Economics and Incentives with Grant Williams

That’s right. You did.

…because it doesn’t happen that often. And it was at your country club, Baltimore Country Club. You couldn’t make it. You’re recovering from a little bit of a cold.

And we just had Meat Day.

I am recovering on multiple levels.

Now, can we tell our audience what Meat Day is, because I don’t think they know.

Sure, absolutely. So Meat Day was something I started way back in 2007 when I had my first child. And as soon as you have a baby, you realize all of a sudden, you’re not playing golf on Saturdays anymore because your wife is like, glad you’re home. Here. Here you go.

[LAUGHS]

Yeah, doesn’t matter how much you worked, by the way.

Doesn’t matter.

Doesn’t matter what you did.

No. So I had to figure out something I could do to get together with my buddies on the weekends. And I got into cooking barbecue. And so I told everybody, hey, bring over your favorite protein, bring over a piece of meat…whatever it is…and we’ll barbecue it; and we’ll play the football, throw the football all day; and watch college football; and act like idiots, like we’re still teenagers.

And so Meat Day was born. And we’ve always started with first course at 9:00 in the morning. It’s 20-hour smoked brisket and a poached egg on top, and then we have a course every two hours thereafter, and finishing up usually around 7:00, 9:00 at night. And there may sometimes be a large quantity of alcohol that’s also consumed.

Lots of great wine, champagne. You’ve got oysters, caviar this year. I mean…

It was a great day.

It was fantastic. Lots of great friends.

Always the first weekend in November.

Beautiful fall day.

And I’d love it if we could start this… we create a movement.

Oh.

Maybe our listeners will organize their own Meat Days.

Ooh.

And if they do, we’d love to see pictures. Send us a T-shirt from your Meat Day. We have our Meat Day T-shirts.

Oh, we could do T-shirt swaps…

T-shirt swaps.

Like the jerseys in…

That’s right.

…in football. That sounds like a great idea.

We’re going to bring America together. Who doesn’t love a little bit of booze and a lot of barbecue?

Americans do.

Yeah.

Let’s not forget that tradition.

We’re having a great month. And we’re glad we’re with you. Today in the program…

I know you’re about to say this…

Sure.

But I just want to tell everybody to listen. We’ve got a great guest coming on…

Grant Williams.

And we say some really important things about gold and the credit cycles that I want you to listen to and make sure you think about and maybe take action on.

And you go to grant dot…sorry, grant-williams…

grant-williams.

grant-williams.com. He’s got great free presentations that I highly recommend as well. OK, Porter, let’s talk a little bit about some nuts and bolts about you being back as the chairman.

Mr. Chairman.

Mr. Chairman of MarketWise. So we had a little bit of confusion recently, where it’s like, oh, well, wait a second, is Porter abandoning Porter & Co.?

No.

“We saw him on this Forever Portfolio thing over at Stansberry Research.” And I want to clarify that. I want to clear the air of that because…

What I’m wearing.

Yep, same thing over here.

Porter & Co. right here. So I want to clear the air of that. So a few things though: first of all, we had a few of our best subscribers, our lifetime Partner Pass subscribers, were a little bit upset because they didn’t have access to the Forever Portfolio over there.

I know that you were the creator of that portfolio. And it was during right at the bottom of the COVID.

March of 2020.

March of 2020. And I remember, you were like, go all in on this, and it’s all set, and forget it, and you’ll be good to go. And I don’t know the performance of that percentage-wise, but I know that it’s been a ridiculous performance.

Yup.

So you will go back and endorse products that you believe…

Well, hang on, everybody. Listen, I’m the largest individual shareholder of MarketWise.

[LAUGHS]

So, of course…

Yes.

I’m going to help them with their advertising. And by the way, Stansberry Research, the business that I created there, is an outstanding research house. All the people that are my proteges, they are still there.

Alan, Bryan Beach, Mike DiBiase, Dave Lashmet…. these are world-class analysts. And yes, I hope you’ll go buy their products.

[CHUCKLES]

Please. I’m a shareholder.

Yes.

And I’m also the chairman and the CEO.

That’s right.

I’m trying to make sure that business grows and does well for its shareholders. But meanwhile, I left that company three years ago. I retired in December of 2020. And as you guys all know, I started a new business: Porter &Co.

And we’re here in my barns, and the only place I’m going to write editorial or create new portfolios is here. So if you’ve purchased Porter & Co., you get me. That’s what I’m selling.

That’s right.

And you’re still going to get that for sure.

That’s right.

Yup.

But here’s what I want to clarify: the Forever Portfolio idea, we do that here. You write about this. You write about forever stocks. This is a staple of what you like to do.

That’s what I’ve done my whole career.

I want our customers to rest assured we’ve got them covered.

Yeah.

Don’t worry about it.

Just look on our back page.

Right.

Yeah. Those are our battleship stocks.

That’s right. OK, I just wanted to clear that up, Porter.

Now, some recent things in the news… and I know that you wrote about this. Let’s talk about our first inaugural Porter & Co. conference that we had right here in your backyard on the farm.

Yeah.

241 people were roughly invited.

What a turnout.

The day was amazing.

The feedback that we had… “it was unlike any conference I’ve ever attended.” And these are the best subscribers, and these are the Alliance subscribers as well.

What I thought made it so special was, it was at your farm. And I remember when we first started the company, we were like, are you sure you want to do this? This sounds like a crazy idea. And you’re like, no, I absolutely do because I want to set an intimate environment.

Most of the people that are Porter & Co. subscribers and virtually all the people that are Porter & Co. Partner Pass members are people who have read my newsletters from me personally for 20 years or sometimes even longer. These are my best customers. And I want to treat them like family members, which means I have them at my farm.

Yeah, so Porter, I want to talk about your specific big idea that you talked about on stage because we recently just had our fifth US bank failure, Citizens Bank, which is not small, by the way.

No.

It’s funny because whenever I think of these bank names, I start to think about, oh, I’ve seen them on NFL. They sponsor stadiums. Why is it always… not always, but it seems like whenever you get to that point where you want to start sponsoring the NBA, or the NFL, or these stadiums, it’s almost like a death knell like, it’s going to happen. They’re going to go under.

FTX in Miami?

[LAUGHS]

…and WorldCom did it before.

True.

Enron did it before for Houston.

You won’t remember, but PSINet here in Baltimore. No one ever…

PSINet. [LAUGHS]

…remembers that business.

Right.

But what happens is all these people take other people’s money, right?

Right.

All these businesses raise a lot of other people’s money…

OPM. And how do you spend OPM? However you feel like it. And they don’t do a very careful job with their investments because it’s not their money.

Right. Well, banks are a little bit different, as we know, this time. And you talked about Bank of America. But before I get there, Moody’s recently just wrote about big banks in the U.S. are sitting on $650 billion of unrealized losses.

And your speech was, if you’re a Bank of America client, get your money out right now. And, of course, some of our people, subs missed the point, and they thought that Bank of America was going under two days later. But it’s sitting on $132 billion of unrealized losses right now. Can we go into that a little bit?

Yeah, so what I said was, if you have cash in Bank of America, and especially if it’s in excess of the $250,000 FDIC limits, or whatever they are now. They might be a little bit more now. I can’t remember the details. But why?

If Bank of America is only paying you 0.06% on your deposits… which is what they’re paying… and you can go get 5% plus in Treasury bills, what are you thinking?

Especially knowing that Bank of America is sitting on very large unrecognized losses in their bond portfolio.

How did that happen? Well, in the spring of 2020 and in the summer of 2020, when interest rates were very, very low because of COVID, Bank of America decided it would be a great time to buy $760 billion worth of long-term bonds.

Now, these are various kinds of bonds… mortgage bonds, Treasury bonds, some corporate bonds… but they’re very, very low-yielding. And as a result, the average that Bank of America is earning on all of its investments is only 2.11% or something like that.

So they can’t afford to pay a market rate for their deposits because they’re not earning enough on their assets. Specifically, like I said, the $760 billion worth of bonds.

