At the start of the show, Jason Hartman talks about SJW, high-frequency traders, and global food prices, which have hit a six-year high. He later continues his interview with Dan Ferris as they discuss Bitcoin, Gold, and Silver. They also discuss the importance of diversification versus playing it safe with multi-dimensional assets.

Announcer 0:02
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 multimillionaire 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 1000s 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 on now. here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 0:53
Welcome to Episode 1616. Now there’s a memorable episode number 1616. I like it. Do you like it? Anyway, welcome, everybody. So today we will have Part Two with Dan Ferris from Stansbury research. This guy had some good information, good information. And as you all know, by now, the crash bros have been wrong, wrong and wrong again. Sorry, crash Bros. You know, it’s good for clickbait. When you want to get views when you want to get listeners when you want to get people reading your blog or your social media post. Just post something negative. Human beings have a bias for negativity. I’m no exception. Everybody does. Why is that? as we’ve discussed over the years, you might remember, most of the time throughout all human history. We lived in an environment of scarcity, of lack of danger of need, of, you know, just the opposite of the world we live in today. The world we live in today, even during tough times. But as Robert Schuller said in his great book title for many years ago, I read it back in the 80s. Tough times never last but tough people do. That’s a good book, by the way, folks, it’s an oldie but a goodie. Tough times never last, but tough people do. Yes. Robert Schuller, the founder of a crystal Cathedral in Garden Grove, California, you might remember him. So even in tough times, we live in an environment of massive, massive abundance. It’s so abundant, it’s ridiculous. The world is awash in goods. I even remember when I was a kid. And you know, I always say watch old movies, watch old TV shows. Listen old music. How? And I’m not saying the world is better today, in a lot of ways. It’s dramatically worse today. It’s definitely worse in terms of culture. The culture sucks. Yes. Good people. You haven’t lost the culture war. Sorry. Oh, well, the culture war is over. And the good people lost. The idiot social justice warriors have one in their name is such a misleading name. Isn’t that a misleading name? SJW. It sounds like it’s a good thing. But those people are really not good people. Oh, well. Anyway, enough of that. So it’s good and bad. The world is awash though in abundance in terms of standard of living in terms of stuff. The world is awash in goods. Remember how in the old days, when a thing used to be significant? What do I mean by a thing? I mean, a widget. I mean anything. Remember how maybe some of you used to get hand me down clothing. And that was a normal thing to have hand me downs. It was a normal thing in the old days to mend your clothes. I bet almost none of you sew anything. How many of you So, yes, how many know how to sew? I’m not saying manually. With a machine. You have a machine to sew for you. But nobody sews anymore, right? You don’t mend anything. You don’t darn your socks anymore. Yeah, throw them out and get new Sachs and guess what? Look at the size. Look at look at real estate. Look at houses, old houses, guess what they have even high end. Nice, older homes. They have very small closets. Nowadays. even lower priced. Smaller homes have very large closets. Why? Because the world is abundant. We have so much clothing all of us. We have tons we have full closets. We have full garages. We have stuff coming out of our ears stuff stuff stuff everywhere. Too much stuff. Okay? It’s an abundant world. And unfortunately, we are taking this into our body. We have abundant waistlines too, don’t we especially as Americans, yeah, we gotta we gotta curb that intermittent fasting, drinking more water, eating healthy vegetables, not too much meat, not too much, you know, fattening stuff we have abundance is too much abundance. You know what I saw the other day, I couldn’t believe this. If you want to know the model for consumption, it is nature. Nature will tell us how much to consume. Here’s an example. You know, I traveled last week. I know. I know. It’s a miracle. Whoo. something crazy. 10 months, 10 months, I wasn’t on an airplane. I couldn’t believe it. It’s been 10 months since I’ve been on a been on an aeroplane. So I went to St. Louis. I went to this conference, saw a lot of my friends and associates contacts, etc. I saw our attorney there. Bob was there our friend Bob, our favorite attorney with with webinar, Jason hartman.com. Slash protect. So Bob and I hung out we had dinner one of the nights I was there. And it was an abundant dinner, you notice the servings in restaurants, you could literally split them easily between two people, if not three people. Literally three of us were at dinner. Myself, Bob and other another friend of ours. We could have ordered one dish instead of three and split it three ways. And that would have been enough food for all of us. Yeah. It’s absolutely shocking how abundant The world is. Yet we don’t even notice it. We don’t even appreciate it. And you can appreciate it by watching old movies or TV shows and look around in their environment and look at how much less stuff they had. Anyway. So Bob’s webinar, Jason Hartman, calm slash protect, we got that out of the way. food prices. Speaking of food, global food prices. Now this is globally, not United States global food prices have hit a six year high. Now you might recall, a couple of months ago, I reported on food prices in the US hitting a 50 some odd year high. I think it was a 52 year high. This is all adjusted for inflation. We know the inflation index is manipulated and obscured, but whatever it is the official index. So we’ll just use that. Understand we need