2117: From Boom to Bust- Understanding Market Cycles and Investment Opportunities with Mark Moss

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The last few months have affirmed something you said years ago that was just so, so true, and I don't think people appreciated it at the time, is that the mortgage is an asset. But now, given where interest rates are now to think, oh man, I got this sub 3% mortgage. Why would I ever, ever, ever sell? It's tremendous. It's much more valuable than the house itself.

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 2117 and Happy Valentine's Day. We got a great show for you today. Mark Moss will be our returning guest. Good guy. Lots of information. You're going to love this episode. It's just packed full of nuggets you can use. But first, I got to show you an amazing survey that just came out, Tom. And you know what? This deserves more attention than I can give it today. So today I'm just giving you the overview. We're going to go over this in more detail later and drill down on some of these numbers on another episode. But wow. This is the estimated housing shortage according to 11 major research firms. Folks, this is not my opinion. This is. This is not even just my experience. Being in the market every day for the past many, many decades and definitely for the last two decades, being in the investor only market, previously being in the traditional real estate market before that, although I did have quite a few investor clients back in the old days. So here is what they say. These are the numbers according to these 11 major research firms. If you're watching on video, you see the chart. If you're not, I'm just going to tell you the numbers. Fannie Mae says that there is a housing shortage of 4.4 million homes. Zillow says 4.3 million home shortage. Bank of America says 4 million home shortage. Freddie Mac says there is a shortage of 3.8 million homes. National association of Realtors says there's a shortage of 3 million homes. Realtor.com says the shortage is not as bad as that. It's just 2.3 million homes. Morgan Stanley says the shortage is 2 million homes. JP Morgan agrees with Morgan Stanley. I wonder why.

