YouSaid · the spoken record

Joe Brown

lines on the record: 73
first: 2021-12-12
most recent: 2021-12-12
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“They're buying has a lot to do with what they're legally allowed to buy. So, in the aftermath of the great financial crisis, when they suddenly were allowed to buy mortgage-backed securities, whereas before they were only allowed to buy treasuries, that's partly why they buy those two things. Mortgage-backed securities and treasuries. The other things that they've been buying, they haven't actually been buying. There were accounts set up with the treasury called special purpose vehicles that purchased things like high yield bond funds. And so that, you know, junk bonds basically. And so they can't buy those themselves. So it's like, you know, an 18-year-old who wants to get drunk, can't go into the liquor store and buy alcohol for himself. He has to send in his 21-year-old cousin to go buy alcohol for him, gives him the money. Same thing. The Fed can't buy junk bonds for themselves, so they give the money to the treasury to buy for them. And so mortgage-backed securities were part of the whole apparatus that they were buying in order to smooth out the volume.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Right now, and they're actually going to taper and they're going to reduce their purchases by $15 billion a month. And if they get the chance, they will raise interest rates. But the problem is it will spark a crash. It's inevitable. You cannot expand the money supply, especially at this scale without it causing malinvestment and a misallocation of resources that leads to problems rot lurking under the system. And so you don't notice it a lot of times until you start to tighten and pull back that easy money. And so it's not the tightening that's going to cause the crash. It's already there. They're just going to reveal it. And then once it does, they're going to have to reverse course and they're going to go full blown. They're going to $120 billion a month is going to look like child's play compared to what they're going to have to start purchasing. They're going to have to start purchasing out on the yield curve to drop long-term rates. They're going to have to do all sorts of things that will”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“All credibility that they have, and they can't do that. They have to look like they're going to start attacking inflation now. And the minutes from their FOMC meeting from this month show that they are almost everybody now is saying, hey, we're open to raising rates sooner if inflation continues to increase. And so they are going to be reducing their balance sheet. The word minimum has been thrown around a lot because they said we're going to purchase. They've always been purchasing a minimum of $120 billion per month. And now they said we're going to reduce that by $15 billion, but it's still a minimum. So it's still unlimited. But if you look at how much they've actually been purchasing since August of last year, August of last year, their balance sheet was at $6.9 trillion. Right now it's at $8.6 trillion. That means in 15 months their balance sheet increased by $1.7 trillion. That's on average $113 billion a month. So that's a lot, but it's not above what they said they were going to be doing at 120. And so they're going to stick to what they're going to say they're going to do.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“It's almost like a universal statement now that I hear from everybody it's like the Fed can't taper, they can never taper, they can't type. The reality is if they want to, they can do anything they want. So the question is not whether they can or not. The question is how long will they do it for and to what extent will they do it? And in my opinion, Jerome Powell getting in for a second term here solidify the taper, especially in light of the data that's coming out of the last couple of months. We're seeing inflation records broken every single month that go back decades. And then just today, even though it was fake jobs numbers when you remove the seasonal adjustment, the jobs numbers jobless claims showed lowest jobless claims since 1969 when they're seasonally adjusted. And so when you look at the Fed's dual mandate, they've got maximum employment and stable prices. They said we're going to ignore prices in favor of employment. Employment's there from the data that they look at. And so if they don't try and at least look like they're going to attack inflation, they'll blow all.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Out the entire system when COVID hit. And so all of these things, all of these levels of intervention plant the seeds for a much greater crisis next time, and they usually happen in greater and greater frequency as time moves on.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Bled over into any sort of financial crisis and that lowering of interest rates led to the housing boom, all that artificial money flooded into housing because everybody thought, hey, when the stock market falls, housing still goes up. And so all that money flowed into housing. We know how that turned out, but they had already crossed Rubicon before. So that led them to, hey, we can do this. We can bail out the financial system, save the banks. Well, we think that that was the end of it, but we have to remember that in 2018, when they had finally started tightening after saying for so many years that all that QE was temporary and that they'd eventually undo it, by the end of 2018, the markets were on the verge of collapse. In 2018, they couldn't handle it at the end of 2018. They had to stop raising interest rates. And that was what started push the market back up. Well, one year later, in September 2019, repo market blows up. And so now they have to start QE infinity or not QE. And less than a year after that, they had to.