsolete by the 1970s. And for reasons of Eurodollar, there's things like repo, there's things like money market funds that developed this ledger system offshore, all these things. And so the Fed and economists started moving toward an M3 which they tried to incorporate. You think about what's an M3. It's not an M2, that's things like institutional money market funds. It's things like Eurodollar deposits, it's things like Repo that they could never actually capture the full broad range of those things. So by 2005, 2006, the Fed said they yanked it. We give. It's not because they were trying to hide monetary.

Because that was, that was the theory. You know, a lot of people were very upset about that. They thought, oh, this is just a big scam. They're covering up. They don't want to, they don't want us to know the money supply and.

Actually being honest, Jason, that's the weird thing about it.

That's amazing.

Once in his life was saying, we can't keep track of money. And it goes back to a green Spanish in 96.

We.

We have so much trouble keeping track of money, why bother even trying? So what they said in 2005 was, we can't keep track of this stuff. So we're not even going to. We're not even going to spend a million dollars to keep the numbers going. Which I think was the mistake. The mistake wasn't that they were covering something up. The mistake was they should have said, we really need to do a better job keeping track of money, even though it's going to be incredibly difficult and nobody's been able to do it for decades. We should have taken M3 and developed it further, rather than just giving up on. And the reason they gave up on it was because of this rate hike nonsense. They really believed that if Alan Greenspan or Ben Bernanke got on TV and said, I'm hiking rates, everybody would just assume that that was tightening in the monetary system. They would act that way when they really had no idea if that was the case.

Very interesting. So, Jeff, I want to make sure we cover because we could talk for a day or two on this, of course. And, you know, it was good when you and George and I had lunch and the. And I listen to you guys really going back and forth about this stuff. But what is your prediction about where we're going in terms of interest rates, equities, market? I mean, are they just going to keep pumping this bubble up? You know, if you listen to Harry Dent, who's been on my show 11 times now, you know, over probably 11 years, he's just been saying the bubble's going to pop forever. And it just keeps inflating. You know, it's like. And that's what. One of the problems I find with a lot of the economists out there and the gurus, you know, what they're saying makes sense, right? Everybody's astonished at the math. You know, over $30 trillion now, you know, in terms of obligations and all these unfunded mandates. And they're just going to print, print, print, and the bubble can't go forever. But the thing is, nobody knows how far it can go.

Well, let me back up first, Jason, because the Eurodollar story, it means that the Fed does not print. The Fed creates bank reserves, which are not a form of useful money in this context. Which is the reason why before last year, all these claims the dollar was going to go to zero, that inflation was going to get out of control. Never happened when you heard that from.

The very first quantitative clearly we're not talking to Peter Schiff.

Yeah, exactly. So why didn't that happen? And look at the yield curve. The chart we're still showing you here explains everything for you.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or advice in any other specialized area, please consult an employee appropriate professional and we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.