2 million home shortage in their opinion. John Burns, who we've had on the show a few times and some of his people have been on, says we are short by 1.7 million homes. Moody's analytics, and we've had them on the show a few times, says we are short by 1.7 million homes. And Zonda, a real estate software used by developers and a research firm owned by my friend Jeff Myers, who's been on the show before, says we are 1 million homes short. Apparently Jeff Myers doesn't think we have that bad a shortage. Only 1 million homes. But compared to what? How much inventory do we have? Well, right now we have about 500,000 homes for sale in the United States. We should have about 1.2 million to just be at the normal level, not the buyer's market level, not the crash level, not the bad market level, just the normal level. We have less than half of normal inventory right now. And as your humble coach and teacher and advisor when it comes to all things real estate, what have I taught you? Well, you know what I've taught you. I've taught you to ask, what are they not telling us? What does this chart? And what do these 11 major research firms not tell us? Well, they don't tell us segmenting by price or geography or many other things, but those are two major components, right? So if you segment just by price, these shortages are are dramatically more acute in the entry level housing market. Those houses we like as good rental properties that make good sense for rental real estate. So we're going to go into this more later, but this is really quite vindicating and quite concerning if you're looking to buy because you just see how this shortage is very bad and it is likely to persist for many, many years. And we've talked about that ad nauseam on prior episodes and all the reasons why that's tr. So we won't go into it today. All right, let's look at the next thing. It is Valentine's Day, so I thought we should talk about romance and particularly romance scams. This is a financial show. I don't want you to lose money. I don't want you to get Burned. And one of the best ways to steal from people is through the heart, right? And this is when people are particularly susceptible. Now, we're all familiar with the Tinder swindler and that documentary that was out a few years years ago. And you know, I don't think that was a very fair documentary. Why is that? Well, because they portray this guy who, you know, gets these women to like him and, you know, he's stealing from them. He gets these, goes after these wealthy women. And this makes men look really bad, right? But a lot of women do that. Actually in the courts support it. Our whole legal system supports that whole thing, right? So it's really not fair, but it is the way it is. Now, these romance scams are not gender oriented, okay? So these are just general romance scams, but they are on the rise. If you're looking at the chart you see from 2019 to 2023, these romance scams are much higher. But remember, we always have to allow and sort of adjust our thinking whenever we look at anything for the very weird Covid era. That's when these peaked at about 80,000 per year being reported in the United States. People reporting these in the Federal Trade Commission, the FTC, keeping statistics on these. Now we see 64,000 reported last year. And it begs the question, how many are unreported? It's a huge number that are not reported. Why? Because, hey, look, a lot of crimes just don't get reported at all. And that's really too bad. You should always report a crime. You should always try to hold people accountable for what they do, whether it be criminally, civilly or whatever, right? And by the way, if you're ever having trouble with your vendors, your contractors, your property managers, reach out to your investment counselor. We've got a list of agencies that you can complain to. Look, folks, you pay taxes to have a government right, you might as well use it. It's so easy to do and you know, no guarantees, just like litigation, no guarantees, very expensive. This costs you no money because you've already paid for it through your taxes and your inflation, right? Because they keep inflating away the value of your stocks, bonds, savings, and thankfully your debt on income properties or even non income properties, because that's inflation induced debt destruction. But I digress. So use these government agencies to your benefit. If you have any bad person or company that is taking advantage of you, that is not doing their job, that is neglecting your property or your needs as a consumer, reach out to your investment counselor. Through jason hartman.com. or if you already have an investment counselor and you're matched up with one of ours, our great team members, they will be glad to help you. We have a whole list of all kinds of data of different government agencies that can help you and assist you get justice, get money, get action, get what you need. Okay, so report it. Report this stuff, okay? So you can. You can solve the problem. Don't be a victim. We will help you fight back. So, for Valentine's Day, this is very fitting, right? More than 64,000 cases reported last year, with losses totaling $1.14 billion. That's with a B. While frequency has fallen, it was highest during the COVID era. So kind of an anomaly. It's still much higher than it was pre Covid. The Median loss is $2,000 per victim, which makes them the costliest of any form of imposter scam. You know, I've heard the stories about these men who go on these dating sites. And, you know, the women will say, send me some money, send me a gift. Send me some cryptocurrency. You know, pay my bills, help me pay my rent, whatever. They could be US based, they could be foreign based. And folks, don't do it. This is almost always 99.9% of the time it's a scam. And look, if it's not a scam. Well, define scam. I mean, in the world of romance, it's pretty hard to define what a scam is, right? So the typical romance scammer contacts their target through social media, feigning love and deceiving people into sending money, often in the form of cryptocurrency or gift cards. Bottom line, a good rule of thumb, sad stories are usually a scam. That's what the FTC says. Now, on another note, and this is really disgusting, so trigger alert. And I bring this up because it goes with the Valentine's Day theme and romance. It's kind of interesting to me, like, nobody talks about this stuff anymore. And that's what I'm about to talk about. So I saw this chart, and it was really scary. Okay, this is STIs, right? So sexually transmitted infections, STDs, whatever you want to call them, right? Am I missing something, or is it like, nobody talks about this stuff anymore? I guess when I was a kid in school, high school, used to hear about this stuff when AIDS was a big deal and Magic Johnson got AIDS and all that stuff. You know, like, that was really publicized a lot. But people do not talk about vd. This is deadly stuff or it's life altering terrible stuff. And promiscuity is just beyond the beyond nowadays. It's disgusting. Okay, so look at this. This is a chart from Statista. And the source here is at the bottom, the ECDC Surveillance Atlas of Infectious Diseases. And this is European Stats. And these numbers are freaking scary through the roof. Okay? So don't just jump into the sack with people, folks. It's really dangerous. Look at this. 29% increase in chlamydia, 131% increase in gonorrhea, 60% increase in syphilis. Folks, this is super scary stuff. So there's your Valentine's Day public service announcement from me. All right, join us for our empowered investor cruise. It's going to be a great time and thank you to all of you who've registered. Registration's really been picking up lately. We are going to have a great mastermind. You're going to learn a lot, a lot. Have a lot of fun, casual hanging out, experience on the beautiful brand new Celebrity Apex cruise ship. It's going to be great. Also, I gotta mention that yesterday I did a video for my YouTube channel where I do software demos where I talk about all of these great real estate tools that you can use to make management easier, to track your portfolio, to manage your managers, or hopefully hybrid self management because hopefully you are becoming independent where you don't have to depend on some manager doing a good or bad job to make things happen for you. Right? You are the person in control. Rather remember, we believe in direct investing. Thou shalt maintain control is commandment number three of my ten commandments for investors. And yesterday I did a full length, about a half hour long demo video session with our sponsor, Baselane. This is a truly unique, groundbreaking product they have where they've combined real estate software and the tools that we need as real estate investors with banking. They overlay all this right onto the banking platform so you don't have to deal with your bank on one side and your real estate software on another side. It's the number one banking platform built for real estate investors. It's banking, it's online rent collection, bookkeeping, tax reporting, analytics and much more. And there's a chance to win a 500 gift card if you go to baselane.comjason and without further ado, let's get to our guest, Mark Moss.

It is my pleasure to welcome my good friend Mark Moss back to the show. You've heard his stuff. He's so prolific, producing tons of content, interviewing all kinds of Great people, including yours truly, of course. And it's great to have Mark back on the show. How you doing, Mark?

Yeah, Jason, it's always a pleasure being back to you. I love hanging out and talking. So, man, we already ripped for quite a while before we should have been recording it, but. But, man, always love to be back. Thanks.

Yeah. Well, you know, you said something to me before we started today that I was just really impressed. And it shows where your heart is and where your character and integrity are of how you want to get away from this sensationalized clickbait media that we have. And, you know, I've been railing on that for a long time. We scroll through YouTube and podcast and just mainstream news, too, and all we see are, like, doom and gloom, the sky is falling. You know, Is it really? I mean, what do you think? You're a macro guy.

Yeah. So, you know, just in regards to that, you know, the problem is that. And we know this from a. From a bigger standpoint, we know, like, mainstream media divides us by running, you know, things that. That fuel rage or fear. And so we know the mainstream media does it, but we don't really maybe think about it being done to us in sort of like our YouTube sort of circles that we're in, in this case, you know, macroeconomic type circles and things like that. But unfortunately, humans are very basic at their core. Right. You learn this in marketing 101. It's like we're motivated by greed and fear, pain and pleasure. Right? That's it. And so those are the two levers. And unfortunately, the fear, because we're always alert to danger, the fear sor. Rings a little bit more true than the greed. So those are the two levers that we want to pull. And unfortunately, you know, in the financial space specifically, I mean, the doom and gloom has just been never ending. And I think. I think it's. I think it's just too much, you know, and unfortunately, it starts to become a game that I am. I'm forced to play because I'm competing for attention like everybody else. And I'm just. It's not me. It's not authentic to me. And. And I don't really like that. So that's sort of what we were talking about. But back to the question, is it all doom and gloomy?

