Lead-Lag Live

Chris Martenson on Federal Reserve Policies, Wealth Gap Dynamics, and Market Transformation

• Michael A. Gayed, CFA

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Is the Federal Reserve inadvertently widening the wealth gap? Tune in as we tackle this provocative question and dissect the proposed tax changes that are shaking up the political and market landscapes. Our special guest, Chris Martsenson of Peak Prosperity, joins us to shed light on these critical issues. We explore the potential increase in capital gains tax to 44.6%, the elimination of the 1031 transfer, and the reduction of allowances in oil and gas. Chris also shares his journey from corporate finance to becoming a public educator on economic realities, discussing his influential "Crash Course" and growing community engagement.

Ever wondered how algorithmic trading and Federal Reserve policies are transforming financial markets? We delve into the challenges faced by day traders in the era of automated systems and the mysterious overnight gains in the S&P 500 linked to futures trading. Our conversation spans the evolving role of the Federal Reserve, from Alan Greenspan’s era to the present, and scrutinizes interventions like the sweeps program and quantitative easing. With upcoming elections on the horizon, we speculate on the future implications of these market dynamics and the broader consequences for financial stability.

Lastly, we confront rising economic inequality and the Federal Reserve's role in it. From taxing unrealized capital gains to the controversial influence of pharmaceutical advertisements on media narratives, we leave no stone unturned. We discuss the erosion of public trust in official narratives and highlight the importance of navigating today’s unreliable information landscape. Wrapping up, we touch on societal issues such as student debt and the addictive nature of modern foods, offering insights on how to break free from these cycles. Join us for an eye-opening conversation that challenges conventional wisdom and provides invaluable perspectives on today’s most pressing economic and political issues.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

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Speaker 1:

First, capital gains being raised to 44.6%, like the highest it's ever been since it first came out, including the really predatory era of the taxation rates of the late 50s 60s. Unbelievable 44.6% capital gains, Also an elimination perennially. I think they talk about this a lot the 1031 transfer, so that's hitting real estate. The depletion and depreciation allowances in oil and gas, so they're hitting basically, Michael, every single major donor class. They might have real estate, oil, people with capital gains businesses. They were also talking about raising the corporate tax like everything you could possibly imagine is part of the donor class to. The Democrats are like hey, it's an election year, Great time to line them up against the wall and just have at it. Like well, that's a really bizarre thing to do. I've never seen anything like that in my entire adult life watching political events happen, and the only thing that bothered me was like, OK, what's the message? They're doing this for a message, so who are they dog whistling to?

Speaker 2:

This should be a good conversation with Mr Chris Martinson, who I've had on Spaces before. He has interviewed me on his YouTube channel. I'm excited to talk to him here. I told him that, to start the conversation, I'm expecting him to be fired up and I think we're going to have a really good conversation on markets, on politics and everything else.

Speaker 2:

If you are watching this live, I can see your comments, no matter what platform you're on whether you're on X, youtube, linkedin so if you want to ask a question while we're live and engaged, don't hesitate to do that. I'll be able to show it on the screen. Let's make this as interactive as possible. As always, this will be an edited podcast under Lead Lag Live on all of your favorite platforms Apple, youtube and Spotify. Please, folks, help me keep the momentum going on this podcast. 1.2 million downloads or so over the last year and a half two years, and the YouTube channel is getting some good traction, so appreciate those that support the at LeadLagroupor handle there as well. So, with all that said, my name is Michael Guyad, publisher of the LeadLagroupor. Join me for the rough hour with Mr Chris Martinson of Peak Prosperity, which tells you a lot about his mindset just from that website domain alone. For those that are not familiar with your work, introduce yourself. Who are you? What's your background? Have you done throughout your career?

Speaker 1:

And are you an optimist? I am, but I'm a realistic optimist. I am very optimistic. That's why I do what I do. I believe that I can actually change the world, and I think I am. And so my background.

Speaker 1:

I like to describe myself as a quick learner. Eventually I'd spent a lot of time getting into. You know, I'm a teacher. I'm a native born teacher and I got it. I got a PhD from Duke University, in no small measure because I love science, I love data, I love doing that kind of work, but also because I wanted to teach and I found out eventually that colleges, universities, don't care about teaching. It's not the game. The game was can you get more National Science Foundation grants than the other guy? And that's the game. So I looked at that game, said it wasn't interesting, went and got an MBA from Cornell, worked in corporate finance for three years at Pfizer of all places, wasn't a good match. They didn't like me, I didn't like them, we left. That was very early, straight out of business school kind of an experience for me.

Speaker 1:

Then I was a consultant for a period of time, flying out Monday, coming home Thursdays. Eventually I read this book called Creature from Jekyll Island. Somehow it just came into. I read it and it totally changed my worldview and made me lose connection with being a consultant, at least in part. And then I developed something called Crash Course, which I just had to get this idea out of my head, and everybody can find that. Here's the book, right here over my shoulder, but it's also a 28 chapter video series online and it was just listen, michael. It should have been the dumbest thing anybody ever did. I'm 42 years old.

Speaker 1:

At that point in time, three young kids and I stop, I quit all my jobs create this thing called the crash course, which is it's terrible, it's a stupid thing. It's some guy speaking for three hours over some slides. It should have been a disaster. It caught on and got translated into 12 languages, viewed well over 40, 50 million times and I distributed the whole thing for free, so I don't even know how many times it got viewed and that one thing led to another. And now, for the past 15 years since that time, I've been the proprietor of PeakProsperitycom, which you mentioned, which, by the way, peak physical conditioning is not a bad thing. So double entendre two types of peaks out there. What is Peak prosperity? It's a community of people and it's where I share my most intense ideas. I have a public face, but behind the paywall we talk about those things that the blob's still a little sensitive about us talking about, but still they need to be talked about. I'm a free speech advocate.

