CW 772 FBF - Commodities Investing & Trading Fake Dollars for Real Assets with Quotes from Paul Harvey, Jim Rogers & Ron Paul

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com welcome to the Flashback Friday edition of the Creating wealth show with Jason Hartman. As he rapidly approaches 1000 episodes of this podcast, he has hand picked individual episodes that he feels is going to be good review for you to prepare you for the future by listening to the past. Let's dive in.

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 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.

Thank you for joining us for another edition of Creating Wealth. This is Jason Hartman and I wanted to say welcome to some of our listeners from around the world, whether it be the U.S. canada, United Kingdom, Australia, Japan, Netherlands, Philippines, Qatar, Ireland, Singapore, India, Korea, Malaysia, Netherlands, Brazil, Germany, China, Switzerland, Thailand and a total of 26 countries total. We appreciate having all of you listening and talking about investing in real estate, mostly in America, but a little bit around the world. American real estate we still think is really one of the best deals going, especially given this perfect storm that has developed over the past two years or so with the subprime mortgage meltdown, the rising commodity prices and the ridiculous increase in inflation here in the US and also globally. Listen in to this first segment. It is from a radio broadcast of Paul Harvey. Now us listeners will certainly know who Paul Harvey is. He's been around just about forever, almost since the beginning of radio, well, not quite, but been around a long time and he is talking about here. I just found this interesting so that's why we wanted to share it with you. It's a very short one minute clip and he's talking about how people showed up to to church and found the churches topless. Yes, the roof was stolen because of the value of the commodities. And then he's going to talk about how these precious metal scavengers are dismantling the exhaust systems of cars because of course there are a Lot of precious metals, platinum and palladium used in catalytic converters. And, and this goes to our whole point that we've been talking about on prior shows where we are talking about packaged commodities investing. Again, the point here is to trade devaluing fake fiat money, dollars or whatever currency it happens to be from around the world that is constantly getting debased. Trade it for real hard assets as quickly as possible, but don't do it with pure commodities. Because the second part of this podcast, we're going to listen to Jim Rogers, who's one of my very favorite authors. I really like some of his stuff. Many years ago I went through his book Adventure Capitalist and then he also wrote another one called Investment Biker where he traveled around the world two times on different occasions and, and talked about the financial markets in different parts of the world. Fascinating stuff. And he's really bullish on commodities. But again, we don't recommend investing in the commodities directly. We like buying them in the form of properties because when we buy the commodities directly, we don't get the special unique things we get when we buy them packaged as a property with improvements on the land. Talked about this many times before. I think you'll really like these. I won't have much to say during this show, but these news clips will be of interest to you. So let's start off with the Paul Harvey radio news clip and then we will go to Jim Rogers and I'll have some commentary in between.

Remember, you're listening to Flashback Friday. Our new episodes are published every Monday and Wednesday.

More than a thousand British churchgoers went to church this year and could not get in. They showed up to discover their beautiful heritage. Buildings were topless. The roof was gone. Hundreds such this year, just this year because prices are so high for copper and lead. Just in Sheffield and Nottingham and Manchester, dozens of churches have been unroofed overnight this year. Often the thieves return to the same church again and again. Scrap metal thieves are even more creative. In Chicago, scavenging for scrap metal thieves are sneaking under parked cars, hacking into exhaust systems, cutting off the catalytic converters. But it's the junk inside the converters that's yielding trace, palladium, platinum, rhodium, thousands of dollars an ounce on the black market.

Now let's listen in to Jim Rogers, who is a real commodities guru and a commodities bull. And you know what? I think he's right. The only spin that I want to give this for you is to just ask you to think about it in a new way because he sounds Very pessimistic about the American dollar and I am in total agreement with him about that. However, he looks at it as bad news. But I look at it as very good news for us real estate investors who are investing in very low, cheap land values and high commodities values. So let's listen in. I'll make a couple comments in between.

Welcome, Jim Rogers. Thanks for being with me on this show.

I am delighted to be here, Jerry.

Great.

