April 28, 2025 • 50 mins
Todd Sheets,the author of 2008: What Really Happened graduated with honors from the University of Iowa and won the prestigious Elijah Watt Sells award on the 1981 CPA exam before embarking on a career in investment banking. His book offers a definitive look at how the financial crisis of 2008 actually happened, peeling away years worth of misdirection from the expert class. We'll also discuss President's Trump's Liberation Day vision for America.
Bill Martinez Live is broadcast live Mondays at 3PM ET on W4CY Radio (www.w4cy.com) part of Talk 4 Radio (www.talk4radio.com) on the Talk 4 Media Network (www.talk4media.com). Bill Martinez is viewed on Talk 4 TV (www.talk4tv.com).
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Bill Martinez Live is broadcast live Mondays at 3PM ET on W4CY Radio (www.w4cy.com) part of Talk 4 Radio (www.talk4radio.com) on the Talk 4 Media Network (www.talk4media.com). Bill Martinez is viewed on Talk 4 TV (www.talk4tv.com).
Bill Martinez Live Podcast is also available on https://www.billmartinezshow.com, Talk 4 Media (www.talk4media.com), Talk 4 Podcasting (www.talk4podcasting.com), iHeartRadio, Amazon Music, Pandora, Spotify, Audible, and over 100 other podcast outlets.
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Speaker 1 (00:00):
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(00:20):
choosing W FOURCY Radio.
Speaker 2 (00:38):
Oh we got a great show planned for you, and
a great guest, Todd Sheets is going to be joining
us in just a moment. Great book that he wrote
that came out last year two thousand and eight. What
really happened?
Speaker 3 (00:49):
Huh?
Speaker 2 (00:50):
Think about that, you know, And that's a big question
still understanding the great financial crisis. And you know, typical
of anything that happens in the government, they always want
to try to whitewash it right and put their spin
on it to kind of confuse us and not really
give the whole skinny of what happened.
Speaker 3 (01:12):
I know that kind of surprises you, right.
Speaker 2 (01:14):
We haven't had a lot of experience in the recent
decades of you know, this fake news and what the
government here they are? They want a department of misinformation.
That's just basically what it amounts to is you know,
trying to do brain surgery on themselves.
Speaker 3 (01:34):
They just, you know, they can't help themselves.
Speaker 2 (01:37):
Everybody is so fixed and ideologically predetermined that they've lost
track of what the truth really is and what truth
how the truth serves us. And that's what it comes
down to. But you know, when people deceive us, they're
not interested in serving us. They're interested in covering their
(01:58):
back ends and their own interests and not we the people,
not America. And this has been the problem with our
politics for quite a while. And of course now the
dynamic that you have with journalism jumping ship and abandoning
their reason to exist and violating the journalistic ethos of
(02:20):
pursuing the truth no matter where it leads and giving
us an objective viewpoint. I mean, this is going to
be really tough. I think, you know, generations ahead will
look back in this error and go, boy, you know,
I just can't make sense of this. It is such
a mess. And even if we go and utilize the
data that has been reported here. It just it's it's nonsense,
(02:44):
it's it just doesn't seem valid. And their instincts are
going to be correct if they have a familiarity with
the truth. But if they don't, then you know, they're
going to be that much further off the mark because unfortunately,
the mainstream media has abandoned ship. As I said, they've
forgot about objective reporting, and there's lots of pressures. I
(03:07):
was speaking with another guest this morning about this issue,
is there's lots of pressures on the media, especially on
the Beltway, because everybody wants to be a part of
the reindeer games, right and if you are on the
side of where power exists. So right now, the Republicans
are in power. So if you're pro conservative, you know,
the door seemed to open a little bit easier for you.
(03:27):
And if you're liberal, you're going to run into problems,
which is obvious. We saw what happened with ap CNN
and other liberal entities that have been purveyors of fake
news when it comes to conservatism. Look at I don't
mind people reporting, you know, but you know, let it
be known it's an opinion, and don't present something as
(03:49):
a fact, and that's all the way around.
Speaker 3 (03:51):
See, everybody's gotten really fast and loose with the facts.
Speaker 2 (03:54):
You know, you have a right, you know, to your opinion,
but not the facts, because the facts should not change.
They should be consistent. I think we can agree on
that right. And you hear from politicians and you know
the way they present things Hakim Jeffreys and others as
if things are the fact. In fact, we had a
president not that long ago who insisted that that science
(04:17):
there were certain aspects of science like global warming. He says,
well that's a fact. Well that's not even a scientific term.
You know, it could be a law, but not a fact.
But see, these are how these terms are so loosely used.
And he even said at one point, you know words
have meaning. Well yeah, okay, that's true. And that was
the thing that was so dangerous about him in particular.
(04:39):
It was that he could be he could be truthful
at times, but it could also be very deceptive. You
just had to see which side of his mouth he
was speaking from. And that was the thing that was
so frustrating because I have no tolerance for people. I
want you to be consistent, and I have more respect
for you if you just a liar all the time,
as opposed to somebody who is trying to, you know,
(04:59):
be deceptive and uh, you know, tell you one thing
and do something else. And and I get the pressures. Uh,
I really do, even though I haven't been on the Beltway,
but I can. I can empathize with what some of
these uh, you know, some of these reporters have to
deal with. You know, they claim that they're pursuing the truth,
and here it is. They lied to us, for example,
(05:21):
about Joe Biden for four years. Now all of a
sudden they want to be honest and say, oh, yeah,
we knew that he was he was slipping up. Yeah,
you were the same ones that were echoing, uh, the
the advisement and and the description of Joe Biden being
sharper than attack and he added all together when anybody
with even bad eyesight and poor hearing could see that
(05:45):
Joe Biden was losing it. And now they want to
act like as if they were there. Even about COVID
for example, Oh yeah, you know, wat you didn't even
spend a day in YouTube jail. You know, we we
spent days in YouTube jail, and we were castigated and
for what and we kept saying, look at this is dangerous.
This is dangerous for the American people. When you're talking
(06:07):
about health, you're talking about anything that has to do.
Like I said, with these major issues, we need to
know the truth. We need to understand what's going on.
If we're going to go to war, Why are we
going to war? What? What are the facts? I mean,
you're going to be spending my taxpayer money? Then I
think I have a right to ask some questions and
get some answers as to why this is justified.
Speaker 3 (06:30):
And here it is.
Speaker 2 (06:32):
I mean the pattern of America, which you know Dwight
Eisenhower warned us about the military industrial complex because they
are a beast. The industrial complex is a beast that
needs to be fed, and it's insatiable, and.
Speaker 3 (06:47):
It loves the war.
Speaker 2 (06:47):
Hasn't seen a war that hasn't fallen in love with.
And you know, next thing, you know, we're getting drawn
into these endless wars with no end in sight. And
then and then down the road you get the question,
go why are we fighting this? No, you forget even
why you're at war. All you know is that you're
at war, killing people and destroying things and wasting a
(07:10):
lot of money, and after everything is all said and done,
you leave eighty billion dollars worth of military equipment behind.
People are dying in your wake as you exit once again,
as you cut and run. It's not a good look
for America. But you know, hey, this is and this
is what we're dealing with, sadly, and it's so it's
(07:32):
so unfortunate and frustrating that we're ending up in that
kind of situation. So you know, it's it really I
put pressure on the media that the media has to
find its heart and soul again and they cannot side
with power because once you've crossed that line, now you're
(07:55):
not really a reporting agency any longer. What you've become
is a propaganda arm for a political party. And this
is valid for both sides, whether you're rooting, you know,
for Republicans or Democrats. We need the media. I mean,
there was a reason why our founding fathers cherished our
First Amendment, right, why it was so critical. But embedded
(08:18):
in that First Amendment right was the general consensus that
we would be honest, that we'd be truthful. And once
truth is compromised for whatever reason, you know, somebody buys
you off you know, they pay you money or they
hold up a carrot and say, hey, look at you
get to hang out with the big boys here, and
you get to go to all the reindeer games and
(08:38):
the cocktail parties and everything like that, and all you
got to do is do our bidding. Once you start
doing that, then you know, what good are you to
the American people. You've given them a false narrative and
you end up putting us at each other's throats sadly,
and that is that is beyond frustrating that you know,
(08:59):
this is but uh, you know what they've done to us,
and whether it's the media or even these social media platforms.
Speaker 3 (09:06):
Uh, as I've mentioned to you before.
Speaker 2 (09:09):
I mean here Mark Zuckerberg and you know before it
was Twitter, uh and these other social media platforms.
Speaker 3 (09:18):
You know what did they do?
Speaker 2 (09:19):
I mean, they they buckled, they buckled under and uh,
it's just it's just unbelievable.
Speaker 4 (09:26):
You know, and.
Speaker 3 (09:29):
I don't you know, I don't know. I mean, it's uh, I.
Speaker 2 (09:33):
Said, it's it's frustrating that they and I say the media,
but anybody that that pretends that they're objective and that
they're giving us the whole truth and nothing. But but
then along the way, for the sake of power and
control and influence, uh, they sell themselves out and at
(09:54):
what costs? You know, uh, here we are. I mean
it's amazing to me. You know, you see this this polling,
the comes out and you've got you know, forty percent
of the merit of America against sixty percent of America.
I mean, these that's that's that's pretty crazy numbers when
you think about it, and you go, Okay, what's going
on here? I mean, is the forty percent in the tank?
(10:16):
Are they just so much supportive of these things that
really are anti American? And I say that only from
a standpoint that you know, who doesn't want our government
to be efficient?
Speaker 3 (10:27):
Well, what's wrong with that?
Speaker 2 (10:28):
What I mean is it okay to spend your even
your great grandchildren's money to people that don't even they're
not even alive yet, they haven't been born. And I
guess that's okay, and that's and we shouldn't we shouldn't
be outraged about it.
Speaker 3 (10:44):
I mean, this is just incredibly you know, frustrating. But
you got forty percent of the people that are angry
and upset because of you know, you can say Trumped
Arrangement Centerm if you want, uh. And of course that's
carried over into Elon Musk. And here's Elon Musk.
Speaker 2 (11:01):
Yes, he's been very wealthy, but it wasn't because somebody
gave it to him. He's worked his tail off and
Donald Trump leveraged you know, what he had, which is
nothing different than the Kennedy's if you remember. I don't
know if you knew this about the Kennedys, but the
Kennedys were rewarded, I mean upon their birth.
Speaker 3 (11:19):
I think.