to make our own adjustments. But yes, food prices high. There is definitely inflation in the system, no question about it. No question at all about it. And an interesting thing I saw today is about the areas prone to guess what? we’ve suffered a lot with it this year, Holmes, this is according to The Wall Street Journal, by the way, homes in wildfire in flood prone areas appreciate more slowly. They say prices for homes and high risk of wildfire areas increased 2.9% year to date in 2020 versus 5.2%. So think about it, folks. That’s almost double. Okay, I know, our human minds tend to think in terms of, well, the difference between 2.9% and 5.2%. What’s that? That’s 2%. That’s 2.3% is the difference? No, it’s not 2.3%. It’s almost 100%. It’s almost double. That’s almost double. That’s so significant. It’s huge. It’s a big deal. Big deal. And the picture in the Wall Street Journal is a picture of San Francisco. You know, it’s it’s been very hard hit. They’re very hard hit. I’ve reported to you In the past about the high frequency traders, you know, those Wall Street firms that have the latest and greatest technology, and it was the subject of one of Michael lewis’s books, you know, Big Short author. And he talked, it was flash boys. That was a flash boys book. Yes, if I’m getting that correctly, he talked about these high frequency traders and how Wall Street is a total scam. And we, we mere mortals cannot compete with Wall Street, we can’t even come close, because they are fighting over the real estate that is closer to the stock exchanges, because they can gain a billionth of a second advantage over competitors, and they can trade shares faster. Now, do you think? Do you think you can beat them? Do you think you can beat their computers that execute those trades? so quickly? Here’s what the here’s what the Wall Street Journal article says. High Frequency traders get even speedier with cutting edge cables. So now, they’re into these new cables that make the trading even faster. But the article says high frequency traders are using an experimental type of cable to speed up their system by billionths of a second billionths of a second, the latest move and technological arms race to execute stock trades as quickly as possible. It says the cable is called a hollow core fiber. So you’ve heard of course of fiber optic cables. Well, this is a hollow core fiber. And I’m not a physicist, I’m not a scientist. I’m no expert. But without even reading any further and I’ve not read this article, I’m reading it to you for the first time I just read the title. And I thought I got a I got a report on it too. But I’m guessing what this is about to say is that the fiber cable itself slows down the speed of light. So you actually want the core to be hollow, so that there is no fiber there to slow the light. Now, as you may know, and I originally learned as a little kid, because I was very into the space program and space exploration and astronomy, you know, when I was a kid that was I was super into that stuff. And I was also really into inventions and Thomas Edison and do you know as a kid, I made hydrogen in the kitchen sink. Yeah, well you have to do is hook up a transformer, put it in the water, put some salt in there, put a bottle to catch one end of it. The bottle fills with hydrogen. This is what every parent wants their kids to be doing making flammable hydrogen in the kitchen sink. But yes, I used to do that. I also made a carbon Arc Light in my bedroom. That was pretty neat too. Okay, so anyway, I’m guessing that 196,000 miles per second not our 186,000 miles per second that’s the speed of light. And that means light goes around the Earth seven times in less than a second. But our high frequency traders on wall street that some of us stock people that should be investing in real estate think we’re gonna beat they that’s not good enough for them. So yeah. hollowcore fiber let’s go back to the article is a next generation version of fiber version of fiber optic cable used to deliver broadband internet to homes and businesses made of glass. Such cables carry data encoded as beams of light. But instead of being solid, hollow core fiber is empty inside. with dozens of parallel l air filled chambers, narrower than a human hair, folks, it’s an amazing time to be alive. Isn’t that incredible? That is super incredible. Because light travels nearly 50% faster through air than glass. It takes about one third less time to send data through hollow core fiber than through the same length of standard fiber. The difference is often just a minuscule fraction of a second, but in the high frequency trading business that can make all the difference between profits and losses. HFT high frequency trading firms Use sophisticated algorithms and ultra fast data networks to execute rapid fire trades in stocks, options and futures. Many are secretive about their trading strategies and technology. Wow. So there you go. Yeah, that’s, that’s super interesting. And it’s so amazing that the trader on his online portal at home, thinks he can actually beat those high frequency traders. If you didn’t see the Michael Lewis interview on 60 minutes about this when he published the flash boys book, go back and watch that we played some of it on a prior episode, when we reported on this originally years ago, he just basically looks right at the camera, and he says, Wall Street is a scam. So yeah, you know, the best you can do on Wall Street, I think is just by the index, but much better to buy a bunch of rental properties. Because income property is the most historically proven asset class in the entire world. It’s the most tax favored asset class in America. And thankfully, it is the most debt favored asset class in America. And when we say debt favored, we mean good debt, where we get three decade long Fixed Rate Mortgages with inflation and do step destruction at negative interest rates. That’s why we love our income properties. Don’t we? Answer my question, folks, nod your head right now say yes, Jason. We do. All right.