Jim, you've written a book that's due to be released this December 4th called a bull. In investing profitably in the world's greatest market, you've taken your money out of the dollar and put it in Chinese yuan, Japanese yen and Swiss francs and you packed up your family and moved to Singapore. Why don't you explain to the folks out there what on earth is going on and why you've taken all these steps.

Well, we moved to Asia because I have a 4 year old daughter who speaks Chinese and I want to make sure she continues to speak good Mandarin and good Chinese. I think that the best skill which I can give to someone born in 2000 is to be completely fluent in the Chinese language and in things Chinese. We've been thinking about this for some time. It's not something that just popped into the, into our minds recently. We've been looking at it for three or four years.

Finally, finally we found the right place, the right schools and right everything else. Plus we do want to be in Asia. Asia is the wave of the future. I think, Jerry, that moving to Asia in 2007 would be like moving to London in 1907 or to New York in. Sorry, to London in 1807 or New York in 1907. So we've just, it's all come together and we moved here.

When I told somebody that recently, they said, well, where are you putting your money? Into which currencies? And I was explaining that I think that the renminbi is probably one of the soundest investments one can make these days. And they said, what else? And I said, the Japanese yen and the, and the Swiss franc, both currencies are undervalued. They've been beaten down by the carry trade. So I've been making new investments in those currencies. I am terribly, terribly pessimistic about the US Dollar. It grieves me to say this since I'm an American, you know, and we're all Americans, my daughter, my wife, everybody. But what they're doing to the US dollar and in America, it just breaks my heart. I can't sit around and just watch them destroy the currency. I've got to protect my family. I've got to protect my daughter, my wife.

This is actually great news for us as real estate investors. Why? Think about it. The value of our loans keeps declining. Let them debase the American dollar. Overall, it is not great news. But as we play the game properly, we are outsmarting the Federal Reserve. And the way the government is spending so ridiculously, irresponsibly because our investments increase in value with these inflationary pressures, the commodities inside them increase in value with the inflationary pressures, and the loan balances decline due to inflation. Remember, as I've always told you, inflation hurts a lender and benefits a borrower. And then you add the real icing on the cake to this whole equation, which is already so incredibly good. And what is that icing on the cake? It is the fact that our tenants pay our debts for us. Wow. You can't get that anywhere else but in real estate investing. Let's keep on listening to Jim Rogers.

Well, for the big part of the 20th century, the US dollar was the reserve currency of the world. What do you foresee as the fate of the dollar being the reserve currency?

Well, unfortunately, I'm afraid the dollar is going to lose its status as the world's reserve currency. As recently as.

The US Was a creditor nation, now we're the largest debtor nation the world has ever seen. We owe the rest of the world over US$13 trillion, which is pretty terrifying. But what's even worse is our foreign debts are increasing at the rate of US$1 trillion every 15 months. Now, in Washington, you think they'd be worried about this, but they don't seem to be. It's the official policy of the Federal Reserve of the United States to debase the currency. The. The head of the central bank right now is on official record as saying he's going to print as much money as he has to to drive down the value of the currency. And he's doing it. I mean, he's cut interest rates twice here in the last few months. He's sending signals to the rest of the world. He doesn't care about the dollar. He's printing money as fast as he can. I mean, this is a terrible policy. It's never worked in the long term or the medium term with all the countries that have tried it. But this is a man who doesn't know much about the currency markets. He doesn't know much. He doesn't know much about anything. As Far as I can see, except printing money. He spent his whole career studying printing money, and now we've given him the printing presses and he's running them. So it's not, not, not good for the world, not good for America. But one has to adapt. One can't sit here and watch, watch him destroy the currency and take, take my family down with it.

Well, my comment there is the only way Jim Rogers or anybody else's family would be taken down with it, as he puts it, is if they save a lot of money, if they have a lot of equity in real estate, if they have a lot of money denominated in dollars in any investment. Stocks, bonds, and bonds are particularly bad. I would really shy away from bonds. I'm not a fan of bonds whatsoever. But stocks, bonds, equity in real estate, savings accounts, all of these items get attacked relentlessly by the devaluation of the dollar and by inflation. But guess what? So does debt. I mean, think about it. When you borrow money, your lender is essentially investing in a way, in a bond, a bond that you hold and you are responsible for paying back. And guess what? They get paid back in constantly devaluing dollars. This is great news for us when we play the game correctly. Let's keep on listening.

