86: Nominal Confusion, FedNow, Capital Formation, and Dynastic Wealth, Lynette Zang

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It is my pleasure to welcome Lynette Zhang to the show. She is chief market analyst at ITM Trading. She has a fantastic YouTube channel. I sort of met her, I guess, sort of in a proxy fashion or virtually, I guess, sort of on George Gammon's channel. And you know, he's been on the show several times and I've been on his show as well many times. We are looking forward to diving into some monetary policy topics today. Talk about the economy in general, how you can prepare, what you can do, and a whole variety of things there. Lynette, welcome. How are you?

Oh, I'm great, Jason. I'm very happy to be here today.

And you're coming to us from my old hometown, Phoenix, Arizona. I lived there for six years. Good, good stuff. Well, you know, the purchasing power loss and I always talk about how inflation is a robber and a thief and it's just sort of secretly robbing people of their wealth. You can no longer put money in a coffee, can dig it up 10 years later and have it be worth the same amount.

Unless it's gold money and silver.

Metals. And we can dive into that too and talk about metals all day long. But talk to us a little bit about that purchasing power decline that we've had over the years, especially since the Federal Reserve was created. I think the dollar's lost about 96% of its value somewhere around there. And you've got a fascinating chart I'm looking at on your website right now, which is just mind blowing and it shows certain time periods with some big dips. I'd like to ask you about that a little bit as well.

Oh, absolutely.

Let's dive into that top.

Well, you're looking at one of my absolute favorite charts, and that is probably from the Federal Reserve educational Department, the Fred. So anybody has access to it and we've actually lost much, officially much closer to 98% when they created the fiat money system. Oh, that one, yes. When they created the fiat money system, they knew that people do not understand inflation. So the benefit for governments is that they get to tax you almost invisibly. And for corporations, they get to pay you less in actual value. And that's actually what has enabled this big, huge divide in income and wealth inequality. So when you're looking at it and up at the beginning on the left hand side of the graph, you. It's kind of flat. That's when there was a gold and a silver standard, because that makes governments have fiscal responsibility, where you start to see that big, huge dip. That's when we first went off the goal. Well, we started the fiat standard. Now, fiat is the literal translation, is government decree.

So fiat, I say by authority is the definition by authority, because the government says so. You have to accept it. And of course, we have legal tender laws that enforce that. And by the way, for some who are listening to this only on audio and not watching on video on the YouTube channel, I just want to explain this chart a little bit if I can, Lynette. It goes way back to the 1700s, and I love it that it's a long history. And even if you are looking at it on video, tad blurry, but I think people can make it out. So, you know, you see some minor variations in the value of the currency. And then you see the War of 1812. That was, by the way, in 1812, for those who may not know, we.

Went off the gold standard to fund the war.

Right, okay, got it. So then you see the Civil War, and you see a huge decline. And I remember I actually have some of these coins in my coin collection, these protest coins that were right around the Civil War because people were so angry about the loss of value in the currency that they started minting their own coins. Right. And this is an interesting part of monetary history that people don't talk much about anymore because it's a while back, but then we come up to the creation of the Federal reserve just over 100 years ago. That was, I believe, the US's third central bank experiment. Okay. And I'd still say it's an experiment. And then, you know, we see this big, massive decline and it is just falling off a cliff. You know, we talk. We see 1933, where they had the gold confiscation. They confiscated gold at like $21 an ounce, and then instantly revalued it at like $33 or $35, I think. Something like that.

Yeah, 35. And wow, Lynette. I mean, this is staggering. People don't realize this. And one of the things that hides it is technology, because technology is a deflationary force. I'm sure we'd agree on that. And so it kind of does mask and hide some of the impacts of this bad fiscal and monetary policy that we've had to endure. Can you unpack that for us? A little bit, sure.