Speaker 2 (11:20):
Joe the father would put like a million dollars into
their account and they would use that kind of as
seed money for their careers and education and that sort
of thing. So what Donald Trump has done is nothing
different than any other you know family has done. And
you know, of wealth that they can invest in their
children and hopefully their children spend that investment wisely, and
(11:44):
Donald Trump has leveraged it wisely. I mean he's he
been perfect. Nobody's been perfect. I mean Kennedy's aren't nobody's perfect.
You know, we make mistakes. But anyway, look, Todd Sheets
has joined us right now, and I want to bring
him on to talk about his book two thousand and eight,
What Really Happened, and also talking about free and fair
trade tod Sheets.
Speaker 3 (12:04):
Welcome, Michelle, good to have you with us. Bill.
Speaker 4 (12:06):
Thanks, I'm delighted to be with you today.
Speaker 2 (12:08):
Well, I'm sorry for a little bit of the technical
difficulties we had, but that's okay.
Speaker 3 (12:13):
We're going to make the most of this time that
we have.
Speaker 2 (12:16):
First of all, before we get into tariffs, I want
to talk about your book two thousand and eight, What
Really Happened? Give you a chance to tell this new
audience that we haven't here toofore had a chance to
interact with and give them background of your book and
why you wrote the book.
Speaker 4 (12:35):
Yeah. So I got into writing the book a long
time ago, actually, when the crisis came along. As I
told one of my children at the time, it felt
to me like a lot of the assumptions I had
operated under during all of my business career kind of
being thrown out the window, and we were totally changing
(12:55):
the relationship between government and economy in ways that I
didn't understand. And you know, I need to do a
deep dive into this. So I spent several years researching that,
going back throughout history, and then another couple of years
specifically focused on the financial crisis, and then that's what
led to the writing of the book here.
Speaker 3 (13:16):
Yes, well, and the thing is is that we're still
paying for it, aren't we.
Speaker 4 (13:20):
Time well, very much so. I mean, you know, one
of the key things is we didn't learn the right
lessons from what happened. And if you don't learn the
right lessons, you can't change things and create the right
policies to keep it from happening again or in a
slightly different way maybe, And so you know, the lesson
that was generally taken away was that this happened because
(13:43):
of a gradual trend of deregulation that went too far
and allowed the system to run crazy and run amook,
and some of those things about the system going crazy
did happen. But what we have to ask ourselves is
why did that happen specifically at that point time? And
does that theory is it consistent with the facts of
(14:05):
what really happened in the housing bubble. And if you
go back and study the bubble itself, as I've done,
and as I lay out in the book, what we
find is that bubble began in nineteen ninety eight, when
housing prices suddenly went off trend. All of a sudden,
We saw a huge escalation in housing prices that was
unlike anything else that we had seen before. And it
(14:28):
stayed that way for four consecutive years. So that's not
like a gradual change. This is a sudden change from
the history. And then in two thousand and one we
see it.
Speaker 3 (14:39):
Let me ask you, when it made that radical change,
why did it do then?
Speaker 4 (14:43):
Yeah, So that's the other thing in the book is
I went back in. What we found was that Fanny
May and Freddie Mack, the two government sponsored enterprises special
privileges designed to enhance mortgage access for low to moderate
income people, were basically created in their modern form in
(15:04):
the late sixties and early seventies. At that time they
were very small, but because of the political privileges that
were extended to them, it gave them a competitive advantage
versus everybody else, and over the course of decades their
market share grew and grew, until by the mid nineties
they were well above forty percent of the housing market
(15:26):
finance that they effectively controlled. And so that was a
change we had never seen. And then, beginning in nineteen
ninety eight, the exact year that the housing prices took off,
Fanny and Freddie doubled their growth rates. They had been
growing by about seven percent a year, and all of
a sudden, they started growing by about fifteen percent a year.
(15:48):
And I go through a bunch of different analyzes that
basically show conclusively that this was the trigger for the
beginning part the first four years of the housing.
Speaker 2 (15:58):
Now, the demogram effics that Freddie and Fanny were addressing
were minorities by and large, right.
Speaker 4 (16:05):
To a very large extent.
Speaker 2 (16:07):
Yes, okay, so that became a sensitive issue, and maybe
that caused people to be a little bit blind to
what was going on because you, as a finance expert,
you would say, whoa, we need to hit the brakes here,
and you didn't need to wait for it to get
to have those kind of dramatic increases. You started to
see as you're looking at the data, you're saying, WHOA,
(16:29):
something's you know, we need to be concerned about it.
But you know, typical of things that get politically mired,
people can be blind to it and before you know it,
then you've got a serious problem. And then worse yet,
you look to the government to give us the to
solve the problem that they created.
Speaker 4 (16:50):
Yeah, exactly, I mean, and you're exactly right about this.
I mean, this ended up hurting the people that it
was supposed to help. Unfortunately, happens over and over again.
So and we see it. It's you can follow the
housing policy which was coming out of Washington. Fannie May,
who helped initiate this, was run by a minority. Yes,
(17:14):
the George Bush administration. You know, they talked about increasing
home ownership among Hispanics and others and those types of things.
Speaker 2 (17:22):
Well, you had Bill Clinton before that and that question,
Oh everybody needed a part of the American dream. But
it was like, you know, okay, I think we should
all have a shot at it. But if you're not qualified,
then at what cost?
Speaker 4 (17:37):
Yeah? And the problem is is when you start pushing
this and then you create these high rates of appreciation
in housing, which were then made even worse in the
early two thousands by federal reserve policies, what starts to
happen is you know people think, well, they stop thinking
about this, like, oh, this is a long term source
of wealth. You know, if I buy it and I
(17:57):
hold for ten, fifteen, twenty years, it'll grow slowly over time,
and all of a sudden, it almost starts to become
like a casino game where you've got to get in
on the action. And that's exactly what happened as a
result of Fanny and Freddie first, and then the Federal
Reserve making the critical mistake when they pushed interest rates
down so low in the early two thousands. You know,
(18:19):
it added fuel to the fire that had already been started,
and then that's what pulled so many of these unsuspecting
people who were supposed to be helped by all of
this in at the worst possible time. And the numbers
on foreclosures were like something like four million homes for
oh that period of time when it all.
Speaker 3 (18:38):
Fell apart and collapse exactly. And you think about these
people that suddenly they're homeless.
Speaker 4 (18:46):
Yes, actually I've spoken to people who went through that.
You know, they had a business going, they had things
going on. You know, they bought a home maybe that
they couldn't really afford, and then this collapse happens, there's
a downturn in the economy, they become homeless. You know,
there's there's thousands and thousands of people working in construction again,
(19:06):
low to moderate income working class people in construction, in housing,
in you know, the mortgage industry who are laid off
as a result of all of this. There's people whose
four to oh one k's are invested in these major
financial institutions, a number of which go completely broke during
this and so you know a portion of that savings
(19:28):
is wiped out by the losses that are experienced by
these Exactly, it's a huge disaster.
Speaker 2 (19:34):
Well, and and then you had the adjustable rate mortgages.
They contributed to this as well because it gave people
a false sense of security that they could afford a
lot more home than they actually could because maybe you
were okay for five to seven years, but then all
of a sudden, the adjustable rate kicked in, right, Yeah.
Speaker 4 (19:52):
And that's exactly. It's a perfect point because that's what
the FED did. You know, at that time, the fed's
control of interest rates was focused on short term interest rates.
And when when the tech stock bubble collapsed, which the
FED had played a role in blowing and creating that also,
the FED reacted in two thousand by pushing short term
(20:15):
rates down low. And when short term rates were pushed
down below the rate of home appreciation, that was a
historically unique thing that gave people the you know what
looked like a great opportunity to leverage up the returns
on a home. So a home might be growing four
or five or six percent a year, if you've got
(20:36):
a lot of debt and it's on a variable rate
mortgage with an interest rate below the rate of home appreciation,
then that's what you know, creates these fifteen twenty twenty
five percent a year increases in your equity investment. And
that's where the Fed blew it. They didn't understand that
they were creating this very unique incentive to buy homes
leveraged up with short term financing. And again I go
(20:59):
through all these statistics in the book, what you see
is in the second phase, this what I call the
acceleration phase of the bubble from around two thousand and
one to two thousand and five or six, was driven
by a massive increase in short term, variable rate lending
that pulled all these people in and pushed the bubble
(21:19):
up even to more dangerous levels.
Speaker 2 (21:21):
And the thing is, Todd, I'm reminded that this was almost,
I mean, are you know the modern era version of
a market crash. People committed suicide. They lost their homes, everything,
their hope, their dreams that they thought, oh here I am,
I get the part of the American dream, and now
(21:43):
it's no more. This was devastating psychologically to everyday Americans.
Speaker 4 (21:49):
Yeah, I've talked to people who went from you know,
having a semi successful business, a young child, who were
living in out of their car. You know, they were
foreclosed out of their home, they lost the money in
their business when the downturm came. They were living out
of a home or out of their car for a
while with a young child, with a baby.
Speaker 3 (22:09):
Imagine.
Speaker 4 (22:09):
This was just a devastating set of circumstances.
Speaker 2 (22:13):
Yes, you see, this is so irresponsible, and it's like,
who do you pin this on?
Speaker 3 (22:18):
I mean, in your book.
Speaker 2 (22:19):
I mean there's lots of like anything like any perfect storm,
there's lots of contributing factors.
Speaker 3 (22:25):
But what I find so appalling is.
Speaker 2 (22:29):
That it seemed the people that were injured the most,
you know, got the least comfort out of this. You know,
like I said, you got suicide rates going up. People
like you say, you know, one day they have a business,
next next day they're living out of their car. And
this wasn't something that they had to endure for you know,
(22:49):
maybe a couple of months. I mean this went on
for years for them to recover.
Speaker 4 (22:53):
Yeah, the unemployment rate stayed very high for years after this.
It wasn't until you know, the late twenty ten before
unemployment rates started really coming back down to more normal
kinds of levels and that kind of thing. So this
was I mean, you know, it was the Great Financial
Crisis followed by the Great Recession, neither of which were
(23:13):
so great, right, only in magnitude.
Speaker 3 (23:16):
Of the damage exactly.
Speaker 4 (23:18):
And you know, this was the worst downturn that we
had seen since the Great Depression in this country, and
it was devastating. And you know, as we started off
talking about we did not learn these lessons that this
was really caused by misguided housing policy and misguided federal
reserve policy.
Speaker 3 (23:38):
Right.