Speaker 2:

Do you find, since you mentioned 15 years, do you find that in the 15 years since that there's been more fervor?

Speaker 1:

around your audience that there's more people that gravitate towards it as people have gotten cynical about the state of the economy, cynical about the media yeah, except it's not quite cynical. Sure, that's the stick that gets you sort of moving. The carrot is, yeah, is people suddenly realizing? Oh my God, I'm actually totally bored by these other conversations. I mean, one of the hazards I got a full, full disclosure a hazard of becoming part of our community is you may find ordinary people so boring that you break out in unstiflable yawns when discussing inane garbage. At your next holiday, get together with your family. It's really a problem. People are waking up. It's a good thing.

Speaker 1:

Look what we just discovered because of covid. I didn't know any of this. Now I went to a medical school right Duke Medical School degrees in pathology, subspecialty toxicology. I've been there, done that. Covid taught me just how broken our whole sick care system really is. And it begins with the food. And if anybody hasn't seen it, the Casey and Callie Means interview with Tucker Carlson just landed like a bomb in my community and for a lot of other folks, which just says look, our food is designed to be addictive and it makes us sick and we get these metabolic disorders. And then there's a pharma business there to sell you an endless supply of drugs around that and a medical system to then give you triple bypasses when all that fails. Right, it's a gross system and people are waking up to that, and that's the stick in the story. But the carrot which I think you'll be familiar with is wow, when you actually take control and get your health back, you get your life back.

Speaker 2:

Yeah, it is funny, to be honest. I know that I hear more people complaining about how tanning boots cause skin cancer than complaining about how sugar actually causes legitimate cancer. I mean, there's almost a direct relationship between sugar consumption and cancer rates, which we can touch on that a little bit. But let's take a step back, because this is obviously primarily more on the investing market side. You sent me a couple of notes on what you want to talk about and you kept on putting in quotes the market, and I love that, because so much I think of. What frustrates me on social media is people don't really have a proper definition of the market. They think the S&P 500 is the market because that's where they're invested from an indexation perspective. But there are many markets, there's many segments of markets. You have to define this stuff in order to come to some conclusions, to see what's really going on. Do we really have a market in the way that we used to anymore, just because of the way things seem to be increasingly manipulated by just a select number of large companies?

Speaker 1:

We do not have a market like we used to, in the same way that I don't think we had a democracy like we used to. Right it's that over time, what happens is very, very ordinary progression of things. Systems and institutions and processes suddenly begin to take over. I think we started to see this in our markets, which I even double air quotes let's put two on there sometimes, because it's that fictitious. I started to notice this as a.

Speaker 1:

I was a day trader for three years of my life full contact, sport, living, eating, breathing 2005, six, seven, 2008,. I had to give it up. Something changed. All of my systems that I'd learned were broken. They weren't working anymore.

Speaker 1:

I had the very unfortunate experience of like sitting on like 10 gold futures contracts with a limit stop order under it and watching them literally get picked off to the penny by somebody in the middle of the night, reaching down at three in the morning and grabbing my contracts. You know, just stop running down to. I'm like, really, 10 contracts is like worth somebody's time and attention. But that's when I realized I was not up against humans anymore. I was up against machines, and those machines had insights into the book of trading that I did not have. You could have all the level two quotes you want. You still don't see what these machines are saying. And worse than that, I saw how these machines were actually controllable, because they're just algorithms, right, and they sit there and they have a programmatic range of things they do.

Speaker 1:

So I started to watch this and I started to see the patterns and maybe I was just making inappropriate patterns. Humans, look up, we see dragons when there's just a collection of stars and dots. But what I started to see, michael, was watching how, when we would get to critical support levels, magically the tick reading would suddenly vault the other direction. You would watch VIX suddenly getting slammed out of nowhere, which caused the futures buying, which caused cash market buying, right. So I started watching this over and over again and then you know there's just one chart. If somebody said, prove this to me in one chart, I'm sure you've seen it.

Speaker 1:

If you invested in the S&P at market open at 930 and you sold at four, you went nowhere from about 1998 to current like fairly nowhere. But if you bought the overnight market closed, take the futures, hold them overnight, sell in the morning, I mean that explains more than 100% of the total gains at this point in time. So it's astonishing. Why are markets so upwardly mobile in the overnights? And the reason for that, I think, is that they're not markets, because markets are places where information is digested. The great discounting machine figures out what things are worth, and that's that. But how is all the action upward mobility, action happening in the overnights? Very simply, that's where the futures are traded. The tail wags the dog, was my conclusion that I came to from that.

Speaker 2:

I think there was a fund that actually tried to take advantage of that no-transcript. Trump gets in, okay, he's going to be more pro-business. I'm curious if any of this is ultimately going to matter as far as who is president when it comes to, in quotes, the market. I say that because the counter argument would be historically, markets actually do better under a Democrat.