Because a lot of it is. It's called nominal confusion. And this is. They knew two key things. They knew a lot of things when they put this system in place, but they knew that people do not understand inflation and they marry the legal money of the state because inflation causes nominal confusion. So if you had a $20 bill 20 years ago and you have a $20 bill today, nominally they are identical. So you think you have a $20 bill, but in terms of purchasing power, what you could buy with that 20 years ago, 10 years ago, 50 years ago, a year ago, and what you can buy with it is very, very different. I like to tell this story. My father was a developer, and this would have been in the early 70s. I don't know why this stuck with me, but he had this young couple at his house, and he worked. The guy worked for IBM. And I remember my mother banging her fist on the table and saying, he's a comer. He's a comer. He makes $12,000 a year. Well, back then, the average wage was about 9,500, and a family of four needed one wage earner. And I'm not saying they were rolling in it, but they were quite comfortable. So if somebody was making $12,000 a year, they were doing very, very well. And my father built very nice homes. Well, today, well, wow, look at what they just did with the stimulus, the $1,200 stimulus checks. If you make $75,000 a year or less, you got 12,000, you got a $1,200 stimulus check or 150. So that alone, you know, I think the average wage now is something like 55 or 58,000. So when you stop and think about it, you know, normal person would go, well, yeah, I'd much rather have 58,000 or 75,000 than I would 9,500. But the difference is in that graph that you showed, it's your ability to purchase. And I would also like to really point out that it's because of what you just saw in the graph. And the tool, which are interest rates, that's the tool that the central banks have to regulate the rate and speed of inflation. So when they're anchored at zero, where do you go? So that's why I'm sitting here. And really, we've already entered it, and it should be pretty clear to everybody, life as we knew it is not the same. And it will never be the same. We are 100% inside of a complete reset, social, economic, and financial.

Okay, so what does a Reset mean from the financial perspective. You know, people have talked, Lynette, about a debt jubilee and you know, I don't think this is going to happen. I don't know why anybody would go for that. You know, I mean, I can see why people, I can see why people that have a lot of debt would like, but I can't see why lenders would ever agree to that kind of deal or I don't know, you know, it just seems like a weird idea to me. I've never understood that too much, but I've done some shows on it. So what does this reset mean? What does it look like? And then of course, let's talk about what we can do.

Well, you know what a reset does, all right, if you have no tools left, the Fed is out of tools. All they can do is create more money and they can go to negative interest rates and that's what it's looking like. So just recently.

They did do kind of an invisible reset where they changed how they were targeting inflation and the Federal Reserve said we're going to allow inflation to run hotter, in other words, higher. Even though they haven't officially been able to hit that 2% target. Though your pocketbook would probably tell you different if you paid attention to food and education, education and insurance and all of the things that we need on a day to day basis. So what they need to do is they need to take us into a new system because the old system is used up and that's the reset. The way that they've done it, they've already started to come out with it. Have you talked with any of your guests about the Fed now?

What do you mean?

Okay, the Federal Reserve Program or something. That is a program that the Fed just announced a few weeks ago and they also announced.

The digital dollar.

So the Fed talked a lot about that.

Okay, well, this all leads into that because the Fed now is about you as an individual having an account directly tied to the Federal Reserve. So when they issue UBI Universal Basic Income, which I think is going to be here like within months, then they will make a direct deposit. They'll just push a button and there'll be all of this money that's set up in your account. And they're going to do that every week or every month. I don't know how, what the frequency is going to be. But this is a consumer driven economy. They have to get the consumer to consume. In the current system, when the Fed makes a policy, it takes about 18 months to work through the system. They Use the banks to distribute that policy and it takes about 18 months for them to know if the policy is working or not. But with these Fed accounts, that is boom, an instant thing. So they push a button and now you have money in there. If you are not spending that money quickly enough, that money will start to evaporate, which will most likely inspire you to go out and spend it.

And really it's already evaporating through basic inflation. But this would be a more specific thing. And what this is like. Think of it this way, folks. This is like a gift card that loses its value over time or it completely expires. But interestingly, you know, that sounds terrible from an individual perspective, but for the collective, it's kind of good in a way because they could force the velocity of money. Right, exactly the point. Yeah. And so that forces inflation because when there's more velocity, that's an inflationary pressure, meaning that money moves faster through the system the more it's traded. It creates inflationary pressure, pressure in the system. And that's why even when you have a lot of money printing or money creation is really the more proper way to say it, or credit creation too, you can have like minimal or non existent inflation. Because if people aren't spending or there's very little velocity, it just doesn't cause that inflationary pressure very much as it should. But it reminds me of George Bush's idiotic remark post 911 where he said go shopping, go out and spend money. You know, and yes, that is true. You know, that does stimulate the economy, I get it. But the basis of wealth in any society or any individual is capital formation. You've got to save in order to invest. And you know, if you're a business, increase your production capacity, or if you're an individual, increase your investment capacity. Or a family or a nation, same thing. Individual, nation, family, whatever, business, all of those categories. So. And the thing that scares me the most, Lynette, is the idea of that, that could be married someday to some sort of social scoring system like they have in China, where they could make your money evaporate from your phone if they, if they think you're a bad kid. You know, maybe you're posting things critical of the government or the Fed on social media. Your money could just evaporate. You know, they of course do it under the guise of our safety. And you know, at first they would apply it to true criminals, but then the definition of what is a crime would keep changing, you know, making it. Yeah, right.