Hey, let’s get to part two of Dan’s interview. Really? some interesting stuff revealed here. Let’s jump in. Let’s talk about Bitcoin a little bit. Yeah, you’re a fan.

Dan Ferris 16:52
Right? Are you? Are you also a gold bug? Um, I don’t know if I call myself a gold bug by gold as well. And I advocate the ownership of gold and silver, frankly. Yeah.

Jason Hartman 17:02
So gold, silver and Bitcoin you like all three of those? Right?

Dan Ferris 17:05
I do.

Jason Hartman 17:08
I mean, Bitcoin, is that in a bubble? Or is that still good? I mean, it’s gone up a lot. Right? It? It’s a one dimensional asset class, there’s no income from Bitcoin. It’s highly speculative. But what are your thoughts? It is?

Dan Ferris 17:24
It’s in the early early days, if if it’s still around, when the last Bitcoin is scheduled to be mined in 2148. It’s still around, and still widely, it’s gained widespread adoption. And if this continues, you know, the 300 I think the market cap of all the Bitcoin is like 320 billion Now, think all the gold in the world, it’s somewhere around 10 trillion or so 10 or 11 trillion? I want to say, these days. Um, so if you just, you know, if for some reason, you know, I don’t know what the reason would be, but if Bitcoin gets on par with gold, if the future sees more competition in the realm of stores of value, right, gold is a store of value. So we’re destroying value. Bitcoin is a store of value in its very earliest days, you know, you could be looking back at 20,000, or whatever it is, right now at 90,000 Bitcoin and saying, bottle. Wow, I wish I’d loaded up back then. And will it be a volatile ride? Well, it’s already been one. So the rational expectation is for that to continue. But at some point, this thing becomes money for a lot of people and a store of value for a lot more people. And the supply isn’t going to go up anything more than the prescribed rate, you know, there’s 18 and a half million of them now, there won’t be any more than 21 million provide, the protocols don’t change. Between now and 2040. We printed 3 trillion US dollars this year alone. So far trillion during all those previous queries. So, you know, Bitcoin is the hardest currency on Earth. Well, okay,

Jason Hartman 19:06
so let me let me pick up that one for a little bit. What do you think about the political end? Or, you know, they’re kind of the same regulatory risk? I mean, the you know, the governments around the world are in a race to come up with their own cryptocurrencies, their own digital currencies, right. And so those will be backed by standing armies. Okay, and, and force of law, and they can just say, okay, you can’t use Bitcoin, it’s illegal, you know, or we’re going to confiscate it like they did with golden in 33. And maybe give you some money for it. Now, granted, this is a worldwide thing. It’s not just a US thing. But, you know, maybe they can say it’s illegal to use Bitcoin, you know, just like it’s illegal to use drugs as a commodity. You can’t trade in cocaine, right. Oh, that’s illegal.