Well, what would be the significance of the world moving from the American dollar to another currency as its reserve currency? What is that going to do to the United States?

Well, this happened to the pound sterling 60 or 70 years. You know, 60 to 80 years ago, the world moved away pound sterling to the US dollar and England was in terrible shape for many, many years. They couldn't borrow as much money as they wanted to. In fact, there came a time when no one would lend any money to the UK After a few, several years, many years, I should say. So it will happen to us. One of the great advantages that the US has is we can print money and borrow money in US dollars and it's been the world's reserve currency. But as that changes, we're going to find ourselves terribly restrained again. I'm not happy about any of this, Jerry. I wish it weren't happening. But those people in Washington don't seem to see the world the way I do.

Just a reminder, you're listening to Flashback Friday. Our new episodes are published every Monday and every Wednesday.

Now, that comment may sound really, really negative and really bad, but I personally am not very worried about it for a couple of reasons. Number one, and I've explained this before on prior shows, remember America's Brand, America's Brand is freedom, stability, and the world's Brinks truck, the world's safe harbor. So that takes a very, very long time to change. Even with the currency devaluation, America has by far the largest economy on earth, much larger than China, much larger than other economies. But we are benefiting from the consumption of the other growing economies around the world as long as we get out of dollars and we take as many of those dollars as possible and we put them into hard assets, things. You know, my mom used to always tell me when I was a kid that I spent money like it was going out of style. Well, guess what, mom? Money is going out of style. But we don't want to spend it on consumer items. We want to invest it in hard assets, in things everybody needs. Housing has universal need. Real estate has universal need. And the commodities, the ingredients of these properties that we buy, because we're really buying very little land there. We're buying mostly the value of the commodities will continue to increase because of inflation and world consumption. As we are in the midst of a global prosperity boom, Even if the global economy slows quite a bit, we are still, historically speaking, in the midst of a boom when you look at it in the context of history over the past several decades. So this is all good news for us as long as we play the game right.

Are you getting any pushback from basically telling the truth about what's going on in the financial world?

Well, to my astonishment, many people have written and said, my goodness, we wish somebody else would, you know, go public with what's happening because it is a serious problem. I have gotten to a couple of hate mails saying, you know, take your money and stay out of the country. I didn't realize America was like North Korea. These people seem to think that, you know, you can't live in America if you think things are wrong. But no, for the most part, to my amazement, everybody seems to say, yes, good Lord, they are. They are ruining things. I hope somebody will do something about it.

Have you been warning about this for very long?

Oh, yes, yes. No, it's been something that's been coming for a while. I'm afraid it's crescendoing now. You know, it's as people. I mean, as Bernanke makes it clear to the rest of the world that he doesn't care about the dollar. I mean, this is something that if you paid attention, you would understand. But in the last three or four months, it's become very clear. When Bernanke went and cut interest rates recently, to protect his friends on Wall street rather than to protect the dollar. It's been very, very clear to everybody. Not to everybody in the world, obviously, but to many people in the world.

Well, one thing I remember is seeing you every Saturday morning on the Fox News Channel on the financial shows and your position always seemed contrarian compared to some of those, especially those youngsters that were on the show. And do you think that the things that used to stay on that show are becoming true and that the young ones on that show are starting to learn their lessons?

Well, it's clear that the things I said on the show are coming true. It's not a question of thinking it or anything. That's not an opinion that's happening. Are they learning? No, of course not. Most people on that show and other shows like that still don't seem to have much understanding of the big picture either, certainly of international finance or world finance. And unfortunately this is many people are going to have to pay the price. I've tried to explain this to people, but people don't seem to want to listen. Well, which is fine. Which is fine. Just gives more opportunities for those who do understand to do something about it. Now, case I'm wrong, you know, I'll lose a lot of money, but I don't think I'm going to. Don't think so far I've been right.