Speaker 2 (23:39):
And you say the misguided reserve policies was that post
to burst or that this was during the whole process,
Because now you've got a problem and everything's crashing and burning,
and then we're looking for the people that created the
problem to fix the problem. What's wrong with this picture?
Speaker 4 (23:58):
That's exactly right. I mean, uh, you know, I made
I just put out a post on this, uh, you know,
on substack here recently about the history of the Federal
Reserve in this never ending stream of problems. And this
was a situation where you know, the FED once the
crisis happened, they did do some things to help from
(24:19):
keeping it to spread even more out of control, but
that misses the fact that they had played a major role.
They were one of the two primary sources of the
of the crisis in the first place. And so, you know,
I said, there's an element there of like thanking the arsonist.
We also put out the fire that they had created,
(24:39):
which is really what the situation.
Speaker 2 (24:41):
Was, right, and here you use taxpayer money, uh to
save banks? Was that a smart move?
Speaker 4 (24:49):
You know, I was very frustrated by that at the time.
It was part of this bailout culture that is a
very unfortunate consequence. And that really was something that the
FED started back in the nineties and it expanded and
expanded and expanded to this disastrous point. I do think
now when we finally got to that point, they did
(25:11):
need to step in and provide some financing to the
system in order to keep it from spinning even further
out of control. So that's what they did that was correct,
But again they were only resolving a problem that was
largely of their own creation. And this was a big
part of what was missed in the aftermath because instead
(25:34):
of understanding what the FED had done and the mistakes
it had made to create the problem, they got a
lot of credit in Washington for playing this role, and
then their role was expanded. I mean, they got larger
regulatory oversight over the system that they had largely been
responsible for driving into the tank. And then they came
(25:54):
back with these very same policies. You know what I
call it is it's a addiction to money and low interest rates.
These were the same policies that had had played a
big role in causing the tech stock bubble took to
blow up and collapse in two thousand and then causing
the housing bubble to blow up and collapse. And they
(26:15):
went into it again in the twenty tens in an
even bigger way. They doubled down on these failed policies.
Speaker 2 (26:21):
And I want to go back to Freddy and Fanny
for a moment. There were early signs and some senators
and congress people were sounding the alarm on Freddie and Fanny,
and it became a race thing because you had I
believe Franklin Rains, was he ahead of Yeah? Was he
(26:42):
head of Freddy or Fanny was right? And so then
it became a race deal. Oh you're only doing this
because he's black, and and you're attacking you know, the
black community here, and uh so they kind of negated,
negated that. And then after everything is all said done, Rains,
who had made some major, major mistakes, he gets rewarded
(27:06):
with a golden parachute what almost what a couple hundred
million dollars if I remember Gregtly.
Speaker 4 (27:13):
Yeah, I don't remember exactly how what the size of
that was. And this is a very unfortunate thing. And
that's a very important point because you know, I remember
listening to Franklin Rain's on conference calls at that time
as I was an investor, not in Fanny May, but
you know, investing my own portfolio and that kind of thing.
And this is a very very capable, very intelligent guy
(27:34):
with a long track record who truly believed, I believe
genuinely in the mission of Fannie May and Freddie Mack.
You know that he had talked about growing up in
a very low income family. I think it was in Seattle.
His dad had been put out of work at one
point in time, had to go on food stamps. He
(27:55):
took a job, you know, picking I think it was
beans and fields out of town. Franklin would go along
with his dad. His dad was so resourceful though, that
he went and bought a foreclosed home that was going
to be that had been condemned so a new highway
could be built just for the lumber, tore it down
and then built a home in another area, and that
(28:17):
became a big source of wealth for the Rains family
that was, you know. And so I think this just
shows even very intelligent, you know, well meaning people, when
they get involved in trying to create these massive programs
that are designed to help other people and their jet
and their interests are sincere, they just end up almost
(28:39):
inevitably blowing them up in such a way that they
become so big that they cause more damage to and
they're intended to. So good intentions and well meaning people
don't lead to good outcomes. And that's one lesson. We
just keep failing to learn from all of these situations.
Speaker 2 (28:53):
And Todd the thing is, okay, look at we're human.
We can make mistakes, but there should I mean in
the sense you did a post mortem on this whole
situation here, and I don't see. I mean, there's a
lot of wisdom and insight in what you've written here,
but I don't see the manifestation of this going forward
(29:14):
to where what happens when this happens again.
Speaker 4 (29:17):
Well, in some ways it has happened again. So you know,
because we didn't rein in the Fed's ability to blow
these asset bubbles, we went through another ten plus years
of extraordinarily low short term interest rates that they were
trying to juice the economy up again. And what happened
is it's pushed asset prices up again. So now we
(29:40):
have housing prices basically back at about or above the
same levels that they were at at the peak of
the bubble. It doesn't mean we'll have another collapse because
lending standards have changed. There than some changes in the
regularatory side, which are good, and the banks themselves are
now very aware that this can happen. You know, people
(30:01):
thought this couldn't happen in the nineteen nineties and two
thousands because.
Speaker 2 (30:06):
The properties were continuing to assess at such an incredible level.
Speaker 3 (30:10):
Right.
Speaker 4 (30:11):
Yeah, Well, we had gone through one hundred years without
a national boom and bust. We had had localized ones,
you know, like in Texas when the oil patch collected,
but nobody thought it could happen on a national basis.
And again, what everybody missed was, you know, for thirty
years leading up to the nineties, Banni May and Freddie
Mack had been amassing so much of the national mortgage
(30:33):
market that all of a sudden they were in a
position to drive a change that had never happened before.
So but you know, we miss all these things. The
FED engages in this easy money, and we have very
high housing prices, so we may not have a collapse,
but we have a significant affordability crisis right now exactly.
No young people trying to start a career or early
(30:58):
in their career and starting a family, you know, they
don't have incomes to match you know, today's housing prices.
Speaker 2 (31:05):
Well that's why you have so many people are homeless,
living out of their cars todd right now, and in
some states higher than you know, whether you're in New
York or you know, California and others.
Speaker 3 (31:15):
It's just it's not affordable.
Speaker 4 (31:18):
Yeah, and so we fail to learn the lessons, we
fail to hold the FED accountable. They go through these
policies again and they create you know, there's an old
saying that you know, history doesn't repeat, but it rhymes.
So it's not the exact same thing, but it's a
related thing exactly. And the core is failing to rein
(31:38):
in the fed's ability to try and use easy money
policies to stimulate the economy in ways that creates hidden
and unforeseen issues like highly valued homes with an affordability
problem or highly valued stocks that make them more vulnerable
to you know, potential dislocations, or that may lower the
(31:59):
return is going forward relative to what people have you know,
expected based on where pasttock returns of that kind of thing.
Speaker 2 (32:06):
Well, we're talking with Todd Chase's the author of the
newsletter on Wealth and Progress. By the way, it's available
to you for free. It's on substack and his book
two thousand and eight. What really happened we've been breaking
that down is it's quite the study. And the thing is,
as you know, people you know that are in charge
(32:29):
of this government, I still want to hold on to
the constitutional principles that this is the government of for
by we the people. It is imperative that we be informed.
It's the consent of the government, and you cannot be
a low information voter. You need to be aware of
these things because guess what these things cycle. It's just
like Todd said, it may not necessarily repeat, but it rhymes,
(32:49):
and we get some sort of semblance of these types
of activities that come in and guess what happens. Traditionally
the politicians take the easy way out and a write
iou checks on the backs of the American people, right Tom.
Speaker 4 (33:05):
You know, Bill, you couldn't have made a more perfect point.
And one of the reasons, like I just mentioned, I
just put out this piece on the Federal Reserve Federal
Reserve on substack, which is called fixing the Fed part
to a punch bowl full of problems. And I go
through this history of problems that have been created by
(33:25):
the Federal Reserve. And I won't go through all the
details now unless you want, but just tick them off.
The Great Depression, the stagflation of the nineteen seventies, the
tech stock bubble and burst, the housing bubble and burst,
and now these new issues that we've just talked about,
and you have to sit back and ask why does
this keep happening? Why doesn't somebody rain the system in?
(33:48):
And the problem and there's there's a very reasonable rational
explanation for that. The problem is as the FED has
figured out that it can use its control of interro
straits to try and manipulate the entire economy in a
way that nobody else in the system has the ability
to do even bigger than Fannie Mae and Freddie Mack.
(34:10):
As I say in one point in the book, by
lowering interest rates in a credit driven economy, they can
drive everything from you know, the price of auto loans
in Alaska, to housing prices in Honolulu to stock prices
on Wall Street. They're the one thing out there that
can drive all is And the unfortunate element is that
(34:31):
for a president who's elected and an administration, the temptation
to have the FED become involved in these preemptive moves
to try and keep any and everything from causing a
slight economic disruption, it's just too powerful for anybody to
want to rein it in, right, And so you know,
(34:53):
I'm not choosing the existing administration of this, but almost
any administration, you know, you've got something that happens like
some of the rolling financial crisis of the mid nineties,
the Mexican peso crisis, or a debt crisis or the
Russian debt crisis. They haven't caused an economic downturn yet,
they aren't even causing failures that are cascading throughout the system.
(35:17):
But there's this big incentive for the federal reserve to
step in before any of that happens, push interest rates
down and try and keep it from spreading. Well, the
problem is if you go back to that playbook too
many times, you might keep things from happening in one administration,
but you just kick the can down into the next.
Speaker 5 (35:35):
Administration exactly, and we get this game where this keeps
happening and happening until it gets so big that the
consequences are are way beyond what the original problem really was.
Speaker 2 (35:48):
Todd, You've been writing about, you know, the tariffs and
current trade situation that's going on in our country. For me,
I'm optimistic about it, but looking at it kind of
like the way you have been, you know, from a
thirty thousand foot perspective, and I think that if we
had all hands on debt cooperating here, this challenge that
(36:12):
we're doing right now in terms of in a sense,
we're reinventing our economy with what Donald Trump is offering here,
which I think could be a good thing and could
help us at least address some of that thirty seven
trillion dollars in debt that we have and get everybody
else to kind of you know, this country has this
sentiment that everybody should be paying their fair share, Well
(36:33):
what about our allies?
Speaker 3 (36:35):
What about the.