Now, they’re trying to get out of this by selling some of the bonds and reinvesting the money at higher yields. But that is such a big portion of their asset base… it’s about half of it… that they’re stuck.

And the only reason why they haven’t had to mark these losses, because that portfolio has now lost, mark to market, $131 billion, which is more than their tangible equity. So in other words, if the government were to say, hey, what’s your balance sheet really worth? They’d be out of business tomorrow.

Now, can that happen? Well, it depends. If their depositors all leave, that’ll happen. And why, if you’re a depositor, would you stay?

You’re making nothing, and you can make a whole lot more if you take your money out. Now, does that mean that a run will happen? No, it doesn’t mean that it will. It just means that it should.

And the one thing I know about economics is, if there’s somebody out there that’s paying over 5% and you’re trying to keep them with 0.06%, you’re going to lose. And you can’t know when. It can just happen at any moment.

And so I said, hey, if I were you, I’d get all my money out of Bank of America. And by the way, they’re going to report earnings in two days, and I think that the report is going to show that those bonds have lost even more money. And that, of course, is what it showed.

Before the report, they were down $105 billion, and after the report, it was $131 billion. And those problems are not going away.

No. So another bank just failed, so that’s our fifth one. Do you expect to see more of these?

I do. I think that I could say their names.

OK.

But if you look at the regional banks that have grown the most aggressively, you will find people that have very suspect assets and then have very lousy bond portfolios and lots of commercial real estate that’s not doing well. And I think in the next credit cycle, all of those banks are going to go under. When I say all of them, we should probably publish a list.

That’s a good idea.

I think that would get us a lot of credibility.

Yeah, definitely. But we’re not just problems… we offer solutions. And your solutions are short-term T-bills. So…

Yeah.

Three months…

There’s going to be a big credit cycle coming, and I’m pretty sure that’s the case… we’ll talk more about it with Grant Williams. And by the way, you can get 5% to your Treasuries. Just sit onto your Treasuries, and wait for these defaults to happen.

Yeah.

With that strategy, you’ll have cash to buy at the bottom.

Yep. And another thing that we’ve been talking about at Porter & Co. and beating the drum on is raising cash, exactly that, because the time… the forever stocks that we talk about, we’ve got to screen for these, by the way. It’s the Inevitables. It’s in the Buffett report, and we have a lot of other places too… is you need some dry powder when that time comes.

And that time will be coming at some point, so why not raise some cash, make 5%, and when that time comes, move into these, and set it and forget it, hopefully?

I want to say one more thing about the banks. There’s always one bank that is the poster child of every big credit boom. There’s always one bank. So if you go back and you think about what happened between 2004 and 2008 in real estate, you had huge booms in where?

In Miami and in Las Vegas, primarily… huge booms. Who was the leading financier of apartment and condo conversion deals in those cities and new construction? Who was the biggest bank in the condo building boom in Vegas and Miami between 2004 and 2008?

Was it Wells?

Corus Bancshares.

Oh, I don’t know them.

-Which bank went to 0 at the end of 2008? Corus Bancshares. And I’m not saying that Bank of America is the poster child for this credit boom. But I am saying that the boom we saw in sovereign bonds was the biggest bubble in the history of capitalism… the biggest. And the biggest buyer of those bonds in the world is Bank of America. So you do the math.

Yeah, very interesting. All right, Porter, let’s not wait any more. Let’s get right to the Grant Williams interview, where we can learn more about this.

Great.

[AUDIO LOGO]

Porter, it’s time for the guest interview, which is one of your extremely talented and really good friends, Grant Williams.

Yeah, I’m happy to introduce everybody to Grant Williams. If they don’t know him, he is a legend in our business for his presentations.

[CHUCKLES]

If God made PowerPoints, they would look like Grant Williams.

[LAUGHS]

Grant, how are you?

Hey, man. Also, it’s so good to see you again. We so nearly got to do this in person. I’m bummed we didn’t get to sit in those chairs together and chat. But it’s always good to see you, my friend.

Well, I know you’re coming to us from Zurich, Switzerland, which is a nice place to be. And you’re going to be at that Precious Metals conference next week there.

Correct, yup.

Anything about precious metals that strikes you immediately as being different than, oh, say, the last decade?

Ha.

What a great question.

Yeah, I think it depends.

Precious metals are one of these things that everybody’s interested in for their own reasons. A lot of people are interested because they can’t stand them, and they don’t understand them, and they think it’s a load of rubbish. Other people are completely fixated with them.

I’ve always been somewhere in the middle. I think there are an incredibly sensible portfolio allocation… at just about every point in the cycle, there are very few points in time where I wouldn’t want to own any precious metals.

But there are times when I think the setup is so good that you need to shift… A, shift that allocation to a larger allocation, and B, perhaps be more aggressive in terms of some of the mining companies. And I really feel like the setup now is one of those setups. We have one of these back in 2015, end of 2015.

Funny enough, I gave a presentation called “Nobody Cares” at that time… it tells you what the sentiment was like… and talked about the setup for precious metals.

Sorry to interrupt. But you do know that, in 2015, I published a list of 10 junior mining stocks to buy and hold 10 years on exactly the same thesis? I had never seen sentiment so dark and then those businesses be completely ignored.

It’s so true. And you know as well as I do, this business is incredibly capital intensive, and capital always goes where it’s going to be loved and treated well. And it isn’t always the case in the precious metal space. But I would argue now, given the radical bear market that a lot of these equities have been through in the last five or six years, the setup’s not been better since 2015.

So I’m actually very bullish on precious metals as an asset class. And I think if you have the right companies, the right managements, the right deposits… and it’s really important to get all three of those… there’s going to be some tremendous money to be made in that space in the next two or three years.

Yeah. Another sign of this is I know that at MarketWise… which listeners should be aware of… I recently was named chairman and CEO of the public company that I was associated with for a very long time, 21 years.

So I’m back inside MarketWise. And I can tell you that the decisions that the publisher are making right now are all about moving away from any publication related to precious metals.

Reminds me that in 2006, sorry, in 2004, Merrill Lynch closed down their entire commodities research group.

Yep.

[LAUGHS]

– And thus began a four-year incredible run in commodities. But you see that at these market turning points–

both the tops and the bottoms–

you see these kinds of behaviors. One other point about this–

Grant, I don’t know if you follow Chris Weber. He’s a legend in our business and in my mind. I think he’s the single greatest newsletter writer of all time. And he is recommending rare gold coins for the first time since 2003.

So you see a lot of these things happening. You see the mainstream completely abandoning gold. At the same time, you see gold price beginning to tick up. And then you see the people who, like publishers, who live on sentiment, moving away from it, while the experts like Chris Weber and Grant Williams are actually moving into it. It’s a very interesting time.

– Well, like me, Porter, you’re old enough to remember the famous <i>Death</i> <i>of</i> <i>Equities</i> magazine cover in ’82 at a point in time where nobody wanted to be told about equities. They were trading at six times earnings with a 6% dividend yield, and yet, nobody wanted to touch them. And that’s the sentiment that you have in the precious metals equities right now even though, as you say, the gold price, particularly, is performing incredibly well, given what real interest rates are doing. If you’d have told me real interest rates would do–

what they are doing now, I’d have told you gold to be trading $1,400. And here we are, knocking around 2,000.

– Let me tell you, though, something about the <i>Death</i> <i>of</i> <i>Equities</i> cover that people forget. The <i>Death</i> <i>of</i> <i>Equities</i> cover was BusinessWeek–

I’m pretty sure. And I’m pretty sure it was ’79. But what a lot of people don’t recall is that at that time, you could earn something like 12% in a long-term Treasury bond.

– Yes, you could.

– And what people also don’t forget is those Treasury bonds outperform the stock market from then all the way to 2008.

– Yeah, 40-odd years.

[LAUGHS]

– So if you bought a long-enough-duration bond–

I don’t know if I’m doing that math correctly–

no, those bonds would have been–

oh, that 30-year bond would have been still around, but–

– Yeah, 2010. Yeah, yeah, but OK.