Well, I mean, when I watch that, when I watch all the financial shows now, Jim Cramer, all those, to me it seems that they're almost deluded about what's happening to the dollar and about what the Federal Reserve should do because they seem to be thinking that more liquidity should be pumped into the system, especially that Jim Cramer.

The host of.

That show, I don't watch shows like that, so I can't help you on what they think. But it is clear that more liquidity is going to drive down the value of the dollar. It is happening. The dollar is at all time lows now. I mean, this is 2007. So that means, you know, at least 100 years, the dollar is now making new lows, which is a shame because we were the world's reserve currency. We were the richest, most powerful country in the world. And it's not going to be good. It's driving commodity prices up. It's driving up interest rates. As you know, long term interest rates have not come down despite all this. And what will happen is as commodities go higher, inflation goes higher, imported goods go higher, inflation will get worse and ultimately long term interest rates will go higher too. We already have a very, very, very steep yield curve in America because the long term interest rates are not paying attention to what the Federal Reserve is doing. So no, in the end, if I'm right, this is going to cause problems for all of us. Worse problems for all of us.

I'm back with Jim Rogers and we're talking about the financial state of the United States right now. And Jim, I've heard that you've endorsed Ron Paul for presidency, is that correct?

Well, I've certainly said on TV that he's the only one who seems to understand what's going on. And I've given money to Ron Paul. I've not given money to anybody else. He is the only one who has a clue what's happening in America right now. And he's been the only one for a while. He seems to be getting traction and I hope he does. I would certainly vote for him if he gets a nomination. And I would not vote for the other. I would not vote for any of those other clowns, that's for sure. I'd vote for protest vote before I would vote for them.

Well, he's the only one I've noticed that's been talking about currency and about the bubbles. And the only other candidate I've heard talk about currency was Duncan Hunter, who wanted to make it a trade violation for the Chinese to peg their yawns to the dollar. So that's the only other candidate that I've even heard mention currency. But I've been following Ron Paul for decades and I know that he's been warning us for years about the real estate bubble and the dangers of the government subsidized loans through Fannie Mae and Freddie back. And do you agree with him that the chickens are coming home to roosters with regard to the.

Well, no.

That's what you and I have been discussing here. Yes, of course it is. He's been exactly right. Again, none of the other clowns have had a clue what's going on. They're part of the problem rather than part of the solution. So, no, most of the things that Ron has said over the years have turned out to be right.

Well.

What needs to be done about the credit bubble?

Well, you've got to pop it. It is being popped on its own accord right now. We've had the worst credit bubble we've had in American history, perhaps in world history. Never before in American history have people been able to buy a house with no money down. And in some cases the builders would even front them money to help Them buy a house. So this credit bubble has got a long way to go as far as cleaning out the system. You don't clean out a big credit bubble like we've had in five or six months. It usually takes several years to, to clean out a bubble like this. And this one will too, in my view. What they should have been doing, they should have been raising interest rates. The Federal Reserve, that's the way you go ahead and clean out the system. We've got an inflation problem. You raise interest rates, it might help with the inflation problem. You know, the Japanese tried this when they started having problems in the early 90s, and they kept putting on band aids, putting on band aids, putting on band aids. And here it is 17 years later, and their stock market is still down 70%. That's 7,0% from where it was in 1990. Well, America seems to be doing the same thing. We're going to cut interest rates, we're going to try to prop things up, and in the end it's going to make things much, much worse. Much worse. Now, if you went ahead and raised interest rates and cleaned out the system and got the pain behind us, then perhaps we could go ahead and start over again. There are lots of safety nets in America to take care of people when there are recessions or when there are hard times. Trying to prolong it with a bunch of band aids and printing a lot of money is just going to lead to many, many, many worse problems down the road. If we went ahead and took our medic, tried to take our medicine now, we might be better off down the road.