Speaker 1:

So back in the theme of markets. Here's where I fall down on this is the Federal Reserve has been very activist and has been getting more and more increasingly activist. Honestly, if somebody wanted to say you know what's going on with the markets today, how do we understand them? I think you have to go back to 1987. First time we had that big market correction, alan Greenspan cutting his teeth, puts the so-called Greenspan put in place. Things are coming along. We have the double dip recession, 91. And then we have this corporate bond market hiccup that happens in 94. And then Greenspan did this thing called the sweeps program, which basically eliminated reserve requirements for banks. Wow, unlimited lending, petscom, you name it, long-term capital management. Then, uh-oh, that needs bailing out. Then Bernanke comes along and he does a bailout, and then, oh no, janet Yellen. Just a series of bailouts 2011, 12, 15, 16. I mean, she's in there with Bernanke and here we are. And then COVID, which just like, forget about it I mean that's a whole separate conversation expanding the balance sheet from four and a half to nine trillion what I've seen in my entire adult life. What I'm trying to say here is that the Federal Reserve had to do a little intervention which necessitated a bigger intervention, which necessitated a bigger and a larger, and a larger, and I don't see what's going to break that pattern. So when we come into the context of this election, the operative question has to be when's the Fed going to implement QE again?

Speaker 1:

Forget cutting rates. Cutting rates is this old thing. I think people have the wrong model right. Pre-2009, pre-bernanke, cutting rates meant that you would inject you, the Fed would inject cash into the market so that banks had more cash to settle their overnight rate. You'd watch the overnight rate drift down because there's more cash, and then, if they wanted to raise rates, they would have to reach in and pull cash out, and then rates would float up until they were in their band. And that was what cutting raising rates meant. Post-bernanke, it means dialing up what's called interest on excess reserves, just turning that dial.

Speaker 1:

And now banks have a choice to make Am I going to get this rate of interest from the Fed, which is risk-free, or a slightly different one out here in the market? And so that's how they set it. Now it doesn't mean more cash coming in or leaving the market. So the old world of where is liquidity coming in and out of the markets is different. So now I actually think Fed raising and lowering rates has got a lot of slippage in that transmission belt.

Speaker 1:

Before it was pretty instant, relatively quicker, where you would push cash into the market and banks are like, what am I going to do with the cash? And they have to find something to do with it and they park it. But now it's a cashless raise and lower. They literally just turn a knob now, and so when they do that, nothing really happens, and so now you have to wait for a slightly lower rate of interest to percolate all the way through to decisions that people might be making on whether they're going to put more on the credit card or if this multifamily investment finally makes a cap rate sense or whatever the decisions are. It's not a very fast transmission rate. I think we're going to get in big trouble before then, because you I can't wait to hear what you think about this but that shockwave from the Japanese carry trade whatever that little quake was that happened I think the Fed's going to have to shove money back into the markets, and so I'm looking for QE before the year end. I think they're going to have to.

Speaker 2:

You and I are both old enough to remember the great reverse carry trade of August 5th. It's because it happened really quickly. I happen to think it's a preview which we can touch on a little bit. But going back to the election point though, I mean, do you think that it's more likely the Fed would enact reinvigorate QE under Trump or under Kamala?

Speaker 1:

I actually think it's independent. I think they're looking at things that are entirely independent. So the Fed used to you know, what it used to do back in the day was it was just there as a backstop right Lender of last resort Bank gets into trouble, they take high quality collateral punishing rate at the discount window. That's what they used to do. Now they're kind of in charge of making sure institutions don't fail, but they also have as the remit apparently making sure that the payment rails, the system, doesn't break Right. So I did a lot of this data, a whole deep dive in something called the great taking, which was really good for me because not only did I learn some laws that I never meant to learn, how it all works, but I learned about how complicated our system actually is. Nobody really knows. I couldn't find a single expert, michael, who could tell me all the plumbing. But now we have central clearing parties CCPs, and we have central clearing parties for the OTC derivative market. If one of those fails right, the whole system kind of the plumbing just stops. So the Fed's now in charge of making sure the plumbing never gets clogged, and I don't know how you do that in a world where, because the Fed is backstopping that. Well you know Wall Street they're like, well you know, too big to fail, I guess. So now we have whatever several quadrillion or whatever the number is of notional derivatives. It's at least 74040 trillion according to BIS, but numbers vary. But that's notional. Who actually knows how much value at risk is at play Point here is that if one of those things freezes up, like we saw with Japan way back when when was that?

Speaker 1:

That was so many? So long ago. When that happened, we saw the central banks have to ride in and ride in hard, and years later, if we're lucky, we'll find out what the Fed actually had to do in the back of that right Swap lines. Who knows? But that's what I'm seeing going on right now is it doesn't really matter to the Fed who gets elected. Listen, no matter how the election goes, a big chunk of the country is disappointed. That's a separate issue. The Fed has a different beast on its hands right now, which is we have a highly over leveraged system that has not been allowed to correct in so long that they fear any correction could go runaway on them, and so they're trying to prevent any down wiggles from occurring.

Speaker 2:

I've had Joseph Wang, who used to work at the Federal Reserve, on some of these shows and he made it a point to me that the Fed is certainly much more left leaning than right leaning, tend to be much more pro-Democrat than not. I'm curious, if you've seen any evidence of that, how policy could be impacted just based on political views by the decision makers at the head.

