Jason Hartman starts the show by discussing human rights. He delineates this into two categories – the individual versus the group. In the interview segment of the show, Jason hosts Dr. Bryan Taylor. They look at a thousand years of interest rates and housing costs. They also examine different plagues and pandemics and the economic impacts they’ve had. He relates this to the current pandemic.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:54
Welcome to episode number 1520 115 to one We have got a great two part show today. And I think you will enjoy this immensely. You like that? Anyway, so in the last couple of days, I have finished the trilogy of the famous eine Rand movie, which is of course, atlas shrugged. Now remember, Atlas is the person who holds up the entire world or I should say the God that held up the entire world and what happens when Atlas shrugs? And why would Atlas Shrugged? And who is Atlas? Well, many years ago, I read the book back in the 90s. And it is no easy feat. And, you know, to be honest with you, it’s I don’t know, at least for me kind of boring. I’m not the fastest reader for sure. And kind of boring for the first maybe 90 pages or so. But after that, wow, it’s good. That book is life. Changing, life changing life changing. And I do think iron Rand is sort of out there on a few things, but the core ideas at the time were certainly revolutionary, just like the Magna Carta was revolutionary, you know, almost 1000 years ago or 900 years ago, I guess. And just like the constitution was revolutionary back in, you know, 1776 to 1789. So, Atlas Shrugged was revolutionary. And so was her other famous book, The Fountainhead with architect Howard Roark. You know, this one talks about who is john Galt and what does that have to do with society today and with real estate investing, and with, you know, so many things in life well, it has a lot to do with pretty much everything in life, because the foundation of democratic civilization is really based on the principle of property rights. And what really? Do you have the right to as a human? What rights belong to you? Do you have the right to your own thoughts? Do you have the right to the privacy of those thoughts? Do you have the right to keep the money you have earned? Do you have the right to keep the property you have earned? Do you have a right to privacy in your effects? While that one, thankfully is right in the constitution? You know, do you have the right to speak freely? Well, certainly not on a left wing controlled college campus. Certainly not on the disgusting technology platforms like Twitter, Facebook, YouTube, they will sandbox you they will ghost post you all kinds of disgusting, evil things these companies are doing. And maybe they’re doing them to some extent, as an agent of the government, because they’re bigger than many government. Are these big tech companies? These are pretty important questions. They’re really important. They’re a lot more important than going to Jason hartman.com slash properties and buying another property. Okay? These are big, big important things, because they affect everything in all of our lives. Do you have the right to your own labor? when someone tries to scam you out of your money? Should you have the right to try and recover that money? You know, what would you do before civilization? Well, you’d go and recover it, or try to recover it through violence that was the only means available to you. And then as things became more civilized, and the Magna Carta and the British government and then the US government most famously established the concept of really reliable and transparent legal process. A court system and trial by jury of one’s peers. And this was absolutely revolutionary at the time that evolved really starting from the Magna Carta, and up to the US Constitution. These are seminal moments in human history. Nothing ever, ever, like that existed before. Everything that existed before that was all about the royalty and the church, and the government having all the power. And really the US Constitution mostly was the one that said, Wait a second, this equation has been wrong forever. Until now. And now we are saying that the rights belong to people and not government. And we’re gonna make a document. I mean, this is so incredibly amazing. And we are all even if we don’t live in the US be so appreciative of this because this concepts spread around the world because it was such It was such a good idea. It was such a revolutionary idea. And thankfully it spread not everywhere, but most places. The concept that there would be a document that would give the finger to the government and say, You don’t have the rights, I, the individual have the rights. And you know, when you think about what’s going on in the world today, and especially in the US with these ridiculous racial tensions, they’re absurd, you know, that the idea that people are constantly claiming like these special interest groups, I mean, this is long before present day this has been happening for decades, okay. Claiming that my group has rights. This group has rights that group has rights. You know, the people of all different colors have rights, the people of different genders have rights the people with you know, new genders have rights. Well Really? Are you sure about that? I mean, I’m 511. Okay. What about my rights as a person who’s 511? Well, on match.com I used to be six feet. But hey, you know, that’s everybody’s lying on match.com. Right. So, what about the 