Yeah.

Well, it depends. Overall. No. The answer is no.

In.

In my opinion, it's no. No to me. To some people, it could be. So what do I mean by that? Well, first of all, what is your time horizon? So I bought A house. I buy lots of houses. But I bought a new home, which is different, in 2021. And it was like, oh man, what are you doing? Don't you know it's top of the market? Don't you know it's gonna be horrible? Blah, blah, blah, blah. I'm like, look, I don't care if that price of the house drops 50% because I'm gonna own this home forever. It's gonna be up. I think home prices are up 50% in, in three years from now. What do meantime. So one is like my time horizon on that. Obviously, you know, but for your audience, I'm, I'm, I'm big in the bitcoin space. I speak at all the big bitcoin conferences I've been buying and talk about for a long time. And it's like, oh my gosh, should I buy bitcoin now or will it go back down? Like, who cares? It's gonna be a million dollars in, in eight years or nine years, like, Right. And so what is the time horizon? 2. Just overall, is it all doom and gloom? And it depends on what your definition of doom and gloom is. I am an inflation bull. I just think, and we talked about this, there's some financial analysts that are so deep into the data and the analytics that I think they missed the bigger picture. And you see, to understand these bigger things, you have to one, pull your head up and look at bigger things. But you also have to have multiple disciplines. So for example, philosophy, psychology, human intention, greed, things like that. So, for example, what do I mean by that? Well, a lot of people, Harry Dent, he spoke at my conference. I've read five of his books. I keep reading his books because his data is good. His analysis and interpretation of that has been wrong. I have, I used him, unfortunately. Sorry, Harry, but I used him in one of my presentations and I have him for the last 12 years predicting a 90 market crash.

Yep.

Three times. I pulled videos three times last year. 90, 90, 90. I have a video from in June saying, if it doesn't happen, I think it was in May. If it doesn't happen by June, I'm gonna have to call it off. But he hasn't. And he's back on Kitco again two weeks ago saying another 90 crap. Like, he'll be right eventually.

Mark, I'll tell you something. I've been following Harry's work since the like, late 90s, okay? And he was really. He had a great track record for quite a while. He was sort of a God in the financial services industry, you know, got paid a fortune for big speaking engagements. He's been on my show 11 times now, and every time it's just like, the end of the world. The bubble's gonna pop. The bubble's gonna pop. But, you know, and I want you to get to your point of the multidisciplinary thing, right? Because I think that's so important. These people that, like, can't see the forest through the trees and they cling to one NARRA and they just keep repeating it forever, regardless of outside evidence. So for, for example, in that light, you know, there's just a lot more to it sometimes than these sort of micro analysis. You know, it always looks like the bubble's big at whatever point you are in history, but they never know how big it can be. That's a question nobody can answer. And let me just give you another example. I remember one time I was interviewing a Berkeley professor. You probably know where I'm going with this one. Okay. He was the author of a few different books on the population explosion, how the Earth can't sustain the population. And, you know, at the time, we hadn't Quite hit the 8 billion mark yet. We were almost there. Now we're over that. And he was going on and on, railing about how the Earth can't support the population. We got to reduce the population. And, you know, I usually give them the, you know, the why don't you commit suicide question, or, or, you know, what do we do? Are we supposed to have a genocidal dictator? But this time I just said, they said the same thing when we were at 2 billion people and then at 5 billion. And now they're saying, at 8 billion, what is the number? And he could not give me a number. I said, can the earth sustain 12 billion, 20 billion, 40 billion? He doesn't know. Nobody knows. Right.

Because maybe there is no such number.

Right.

And the reason why. And this goes. I mean, this is a little bit sidetracked here, but this is. It's about capitalism. And so when I say capitalism, I'm not talking about a political modality as it's sort of referred to today. Capitalism is just natural and emergent process. I have private property, I have limited resources, and I try to use those limited resources more efficiently. And then cooperatively, we trade in order to improve both of our lives. And that's kind of how I think about capitalism. So what happens is, as something becomes scarce, like we had the whole world operated on a theory of peak energy. Remember that?

Yep.

We're going to run out of energy.

Peak oil. Peak oil is what it was. So oh my gosh, we're going to run out of oil. We're going to run out of oil. Well, two things happen. One, as we start running, if hypothetically we start running out of oil. Well, not hypothetically, that's what happened. As we start running out of oil, supply and demand pushes the price up, up.

Yep.

George, our good friend George Gammon says high prices are the cure for high prices. So as the high prices go up, two things happen. One, people use less of it. So that's one, it cuts that off. And two, people are incentivized to go find new things. And that's what happened in 2008. We came up with a new technology called horizontal drilling or fracking and we have more energy than we know what to do with now.

And, and not only that, we also, on the demand side, we find ways to make the oil we have go further. So if you look at automobiles, for example, I mean they've become tremendously efficient, right? You a Chevy Suburban. Now that gets the mileage of what a little crappy tiny car got years ago. It's, it's amazing how efficient these cars have been getting.