Speaker 2 (36:36):
Rest of the world that has been taking advantage of
America and Americans? And I can't help but think that
if the FED was cooperative and on the same page
of what we were trying to do, we could affect
something that could be rather revolutionary and successful for everybody,
whether you're a Democrat or Republican. But for some reason,
(36:59):
because of tds uh and this you know, deranged Donald
Trump syndrome that people are going through. You know, they're
they're they're hurting. They're not hurting Donald Trump, They're they're
hurting us. And I'm trying to, you know, rally a
cry here to say, look at we need to get
on the same page. And I think this is a
(37:19):
golden opportunity and Trump's vision of a you know, you know,
a golden, golden era for America could be possible, but
it requires cooperation.
Speaker 4 (37:32):
Yeah, there's no question about it. And I think, you know,
there's a lot of people This is another thing where
the criticisms coming from both the left, the anti Trumpers
is from the right and another segment of the left
which basically keeps waving the free trade flag. But once
you've got to I think there's two big components here
(37:52):
that we've got to take into consideration. One is China
and China we cannot continue to fun and the growth
and the power of the Chinese Communist Party. If we
had gone down this path with them and they had
become a trading partner playing on an equal playing field
(38:14):
by Western standards in rule of law, and they had
become a global ally in terms of geopolitical issues, that
would have been fantastic.
Speaker 3 (38:23):
But it hasn't happened, and it's not going to happen.
Speaker 4 (38:26):
Do you think I don't think it's going to happen.
I mean I made a comment at one place, you know,
once a totalitarian regime, always a totalitarian regime. And the
big mistake that we made there, and I understand why
But we go back to the nineties. It was just
after Tienum and Square had fallen. For people who remember that,
or who if they don't, you know, that was appeared
(38:46):
when there were pro democracy protests that took place largely
by students. China was in the midst of moving down
towards a more market oriented economy to try and resurrect
all the empower average people that had been left over
from communism, and the Communist Party let it go on
(39:06):
for a little while and then the tanks rolled in,
a couple of thousand people were killed, they shut it down,
and the message to the Communist people was very are
to the Chinese people was very clear, but we missed it.
The message was we will only let these reforms go
economically or politically, or from any other perspective as long
(39:28):
as they are in the interest of the Chinese Communist Party.
And unfortunately we missed that. And as time has gone
on and we basically funded China's rise from an insignificant
player in the world. You know, back in around nineteen ninety,
their GDP was about six percent of ours, which means
(39:48):
ours was fifteen or sixteen times bigger than theirs. Exactly
today they're almost sixty seven percent of ours, which means
we're barely over one times the size of them. They
have become, you know, they have not become a trading
partner by Western standards. They basically engage in economic warfare,
(40:09):
and on the geopolitical front, they are engaged all over
the world in activities that are trying to counter you know,
the initiative of America and democratic free countries. So that's
the big issue in trading, and we have to deal
with that. We cannot let the status quo go on.
So they GDP keeps rising relative to ours, which makes
(40:33):
them even a bigger adversary.
Speaker 2 (40:35):
Right, Well, it's it's amazing how they've been able to
declare war on America, and America it just lets it happen.
You know, there's no response, whether you know it had
to do with trade, the import or export of fentanyl,
we can talk about COVID, other things that the Chinese
have done that have been antithical to America's interests, and
(40:58):
they continue to do that. And meanwhile they're hovering over Taiwan.
They're building uh, you know, bases in the South China Sea,
claiming that as as their own land and property. I mean,
you know, it's almost like Ukraine and Russia DejaVu one
more time here, yeah.
Speaker 4 (41:18):
Only only from a much different perspective, which is that,
you know, because we isolated Russia's economy and it ended
up collapsing because of the inefficiencies of the communist command
and control model, they today are a relatively insignificant player
from an economic resources perspective. You know, they're they ranked
(41:41):
somewhere around twentieth. I think their GDP is is below Canada,
Brazil and a couple of other countries. So you know,
they're rape, They're they're rattling their sword and causing a
lot of problems in Eastern Europe. But their ability to
play a major geopolitical role is nothing like what it
had been in the past because they are so much
(42:01):
smaller than we are and so many other countries. But
now China is a major and real competitor, and and
you know, added to all the issues you mentioned, you know,
China is also helping Russia and helping Iran exactly. I
was going to say, cause havoc over in these other
in the Middle East and in Eastern Europe, and that
kind of thing. So yeah, this is like, I mean,
(42:23):
I think, you know, we've got to go back to
this model of isolating these hostile totalitarian regimes and holding
it in, not allowing them into the you know, the
global Western economy, which gives them the opportunity, you know,
to do all these things. And by the way, as
they've done this, they've also continued exploiting their own working
(42:43):
class people. It's not like all the benefits are flowing
down to raising all these people up. I mean, you
know what you hear about working standards over there are terrible.
Speaker 2 (42:52):
Right exactly. Well, you know, it's going to be a
tough situation. It's like that pennzoil commercialing baby later. The
inference is when you defer it, it gets more expensive.
And we've seen this in our own you know, as
you cited earlier, we see this in our own government.
You know, the problem gets kicked down the road and
(43:12):
it gets more complex and the costs increase with the complexity.
And so here we are. When are we going to
face this problem? And Donald Trump has said, look at
no more. We're going to look for free and fair trade.
We're going to look out for things that are in
America's interest also looking at NATO and what's happening there
in Europe that the United States is. I think Donald
(43:35):
Trump has seen it right to say, look at the
United States should not be carrying Ukraine to the level
that we have been. The European countries, the neighbors there
to Ukraine have more to lose than the United States
has to lose. But it seems that the United States
cares more about Ukraine than they do.
Speaker 4 (43:54):
Well, you know you've touched on I'm actually in the
middle of writing another substack piece which will also.
Speaker 2 (43:59):
A year you're channeling me, you know, I think I'm
stealing all your good ideas.
Speaker 4 (44:07):
Yeah, no, I'm going to address these exact issues. I mean,
the times have changed, you know. We it was one
thing at an earlier point in time for US to
kind of play the global policeman role. But what people
have lost sight of was if you go back to
the beginning of the US European relationship, you know, and
from a military perspective, World War One and World War Two,
(44:30):
we were not the first responder in.
Speaker 3 (44:32):
Either of those wars exactly.
Speaker 4 (44:34):
They started and major things happened and went on for
years before we then came in to provide the backup
support necessary to bring them to an end. But as
time went on, it got to the point where, you know,
this almost absurd situation where you have a confrontation in
far eastern Europe. That because Russia is now a much
(44:57):
smaller player than it was during the years of the
so Union, it doesn't have big international global implications like
World War One and World War two did. It is
a regional, local kind of thing. Europe needs to take
responsibility for that and play the first responder role. I
think we should. We can be playing a role, you know,
(45:18):
with tariffs and sanctions and those kinds of things to
really squeeze down on Russia, which is where I'm hoping
where this will all go. But this is Europe needs
to be first and foremost responsible for this. But you know,
they have shirked that responsibility in the post World War
two era. They were too happy to stay in a
dependent state on the United States instead of assuming the
(45:42):
responsibility for their own safety and defense. And that's just
a massive failure of leadership on the part of the
leading European country zone.
Speaker 2 (45:51):
And they need to be aware that if this negotiation
between Putin and Zelenski doesn't work out in a balanced
sort of manner. In other words, that the bully is
rewarded for being a bully, then what's their protection. So
they need to be very interested in what's going on
with the negotiations here and support a fair solution. Right now,
(46:16):
it seems like Putin has all the cards, as Donald
Trump would say, and he's just bullying his way through this,
holding off, you know, from not bombing Ukraine any further
and having a committed one hundred percent peace treaty until
this is resolved.
Speaker 3 (46:34):
Right, Yeah, And I.
Speaker 4 (46:36):
Think Putin is I think that Russian economy is in
a much more fragile state that they are letting on.
I think they have spent enormous sums of money the
economy a huge portion. I've heard numbers as much as
forty percent of their GDP is now made up of
military spending. They are very oil dependent, they have inflation
(46:59):
is up in the twenty twenty five percent range. They've
been printing enormous amounts of money to try and keep
funding this. And I think the numbers I've heard is
they've lost close to or over a million people.
Speaker 2 (47:11):
And so that's what I heard, and I don't know
how this is sustainable for Putin as the leader.
Speaker 3 (47:16):
I think he's very vulnerable.
Speaker 4 (47:18):
I agree, and I think if we really put the
screws on him, he could pay a big price, which
would send a message to anybody around the world that
this is not the way to work your way out
of your problems.
Speaker 2 (47:28):
Well, am I often thinking these EU countries, these neighboring
countries should be more involved and have a higher interest
in this.
Speaker 4 (47:35):
They should be They should be playing the leading role.
Speaker 3 (47:38):
Yes, we should be there.
Speaker 4 (47:42):
We can be there in this soft approach, which is
to screw down on the tariffs and the sanctions and
the things that hurt the Russian economy. We should have
a backup role from a monetary perspective, if at all,
but they need to be playing the leading role in
providing the financial support and if boots are on the
ground that needs to come from Europe.
Speaker 2 (48:00):
Todd, we got a minute left. I'm going to let
you summarize this. I'm going to go back to tariffs
and this opportunity that is before is what do you
see happening?
Speaker 4 (48:10):
And so I think first and foremost we need to
deal with the Chinese problem that we mentioned that's going
to be difficult, but I think it will be dealt
with in a way where it's phased in so it
gives business some time to adjust. That's a tough issue. Second,
we do need to level the playing field with our
friends and allies that's primarily Europe, Japan and India, so
(48:31):
that it's balanced and when we get into the next
round of growth, our workers here have the opportunity to
participate in that on a fair and equal way. So
we want to encourage people to trade with us. But
we've got to move away from this post World War
thing where it was two to one sided in everybody
else's favor and against our workers here.
Speaker 2 (48:51):
How much time does Trump have do you think, you
know to carry this out? You know he's been saying
this is in process. I believe that's the case. That
the clock is ticking. And you know, it's a good
opportunity for him because you know, he scores a couple
of wins here. He's going to close a lot of
mouths really quick here and a lot of naysayers, don't
(49:11):
you think?
Speaker 4 (49:12):
Yeah? I do, and I think that's this. I think
it will happen sooner rather than later. I think there's
big incentives for these other parties to negotiate, and there
are big incentives for us to make it work for
our companies also.
Speaker 2 (49:22):
Well, Todd, we got to leave it there. Todd Sheets,
thank you so much for being with us. He's the
author of the newsletter on Wealth and Progress and right
now it's available free of charge on substack. He's also
author of the book two thousand and eight What Really Happened?
