Peter St. Onge - Making Sense of the American Economy - Porter & Co. Black Label Podcast

Episode Transcript
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(00:00):
Welcome to the Porter & Co.
Black Label Podcast,
your home for provocative insightsthat lead to lasting wealth.
And here are your hosts, PorterStansberry and Aaron Brabham.
[MUSIC PLAYING]
- Porter, it's time foranother Black Label Podcast.
Now these are the Black LabelPodcasts that are clean.

(00:22):
- We don't havedirty ones anymore.
- No, we don't dothe gin and tonics,
we don't do all that stuff.
- We're too oldfor that nonsense.
- That was fun. Idid have a good time.
But you're right, thehangovers are brutal.
I don't want thehangovers anymore.
- No, we're here to talkabout serious ideas.
We have a great economiston the show today.
- Peter St Onge.
He has a PhD in economics,was an MBA professor in the unwoke

(00:42):
Taiwan. Should have gotinto that a little bit.
He actually has a great story.
He was making a ton of moneyduring the dot-com boom and he
kept selling too early and thenthe stocks would keep going up
and he was calculating hismillions of dollars that...
- Didn't make?
- That he didn't make.
- Which is not thesame thing as losses.
- No. No. That he didn't make.
So he went to an island withno internet in Thailand.

(01:03):
And when he came back,he lost everything.
- Yeah.
- That got him.
He's also a visiting fellowat the Heritage Foundation.
Very sharp.
- Knows his stuff.
- He has an X account.
You can find him @ProfStOnge,
Prof St Onge, and hispodcast is Peter St Onge,
O-N-G-E, .com.

(01:24):
So I look forwardto having him on.
We're going to talka lot of economics,
a lot of things thatwe would normally
kick the show off of, of theconsumer, inflation, money,
and all that type of stuff.
So we're going to skip theteaching part today and we're
just going to go straightto the interview.
- Well, before weget to Peter St Onge,
which I want to endorse hispodcast and his X account,

(01:46):
his Twitter account.
I listen to both and read his...
I listen to his podcast andI read his X account every day.
He is a really goodthinker and he is sound.
Very few people areideologically sound.
He is completely sound.
The other podcast that I wantto point everybody to listen to
is not just Peter St Onge,
but I discovered the very bestbusiness podcasts I've discovered.

(02:09):
Now, Peter St Ongeis an economist,
but this is a businessthing, and it's Acquired.
- Yes.
- It's The Acquired Podcast.
And I've been listening, thisweek, to several of their shows.
They've got a greatexplanation of Hermés, of LVMH,
of Microsoft, of Nike.
If you are a fan ofbusiness, as I am,
you will love this podcast,and it's completely free.

(02:30):
They do a fantastic job.Very impressed by their work.
But let's go talk to Peter StOnge and get on with the show.
- All right, Porter, wehave the legendary Peter St Onge.
- As I was saying earlier,he's a real economist.
He didn't just sleep ata Holiday Inn last night.
- He's not one playing aneconomist in the box that wings it.
- That's right. Peter, how areyou? Thanks for joining us.

(02:51):
- I am great. Thank youfor having me on at last.
We had a couple of dramatictwists and turns along the way,
so I appreciate finallymaking it come together.
- Yep.
We see the world the same way,
through the lens ofAustrian economics,
but there's a big mysterythat I've always wondered,
and that is how is itthat the central banks have gotten away
with this for so long?

(03:13):
And by that, I mean since 1971,
the constant increaseto consumer inflation.
Do you know that total consumerdebt in the United States has
never declined since 1971?
And now, the total debt worldwide,I mean, it's astronomical.
I don't know the numberoff the top of my head.
In the United states, it'sabout 500% of GDP, total debt.
You've got these runawayinflations all around the

(03:35):
world, but you have verylittle, relatively speaking,
consumer price inflation.
Obviously, there's been morein the last five or six years.
But how are theygetting away with it?
And where's
this...
this eventually has to blow up.
So when is that going to happenand what will be the catalyst?
- Yeah.
So there's actually been a lotmore inflation than it seems.

(03:56):
You want to keep in mindthat when the economy grows,
or just when thepopulation grows,
that should make thingscheaper because...
- Absolutely.
- If you've got more stuff outthere, you got more workers,
you got more peopleproducing things, then
if your money's not growing,
then everything shouldactually get cheaper, right?
So when you actually controlfor things like that,

(04:17):
we've had inflation,meaning money printing,
raising prices, we've had that on theorder of like 6 or 8% for decades.
But the question is, howdo they get away with it?
And I think, really, it's acombination of fantastic marketing.
The finest marketersmoney can buy,
the finest lobbyists money canbuy, and then public education.