– Anyways, my point about that is, everybody says, oh, how could investors have been that stupid? Well, we forget because in our investing lifetimes–

the last 25 years–

there hasn’t been any kind of interesting interest rate. But now, we’re moving into an environment where interest rates are actually more and more attractive–

and I think you’re going to see the stock market multiple go down. I think it’s going to be a very tough decade or so for stocks until or unless we can get our financial house in order–

which is something I want to get into in a minute.

And you’re the guy to talk to about it because you and I have been two of the writers around the world who have been most consistent in our view that this kind of financing was going to lead to a disaster. But first, you interviewed me about a year ago at my farm. It was by far the best interview I’ve ever done in my career. And you asked me a whole bunch of questions that I don’t know the answers to in your life. So I want to take just a couple of minutes first and ask you some basics.

– Sure. Go for it.

– First of all, just in general, where did you grow up, what did your parents do for a living, and what led, if anything, in your youth to an interest in economics and finance?

– Well, I grew up in a tiny suburban town about 20 miles southeast of London.

The town was called Orpington–

the place, the nearest town anyone’s ever heard of is a town called Sevenoaks.

It was commuter belt–

nothing special about it–

small town, maybe 50,000 people–

no more than that. I went to a great school–

grammar school–

which was a state school but a really high-quality education.

My dad was the company secretary for a merchant bank. And my mom was a housewife because, Porter, back then, you didn’t need two parents working to be able to afford to raise a family of two kids in it.

It’s a different time.

So I went to school. So I went to a great school.

I was smart and lazy–

a terrible combination. I coasted through all my exams. My school report was basically handed back every year just the same thing–

could do better, could try harder–

same thing every time.

– Sounds very familiar.

– And then–

yeah, right. [CHUCKLES]

And then I got the chance to go to university–

just. And right when I was mulling over going to university, I got offered a job at the age of 18 in the settlements department of an investment bank called Robert Fleming &amp; Co. in London, which was a very old Scottish merchant bank at the time. But they were part of, or they had an affiliation with the Jardine group out in Asia, so they were at the forefront of what was the craziest market in the world back then–

the Japanese equity market.

And so I got offered a job in the settlements department–

a partition wall away from the trading room, which is what I wanted to do.

And that interest had come purely from–

I’ve told this story many times–

my Uncle Harry, who was a foreign exchange dealer–

didn’t know what he did. But he was the coolest guy I knew, and I wanted to be him when I grew up. He did card tricks, and told jokes, and made everybody laugh, and had a great car, and Space Invader machines in the barn at his really cool house. And I thought, you know what, whatever he does, I want to do.

And it turned out he was a foreign exchange trader. So I never quite made it to those lofty heights. But the settlements department was that for the Japanese equity warrant traders.

And I literally–

after being there for about six months, I would come in every morning at 5:00 in the morning–

I didn’t start till 8:30.

I come in at 5:00 in the morning, and I’d sit in the reception. I’d wait for the head dealer to come in–

a guy called John Galvanoni, who was a legend in London at the time.

God rest his soul. He died a few years ago.

And I’d ask him for a job every morning. John, you got any jobs for me? And he went from just completely ignoring me to just saying, no, son, to learning my name to–

one day, I managed to parlay that into a job in the trading room. And I was doing that for 30-odd years. So I got to do what I wanted to do even though I didn’t know what it was.

And that job–

trading those equities–

A, I got my baptism in a crazy, crazy, crazy bull market in Japan. B, a year after getting my first trading book–

we had Black Monday in ’87, so that was a very formative experience for me. And that job took me all around the world–

to Japan, and Hong Kong, and Singapore, and Sydney, and New York–

and I loved every minute of it. I really did.

– Yeah, that’s a great story. I have a theory that everybody needs a rich uncle.

– Yeah, [LAUGHS]

right.

– I had a very similar setup. And when you can see firsthand that that is possible, it leads you to be a lot more ambitious than, I think, if you don’t know it’s possible.

– I think you’re right except I was so young–

I would have been seven or eight–

and so I didn’t have any concept of rich or–

I just–

cool, right? I thought, oh, man, that’s such a cool car–

and the Space Invader machines in the house, and the card tricks, and all the jokes, and stuff. I didn’t really know what rich meant. I just knew that he was a fun guy to be around, and I could see how much everybody else enjoyed his company. And I thought, I want to be that guy.

What does he do? OK, I’ll go do that.

– I didn’t know either, but I did know that my uncle had a golf cart to get to his pool.

[LAUGHTER]

And I thought that’s pretty cool.

– There you go.

[LAUGHS]

– So let’s talk about something a little bit more serious and, unfortunately, more urgent and dire. You and I both know that for economies to do well, people have to have incentive to produce and incentive to be productive. And the more they’re taxed–

whether it’s in direct taxes like income taxes, or indirect taxes like regulation, or indirect theft like inflation–

the more of that that exists in the culture and then in the society, the less wealth will be produced.

And if you’ve ever wondered why United States is such a wealthy country or how Singapore went from being a devastated city that had been destroyed by the Japanese to the wealthiest city in the world, it’s because of economics. It’s not because of natural resources. It’s just economics. If you allow human beings to produce and you allow them to keep the value of their production, they’ll produce like crazy. If you tax them and cheat them, they will do nothing.

And America seems like it really turned a corner at some point–

I don’t know if you want to argue that’s the 1930s and ’40s, or you want to argue that’s the 1960s and ’70s, or you want to argue that’s the Obama years–

but we now have an entire population that believes that their retirement is the government’s responsibility. They believe that their health care is the government’s responsibility. They believe that the education of their children is the government’s responsibility.

We go down the line.

But we haven’t found a way to pay for any of this. And we won’t because socialism means, eventually, your neighbor runs out of money. So the question I have for you is, what happens to all these Western democracies and, in fact, Western civilization because we’ve all turned away from the facts of economics and the things that we know work?

– No, it’s such an important question. And it’s, as you alluded to there, it’s a question that so many countries have to ask. And it is all these liberal Western democracies. They’re all in the same boat because they’ve all pursued the same policies.

And I would say, Porter, the point you made is true–

that people have reached the point where they expect their retirement to be the government’s responsibility, and they expect their health care to be the same. But you can’t really blame them because they’ve been told that over and over again by, guess who? The government.

And I think this period we’ve had of low interest rates has allowed governments to make more and more promises and to be able to pay for those promises in the short-term with ever-declining interest rates. And look, you’ve written about this for many, many years. I’ve talked about it. Plenty of people have talked about this. Ultimately, those bills become due. And it’s fine when you can roll the debt over as we have done now for decades.

But suddenly, we’re looking at the point where the rubber meets the road. And we’ve seen that the cost of covering the US debt triple in the last year. We’ve seen it now taking about–

– And this is over a trillion dollars this year, I think?

– Right. Yeah, it’s going to take up 15% of the government’s receipts. And, of course, the only receipts the government has are tax receipts. So we all know what the answer is going to be–

in order to increase their receipts, taxes are going to have to go up.

And in line with taxes being forced to go up, they are going to have to, at some point, renege on some of the promises they’ve made. You and I know this is coming. And people who’ve been engaged for a long time know these two things are coming because this is the only way out.

The third way is what we’re seeing at the moment, which is inflation. And to do that–

to devalue the debt in nominal terms–

in absolute terms, sorry–

by devaluing the currency is a tried and trusted way of doing this. But it’s such a difficult needle to thread because A, it makes people angry when the cost of living rise too much, and wages don’t keep pace–

which is exactly what we’ve seen in the last 20 years.

You get these moments where, suddenly, people are energized enough about the disparity to start striking. Look at all the strikes we’ve seen recently–

the UAW, and the strikes in Hollywood, and various other big box companies that have been forced to give pay rises to their employees. We’re at that point–

– Can I interrupt just for one second?

– Yeah, jump in anytime you like, my friend. This is a conversation.