Todd Sheets, thank you for being with his take Care Bill,
Thanks so much. I joined it and ladies, gentlemen, thank
you for sharing a part of your day with us.
(49:45):
So appreciate you joining in and you know, getting this
information and hopefully it blesses you and causes you to
do your own studying and your own research so that
you own your own knowledge, that you're not being told
what you should believe. This is what the show is
all about, to bring you these guests that have the background,
(50:07):
the experience, the knowledge to share with you so that
you know more and hopefully you know more than what
you did when you first started watching the show. Again,
I thank you for being with us. May God bless
you and may keep you, May make His face shine
upon you and be gracious unto you and give you peace.
Speaker 3 (50:25):
God blessed. Thank you,
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(00:20):
choosing W FOURCY Radio.
Speaker 2 (00:38):
Oh we got a great show planned for you, and
a great guest, Todd Sheets is going to be joining
us in just a moment. Great book that he wrote
that came out last year two thousand and eight. What
really happened?
Speaker 3 (00:49):
Huh?
Speaker 2 (00:50):
Think about that, you know, And that's a big question
still understanding the great financial crisis. And you know, typical
of anything that happens in the government, they always want
to try to whitewash it right and put their spin
on it to kind of confuse us and not really
give the whole skinny of what happened.
Speaker 3 (01:12):
I know that kind of surprises you, right.
Speaker 2 (01:14):
We haven't had a lot of experience in the recent
decades of you know, this fake news and what the
government here they are? They want a department of misinformation.
That's just basically what it amounts to is you know,
trying to do brain surgery on themselves.
Speaker 3 (01:34):
They just, you know, they can't help themselves.
Speaker 2 (01:37):
Everybody is so fixed and ideologically predetermined that they've lost
track of what the truth really is and what truth
how the truth serves us. And that's what it comes
down to. But you know, when people deceive us, they're
not interested in serving us. They're interested in covering their
(01:58):
back ends and their own interests and not we the people,
not America. And this has been the problem with our
politics for quite a while. And of course now the
dynamic that you have with journalism jumping ship and abandoning
their reason to exist and violating the journalistic ethos of
(02:20):
pursuing the truth no matter where it leads and giving
us an objective viewpoint. I mean, this is going to
be really tough. I think, you know, generations ahead will
look back in this error and go, boy, you know,
I just can't make sense of this. It is such
a mess. And even if we go and utilize the
data that has been reported here. It just it's it's nonsense,
(02:44):
it's it just doesn't seem valid. And their instincts are
going to be correct if they have a familiarity with
the truth. But if they don't, then you know, they're
going to be that much further off the mark because unfortunately,
the mainstream media has abandoned ship. As I said, they've
forgot about objective reporting, and there's lots of pressures. I
(03:07):
was speaking with another guest this morning about this issue,
is there's lots of pressures on the media, especially on
the Beltway, because everybody wants to be a part of
the reindeer games, right and if you are on the
side of where power exists. So right now, the Republicans
are in power. So if you're pro conservative, you know,
the door seemed to open a little bit easier for you.
(03:27):
And if you're liberal, you're going to run into problems,
which is obvious. We saw what happened with ap CNN
and other liberal entities that have been purveyors of fake
news when it comes to conservatism. Look at I don't
mind people reporting, you know, but you know, let it
be known it's an opinion, and don't present something as
(03:49):
a fact, and that's all the way around.
Speaker 3 (03:51):
See, everybody's gotten really fast and loose with the facts.
Speaker 2 (03:54):
You know, you have a right, you know, to your opinion,
but not the facts, because the facts should not change.
They should be consistent. I think we can agree on
that right. And you hear from politicians and you know
the way they present things Hakim Jeffreys and others as
if things are the fact. In fact, we had a
president not that long ago who insisted that that science
(04:17):
there were certain aspects of science like global warming. He says,
well that's a fact. Well that's not even a scientific term.
You know, it could be a law, but not a fact.
But see, these are how these terms are so loosely used.
And he even said at one point, you know words
have meaning. Well yeah, okay, that's true. And that was
the thing that was so dangerous about him in particular.
(04:39):
It was that he could be he could be truthful
at times, but it could also be very deceptive. You
just had to see which side of his mouth he
was speaking from. And that was the thing that was
so frustrating because I have no tolerance for people. I
want you to be consistent, and I have more respect
for you if you just a liar all the time,
as opposed to somebody who is trying to, you know,
(04:59):
be deceptive and uh, you know, tell you one thing
and do something else. And and I get the pressures. Uh,
I really do, even though I haven't been on the Beltway,
but I can. I can empathize with what some of
these uh, you know, some of these reporters have to
deal with. You know, they claim that they're pursuing the truth,
and here it is. They lied to us, for example,
(05:21):
about Joe Biden for four years. Now all of a
sudden they want to be honest and say, oh, yeah,
we knew that he was he was slipping up. Yeah,
you were the same ones that were echoing, uh, the
the advisement and and the description of Joe Biden being
sharper than attack and he added all together when anybody
with even bad eyesight and poor hearing could see that
(05:45):
Joe Biden was losing it. And now they want to
act like as if they were there. Even about COVID
for example, Oh yeah, you know, wat you didn't even
spend a day in YouTube jail. You know, we we
spent days in YouTube jail, and we were castigated and
for what and we kept saying, look at this is dangerous.
This is dangerous for the American people. When you're talking
(06:07):
about health, you're talking about anything that has to do.
Like I said, with these major issues, we need to
know the truth. We need to understand what's going on.
If we're going to go to war, Why are we
going to war? What? What are the facts? I mean,
you're going to be spending my taxpayer money? Then I
think I have a right to ask some questions and
get some answers as to why this is justified.
Speaker 3 (06:30):
And here it is.
Speaker 2 (06:32):
I mean the pattern of America, which you know Dwight
Eisenhower warned us about the military industrial complex because they
are a beast. The industrial complex is a beast that
needs to be fed, and it's insatiable, and.
Speaker 3 (06:47):
It loves the war.
Speaker 2 (06:47):
Hasn't seen a war that hasn't fallen in love with.
And you know, next thing, you know, we're getting drawn
into these endless wars with no end in sight. And
then and then down the road you get the question,
go why are we fighting this? No, you forget even
why you're at war. All you know is that you're
at war, killing people and destroying things and wasting a
(07:10):
lot of money, and after everything is all said and done,
you leave eighty billion dollars worth of military equipment behind.
People are dying in your wake as you exit once again,
as you cut and run. It's not a good look
for America. But you know, hey, this is and this
is what we're dealing with, sadly, and it's so it's
(07:32):
so unfortunate and frustrating that we're ending up in that
kind of situation. So you know, it's it really I
put pressure on the media that the media has to
find its heart and soul again and they cannot side
with power because once you've crossed that line, now you're
(07:55):
not really a reporting agency any longer. What you've become
is a propaganda arm for a political party. And this
is valid for both sides, whether you're rooting, you know,
for Republicans or Democrats. We need the media. I mean,
there was a reason why our founding fathers cherished our
First Amendment, right, why it was so critical. But embedded
(08:18):
in that First Amendment right was the general consensus that
we would be honest, that we'd be truthful. And once
truth is compromised for whatever reason, you know, somebody buys
you off you know, they pay you money or they
hold up a carrot and say, hey, look at you
get to hang out with the big boys here, and
you get to go to all the reindeer games and
(08:38):
the cocktail parties and everything like that, and all you
got to do is do our bidding. Once you start
doing that, then you know, what good are you to
the American people. You've given them a false narrative and
you end up putting us at each other's throats sadly,
and that is that is beyond frustrating that you know,
(08:59):
this is but uh, you know what they've done to us,
and whether it's the media or even these social media platforms.
Speaker 3 (09:06):
Uh, as I've mentioned to you before.
Speaker 2 (09:09):
I mean here Mark Zuckerberg and you know before it
was Twitter, uh and these other social media platforms.
Speaker 3 (09:18):
You know what did they do?
Speaker 2 (09:19):
I mean, they they buckled, they buckled under and uh,
it's just it's just unbelievable.
Speaker 4 (09:26):
You know, and.
Speaker 3 (09:29):
I don't you know, I don't know. I mean, it's uh, I.
Speaker 2 (09:33):
Said, it's it's frustrating that they and I say the media,
but anybody that that pretends that they're objective and that
they're giving us the whole truth and nothing. But but
then along the way, for the sake of power and
control and influence, uh, they sell themselves out and at
(09:54):
what costs? You know, uh, here we are. I mean
it's amazing to me. You know, you see this this polling,
the comes out and you've got you know, forty percent
of the merit of America against sixty percent of America.
I mean, these that's that's that's pretty crazy numbers when
you think about it, and you go, Okay, what's going
on here? I mean, is the forty percent in the tank?
(10:16):
Are they just so much supportive of these things that
really are anti American? And I say that only from
a standpoint that you know, who doesn't want our government
to be efficient?
Speaker 3 (10:27):
Well, what's wrong with that?
Speaker 2 (10:28):
What I mean is it okay to spend your even
your great grandchildren's money to people that don't even they're
not even alive yet, they haven't been born. And I
guess that's okay, and that's and we shouldn't we shouldn't
be outraged about it.
Speaker 3 (10:44):
I mean, this is just incredibly you know, frustrating. But
you got forty percent of the people that are angry
and upset because of you know, you can say Trumped
Arrangement Centerm if you want, uh. And of course that's
carried over into Elon Musk. And here's Elon Musk.
Speaker 2 (11:01):
Yes, he's been very wealthy, but it wasn't because somebody
gave it to him. He's worked his tail off and
Donald Trump leveraged you know, what he had, which is
nothing different than the Kennedy's if you remember. I don't
know if you knew this about the Kennedys, but the
Kennedys were rewarded, I mean upon their birth.
Speaker 3 (11:19):
I think.
Speaker 2 (11:20):
Joe the father would put like a million dollars into
their account and they would use that kind of as
seed money for their careers and education and that sort
of thing. So what Donald Trump has done is nothing
different than any other you know family has done. And
you know, of wealth that they can invest in their
children and hopefully their children spend that investment wisely, and
(11:44):
Donald Trump has leveraged it wisely. I mean he's he
been perfect. Nobody's been perfect. I mean Kennedy's aren't nobody's perfect.
You know, we make mistakes. But anyway, look, Todd Sheets
has joined us right now, and I want to bring
him on to talk about his book two thousand and eight,
What Really Happened, and also talking about free and fair
trade tod Sheets.