(04:38):
So people have gottendemonstrably stupider.
You can go back and runState of the Union speeches through
Flesch-Kinkaid scores, whichestimates what the grade level--
- Yes. Yes, I know. Iknow all about that.
- We use that here.
- We write our newslettersto a fifth grade level.
- For sure. Right.
So you can go back and lookat the level of discourse back in

(04:59):
like 1900, 1904election, and they were
talking to what wouldtoday be college students.
Now remember, these are professionalspeechwriters who are aiming at
the median American.
So they're a reflectionof the electorate, OK.
So it was like 13th,14th grade back then.
Today, you look at presidentialspeeches and, I mean,

(05:19):
especially Joe Biden, buteven under Barack Obama,
it was like eighthgrade, sixth grade.
Now, fourth grade.
These are the same classof speechwriters who are still
thinking that they'retalking to the median voter.
I mean, this is the top of the game ifyou're writing presidential speeches.
I'm going to taketheir word for it.
The electorate has gottenextraordinarily stupid.

(05:41):
And if you map out that declinein the level of discourse
against the percent ofAmericans who attend public
schools, not educated,public schools specifically,
it's like one-to-one.
So absolutely, yougo back to the 1900s,
people are talking about money,they understand the issues,
they understand the roleof gold in limiting inflation.

(06:03):
They understand the so-calledrubber dollar, where
there were these constantinflationist cranks who were
trying to push a flexibledollar in order to inflate.
The electorateunderstood that graph. [INTERPOSING
VOICES]
And so when they sawevidence of it... yeah.
Yeah. Right. Bingo. Exactly.
And so when they sawinflation rising up,

(06:23):
they knew exactly who to blame.
Nowadays, we got themarketers, we got
the lobbyists, we gotthe public education.
And so when inflationtakes off, it's...
remember a couple ofyears ago, it was Mr.
Putin's war, it was peoplebuying too much stuff on
Amazon, it was globalwarming, as always,
just every excuse under the sun.
And 100 years ago,
people would have laughed them outof the room for that crap.

(06:45):
Nowadays, the media sitshere, they consider it,
they're of course, productsof public education.
So I think, fundamentally,
the people areabsolutely being gaslit.
They're being gaslightedinto thinking that
our wise economic overlordshave things under control when
actually they arecausing the problem.
They are causingthe business cycle,
they're causingthe boom and bust,

(07:06):
they're causing this endlessseries of inflations,
recession, inflation,recession, over and over.
Every so often, of course,it gets way away from them.
So 1970s, just acouple of years ago,
and inflation hitsdouble digits.
That's when people finallystart waking up and finally
start asking howthe system works.
Yeah.

(07:27):
I felt sorry for theauto workers. They...
- Yeah.
- They've seen the real valueof their wages fall in half over
the last five or six years,but they got a 30% raise.
And I'm just wondering howmany of them can do the math?
Probably none. Soit's too bad for them.
Peter,
an idea that's occurred tome is that the handwriting is

(07:49):
really on the wall forpaper money in total.
It's in 10 years, it'snot going to be here.
There's just no way.
There are too many advantages,too many cost advantages,
efficiency gains,
to be made by using digitalledgers of all kinds.
It's going to really affectthe banking system because the
entire reason why you havea bank is because that's the

(08:10):
trusted intermediary thatallows your company to pay you
and allows you to exchangevalue all over the world.
We don't need anyof that anymore.
Your company can issue you aBitcoin via your phone in real
time immediately,no intermediary.
None required.
And the efficiency gains aregoing to be so evident that
it's not going to be stopped.
Now, you can say,
they're going to make a lawagainst something like that.

(08:32):
If they do, and Iknow that China has,
it's going to be such a hugeimpediment to their economy
that they won't be ableto hold the tide for long.
Eventually, we're all going tobe using digital currencies.
And the only currencies thatwill be safe to use are the
ones that are truly...
that don't requirean intermediary.
They're truly anonymous.
All the stuff thatyou want in a money.
OK, so here's my idea aboutall this is some combination of

(08:56):
digital money, a.k.a.
Bitcoin, and AI is going tofinally render the entire central
banking gameimpossible to sustain.
Because everyone's going toknow the real intrinsic value
of every currency in real timebecause that's the way you
evaluate cryptos.
And if you put that same kindof analysis onto the dollar,

(09:17):
you would never, ever own it.
And then there's the Gresham'slaw impact of all of this,
which means that thegood money, Bitcoin,
will be hoarded and the badmoney is going to plummet.
See the Continental duringthe Revolutionary War,
see the greenbackduring the Civil War.
No one's going towant it anymore.
And the change is going tohappen so suddenly that there

(09:38):
will be very seriouswinners and losers.
And then you look at a companylike Microstrategy that's
borrowing the dollar at fixedrates and buying Bitcoin,
and look at the stock price.
And I just wonder howlong that can go on.
How long is the governmentgoing to be able to give a free
path to prosperity from anybodywho shorts the dollar efficiently?