– To me, there’s just nothing more ironic than watching people who have notoriously progressive politics and have been advocating for record-setting levels of taxes and government spending to then strike [LAUGHS]

because–

– Right?

– –their wages can’t keep pace with inflation. It’s just like, well, what’d you think was going to happen, dummy? [LAUGHS]

– Porter, we live in a world where there is so much access to information, and it’s never been easier to get educated, to understand the world around you. But at the same time, it’s never been easier to just sit for hours looking at TikTok, and Instagram, and all these things that suck time away. And so people just don’t understand the world around them. I was reading an article today about a march in London.

And I think the group–

and I apologize, I’ve got this wrong–

is queers for Palestine. And it was a big rally talking about–

and there’s a ton of these protests going all around the world.

And the person writing the article was making the point, say, look, you have to educate yourselves about these serious issues because if you went to Palestine, you would be put in prison. It’s that simple. And so people get very simplistic about causes.

But inflation is the one cause that hits home at people. And when you can’t afford to put food on the table and you can’t afford to put a roof over your family’s head, then people get really angry.

And they get out in the streets, and they vote out incumbent political parties, and they set fire to things. And all the stuff we’re seeing now, guess what? We saw it in the ’70s when we had exactly the same problems.

So I think we’re at a point now where it’s really important to understand that none of this stuff is coincidental. We don’t just happen to be seeing a lot of strikes. We don’t just happen to be seeing social unrest. We don’t just happen to be seeing division everywhere.

It comes back to the things you’re talking about–

that these unsustainable debts, these unfulfillable promises have reached a point where something has to be done about them. And it’s going to be confiscation through inflation. It’s going to be tax increases. It’s going to be the cutting of benefits.

And that tends to happen at points like this where the public are getting very antsy. And the political scene is going to be a mess going into this next election–

a real mess. You think 2020 was bad. Wait till you see this next election cycle. It’s going to be chaos.

– Yeah, I just saw a clip from my friend, Cuppy–

– Vivek Ramaswamy.

– –who put out the Vivek–

– Yeah, yeah. I saw that.

– –calling out the media in public in prime time. And I’m like, uh-oh.

– He needs a security detail.

– Just wait. I guarantee you, within 10 days, there’s going to be people alleging that he was having sex with underage children, or doing crack, or–

something will–

[LAUGHS]

There are things you’re not allowed to say.

– Well, it’s interesting, right?

– The media is corrupt and has corrupted our elections–

you’re not allowed to say that.

– But isn’t it interesting that that’s the point we’ve reached now?

And this guy is calling that out. And, of course, that’s what happens at these turning points. And I sadly think you’re right. I think the hit pieces will start coming thick and fast.

But there is always a tipping point where, suddenly, enough people get behind a sentiment like that that it makes it actually a popular sentiment. And you can see it–

– That’s right.

– –given oxygen. And maybe we’re at that point–

– It came after–

– There you go.

– –the failure of Carter in the ’70s.

– There you go.

So maybe that was the opening rally cry of a move to do something about the bias and the press and to do something about the way that stuff’s handled. I don’t know. I live in hope because I think, the sooner that happens, the sooner we can start the pendulum going back the other way. But it was a very interesting piece to see. That’s for sure.

– The one nice thing about getting older is that–

back when I was in my 20s and 30s, I was very aggressive and motivated about changing these things. And now, I’m in my 50s, and I realize–

A, I can’t change any of it, and B, it doesn’t really matter because I ain’t got that long left.

[LAUGHTER]

It’s going to be somebody else’s problem, not mine.

But I did want to ask you–

I have a feeling–

and it’s just a feeling, and at some point soon, in our subscription materials, you’ll see all the data behind this. And we might even put up a chart or two in this podcast to help you understand what I’m trying to say.

I think there is a very serious change happening in the credit cycle. People are defaulting on auto loans at unprecedented rates even beyond which happened in 2008.

And people generally don’t ever default on auto loans unless they’re deliberately rolling over into a cheaper auto loan. And with interest rates so much higher, that’s not what’s happening. These are people who genuinely can’t afford to pay for their cars. And like I said, that doesn’t happen because you can live in your car, but you can’t drive to work in your house. So generally, if people are in credit trouble, the car is the last thing they default on.

The other interesting thing I would point out is, when we put this chart up, you’re going to see that there’s no relationship anymore between student loans and default rates because the government is not letting anyone default on their student loans. So all those loans are–

they’re going to be defaulted on. They’re never going to be repaid.

The auto loans–

there’s going to be a huge default cycle that takes place–

and, of course, credit card loans too. And then eventually, maybe even mortgage loans. But mortgage rates are so low that I think you’ll see them be OK.

But my question to you is not just about the credit cycle and the consumer, but maybe even more importantly, there’s about 40% of the Russell 2000 that can’t earn enough to even pay their existing interest rates. So what do you think? Assuming, if you will–

I’m not saying that you are saying so. I’m saying, “assuming” we tip over into recession next year, and assuming that unemployment goes from 3% to 6% or 7%–

which wouldn’t be that severe of a recession–

do you think we might see something historical in terms of a credit cycle?

Yeah. Well, look. We’ve seen a historical credit cycle already. But it just happens to have been a positive one.

And so no one’s been worried about it. Everyone’s been just cheering it to the rafters, and every year, lower rates have been great. But if you look back, this is incredibly historic credit cycle on the upside. And the chance of that not being echoed on the downside is very, very small.

Now, central banks will do everything they can to avoid that because it’s going to be so damaging the amount of credit that’s built up in the system.

And to your point, the number of zombie companies there that cannot sustain their debt payments through their course of business is just unbelievable to me.

But it never mattered. It never mattered until rates began to do what they’re doing now. And now, they’re doing it fast. And the Fed has been desperately trying to convince people for a year and a half now.

Look, guys, we’re serious. Not only are we going to raise rates, but we’re going to keep them up for longer. And yet, still, the equity market doesn’t get that. Still, the equity market is not priced for what the Federal Reserve are desperately telling them is going to happen in the next year to 18 months.

So we’ve got that to come. We’ve got that moment where markets realize that, oh, they really are serious, and this is the world we’ve got to face for the next little while.

We’ve got the catchup in unemployment still to come. And we have the unwinding of this credit cycle. And all the points you made are absolutely correct about all these defaults we’re seeing.

And also, Porter, credit card interest rates are the highest they’ve ever been right now. We’ve seen the consumer put more and more on their credit cards. More and more of it is necessities rather than on vanity purchases.

The headline numbers suggest the consumer is in OK shape. Underneath it, if you dig into the data at all–

which I know you do–

you can see that it’s far from the case. Underneath, the foundations have been chipped away piece by piece. We just haven’t reached that tipping point yet.

And I think most people thought that that tipping was going to be an interest rate level, an absolute level–

either the rates would get to 3%. 3%, and that would be enough. Or 4% or maybe 4.5%, and that would be the tipping point.

But I suspect that the actual tipping point is going to be the length of time that these rates stay where they are. There’s going to be a point where people can’t actually take it anymore that they’re hanging on and hanging on, thinking the cuts come in anytime soon.

But the data is confounding them and not giving the Fed any room to cut. The only thing that is going to give the Fed room to cut now is once this process starts. So it’s chicken and egg. I think that process is much closer to happening now than it has been at any point in time. And look, you and I know, you can’t put a time on it. You can’t say when something like that’s going to happen.

But the evidence continues to mount every single time an official statistic is released–

that if you bother to look into it–

that the deterioration both in the state of the consumer and the state of the economy is actually accelerating. So anybody that believes that we’re going to get through this–

there’s going to be a soft landing or a no landing scenario–

I suggest, is just smoking something because I just don’t see any way out of this now without some kind of major correction at some point in the next 12 months–

probably sooner.

– Yeah.

And I think that’s what’s–

in my opinion, of course–

that’s what’s giving rise to the move in gold that everyone knows–

the real money, the people who really know what’s going on–

13 families, if you will.