511? People? I mean, you know, what about that group? I mean, does that group get special protection? I don’t know. I mean, I think so. I think I think all the five let’s listen, you know, all presidents pretty much has been like six feet two and above, tall, tall people tend to somehow make more money in life. Well, I mean, I’m not short, but I’m not tall either. I’m just, you know, my, I guess by the average height. I am a little tall, but not very tall. Certainly, there are many people taller than me. Well, I think I deserve special rights because I’m 511. How tall are you? You know, maybe your group deserves special rights because of your height. And the concept of this stuff, rightfully rightfully came out of the idea that that’s an immutable characteristic. That’s the way the law looks at it, you know, they say, it’s an immutable characteristic, it’s something you can’t change, I can’t change my height, I can’t change my skin color, right? That’s an immutable characteristic. So people should be protected out of something that’s an immutable characteristic. But really, they should be protected for characteristics that are immutable to like, their speech, their religion. And I think that’s all well and good. But here’s the problem. Here is the here’s the problem. Here’s where it all goes wrong. And ein Rand setup best, and I’m not I don’t have this in front of me. I’m not reading it. So I’m going to get it a little wrong. But I think the concept will still be conveyed. And the concept is that there is no such thing as group rights. There are only individual rights groups cannot have rights because the smallest minority in the world is the individual. The individual person is the only unit that deserves rights. No groups deserve any rights only individuals because if you look at any group of people, you know who are purple colored or you know, whatever color they are, whatever gender they are or whatever religion they are, then you look in that group and people will differ obviously, they’re not all the same. Okay? I mean, how absurdly arrogant to think that they’re all the same and paint them with a broad brush. They’re all different. Okay, they’re all individuals. That’s why they’re only individual rights. There is no such thing as group rights. Now in the Atlas Shrugged movie, and then the book which I hate to say this you’ve heard me say it before, but I’m gonna say it. The book is better. I hate when people say that sounds so intellectually snobbery, right? The movies, all three of them really, you know, they’re not cinematic masterpieces, but they’re worth watching and they’re free on YouTube, which I can’t believe the oppressive. Disgusting, you know, off of that. I always call it Google. It’s really alphabet, the parent company, but Google and YouTube, same company, right? Or same ownership. You know, they’re always oppressing speech. I’m surprised they would let the ideas of atlas shrugged and iron Rand get out there. I guess they haven’t gotten around to censoring those yet. So no one sees them anyway. They’re all free on YouTube. So watch all three of them start tonight. The first one’s the best because bagni taggarts character. I think that’s Taylor Schilling. Oh, she’s easy on the eyes. Let me tell you, it’s worth watching. But no, the ideas are so good. And that’s really What’s important in life? ideas, good ideas. Now, what if someone’s ideas are different than another person? Should they be protected? Yeah, that’s the whole point of the First Amendment. So listen to this clip from atlas shrugged. And this was in the third movie. Oh, no, this was in the second movie, the second of the trilogy, which I watched the second half of last night and I watched the whole third one. You like this? It really shows you what happens with government and how government starts to abuse us people listen up, in the name of the general welfare, to protect the security of our fellow citizens. It’s always for our security for our own good in the name of the general welfare
Clip from ‘Atlas Shrugged’ 11:44
is to create for the duration of the national emergency. The statutes of directive 10 to 89. Job remain in effect. All employees and wage earners of any kind shall henceforth be attached to their current jobs. may not be discharged, but self employment.
Jason Hartman 12:04
So they’re saying that directive 10 to 89. This is the government’s new edict in this fictitious world that is sadly becoming non fiction. You know, Iran, she wrote this book as a fiction book. And George Orwell wrote his book 1984 and Animal Farm. Those were fiction, but they’re all becoming true. They were predictions. So here they’re saying, the employer cannot fire the employee and the employee is not allowed to quit. Because it’s for the general welfare for the good of all. You know, as much as I like Star Trek, it’s so communistic and collectivist and I hate collectivism. It’s terrible, so oppressive, because the collective doesn’t have rights. Only the individual has rights and What did Mr. Spock one of my favorite characters in Star Trek, what did he say? And in one of the Star Trek movies as he was dying, he said to Kirk, he said like he was in some room filling up with gas and he was dying. Right? Remember that one? Remember that? What did he say that was so famous? And of course they were promoting this line because Star Trek is a leftist, idealistic collectivistic communistic concept, and he said,
Clip from ‘Atlas Shrugged’ 13:29
the needs of the many outweigh the needs of the few.