Tell us we are definitely In a surveillance economy. And I did a piece on this maybe a year ago and took a look at. And somebody just asked me this question the other day. Well, if we have these direct accounts with the Federal Reserve, the individual does, then what's the role of the bank? Well, here's the thing, the banks are sitting in the middle. So the Fed has, or any central bank anywhere you are in the world, they can just push a button and create that money as you indicated, but they don't have the relationship with the clients. Right. That's what the bank has now, the technology.

Has. That's big data. They have the data on your habits. And what we're seeing is a merger of the three. And when that happens. You're absolutely right. We're already living in the surveillance economy. Go through any. I was driving in Paradise Valley yesterday and I noticed cameras in the cactus. Right.

Unbelievable.

I know, I know. We were like. I actually did a U turn because I couldn't believe what I saw. And oh, there it was very obvious once you really knew that that's what you were looking for.

Unbelievable. You know, it's so scary. This is why I call it Covid 1984. Because Covid has given the government, governments around the world. And it's all starting with China, of course, the most excuse. It's a great excuse. It's giving them great cover to do contact tracing. You know, first it's going to be phones and cameras, then it's going to be Apple watches and then it's going to be, it's going to be chips implanted in our body and that's we're going to spend by the chip will be in your wrist and you're going to just put it near the card, read the chip reader and that's how you're going to pay for things.

And well, you know, I did, I did a research piece a little while ago, a few months ago where I went to the lab where the COVID was, some said it was released from. And actually if you read the papers that are in there, you can actually see that they've known about this for a long time that they admit to engineering and working on creating this superbug. They have beautiful flow charts that shows how it transmits from animals, the bats to humans. And they also knew that it was a matter of time. And what was interesting to me, I mean all of that was interesting to me, but it was also interesting that at the same time that they were working on creating this superbug, they were not working on creating a cure for this superbug. So that's number one. Number two, I just found this the other day. I think this is a. This is a new development where they are putting. I can't remember the name of the company. It's not in front of me, but I can send you the link to it. Putting a chip in a vaccine. And the government of Bangladesh is where they are rolling this piece out now. They're also this company that does that chip into the vaccine, which of course is. Oh, Gavi. That's right. Actually, this is bigger than. Bigger than just a company that's doing this because this is through. Don't hold me to this. I don't have it in front of me. But something like the World Economic Forum, which. Their new symposium coming up is called the Great Reset. But they're working with Gavi, who was founded by, let's say. Oh, it was ID 2020. I'm sorry, I'm going through so much data, sometimes it takes me a minute if I'm thinking about it. But the name of the entity is ID2020. It was created in 2016. The Rockefeller foundation funded them initially, as well as Bill and Melinda Gates. GAVI is a vaccine alliance that was created by the Bill and Melinda Gates foundation, and they are working with the city or the country of Bangladesh, the government of Bangladesh, to insert these chips through a vaccine.

Vaccine. Yeah, I know. I know about that. Yeah. It's pretty scary stuff for sure. And I wouldn't trust Bill and Melinda Gates as far as I could throw them. I mean, think about it. Bill Gates, his career started as a. He started as a ripoff artist. He basically ripped off, you know, what made him so rich in the beginning, but no one talks about that anymore, you know, and he's the perfect sort of fatherly figure, you know, wearing a sweater, you know, he's the perfect guy to pull this off. Right. But, hey, I want to get back to the thing on the banks for a minute and let me show you this chart on my screen here for a second, because I thought this was interesting, if not kind of hopeful. You said with a Fed coin. Can you see this chart about square?

I see it.

So this is kind of hopeful. It shows that square, the payment processing platform. And we've all seen these alternatives, you know, PayPal, Venmo, square stripe. And they're all a little different. I don't mean those are all exactly the same thing. Of course they are different. But the concept being the cashless movement. Oh, yeah. And this doesn't require a Cryptocurrency and it's, you know, it's a group of private companies. But what's interesting about this is that Square's valuation is rivaling some big giant banks. Now look at this, for example. At its current valuation, it puts the company closer to the ranks of large US Banks. Goldman Sachs, that's on purpose. Okay? Goldman Sachs, with a current valuation of 74 billion, is just 20 billion doll dollars ahead of Square. I mean, look at Goldman Sachs has been around for a long, long time, right? Larger companies like JP Morgan Chase and Bank of America are still far ahead, but could be within distance if Square continues to capitalize on the new digital payment environment. And the same concept applies to other companies. Square is just the example here.