The people know that there’s big problems in the banking system. And if the Fed is reluctant to bail out, the banks, particularly the regional banks, there could be a lot more financial uncertainty that develops as the credit cycle rolls over. And that’s when people go to gold. They go to gold when they don’t trust the money, or they don’t trust what the Fed’s going to do to the money next, or they don’t trust the banks.

So that’s why you see Bitcoin moving up and gold moving up. And I think that will probably continue for the next while.

– Well, look who the biggest buyers of gold have been? That’s all you need to know–

the central banks. They bought more gold in the last year than they bought at any time since the 1950s. Yeah. And it does tell you a lot.

They were perennial sellers for many, many years under the Washington agreement. They were all saying that we’re going to sell–

let’s be gentlemanly about this, and we’ll stipulate how much we’re going to sell. That agreement quietly went away a couple of–

probably eight or nine years ago.

And last year, central banks bought more gold than it bought in 70 years. And that should tell you everything you need to know because they’re price-insensitive. They have unlimited balance sheets. They can print all the money they want.

So why are they buying gold? There’s a very obvious reason for that. And people need to pay attention to it, and just believe that.

– Yeah. I’ve wanted for a long time to write a little pamphlet or maybe a sales letter even that says, who’s buying–

“Who’s Been Buying All the Gold?” and tell the story of history about how empires and countries that have great economies and that are on the rise buy gold and that countries that are in decline and heading into trouble begin to lose their gold.

– Canada recently.

PORTER STANSBERRY: And why you should really pay attention–

– Canada, yeah. The UK, another example.

PORTER STANSBERRY: –to all that.

– Yeah.

Yeah, it matters. You and I know–

gold is money. JP Morgan said that everything else is credit, and he was absolutely right. But there are points in the cycle where that doesn’t matter. And when you have the tailwind of free capital–

which you’ve had for such a long time now–

it doesn’t matter. But once we get to the purging part of the debt super cycle, gold matters an awful lot. And if you don’t have it before it matters, good luck trying to get hold of it when it does without paying elevated prices.

– Grant, you’re one of the maybe half a dozen people that I think are must-reads for anyone that cares about economics, and finance, and that either has a lot of money or seeks to have a lot of money in their lifetimes. Tell us your website address. I believe it’s grantwilliam–

– grant-williams.

– –grant-williams.com.

– -williams–

yeah, hyphen, dash–

that’s it. Yep, very easy to find, very easy to find. I say dash. Could be–

[INTERPOSING VOICES]

– I don’t know.

PORTER STANSBERRY: Yep.

– Yeah, that’s it. [INAUDIBLE].

– I know you have some subscription service. What I would tell people is, whether you want to buy his service or not, go to his website–

grant-williams.com–

and look at his presentations, which he has up there for free. They’re extraordinary. I mean, they are absolutely the best in our business.

I want to ask you one last question. I suspect you won’t comment.

[LAUGHTER]

But I know there are a lot of people who are long-time fans of yours that will be listening to this podcast because you’re on it. And I just wanted to know if you would be willing to say anything about the ongoing situation at–

what was it called?

– Real Vision?

– Real Vision. Sorry, about to say “Real Value.” Real Vision–

the business that you’re associated with in the past that does the long-form interviews that you’re famous for.

– Yeah. I won’t say, no comment, because that would give you a win, and I’d hate to do that. But look, I co-founded that business back in 2013 and just poured my heart and soul into it–

enjoyed every minute of that ride. I stepped away at the end of 2018 after doing a year of long-form, in-depth interviews–

which I learned so much from and which, to this day, I think a lot of them are available on YouTube. And if you get the chance to watch them–

not for me, but for my guests in those conversations–

they’re well worth your time. You’ll learn an awful lot from those.

And after that, the company decided to go in a different direction as well as I do. When you’re the founder of something, you want it to continue, you want it to be successful, and my thoughts on that haven’t changed. It’s become something that I didn’t set out to build, and that’s absolutely fine. There’s no sour grapes on my part. I wish it continued success.

I don’t know what else to say, Porter, mate. I really don’t.

– That sounds–

well, that sounds good. I’m sure a lot of people were interested in your view about that, so I appreciate you sharing it. And I really appreciate you being here with us today. And more than anything, I really appreciate just getting to be your friend.

A lot of people don’t know this, but Grant Williams was one of my heroes in this business. And I remember very well the first time I was in a green room with you. I was afraid to come up and talk to you.

– Oh, come on.

– You, Bill Bonner, Doug Casey, Jim Grant, the New York–

the industry observer guy–

these guys were all my intellectual heroes. And it’s been tremendously important to me. And it’s just such a great experience to get to know them and realize they actually are that smart. So–

– Well, Porter, listen–

– –thanks for being my friend. And thanks for being here on the podcast.

– Listen, the pleasure’s all mine. Thanks for inviting me. And listen, you belong in that group of people way more than I do, so just walk proud, my friend. Chest out and walk proud.

– All right, well, we all know that’s not quite true.

[CHUCKLES]

But thank you, Grant.

– Hey, no problem at all. No problem at all.

[AUDIO LOGO]

– Wow, what a great interview. Grant Williams is always sharp. And one thing that stuck with me besides the great conversation is, there’s this old saying that you are the average of the five people you surround yourself with. And you mentioned some fantastic names–

Bill Bonner, Grant, Jim Grant–

who else?

– Jim Rogers.

– Doug Casey, Jim Rogers. I mean, how important is that? You really have to surround yourself with people that will elevate you.

– It’s probably going to help your thinking a lot. It’s going to make sure that your thinking is very sound. The other thing that I would tell you guys about Grant Williams in particular–

and also Bill Bonner–

a lot of times people who are bearish can be very negative and very unpleasant to be around because they’re just negative about everything.

I don’t want to name any names, but there’s one guy that particularly [LAUGHS]

comes to mind.

He’s just unpleasant. He can be very smart, but he’s just so negative and nasty all the time.

And there is just simply not a kinder, more dignified, and sweet person than Grant Williams or Bill Bonner. They both have this wonderful demeanor that they understand that there’s problems, but they take it with such grace. It’s almost like they know it’s just a big joke. And they just handle it better.

I hope that you guys that hear these financial problems that we talk about–

because we want to warn you about them–

I hope that you’ll see the same thing in us. We know there’s going to be trouble, but that’s OK. We’ll find our way through it, and inevitably, everything will work out.

– Yeah, I think it goes back to also what you said, which is, there are some advantages to getting older.

We have a little bit less time, and you should have some fun right now because the clock is ticking. And we’re also not naive enough to know that we can change the world. We can do our best to give the appropriate information, and, hopefully, people make the right decisions.

But yeah, to get caught up in all this chaos–

and Grant’s dead on. And you and I don’t go down the political route a lot, but it’s going to be chaos for the next election cycle throughout the world. I mean, it’s already madness. And we’re going to see some wild things happen–

no doubt about it.

– One nice thing about Twitter and other social media stuff is that–

remember, 25 years ago, when your only source of media was basically three network television channels?

– Mm-hmm.

– And maybe PBS and–

I don’t know if you had the UHF channel or not, but–

– Back when we had to get up and go turn the channel.

– Turn the knob, yeah.

– Yes.

– Well, there was just no way to escape the politics back then.

– No.

– During the presidential election cycle, you’re just going to see ad after ad after ad.

– That’s it.

– Bob Dole is terrible.

[LAUGHS]

– Yes.

– All that stuff, right? And what’s nice is you can actually, now, almost completely avoid it if you try.

– Yeah, absolutely–

because it’s very toxic.

It’s there to divide us. And we’re going to get a lot of it, so it’s like drinking from a fire hose. All right, Porter, let’s get into some more fun stuff–

“You Just Can’t Make This Stuff Up,” which is one of my favorite segments.

– I got one you haven’t seen yet.

– Ooh.

– Go.

– OK.

– You go first.

– OK. First of all, this is piling in on–

we’re in sync today.

One of my favorite Twitter accounts is CarDealershipGuy.