And the same with the food, right? So hey, we have too many people, we can't feed them well. We're so much more efficient with growing food now we can grow so much more than we used to. And so that's why it's like maybe we don't ever get there, we don't know. And that's why they can't answer these questions. But back to the doom and gloomers. So there's plenty of doom and gloom that we can constantly throw. And back to the Harry Denson and people like him, their analysis is correct. The problem that they have is they think very linear and they think about constraints in the market without realizing the human side of things like the greed side. So for example, every time, back to every one of these guys, they continually think that the, the central banks, the government's backs are against the wall. This is it. Checkmate. Right. Like it's a linear game like chess, which is pretty complex, but checkmate. Right. But they fail to think about how many more magic tricks the Fed or the central banks have up their sleeve.

Exactly.

And, and so I had a dinner and I spoke at this Vancouver resource investor conference a week ago up in Vancouver. I had dinner with Brent Johnson, our friend Brent Dollar milkshake guy and Adam Taggart from Wealthy on. It was a good Conversation we should have recorded. It would have been amazing over dinner. But the question I kept posing to them was, you know, because Adam is, is in the bear camp for sure. Yeah.

Adam is wrong and Brent is right.

I, I think Brent is more right. Right. And so Adam is in the bear camp for sure. And he's like, but Mark, what about the inversion and what about the debt and what about the corporate bonds? You know, they lock that in. But all those corporate bonds have to be rolled over. How are they going to do that? And my question, my answer to all of those was great, so what if the Fed just takes all those bonds on their books like they did before. Oh, but Mark, don't you know there's $2.9 trillion of commercial real estate mortgage backed bonds that have to get rolled over there again.

If you can just bail that out too.

Or the Fed, or the Fed puts out on the books. Oh, but, but don't you see, I mean now you see all over the news right now, don't you see the, is ending in March. That's, that's certain destruction. The base going to collapse or they.

Just extend, they'll just do another thing.

Or they, but, but Mark, the economy, everyone's going to lose their jobs. So they'll send out 1200 checks to everybody.

Like, like where, like they'll extend unemployment benefits. They'll do whatever they need to do.

Exactly. And so like they look at, they look at these constraints like it's like this fixed game that someone's going to play by the rules without failing to realize that the rules have changed. And part of my analysis into this, and I've done some videos where I literally broke this down. I don't have all the dates and numbers in front of me, but I'll, I'll kind of give you the overview of it.

It.

Let me tell you a story first. You told me a story, I'll tell you a story. So Albert Einstein, arguably, you know, one of the smartest people in history, he was a professor. And when he was a professor he would obviously give his students a test. And every year he gave the same test, like the actual same one with the same questions and everything. And one of his student aids came up to him and said, hey, you know, excuse me all sheepish. I, I don't want to offend you, but do you realize that you just gave out the same test that you gave out last year?

Right.

I just don't know if you realize that. And he said, yeah, I do. Well don't you think that like the students from last year are going to give the answers to the new students and they're just going to like probably cheat or whatever. And Albert Einstein said the answers have changed. And you see what happens is what that means is as new information comes, we have to be willing to change our mind because the answers change.

Even though the question is still the same.

The question is still the same, but the answers change. And I know the famous last words, this time is different. Famous last words, this time is different, but it is. And so what do I mean by that? That in 2008 the way that central banks interact in markets and economies changed. We saw the start of quantitative easing, they started buying mortgage backed securities, putting them on their books, buying bonds, propping up the market. Okay, so we hadn't seen that before. Sure, throughout history we've seen it. Japan try a little bit. But basically 2008 marked the time that we saw in the US and really changed the market. Now since that time it's only gotten bigger and faster and more developed. Let me give you some dates off top of my head here. So in 2006, you remember this, in 2006, the real estate market started crashing home starts were down 26%. That's a crash. Okay, that's a crash. But it wasn't until 2008, almost three years, two and a half years later, before the Fed actually got some sort of a bailout. Together they did nothing. Let me show you a couple other things. When Bear Stearns went bankrupt, that is basically looked at as the trigger that caused the entire banking collapse to cascade down. Right. It took seven months from the time Bear Stearns went bankrupt before the Fed did anything to help the banking crisis In March of 2023, when the banks collapsed, it took six days.

So they learn lessons and they act.

Fast, but it's even more than that. So yes, they've learned lessons, but it's even more than that. Jason, what happened in 2008 was the first time we saw them. Now look, I get it. Kenzie in economics. The whole point of Kenzie economics is to sort of paper over these, these dips and so forth. I get it. So they've been doing this for a long time, but it was a big shift, it was a big change in 2008. And so let me give you a couple other things. So, so we saw the bailout, so we saw the $700 billion bailout, the TARP package. Then it ended up being about a trillion dollars. But let's fast forward. So they were, they were reactionary. They watched Bear Stearns collapse. They waited seven months, they reacted, but they reacted very slow. Okay? And if we look at fast forward, let's go to 2020. In 2020, when the markets crashed, within weeks we had trillions of dollars of bailout packages already in the markets.

Right.

We had the, the, the 1.2 trillion, the $1.7 trillion package they put out. Then over the next 90 days, the Federal Reserve opened up 13 special funding facilities to buy everything in the market, including buying equities indirectly.