But what I also like to point.

Out, do we really need a digital currency?

You know, well, we don't need a digital currency. The central bankers need a digital currency and they need to get rid of cash because what gold did to them is it put restrictions around how quickly they could rob us through inflation. Now the dollar is actually a debt instrument that pays no interest. So they have to get rid, they have to get rid of this piece of paper because as long as this piece of paper is out there, they can't go, well, what's a dollar? It's 1.00, right? In a digital currency, there are no limitations on how far past that point that they can go. And so keep. But now they would be attacking your principal, not just your purchasing power. However, having said all of that, Square and any of those other fintech companies like that, they may look neat and clean, but if you were to look underneath, I think what you see is Goldman Sachs or Goldman Sachs or JP Morgan or all those guys have a big chunk of that. So they're not really as removed as it would be nice if they were. But the central banks, there's nothing left. There's no valuation left. The only thing that is left is our confidence. Remember, it goes back to when they started this whole scam. What they knew is that people marry the legal money of the state. Hence we've got the US dollar here and we've got a digital dollar, right? If they change the name, people would know. And I think I might be older than you. I remember all of the chaos and the craziness that was happening back in the 60s and the 70s with the Vietnam War, women's lib, civil rights, the oil embargo. I mean, there was a high inflation, the stock market, I remember all of that. But what I didn't know then as a teenager I knew that there was a lot of change in the air. I could feel it. I even remember saying to myself that don't ask me why a 17 year old girl would think about this, but I remember saying to myself, Social Security isn't going to be there for me by the time I get there. And frankly, here we are. But I had a $20 bill in my wallet in June of 1971. I had maybe it was even a brand new $20 bill in my wallet in September of 1971. They looked almost identical. So I didn't know anything had changed. And you listen to that Nixon speech and he says, oh, he said temporary.

Temporary. Yeah, yeah.

Well, not only is it temporary, but you don't have to worry about inflation because if you buy American goods, your dollar is going to buy exactly the same amount. And as you pointed out in that first graph, lies, lies, lies.

But I want to just go back and talk a little bit more about this Covid thing because there are so many coincidences that I don't think it's a coincidence.

Coins are amazing. It's the handiest thing for government ever. I mean this is, if you're a government control freak, this is your dream come true. What's going on right now.

If you just start to read all of the imf, the BIS and the federal government and the state, if you start reading those documents, you don't have to think about conspiracy theory. It's actually all out there in open language. It's just that nobody goes and reads there. But remember, have you talked much about the Libor that the created benchmark, they created it in the 80s and then it fell.

Not a lot. We talked about that. We covered, we covered the Libor scandal back then, but we haven't talked much about Libor. Tell us more.

Let me tell you. Well, okay. In 2012, it came to light that this was a stated rate. So banks would get together and say, oh, this is what I think the interest rate should be. This is, this is so shocker that it's manipulated. It's not even a market rate. But once the public knew about it, they had to get rid of it. You covered it back then? Well, the date that it goes away is December 31, 2021. So since that period of time, you have about five or six central banks that have attempted to create a new benchmark and they've created it in this country, the sofr. But then they attempted to create a market for this new benchmark and guess what?

They couldn't get cooperation. They could not create that market. Now, in this recent turmoil, especially when they came out with the Main street lending program or all these other lending programs, frankly, they had the opportunity to really develop that market. Look at the trillions that they've created. So they could have, in my opinion, but apparently I'm wrong. They could have created that market and forced it. Instead, they went back to the Libor, knowing full well that it's going away. In how many months do we have left? 15 months, 16 months? So that is failing. And the problem is, is you have about nominal again. There's that term nominal. Whenever you hear that term nominal, you have to know that the truth is being hidden.

Nominal means in name.

It's the number.

That's the definition of nominal.

Yeah, right. So we have about 6 trillion in nominal contracts that are tied to Libor that must be reset, restructured is the way the term they used, and tied to this new benchmark, which nobody's been able to really create that market for. And it was a big experiment anyway. So, you know, the timing of all of this, the fact that they were instrumental in helping create this superbug, and then it magically came out, and the way that it impacts people.

There's a. There's a lot of good questions, for sure. And, you know, we may never know or at least not know for a long time. Lynette, let's kind of switch gears and talk about what we can do about things. What should we be doing to protect ourselves? I have a feeling you're going to lean toward metals as a store of value. But what do you think?