He’s fantastic, really does a great job. The percentage of subprime auto borrowers 60 plus days past due on loans hit a record 6.1%

in September. Like you said, that is astronomical.

And it’s funny–

not nothing funny about it–

but he hadn’t commented on it, but here’s this quote–

“Truthfully, it’s taken me a couple of days to digest it. I’m concerned. But my concerns go way beyond the car market. I’m concerned about the people that are struggling to keep up with their bills.

I’m concerned about families that will lose their means of transportation. I’m concerned about the economy. Most of all, I’m concerned about the future of the country.” It’s really wild how–

like you had said, if you are willing to and you’re not willing to lose your car, you’re going to lose everything. And it happens really fast.

– You know how we can fix the economy? We need more government spending.

– Absolutely. Right?

[LAUGHS]

– No.

[LAUGHS]

We need to cut everybody’s taxes to a flat tax of 15% or 20%. We need everybody to pay something, and we need to stop taking all of this capital away from our most productive people, and we need to stop giving it to the government. We need to cut regulation. We need to encourage people to invest in building new companies. We need to get out of people’s way.

– Yeah, what would happen right now if we had a president that said, you know what, America’s energy-independent, and all we got to do is support oil. Like you said, cut regulations there. What do you think happens to inflation?

– We go down–

way down–

– Immediately.

– –to nothing.

– Immediately because of forward-looking, positive aspects of knowing that. OK, let’s get in this–

[INTERPOSING VOICES]

– Yeah.

– Sorry, one more point about this–

the biggest issue for an economy is, if you are a person of working age, you have to accept that you’re going to have to work.

You can’t live your life on Social Security Disability or whatever. You’ve got to work. And the more that we don’t–

the more that the politicians cater to these people who want something for nothing, the worse the economy gets–

which is what’s so funny about watching the writers’ strike, as I was saying now.

– Right.

– [LAUGHS]

[CLICKS TONGUE]

But of course, that’s just not what’s going to happen.

– No, now they’re promising UBI because we’ve got money for that–

– Yeah, right.

– –because we need to reward people for sitting at home. Now, this trend–

and I’m on Twitter, I’m not on TikTok–

but I know you probably see it too. It’s the trend of these young students that–

they thought Biden was truly going to allow their student loans to be forgiven.

– He tried his best.

– He did try. Give him that.

But they’re working because there’s not enough handouts anymore like there was during COVID. And they just can’t believe that somebody could work from 9:00 to 6:00 and still not really be able to make that much money. Well, I remember, when we were younger, working more than 9 to 6 and still not having enough money to really make it either.

– I remember very well.

– It’s called working hard.

– My first job in finance paid $22,000 a year in salary.

– OK.

– I lived on Steve’s futon in his living room. Yep, and I worked every day–

every single day–

from 7 to 7 even on Saturday and Sunday.

– This was when the cops showed up because they thought that your car was a stolen car that somebody had basically taken everything out of.

– 4:00 in the morning, I was still at work, and my car was in the parking lot. And my car was in such a bad state of repair. It was missing the passenger seat.

[LAUGHS]

All the windows were rolled down, and it was raining–

because I didn’t know it was raining because my office didn’t have any windows.

[LAUGHTER]

– Right.

– And the cops thought my car had been stripped and stolen, and they were worried that I might have been kidnapped.

– Yeah.

– But I was just at work.

– Yeah, exactly. That’s called work.

– That’s how life is when you’re in your mid-20s and you’re trying to make something of yourself.

– Yeah, you work incredibly hard. Know nothing–

you got to fight your way–

it was like Grant Williams said earlier–

he bugged the senior person to try to get that job. And it was about tenacity.

– Do you know that I sent Jim Grant, the famous newsletter writer, an email every year on his birthday–

every year–

asking if he would please meet with me to talk about ways we could do business. And I think for 10 years in a row, from 2002 to 2012, he said no. But then finally, in 2012–

so maybe for nine years, he said no–

then on the 10th year, he said, my wife keeps asking me why I won’t at least just meet with you.

[LAUGHS]

And so I went to New York, had lunch with him, and then we did some business deals. And then we got to know each other, and then I got to host his 75th birthday in New York.

– How cool is that?

– Proud of you.

– Wouldn’t have happened if you hadn’t been tenacious.

– Tenacious, yeah. That’s the only thing that really lies behind every successful person in business, is that we just don’t ever give up.

– That’s right. There is no quit.

– No.

– It’s almost like you have to be, in certain ways, a bit delusional in really believing.

– I’d say that’s a fair description of me. [LAUGHS]

– Yeah, and for me, too, because–

you know my background. And there was nothing given to me either–

and especially when I left your side the first time in 2015, and I was determined to do it on my own and take some of the tools that you taught me. And after four failed businesses, it didn’t matter. I was going to figure it out. And I was going to get it done.

And I did. And there’s no better feeling than that kind of satisfaction–

– Oh, it’s the best.

– –of knowing that you did something against all odds, and you just tuned out the noise, and you put your head down, and you made it happen.

– And listen, just one thing I want everybody to hear me loud and clear–

I am very proud of what Porter &amp; Co. has done. It’s the crowning achievement of my career. I love this business.

I’m never leaving it. And the reason why we were successful is not just that we have attracted some great subscribers. But look what we did for them.

– Yes.

– Look at all the great recommendations being made.

– The track record, it’s been phenomenal.

– Yep. And by the way, not mistake-free, right?

– Of course, there’s a few.

– What happens when we make a mistake? We own up to it. It’s in our hall of shame.

– That’s right.

– It’s on the back page of our newsletter for the rest of my life.

– Yes.

– And that’s all people expect. They want you to do good work, and they want you to have integrity.

– But wasn’t it–

– And by the way, is that simple or what?

– It’s simple, but wasn’t it a lot easier this time, having 25 years experience of the mistakes that you made before?

– It was also really a lot easier because there were a whole lot of people in our markets that knew if they bought my product, they would get their money’s worth.

– That’s right.

– And so it was a lot easier to get some new business, to get going because there are people out there that already knew and trusted me.

– Yep. All right, Porter, let’s move on to some more “You Just Can’t Make This Stuff Up.” So the Wall Street Journal is reporting–

not a shocker to you and I, by the way–

EV cars just aren’t working out as well as they thought. Toyota, recently, and Ford are sitting on a bunch of inventory right now because people, they just don’t want them even with the gas prices right now.

– Yeah. Remember when President Biden recently went to Detroit, and he met with GM? And he said that GM was changing the world with electric cars when in reality, they had sold 300 electric cars the previous year.

[LAUGHS]

And Tesla, which sells all of the electric cars. Biden won’t go give that guy any government money or help him because he’s no longer the Democratic–

AARON BRABHAM: That’s right.

– –kid.

But yeah, it’s shameful. It’s shameful what’s happened to General Motors. It’s shameful that the bailout that the government gave the unions and the bankruptcy of ’08 and ’09–

and I’m not surprised that their cars aren’t selling because I think most Americans don’t want to do business with the government. They don’t want to buy government motors.

– That’s right.

– They want to buy Tesla.

– Even for the EVs, people are starting to understand–

we talked about this. Long ago, we used to joke about it.

– Chevy Bolt, we made fun of–

– And we also talked about this–

that people, they have this whole like, yeah, but I have an EV car. OK, but when you plug it in and–

– You plug it in–

– –that electricity comes from two sources–

natural gas or coal.

There is no solar on the other side that’s powering the house, that’s powering the cars. So recently, the true cost–

not a surprise to us, we’ve been doing this for a long time–

the true cost of fueling an electric vehicle today, including excess charging costs and subsidies, is equal to $17.33 per gallon.

PORTER STANSBERRY: A shocker.

[LAUGHS]

– Yeah, go figure, right? Right?

– What a shock. You mean, if I generate all the energy at a plant, and I send it down a copper wire, and then I put it into a transformer, and then I put it into another wire, and then I put it into a distribution thing, and then I put it into my car, that’s not very efficient?

[LAUGHS]

Oh.