Dan Ferris 19:55
So has that bog stopped people from trading cocaine? No, it hasn’t stopped them,

Jason Hartman 19:59
but You know, it’s vastly diminished. I mean, I would argue that if it were a legal commodity, let me

Dan Ferris 20:05
ask you that traded a lot more. You think the price of cocaine would be higher illegal alone?

Jason Hartman 20:11
Well, that’s an interesting question, because it would have been lower in the sense that there’d be more supply when you disrupt the crime syndicates monopoly. Which by the way, is the same that already happened with marijuana. Okay, so we saw that happen with cannabis, the price dropped dramatically. I remember I visited a cannabis farm with one of my mastermind groups in Colorado shortly after it became legal there. And, and she said, You know, people think we’re making all this money we’re not, it’s the price has dropped so much since it became legal. And, you know, the same is true with human trafficking, if you want to take the profit out and ruin the industry for the crooks and the scumbags make prostitution legal, and then you’re going to disrupt their monopoly, right? If you want to have competition on Wall Street, and you want to have a startup culture, you want to have competition in the banking industry deregulated. And then you’ll have much more consumer choice and competition. Listen, I’m a libertarian. Okay. So I agree with you there.

Dan Ferris 21:06
But

Jason Hartman 21:07
yes, the legality, in a sense, makes it more expensive when it’s illegal. Because producing it’s illegal, but training it? I don’t know, it’s kind of different, right?

Dan Ferris 21:19
What do you think? Well, let me ask you this, can you? Let’s just think of it differently. I’ve seen this argument. You know, people come to me with this all the time. And they say, What if? What if the government gets a hold of this? And I think that’s the wrong framing? I think the framing is Oh, you’re talking about Bitcoin now. Yeah. Bitcoin. Back to Bitcoin. That was where we started. That’s the framing to me is not what is the government makes it illegal or regulated heavily? The framing to me is this was created to be outside of that system, period. It is anonymous, it’s effectively unhackable. And they are now wanting to compete, there. They are, are scrambling to try to compete with this. It’s not like they’re sitting around wringing their hands, and they can’t wait to get their hands on and regulated, they’re scrambling to figure out how the hell they’re gonna disintermediate and compete, and they’re not. That’s why we

Jason Hartman 22:20
made with with like fed coin, or the Chinese did. You mean,

Dan Ferris 22:26
that is what I mean? They are, they’re trying to figure out some way to compete with this. They’re not going to make it go away. It was created to get around all that, because the, you know, the original Bitcoin paper is like, boy, you know, we had currency suck. Let’s make what let’s make a truly hard currency. You know, and I’ll be damned if they, I mean, you know, it’s early days, it’s 11 years old. So let’s not get too crazy, but so far, so very good. You know, we got the PayPal deal, which is like 300 million plus customers 26 million merchants. I mean, when this thing gets paid.

Jason Hartman 23:07
PayPal doesn’t have there’s no government competition. PayPal is not competing with the government. Right? See, governments don’t have to compete on merit. They just make a law.

Dan Ferris 23:17
Right. I’m sure they’re a monopoly. Right. So comes out of the barrel of a gun. Right? Right. Yeah. So I don’t worry about that government regulation angle on Bitcoin too much. I think Bitcoin is it’s gained momentum, it’s gained, even at its tiny $320 billion market cap compared to 10s of trillions of dollars of the biggest reserve currency US dollars. And, and, you know, euros and yen, the other two big ones, you know, we get a little tiny piece of that Bitcoin gets a little tiny piece of that, sure. It’s gonna be a million perfect for, you know, it’s gonna be could be a combine of being like a multi 100 bagger over time. And a 50 bagger. So is is not hard to envision at all.

Jason Hartman 24:06
Yeah, I mean, the thing is, damn, nobody actually uses it as a currency.