Speaker 1:

Well, you know, I don't hold the Fed in very high esteem. In fact, I'm kind of a little bit of contempt in there. Well, yeah, so, so I would have to judge that the Fed's policies are progressive because they're very destructive, right? So progressives think abstractly and they think the abstract is more important than the real. So for the Fed, they had this abstraction. It was really important that housing, you know, not correct too much because the wealth effect and it's a big abstraction. They never thought about the idea that when they did that, what they did was they basically forestalled, if not ruined, an entire generation of household formation. So that's kind of, to me, the essence of a progressive policy, right? Oh, let's, you know we're really burdening our system and it's very destructive for shoplifters. So let's raise the shoplifting limit to 950. You know that'll help and it doesn't. It makes things worse and instead of going, wow, that made things worse, maybe we should rethink this policy.

Speaker 1:

I've watched the Fed for over 15 years basically reward one class of society at the expense of another right, and so we've seen it right. The bottom 50% since 2020 has gone nowhere in terms of its collective ownership of the American pie. The top 0.1% has gained, whatever the number was last. 4.7 trillion, right, it's just a massive transfer of wealth. 100% belongs to owned by the Federal Reserve, full stop. That's how it is.

Speaker 1:

And now that that's gone on long enough and it's bad enough, you see, somebody like the Harris and Biden folks say maybe we should tax this, including really bizarre ideas like let's tax unrealized capital gains, which would be like a bomb going off in the markets. But really, I mean we're going to see all of these wild reactions, but fundamentally, somebody at the Fed should have been apprised of the old Plutarch quote from thousands of years ago which is the oldest and most fatal ailment of all republics is a gap between the rich and the poor. The Fed has been specifically dynamically, aggressively rewarding the 0.1% and hasn't had a care in the world for the bottom layers of society. And I hate to tell you I mean I hate to say this this isn't like the not old school RFK Jr style liberalism. This is a sort of new liberalism which really doesn't care about history or people, and it's a little worrying.

Speaker 2:

So to me that makes it sound like you don't think it would matter whether it's Trump or Harris, it's just the explanatory variable is the Fed. As far as the widening of that wealth gap and let's face it, I mean the wealth gap is why people tend to vote one way or the other Well, sure, but you know the 0.1% isn't that many people.

Speaker 1:

So, yeah, I mean, they still try and sell us every day. Cnbc and you know all that, msnbc, they're all trying to tell us that, oh, stocks are up. This is generally good, but the truth is, according to the Fed's own data, 92.5% of all equities are held by just the top 10%. So, by definition, it's not good for everybody, right? Unless you believe in the derivative, which is well. When stocks go down, that's when all the little people lose their jobs, which might be a fair critique. But it's not like we're sharing equally at all in this. And that's the point I really want to make about our markets is I believe fully in capitalism, but we don't have capitalism when you have somebody deciding they need prices of assets to only be they know the right prices for assets. Honestly, michael, it feels like a Soviet crop report, politburo kind of decision. A small group of people say money ought to have a price of zero. I'm old enough to remember. Do you remember $17 trillion of negative yielding debt? What even was?

Speaker 2:

that which, by the way, I'm glad you mentioned that, because for all the people that talk about the bond bear market that COVID was the start of the secular Like. Really the bond market's been in a bear market for a long time because you have negative real yields, you have negative return.

Speaker 1:

What is a negative return on a bond? Yeah, it's crazy talk.

Speaker 2:

It really is? I don't know. It's just interesting to me that people still fall for money illusion. Right, it really is owners, and I always go back to that. I wrote a piece on this. I always go back to the moment. You do that, then it's going to be lowered to 75 million, then 50 million, then 25 million, then it's going to be a million. You open up the whole floodgates on that. It's also not clear to me if that's just rhetoric, because pollsters seem to think that voters like to hear that. I mean, do you really think it's even going to be a remote possibility that that would ever actually take place?

Speaker 1:

Well, this this actually concerned me a lot. So I'm not a very astute political analyst, you know, but this bothered me. So this was actually she's just retreading a lot of stuff that came out under Biden. It was March and it came out in an omnibus spending bill and Biden had all kinds of stuff and it made such small waves. I was really surprised because of how aggressive they were. First, capital gains being raised to 44.6%, like the highest it's ever been since it first came out, including the really predatory era of the taxation rates of the late 50s 60s. Unbelievable 44.6% capital gains. Also an elimination perennially I think they talk about this a lot the 1031 transfer, so that's hitting real estate. The depletion and depreciation allowances in oil and gas so they're hitting basically, michael, every single major donor class they might have real estate, oil people with capital gains businesses. They were also talking about raising the corporate tax, like everything you could possibly imagine is part of the donor class to.

Speaker 1:

The Democrats are like, hey, it's an election year, great time to line them up against the wall and just have at it. Like well, that's a really bizarre thing to do. I've never seen anything like that in my entire adult life, watching political events happen. And the only thing that bothered me, I was like OK, what's the message? They're doing this for a message. So who are they dog whistling to, maybe behind closed doors, or telling everybody don't worry this and these, these won't pass. We're just saying this, you know? So that the young people who are all inflamed on campuses right now, think we're about to soak the rich, right? Maybe it's cynical like that, but if not, it meant that something really frightening, which is they didn't need these people anymore, and that's what revolutionaries do, right?

Speaker 1:

So when I say Marxist, I mean this literally, because in Marxism you've heard Kamala talking about, you know, equity and equality, whatever those things mean. They want equal outcomes, even though not everybody wants to work as hard. They believe in all of this de-genderizing everybody. So we're all the same, right? Which, if you look at Mao's uniforms or Pol Pot's Cambodian Khmer Rouge uniforms, they're all unisex, right? No difference, right? So we're watching these sort of tendencies towards authoritarianism. They don't believe in in in free elections. They believe in our democracy, which is a possessive use of the word our, not the collective use. They believe in malinformation, which is information that's true, but is a little inconvenient to prevailing government policies, right. So these are all things they believe in and they come out with these tax proposals like here's something if you know, if you haven't watched it, anybody watching this?