Well, the. Okay, so what is gold? Gold is good money, and it's been good money for 6,000 years. And there's such a thing that's called. It's called the dynastic wealth stool. And that represents wealth that has been in families at least 300 years. You can think about the Queen of England at least 300 years. And it has three legs. Real estate, rare collectibles, and gold money. So if you've got this that's going away, then you need real money that holds its purchasing power. And I don't know if you have a gold chart to put up there, but, you know, even though it has been admittedly the price has been admittedly manipulated and suppressed by the central banks and their minions. In other words, you know, JP Morgan and all the commercial banks, it's cheap and easy to do. No big deal. Well, even so, what happens in a reset, in a financial reset Is they when all confidence is lost, so the worst is yet to come. And when people lose all confidence in this currency and in the financial system and in what in the short term they think of as traditional institutions, well, they reset that piece of paper that I just tore up and threw away against real money, gold. And then gold expresses to its somewhere near its true value for its most important function, which is to hold its value, your purchasing power value even.

Is that the same thing as investing or is that just insurance and storing of wealth versus investing? See, I think a lot of people get confused about the purpose of gold or silver or platinum or palladium. They think, oh, this is going to give me like return on investment. It's kind of like saying, okay, I don't have a bunch of debt, I've got my financial life together. But I'm still listening to Dave Ramsey, which is not going to teach me anything about investing. He's just going to teach me stuff about getting out of debt. But they don't graduate from the Dave Ramsey school, which I think Dave Ramsey's fine for the group he serves. The problem is people keep listening after they're past, they've graduated, you know, from Ramsey School. So. So that's the thing, you know, I mean, when something doesn't produce income, it doesn't give you tax benefits. You know, I think it's fine as insurance, but is it investing? I don't think it is.

It's not. It's not really investing per se, but it is. So it is. You're right. It's wealth. Insurance is its most important function and right now, storage. Exactly. It holds its value intact. Over time, anything can happen short term, easy to manipulate. But here's the other piece. Personally, I prefer to have the lion's share of my wealth in an undervalued asset that is in a long term positive trend. And the least amount of my wealth is. Is in an overvalued instrument that is in a long term negative trend.

What is that overvalued instrument? Is it the dollar or the.

It is exactly the dollar and it's also the stock market, but that's a different story. And do you know how. Absolutely. 100% it's overvalued. The central banks keep telling you we need more inflation. And what that really means is the currency is overvalued and we're doing our best to take it down. And you showed that chart at the beginning of the show. There you go.

Sure. But the central bank would say.

They do say we need More inflation. We know that that's their stated goal, is 2%. But is there an argument that the 2% target inflation rate, looking at the Phillips curve and looking at GDP growth, which by the way is not adjusted for inflation enough, at least often enough, and population growth, I mean, is there, is it fair to say that inflation, Lynette, can grow at the rate of GDP and or population? Or is it just. Are you a purist that's saying there should be no inflation no matter what?

Okay, I would say that I'm probably. What I would say is that inflation is not a monetary phenomenon.

So you're not a Milton Friedman fan?

No, no. It is a fiat money phenomenon built into the system to get you to accept working for less. And it is an invisible way for the government to tax you more. Because think about this. With inflation, things go up, right? Because it takes more money to buy the same goods and services. So just using real estate as an example, you have a house, the house has. If it's a place where you're living, the house has a function. Right? Well, I can remember when my father sold that house, they were making $12,000 a year in the 70s. I don't really remember, but maybe that the house that he sold them was, I don't know, $20,000, something like that. In today's market, that same house is a really nice house, is probably closer to 500,000. So you sell that house, it's really not the house going up in value, it's really the currency going down in value. But unless you reinvest those dollars, you're going to pay taxes on that inflation.

And Lynette, you know, I love what you just said because that's why I love income property. Because when you finance it with debt, you basically get paid to borrow that money. You can get a three decade fixed rate mortgage. Of course, it's subsidized by the government through Fannie and Freddie. So, hey, I want my subsidy too. You know, investors deserve their own form of welfare and they better go take it, you know, because you know, you're, you're borrowing it below the cost of real inflation and taxes. And that's a beautiful thing. Not to mention the fact that you're, you're outsourcing that debt to the renter. The renter pays the debt. You don't pay it yourself. It's a wonderful thing.

Now let's kind of, let's stay on this key piece because real estate inside of a reset faces two issues that gold can help you with. And you need gold or you're going to be in trouble. Number one are those real estate taxes. And during the Depression, if you had the property paid off, if you could not pay those taxes, you lost that home. So if you have barterable gold over time, then that gold in terms of dollars goes up. And so that ensures that, that you can always pay those taxes. And I have a strategy that I created for myself, so we're looking at all of that. And so there's a certain level of gold that you need based upon the current property taxes that can help ensure that no matter what happens, you can meet those property taxes and hold onto that property.