Speaker 3 (12:04):
Welcome, Michelle, good to have you with us. Bill.
Speaker 4 (12:06):
Thanks, I'm delighted to be with you today.
Speaker 2 (12:08):
Well, I'm sorry for a little bit of the technical
difficulties we had, but that's okay.
Speaker 3 (12:13):
We're going to make the most of this time that
we have.
Speaker 2 (12:16):
First of all, before we get into tariffs, I want
to talk about your book two thousand and eight, What
Really Happened? Give you a chance to tell this new
audience that we haven't here toofore had a chance to
interact with and give them background of your book and
why you wrote the book.
Speaker 4 (12:35):
Yeah. So I got into writing the book a long
time ago, actually, when the crisis came along. As I
told one of my children at the time, it felt
to me like a lot of the assumptions I had
operated under during all of my business career kind of
being thrown out the window, and we were totally changing
(12:55):
the relationship between government and economy in ways that I
didn't understand. And you know, I need to do a
deep dive into this. So I spent several years researching that,
going back throughout history, and then another couple of years
specifically focused on the financial crisis, and then that's what
led to the writing of the book here.
Speaker 3 (13:16):
Yes, well, and the thing is is that we're still
paying for it, aren't we.
Speaker 4 (13:20):
Time well, very much so. I mean, you know, one
of the key things is we didn't learn the right
lessons from what happened. And if you don't learn the
right lessons, you can't change things and create the right
policies to keep it from happening again or in a
slightly different way maybe, And so you know, the lesson
that was generally taken away was that this happened because
(13:43):
of a gradual trend of deregulation that went too far
and allowed the system to run crazy and run amook,
and some of those things about the system going crazy
did happen. But what we have to ask ourselves is
why did that happen specifically at that point time? And
does that theory is it consistent with the facts of
(14:05):
what really happened in the housing bubble. And if you
go back and study the bubble itself, as I've done,
and as I lay out in the book, what we
find is that bubble began in nineteen ninety eight, when
housing prices suddenly went off trend. All of a sudden,
We saw a huge escalation in housing prices that was
unlike anything else that we had seen before. And it
(14:28):
stayed that way for four consecutive years. So that's not
like a gradual change. This is a sudden change from
the history. And then in two thousand and one we
see it.
Speaker 3 (14:39):
Let me ask you, when it made that radical change,
why did it do then?
Speaker 4 (14:43):
Yeah, So that's the other thing in the book is
I went back in. What we found was that Fanny
May and Freddie Mack, the two government sponsored enterprises special
privileges designed to enhance mortgage access for low to moderate
income people, were basically created in their modern form in
(15:04):
the late sixties and early seventies. At that time they
were very small, but because of the political privileges that
were extended to them, it gave them a competitive advantage
versus everybody else, and over the course of decades their
market share grew and grew, until by the mid nineties
they were well above forty percent of the housing market
(15:26):
finance that they effectively controlled. And so that was a
change we had never seen. And then, beginning in nineteen
ninety eight, the exact year that the housing prices took off,
Fanny and Freddie doubled their growth rates. They had been
growing by about seven percent a year, and all of
a sudden, they started growing by about fifteen percent a year.
(15:48):
And I go through a bunch of different analyzes that
basically show conclusively that this was the trigger for the
beginning part the first four years of the housing.
Speaker 2 (15:58):
Now, the demogram effics that Freddie and Fanny were addressing
were minorities by and large, right.
Speaker 4 (16:05):
To a very large extent.
Speaker 2 (16:07):
Yes, okay, so that became a sensitive issue, and maybe
that caused people to be a little bit blind to
what was going on because you, as a finance expert,
you would say, whoa, we need to hit the brakes here,
and you didn't need to wait for it to get
to have those kind of dramatic increases. You started to
see as you're looking at the data, you're saying, WHOA,
(16:29):
something's you know, we need to be concerned about it.
But you know, typical of things that get politically mired,
people can be blind to it and before you know it,
then you've got a serious problem. And then worse yet,
you look to the government to give us the to
solve the problem that they created.
Speaker 4 (16:50):
Yeah, exactly, I mean, and you're exactly right about this.
I mean, this ended up hurting the people that it
was supposed to help. Unfortunately, happens over and over again.
So and we see it. It's you can follow the
housing policy which was coming out of Washington. Fannie May,
who helped initiate this, was run by a minority. Yes,
(17:14):
the George Bush administration. You know, they talked about increasing
home ownership among Hispanics and others and those types of things.
Speaker 2 (17:22):
Well, you had Bill Clinton before that and that question,
Oh everybody needed a part of the American dream. But
it was like, you know, okay, I think we should
all have a shot at it. But if you're not qualified,
then at what cost?
Speaker 4 (17:37):
Yeah? And the problem is is when you start pushing
this and then you create these high rates of appreciation
in housing, which were then made even worse in the
early two thousands by federal reserve policies, what starts to
happen is you know people think, well, they stop thinking
about this, like, oh, this is a long term source
of wealth. You know, if I buy it and I
(17:57):
hold for ten, fifteen, twenty years, it'll grow slowly over time,
and all of a sudden, it almost starts to become
like a casino game where you've got to get in
on the action. And that's exactly what happened as a
result of Fanny and Freddie first, and then the Federal
Reserve making the critical mistake when they pushed interest rates
down so low in the early two thousands. You know,
(18:19):
it added fuel to the fire that had already been started,
and then that's what pulled so many of these unsuspecting
people who were supposed to be helped by all of
this in at the worst possible time. And the numbers
on foreclosures were like something like four million homes for
oh that period of time when it all.
Speaker 3 (18:38):
Fell apart and collapse exactly. And you think about these
people that suddenly they're homeless.
Speaker 4 (18:46):
Yes, actually I've spoken to people who went through that.
You know, they had a business going, they had things
going on. You know, they bought a home maybe that
they couldn't really afford, and then this collapse happens, there's
a downturn in the economy, they become homeless. You know,
there's there's thousands and thousands of people working in construction again,
(19:06):
low to moderate income working class people in construction, in housing,
in you know, the mortgage industry who are laid off
as a result of all of this. There's people whose
four to oh one k's are invested in these major
financial institutions, a number of which go completely broke during
this and so you know a portion of that savings
(19:28):
is wiped out by the losses that are experienced by
these Exactly, it's a huge disaster.
Speaker 2 (19:34):
Well, and and then you had the adjustable rate mortgages.
They contributed to this as well because it gave people
a false sense of security that they could afford a
lot more home than they actually could because maybe you
were okay for five to seven years, but then all
of a sudden, the adjustable rate kicked in, right, Yeah.
Speaker 4 (19:52):
And that's exactly. It's a perfect point because that's what
the FED did. You know, at that time, the fed's
control of interest rates was focused on short term interest rates.
And when when the tech stock bubble collapsed, which the
FED had played a role in blowing and creating that also,
the FED reacted in two thousand by pushing short term
(20:15):
rates down low. And when short term rates were pushed
down below the rate of home appreciation, that was a
historically unique thing that gave people the you know what
looked like a great opportunity to leverage up the returns
on a home. So a home might be growing four
or five or six percent a year, if you've got
(20:36):
a lot of debt and it's on a variable rate
mortgage with an interest rate below the rate of home appreciation,
then that's what you know, creates these fifteen twenty twenty
five percent a year increases in your equity investment. And
that's where the Fed blew it. They didn't understand that
they were creating this very unique incentive to buy homes
leveraged up with short term financing. And again I go
(20:59):
through all these statistics in the book, what you see
is in the second phase, this what I call the
acceleration phase of the bubble from around two thousand and
one to two thousand and five or six, was driven
by a massive increase in short term, variable rate lending
that pulled all these people in and pushed the bubble
(21:19):
up even to more dangerous levels.
Speaker 2 (21:21):
And the thing is, Todd, I'm reminded that this was almost,
I mean, are you know the modern era version of
a market crash. People committed suicide. They lost their homes, everything,
their hope, their dreams that they thought, oh here I am,
I get the part of the American dream, and now
(21:43):
it's no more. This was devastating psychologically to everyday Americans.
Speaker 4 (21:49):
Yeah, I've talked to people who went from you know,
having a semi successful business, a young child, who were
living in out of their car. You know, they were
foreclosed out of their home, they lost the money in
their business when the downturm came. They were living out
of a home or out of their car for a
while with a young child, with a baby.
Speaker 3 (22:09):
Imagine.
Speaker 4 (22:09):
This was just a devastating set of circumstances.
Speaker 2 (22:13):
Yes, you see, this is so irresponsible, and it's like,
who do you pin this on?
Speaker 3 (22:18):
I mean, in your book.
Speaker 2 (22:19):
I mean there's lots of like anything like any perfect storm,
there's lots of contributing factors.
Speaker 3 (22:25):
But what I find so appalling is.
Speaker 2 (22:29):
That it seemed the people that were injured the most,
you know, got the least comfort out of this. You know,
like I said, you got suicide rates going up. People
like you say, you know, one day they have a business,
next next day they're living out of their car. And
this wasn't something that they had to endure for you know,
(22:49):
maybe a couple of months. I mean this went on
for years for them to recover.
Speaker 4 (22:53):
Yeah, the unemployment rate stayed very high for years after this.
It wasn't until you know, the late twenty ten before
unemployment rates started really coming back down to more normal
kinds of levels and that kind of thing. So this
was I mean, you know, it was the Great Financial
Crisis followed by the Great Recession, neither of which were
(23:13):
so great, right, only in magnitude.
Speaker 3 (23:16):
Of the damage exactly.
Speaker 4 (23:18):
And you know, this was the worst downturn that we
had seen since the Great Depression in this country, and
it was devastating. And you know, as we started off
talking about we did not learn these lessons that this
was really caused by misguided housing policy and misguided federal
reserve policy.
Speaker 3 (23:38):
Right.
Speaker 2 (23:39):
And you say the misguided reserve policies was that post
to burst or that this was during the whole process,
Because now you've got a problem and everything's crashing and burning,
and then we're looking for the people that created the
problem to fix the problem. What's wrong with this picture?
Speaker 4 (23:58):
That's exactly right. I mean, uh, you know, I made
I just put out a post on this, uh, you know,
on substack here recently about the history of the Federal
Reserve in this never ending stream of problems. And this
was a situation where you know, the FED once the
crisis happened, they did do some things to help from
(24:19):
keeping it to spread even more out of control, but
that misses the fact that they had played a major role.