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Each other. And so they just did it with so much leverage that eventually something happened. They entered the trade because they expected prices to come back together, but prices didn't come back together. Prices kept on diverging. And when that happened, they were so leveraged that they had to start closing out those trades. Well, if you buy a short to close and you sell along to close, that's going to push the prices of what you're long down, the prices of what you're short higher because you're adding to the buying pressure and the selling pressure and make the problem worse so they couldn't get out without risking collapsing the financial system. So the Federal Reserve stepped in and said, all right, Wall Street, bail them out. That led to the greenspan put later when he lowered interest rates. They had already crossed the Rubicon. Hey, we can bail out the system. They lowered interest rates to soften the blow from the dot-com bubble bursting, which would have only hurt some people's stock market brokerage accounts. Wouldn't have”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“The only thing that you could say is they didn't do it enough to cause prices to go up. Now, I would argue then that that's a good thing. If they would have been able to, then they would have made things much worse. And Bernanke wasn't the first one in this recent line of central bank intervention. We have to start back at long-term capital management as a hedge fund that collapsed. And that was, I can't remember, I think it was 89 or no, not even 98. And so the Federal Reserve came in and they bailed out. They forced Wall Street to basically bail out long-term capital management so that it didn't knock down the rest of the financial system. Long-term capital management, they were engaging in relative value trades where they would short one thing, use the proceeds to buy another thing that were almost identical and they would do it when the prices diverged a little bit from each other in the expectation that the price would come back to.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“When he got into office, he doubled down on everything and increased everything that Hoover had been doing. So the idea that Hoover was a free market and the FDR came in to try and fix it completely false. And what FDR did was I mentioned what he did with the gold, right? He took everybody's gold. He then repriced gold higher now that he had it all for himself allowed a bunch of money to be printed as a result of that. Another thing that he did was in an attempt to push prices up. He did crazy things like burning crops. Imagine that. During the Great Depression, the worst period of economic suffering in our history and they're burning food in an attempt to make it more scarce to push prices up. And so the idea that Bernanke was looking back and saying, we're not going to repeat the mistakes of the Great Depression by not intervening and not printing and not doing that is completely misguided because they did do that during the Great Depression.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question. Going back to what FDR did in 1921 for the first Great Depression, they allowed that one to resolve itself naturally. There was no intervention. The government balanced their budgets. The Federal Reserve raised interest rates. And that depression, again, it was the worst one in U.S. history up to that point. They called it the Great Depression at the time. It solved itself within 18 months. It was difficult, but it fixed itself. At that time, Uber said if I'm ever in power when something like this happens, I will do everything in my power to make it easier. I will do all of these interventions, all the stimulus, whatever. While he got his opportunity, and in 1929, things started to fall apart, he embarked on at that time an unprecedented level of government intervention, Federal Reserve did not raise interest rates like they did the first time. And FDR actually ran on the platform of free markets saying Hoover's doing all this wrong. He shouldn't be intervening.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“From running out of gold. And so Nixon did to the rest of the world what FDR did to American citizens, and he said we're confiscating the gold and moved the world back onto a credit standard, which it hadn't been on for thousands of years. And so for the last 50 years, that's where we've been at. And now we're facing the inevitable consequences of unprecedented levels of monetary expansion as a result of no ties on money creation. And that's the history of what brought us to today.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“World War II happened, everybody runs out of gold, so they come to America, they say, You've still got gold. Let's just have you be the central bank to the entire world. So you went from banks, the invention of banks where people centralize their money with the banks to the invention of the central bank where all the banks centralized their money with the central bank. Then in 1940 at Bretton Woods, you had the rest of the world centralized the money supply under one central bank, the Federal Reserve, who said, trust us, we'll hold all the gold. We'll give you paper and we promise that you can come get your gold at any time with that paper at the age old scheme. And it only took 30 years from then for America to print so many more dollars, same exact thing that the Goldsmiths did, same thing that the banks did, Federal Reserve printed so many extra dollars, the US spent all these dollars into existence that the rest of the world said, hey, we better go get our dollars because if we're not the first ones to go get our gold, then we're not going to be able to get it. And turns out we were two weeks away.