I'm so glad you mentioned that because number one, in these areas that are these left leaning, poorly run areas that are so in debt, you know, New York, California, etcetera, there's more, but those are the two poster children for big government disaster. Property taxes are going to go up in those places. All taxes will go up in those places because their tax base is fleeing. I mean it is fleeing. Stripe, the credit card processing company, which by the way I'm a customer of, you know, we use them to process our cards is, you know, they're offering people $20,000 one time bonuses now if they will move out of their offices in New York City and San Francisco to a cheaper place because they know that they can keep them for less money and they don't have to house them in those overpriced offices in those cities. So these cities are just an absolute disaster and they're going to lose their tax base and so their taxes are going to go up now. And this is why I say to investors, do not pay off your properties. There's no such thing. A free and clear property almost everywhere on planet Earth there are scarcely very few exceptions. You have a perpetual lien on your property called property taxes. And worse yet, you might have a homeowners association too. So don't pay them off, keep them encumbered. They're never free and clear.

Good stuff. So in that case too there are. Oh God, you brought up so many things. The other risk we could talk for a while. The opportunity. So and we're talking about how gold. And remember, there's that three legged stool. Right. So the other risk that you run inside of a reset is having the ability to pay off the mortgage. And a lot of people experienced this in 2008. You know, I know people that went ahead and took those plans because they were losing their houses. But if you read those documents, boy, oh boy, did they get screwed? Oh, I hope I can see.

What documents are you talking about? A loan modification.

That loan? Yes, those loan modifications.

Well, I modified several of my properties and it was fantastic. They. It's like giving me free money. I loved it.

Well, the person that I read her documents for, which happened to be one of my sisters, a lot of them, she basically is paying like interest only and not even all of the interest or something like that. And after 30 years, she still owns, owes this huge block of money, money that they defer. You were probably smarter than she was. You probably weren't as desperate as she was. So I'm going to tell you because if I read those documents, there's no way I would have done made the choice that she made. But frequently when these things get modified, they are not in the naive person that doesn't understand what they're doing. Not in your best interest.

Tell us more about the reset.

Okay, so in a reset you want to have the ability, even though you're going to always have those property taxes, if you need to, you want to pay it off rather than reset it inside of a hyper inflationary reset. So because gold is severely undervalued, mean my latest calculation, and the more debt they grow, the higher this number goes. The true value, the fundamental value of one ounce of gold is north of 12,500 bucks.

Wow. You know, I'm constantly giving Peter Schiff a hard time. He was on my show before and I remember seeing him shortly after that interview on my show when he was on years ago on CNBC saying that gold would be $5,000 an ounce by the end of Obama's first term if Obama was elected. That was before Obama was elected. And you know the complete opposite happen. I mean, how can you predict this stuff? And when you look at the manipulation like you look at gata, the Gold Antitrust Action Committee, and they claim that gold's all manipulated, I believe them. The central banks have an incentive to push the price of gold down until they don't or until they can't. One or the other. Right.

Well, okay. But I think to understand this, and I'll tell you where I come up with that number too. Yeah, I want to know a reset of the currency, the way that it has been done every single time over 4800 times, is they take that fiat money that has no intrinsic value and is used in one place and they revalue it against that gold money. That's when they need the gold money to go up in terms of fiat to Reset it. So a simple formula. Since money's created by debt, or credit and. Or credit, you take all of the debt that's out there as a proxy for all of the money that has been created, and that could be an unlimited amount. That's why I said the more debt they grow, the higher that number goes. But with gold, physical, whether it's in the ground, above the ground, regardless of the form, because it's indestructible, you just divide all the debt by all the gold, and it'll get you somewhere near its true value for its most important function. Where Peter Schiff was wrong, and I'm not really a fan of his, but where Peter Schiff was wrong was in timing. Because we weren't ready for the reset yet, but we've been. Basically, the whole world has been anchored at zero since 2008. It was 2008 when the system actually died and was then put on life support. And all they really did was mask all the problems and allow them to get bigger and allow the financial system to get more fragile. But ultimately, the system has to reset because there's no place to go. How far below zero do you think we can go in terms of.

When you say that. When you say that, you're referring to negative interest rates, right?

Yes, I am.