Dan Ferris 24:11
No, that Well, I mean, we all thought

Jason Hartman 24:15
number one, the founder of overstock, you know, he was on the show, and you know, I really enjoyed him as a guest. You know, he’s a big Bitcoin fan, so he overstock was like, you know, it was a huge deal when they said we’re gonna accept Bitcoin you can buy stuff on overstock.com with Bitcoin, right? I don’t even I doubt you still can I’m not sure. But you know, nobody uses it in commerce. It’s just it’s just like this thing out there that they all they all trade it for dollars, like, you know, with the look at the cash app, and the whole point of it is okay, buy some Bitcoin but you need dollars to buy anything else. So you’re just going to convert it to dollars, you know,

Dan Ferris 24:50
but I think the important thing is that you know, these are the fat pipes that are put in place and nobody’s using them right. You put the fat pipes in place, eventually people you Use them. So I don’t worry about that at all. In fact, when I see all this adoption of by merchants and services like PayPal, I’m like fine, traded, you know, trading in dollars, do whatever you want to do with it. But one day, you will, your trust in the US dollar will begin to fall. And you and I both know that when that sort of thing happens, it can happen so fast that if you’re not prepared well ahead of time, it can really catch you off balance. And you know, so you want to everything is, as I see it, everything is proceeding very well for Bitcoin to become a currency. You know, lots of people accept will accept it as a currency right now. Well, they

Jason Hartman 25:47
had 11 years and nobody’s really accepting it now.

Dan Ferris 25:50
Yeah, but what’s 11 years in the life of a kind? No,

Jason Hartman 25:53
but I mean, you know, they started to accept it a little bit, right, like people bought pizza with it. Now that pizza would be $100 million, or somewhere.

Dan Ferris 26:02
That first $20 pizza, but it’s just

Jason Hartman 26:05
not used. And and, you know, the other thing is, I’m surprised you hear so you know, it’s funny. It’s like millennial hypocrisy, right? Um, you know, Millennials are really into it. Okay, they they like it, because it’s a cool technology. Sure, but it’s super bad for the environment. I mean, mining Bitcoin is terrible for the environment, right? But the electric usage, and they

Dan Ferris 26:29
buy that along. in certain ways. I don’t. I mean, I understand that they will move,

Jason Hartman 26:36
electricity would be much better for the environment, if it was all nuclear, because that’s the best form of electricity, bar none. I mean, it’s way better than solar, or those spinning guillotines in the sky that kill all the birds, and take tons of resources to make and all kinds of environmental sins are created and making solar panels and windmills. I mean,

Dan Ferris 26:55
solar panels are toxic waste and carbon terrible. I know. sounds ridiculous. And there is no

Jason Hartman 27:00
place for solar panels, though, on cars and boats and motorhomes that’s a really good use of solar panels. You know, that’s about it.

Dan Ferris 27:08
so far. ability is nice. That’s right. Yeah. But the other thing is, you know, we’re talking about not using this as a as a currency. I mean, I can’t do that with gold either. Really, I know, some people will accept some people love to accept it. But we have these legal tender laws, including gold are designed to get around all that their stores of value. And and frankly, you know, that, you know, these slips of paper that I have loaded up here in my pocket. This is this is not this thing that they’re in this silver thing is a better store of value that all this paper right here.

Jason Hartman 27:45
You know, damn, I don’t know, I would love to, like I’ve said a million times. I’d love to be wrong about this. But those wads of paper, have aircraft carriers.

Dan Ferris 27:56
Be sure how many aircraft carriers does it take to decrypt all your Bitcoin?

Jason Hartman 28:03
It’s not about decrypting it it’s about the fact that those legal tender laws that support those dollars have a giant global institution with military bases in like 170 countries.

Dan Ferris 28:16
I mean, that’s the dollar in the Bitcoin network is the biggest one in the world. Just about any time associated with that type of system.

Jason Hartman 28:28
So like I said, I want you to be right about this. Okay.

Dan Ferris 28:32
Do you really, really do. Okay, so what else?