Speaker 1:

There is a 19 minute video on YouTube. It's called Rules for Rulers. Watch it, watch it again. It is so important, particularly when they talk about the part what happens when revolutions happen into power is revolutionaries are not the same people you need, so you tend to like dispense with them. Right that?

Speaker 1:

I was wondering, michael, if that wasn't what I was seeing in these tax proposals. Was the Democrat saying, hey, we don't need you all anymore. Been a great ride, thanks for getting us to this point. But we're going to the power. Dynamic has now shifted. We no longer need capital gains, oil, gas, landlords, you know, entrepreneurs, we don't need you guys anymore and gals.

Speaker 1:

So that worried me, because that can only mean one of two things right, there won't be an election, or they already know the election's in the bag.

Speaker 1:

One of those two things is why you would promote those policies like that at that point in time. So I'm a little worried about both the optics, if not the reality, because if the reality of those taxes come down, this is ruinous. Right, there's some magic line at which you realize you're a slave, right. That's when 100% of your output has to go towards your master. Right, I have no free time. 100%, but where's the line? Is it at 99%? Because I think we'd still say, yeah, 99% feels a little slavey to me, so we all have to draw that line. So if in California you are a high earner, which means you're a successful ophthalmologist or a small business person, or you've been an entrepreneur and you work 20 hour weeks for 10 years and you've built something up in California at a top rate of 13.8 plus 44.6 on the capital gains, plus I think it was almost that on ordinary income, you could be easily in a 60, 65% tax bracket. Where's your slave line? We're getting there right, and that's Marxism to me.

Speaker 2:

Yeah, and I keep going back to. The joke of all this is that debt's only going to go up anyway. So what's the point for the taxation I've got to quite follow. I'm probably not as cynical as you are, but I'm pretty damn cynical, right. And maybe that's more a function of age and you've seen a lot more than I have with me in my 40s. Here you do have some fans. I will show something from a comment from somebody. Watchonx, chris and a few others alerted many of us to early coronavirus narratives. For that alone he deserves a listen. He's always been beneficial by firehose of events, risk consideration, thumbs up. I didn't really track you honestly that much around that time, but take us back to that crazy period when people would put underwear as masks and where some of the skepticism came from from your end.

Speaker 1:

This is such an arc, so it started. I wake up on January 22nd and I find out that China has walled off with police. They've literally walled off Wuhan. And I'm smart enough or experienced enough or educated enough to know that, a China doesn't do that willy-nilly and, b that how important Wuhan was as an industrial chemical center and also a logistics center for their economy. So this was serious.

Speaker 1:

So I went out to the world with this thing saying hey, there's this thing called the coronavirus. It hadn't been named COVID. At that point I was like oh, here's some basics. I literally told people buy face masks, toilet paper and get some food, because this thing's coming For the next two weeks. The weirdest thing I'm out here saying this is a real deal. I'm watching, you know, the Chinese stuff which, unfortunately, I fell for some of those people tipping over in the street and I realize now I can't trust anything out of China. But what I was seeing is the scientists are like wow, this looks pandemic. The weirdest thing started happening, right. The WHO said, oh, we shouldn't limit flights from China because that would be racist. I'm like no dude, that's called Pandemic Medicine 101. It's in your own pandemic guide, right? And then I'm doing this in the New York Times and saying it's just the flu, bro, and I'm here going. No, this is a thing that's going to hit supply chains. We should be careful.

Speaker 1:

On February 5th, my wiki page, which had been up for 12 years or longer, got taken down because apparently, according to the mystery editor, I was a non-notable person who was way outside of his lane. Sure, I had this PhD from Duke, but I hadn't done science lately. Was there critique, whatever? All of a sudden, I realized what I was up against. My YouTube counts were going like this, whatever. All of a sudden, I realized what I was up against. My YouTube counts were going like this. And then in March early March I mentioned there was a strong signal that came out in a Chinese research paper about something called chloroquine phosphate. Of course, a better version of that is something called hydroxychloroquine. It was a strong signal. This is even before Trump mentioned it. And all of a sudden, my YouTube subscriber count just flatlined and I was getting reports from people. All of a sudden, hey, chris, you know I've just been unsubscribed from your channel. That doesn't happen on any other channel. What's up?

Speaker 1:

That's when I started to shift and go oh, I'm up against something very different here. I got YouTube strikes because I mentioned things like ivermectin, you know, and I started when the vaccines were first being developed and before they came out, I said here are the concerns. So I was really running against the system. My first, my first episode that said, hey, this thing probably came from a lab. Here's the data behind it. Here's why, genetically, it looks like an ideal match. That was May 4th 2020.

Speaker 1:

I got strikes and suppression for that. Twitter was hammering me because this is pre Elon. I was up against a machine that didn't want people to have real information. What they wanted was everybody afraid, isolated, scared, using masks which don't work. We had the data even back then, you know they wanted people doing things that didn't work.

Speaker 1:

And the worst part, michael, was we had the strongest signal I had. Ivermectin was pretty good. Hydroxychloroquine was pretty good. You want to know what the strongest signal was? Vitamin D. If you had vitamin D levels that were below 20 nanograms per ml, you were in the ICU with this, with COVID, and if you were above 50, nobody, nobody in the ICU. I mean, it was just the most perfect chart I've ever seen in science.