(09:59):
- First off, I agreewith everything you just said.
You know, you're seeing Gresham'slaw in action right now.
In fact, Bitcoin criticscomplain about it.
They say, ah, you can't buycoffee with a Bitcoin...
- Because they're morons.
- Once people get ahold ofBitcoin, they spend dollars.
They get rid of those crappy paperconfetti and they hold on to the Bitcoin.
And another aspectthere, of course...

(10:20):
another sort of knock onBitcoin is that people say, no,
no, no, it's impossible becauseBitcoin fluctuates too much.
Well, OK, so if you look atthe dollar, you look at post Nixon,
there have been multipleperiods where the dollar has
either doubled or dropped inhalf in a matter of two to
three years since Nixon.
Now, if you didn'tknow anything about history,

(10:41):
you would look at thatand say, oh my god,
gold could never be money.
Are you kidding?
You can't have a moneythat doubles in two years.
Drops in half in two years.
How would you ever havea functioning economy?
Then you would learn abouthistory and you'd say, well,
wait, what happened here?
And the key there is that whensomething becomes a money, it is far,
far more stable because it hasthis sort of ballast demand.

(11:02):
This core demand, right.
The overwhelming demand formoney in general is for savings.
If you took a snapshot right nowof all the dollars in existence...
first of all, noneof them are...
you always see theseimages of dollars flowing.
OK, there are nodollars flowing.
Every dollar is ownedby somebody, right.
And if you took a snapshotof all the money right now,

(11:22):
something like 80,90% of dollars,
they're in savings account.
They're in long-term storage.
They may as well beburied in the yard.
Once a currencybecomes monetized,
once it is thedominant currency,
whether that's gold orwhether that's Bitcoin,
that's what happens to it.
The vast majority ofit is salted away.
It's not going anywhere.
It becomes this ballast thatstabilizes the fluctuation.

(11:46):
So over time--
The big question is when, right?
Is this going tohappen in 10 years?
Is it going to take 30 years?
And that's a function of howmuch the clown show screws up
in Washington, in Brussels,in Tokyo, and the rest of it.
So that's the keyquestion, is the timing.
I think absolutely, ona long enough timeline,
we know fiat is doomed.
Paper money hasdied over and over.

(12:07):
Typical lifespanis about 50 years.
If we count that from Nixon,we're coming right on schedule.
And so then the question isjust, is it going to be gold,
which, traditionally,when paper money
dies, humanity goes toeither gold or silver.
So is it going to be preciousmetals or is it going to be
Bitcoin?
If this is something that'sgoing to happen in the next
three years, I thinkwe'd probably go to gold.

(12:27):
And the reason is that notenough people understand
Bitcoin yet.
The median person whounderstands Bitcoin is probably
like 30 years old.
They don't havethat many assets.
They're not in decisionmakingcapacities in the financial system.
On the other hand,
there are senior people inbanks who actually have living
memory of a gold-basedfinancial system.

(12:49):
So if we're talkingthe next five years,
I think we probably go to gold,and then Bitcoin, gradually,
as people come to understand it,
they shift from gold to Bitcoin.
On the other hand,
if this is something that's notgoing to happen for 20 or 30
years, I think we skipgold altogether, honestly, and
we just go straightto Bitcoin.
Bitcoin is a superiorform of gold.
It has, at this point, actually,
lower inflation than gold does.

(13:10):
In other words, less ofit is printed per year.
And Bitcoin has the killer app,the absolute advantage versus
gold, which is thatit cannot be seized.
That has been gold's Achillesheel through history.
When you praisegold to a fiat bro,
they might say something like,well, if gold is so amazing,
how come no countryon earth uses gold?
And, of course, the answer is thatgovernments are very good at violence and

(13:33):
gold is necessarily seizable.
Right, if I come out with a goldcurrency and I tell you it's
backed by gold, but it's secret.
It's hidden. I can'tshow it to you.
OK, you're not goingto buy it, right?
It sounds like the Perth mint.
- Yeah.
- Bingo.
So the only way that you canhave a gold-backed currency is
that you've got to havethe gold stored somewhere.
Where people know the address. Maybeit's got a camera on it.

(13:53):
Maybe you break itopen every so often,
make sure it's notnickel on the inside.
Governments can, ofcourse, find that as well.
They unfortunately knowhow to use the internet.
So it is eminently seizable.
Over and over, gold has beenseized throughout history.
In fact, we havethis cycle, right.
So the government seizes gold,pumps out the paper money.
That works for a littlewhile because it's prudent.

(14:14):
Gradually, theykind of let it slip.
Then you get hyperinflation,you go back to gold.
Cycle starts overand over and over.
We get these long monetarycycles, something like 50 years.
That is what Bitcoin canfinally break is that cycle.
So once Bitcoin wins... like,we only have to get lucky once.
They got to get luckyevery single time.
If Bitcoin wins onetime, that's it.