Yeah. Yeah. You know what's interesting just conceptually about the negative interest rate, I mean, it's such a weird idea. You know, it's just a weird concept. Think about it. You know, the whole concept of the time value of money makes a lot of sense because I would rather have the utility of that money today to be able to use it. When I was a kid, you know, I learned about inflation through Popeye, okay, The cartoon, and Wimpy, the characters always said, I'll gladly pay you Tuesday for a hamburger today. And I thought, that's a pretty good idea. I'd rather have have the benefit of the hamburger today and pay on Tuesday.

And what's so weird about the time value of money, though, is flipping that equation on its head when you have negative interest rates. It's almost like if you have gold, right, you have to. If you don't want to keep it in your house, which is very dangerous because, you know, you could have a home invasion robbery. Like my grandfather, who was a gold bug and a coin collector. Did you basically pay for a storage unit or a safe deposit box? Right. And you store it there, and you pay to store your. Your precious metals? Well, you know, in a way, why wouldn't you pay to store your money in a bank. Right. You know, that's basically what negative interest rates are. Yes.

It's weird, except that you're paying to store a diminishing instrument versus paying to store an undervalued asset. That's in a long term positive trend.

Fair enough. But people do that all the time. That's what every storage unit in America is full of, is depreciating assets. Right. You know, their old junk is in all these storage units.

That's probably kind of a silly thing. They might want to, like, rethink that. However, if I have an asset that I 100% know, and I do, I've been in this industry on some level since 1964. And my uncle was a major antique dealer. And I'll tell you this story because this really had a much bigger impact on me than I ever realized. But he was my very favorite uncle, and he really taught me how tangible assets move from undervaluation to fair valuation to overvaluation to fair valuation to undervaluation constantly in a figure eight. Okay. And he had. I was there. And Remember, this was 1964. I was 10 years old. And we were. My parents and I were at his house, and he said, come here, I want to show you something. So we went into this back bedroom and he had two huge floor safes. And he opened up the doors of those safes, and he said to my parents, I don't think I was paying a whole lot of attention. I was 10. But he said, if anything should happen to me, aunt Birdie will be well taken care of for the rest of her life because of what's in these safes. So I turned around to look. Now, I didn't really understand too much of what I was looking at now, having been in the industry, if I had to guess, I would say that there were probably the equivalent of 1500 ounces of, you know, three monster boxes or 1500 ounces of gold in each safe. So 3000 ounces. But in 1964, it was illegal to hold more than 5 ounces of gold in any other way but the way my uncle was holding them. And that was pre 33 coins. They were raw, they weren't slabbed yet because there wasn't really a huge market. It was just those that were in the know. And at that point, he was probably picking them up for 35 bucks an ounce when he would go into higher end estates. So think about that for a minute. And I kind of want to. I kind of want to double back to the mortgage and then the opportunity, if I can.

Right. And that's what I want you to close with is any other action items.

Okay. Because. And this is an action item, right. So if you're holding a mortgage, then if you were in a position where you were forced to pay that off or reset on terms that you did not like. Right. You have gold that is undervalued here. And frankly, real estate that at this point is overvalued. It was targeted for reflation. Well, that flip flops, right? Now you can take this gold. What might. Let's. Let's make life easy and let's just say you have a $200,000 mortgage and spot is at 2,000 bucks an ounce. So you could either take that 200,000 and pay off your mortgage, or you could take that and buy all of that gold. But when it flips around, now, what might have taken you, you know, 100 ounces to do, boom, you take it and you pay it off with 1 ounce or 2 ounce, because historically, 25 ounces of gold or the equivalent would buy an entire city block, buildings and all. Which takes me to New York, because you know that at some point those real estate. Well, it's already started, but the real estate prices are going to drop. And in Japan, commercial real estate in the early 90s dropped 95%.

So now when you see this pattern, it's called a confirmation. And it's an indication that smart money is quietly accumulating. Now you start to take some of those gains here and you convert it into what will be at some point, undervalued real estate at a bargain price.

Right, but that whole. That whole discussion is predicated on market timing. And market timers tend to not. That tends to not work over the long term, but let's just say it does. Fair enough. The one thing I'd like you to say.

Hang on one second with you on that.

Well, I know. Fair enough. Hang on. But before you differ with me, let me just tell you one thing. You're fine, you're happy to differ with me. It's more than fine. But what I'm saying is people are valuing real estate prices based on the price of the property rather than. And nobody buys on the price. That's why it's allowed to go up so much. They buy on the payment. And the payment. Real estate's actually gotten cheaper since the peak in 2006. It's cheaper today. And you know, it depends what real estate where. You know, it's complicated, of course.

