LT w/ Dr. Elliott: Israel Oil Recession
LT w/ Dr. Elliott: Israel Oil Recession
Summary
➡ The majority of CEOs expect a recession in 2024 due to declining business metrics and the increasing debt burden. The government combats financial issues differently compared to families and CEOs, focusing more on gathering revenue rather than cutting down expenses, leading to the printing of more money and a continued rise in national debt. Current economic measures to curb increasing inflation, mainly raising interest rates, may potentially deepen the recession and lead to a depression.
➡ Despite the pause in official interest rates, mortgage rates continue to rise due to inherent risks associated with long-term loans. To mitigate risks, it is proposed to allocate into secure assets such as silver, which is currently undervalued and outperforming gold.
Transcript
Folks, it’s great to have Dr. Kirk Elliott back again. I mean, not much going on in the world, right? It’s just been amazing. We cannot believe the things that have shaped up even in this past weekend, did not see it coming in Israel and more. And I know that you’ve got a lot to share with us on that front, but welcome back and by the way, folks, and we slash gold.
It’s in the description box below. You can reach out to Elliott and his team at any time while we’re talking. And yeah, can we get just an update, maybe, how Israel probably affected the wallet to many people? Yeah, I mean, I was talking to some people in Israel over the last couple of days, lt, and I just had so how is it going? I mean, they’re hunkering down in hotel rooms in Jerusalem, basically, because there’s missiles flying around and everywhere, and they said, well, it’s escalating by the hour, is basically the answer.
And so here’s where things start to get squirrely in my head about this whole thing. Israel has the best defense intelligence network on the planet, it would be my guess. I think they’re amazing, right? So they know when a dog crosses the border, pretty much, and they can be there in minutes. So some of the people that I knew, it’s like, well, basically, invaders coming in and missiles flying off, and it took hours for them to respond, not minutes.
It’s like, why did they let this go on for so long? Right? So I don’t know. I don’t know what’s happening. But you’ve got to know, none of us as citizens expected this. But I can’t imagine that they didn’t expect it because a lot of times these things are very symbolic in nature. It’s the 50th anniversary of the Yom Kippur War, one of the bloodiest in Israeli history.
Right? Now they’ve got another very bloody war with thousands of people being injured or killed, and it’s like, oh, my word, this is really bad. So what did Netanyahu do? So Netanyahu basically said no more food or water or supplies into the Gaza Strip, no more help agencies like the Red Cross can go into. And so they’re basically almost like, starving out the population there, which is going to tick off the other side even worse.
And probably the theory is force them into compliance. Right? But now there’s other countries around the globe that are starting to pick, like like Zelensky in Ukraine said this was an act of like, which part of it? The first part where the missiles came flying across, or the withholding of food in the, you know, the like, what are they talking about? Right, well, they’re basically talking about Israel’s response, and not many people are actually talking about the first act of aggression, right, which is just a little bit bonkers to but but yet you’ve got this going on.
So countries drawing sides now, whenever there’s an Israeli conflict, what’s one thing economically that mean almost every single time? Because of the proximity to where they are in the rest of the Middle East, oil prices go up. Right. So this is what I’m expecting, is because you can correct me if you think that I’m wrong lt I don’t think this is going to be short lived. I don’t think it’s going to be like, done tomorrow.
I think this might drag out for a while and get ugly. Some of the research that I’ve been reading over the last couple of days are expecting oil to hit $150 a barrel. So that’s a lot because it’s in the 90s right now. So going from in the that’s over a 50% increase in price. Oh, my goodness. Right. We were just in California. There’s a nonprofit called Project Rescue that our company and us as a family, we support a lot, and we just love what they do.
And they rescue women and children from Lifestyles of Sex Trafficking. So they had a gala down there, and we were there for a couple of days just celebrating with them all the lives saved. Right. Which is amazing. But I had to get some gas in California. So it’s like $6. 91 a gallon already. So imagine if oil goes up over 50%. Well, what’s 50% of basically $7? Another 350? That would put gas prices at the pump a little more than $10 a gallon.