Well, with the subprime meltdown, instead, the Fed has been injecting money into the system and claiming that that's going to help the homeowners who are at risk to lose their homes because of the problems with the mortgages. Who does this really help? Who really benefits the homeowners?

No, it helps a few firms on Wall street that perhaps will not lose money on all the loans that they've made. But most of the homeowners are not going to benefit from this because there is an over. There's a huge glut of housing in America. Cutting the interest rates is not going to get rid of the glut of housing. It's not going to make house prices go up. It may save a few homeowners, but for the most part, the people who bought homes were overextended, shouldn't have been buying homes in the first place. As I said, never before in American history could you buy Homes with no money down. And everybody of course was buying very low interest rate, getting low interest rate mortgages that have to be reset. Well, they're now being reset. And no matter, well, not no matter, but if his interest, even if he cuts interest rates another half or 1% or something, still many of these mortgages are going to be reset at higher rates. And many people we've got who are underwater with their house prices now, where the prices have gone down so much that they don't have a profit anymore, are probably going to walk away from the mortgages anyway. So this is not going to help anybody except a few friends on Wall Street.

Well, and President Bush, I mean one of the things that he touted during administration was the fact that the number of homeowners, people who own their own homes, was raising as if this was something that should be celebrated when really it was not a result of people earning the money and accumulating the wealth to buy houses that just easy credit. Isn't that right?

Well again, whatever happens, all of these are leading to further and further long term problems. Politicians look for short term solutions because they're not going to be around in the long term. You know, somebody else is going to be the politician. Short term band aids have never worked eventually. And I've got a four year old and I'm more worried about the four year old than I am worried about the next election.

Well, yeah, and you know, it seems to me that politicians like to manipulate the system and then demagogue about it. And the easy credit has been one way for them to do that.

It certainly has. And the politicians love to talk about how everybody can own a home, et cetera, et cetera. Well, you have to have economic reality. It's great for everybody to own their own home. I'm all for it too, but I also am in favor of economic reality because eventually somebody has to pay all these bills.

One thing that I want to do is play a little sound clip from Ron Paul questioning Bernanke earlier this week and then just get a few comments about it.

It's about two and a half minutes if that's okay with you.

Okay. John, would you go ahead and play that?

So I think we have to get back to the very fundamentals of where this problem comes from and the bubbles occur when we have this malinvestment and the creation of new money. So my question boils down to this. How in the world can we expect to solve the problems of inflation, that is the increase in the supply of money with more Inflation.

Congressman, first, just a small technical point on the growth in money. Money growth has been pretty moderate over the last few years. The increase in MGM is probably related to the financial turmoil. People have been taking their savings out of risky assets, putting them into the bank, and that makes the money data show faster growth. So I'm not sure that's indicative of policy necessarily.

What we tried to do is follow the mandate that Congress gave us. And the mandate that Congress gave us is to look at employment and inflation as measured by domestic price growth. And as I talked about today, and I think you would agree that we do see risks to inflation and we are taking those into account and we want to make sure that, that prices remain as stable as possible in the United States.

But how can you do this and pursue this, the policy you have, without further weakening the dollar? There's a dollar crisis out there and people's money being stolen, people who have saved, they're being robbed. I mean, if you have a devaluation of the dollar. 10%. People have been robbed of 10%. But how can you pursue this policy without addressing the subject that somebody's losing their wealth because of a weaker dollar and it's going to lead to higher interest rates and a weaker economy?

If somebody has their wealth in dollars and they're going to buy consumer goods in dollars, a typical American, then the, the, the, the decline in the dollar, the only effect it has on their buying power is it makes imported goods more expensive.

But not if you're retired and elderly and you have CDs. And their, their, their cost of living is going up. No matter what your CPI says, their cost of living is going up and they're hurting. And that's why people in this country are very upset.