Right.

But if you Take, if you take the same, you know, the same mortgage in 2006 for the same payment, you get $100,000 mortgage. Today you get $170,000 mortgage and that property has not gone up that much. It's actually cheaper today, interestingly. Go ahead.

Well, it probably depends on where you are. And that is a really valid point because that is exactly why they push the interest rates down. It's the same reason why the stock market is going up. Okay, so these are all manipulations, what I'm talking about, what I'm taught. And hey, in Denmark, they have negative interest rates on 10 year loans right here.

That's why they're the happiest country.

Buy this real estate. We'll pay you to buy this real estate. So can that, can that work? And that push, of course all these manipulations can push the nominal price up. However, when we're talking about a reset, and this is not market timing, this is history that I'm talking about, not talking about market timing, I'm not going to tell you this is going to happen by the end of Trump's reign. I'm telling you that when confidence in the currency and the institutions are lost, and we've watched that confidence deteriorate over time and it's pretty low right now, that's why we have the rise of populism, that's why we have all of these riots going on. When that confidence in this con game is lost, they will have to reset the system. And that's what everything they've been working for is happening. I can't tell you it's going to be tomorrow at 8:35. I wouldn't even try and tell you it's tomorrow at 8:35. But what I do know is that that Libor reset or the Libor going away, rather they put a deadline on it and that is December 31st of 2021.

What does that mean to people when the Libor goes away? I mean, I know they changed the index on a lot of these mortgages and so forth, but what.

That's a great question. You know, it means a lot of things, but the biggest thing that it means is that all of the valuations on all of these loans and all of these mortgages and all of that stuff that's tied to Libor. Well, when the Libor goes away, that means that those rates are either fixed at that level and therefore there is a change. Here's where the biggest is there is a change in valuation, even if they force it onto a new benchmark it is a change in valuation in the whole system. So for you or me, we're not going to see it coming. But for all of the banks and the financial institutions that are holding all of those contracts, including all of those derivative contracts, I mean, it's very complicated, but you're looking at many, many hundreds of trillions in nominal value. And the last time that I saw it, before they changed the accounting laws, I counted out 1.4 quadrillion in these nominal derivative contracts. And that was a while ago. So it's worse now. All of that valuation changes in the entire financial system, and the system implodes. So there is a forced reset with a deadline that I did not give it because, hey, I don't have that kind of control. I would never tell you a date unless the powers that be set a date, because they're the ones that can change it. They're the ones that can do it. So what it means to you and me is that the entire financial system will go into a forced reset. That's why the convenience of coronavirus, where they're justifying and pointing fingers and trying to deflect so that the guys that got us into this set, this problem, can remain in power afterwards. That's what this whole thing is about. And that's why you need physical gold, physical silver, outside of the system, because it's not subject to those same things. And it isn't me saying I can't tell you that spot is going to go or gold is going to go to 12,500. I can tell you that at the time that I did that, that was its current fundamental value. But if you look at what happened in Venezuela overnight, because it's that piece, you know, we're in a constant reset. We've already started. But the big one that people are going, well, when is that going to happen? When is it going to happen? That piece happens overnight. So it's kind of slow, until fast.

Then it's kind of sudden. Yeah.

So there's some nuances in there, Jason, that I'm referring to, but that's how a reset is done. It's not because I say gold is going up. It's because that's how they do it. And there's only been one way to do it. They've tried other ways. It doesn't work. So over 4800 times, I can't guarantee tomorrow, but I kind of think if something has happened the same way every time and we're doing the same thing, we are most likely to get the same outcome. So it is wealth protection. Absolutely. But it's also opportunity positioning because there's going to be a lot of stuff that when this whole debt bubble explodes, it's going to come back on the market and if you are holding your wealth firm, you're going to be able to take advantage of that. That's what I'm talking about. And the rest of the action, food, water, energy, security, community and barterable.

And community. Yeah. You know, a lot of your stuff reminds me a of Kathryn Austin Fitz. I had her on the show years ago and she talks about some of these same things with permaculture and so forth. Really, really interesting, Lynette. We could talk for an awfully long time, but we gotta wrap it up. Give out your website.

Yeah, it's itmtrading.com and also if you go on YouTube and that's where you see my work, I produce at least three, four, six pieces a week and that's on YouTube. Itmtrading.com too. Or you can google my name, Lynette Zhang, and I'm pretty sure I'll come up.

Good stuff. Lynette Zhang, thank you so much for joining us and happy investing.

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