It’s like what? I mean, Americans can’t really afford the gas as it is, let alone with over a 50% increase. Right. So I think what’s happening here is countries are drawing sides. There’s political geopolitical conflict that always causes markets to kind of come down because normal traditional markets respond very well to certainty, stability, peace. But we have anything but that right now. Because if you think about know, in kind of practical terms, let’s say you’re wanting to invest for your retirement.
Lt and it’s like, what company should I invest in? What stock should I buy? Well, how about apple? We love their products. We love their management. We love every time Apple comes up with a new product, seems like people want it. As long as the economy is growing, that’s probably going to be a good stock in the know, our brains go through that process on every stock, whether it’s General Motors or whether it’s Google or whether it’s Amazon, you name it, right.
So if there’s ever a hiccup or a hurdle in the road, our brains kind of go, kooky, I don’t want to invest. Right. I don’t know what’s going to happen. Look, there’s this war. Is the economy going to be solid? Are they going to have mask mandates again coming up this fall? Is the inflationary pressure is going to persist and they raise interest rates yet again? And what if there is another shutdown of travel mask mandates, shelter in place, laws of COVID 2.
0 are businesses going to go out of business again? Right? There’s all these looming questions that people are asking, and when they have those questions, what’s their answer? We’re going to stop investing. We’re just going to sit on the sideline for a while. We’re not going to invest. That causes normal markets to actually go into upheaval during times of war, which now we’re seeing. Now we’ve got even more brewing conflict on the Pacific Rim with China basically, and Taiwan starting to flex a little bit against each other yet again for like the 15th time in the last year.
But you never know when a spark is going to erupt something big. Even Trump in New Hampshire this or this week. Like, when was it? It started on Saturday. When did the Israeli war again start? I think it was over the weekend. I think it might have been on so well, that would make sense at the beginning of the feast celebration for Yom Kippur. It would probably been on Saturday or, you know, at the beginning of the week, was speaking in New Hampshire and he basically said to him, this is probably the beginning of World War Three.
It’s like, oof, those are fighting words there. I mean, that’s a big statement, right, from somebody who ran the United States and our military and it’s like, understands geopolitical conflict and diplomatic relations and all of like but this is a big deal. This is actually bigger than just Hamas throwing some missiles into Israel and Netanyahu retaliating by cutting off supplies and food and water, right? This is going to start bringing in other countries, which I think the geopolitical ramifications are going to be big, which will impact the markets.
Right. So not what’s that you’ve got on the screen. Yeah. Eric Trump Taiwan is next. Every global conflict we are witnessing is a consequence of the weakness of Is. I mean, I agree with Eric’s statement there, because this is why Putin could get away with saying what he did during the, like yeah. Or Xi in China or anybody for that matter. When they’re trying to strip away the world’s reserve currency status of the US dollar, strip away our petrodollar status, they look at our weak leadership here in America and they realize, hey, now is the time to strike.
If we’re going to replace the US dollar as the world’s reserve currency, let’s do it now. Because their leadership isn’t really going to care. In fact think they’re one of us, right? They’re global like we are. So imagine if a country was trying to strip the US of its reserve currency status or petrodollar status while Trump was president, or Reagan, either one of them. They would have said, no, not on my watch.
This isn’t going to I mean, and they would have the internal fortitude to fight against that because it will impact Americans way of life, right, but we’re living in a different time, different place. And we happen to be the generation that’s alive that’s seeing all this play out now, with oil prices slated, predicted to go up well to $150 a barrel, which is a lot. This is why America’s economy, and the global economy for that matter, can’t handle that right now.
Literally, we can’t handle it because if you look at kind of a recent poll from this week that was polling CEOs about, are we going to have a recession in 2024? Well, I would believe what a CEO says, because what are they looking at? What are the analytics and the metrics that they look at every single day? They’re looking at how many sales do they have of their product? What’s the cost of goods? How is that impacting our margin? Do we have an expanding margin? Do we have a squeezing margin just to make ends meet? What does our balance sheet look like? Do we have a lot of liabilities or do we have a lot of assets in our income statement? Are we paying too much for our debt? Is there enough income coming in to offset all that? Right? CEOs are looking at all of this stuff from companies every single day.