(14:36):
Because you don't need thoseintermediaries anymore.
There is no entry point.
- It's like when peoplestart using Bitcoin directly,
it's like the geniecoming out of the bottle.
There's no putting it back in becausethere's no seizing it, unlike the gold.
Let me ask you adifferent question.
Hope springs eternal.
And

(14:58):
in my entire life span,
I've only seen Americans makeworse and worse choices when it
comes to freedom andliberty and economics.
It's been a verysteady direction.
And every president that comesalong that promises the return
to freedom, like RonaldReagan, like Donald Trump,
like George W.
Bush, they do the opposite.

(15:19):
They get us into wars,they increase the size of
government, they increasethe size of the debts.
There is no actualliberal choice in America.
And you know what Imean by liberal choice.
I mean the classic liberal choiceof less government, more freedom.
If you tell Americans that theentire government spending to
GDP ratio in 1930s was 3%,they won't believe you.

(15:39):
But, of course, that's true.
And, it was a much bettercountry, a much better economy.
As you know, governmentequals force.
And the more force youhave in the economy,
the less efficientit's going to be.
Now, all this isold news to you.
But my point about this is I'veonly experienced America going
in one direction, which ismore government, more force,

(15:59):
more intervention, moredebts, and eventually,
that will blow up.
America is a veryexceptional nation.
It has incrediblenatural resources,
has incredible human talent,has had incredible technology.
There are so many things thathave propped up this giant
government experiment.
But I still fundamentallybelieve that we will eventually

(16:21):
take a turn the other way andmove away from the precipice
and return our country tosome semblance of freedom.
And I think that what yousee happening in Argentina and El
Salvador are the first real
large-scale experimentswhere you're seeing
populations finally turn awayfrom government solutions and

(16:43):
adopting free market solutions.
Is there any hope for Americaor should I be buying a
passport in Malta and movingmy banking to Switzerland?
- So I'm actually extremelyoptimistic about America.
The dynamic that you'retalking about, I think,
is the frog inthe boiling water.
And there's twosolutions to that, right?

(17:04):
As the water getshotter and hotter,
the frog doesn't realize it.
And then you take a snapshot.
So back in 1913,
the federal governmentwas like 5% of GDP, now,
government overall is like 50%.
And you ask, how in theheck did we get here?
Well, the answer is, ithappened pretty gradually.
And there's twoways out of that.

(17:24):
One of them is thatyou get a crisis.
So the most likely at themoment would probably be a
banking or a fiscal deficits,
like bonds collapsingor something.
And in that case, the waterboils all of a sudden.
The frog realizes itand the frog jumps.
And that's more or lesswhat happened in Argentina and El
Salvador.
Things got so bad, the safetysituation in El Salvador,

(17:46):
the corruption in bothcountries, the inflation,
of course, in Argentina,
things got so bad thatthe frog jumped, right.
In both countries, thepopulation said, you know what?
Screw these traditionalpoliticians.
I'm going to go for somebody who'sgoing to make radical change.
So that's one way to do it.
Now, the problem with doingit that way, of course,
is that there's a lot ofvictims along the way, right.
So if you're waitingfor the crisis,

(18:06):
the crises can take a lotof people down with them.
You could theoretically have acrisis where the supply chains
don't work andpeople are starving.
So the other way to do itis my preferred method,
which is that you highlight thatthe water is actually getting hot.
You sit people down beforepeople are starving in the
street and you explainwhat's going on.
Here's the bad thingsthat are happening.

(18:27):
If this continues, these terriblethings are going to happen.
What you're trying to do is to get thefrog jumping before the water boils.
So that, I think, isthe preferred method.
The key there is, ofcourse, free speech.
It's people like you or Iwho have the ability to reach
voters or to reach peoplewho can politically organize,
can intervene in the political

(18:47):
process at the primarystage and whatnot.
- Hang on one second.What's free speech?
You have any idea how manytimes the government's come
after me for pure speech?
- Oh, for sure. Absolutely.
And I think the thing that'simportant there is that if we
go back through history,there has never,
ever been a period where dissidentshave a level playing field on speech.

(19:10):
But if you go back to the 1970s,for example, Murray Rothbard,
he talked about how you couldget the entire libertarian
movement in a single livingroom in New York City.
- That's right.
- And the way thatlibertarians...
which was really the onlysmall government party.
- And they were also allsleeping with each other.
So it was a common living room.
- Well, they were allsleeping with Ayn Rand.
- Right. Yeah.

(19:33):
- It was the '70s, whatare you going to do?
And the way that themovement, back then,
spread the message was thatlike they would literally put
books in anarchistbookstores where, I guess,
they didn't read them
or they would put a send 20bucks for a self-addressed
stamped envelope, andthen you would get like a
mimeographed...
- Yeah, that's the...

(19:54):
that's actually theorigins of Agora Inc.
That's exactly how they started.
Was that kind of publishing.
- Yeah. So if you consider...and that was the 1970s.
The country waswealthy enough that
you had some academics likeMurray Rothbard who could sit
around and think about these thingsand they could propagate their views.