They were one of the two primary sources of the
of the crisis in the first place. And so, you know,
I said, there's an element there of like thanking the arsonist.
We also put out the fire that they had created,
(24:39):
which is really what the situation.
Speaker 2 (24:41):
Was, right, and here you use taxpayer money, uh to
save banks? Was that a smart move?
Speaker 4 (24:49):
You know, I was very frustrated by that at the time.
It was part of this bailout culture that is a
very unfortunate consequence. And that really was something that the
FED started back in the nineties and it expanded and
expanded and expanded to this disastrous point. I do think
now when we finally got to that point, they did
(25:11):
need to step in and provide some financing to the
system in order to keep it from spinning even further
out of control. So that's what they did that was correct,
But again they were only resolving a problem that was
largely of their own creation. And this was a big
part of what was missed in the aftermath because instead
(25:34):
of understanding what the FED had done and the mistakes
it had made to create the problem, they got a
lot of credit in Washington for playing this role, and
then their role was expanded. I mean, they got larger
regulatory oversight over the system that they had largely been
responsible for driving into the tank. And then they came
(25:54):
back with these very same policies. You know what I
call it is it's a addiction to money and low interest rates.
These were the same policies that had had played a
big role in causing the tech stock bubble took to
blow up and collapse in two thousand and then causing
the housing bubble to blow up and collapse. And they
(26:15):
went into it again in the twenty tens in an
even bigger way. They doubled down on these failed policies.
Speaker 2 (26:21):
And I want to go back to Freddy and Fanny
for a moment. There were early signs and some senators
and congress people were sounding the alarm on Freddie and Fanny,
and it became a race thing because you had I
believe Franklin Rains, was he ahead of Yeah? Was he
(26:42):
head of Freddy or Fanny was right? And so then
it became a race deal. Oh you're only doing this
because he's black, and and you're attacking you know, the
black community here, and uh so they kind of negated,
negated that. And then after everything is all said done, Rains,
who had made some major, major mistakes, he gets rewarded
(27:06):
with a golden parachute what almost what a couple hundred
million dollars if I remember Gregtly.
Speaker 4 (27:13):
Yeah, I don't remember exactly how what the size of
that was. And this is a very unfortunate thing. And
that's a very important point because you know, I remember
listening to Franklin Rain's on conference calls at that time
as I was an investor, not in Fanny May, but
you know, investing my own portfolio and that kind of thing.
And this is a very very capable, very intelligent guy
(27:34):
with a long track record who truly believed, I believe
genuinely in the mission of Fannie May and Freddie Mack.
You know that he had talked about growing up in
a very low income family. I think it was in Seattle.
His dad had been put out of work at one
point in time, had to go on food stamps. He
(27:55):
took a job, you know, picking I think it was
beans and fields out of town. Franklin would go along
with his dad. His dad was so resourceful though, that
he went and bought a foreclosed home that was going
to be that had been condemned so a new highway
could be built just for the lumber, tore it down
and then built a home in another area, and that
(28:17):
became a big source of wealth for the Rains family
that was, you know. And so I think this just
shows even very intelligent, you know, well meaning people, when
they get involved in trying to create these massive programs
that are designed to help other people and their jet
and their interests are sincere, they just end up almost
(28:39):
inevitably blowing them up in such a way that they
become so big that they cause more damage to and
they're intended to. So good intentions and well meaning people
don't lead to good outcomes. And that's one lesson. We
just keep failing to learn from all of these situations.
Speaker 2 (28:53):
And Todd the thing is, okay, look at we're human.
We can make mistakes, but there should I mean in
the sense you did a post mortem on this whole
situation here, and I don't see. I mean, there's a
lot of wisdom and insight in what you've written here,
but I don't see the manifestation of this going forward
(29:14):
to where what happens when this happens again.
Speaker 4 (29:17):
Well, in some ways it has happened again. So you know,
because we didn't rein in the Fed's ability to blow
these asset bubbles, we went through another ten plus years
of extraordinarily low short term interest rates that they were
trying to juice the economy up again. And what happened
is it's pushed asset prices up again. So now we
(29:40):
have housing prices basically back at about or above the
same levels that they were at at the peak of
the bubble. It doesn't mean we'll have another collapse because
lending standards have changed. There than some changes in the
regularatory side, which are good, and the banks themselves are
now very aware that this can happen. You know, people
(30:01):
thought this couldn't happen in the nineteen nineties and two
thousands because.
Speaker 2 (30:06):
The properties were continuing to assess at such an incredible level.
Speaker 3 (30:10):
Right.
Speaker 4 (30:11):
Yeah, Well, we had gone through one hundred years without
a national boom and bust. We had had localized ones,
you know, like in Texas when the oil patch collected,
but nobody thought it could happen on a national basis.
And again, what everybody missed was, you know, for thirty
years leading up to the nineties, Banni May and Freddie
Mack had been amassing so much of the national mortgage
(30:33):
market that all of a sudden they were in a
position to drive a change that had never happened before.
So but you know, we miss all these things. The
FED engages in this easy money, and we have very
high housing prices, so we may not have a collapse,
but we have a significant affordability crisis right now exactly.
No young people trying to start a career or early
(30:58):
in their career and starting a family, you know, they
don't have incomes to match you know, today's housing prices.
Speaker 2 (31:05):
Well that's why you have so many people are homeless,
living out of their cars todd right now, and in
some states higher than you know, whether you're in New
York or you know, California and others.
Speaker 3 (31:15):
It's just it's not affordable.
Speaker 4 (31:18):
Yeah, and so we fail to learn the lessons, we
fail to hold the FED accountable. They go through these
policies again and they create you know, there's an old
saying that you know, history doesn't repeat, but it rhymes.
So it's not the exact same thing, but it's a
related thing exactly. And the core is failing to rein
(31:38):
in the fed's ability to try and use easy money
policies to stimulate the economy in ways that creates hidden
and unforeseen issues like highly valued homes with an affordability
problem or highly valued stocks that make them more vulnerable
to you know, potential dislocations, or that may lower the
(31:59):
return is going forward relative to what people have you know,
expected based on where pasttock returns of that kind of thing.
Speaker 2 (32:06):
Well, we're talking with Todd Chase's the author of the
newsletter on Wealth and Progress. By the way, it's available
to you for free. It's on substack and his book
two thousand and eight. What really happened we've been breaking
that down is it's quite the study. And the thing is,
as you know, people you know that are in charge
(32:29):
of this government, I still want to hold on to
the constitutional principles that this is the government of for
by we the people. It is imperative that we be informed.
It's the consent of the government, and you cannot be
a low information voter. You need to be aware of
these things because guess what these things cycle. It's just
like Todd said, it may not necessarily repeat, but it rhymes,
(32:49):
and we get some sort of semblance of these types
of activities that come in and guess what happens. Traditionally
the politicians take the easy way out and a write
iou checks on the backs of the American people, right Tom.
Speaker 4 (33:05):
You know, Bill, you couldn't have made a more perfect point.
And one of the reasons, like I just mentioned, I
just put out this piece on the Federal Reserve Federal
Reserve on substack, which is called fixing the Fed part
to a punch bowl full of problems. And I go
through this history of problems that have been created by
(33:25):
the Federal Reserve. And I won't go through all the
details now unless you want, but just tick them off.
The Great Depression, the stagflation of the nineteen seventies, the
tech stock bubble and burst, the housing bubble and burst,
and now these new issues that we've just talked about,
and you have to sit back and ask why does
this keep happening? Why doesn't somebody rain the system in?
(33:48):
And the problem and there's there's a very reasonable rational
explanation for that. The problem is as the FED has
figured out that it can use its control of interro
straits to try and manipulate the entire economy in a
way that nobody else in the system has the ability
to do even bigger than Fannie Mae and Freddie Mack.
(34:10):
As I say in one point in the book, by
lowering interest rates in a credit driven economy, they can
drive everything from you know, the price of auto loans
in Alaska, to housing prices in Honolulu to stock prices
on Wall Street. They're the one thing out there that
can drive all is And the unfortunate element is that
(34:31):
for a president who's elected and an administration, the temptation
to have the FED become involved in these preemptive moves
to try and keep any and everything from causing a
slight economic disruption, it's just too powerful for anybody to
want to rein it in, right, And so you know,
(34:53):
I'm not choosing the existing administration of this, but almost
any administration, you know, you've got something that happens like
some of the rolling financial crisis of the mid nineties,
the Mexican peso crisis, or a debt crisis or the
Russian debt crisis. They haven't caused an economic downturn yet,
they aren't even causing failures that are cascading throughout the system.
(35:17):
But there's this big incentive for the federal reserve to
step in before any of that happens, push interest rates
down and try and keep it from spreading. Well, the
problem is if you go back to that playbook too
many times, you might keep things from happening in one administration,
but you just kick the can down into the next.
Speaker 5 (35:35):
Administration exactly, and we get this game where this keeps
happening and happening until it gets so big that the
consequences are are way beyond what the original problem really was.
Speaker 2 (35:48):
Todd, You've been writing about, you know, the tariffs and
current trade situation that's going on in our country. For me,
I'm optimistic about it, but looking at it kind of
like the way you have been, you know, from a
thirty thousand foot perspective, and I think that if we
had all hands on debt cooperating here, this challenge that
(36:12):
we're doing right now in terms of in a sense,
we're reinventing our economy with what Donald Trump is offering here,
which I think could be a good thing and could
help us at least address some of that thirty seven
trillion dollars in debt that we have and get everybody
else to kind of you know, this country has this
sentiment that everybody should be paying their fair share, Well
(36:33):
what about our allies?
Speaker 3 (36:35):
What about the.
Speaker 2 (36:36):
Rest of the world that has been taking advantage of
America and Americans? And I can't help but think that
if the FED was cooperative and on the same page
of what we were trying to do, we could affect
something that could be rather revolutionary and successful for everybody,
whether you're a Democrat or Republican. But for some reason,
(36:59):
because of tds uh and this you know, deranged Donald
Trump syndrome that people are going through. You know, they're
they're they're hurting. They're not hurting Donald Trump, They're they're
hurting us. And I'm trying to, you know, rally a
cry here to say, look at we need to get
on the same page. And I think this is a
(37:19):
golden opportunity and Trump's vision of a you know, you know,
a golden, golden era for America could be possible, but
it requires cooperation.