Well, they’re seeing 84% of CEOs interviewed said we’re heading into a recession in 2024. Well, I would like to correct that statement as an economist and say, okay, that’s kind of a dumb thing to say because we’re already in a recession. A recession is two quarters of declining output. We’ve seen declining output every single quarter since March of 2020 during COVID Literally, it’s like we dove into the deep end of the recession pool a long time ago, right? We’re treading water.
But here’s the point here, they think, 84% of them think we’re heading into a recession. Who cares how we define recession? They think it’s going to get bad. Well, same question was asked staff at the Federal Reserve. 0% thought that we were going into recession. It’s like, oh man, they’ve really drank their own Kool Aid, right? They think that monetary policy, fiscal policy over time in the Keynesian economic system that they’re putting together is going to get us out of this recession.
I would say maybe in past economies you could have, but we’ve let it go too far. We’ve let the debt go too far. Well, now the only way to slow down inflation with interest rates is to have interest rates be higher than the inflation rate. Unofficially, the inflation rate is hovering around 15%. That means interest rates have to go north of 15% with everybody that’s carrying debt. And they’ve got this noose around our neck of debt.
It’s like if you raise rates any further, which is why there’s a reluctancy to raise rates, but why they have to keep doing it. It’s like people are just going to simply stop spending money, go into just not just a recession, a depression, right? It has the potential to get really bad because if they stop spending money, then the small businesses out there, they don’t make money, therefore they can’t spend their money.
That’s supposed to come in from every buyer or whatever that comes by. And it’s like a snowball effect on everyone. That’s the way I’m hearing it. Well, it is a huge snowball effect. And here’s where politicians are different than families in a big way, because if you and your wife were having financial problems, you’d sit down at the dinner table and say, hey, babe, we’ve got a problem.
We’re going to have to file for bankruptcy. I hate to say it, I’ve been a bad leader of our family, and we’ve spent just way too much, and now we don’t have enough income to cover our debt payments, and we’re just going to have to file for bankruptcy. Your wife would come back with, well, what are we going to do about it? Let’s cut spending. Let’s not go down that road, right? And so figure out what you can cut, and you have this dialogue back and forth, and you make the hard decisions on what you should cut out of your budget, and that’s how normal family would work.
When the government runs out of money, what do Congressmen do? They don’t look at the balance sheet like a CEO would. Like the CEOs we just talked about that were in the poll, they don’t see anything as an expense problem. They see everything as a revenue problem. So they say, okay, we don’t spend too much because we just need to raise more money, so let’s raise taxes or let’s just print our way out of it, right? That’s like a hidden tax.
And people aren’t going to be taxed, so they just go to the printing press. And they’ve done that for 100 years. Which is why we now have $33 trillion worth of debt. Because they never look ever, like, literally ever do. They look at the expense side and say, okay, let’s cut this. Unless it’s more of a philosophical view from the leaders at the White House and say, we’re going to cut the defense spending.
Right? But they’re never going to cut entitlements because entitlements are voters, right? The people are not people. They’re votes, right? So they want to keep that money gravy train coming in, so they keep getting voted in. So this is how McCarthy actually got ousted last week was because of the debt ceiling, because he voted to extend it for 45 days. And part of the GOP said, enough is enough.
Can’t you just treat the economy with good reason and logic and fundamentally sound doctrine and stop printing money that we don’t have? But yet you voted for it. You actually voted for the bill. So now he’s gone and probably Scalise is in or whatever. I don’t know how it all works and if it happens right away, but you’ve got all of this happening and politicians never look at the expense side, they always look at the revenue side.
How can we raise taxes to generate more revenue? Let’s just print more money. Let’s just print money. Right? So now we’ve got these problems with that though, we have to look at the ramifications, right? Because is that a new hack that they put on the website? I don’t know. It’s US debt clock and the money supply increased. They’re showing this chart here and I don’t know if you can see it or not.