(20:16):
You go back further and it'seven worse for the dissidents.
I mean, in WorldWar I, literally,
they were throwing dissidentsin prison for wrongthink.
- That's right. Yeah.
- FDR. Yep.
FDR as well.
So on the one hand, of course,
we don't have alevel playing field.
God bless Elon Muskbut across the board,

(20:36):
most Americans still...
a lot of Americans stillget their news from a little
evening, local broadcast.
And those are justoverwhelmingly, we saw during
COVID, those are all captured.
So, of course, it's nota level playing field.
But if you go backthrough history,
it is a damn sight bettertoday than it has ever been
in, really, in human history.
- That's a good point.That's a good point.

(20:57):
And especially with the freedom ofTwitter really does give me hope.
The entire world saw PresidentMilei's speech at Davos,
which was able to betranslated in his voice,
thanks to Google AI.
I mean, that had an immediateimpact all around the world.
And it's one of the greatestpolitical speeches I've ever seen.
And it's incredible thatit took place at Davos.

(21:19):
So maybe there is some hope.
Maybe I shouldn't buy theMalta passport just yet.
- You got to go back to thered pill, not the black pill.
- Peter, I've got onemore question for you.
And you've been really generouswith your time so I'm also
happy to open the floor if there's anyother message you'd like to promote.
But I have an unusualview about how

(21:39):
people should best handlethe ongoing inflation.
I think most people believethat buying property,
that buying gold,
that buying hard assets is thebest way to deal with inflation.
But I've never believed so.
And my belief stemmed from a1983 letter that Warren Buffett
wrote where he explained howinvesting in economic goodwill

(22:00):
is actually the very bestway to deal with inflation.
And the reason why, of course,
is that inflation makes thevalue of brands and other kinds
of business advantage way morevaluable and doesn't require,
oftentimes, capital.
So if you look at theexpansion of the value of, say,
Coca-Cola's brand, yes,
they've invested inadvertising and all that stuff.

(22:21):
But unlike a gold company,when they sell a Coke,
they're not liquidatingtheir balance sheet.
And so I've always believed thatcommon stocks were the, now, hold on...
high-quality common stocks thatare very capital efficient,
where they have lotsof economic goodwill,
which is brand value,which is sustainable market advantages,
that don't require equivalenteconomic investments.

(22:42):
So I'm not talkingabout the railroads,
which is funny because Buffettlater bought railroads,
I'm talking aboutthings like Geico,
things like Disney,things like McDonald's,
things like property andcasualty insurance companies.
These things, royalty companies.
Fantastic example ofeconomic goodwill.
These things, I believe,
offer people the very besthedge against inflation.

(23:04):
And I think you can prove thatto be true by looking at the
market just nominally,but more importantly,
looking at stock multiples.
There's a reason why stocksare trading at more expensive
multiples today, and it'sbecause the money is so unsound.
So therefore, when the divisor
changes, thenumerator increases.

(23:24):
- I think you'reabsolutely right.
Disney needs somemarketing changes. But...
- Yeah, of course.
- But the value of thebrand is still, it's not...
- No, you're absolutely right.
When they straighten that out,the brand has immense value.
Your broader point,
which I think is missed alot in the hard money crowd,
is that equities, stocks,are inflation hedges.

(23:45):
- Yes, they are.
- You go back to the1970s, stocks held up fine.
If you go from 1970 to1980, stocks kept up. Why?
Because stocks arehard assets, right.
The ability of Coke to sell a beverageat a premium, that is a hard asset.
It is not imaginary.It's actually there.
Coke has offices, they haveemployees, they have trucks.
Those are hard assetsand people miss that.

(24:08):
In fact, if you go back to thehyperinflation in the Weimar
era, people in thefirst couple of years,
they were not talkingabout rising prices,
they were talking aboutrising stocks because stocks
capitalized future inflation.
That's what we've seen over thepast couple of years, right.
We've had double-digit inflationand stocks have exploded.
So absolutely. I'm a huge fan.

(24:28):
The most liquid formof hard asset...
yes, you want to own some goldbecause gold is negatively
correlated withinflation quite nicely.
But definitely, youwant to own equities.
I'm a fan of property if theFed is subsidizing capital,
which it usually is.
Right now, I'm not sure it is.
And plus, you canmultiply your money.
But yes, I am absolutelya fan of stocks.

(24:50):
I, myself, own stocks along withthe other hard money assets.
NVIDIA is my largest holding,
which I've held for a whilebecause I'm a momentum investor.
- Give that man a cracker jack.
- Yeah. No kidding. Wow.
- But yeah, I'm a huge fanof high quality stocks with
economic moats, as you say.
- Just to be clear,
Stansberry Researchrecommended NVIDIA in 2016.

