Anthony Pompliano 0:00
And then maybe let’s talk a little bit about kind of the feds response to where we are now. So we’ve seen that we’re in this deflationary environment dollar strengthening asset prices selling off, you saw the emergency rate cuts to zero. And then you get, I have no clue what number we end up on on the quantitative easing side, but it’s going to be in the trillions.
And it’s going to be big, right? And so it may be 2 trillion, or it could be 10 trillion. Who knows? Kind of what do you think about the response so far? And then the one question I keep asking people is like, do they have another option? It almost feels like they’re doing exactly what they have to do to keep this going. Even if we all think that it’s crazy that it’s happening. It’s almost like they have to do it, right.
Brent Johnson 0:41
Yeah, I mean, there’s two parts to this one. What are they supposed to do? And then what do they have to do? So there’s a lot of people who come out and say the Fed should do nothing, they should let the markets run themselves.
Yes, that is what they should do, you know, free market and I would love it if that world existed, that world does not exist. central bankers were created with the express purpose of what is going on exactly right now, they were created so that when we get into this environment, they can plug the hole with newly printed money.
So to think that they’re not going to do it is foolish, of course, they’re going to do it. It’s just a matter of what are the what are the knock on effects of them doing it? How successful are they? Are they successful the first time? Or do they have to take multiple programs to finally get it under control? I’m convinced that they will eventually get it under control and the dollar will go much lower.
I’m also convinced they’re going to fail before they get before they’re successful. So that kind of that’s kind of a long way of answering your question, what do I think about it now? I think they’re doing what they have to do in a crisis.
You know, when the patient is hemorrhaging, you just want to stop the bleeding, right? And then you can figure out the treatment. And that’s what central bankers they’re just trying to stop the bleeding right now. They’re extending swap lines, they’re buying corporate bonds, they’re doing QE, they’re cutting rates to zero.
Again, all the countries are doing this, this isn’t just the Fed, they’re all doing it. They’re just trying to stabilize the system. And then they’re going to and I think what’ll happen, I think they will do something, it’ll will arrest the rise of the dollar, maybe the dollar will even fall for five, six months. But the issue is that you have to understand is, to your point that they’re doing what they have to do, in the system that they have designed.
You either print money to put more collateral in the system off of which it can be loaned into existence, or you do the or you just make the loans bigger, right? One of those that that’s the way money is created. It’s either physically printed or it’s loaned into existence. Those are the two ways. We’ve reached the point where there’s no more loans being created.
So they’re having to come in and plug that hole. I think the hole is dramatically bigger than anybody can conceptualize. So the fact that they’re coming in and printing I don’t even know what they’ve done. So far. It’s like, you know, they’re doing 120 $5 billion a day and repo they promised a trillion dollars of this, you know, up to $2 trillion of that the Congress is going to authorize two or $3 trillion fiscal spending.
And what’s the dollar done? It’s at its high of three years. It’s barely been backed off, right. And that just shows me that the demand is so high. Can you imagine a year ago if we just said they’re going to do all this, the dollar would have fallen to 80 because nobody believed we could get into this kind of $1 scramble.
But you know what, we’re here. And now that the fuse has been lit. I think this thing is going to accelerate higher now. It doesn’t mean there’s not going to be periods of time where they get under control before another fire pops up, or another bomb goes off, but the battle now the battle has started.
You know, the battle was simmering for a long time, but now the battle is on. There’s going to be times where one side wins and the other side wins. But I think before it’s all said and done, that this dollar squeeze is going to squeeze the dollar higher.
Anthony Pompliano 3:59
Yeah, One of the questions I get so there’s a lot of people listening who will agree with everything you just said. And then they’ll say, great, I’m an individual, how do I play it? Right? What are my options? Not so much as like, what’s the advice to go do but just what are the options? And they’ll say, should I just hold dollars in my bank account? Should I go and find currency pairs and short? You know, something against the dollar? Like, what are you kind of tell folks is just the options on the table they could look at if they’re interested chefs?
Brent Johnson 4:26
Well, short answer is there’s a few different things you can do the correct answer, it kind of depends on where you live and what your home currency is, you know, in as a general rule, I would say it’s kind of the same answer for everybody, but it’s also a little different. I think the best place to be over the next two or three years is United States assets.
Now, it doesn’t mean there’s not going to be paying along the way but I think if I am sitting in Sydney, Australia, and I see what’s happening to the Australian dollar, I know what the Royal Bank of Australia has said they’re going to do The Australian dollar and I know the growth prospects for Australia pale in comparison to those United States I would rather buy Coca Cola let the Aussie dollar go down six or 7% collect the 4% dividend from Coca Cola there I’ve got a 10% return and if Coca Cola happens to go up two or 3% that’s all the better right? And even if it goes down 10% I’m still even so so you know, I think the first thing you should do is if you’re is hold dollars, you know, most people in United States we just hold dollars because it’s our natural currency.
But I think if you’re overseas and especially if you have a business that has liabilities in dollars, you should definitely hold dollars versus your local currency. That’s the first thing if you then have some excess savings which you can deploy into US dollar assets. Maybe you buy some big you know, the the Dow or maybe even some short term treasuries, I think that would be a good idea.
I think you should buy some gold. I think you should have some Bitcoin, if you can, again, it There’s kind of a progression, right? If you if you have enough liquidity to do all this stuff, maybe you do all of it. But I think the first thing you do is, you know your own. Just you have your cash or your savings and US dollars.
You know, what, where did we set up a fund specifically to play this? Now, this fund is it’s only geared towards high net worth individuals, you know, again, I would prefer it wasn’t only for high net worth individuals, but this is these are the regulatory requirements that have been put down on us.
So it is somewhat limited to certain individuals, but to anybody that would want to talk about that in more detail. I’m happy to talk to them about the opportunities we see. We see incredible opportunities. We’re having a lot of success, and we think we’ll continue to have a lot of success and that strategy, but I think in general, I think we’re still in deflation.
I think we’re probably going to have deflation for a little while. on a global basis. I think we’re going to continue to have deflation, but in the not too distant future. I think I think we’re going to start to see some inflationary effects in the United States. So, you know, I can’t really give advice over the internet on what people should do individually. But if you kind of think about those, you kind of think about those dynamics.