Speaker 1:

It was like doink and I was like, oh, we got to talk about this right, unbelievable suppression. And I'm like, well, wait a minute, it's almost like the system wants us to be sick, you know, not healthy. And then I realized, I mean, think about it. Think about what Australia did, for instance, or other places Lock people down, make them stay inside, only allow them out of their house for an hour a day, so they're not getting sunshine, which is natural vitamin D, keeping them isolated, causing old people to die alone without their loved ones. Maybe a FaceTime if you were lucky and there are compassionate nurses involved, right.

Speaker 1:

So I just watched this whole thing happen. I'm like, listen, I'm this guy. If you flip a coin 10 times and it comes up heads every time, I'm going to start thinking it's not a fair coin. Everything my health authorities did made things worse, not better. Accidentally, you got to be better than that sometimes. So I suddenly realized this was a plan, it was a program and, as I, yeah, they overdid it. And because they overdid it, millions of people woke up and I think they lost the plot line and they had a good little racket going. And now people are waking up and going yeah, no, thanks, I do not consent any longer.

Speaker 2:

So that was my arc through that, but I just told the truth, I found it, and I told the truth and I found out the system doesn't like the truth, yeah, and I've been seeing some of those headlines of Zuckerberg right saying the Biden administration was suppressing stories, right, which I'm sure that happens in every administration to some extent. I mean power does that. It doesn't matter if you're Republican or Democrat, but it does seem egregious. And I don't know about you, but I don't recall ever a time where free speech has been talked about so much. It seems like every time I turn on financial media, traditional media, there's some news story about free speech being under attack. And you're seeing it not just in the US but global, with what's going on with Brazil and X. Where is all this end? I mean, it seems like we're entering this kind of new phase of how we can even debate or have discourse.

Speaker 1:

Well, we are and I think Mike Benz does probably one of the best jobs sort of synthesizing the blob that happened. And so what happened was government figured out that it could actually lean on these private companies and then sort of say, oh well, it's these people doing it. And, by the way, the Zuckerberg thing wasn't really an apology. A good apology has three components. You say I'm sorry, here's the harm I caused and I'm going to make amends for that somehow. And then, finally, here's why it's not going to happen again. Right, here are the systems, here are the changes. He didn't have any of that, so it wasn't an apology. In fact, he was probably running interference by saying, well, they leaned on us, but ultimately it was our decision which allows them not to reopen the Supreme Court decision around that right, because that was the litmus test was did the government cause you to do that? He's like no, no, no, that was on us, totally right. Mark Zuckerberg's organization, facebook, is responsible for tens, if not hundreds of thousands of deaths, and they did this very directly by taking vaccine injury support groups that were finding each other because there's a lot of vaccine injury out there, tons and they would start talking and these groups would come together, very important support groups, and then Facebook would put a bullet in them and like, just like, strike the group. And so we know that a more people were injured because they didn't have access to good information. B some people committed suicide because they lost their support groups. That's on Mark's soul, whatever he has of one, and so it's.

Speaker 1:

Let's be clear about this Free speech has to be the most important thing ever to human prosperity. I talk peak prosperity. I care about prosperity. I want us to be prosperous. I'd rather not go back to the dark ages. Free speech is absolutely vital because you're a creator, I'm a creator. We both know the process. Your business doesn't exist. You have to wrestle it out of the vapors, right, and that wrestling process whenever a new idea wants to come forward, what was it?

Speaker 1:

Niels Bohr said science advances one funeral at a time. There are people who are like you need the free speech. It's a scrum, it's full contact sport. It's awkward. People get uncomfortable. Once you block that and say, oh no, we know the truth. You can just take whatever advancement you're having as a society and cap it You're all done, there's no more growth happening. You said everything I needed to know I learned at 13. I don't want to be challenged from this day forward. It's not going to be a very exciting life going forward or a very fulfilling one.

Speaker 1:

So free speech is absolutely the cornerstone of prosperity. Has to be, and we have to have the free speech to be able to talk about things like I don't know. Are all these AI data centers going to be for good or for ill? Maybe we should talk about that. Hey, these, you know, total liability protection for these major corporations for vaccines has some pros and cons. Can we talk about both sides of that coin? Right, and so they're trying very, very hard to pretend like they know what the right side of the coin is and that they already have the right answers. But they're wrong. They couldn't possibly be more wrong. And if we get further down this path of seeing our free speech constrained, not only do I think you can put a cap on our prosperity, I think it goes backwards very rapidly because we're going to lose out to the rest of the world that doesn't do this to themselves. It's a self-inflicted wound.

Speaker 2:

I think the dilemma, though, is that it's the old must fly the freedom of speech versus freedom of reach, to the extent that everyone's always on the same four or five social media apps every single day. The reach is going to be always manipulated by the algos and the intentions of those who are programming those algos, whether it's humans or AI. So you can have freedom of speech, but you're still in an era where people's minds are going to be very much swayed because they're getting the same message repeatedly on those home timelines.

Speaker 1:

Well, it's true, I'm very worried about my AI experience because I know we're all targeted right. Like you know you, both of us have made the mistake of arguing with bots on Twitter. We just have right, you know. You can't tell them apart anymore and maybe we can fall victim of being in our own echo chambers. That's why, like you know what I want, I want the app which says I click on follow, I want to hear from that person, full stop. I don't want any filtering, Just I decide. Right. I would love that personally. So, so, maybe we'll get there as we struggle through this, but for now, watching what's going on with this, I believe in this one. Charlie Munger, quote you show me the incentive, I'll show you the outcome.