I’ve got to zoom in probably a little bit more. I think that might be a hack because last week they had a scripture reference at the top about the money changers. And I think that’s probably a hack, which is they’re pointing out how bad the debt is and what happens. Because if you look at that money supply increase in about 2018, that last green line on that chart, it goes all the way to the top of the page and it goes straight up.
How could they add that much money supply that quickly? A, it was during COVID with all the stimulus, right? But B, how could it come down so quickly? It came down just as fast as it went up. Now they’re pulling money out of the system to prepare us for Central Bank digital currency. So this one chart that you have on the screen is very telling. You create this problem, massive amounts of inflation.
Because how they create the money supply? People say we need a new solution, give us something new government. They say, how about Central Bank digital currency? There’s transparency, accountability there and blah, blah, blah. And then to get that though, a digital version where they can control people like there’s nobody’s business, right? They have to pull paper money out of the system. That’s what that chart is telling us.
Because the money supply went mushrooming cloud to the top, just expanding, expanding, expanding. And then it came down as quick as it went up because they started pulling money out of the system. So all of that increase in money supply, printing of money, is true inflation, right? Right. So rising prices is not inflation. That’s a symptom of inflation. The true inflation is just increasing money supply. Right. But we have this problem because we look at this money supply and it’s coming down.
So you would think, well, inflation should be coming down. No, there’s a whole nother way to measure money supply, right? So what they’re measuring there is the amount of money in the banks, your checking accounts, savings accounts, money markets, something that’s easily liquid. The one that they don’t measure is called MZM. See, that’s the M two money supply is what it’s called. MZM basically measures all basically Euro dollars and everything that’s printed to go overseas that we never see the light of day from.
It’s what provides for stimulus that’s going through the roof, which is why we have the inflation that we have. Right? So this is the problem now, how do you slow down the inflation that you create? You have to raise interest rates, right? So this is what they’ve been doing for the last ten months, is raising interest rates to slow down inflation. Well, last month they had a pause.
Right? Well, the month that we’re in now, and Jerome Powell said we get to pause the rate hikes because we’re winning this battle of inflation. It’s like, okay, I’m calling it bluff, liar, liar, pants on fire. Right? They haven’t tackled inflation, which means they’re going to have to continue to raise interest rates down the road. But they have this artificial pause right now to kind of trick people and lull them into us thinking they’re winning.
Well, so they paused interest rates, but did all interest rates stop going up? Nope. Mortgage rates kept going up and up even after they paused interest rates a couple weeks ago. Right. So it’s like, Kirk, how could mortgage rates continue to go up even if they paused interest rates? Isn’t that the goal, is to stop rate hikes? That’s why they pause it. So here’s the thing. The official interest rate that banks lend back and forth to each other, that’s what they paused.
But if you’re Wells Fargo or Morgan Chase or bank of America or Citi or something like Got, if you’re an economist in their mortgage division, you’ve got one of the hardest jobs in the world. And here’s, like, imagine trying to come up with an interest rate that rewards you for the risk that you’re taking, which the risk is, are these people is this family that we’re giving money to? Are they going to be around 30 years from now? Are they still going to have a job 30 years from now? Are their wages going to go up during that time frame? What about inflation? What’s it going to do during that time frame? And what’s housing going to do? Is the housing market going to come down, which means we might not have loan to value ratio for mortgage insurance and everything else they have to try to project up to 30 years in the future.
What’s going to happen? Are the people that they’re lending money out have the ability to pay it back? Well, it’s hard to even figure out what we’re going to do tomorrow sometimes, let alone 30 years from now and what it’s going to look like. So what’s happened with interest rates? This is very telling of the economy. Interest rates on mortgages, 30 year mortgages are going through the ceiling even after the rate hikes stopped, right after they paused them.
So average interest rates now in America on a 30 year loan are approaching 8%. I mean, we haven’t seen interest rates on a 30 year mortgage approach 8% since 1990. I’m guessing 1995 or 1996. Somewhere in that ballpark, right? That’s a long time. Right. So what does that mean? It means that the big banks are saying, well, Fed, you may have paused interest rates, but that doesn’t mean that we’re at any less risk.