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“So you've got 18 years. You have two of the largest depressions that our country had ever seen after the invention or the implementation of the Federal Reserve in America. And then from there, what you had happen was one of the ways they made it, tried to make it easy for the economy to ease the blow of the Depression was confiscating everybody's gold because remember, this was a bank run. This was a run on gold just like the goldsmiths. And so they took all the gold from everybody, gave it to the Federal Reserve. This was FDR and made it illegal to own gold. And then he repriced gold higher once the Federal Reserve had it all and allowed an artificial expansion of the money supply as a result of that. And so this was only able to be done through the monopoly on violence that the central government has because a little individual bank goldsmith wouldn't have been able to get away with this. And it turns out that the rest of the world was doing the same thing.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“An increase in large scale panics or busts or recessions or depressions. Well, after the Federal Reserve was started in 1913, seven years later, you had the first recession that was called the Great Depression in 1921. There's a great book about that called The Forgotten Depression by Jim Grant. And James Grant actually, I think is his author name. And so that was called the Great Depression because it was the worst one up to that time. And it was caused by an artificial expansion of the monetary supply. Free market rained, they allowed it to just solve it for itself, fixed itself within 18 months. They repeated their mistake, though. Artificial expansion of the money supply, easy credit, caused the next one Great Depression started in 1929. That one was so much worse because they tried to ease the pain of that one and that one then became known as the Great Depression going forward because it was so much worse than the first one. From 1913 to 1913,”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Well, the central bank just gives them gold that's they're drawing from the rest of the system. But the problem is you can't eliminate risk. You can only transfer risk. That transferred risk from the individual banks up to the entire system. And I use the example of being next to a cliff a lot. If you have 20 people next to a cliff, one person falls off. What are the rest of the 20 going to do? They're going to back away from the edge, right? But if you have, if you give everybody a rope, well, if one person takes a step while the other people might be able to pull them back, right? But that means the individual risk has been transferred to the hole so nobody backs up anymore because now one individual doesn't have the risk of falling off. So you get close enough, one, two, three people fall. The entire system falls off. So you can't eliminate risk. You can only transfer it. And that's exactly what happened at the invention of the central bank. That risk was transferred to the system through the central bank. And to test that, you'd say, okay, well, then at the invention of the central bank, you should probably see.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“So now you have one piece of gold trading twice once as a piece of gold and once as a certificate of redemption. So you have an expansion of the money supply when the goldsmith starts lending that gold out. That's the invention of fractional reserve banking. Well, eventually this causes bubbles and prices start to skyrocket and then that debt has to start getting repaid and then that whole system unwinds. Everybody goes to redeem their receipts because they realize there's not enough gold there. You have a run on the bank. This should have been outlawed. wasn't outlawed. By the way, this is very old. 800 years ago, we have records of this happening in Italy, the banking crisis that looks very similar to our financial crisis 12 years ago. So we have, that should have been outlawed, but it wasn't. Instead of that, it was nationalized. And so now you have banks no longer have the risk of having a bank run because you have the invention of the central bank, which operates as a bank to the banks. So if one bank is at risk of a bank run where everybody tries to go get their goal,”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“And people are like, hey, I don't want a store to my house. I can't use it for small purchases. So I'm just going to leave it with the goldsmith. These were the original bankers. And so they'd say goldsmith, here's my gold. I'm going to get a receipt from you and I can go give you that receipt and get that gold back anytime. Eventually those receipts started trading because if I'm going to go get my gold to buy a horse from you and then you're going to go give that gold back to the goldsmith for a new receipt, I might as well just give you my receipt because then you can go get my gold whenever you want. And so the goldsmiths caught on to this and they realized we've got a lot of gold. Nobody's redeeming it. We can lend it out and start to make bank here. And so what you had happen was a rapid expansion of the money supply in these local economies when the goldsmiths realized what they could do. And you have before you have 10 pieces of gold, let's say, that are all on deposit with the goldsmiths. You've got 10 pieces of gold in circulation. But now the goldsmith loans one of those pieces of gold out.