Jason Hartman 13:34
Really? Are you sure about that? I don’t think so. Spock, I think you were wrong on that one. Because the many don’t have rights. Only individuals have rights. There is no such thing as group rights. Let’s keep listening to directive 10 dash 289 in this formerly fixed government,
Clip from ‘Atlas Shrugged’ 14:00
all industrial and manufacturing entities, henceforth remain in operation. And owners of set establishment shall not quit, entire sell, or transfer.
Jason Hartman 14:13
So all companies must remain in operation and owners of such companies shall not quit, retire, sell or transfer their companies. Guess what part of private property rights is being able to abandon your property and to exchange your property. And I want you to think about all the ways and when I say property, I don’t mean real estate, look at the shows about real estate. But I don’t mean all the ways that government interferes in abandoning transferring or even renting property like real estate property, I mean, any property, your gold your savings account or stocks your furniture, that’s all private property, all of that, you know, private property rights. Guess what else is private property, your mind and your time and your effort. So when someone takes advantage of you in a deal, this is a good example. Remember, they are literally stealing your life because it took you time to earn that money to buy that property. Okay? So don’t let people do that to you. Because that is literally criminal. Even if it’s not criminal by the law. It’s just criminal for someone to steal your life. They do not own your life. And when someone takes advantage of someone else, they’re stealing their life when some big disgusting company and you call them and try and get whatever problem you have solved, and you wait on hold for fourty Five minutes, and then you’re transferred around, they are literally stealing your life. They should be held accountable for that. What else do you have but your time?
Clip from ‘Atlas Shrugged’ 16:11
Is this free. All copyrights and patents pertaining to any invention, formula or process shall be transferred to the federal government by means of gift certificates signed by the person owners of said copyrights.
Jason Hartman 16:26
So all the copyrights and patents need to be transferred from the company or the individual to the federal government.
Clip from ‘Atlas Shrugged’ 16:35
Or no new devices, inventions, products or goods of any nature are to be created or manufactured. And the Office of patents and copyrights is hereby suspended.
Jason Hartman 16:50
Well, let’s not innovate anymore, folks. Let’s just keep the status quo. Oh, that’s brilliant. Maybe the horse and buggy will be the extension. Human inventiveness. And why go any further?
Clip from ‘Atlas Shrugged’ 17:06
Every company or sole proprietor shall henceforth produce the same quantity of goods or provide the same services as in the basic year, a year, just no more, or no less. Six.
Jason Hartman 17:20
So you can’t produce any less goods, you’re forced to keep your production as it was. But they’re also saying you can’t produce more goods, you’re not allowed to become more efficient. Now, why are they saying that? Well, they’re saying that because they don’t want a glut of anything did might cause turbulence and market prices, because they don’t want a free market.
Clip from ‘Atlas Shrugged’ 17:45
Every citizen regardless of income, shall henceforth spend the same amount of money as in the basic year, etc.
Jason Hartman 17:54
So you have to spend the same amount of money, like every citizen is forced to spend the same amount have money. Can you imagine this? I mean, this sounds crazy. But if you really think about it, some of this has already happened. Some of these things in some form or another,
Clip from ‘Atlas Shrugged’ 18:11
wages, prices, dividends and other forms of income, are hereby frozen at present figures, directive 10 to 89, Chuck, administer and enforce the unification whose decisions will be fine. It’s all happening so fast.
Jason Hartman 18:31
Well, that’s that’s what happens. That’s called government tyranny. And, sadly, we have another form of that tyranny today ein Rand thought it would only be the government, but we have big tech companies. And it’s tech tyranny. That’s another another version of this. You know, they used to have tyranny by big giant monopolies. Now, interestingly, Iran was, I think, okay with that, but I don’t agree with her. I don’t agree with her on quite a few things. But it’s thought provoking. You know for sure. It’s very thought provoking. Okay. Without further ado, let’s get to our guests. Oh, by the way, I want to remind you we have a live stream, of course, coffee talk, coming up Sunday again, as usual because we don’t have meat masters. And so that will be Sunday at 11am. Pacific. Live streaming on Facebook and YouTube to big evil tech companies right there. Yes, yes, yes, yes. I know. I’m gonna get an email from someone saying, well, Jason, you’re such a hypocrite. You know, you’re using these big tech companies and then you’re complaining about them? Yeah, You’re damn right. I’m complaining about them. They’re way too big. And they’re way too abusive. But what else can I use? Give me an alternative. There’s like nothing. they’ve they’ve basically created semi monopolies. It’s the world we live in, folks. Hopefully won’t stay that way forever. All right. So livestream on Sunday. Join us for that mark your calendar episodes all week this week. And we’ll have another webinar coming up here for you to announce soon and we will have the recordings of meet the masters. I think we’ll have those in about a week and a half for you. So many people purchase them already. But for those who didn’t get a copy, you’ll have that available in about a week and a half or so. Alright, we send them off to the producer yesterday, and we’re going to get those all cleaned up so they’re nice and easy to listen to. And let’s get to our guests.