(25:12):
- Yes, that is...
- Beautiful. Look at that.
- That is correct.
- Those help the averages.
- Yes. Yeah.
- Well, Peter, thanks verymuch for being with us.
It's fun to get to meetyou and talk with you.
I'm sure we'll talk again soon.
And however we can do business
together, let us know.
- Yeah, absolutely.Looking forward, gents.
- OK. Bye bye, Peter.
- Bye bye now. [AUDIO
LOGO]
- Man, I really likePeter. Sharp guy.

(25:33):
- Yeah, he's great.
He obviously knows what he'sdoing and is a thoughtful person.
I follow him on Twitter. X.
- Yep.
- And he's always a great read.
- Yeah, what I like about itis his mission statement is,
I want to break down complexeconomic topics that people can
digest and understand in yourreal life, like what we do.
- It seems likeexactly what we do.
- It's exactly what we do.

(25:54):
- And not surprising,
he thinks the same way aboutthe world as we do because
there is a firm foundation that allthese other mirages are built on.
And if you can learn tosee through the mirages,
you can do a lot better in life.
- Yeah, for sure.
And I really enjoyed the conversationthat you guys had about equities,
about capital efficientequities and goodwill
companies, because I thinkpeople are starting...
especially theyounger generation,

(26:14):
they're very scared to enterinto equities because they
think it's all youshould own is Bitcoin,
all you should own are Gamestop,
and AMC,
these meme stocksand stuff like that.
And they don't understand.
- What you should ownis a great businesses,
and neither of those memestocks are great businesses.

(26:34):
- You mean movie theaters?
- Not a great business.
- You mean physical locationsfor games that you can get
everything online now?
- Not a great business.
- It's like Blockbusterof games, basically.
- Yeah, exactly.
- It's terrible. OK, Porter,let's get to a few...
you just can'tmake this stuff up.
There's so much these days. Ikind of get exhausted from it.
But this is where

(26:56):
America is headed.The world's headed.
- I don't know what to make ofit all but it's just strange.
It's much like when we were inthe middle of COVID and I said,
how could anyone who knowsthe first thing about virology
believe that wearing a clothmask accomplishes anything?
It's the same thing as sayingyou're going to keep out
mosquitoes with achain link fence.

(27:17):
It's actually.. it's thediscrepancies are even larger.
It will not work.
And yet you had every scientistin the world saying the
opposite of what was true.
It was just wild.
- And if anybody saidanything different,
they were immediately banned.
That was a differentX back then.
That was a different Twitter.That Twitter was ruthless.
- Of course. And how about this?

(27:37):
When Biden puts forward themost inflationary government
budget in history, he calls itthe Inflation Reduction Act.
- That's right.
- It's so Orwellian.
- Yep.
- And I think thatwhat Peter does,
and what I try todo with people,
is let's get back downto first principles, kind
of the way that Elon Musk does engineering,and say, wait a minute,

(27:58):
what are the actual facts andwhat is this policy actually
going to achieve, nothow it's been marketed?
And I wonder how many people
reading our newsletters andlistening to our podcast,
appreciate that and understand thatthat's what really makes us so different.
- I think a lot. And Ithink that the tide...
I really do believe thatthe tide is turning.

(28:20):
I'm on X all the time.I really enjoy it.
And for example,
if you have any post from theWorld Economic Forum or Bill
Gates or anything likethat, all you see is hate.
There's not one support.Not one supporter.
Not only that, they end up just turningoff the comments because they're
going to put outtheir propaganda,
but they're not going to allowpeople to actually have a voice.
So I think there's a lot. Ithink the tide is turning.

(28:41):
I see and talk to more and more"normies," I would call them,
that are pretty awakened.
And I think that our workdoes do very well and I think
the podcast does help.
So going back to theCanadian government,
because the Canadian governmentis absolutely captured.
There's no way about it.
The whole truckers shuttingdown, the whole truckers protest.

(29:03):
And then they latersaid, oh yeah,
that was against their emergency
authorization usageact for the first time,
but nothing happens ever.
So the Canadian government's2024 budget proposes to
increase the capitaltax rate from 50 to 66%
- That's going to work great.
- Yeah. Over corporationsand individuals.
- Oh, and they're also going to makeit impossible to leave Canada now.

(29:26):
- That's right. Now, you can't.
Yeah, you can't.There's exit tax.
- And America alreadyhas that, by the way.
The land of the free.
- Yes, they do.
- Yeah, we're freebut if you leave,
we'll take half your assets. Thank
you.
- That's exactly right.So this is just...
- How is America going totake half your Bitcoin?
- Well, what do you...
Bitcoin? It fell over the boat.
- I haven't seen it.
- My USBs landed in the water.

(29:47):
- Who knows?
- I don't have it.
- Who knows what happened?
- Yeah, who knows?
- Good luck.
Good luck enforcing thoselaws if there's a real
hyperinflation here.
- Yeah, for sure.
But we're going to seemore of this tax madness.
Biden's proposed,
the administration's proposed 44% taxrates and all this other nonsense.
So, OK, this is kindof near and dear to me.
Porter, you know, I fly up here.