Jason Hartman 28:39
Should we cover? As we wrap it up here? Dan, anything more just generally on the economy? What’s next? What 2021 is going to look like? And you are in inflationist? Right? You You believe inflation is definitely here and are coming right?

Dan Ferris 28:54
Eventually. It’s inevitable. It is the last resort of everything and Republicans to degrade the currency. Absolutely. The mechanism is different than most people understand. But you know, sooner or later, they’re gonna, they literally sit around thinking, we need to do something, how can we push prices up, and we should take them out the word it will happen? Yeah. Yes.

Jason Hartman 29:16
Now, inflation is a fantastic business plan for governments and central banks. Because especially when they’re debtor nations like the US, right, because they deflate the value or inflated away the value of their debt, whichever way you want to look at it, you know, the debt gets cheaper to repay if there’s inflation, right. So that’s a very good deal for governments and for central banks. So yeah, they want it. Um, any thoughts on all this talk about the great reset? It’s amazing that the elites who run the world or at least

Dan Ferris 29:47
think they run the world,

Jason Hartman 29:49
you know, are just completely open about the Great Recession? It’s like you’re not even hiding it.

Dan Ferris 29:55
Well, yeah, the World Economic Forum’s great reset. Yeah, I went to the website. Read about the great recession. And it sounds so I hope I’m allowed to talk because it just sounds so airy fairy and kind of nebulous. But we all know what it means, right? It’s, it’s just a bunch of people like we were talking about. It’s a bunch of people telegraphing that they’re going to aggregate as much power as they can to change capitalism, right. And we should take them at their word as well, and they will try to do it. But you know, you and I both know, you can regulate, and you can change things and you can clamp down on people, but you can make markets go away. Right? That’s why drug dealers do so you know, make so much money, at least the people at the top, the rest of them don’t make anything but so I’m not telling you, I know how how the future comes out, you’ll never hear we predict, you know, I say don’t predict, prepare. And I think the way you prepare is by being truly diversified. Certainly, as an investor and as a human. You know, you need to hedge all kinds of eventualities, my wife made me or she made me, she said, I’m buying earthquake bags, which are these backpacks filled with supplies that you might need to strap on if you got to walk out of your house, because

Jason Hartman 31:13
the 72 hour bug out bag is what he’s talking about. Yeah,

Dan Ferris 31:15
that’s right. Right. So bug out supplies, you know, that’s a hedge and firearms are right and, and the training that goes along with them and, and entertaining all the scenarios in which you may have to use them. It’s the same with finance, I wouldn’t, you know, run out and sell my stocks and bonds. But I want to be truly diversified. Meaning, have your stocks and bonds and your cash that’s in the financial system, you need it to function, right. But also go outside the financial system, have your Bitcoin have your gold and your silver, preferably in not just in the country you live in. Right. And also, we all know, like your real estate guy, we all know something about some asset, or some potential store of value. That might not be traditional. I heard about a guy who’s investing in whiskey and casks in Scotland, and making money because I’ve seen as deals, yeah, dark spirits actually can hold their value over time. Because, you know, they sit there for 30 years, and not everybody is making this or that particular brand. And people do that with wine. They do it with Ferraris, they do guitars, if you talk to people, rich people in Europe who preserve value over centuries. So how did they how do you do it? They say a third, a third, a third, land, gold and art, not stocks, cash, land, gold and art. And and the idea is that you got to figure out how to preserve wealth over time, outside the financial system. Now, that’s something we need to think about more than ever.

Jason Hartman 32:47
Yeah. And remember, the financial system is low hanging fruit for the powers that be because they can just come along and say, Oh, you know what, all those retirement accounts that have brokerage accounts attached to them, or savings accounts. We’re just going to nationalize all that it’s been done before, folks, and they can do that with a stroke of a pen. And that’s really easy to get to it’s really low hanging fruit, you know? So

Dan Ferris 33:12
give out your website. Oh, investor, our.com or Stansbury research calm, that’s where you can find me.

Jason Hartman 33:18
Good stuff, Dan Ferris. Thanks for joining us.

Dan Ferris 33:20
Hey, man, it was a lot of fun.

Jason Hartman 33:27
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