Well, if that isn't telling, I don't know what is. Ron Paul is absolutely right. Ben Bernanke is liar, liar, liar. I mean, can you, can you believe that? Gee, only if you buy stuff that's imported will you be affected by this. That is so untrue. We live in a global economy and the ingredients to almost everything you could possibly buy, whether it be at the grocery store, the electronics store, services, because think about it, service people have to buy stuff too. There's this ripple effect. Inflation is everywhere. And the devaluation of the dollar is hurting the elderly the most because they tend to be the savers. They did the right thing. All their life they were told, save money, save for retirement, yet they have been totally burned through the policies of the Federal Reserve. What can we do about it. Well, the best thing we can do is not get burned. So follow our plan. Use debt. Trade dollars for hard commodities that are likely to increase in value. Put tenants in the properties so the tenants pay the debt back for you in depreciating dollars. That is a very, very good deal. Keep on listening.

First of all, Jim, what did you think of Bernanke's response to Ron Paul's question with regard to the growth of the money supply?

Well, we know he's lying. I mean, you know, the statistics are pretty clear that they have been printing money that M3. They stopped reporting M3 year and ago so that people wouldn't know. But there are people who have been able to reconstruct M3 and M3 is rising at a very rapid rate. The government has been. The central bank has been printing a lot of money since Bernanke showed up. But by the way, they were printing a lot of money on the Greenspan too. Greenspan and Bernanke together have really, really, really undermined the value of the dollar. What is really terrifying from what I heard Bernanke say though is when he started talking about how the.

Collapse of the dollar or the fall in the dollar does not affect Americans who buy products. That is grounds for impeachment if you ask me. Because that is such an untrue, an unaccurate, inaccurate statement that how can a man who claims to be an economist and the head of central bank try to get away with that? I mean, he's either lying or he's a total charlatan. One or the other because everybody is affected when prices go down, when the dollar goes down, copper goes up, Scotch whiskey goes up, cars go up, tires go up, everything goes higher. If the price of imported tires goes up, that means the price of domestic tires are going to go up too. So even if I only buy US tires and all the foreign tires coming into the country are higher price, the domestic people are going to raise their prices too. So I mean, it was terrifying to hear him say that. And I don't know if he really believes it. If so, then he's a fool. And if he doesn't believe it and he knows he's telling a lie, then he's a charlatan and should be impeached because that was such an extraordinary, extraordinary statement to hear that from anybody except somebody who doesn't know what they're talking about. When the prices, when the dollar goes down, it affects all of us. Even if we only buy American products, it affects you dramatically. And again, even if you don't buy American tire, foreign tires, American tires are going to go up because the price of rubber is going to go up. The price of everything is going to go higher as the dollar goes down. So, I mean, I'm just. I was shocked and terrified when I heard the man say that.

Well, I wouldn't put it past them to give the big lie over and over again. I mean, if they're capable of manipulating inflation.

What inflation exists, to me, they're capable of anything. Jim, we're back, and we're going to talk more about Bernanke's presentation and his responses to Ron Paul's questions. I'd like you to explain a little bit more to the folks out there who may not understand about M3 and how they manipulate the consumer price index, because I keep seeing these comments on blogs and in articles criticizing Ron Paul for claiming that there's inflation because they say that inflation's at 2.5%. What do you have to say about that?

Well, you know, I would like to know where the people shop who say that inflation is 2.5% because the price of everything is going up. Jerry, no matter what you look at, if you look at entertainment or education or health care, gasoline, utilities, insurance, everything is going up. And so people who say that inflation is 2.5% just aren't with it. Now, the government says that, but the government, we know is lying to us. The government, they used to say. They used to acknowledge that they hedonically adjust prices. It used to be on their website, the Bureau of Labor Statistics. They would hedonically adjust things. You know what hedonism is? I mean, hedonism is when they're trying to show us a good time. So they're manipulating the numbers and misleading us. But more and more people are catching on that inflation's not 2.5%. I mean, inflation's going through the roof despite what the government says.