(30:07):
I kind of don't have a choicethat America has chosen
Boeings, we don'thave many airbuses.
And I fly on Boeing 737 MAXs.
- Oh, and by the way,
landing in the mountainsin Colombia is not easy.
- No. Yeah. It's not that easy.
And, you know--
- Weather is always bad. Fog.
- And we've been writingabout Boeings for a long time.

(30:27):
- By the way,before anybody else.
- Yes. Yeah, when did you firststart writing about Boeing?
- About two years ago,
I predicted that Boeingwas going to collapse.
- So what was it back then?
What was the firstcatalyst that you saw?
- It was the GEleadership's game plan.
They were issuing tons and tonsof debt and buying back stock.
And then in the meanwhile,
COVID hit and everybodystopped flying.

(30:47):
- Right.
- OK, that was strike one.
Because why would youlever your balance sheet?
If you owned thisentire company,
you would not behave this way.
- No.
- OK, so they'redoing something wrong.
What else are they doing wrong?
And then when I startedwriting about it,
I got lots of Boeing engineerstelling me the financial
engineering is not the problem,
the real engineeringis the problem.
And they were telling me that the 787Dreamliner is going to split in half.

(31:08):
- Ooh. Ooh.
- And so we started sayingthat Boeing is going to have an
enormous problem in that itwill eventually go into some
kind of receivership.
Now, it's such an importantgovernment contractor,
I don't know if it'lltechnically go bankrupt.
Which, by the way,
Fannie Mae and Freddie Mac didn'ttechnically go bankrupt either.
But what I'm saying is it'sgoing to be a wipeout for the
common stock shareholders.
And that is progressing.

(31:29):
They lost $4 billion incash in the first quarter.
- Yeah, well...
- $4 billion in cash.
And they have a virtualmonopoly on airliners.
How is that possible?
- Well, it's becoming dangerousto be a whistleblower at Boeing.
They had a second whistleblowerrecently that mysteriously died, again.
- By the way, I wouldlike to go on the record.

(31:50):
If they say I killedmyself, know that I didn't.
I'm happily married. Ihave three young children.
I have a beautiful farm.I have plenty of friends.
I'm not lonely or sad.
- I was making that analogy toBoeing's going to quickly catch
up to the Clinton Kill List.
And by the way, I'm not sayingany of that stuff either.

(32:10):
I fly your planes.
I get on there and I hope thatI make it in time. I buckle up.
The seat belt doesn't comeoff in case the door pops off.
I don't want to getsucked out of there.
Don't sit next to theemergency window anymore.
That used to befor more legroom,
now you're the firstvictim to get sucked out.
- Out the door.
- And by the way, I actuallywould propose if they allowed

(32:31):
an upgrade, because they'd liketo ding you on fees if they had a
parachute, I would selectthat every single time.
- That's a good idea.
- Every single time.
Just let me strap one onthe back for an extra $100.
Take my money.
- You don't get on a boat withouta life jacket because you sink.
- Exactly.
- And by the way, ifyou're on a plane,
you're going to sink too.
- Right.
But if the doors pop off, I wantI want to pull the rip cord.

(32:54):
I want to have somekind of chance.
- You know whatI've always wanted?
I want an airline thatadvertises that you can bring
any weapon you want on board.
Because that airline wouldnever have anybody be rude.
- Oh, no, there's...
- It wouldn't haveany hijacking.
Everyone would be very polite.
We encourage you to bring yourgun and wear it on your hip.
- Yeah. At the end it'swho's got the biggest gun?

(33:16):
That's definitelythe guy that...
- I can tell you, if you go toplaces where people carry guns,
where everyone carries a gun,everyone is spotlessly polite.
- Yes. Yeah.
I know you've beenin gun stores.
I've been in gun stores a lot.
- Everyone's very well behaved.
- And nobody's behaving poorlybecause all the guys behind the
counter have guns andthey know how to shoot it.
- You don't see the,

(33:37):
you know the videos where thepeople are getting into a fight
at the fast food store?
- None of that.
- Where they grab stuff off thecounter and throw it at the employees.
- Or jump across thecounter on the other side.
- You don't see any of that.
- No, that's notgoing to happen.
Although, I have seen a few likeDarwin award winners where they
thought it was wiseto rob gun stores.
Three of them come in and some65-year-old cowboy blows them away.

(33:59):
OK, Porter, hey, we might havesome new listeners out there.
If we do, we have Porter's biggestprediction as a free report.
What's the difference betweenus and other financial
publishing companies when itcomes to being on our email list?
- Oh, we don't spam you ever.
- Never. We give you content.
- Content's it.
- We give you aton of education.

(34:19):
Very interesting stories.
- Sure.
- Things thatrelate to your life.
- Yeah.
- And every week,
we're going to send you an importantstory from business and no spam.
- Exactly.
So if you'd like to
join us on our email, justgo to porterspodcast.com.
- We should rename ourfree weekly e-letter.
It should be called the NoSpam Financial E-letter.