Right.

Okay, but now they, so they went from reacting very, very, very slow to reacting like lightning fast. Okay, but here's what's changed now. They're no longer reacting now they're preemptively moving.

They're proacting.

They're proacting. So what does that mean? Let me give you some examples. So, so the BTFB is an example, but that was, that was like, sort of like a reaction, but the finger was on the trigger.

Right.

But what they've done now, for example, Brent Johnson didn't get this, but we talked it out, is they've gone around and opened up swap lines with all these nations. And not just our friendly nations, like most of the developed nations, like 13 of them, I think at the top of my head. What does that mean? That's like a credit card. Okay? So like my kids, I get my kids a credit card. If you get into trouble, use this card. They don't have to call me, I don't have to wire money over Western Union. They just have it. So all these nations, at the first sign of trouble, boom, they can just tap into as much money as they want. So that's proactively moving. Right? And so I think when you look at the answers being changed, when you look at data pre 2008 and you make your assumptions based off of the check made of what the Fed or the treasury will do, because this is what happened in the 70s or in the 60s or the 40s. Like it was a different time then.

Yeah, of course it was.

And so I think people just haven't realized that. And so back to just kind of all the way back to the first question, Am I bullish or bearish? I'm bullish. I'm not as bearish. I don't see doom and gloom because I think they're going to keep paper and over. Now that's not a good thing. And in my opinion it's actually a.

Healthy thing overall, no question.

It's actually worse. Okay. It's actually Worse, we'd be better off having a big crash, right? Because then it resets the game and it allows new entrants to get back in the game. Now, my kids could one day buy things and, you know, whatever. It's like if you and I were playing a game and it never ended and all these people like, I want to play, I want to play, I want to play. So we want to reset the game. And unfortunately, instead of the, the crash like everybody's expecting, I think it's a crash up and most people never get that chance. Now, eventually, the law of diminishing returns says that eventually the game is over and we're already there. Let me tell you what I mean by that. In Kensington economics, they use debt to stimulate the economy. The goal is to take on a dollar worth of debt to get $2 worth of growth.

Right.

Once you get past 90% debt to GDP, the Keynesian multiplier starts to work against you. So instead of a dollar debt, $2 of growth, now you get a dollar debt, a dollar 50 growth.

And, and is that because of the interest equation where you're, you're paying more interest than you get in revenue?

Well, that's part of it, but it's just the law of diminishing returns. If a little bit is good, it doesn't mean like a whole lot is good.

In other words, maybe a allegory to it would be, you know, you wake up, you have a cup of coffee, you know, an hour later you have a second cup, which is pretty much what I do. I'm drinking my coffee and you get some energy. But if you drink 10 more cups, it's not going to work. Right. It's going to have a diminishing return and make you feel sick.

Right? So the debt becomes unproductive. So instead of debt going to productive things that have a good high use and return, the debt goes to unproductive things which have less growth. So let me just fast forward so save time. I know we have short time today where we're at today. Right now we're getting $1 of deficit spending for 60 cents of growth.

Growth.

We're getting $1 of debt for 40 cents of growth. That's digging a hole deeper.

Yeah. Right.

Okay, so eventually it goes to 20 cents and then it goes to 10 cents, 5 cents. And eventually there's no growth for the debt. So eventually this is. This ends. Eventually this ends. But I think. But if I put my prediction hat on, and this is a conversation Brett and I had, and we agree on This I think we see a hundred trillion dollars in the debt before the game ends.

Yeah. And so we're at 34 trillion now. And that's the thing I always say, Mark, you know, nobody knows how long they can down the road. Right. It's all unhealthy. No one would say it's good and it's okay, except maybe it's bad people on the far left.

Yeah.

But the question is how long can it go?

Yeah. So it's the law of dimension return. So I think we just watch that and we watch as that, as that growth continues dropping from $0.40, $0.20, $0.10 and we'll see when it finally goes or. And that's ultimately that. That's where I put my base case. Eventually things get bad like Argentina and then the people realize that and they vote somebody else in like Miele maybe. But, but I think this law of dimation returns. Now back to the, the super smart analysts that don't take into the rest of this human psychology into effect. So if you think about who's really running the world and not get into like crazy stuff here, conspiracy stuff, but like it's the corporations and the bankers, Right? Like that's who lobbies the government and writes the laws. Right? So it's the corporations and bankers. They cannot let this system crash. Why would they, why would any government, why would any government or central banker allow the whole game to come crashing down and end and they lose everything when they could choose to print? So when they're forced between these, then what? A lot of people want to push back on this one. Jason. I'll throw this out and I'll take a, a pause here. But a lot of people push back is like Mark, but you don't understand. The Fed's fighting inflation. If they do this, we're going to have massive inflation. The people are going to get pissed. They're going to be, they're going to be rioting or, you know, whatever. Yes, that is true. The people will be pissed over higher inflation. But when given two choices, you have to understand you have two choices. Do I want massive deflation and I want to lose everything I own, or do I want a little bit more inflation? They're going to choose inflation every time.