Jason Hartman 20:55
It’s my pleasure to welcome Dr. Brian Taylor. He is president and chief economist at global financial data, they specialize in providing financial and economic data that extends back to the 1000s. That’s right, a millennium of data and going on into current day. So we’re going to examine a long term history of financial and economic data. And this is beyond what any other data provider has ever delivered. So I think you’ll find this to be a fascinating interview. Dr. Brian Taylor, welcome. How are you?
Dr. Bryan Taylor 21:27
I’m doing fine today.
Jason Hartman 21:28
Good. And you’re coming to us from my old hometown area. Orange County, California here in San Clemente. Right. absolutely excellent. Here today, but it’s always beautiful by the afternoon. Good stuff. Well, hey, one of the things I’ve been saying on on the show for a while now is that interest rates are the lowest they’ve ever been in human history. Can you elaborate on that for us and talk to us about the long term history of interest rates? And are they really the lowest they’ve ever been in all world history? Oh, absolutely.
Dr. Bryan Taylor 22:00
The yield on the 10 year bond today is under 1%. And until a few months ago, the yield was never below 1%. In Europe, interest rates are negative for Germany and several other countries. And that simply has not been true. Now, this is the combination of what we call the interest rate pyramid that from 1940 during World War Two, up until 1980, interest rates increase from around 2% to double digit levels around 15%. During the past 40 years, they have decreased to the point that now they’re under 1%. Just amazing. So when we talked before, this is actually the second take on this interview, because we had some technical problems, as everybody experiences that when we talked before you were talking about coming up on to the environment we’re in now
Jason Hartman 23:00
No, you mentioned World War Two. And you know, even before that, and kind of what was going on. So give us a little background there. Sure. The reason that interest rates were so low in 1940 was that the government wanted to minimize its cost of funding its debt, that during World War Two, the government debt exceeded GDP. And so if the government could keep interest rates low, which they did, that would save the government a lot of money. And so they deliberately pushed down interest rates. What that did though, was it created inflation, and so they couldn’t keep interest rates low after the war. And then from 1951 on the market was allowed to determine interest rates, and the government ran deficits, and one thing led to another and interest rates kept going up and up and up till they were at double digit levels. People getting mortgages had to pay 18 or 20%.
Dr. Bryan Taylor 24:00
interest on their mortgage. It was insane. Yeah, yeah. That was kind of Paul Volcker era you’re referring to now, right? Yeah, yes. That’s, and he reversed it. He broke the back of inflation. He’s, you know, long been credited for that. And just recently passed away, as we all know, was that the right thing to do what Volcker did, I was pretty painful at the time. Yes. And you had to go through that pain because interest rates were going up. There was no end in sight, people thought that double digit inflation and double digit interest rates were going to be around forever. And the only way to change things was to change the psychology workers were demanding double digit increases in wages, because they were anticipating higher inflation. And until you broke that mentality, until you convince people that inflation was not going to go up anymore. Interest rates would not decline and it worked. There was
Jason Hartman 25:00
In the short run, but over the long run, you can see the result. Interest rates are no longer 18%. Interest rates now, for mortgages are 3% or even 2%. So it was excess. So wiseness engineering of the economy that we have, that’s the beauty of the environment we live in, obviously, or interest rates too low now, or I mean, there are good and bad effects on on both sides of this equation, right? Yeah. But I do not think that interest rates are too low. Now, I think that interest rates are going to be at this level of around 1%. For the next 10 years. What we did was we carried out an analysis of total returns to bondholders. And what we found was that the interest rate at the bond yield any point in time is a good predictor of what your total return will be by investing in bonds over the next 10 years.