Well, as much of a Jim Rogers fan as I am, that was a pretty lame explanation of hedonics. Basically, as we've talked about on prior shows, the government messes with inflation, and they lied to us about inflation in several ways. One of them is through a methodology called hedonics. And we've gone into this in much more detail on prior shows. So you can look back at the show notes and listen to those. But just to give you a quick summary here, hedonics is where they say that the product you're buying, that the consumer is buying, produces the equal or greater amount of pleasure, if you will. Than the older product. So the newer product is better because of progress and technology, as it should be. And that newer product should be adjusted for inflation through the hedonics index. So, for example, if you were to buy a laptop computer today, of course that computer is more powerful and pretty much better in every way than it was 10 years ago. And it may even be less expensive today. But they don't just say that that computer is less expensive. They say that if you were to buy an equal computer, which isn't even produced today anymore, to the one you would have purchased 10 years ago, what would that price be today? Well, they don't produce it, first of all. I mean, I remember back in 1989, I bought my first computer. It was a Compaq SLT 286, and it was a 14 pound lunchbox style computer, and it had a tiny little screen and a DOS operating system. And I remember the big decision was, should I get a 20 meg megabyte, not 20 gig but 20 meg hard drive, or should I get the 40 meg hard drive? Well, I couldn't imagine any reason I would ever need a 40 meg hard drive. And now, of course, I have a 200 gig hard drive in my MacBook Pro. So obviously we use that space. And it was an SLT 286. So it was a very slow computer by today's standards, and it cost $4,200 back in 1989. Now, such a computer doesn't even exist. No one produces that computer today. But what they would do is compare today's processing power with the processing power back in 1989 and hedonically adjust it. This does not hold true in real life. The reason it does not hold true is because I can't buy that old computer. And even if I could, it wouldn't work because it wouldn't be compatible with anything else. I couldn't use the Internet, I couldn't use email. That technology would not be useful to me today. So the fact is I have to pay more even though I get a better product. That's true, but folks, isn't that the point? Don't we have the right as consumers to expect progress? I mean, progress has happened since the beginning of time, and we should expect the progress benefit to accrue to us without the government manipulating the numbers to hide inflation. So that's a brief explanation of hedonics. If you want a better explanation, go listen to the old shows@jasonhartman.com and there's much more to it there. Anyway, we're about to wrap up here, so keep on listening for another couple minutes.

Well, let's end the segment talking about your new book, A Bull in Investing Profitably in the World's Greatest Market. And that's what you've been doing, isn't it, investing profit in China.

I do have investments in China. I've had them for a long, long time. And I'm not buying Chinese shares right now because the market's gone through the roof. But my book is not a book of hot tips. It's a book about what's going on in China. If you want to invest in China, there are various ways to do it. Real estate, the currency stocks. One of the best ways, of course, is to buy commodities, because the Chinese have to buy commodities and they're going to buy more commodities. So there are plenty of ways to invest in China. I do a few case studies of a few industries to help people figure out what's going on. And then if people decide they want to invest in China, I've given them some ways to do it.

Well, and let's talk about commodity investing, because I believe that I've read that you are saying that the stock market in the United States is not going to come back for quite a long time and we're in for a rough ride. And you recommend at this point investing in commodities, is that right?

Well, I'd rather be in commodities than in stocks. I do own stocks in America. I mean, I've had some things I've owned for 20 or 30 years. I don't sell them just because the market may or may not go down for a while. But I think that the best place where people should have money now is either in sound foreign currencies or in real assets such as commodities. I've been buying more agricultural commodities recently because I think that's a better place for people to have money than in stocks. I mean, certainly better than investment banks on Wall street, which I've sold short.

Well, what is it about agriculture that you think is a good place to be? I mean, one thing that I've been reading is that there's less farmland in the United States, and perhaps that's true throughout the world. But why agriculture?

Well, the number of acres devoted to wheat farming has been declining for 30 years. The inventories of food are the lowest levels they've been since 19. There are a lot of positive things taking place in the United States, in the world. In the world positive for agriculture. Less and less land is available for growing crops. And now, of course, we have ethanol and biofuels. And because of biofuels, more and more agricultural products will be burned in gas tanks. So you're going to have greater demand for agriculture and less supply. And that normally means a bull market when supply is going down and demand is going up.