I totally agree with you. And you know what? They're going to choose inflation because it's. Even those people, you know, think it, it's usually relatively slow, like it's not an overnight thing. Like hey, we're going to end Social Security or we're going to end Disability insurance programs. Right. It's not that sudden. Inflation is this gradual boil the frog type of idea. Right. And, and it benefits the elites the most because of the Cantillon effect. Right. They're close to the money printer and they, they benefit from the inflation, actually. And they own assets that are basically hedged against inflation and they have debt which is declines with inflation. So yes, inflation is the business plan. Absolutely.

Yeah, yeah. And then I would also say that I think it's important for people to understand this. And I, I, I talk about this all the time and I know actually you worked out this whole Hartman index or whatever it was called, and so thinking about things not in terms of dollars but in purchasing power.

Right, right.

And so if you, if you can put your, in your mind into that sort of a frame for a minute and you think about what is a crash? Everyone's afraid of a crash, right? Doom and groom, doom and gloom. Oh, it's gonna crash, gonna crash. So what is a crash? A crash, the way that I see it, define it, would be that something happens where my pay goes down, I lose my job, I get a low paying job, I lose my, you know, the value of my home, value of my retirement accounts go down, down, and I can no longer afford the same quality of life I had before.

Right.

Let's just frame it up as that. So something happens to my income and my, my wealth, my investments. So I can no longer afford the same quality of life I had before.

It's a big loss in purchasing power, purchasing power.

So now if we define it that way, then we can have a crash down. That's what people are afraid of. 2008. 2000. Right. The General is fighting the last war, so to speak. But we can also have a crash up, meaning that prices go up so fast, but my pay doesn't rise with them. And I can also no longer afford the same quality of life. The outcome for me and for most Americans is the same. My quality of life goes down. Whether prices went up or down doesn't matter. The outcome to me is the same. So now we have to figure out how do we protect ourselves from that. And the reason why it's important is you have to understand what am I trying to protect from?

Yeah.

Am I trying to protect from a crash down or crash up?

Right. Deflation or inflation?

Deflation or inflation. Exactly right.

Okay, so, so what is the answer to that? But also, I want to make sure you address the yield curve because we talked about that a little bit beforehand and you know, you just Said the great line, I love it. The general fighting the last war. That's really good.

So let's talk about the yield curve for a minute. Now look, I, I'll self admit here, like I said, there's plenty of people that are into the weeds and way more detail than this. But I think I have maybe a better grasp on some other disciplines and we can bring this together. So let's just understand the yield curve. The yield curve is the curve of the, of, of what the bonds pay the yields. So short term debt pays less, long term debt pays more. It makes sense, right? Because if, if Jason, hey, loan me 20 bucks till tomorrow, like you'll give me 20 bucks, no big deal. If I said Jason, give me five grand for two years, you're going to want some return.

Right.

So we want more return for the longer risk. The yield curve. Right. The yield curve has been inverted because short term money is more expensive than long term. Now some of our friends talk about the yield curve, yield code you've heard and how a hundred percent of the time it said there' recession coming. But what we want to do, a saying that I've sort of modeled my business and life off of is success leaves clues that doesn't mean copy the exact same thing. It means try to understand the mechanism of how it worked and do the same mechanism. So what is the mechanism of the yield curve and why does it tell us there's a recession coming? Well, the mechanism works like this. If the long term money gets cheaper than the short term money, then the market is saying that there's going to be a recession coming. Mean and if a recession comes, the Fed will lower rates. So if rates are lower in the future, that means the Fed's going to cut rates. And that means that the market is pricing in a recession. Okay, that's, that's historically been correct but remember the way the central banks work in the markets is different today. So what we're seeing today is something different. We are not in a recession and the Feds are lowering rates. So whoa, hang on, that this is different. That's not what we had before. So they're sort of proving that whole mechanism them to be different this time. So anyway, that, that's sort of my thought on it now. Okay, the Fed has paused rates. We know there's rate cuts coming. The market's pricing in six of them. Jerome Powell was on the news this week at the FOMC meeting. He's trying to say whoa, whoa, whoa, whoa, we're going to slow it down there's going to be three, maybe not March, maybe we'll push it back to May. Like he's trying to job on that. I think that the treasury is front loading the bills, trying to force the Fed's hand into action. I saw some stuff on Twitter today with the new jobs reports that came out out and they're saying that they want to have a big jobs miss they like the bls, the government, the treasury want to have a big jobs miss so that they can force the Fed into action. Because the last thing the, the Fed people think that the Fed's not really looking at cpi, they're looking more like a pce, which is like a better, a better measure for them. But really what they're looking at is the, the unemployment because unemployment moves very slowly and if it starts getting away from them, it could take a long time to get it back up. And so if they could show back to this new report that just came out out from the bls, if they could show a big jobs miss that would really move the Fed forward into action. And so the point that I'm making is that the Fed and the treasury are sort of fighting. They're sort of at odds here where the Fed is trying to slow inflation and keep the dollar propped up, but the treasury is going broke, a trillion dollars just in interest on the debt. Tax revenues are dropping. So the treasury needs interest rates to come down and they need revenues to come back up. So they need the Fed to lower the rates. And so I think by front loading the bills and then like I said, with this new jobs report that came, potentially trying to trigger some sort of a pivot. I think the Fed's going to pivot sooner. Anyway, back to the point I'm making is like we haven't seen a recession and yet rates are already starting to come back down.

Right.