Speaker 1:

You know why pharma companies are by far the number one advertisers. Like I was just watching the Olympics. Like I like rock climbing, so Evie and I were watching, you know, the rock climbing part of the Olympics and it was on Peacock, which is the NBC app, and it was just, it was just ads. All it was just fighting through these ads 60 second to 220 second ad cycles, 80 percent of them were for pharma products. Like, did that many people really have eczema between their toes or whatever they were selling this product for. No, and I don't think anybody watches an ad on the and goes to their doctor and says give me this new eczema drug. Those are so they can control what NBC will and will not consider permissible on its platform. This is like absolutely an incentive structure and pharma companies throw their billions and billions and billions of dollars out there so they can control the message flow.

Speaker 1:

I think that well and, by the way, big thing I'm concerned about I can't get my arms around it, but you probably heard of FASAB 56, right, which is the government's allowed to like literally cook its books. By law, they gave themselves the right to not talk about certain spending if it was in the interest of national security. And you're thinking, ah, you know some Area 51 skunkworks. Yeah, that thing's, of course, expanded and mushroomed. I would be interested to know how much direct revenue Facebook gets from the government in the same vein as, like the pharma funding, which says listen, if you, as long as you toe our line, we'll continue this secret FASAB 56 funding program. I don't have evidence for it, but I will not be surprised to find out that this is how big I think it is.

Speaker 1:

We know that every year the government says, oh, we had a $1.6 trillion deficit this year. And then you go over to treasury debt, to the penny site, and you find out that actually total debt in the system, federal debt, expanded by 2.1 trillion. You're like where's the missing 500 billion? I'm pretty sure it's buried in FASAD 56. It has to be right. I mean, how else does your debt grow when your deficit was 1.6, but your debt grew at 2.1? That's a weird thing accounting-wise. So we know that there's a lot of federal money. That's all in the interest of national security.

Speaker 1:

But you know what it is? It's narrative control. Controlling the message flow, information is the new battlefield and unfortunately, I think that the way I fall on this is that everything is now in service to this narrative, whatever that thing happens to be. There are these people who think they know the right narrative and I don't agree with that. I agree with free speech, free markets, free this, free that, and it's ugly sometimes. Sometimes free markets correct, sometimes they go backwards, sometimes people say things you don't like, but that's the point and I think that's what we need to get back to.

Speaker 2:

So I guess the question is how do you even go about, in quotes, finding the truth right? Because there's a fine line between rejecting the narrative of the moment and then going to the extreme of a conspiracy theorist, and you know what, Maybe there's something to the idea that every conspiracy theory has some degree of truth to it. How do you get people to actually even go about that process of figuring out what's real and what's not?

Speaker 1:

conversation last year it started to open up a little bit. I will bet you anything that this year, at Thanksgiving conversations all across the country, people are going to come together and go. You know, I'm not sure what happened to Aunt Sally, but I'm starting to think it was the fourth booster, right? People are going to start having that conversation because it's just that obvious, right? So the truth will find its way out. But we already knew this right?

Speaker 1:

The CDC stopped reporting the uptake of the vaccine boosters in May of 23 because they'd gone to almost zero. They still try and pretend, like you know. Oh my God, everybody's still getting them. Get yours now. Make sure you go down and get get your double booster plus your, your influenza, all this and that. But if you look at the actual uptake, kind of people figured it out all on their own.

Speaker 1:

So I think the way you know it just has to be, you have to let the reality exert itself in some way. So the question is are people happier than they are today, than they were last year or four years ago? The answer is no. You know the number one conversation I have with people now and I was just at Ken McElroy's Limitless Expo out in Dallas. You know 1800 people, all entrepreneurs very positive. But the number one conversation people are having, at least with me, is something feels really wrong and I don't quite know what it is. When you start looking at things that way, yeah, something's wrong. Start with that. Yep, we don't know what it is. We can all have disagreements about it, but you still have to make decisions. You still have to run a portfolio. You still have to decide if you're going to buy this next asset. You still have to keep swimming, you know, because that's the game we're in. So how do you do that? Well, for me it's a system of saying I'm not a futurist. People call me that all the time. I have a pretty good track record. All I do is say if the ball's traveling in this direction, it's going to keep traveling. I look at the Fed's balance sheet. It's just been, you know, some wiggles, but it's just like oh, it's just going to keep expanding. I'm going to keep making that bet until they prove me wrong.

Speaker 1:

I've watched shenanigans in some of our key commodity markets for so long. I just know they're going to explode at some point in time. They have to right, because the price of copper today is exactly the same per pound as it was in 2008. While the cost structure of mining and opening new mines, the permitting processes and also the available ore grades on the next projects are all negative towards profits at that price level. So nobody's opening them.

Speaker 1:

You can read the analysis, even in Golden Sacks Commodity. That said, you know, copper would kind of have to be $35,000 a ton to justify any of the new mines we've analyzed. So they're not opening most of those mines. There's a few very, very select smallish high-grade mines here and there, but for the most part we're not opening new copper mines. You know where that's going to lead. That's going to lead to big supply problems at some point in the future, which means we're going to have price problems at some point in the future. It's all completely obvious.