(34:41):
- I think people wouldprobably sign up just for that.
- Yeah, it's awful, thespamming these days.
- Yeah, it's refreshing.
And as a marketer,
when I joined you,
this was the thing thatI was most excited about,
was caring for the list andcaring for the people on it.
And really,
I'm tired of being spammed,I'm tired of all the garbage,
I'm tired of allthat type of stuff.
- I had a crazyidea in business.

(35:02):
That if you just treated yourcustomers really well and gave
them the information that you wouldmost want if your roles were reversed,
that enough of them would subscribeand you'd have a good business.
It's like the guy who signedup Michael Jordan at Nike.
He's like, if we just do the rightthings in terms of getting the right
players and gettingthem the right shoes,
we won't be able tohelp making money.

(35:23):
And I can't tell you how oftenin business it goes wrong by
people believing that theintrinsic value of the business
is created by the sale.
It's not.
The sale is theculmination of the creation
of the intrinsic value.
And the way you create thatvalue is by serving the customer.

(35:44):
It's been very hard toget that message through.
- That's what we do over here.
And we'd love to have you joinus. Go to porterspodcast.com.
We'll send you a freereport for your email.
And we haven't been getting thatmuch feedback in the mailbag.
I don't know ifthat's good or bad.
I don't know if we don't havethat many listeners these days.
Actually, we do.
Our listenership is really good.
Or we're notcontroversial enough.
Sometimes that'sgood for you and I.

(36:05):
Maybe we'll get alittle heat today.
Well, we'd love to getsome emails, some feedback.
You can go to
podcastfeedback@porterandcompanyresearch.com.
That'spodcastfeedback@porterandcompanyresearch.com.
Porter, we appreciateall of our listeners,
all of our subscribers.
- Sure do.
- This is our monthly show.
- You guys give us the best job in theworld and we don't take it for granted.
- Yeah, absolutely.

(36:25):
And next show will be atthe end of June, and we will
have some tales from North Irelandfor my 50th birthday golfing trip.
- Great.
I got a couple of things torun by you in front of people.
We've got to get some peopleto come and talk about my
favorite kind of investing,which is distressed debt.

(36:46):
I swear, if people knew how tobuy the right kind of corporate
debt, they would neverbuy stocks again.
And I think that's a themewe've got to keep hammering.
- Yeah, I love that idea.
And I'll tell youwhat, let me do this.
For anybody that writes into
podcastfeedback@porterandcompanyresearch.com...

(37:07):
- Holy moly, that'squite an email.
- Well, that's why it'sgot to jump through a hoop.
- What it is now?
- podcastfeedback--
- podcastfeedback@--
- porterand--
- porterand--
- company.
- company. Spelled out?
- research.
- research.com. OK.
- It's got to bethe longest one.
- By the way, buyingbonds is tough too.
You have to use a Cusip number.
- Right. Here's what I will do.
I will personally sendone of Marty Fridson's,

(37:31):
the Dean of High Yield's,full issue to them.
So they can read the work. Butyou got to send me an email.
- All right.
- I need to have a littlebit of interaction here.
- OK.
- And along with that, Iwill happily give you Lance
James's phone number, which isour head of customer service,
and we actually havean incredible deal...
a deal for you to actuallytake a look at that work.

(37:53):
- Well,
I'm very sincere about this.
I hope that we can getpeople to understand the world as it
is instead of as it's portrayed.
And the other thing I reallyhope I can do for investors is
just teach you three things.
Teach you that there's a bigdifference between stocks that
have capital efficiencyand stocks that don't.
If you know that,
you can beat the marketwith your eyes closed.
The second thing I want toteach you is, ironically,

(38:15):
why you shouldnever buy a stock,
OK.
- Right.
- Why not?
Well, if you'regoing to buy equity,
you should alwayssell puts first.
And I can explain why.
And the other reason is,
if you know how tobuy distressed debt,
you'll never want to buy stocksbecause you can make way more
money in bonds than you canin stocks with less risk.
And these are things that kindof have been my mantra as an

(38:36):
investor and as afinance guy for 20 years.
And I'd love everybody in the podcastto understand more about both.
- Yeah, so write me.
And by the way,
there is nobody better onearth than Martin Fridson.
- No.
- Nobody.
- It's amazing that he is onour team. He's in his 70s.
He has earned a fortune infinance and he still just loves
writing about distressed debt.
- He loves it, andthat's his passion.

(38:57):
He wants to help peopleout. So write in.
Porter, thanks so much. We'llsee you guys next month.

NARRATOR (39:04):
Thank you for listening to the Porter & Co.
Black Label podcast,with your hosts,
Porter Stansberry and AaronBrabham. We'll see you soon.
[MUSIC PLAYING] PLAYING]

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Peter St. Onge - Making Sense of the American Economy

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Peter St. Onge - Making Sense of the American Economy