– Yeah. Who would have known?

– Who would have thought it?

– We would have never thought of that.

– Gee whiz.

– It’s funny. The other day on Twitter–

I do love Twitter, and I know you do too–

the other day, I’ve seen–

people are always innovative. They’ll figure out how to make some money.

There are now companies around America that have a utility van, and in the back, they have power generators, gas-powered generators that they’re plugging into cars [LAUGHS]

that are EV that run out. So you’re paying that guy to power up your EV car.

– You know what Barnum said? He said you’ll never go broke underestimating the stupidity of the American people.

– Boy, isn’t that true?

– Yep.

– Unfortunately.

– People will absolutely believe anything.

– Yeah, that’s–

– You can buy an electric car, and it’s going to save you money.

[LAUGHS]

– Right.

– No way.

– Oh, well, they pat themselves on the back for doing good for the environment even though, if you look at the lithium mines and you see how everything is mine–

and I know you’ve seen this too. We talked about this for a long time.

You’ve got the wind turbines.

First of all, these things are completely inefficient. It takes an enormous amount of copper, and then they don’t work forever, obviously.

– Takes an enormous amount of money to operate them.

– Enormous amount. And a lot of them actually run off of getting started–

– It’s free. It’s wind.

– –by–

no, but–

– It’s free, Aaron. It’s wind.

[LAUGHS]

– But that’s not true because they’re actually run by power generators that, actually–

– What?

– –will get them going.

– Really?

– Now, here’s the crazy thing.

– Oh, you know what you’ll find in every single industrial-sized solar installation? You know what you’ll find in every single one?

– All right, let’s hear this–

– In every single–

– –sounds good.

– –utility-scale industrial solar installation, you will find a natural gas pipeline.

– There you go. Every single one of them?

– I wonder why.

– I know. It’s really bizarre. It’s infuriating. People just–

they don’t have logical–

logic. Sorry, they don’t have logic. There’s no critical thinking anymore.

PORTER STANSBERRY: None.

– And by the way, these wind turbines–

and we talked about solar a long time ago, and you talked about how–

– There’s a big problem with solar. You know what it is?

– It’s not efficient at all.

– It’s called night.

– Yeah.

[LAUGHTER]

Or clouds.

– The Earth spins.

– Yeah.

– We’re in darkness half the time.

– Well, we talked about how crazy it was that Germany was the one that wanted to start with this. And is it sunny in Germany?

– Yeah, it is sometimes.

– Sometimes.

– That’s fine, yeah.

AARON BRABHAM: Sometimes.

– That’s not really the problem. Night’s the problem.

AARON BRABHAM: Well, night is a problem.

– The other problem is that when you export your energy, security to Russia, what happens to you next?

AARON BRABHAM: Yeah.

– It’s like counting on the mob to protect you. They will–

kind of. [LAUGHS]

– They’ll get you for a price.

– They’ve exported their entire foreign policy to the United States–

– [INAUDIBLE]

– –which has never met a war it didn’t love.

– No, that’s right.

– Those are really bad combinations.

– Yeah, those are really bad.

– I love the videos of them digging up–

sorry, what were they–

they were tearing down a wind farm to get at the coal underneath it.

– Yeah, that’s right.

[LAUGHS]

That’s one of their new ones. Also, they’re getting shipped wood from Canada overseas–

– And North Carolina.

– Yeah, and North Carolina overseas to–

– [INAUDIBLE]. Let’s chop down trees in North America, ship them to Germany, and burn them.

– I think they forgot about the fuel cost part of transportation over there.

– It’s green though because the trees grow back.

[LAUGHS]

– Exactly. That’s right. This whole green thing is a total scam. 447,000 Americans are now working two full-time jobs.

– 447,000 Americans. That’s half a million people out of 100 million families more or less. Oh, OK.

– Two full-time jobs–

because the unemployment rate, if you look at the statistics–

– 3.5%.

– It’s 3.9% right now–

unemployment. So we should be celebrating because it’s very low.

– No, I disagree.

– That’s what the government tells us.

– I disagree. I think unemployment needs to be between 6% and 8% for the economy to actually be healthy. You want to know why?

– Explain.

– Try going anywhere and getting decent service.

– Oh, that doesn’t exist anymore.

– Why not? Those people shouldn’t have a job. They need to be unemployed. [LAUGHS]

– Well, yeah.

– They need to know, that’s not going to cut it. They’re going to have to work a lot harder.

– I’ll tell you what? I’m over. I am absolutely over. I live down in South America. People work really hard there because there are no government handouts.

And things are still relatively cheap. But what I’m over when I come to the United States–

everybody wants a damn tip. It doesn’t matter–

if I do all the work myself, if I poured my coffee and I went to the register, it wants a–

now it’s 25%, 30%, and 35%.

– I was at a McDonald’s kiosk.

AARON BRABHAM: Yeah.

– Have you been to these things–

AARON BRABHAM: Yeah, yeah.

– –where you’re on the screen?

AARON BRABHAM: Yeah, because–

– And the computer said, add a tip.

AARON BRABHAM: Yeah, that’s what I’m talking about. No, I’m not doing it.

– To the computer?

– Right, right. [LAUGHS]

– I’m teasing. I didn’t–

– They haven’t got there yet.

– It’s a good story.

– Well, don’t let the facts get in the way of a good story.

– I can imagine my friends who are McDonald’s franchisors calling me and being like, what are you talking about? That does not happen.

[LAUGHS]

– Well, I’ve been at some places that I just was completely baffled that they should deserve tips if I’m doing anything.

– Speaking of McDonald’s, as you know, it’s one of the businesses that I admire greatly.

– Yes.

– Their franchise in San Francisco–

in the city–

closed.

– Closed. It’d been around for 60 something years?

– I want the listeners–

think about–

to yourself–

when’s the last time you saw a McDonald’s location close?

– I don’t think I ever have.

– What an incredible indictment of the progressive philosophy that has guided that city’s politics for who knows how long. And Gavin Newsom wants to be our president.

– Oh, yeah.

– Whoo. I’ll tell you what? If Gavin Newsom becomes our president, I might have to move to Columbia too.

– [INHALES]

[SIGHS]

I’ve got a place for you, don’t worry.

– I’m thinking maybe Ireland.

– I can imagine. [LAUGHS]

I’d love to go visit you and play some golf over there.

– Yeah.

– That’d be fantastic. OK, Porter, with all this equity and all this push for–

– Equity and inclusion.

– –and inclusion for people to be hired regardless of their skill set–

it’s all about the color, It’s all about the gender, and all that. So this won’t shock you at all. The US Equal Employment Opportunity Commission requires companies with 100 or more employees to report their workforce demographics every year.

Bloomberg obtained 2020 and 2021 data for 88 S&amp;P 100 companies–

88 out of 100–

and calculated overall US job growth at these firms. The overall job growth included 20,524 white workers. The other 302,570 jobs, or 94%, went to people of color.

It worked. They’re pulling it off.

– The Supreme Court just changed all that.

– Did it for colleges.

– No, no. The ruling applies to employers as well.

– OK.

– I only know this because–

– What?

– –I’m now the chairman of the board–

– Oh, oh. Are they telling you? Is that what they’re telling–

– –of a company that has more than 100 employees.

– Oh, no way.

– And so we were able to make a decision as a company that we were only going to hire based on merit.

– OK, well, are you going to be able to get around this? Are they going to try to hammer you? What are they going to do?

– I don’t know. Listen, I’m just telling you, I won’t participate in any business that hires someone for any other reason than merit.

I wasn’t a part of slavery.

I was born after the Civil Rights Movement. I’ve never discriminated.

– Yep.

– By the way, this is what got us canceled the first time.

– Yeah, I know, I know, I know.

– We went to high school that was completely integrated. We didn’t–

I did not experience any racism at all–

– No, not at all.

– –in my upbringing. I didn’t–

I never–

we treated everybody the same.

– That’s right.

– And I always have my whole life, and I’m not going to change now–

not going to happen.