Speaker 1:

But the price of copper is still controlled in the futures market where 99% of the trading activity is by speculators. They're all noise in this story. There's no signal. They don't care. All they care about is the actual price that they get for their paper contract. So I think there's actually alpha to be had in this narrative structure. But you have to back up and ask. The bigger question is like are we having a fundamental disconnect here? I think commodities is the one area where I'm noticing like the biggest, most large fundamental disconnect, leaving aside all the companies with PEs of over 200. By the way, there's a lot of them.

Speaker 2:

Yeah, it is. I mean. The counter to that, of course, is well, you know, china is never going to get out of its recession, slash depression. They're the biggest driver at the margin of commodity demand. But it's demand and supply right. And to your point about valuations, the relative valuations are all right. Stupid now when you look at tech versus the commodity space.

Speaker 1:

Yeah, no, indeed, and I think this is also pretty easy. Here's a narrative structure that's been wrong for a long time. Nuclear is bad right. Germany's dismantling they just dismantled their last three. We've got this boondoggle of a giant boiling water reactor thing in Georgia which is like 10 years and 3X the budget over what it was supposed to be delivered at and mismatches there.

Speaker 1:

But we're not in a fundamental narrative structure right now. We're at a momentum narrative structure which is largely a derivative of is the Fed going to print more and throw it in the market? Because we're humans Incentives. If there's easier profits to be made just riding the coattails of a central bank print-a-thon, then that's what people do. Mining is hard, dangerous, nasty, dirty business and it's risky. Obviously not a lot of fun to be had there compared to riding the video up for a thousand percent right. So that's where we're at. I think that what we're going to be seeing in the next few couple years here is the shifting of that narrative structure, and I think it could be quite the snapback. That rubber band has been stretched for well over a couple decades now, I think, chris, for those who want to track more of your thoughts, more of your work.

Speaker 2:

where would you point them to? And how do you get more people to be aware of other messages which may not be very popular now but might be popular later?

Speaker 1:

This is the important part I learned. Remember I said I'm a quick learner. Eventually, I spent so many years thinking I could change minds with data. You can't Well few, not that many, it's really. It's what's the stories we're telling ourselves and what's the narrative structure, and that's. It's really important to see that stuff clearly. Listen, I've got a YouTube channel, you know. Peak Prosperity is his website. You find me on Twitter. I'm on all the social media, but those are my biggies.

Speaker 1:

But ultimately, if you really want to go deep on this stuff, you have to understand what I call framing material, and this framing material is material that helps you make sense of the world, in a way of erecting some scaffolding so you can make sense of things more quickly. Simple example I do this. I have a piece of framing material I call rats in a cage, Right. And so there are these studies they did in the 40s, 50s, 60s, where they took social animals, in this case rats, which are a social creature. And if you put a rat in a cage and you shock it and give it no escape right, it doesn't have a water if they can climb up on or anything, just a bare metal floor cage and you shock it. Man, you got an unhappy rat, Just sits there. It's very unhappy. Problem starts when you put a second rat in the cage and you start treating them both with these shocks, because now they have something they can look at and direct their attention to and they fight. It's called shockuced aggression, Been run with dogs, baboons. I submit to you it's being run on humans. So when you go on Twitter and you see these outraged things, oh no, it's this racial group against that racial group, it's police against that, it's this, it's left, it's right.

Speaker 1:

I submit that actually you're part of a program we all are. We're being treated like rats in a cage and what's shocking? Well, there's some shocking stuff going on. Not having a border is a shocking thing. Having a FBI director who doesn't know the difference between a spent case and a cartridge kind of shocking. Being told that the roof was a little too slopey, when that roof was literally ADA ramp compliant, right.

Speaker 1:

These are all shocks and I submit to you they're intentional and these shocks are designed to make it difficult to understand what's actually happening, because we're busy fighting and being outraged. We only have so much capacity for outrage and then we're emotionally drained. So watch the emotional draining process. You have to be educated. Once you see it, you can sort of inoculate yourself from it a little bit Because, as I mentioned, all of business is making decisions on imperfect information.

Speaker 1:

But now our information is getting extra imperfect. In some cases it's been fraudulently manipulated. Hello BLS McJobs reports anyone right? So we have to fight our way through an increasing thicket of very confusing information, but we still have to make decisions.

Speaker 1:

So what I do in the world is I help people get a scaffolding to help it make sense again. And now I don't have to understand what's going on between the yellow vests and the police in France. I understand rats in a cage. I don't have to understand what it means when I find out that you know the only non-dischargeable debt is student debt. Like why are we shafting our young? That's weird, Shocking.

Speaker 1:

So once you see the shocks for what they are, you know it gives you something to get, to get off the floor, get out of that shock cycle a little bit. And I know it seems kind of kind of weird and maybe a little red pilly, but that's the world we're in Once you find out your foods are actively designed to make you addicted to them and put sugar, fat and salt in a bliss combination so that you literally can't turn off your swallow reflex and you overeat and make yourself sick so that somebody can sell you pills. Once you see that cycle for what it is. It changes your life and it makes it better, but it's a little rough at first, no question.

Speaker 2:

Fasting solves this, folks. I can attest to that directly. Everybody, please make sure you give Chris a follow. Check his content out on various social media networks. I appreciate those that watch this live stream. I have another video coming up where I'm going to be live, this time being the guest for another show shortly. And please, folks, continue to support Leadlag Live.

Speaker 1:

Thank you, chris, appreciate it, michael, my pleasure, and I can't wait to have you on because I got to find out about this fasting stuff.

Speaker 2:

And, as I've said, japan is going to put the entire world into an extended fast. We'll touch on that, we'll talk about that, thank you.

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Michael A. Gayed, CFA

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