Dr. Bryan Taylor 26:00
years. And that pattern has followed through for the past 50 years. And so if you use that analysis, then there’s no reason why interest rates will not stay around 1% or maybe 2% for the next 10 years. And that’s just a reality that people are going to have to expect. I know most people expect that interest rates are going to bounce back, they are going to start going up. Our analysis shows that’s just not true. People have to get used to an environment in which there’s almost no yield on fixed income securities, as is the new reality. And that really does hurt savers and older people, usually, because they’re usually the savers living off fixed income or fixed income investments, I should say even what are your thoughts there? No, that’s absolutely true. I mean, there’s no place to hide really, the only place where you could get a decent return would be destroyed.
Jason Hartman 27:00
market, but then that involves taking a lot of risk in terms of the ups and downs of the stock market. But well don’t don’t forget about income property or real estate as an investment. But yeah, so no, that wouldn’t alternative. So basically, the powers that be have pushed people in to really taking more risk, whatever the investment is, because they’ve got to get some yield somewhere. What are the consequences of that for society? Well, you just gonna have to have a different mentality. I mean, people have expected for years that they can get a fixed rate of return and rely upon that further retirement. That’s just not going to be true in the future, is also going to affect the government in terms of pensions, that most of the pension plans are expecting higher rates of return than what they’re going to get. That means that the government is going to have to borrow more money in order to pay for all these pensions which they have promised.
Dr. Bryan Taylor 28:00
And it’s gonna start to create a mess over the next 10 years. How they get out of it. I don’t know, but it’s just a problem they’re gonna have to face is inflation coming? Alright man, it’s all right here. many would argue grocery prices are certainly at a five decade high. We know that. But what’s the outlook for inflation? I think inflation is going to remain low, I do not see any return to the high inflation of the 1970s. You just have a lack of demand out there. And that’s what’s really controlling the prices more than the inflationary factors of less supply. So, I mean, if they pump enough money into the economy, though, can’t they just create inflation, no matter what you look at what’s happened to housing just in the past two months, I mean, the market is off its rocker. It’s just unbelievable how housing is just going through the roof right now in terms of demand.
Jason Hartman 29:00
There’s very little supply that’s gonna lead to inflation ultimately, right with these these incredibly low interest rates are no. Well, no, not necessarily. If you look at Japan, Japan has been trying to create inflation for a decade. I know. But I hate that Japan example because Japan doesn’t have a population. You know, they’re just going through. I mean, they’ve got a demographic problem that is probably never been experienced before. I mean, Western Europe and Russia are next. But Japan is the worst of the worst in terms of demographics, you know, and they don’t, they don’t have any immigration. So it’s like a closed system, and a population that is in massive decline. And as they age, there’s no younger workers to support those older retirees. It’s a curette very imbalanced if Japan doesn’t start either making babies or having immigrants that country’s over. Yeah, no, it’s true. So So does that
Dr. Bryan Taylor 30:00
apply them. I mean, you know, I just want to draw that out from you know, I mean, I agree with you completely. But I mean, that’s where the United States and Europe are headed. I mean, they’re projecting that the population for the world will peak in a few decades and start to go down. Yep. And that’s the reality. And, you know, I mean, I see no reason why the stock market 50 years from now won’t be very much different, where it is today, simply for that reason. In Japan, you not only have a lack of increase in the population, but no increase in GDP, you know, no increase in the profits. And unfortunately, that’s where the United States and Europe is headed. Now, the United States is much better off than Europe or Japan, you’re as a massive it’s just delaying the inevitable it may be it’ll happen here in a few decades rather than today, or in the next decade. It will happen
Jason Hartman 31:00
In Europe, I mean, if you look at the European countries, some of the stock markets for France and England and other countries are still below where they were at 20 years ago. Right. Yeah. And I agree with you that that problem is coming. But it’s a ways away in terms of the demographic problem in the US. The US is still got a healthy trajectory for a few decades. But that is ultimately coming. You’re absolutely right. I totally agree. And it’s, it’s a worldwide problem, you know, the mouth museums have convinced everybody not to have any kids. And so, you know, that’s, that’s where we’re going. There’s very low birth rates in many, many parts of the developed world. It’s just the way the way things are. This will be continued on the next episode. Thank you for listening and happy investing.
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