Speaker 4 (37:32):
Yeah, there's no question about it. And I think, you know,
there's a lot of people This is another thing where
the criticisms coming from both the left, the anti Trumpers
is from the right and another segment of the left
which basically keeps waving the free trade flag. But once
you've got to I think there's two big components here
(37:52):
that we've got to take into consideration. One is China
and China we cannot continue to fun and the growth
and the power of the Chinese Communist Party. If we
had gone down this path with them and they had
become a trading partner playing on an equal playing field
(38:14):
by Western standards in rule of law, and they had
become a global ally in terms of geopolitical issues, that
would have been fantastic.
Speaker 3 (38:23):
But it hasn't happened, and it's not going to happen.
Speaker 4 (38:26):
Do you think I don't think it's going to happen.
I mean I made a comment at one place, you know,
once a totalitarian regime, always a totalitarian regime. And the
big mistake that we made there, and I understand why
But we go back to the nineties. It was just
after Tienum and Square had fallen. For people who remember that,
or who if they don't, you know, that was appeared
(38:46):
when there were pro democracy protests that took place largely
by students. China was in the midst of moving down
towards a more market oriented economy to try and resurrect
all the empower average people that had been left over
from communism, and the Communist Party let it go on
(39:06):
for a little while and then the tanks rolled in,
a couple of thousand people were killed, they shut it down,
and the message to the Communist people was very are
to the Chinese people was very clear, but we missed it.
The message was we will only let these reforms go
economically or politically, or from any other perspective as long
(39:28):
as they are in the interest of the Chinese Communist Party.
And unfortunately we missed that. And as time has gone
on and we basically funded China's rise from an insignificant
player in the world. You know, back in around nineteen ninety,
their GDP was about six percent of ours, which means
(39:48):
ours was fifteen or sixteen times bigger than theirs. Exactly
today they're almost sixty seven percent of ours, which means
we're barely over one times the size of them. They
have become, you know, they have not become a trading
partner by Western standards. They basically engage in economic warfare,
(40:09):
and on the geopolitical front, they are engaged all over
the world in activities that are trying to counter you know,
the initiative of America and democratic free countries. So that's
the big issue in trading, and we have to deal
with that. We cannot let the status quo go on.
So they GDP keeps rising relative to ours, which makes
(40:33):
them even a bigger adversary.
Speaker 2 (40:35):
Right, Well, it's it's amazing how they've been able to
declare war on America, and America it just lets it happen.
You know, there's no response, whether you know it had
to do with trade, the import or export of fentanyl,
we can talk about COVID, other things that the Chinese
have done that have been antithical to America's interests, and
(40:58):
they continue to do that. And meanwhile they're hovering over Taiwan.
They're building uh, you know, bases in the South China Sea,
claiming that as as their own land and property. I mean,
you know, it's almost like Ukraine and Russia DejaVu one
more time here, yeah.
Speaker 4 (41:18):
Only only from a much different perspective, which is that,
you know, because we isolated Russia's economy and it ended
up collapsing because of the inefficiencies of the communist command
and control model, they today are a relatively insignificant player
from an economic resources perspective. You know, they're they ranked
(41:41):
somewhere around twentieth. I think their GDP is is below Canada,
Brazil and a couple of other countries. So you know,
they're rape, They're they're rattling their sword and causing a
lot of problems in Eastern Europe. But their ability to
play a major geopolitical role is nothing like what it
had been in the past because they are so much
(42:01):
smaller than we are and so many other countries. But
now China is a major and real competitor, and and
you know, added to all the issues you mentioned, you know,
China is also helping Russia and helping Iran exactly. I
was going to say, cause havoc over in these other
in the Middle East and in Eastern Europe, and that
kind of thing. So yeah, this is like, I mean,
(42:23):
I think, you know, we've got to go back to
this model of isolating these hostile totalitarian regimes and holding
it in, not allowing them into the you know, the
global Western economy, which gives them the opportunity, you know,
to do all these things. And by the way, as
they've done this, they've also continued exploiting their own working
(42:43):
class people. It's not like all the benefits are flowing
down to raising all these people up. I mean, you
know what you hear about working standards over there are terrible.
Speaker 2 (42:52):
Right exactly. Well, you know, it's going to be a
tough situation. It's like that pennzoil commercialing baby later. The
inference is when you defer it, it gets more expensive.
And we've seen this in our own you know, as
you cited earlier, we see this in our own government.
You know, the problem gets kicked down the road and
(43:12):
it gets more complex and the costs increase with the complexity.
And so here we are. When are we going to
face this problem? And Donald Trump has said, look at
no more. We're going to look for free and fair trade.
We're going to look out for things that are in
America's interest also looking at NATO and what's happening there
in Europe that the United States is. I think Donald
(43:35):
Trump has seen it right to say, look at the
United States should not be carrying Ukraine to the level
that we have been. The European countries, the neighbors there
to Ukraine have more to lose than the United States
has to lose. But it seems that the United States
cares more about Ukraine than they do.
Speaker 4 (43:54):
Well, you know you've touched on I'm actually in the
middle of writing another substack piece which will also.
Speaker 2 (43:59):
A year you're channeling me, you know, I think I'm
stealing all your good ideas.
Speaker 4 (44:07):
Yeah, no, I'm going to address these exact issues. I mean,
the times have changed, you know. We it was one
thing at an earlier point in time for US to
kind of play the global policeman role. But what people
have lost sight of was if you go back to
the beginning of the US European relationship, you know, and
from a military perspective, World War One and World War Two,
(44:30):
we were not the first responder in.
Speaker 3 (44:32):
Either of those wars exactly.
Speaker 4 (44:34):
They started and major things happened and went on for
years before we then came in to provide the backup
support necessary to bring them to an end. But as
time went on, it got to the point where, you know,
this almost absurd situation where you have a confrontation in
far eastern Europe. That because Russia is now a much
(44:57):
smaller player than it was during the years of the
so Union, it doesn't have big international global implications like
World War One and World War two did. It is
a regional, local kind of thing. Europe needs to take
responsibility for that and play the first responder role. I
think we should. We can be playing a role, you know,
(45:18):
with tariffs and sanctions and those kinds of things to
really squeeze down on Russia, which is where I'm hoping
where this will all go. But this is Europe needs
to be first and foremost responsible for this. But you know,
they have shirked that responsibility in the post World War
two era. They were too happy to stay in a
dependent state on the United States instead of assuming the
(45:42):
responsibility for their own safety and defense. And that's just
a massive failure of leadership on the part of the
leading European country zone.
Speaker 2 (45:51):
And they need to be aware that if this negotiation
between Putin and Zelenski doesn't work out in a balanced
sort of manner. In other words, that the bully is
rewarded for being a bully, then what's their protection. So
they need to be very interested in what's going on
with the negotiations here and support a fair solution. Right now,
(46:16):
it seems like Putin has all the cards, as Donald
Trump would say, and he's just bullying his way through this,
holding off, you know, from not bombing Ukraine any further
and having a committed one hundred percent peace treaty until
this is resolved.
Speaker 3 (46:34):
Right, Yeah, And I.
Speaker 4 (46:36):
Think Putin is I think that Russian economy is in
a much more fragile state that they are letting on.
I think they have spent enormous sums of money the
economy a huge portion. I've heard numbers as much as
forty percent of their GDP is now made up of
military spending. They are very oil dependent, they have inflation
(46:59):
is up in the twenty twenty five percent range. They've
been printing enormous amounts of money to try and keep
funding this. And I think the numbers I've heard is
they've lost close to or over a million people.
Speaker 2 (47:11):
And so that's what I heard, and I don't know
how this is sustainable for Putin as the leader.
Speaker 3 (47:16):
I think he's very vulnerable.
Speaker 4 (47:18):
I agree, and I think if we really put the
screws on him, he could pay a big price, which
would send a message to anybody around the world that
this is not the way to work your way out
of your problems.
Speaker 2 (47:28):
Well, am I often thinking these EU countries, these neighboring
countries should be more involved and have a higher interest
in this.
Speaker 4 (47:35):
They should be They should be playing the leading role.
Speaker 3 (47:38):
Yes, we should be there.
Speaker 4 (47:42):
We can be there in this soft approach, which is
to screw down on the tariffs and the sanctions and
the things that hurt the Russian economy. We should have
a backup role from a monetary perspective, if at all,
but they need to be playing the leading role in
providing the financial support and if boots are on the
ground that needs to come from Europe.
Speaker 2 (48:00):
Todd, we got a minute left. I'm going to let
you summarize this. I'm going to go back to tariffs
and this opportunity that is before is what do you
see happening?
Speaker 4 (48:10):
And so I think first and foremost we need to
deal with the Chinese problem that we mentioned that's going
to be difficult, but I think it will be dealt
with in a way where it's phased in so it
gives business some time to adjust. That's a tough issue. Second,
we do need to level the playing field with our
friends and allies that's primarily Europe, Japan and India, so
(48:31):
that it's balanced and when we get into the next
round of growth, our workers here have the opportunity to
participate in that on a fair and equal way. So
we want to encourage people to trade with us. But
we've got to move away from this post World War
thing where it was two to one sided in everybody
else's favor and against our workers here.
Speaker 2 (48:51):
How much time does Trump have do you think, you
know to carry this out? You know he's been saying
this is in process. I believe that's the case. That
the clock is ticking. And you know, it's a good
opportunity for him because you know, he scores a couple
of wins here. He's going to close a lot of
mouths really quick here and a lot of naysayers, don't
(49:11):
you think?
Speaker 4 (49:12):
Yeah? I do, and I think that's this. I think
it will happen sooner rather than later. I think there's
big incentives for these other parties to negotiate, and there
are big incentives for us to make it work for
our companies also.
Speaker 2 (49:22):
Well, Todd, we got to leave it there. Todd Sheets,
thank you so much for being with us. He's the
author of the newsletter on Wealth and Progress and right
now it's available free of charge on substack. He's also
author of the book two thousand and eight What Really Happened?
Todd Sheets, thank you for being with his take Care Bill,
Thanks so much. I joined it and ladies, gentlemen, thank
you for sharing a part of your day with us.
(49:45):
So appreciate you joining in and you know, getting this
information and hopefully it blesses you and causes you to
do your own studying and your own research so that
you own your own knowledge, that you're not being told
what you should believe. This is what the show is
all about, to bring you these guests that have the background,
(50:07):
the experience, the knowledge to share with you so that
you know more and hopefully you know more than what
you did when you first started watching the show. Again,
I thank you for being with us. May God bless
you and may keep you, May make His face shine
upon you and be gracious unto you and give you peace.
Speaker 3 (50:25):
God blessed. Thank you,
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