The other thing I would say just one more thing and I'll take a break here is back to some of our friends who are super into the weeds and super analytical on this. They'll say, but Mark, this isn't qe. Look, they haven't done qe. Okay, sure, in March of last year, they didn't do qe. They didn't even pivot. Technically, they stayed in a tightening stance, but they injected $100 billion into the banking industry and that sent the markets high, higher. So just because it doesn't fit your technical definition of what quantitative easing is, doesn't change the fact that they did something to backstop the market, show that the Fed Put is still there and push it higher. I had a conversation with Jeff Snider at Georgia's event and he's like, but Mark, don't you see? The Fed didn't even do anything and yet the markets went up. I'm like, technically you're correct. They didn't inject money, but they said that they were going to do something and their words drove the market.

Right.

And so that's, that's sort of what I'm talking about there.

Yeah, yeah. No, no question about it. So, you know, this maniacal focus on things like the yield curve. Talk about fighting the last war. You know, there's way more to life than the yield curve. I remember Ken McElroy and his wife Danielle were interviewing me on their show and they said, yeah, Jason, you're so optimistic about the real estate market, but you know, George says this and that and the yield curve. And I said, look, all these 135 million people, people with either super cheap mortgages or 42% of them with no mortgage at all, they don't care about the yield curve. All they know is that they've got an incredible deal on housing that cannot be duplicated. It's impossible to duplicate how good a deal they have. And they have 28 years left. That's why there's no inventory and there's not going to be a lot of inventory because those people are only thinking about that, that. Now, you know, they didn't say this, but, you know, I'm debating myself. Okay, Jason. Well, if the yield curve influences the economy and means there's going to be a recession, the people could lose their job. And that's why I went to the trouble of researching what I talked about on your show recently, which is even on unemployment insurance, they could handily qualify for the loan they already have. Right. I mean, their, their debt to income ratios are superb based on unemployment insurance and that, that would be like the worst thing ever, right?

Yeah.

If they had no side hustle, nothing. Right.

So, yeah, I do want to just.

Benefits weren't expanded like they usually are during recessions.

Yeah. I do want to just reinforce, to kind of back, to walk some of this bullishness back. First of all, as I said, it's not bullish. A crash would actually be much better for us.

Right.

So it's not bullish, it's just the direction is what I'm talking about here. Second of all, nothing ever has moved up or down in a straight line. Things crash and then they have bounces or things go up and they have dips. So nothing moves in a straight line. I'm an inflation bull because I understand the government are at this last stages of their empire and they have no choice but to print ungodly amount of money. So that's, that's the trend. But it's, it's extremely volatile. So if you look at like Weimar Republic, you see the chart of the, the gold to German market ratio and over nine years it's like a hockey stick. But if you overlay volatility, it was so volatile that people kept getting shaken out. So I think this is a lot of volatility. I mean, we have a dozen sort of pin pricks or gray swans that we can see right now obviously with the election and we have the, you know, liquidity concerns and we have obviously immigration, we got wars. I mean, no, no shortage of potential pen, pen pricks here. So volatility, yes, but what is the direction we're in? And I just go back to human nature and greed. When your back is against the wall, do you just choose to die or do you hit the printer and like you're just going to hit the printer.

Exactly. Yeah. That's what they will always do. And, and that only question is how long can they kick the can down the road? Earlier you said, said maybe a hundred trillion dollars is the number where the jig is up. So here's the question mark. Let's project out.

And I know I didn't, I didn't say it, it ends at 100. I said I think we get to 100 before it ends.

Okay, fair enough. So my question is, let's project. How long does it take to get to $100 trillion in debt? I mean, it has to triple from where it is now. How long does that take?

Well, the CBO Congressional Budget Office projects will be at 50 by the end of the decade.

Decade, wow.

Okay, so maybe that's their projection, but.

I'm sure it's by 2035. Word, 100 trillion. Possibly. Right.

I would say by 2035 we're there. I mean again, CBO says 50 by the end of the decade. I think that's undershooting. We're basically adding about a trillion every 90 days right now. Right. So yeah, probably 2035 is probably a pretty good bet.

Yeah. Yeah. Interesting. So when we get there, there, do we experience just a massive like stagflation area, sort of anemic economy? Is that what happens at that point?

Yeah, I think that's what happens. And, and the reason why is Back to sort of the diminishing returns, which is money is going into unproductive areas.

Yeah.

And so, like, if it's. If each dollar is being used efficiently, then we have growth. But when you squander it and waste it, you have slow growth. Right. And so I think as this continues, what we're seeing is the government, governments around the world, in the United States as well, continues to play a bigger, bigger, bigger role of gdp. And of course, we know governments are anything but efficient with their money. And so we continue to see this inefficient blob take over more and more and more and more of the market. And that ultimately just kind of stalls things out. Yeah. And then it's. It's sort of like running up a hill with a big weight, you know, with a backpack full of rocks on you. Now you have all this debt, you're trying to carry that instead of allowing the natural process of creative destruction like in, in 2020, you know, we saw a lot of these airlines get bailed out, for example. Like, man, if they would have been able to go bankrupt, bankrupt, wipe out about a bunch of that debt, and have a new group come in, buy them up, and revitalize them, then we could have seen all. We could have seen massive growth for the airline industry coming out of that. But instead, we just put the patient on life support. So to answer your question, yeah, we have more patients on life support, and they're just sort of like meandering along.