We don’t think that people are going to be able to pay off their loan. So we’re going to keep raising interest rates. Right. So on the secondary market, interest rates are continuing to climb, which means this isn’t a good market, where even after the Fed officially pauses interest rate hikes, interest rates continue to go up in the secondary market. That’s not a good sign. That’s not a good sign for the economy.
But yet that’s what we have right now. So moving forward, it’s like, how do you protect from that? Well, A, I certainly wouldn’t be in bonds, right. Because bond prices come down when interest rates go up. And we’re obviously in a rising interest rate environment. But talk to your bond broker, talk to your stockbroker, talk to the person who handles your securities and have a convo with them and say, what should we do? Right.
And see if what they say is different than what you’re hearing on this show. Right. Guaranteed, it’s probably going to be. But here’s what I would do. I would allocate I can’t speak to stocks or bonds or annuity contracts because I’m not securities licensed and I’m not insurance licensed. Right. But what I do do as an economist is a dual PhD economist. I look at the trends. I look at the puzzle pieces that put things together and how different markets respond to policy coming out of DC.
How does it respond to rising interest rates or lowering interest rates? How does it respond to printing money or pulling money out of the system? How does it respond to employment or unemployment? Right. So right now, given the world that we’re living in, allocate into strength, allocate into safety, that happens to be silver right now, not even gold, still love gold. But I think there’s a time and place for it where we can maximize your ounces of gold down the road even further by really allocating into silver now, which is outpacing the rate of growth of gold.
If it does that for a year, let’s say it goes up 30% more than gold, well, I get you 30% more ounces of gold when we go to that point. What if we double? I get you twice as many ounces of gold when we get to that point. Right. So all that I do is care about what is the undervalued asset, the one that’s outperforming, and we overalllocate into that because it makes sense.
Right. And so you guys there, when folks reach out to you either online or they give you a call, that’s the kind of guidance that you provide. There is the investments in IRAs. You mostly have silver because it’s growing faster than gold. Right. In the simple form, yeah. There’s a historical ratio of how many ounces of silver does it take to buy 1oz of gold? Well, historically, that number is 20.
Well, today it’s 90, near a historical high. Takes 90oz of silver to buy 1oz of gold when historically that number is 20 to one. So what does that tell us? Silver is greatly undervalued and should outperform. That’s what that number tells us. So my goal is to minimize risk, maximize return. That’s why I’m into silver. Now. People might say, well, Kirk, you’re missing the whole boat because we’ve got currencies that are going to be backed by gold under this new system.
It’s like, undoubtedly that’s going to be the case, right. As people look for something that’s real and transparent and has accountability, right. That would mean, in my view, tangible, backed currency is probably the safest thing that there is. But before we get to that point, I bet silver grows a lot faster because of supply chain disruptions. They’re running out for electronic and consumer use, right? They’re actually running out.
So then the manufacturers are going to have to pay a much higher price when it runs out. And they will, because they’re just going to pass it on to the consumer. Now we’re going to have even more inflation, right? So we’re living in a world where truly governments have run out of money. They’ve reverted to the printing press, not just here in America, but across the globe, literally almost every country around the planet.
They’re printing money like there’s no tomorrow. And it’s going to create an inflationary spiral like nothing this generation or previous generations has ever seen. So we definitely need to continue to stay in prayer. And fear not, folks. I mean, we’re in a strange time. We talk about this a lot on our show, about some of the nefarious ways of our governments, the deep state and more, and what they’re up to and how they’re trying to control us.
And our hope and prayer is that these guys get demolished, taken out soon, and we see some good things in the future, for sure. So, again, remember, amwino. com forward slash gold. That’s where you can reach out to Dr. Kirk Elliott, and they will support you and guide you in a very good way, more than I’ve ever experienced in my lifetime, for sure. And we just look forward to these updates and more.
So thank you, Dr. Kirk Elliott, again for joining us. We look forward to meeting you again next week. It’s awesome. It’s my pleasure. We’ll talk to you soon. .
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