AARON BRABHAM: I think it’s the right thing.

– So if they tell us that we have to follow the law, that’s fine. I’ll just resign.

– OK.

– Yeah, I won’t participate in any of that. I think it’s utterly wrong. I think it’s entirely un-American, and I think it’s evil.

– Yeah, I think so too.

– And those kind of laws are what’s going to cause racism.

– That’s right. I know it definitely does. It’s entitlement. It’s the ultimate idea of entitlement.

– And we’re not allowed to say that because we’re two white men.

– Well, of course.

– We’re now the–

whatever. We’re now the class that’s no longer favored.

– Yeah. No, not at all. And by the way, it’s like the prime minister for Scotland–

which I don’t know if we talked about it before–

Scotland is 96% white.

– Oh.

– And–

– Yeah.

– –he goes on a rant in front of parliament, and he’s like, the judges are white. The police officers are white. The congressional members are white. The–

and he’s like, we got to stop this. And that just that doesn’t make any sense, you know?

– The people in Scotland are white because of evolution–

[LAUGHS]

– Yeah.

– –because they need vitamin D, and it’s not a great sunlight place.

– That’s not.

– People get white there.

– Yeah, that’s what happens.

– Because they’re from Scotland.

– Yep.

– It doesn’t mean that they’re evil people, or that they’re racist.

– Well, them and also we’ve got a couple of congressional members–

the squad have said that they will happily take in any Palestinians or Hamas members to our countries. So they’re excited.

– I don’t want any Hamas people here.

– I don’t want any Hamas people either.

– No.

– No. Palestinians, fine. That’s different from Hamas. But even then, let’s do some things with the border. Now, they’re estimating 10 million people under Biden have come over.

– This is an unpopular view. I got no problem at all with any kind of immigration. I think America has always been the land of immigrants, the land of the oppressed. I have no problem with that. What I have a problem with is letting people in so that they can be on the dole and vote for more progressive policies.

– Yes.

– So how about this? If you weren’t born here, you’re not getting any benefits, none–

no Social Security, no Medicare, nothing. You get nothing. Guess what? People still come.

– Oh, they’d happily come.

– Yeah.

– But there’s no reward system for the progressives. They want those people–

– It’s got to stop.

– –to be here.

– It’s got to stop.

– Let’s go to a little bit of mailbag here. I only have one because there were so many that were duplicates. But it was from the conference. “I returned home from the conference this week, and I wanted to send a note of appreciation.

The information shared by the presenters was top-notch. The food provided was better than any restaurant my wife and I ate at while in Baltimore. I’m amazed it was at no cost–“

I mean, they’re subscribers, they’re our best. Of course, we’re going to take care of them as we said.

“–and

that Porter was willing to host us at his home. I am in awe of the generosity. I’m telling anyone that will listen about Porter &amp; Co. And the quality of the research you provide.

Keep up the great work. I’m looking forward to all future newsletters.”

Thank you, Tony. We appreciate it. And thank you all the other subscribers that gave us feedback.

– And thanks to the incredible staff that we have that put on that show. It was amazing, and the food was genuinely excellent.

– I don’t think I’ve ever had catered food that good in my life.

– Oh, those big kettles they had in the fires?

– OK, that–

yeah, so you had three–

I don’t know what size those were–

but they were like huge, giant Webers and salted fish on there, had–

– Beef and chicken.

– Beef and chicken was–

– Yum.

– –top-notch. And you had some Eifrig wine. Shout out to Doc for that. And he showed up, and that was fantastic.

And we had some good friends there. And we’re going to do it bigger and better because that’s what we do.

As we go by, it’s only going to be available for the partner pass subscribers at the farm. We’ll be sending information about that. And by the way, we have all the videos and presentations up on the website for the members. You log in. They’re all there for you on the tab. And we’d love for you to check those out and send us some feedback.

And if you’re a new listener and would like to get Porter’s biggest prediction ever, it’s a free report. I’m not asking for anything. We’re not trying to pedal anything this week. We’re very happy with our success, Mr. Chairman.

But you can go to porterspodcat.com–

porterspodcast.com. All we ask for is an email, and we’ll send you one of your biggest predictions ever that is a great research report.

– I can’t wait to see it. And I’ll also tell you, if you sign up for that, are you going to be getting what I write on Fridays?

– Yes, you absolutely will. So the other benefit–

if you sign up, you get this report. And you also will hear from me every Friday.

– Every Friday.

– Yep. And that that’s a pretty good piece.

– Yeah. I don’t know if anybody in the industry–

I don’t believe so, you would know better than I–

that gives so much deep editorial content, deep research for free. I don’t know anybody else.

– Well, it’s really simple.

If we show you, if we demonstrate that we know what we’re talking about and you’re going to invest money with us, then paying us whatever is peanuts–

paying us whatever. What do we charge you now? $8,500 for a lifetime–

– For a lifetime.

– –of research. It’s peanuts compared to all the stuff you’re going to get–

all the good ideas and all the money you can make.

And one quick note on that, and we’re going to get into it the next podcast–

we do this once a month. We have some very exciting things that we’re going to have with Marty Fridson coming up next month, who’s the dean of high yield, because that’s another one of the ways that you can win big–

– Win big.

– –that doesn’t happen that often. And he’s about to enter his Super Bowl.

– He is. It’s going to be crazy. The last good credit default cycle we saw was ’08, ’09. There is also a very brief and only about six months in 2015, 2016. So these things happen roughly every 10 years, and we’re about to have the biggest one in my lifetime.

– Yeah, and we’ve got the best guy in the world. Thanks to country club guy. He went and got him for us, and we’re very honored to have him. And I’ll do another teaser here.

Porter, you have an incredibly talented, one of the smartest guys out there, a Rhodes scholar who has–

does he also have a law degree?

PORTER STANSBERRY: Mm-hmm.

– Yeah. A law degree at Yale, I believe?

– Yeah. His undergrad is in microbiology.

AARON BRABHAM: Microbiology.

– Has a law degree from Yale and was a Rhodes scholar. And he’s going to be our biotech analyst, and we’ll be launching that, I believe, in January.

– January. January, we’re going to be filming it. So look at the end of January, early February, only for the Partner Pass subscribers. But man–

– And here’s the best thing. If you already joined us as a Partner Pass subscriber, what do you have to pay to get our new biotech project?

– Nothing.

– Nothing.

– It’s included, as we promised.

– That’s right. When I tell you, a lifetime, I mean, lifetime.

– But we will be raising the prices because that’s what we also promised you as well. So lots of great things coming. And let me tell you, I’ve had a couple of conversations with him. I’m blown away by his drive, his passion.

He’s got this industry report that I’ve never seen before. He’s looking at this cycle that’s happening right now. Biotechs are so undervalued.

PORTER STANSBERRY: They’re so cheap.

– Once again, just like Marty Fridson, we’re about to hit this biotech phase as well. So we’ve got some really great things happening.

– I would wager that the average return on our new biotech analysts’ first dozen recommendations, which will come out over the next, probably, 24 to 36 months–

the average return on those recommendations will be 50%, on average, over the next 36 months.

– Yeah, and this because you have a long history with your college professor, who was your first employee.

– Dave Lashmet.

– Dave Lashmet, who is a complete genius.

– He’s a done a great job for Stansberry. Yeah, and one out of three of Dave’s picks double.

– That’s just–

[LAUGHS]

– It’s insane.

– I don’t really understand it.

– And I think our new biotech analyst will be able to deliver the same exact quality.

– Well, that would be fantastic. I’m really excited for the future of Porter &amp; Company. Mr. Chairman, congratulations on getting back in the King chair.

– Thank you, guys. And I really appreciate you tuning in. We’ll see you next month.

[AUDIO LOGO]

ANNOUNCER: Thank you for listening to the <i>Porter</i> <i>&amp;</i> <i>Company</i> <i>Black</i> <i>Label</i> <i>Podcast,</i> with your hosts, Porter Stansberry and Aaron Brabham. We’ll see you soon.

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