That's what we always do in our culture. We never want to take the pill, we never want to take the medicine and, and do the actual cure and have price discovery and market clearing. We always, like, paper it over with to the next thing. You know, it's just, just the way it is. It's the way it is. Mark, anything. I didn't ask you that. You want to share. Just anything you've got going or anything you want to talk about.

One, I think as bad as all this sounds, and again, I think a crash would be better, but I don't think that's where we're headed. There's always a crash coming, but I think the trend is up and to the right at the same time. As bad as that is at the same time. What a time to be alive, Jason. You know, I. I see people all the time saying we have it worse than generations before us and things like that.

That's just not true.

I just got my wife this brand new navigator for Christmas and like, dude, the thing drives by itself. Heated Seats. It's massaging my back as I'm flying down the freeway. I'm chatting on my phone with friends from other countries at the same, like, whoa, right?

It's amazing.

So I think you can, you can focus on the doom and gloom, but you can also realize that all of this money in debt has more money, trillions of dollars moving around the ecosystem all the time. Like there's never been an easier time or a better time to make more money. So you can choose where you want your focus to be. That's sort of my, my point with that. Yes, things are bad and unfortunately, things are going in a very bad direction. I know you and I kind of see eye to eye on a lot of and political problems, and so we're certainly going in a bad direction. But if we can stop and just look at where we're at, we have it pretty dang good. The other thing I would say is that during that Weimar Republic boom that we had, what happened is because of that massive inflation, but because more importantly, the volatility that happened, people saw prices go up and then crash up and then crash up and then crash. But without really understanding what was happening, what they did is they got tricked into thinking, oh my gosh, my gold, my real estate, my assets have never been so high, I should sell them before they crash back down. And what happened at the end when the currency finally collapsed is that they all held a bunch of worthless paper and they had no assets and the paper ended up being burned in the fireplace because it was worth less than wood.

It's an amazing picture on Wikipedia of that, by the way.

Yeah, yeah. So I would just say, you know, zoom out, understand what the picture is. Assets are the way to go. You build wealth is assets. The goal is to get more assets. Don't get shaken out. The goal is not to get more paper currency. It's, it's, it's assets.

I completely agree with that. Assets that basically protect you from inflation. Assets are the key, especially those assets everybody wants and needs. And Mark, you know, you alluded to it, but maybe you want to just expand on this and I'll give you a little bait to do that with. Yesterday, Sam Altman with OpenAI Chat GPT was interviewed and he said that he believes, in fact they have a betting pool at OpenAI that of what year we will see the first billion dollar solopreneur because these AI tools have democratized power and given so much power, power to so many solopreneurs and, and small people that never had this reach and power before that they have with artificial intelligence. So, you know, we know solopreneurs, certainly you and I, that make many millions of dollars a year from their bedroom. Right. And now, you know, he's saying we're going to see the first billion dollar solopreneur. I don't know. Any thoughts on that?

I mean, it depends on what that classification would be. So, for example, if you're an artist like Kanye West, I mean, you're a billionaire, or he, he was right before he went crazy. Was he a solopreneur? I mean, he's just a recording artist.

Yeah, right.

I mean, I think he was a billion dollar solo. So I don't know what, what's her name?

It's a fuzzy definition.

What's her name? Kardashian. She became the first Khloe. I think one of them became a billionaire. She, she got fame and she put her name on a makeup line. Right. So was she a solopreneur? So I don't know, but I would say it's certainly getting easier. I think overall, though, I think most people have the wrong opinion of AI from a standpoint of. I think it makes, and this is, this is actually a bigger point, but I think it makes smart people smarter. It doesn't make dumb people smarter. So what do I mean by that? A lot of people point to this hollowing out of the middle class because we've sent all our jobs to China, right? That's partially true, but that's not totally true. What really happened, the bigger driver of that was not that we sent our jobs to China. The bigger driver of that is that the economy changed. You see, in an industrial age, through the 1800s, and in 1908, Henry Ford created the automobile and mass, mass production. In mass production assembly lines, we all do the same job. You're way smarter than me. But on the assembly line, I put something on, you put something on. So it made dumb people smart and made smart people dumb. And everybody was equal. And we had this massive middle class because everybody was equalized on the assembly line. Today we've moved from the industrial age. We're in the information age. Everybody already knows this. And so now we're working from home on our computers. And we're only going to be able to do that better with your point, with the AI. And what that means is the smarter people, people get, more motivated people, the harder working people get further ahead and the unmotivated, uneducated, unsmart people get further behind because there's no assembly line where we're all doing the exact same job now. It's the meritocracy where we're working on, on that. So I think AI maybe by the end of the decade, maybe in the next seven years or so, I think we could probably see that. I think we're already getting close. I think there's already several that are probably halfway there.

So anyway, yeah, yeah, very interesting.

Mark, where can people find find you1markmoss.com Everything's linked there. I'm on YouTube. I make a couple YouTube videos a week. Podcast radio, so everything's linked there. Social media@1markmoss.com everything's linked there. Go check it out.

Excellent. Mark Moss, thanks for joining us.

Thank you.

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