And do you also ascribe to the peak oil theory? Are you in oil, investing in oil as well because of the possibility that the peak oil theory is correct?

Well, I have. In my last book, Hot Commodities, I talked about the oil and what's happening with oil. Jerry, I have no way of knowing if there's peak oil out there or not. I'm not a geologist, and even if I were, how can I have covered the whole world looking to see if there's any. But I do know that nobody has discovered a gigantic elephant oil field in over 40 years. I do know that every oil company in the world has declining reserves. I do know that nearly every oil country in the world has declining reserves. So maybe there's gigantic amounts of oil left out there, but if so, we don't know where it is. And we've got to find it very quickly and in very accessible areas. But the surprise is going to be how high the price of oil stays and how high it goes. Maybe there's billions and billions of barrels of ore left, but we don't know where they are.

Well, I'll tell you. My father is a retired petroleum engineer and he strongly believed in the Hubbard's peak and peak oil. So you might be all the way there.

So far, the evidence is that he's correct. But it really doesn't matter, Jerry, unless somebody finds out, let's say it's there. Where is it? We got to find it very quickly. And if we don't, the price of oil is going to continue to go higher. So far your father and Hubbard have been King Hubbard have been completely correct. Yeah.

Well, another thing I want to talk to you about is China, because as you know, there are social conservatives in our country that don't want to have trade with China because they perceive China as communist and godless and immoral. What have you observed about China since you've actually been there and have seen the markets opening up? What do you think about the level of freedom and modernization in China?

They call themselves communists, but I'm telling you, they're among the best capitalists in the world right now. Massachusetts is more communist than China is. I mean, he's trying to do business in Massachusetts, try to do business in China. I promise you most people would Accept China. You will also find that there are lots and lots of rights now. I mean, there are hundreds of magazines and newspapers in China. Thirty years ago, of course, when they were, when hardline communists were running it, there was only one newspaper, lots of TV stations. Now the Internet. There are tens of millions, scores of millions of people in China on the Internet now. I mean, it's virtually impossible to censor people even if you want to. There is some attempts at censorship, of course, but I've driven across China a few times. The churches, the mosques, the temples are all packed with people now. They certainly aren't godless. Maybe they were godless officially 40 years ago, but they're not anymore. No, there are dramatic and massive changes taking place in China. Are there problems? Of course there are and will be huge problems. Just as there were in America 150 years ago, 125 years ago. We had terrible problems and horrible setbacks. But we did a pretty good job. And they are in the process of doing a pretty good job.

Well, Jim Rogers, I really want to thank you for being with me for this interview.

Very interesting. And I'm going to recommend that everybody go buy your new book, A Bull in Investing Profitably in the World's Greatest Market. Thank you very much for being with me.

Very good. Thank you, Jerry.

Well, that was it, you know, a long time ago one of my real estate mentors, Robert Allen, who's written several best selling books, said don't wait to buy real estate. Buy real estate and then wait. And you know what? That is very true. But you've got to buy a special kind of real estate financed a special way in the right markets at the right time based on our methodology. Jim Rogers is right. The value of commodities will continue to increase. They've already had quite a run. But there is a global prosperity boom across the occurring that is of historical proportions. Something that has never before happened in human history. This is a game changer. It is a life changer. The world will never be the same again because of it. You combine that with the fact that post 1971 world where the government started aggressively devaluing our currency in the U.S. good news for us as long as we're following the right plan. Bad news for us if we're following the old plan, which does not work anymore. Follow my plan because it makes sense based on the current environment we are in. So I hope this was helpful to you. This information is crucial to your financial future. Use it. Call one of our investment counselors here. Inquire at our website@jasonhartman.com go to jasonhartman.com and get the free CD. Attend one of our events coming up and we will look forward to helping you grow your wealth based on the new world in which we live. It is a different world, but it is still a world of abundant and truly incredible, incredible, incredible opportunities to create wealth if you do it the right way and you follow the right roadmap. So with that, thank you so much for listening and happy investing. Hey, so we've been Platinum members for a couple of years now and we're just real pleased with the way things are working out.

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