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Wealth gets more abundant, but the money supply stayed relatively the same. Money supply of gold and silver throughout history kept pace with the growth of population at about 1 to 1.5% every single year. And so what you inevitably have happened, especially as things like the Industrial Revolution come in where you have technology and progress and growth expanding very rapidly, is that the money starts to get very valuable, almost too valuable. And so whereas before a couple hundred years ago, you could slap a gold coin down on the counter for a beer. Now you slap a gold coin down on the counter and that's going to pay for a horse or it's going to pay for your month's rent. It's worth a lot more because the money supply stayed the same, but the wealth in the world, the real stuff, the real goods and services have grown so much more. And so then you have this tendency towards centralization with gold moving from being the medium of exchange to more of a store of value and then for larger purchases.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“The price changes of everything are just pure information, and you can make accurate decisions off of those. And so gold and silver allowed people to do that. The problem, though, that arose, and this is a very slow, like centuries long problem, is one of deflation. Deflation is a natural force of history that always happens everywhere consistently, persistently from the beginning of humanity until the end of humanity. Deflation is getting more for less. That's where things and stuff and wealth gets more abundant. Every time we figure it out a way to offload human labor to something like fire, when we offloaded human labor of gathering so many roots and nuts and veggies and berries to fire to cook them, to get more nutrients out of them, that was a growth. That was a leap forward in energy that we could then use our labor for other more productive purposes. Every single time we've been able to do that, that means wealth, real wealth.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“System, but it was complex. There were credit markets and they had innovative ways to keep track of things like tally sticks that were used as currency. And so that was the first monetary system. As nation states emerged, governments wanted a way to pay for and keep standing militaries. And gold and silver emerged as a great medium to be able to do that. And so gold and silvery emerged as commodity money. Now, the reason why gold and silver specifically emerged is because they operated very well as money, specifically because you can't just go out and make new gold or new silver without heavy intensive labor. You have to dig it out of the ground. You have to refine it. And so gold and silvery merged as good money because it preserved the pricing signal. Pricing is information. It's everything in an economy. And if the money supply stays relatively the same, that means all”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Even something is what you would think is as simple as a history of money is generally misunderstood. We typically think of, you know, if you read your classic economics textbook, it starts off with barter and says, hey, one person makes shoes, the other person has a lamb. They start to trade with each other. Well, one person has to then go trade for apples in order to get their shoes. And it's just this whole mess. And when you study history, anthropological evidence shows that barter never existed as a monetary system ever any time, ever in history. There's a great book, Debt the First 5,000 Years by David Graeber, and it talks about the earliest recorded monetary system that we had on Earth was a credit-based monetary system. And that was basically, if you think about rural communities who owe each other favors and very hospitable environments that are separated from technology, they still operate under kind of like a credit-based monetary system.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Reason why they're required to say that is because of their licensing. Where do those licenses come from? The SEC and FINRA. So ultimately, from the top down, you've got the government weaseling its way down to your financial advisor telling you that treasuries are the safest investment. When it's the government that's directly benefiting off of that by them being the ones that are loaning you the money. And so after a while, I just realized the stuff that I was selling was so disaligned from what I believed to be true that I had to go out on my own and then try to educate people about how the system works ever since.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT
“Got into the industry because I was very curious about the way money works and how investing works. And so that was really the only path that I saw in front of me to learn about these things was kind of going to the belly of the beast. And I'm just by nature a very curious person, especially when something doesn't make sense. And the more I dug in, the more licenses I stacked up, the more I realized, hey, a lot of this stuff isn't making sense. And I read a lot. Like I read 100 books a year and I started to notice the things I was learning from inside were not the same things that I was realizing were true from books that I was reading. And like a good example of that is bonds. If you go to your financial advisor and you say, hey, what's the safest investment? I can buy. They'll tell you government treasuries. And the reason for that is because, well, their broker tells them that they have to tell you that.”
2021-12-12 · We Study Billionaires · TIP404: The Untold History of Money w/ Joe Brown · IDENTIFIED FROM THE TRANSCRIPT