The New CS Board

[jumanji0881]

Milton Berg:
“The US Dollar Is a Joke”

https://www.mauldineconomics.com/download/global-macro-update-transcript-milton-berg

This is what I think. Inflation is a monetary phenomenon. I know people talk about supply
chains and shortages. In the history of the world, all inflation is caused by the money increase
to a greater extent than goods increase, and goods and services increase. And this has been
going on for decades, where the Federal Reserve has been basically... I don’t want to use the
word printing because they don’t really print. They’ve been allowing credit to increase, debt
and credit to increase.
Now, if you get an honest Federal Reserve, Jerome Powell is honest and he wants to get
inflation back down to 2% or lower, it’s going to be very difficult for our economy. It’s going to
be very difficult. Rates are going to have to go high, and it’s probably going to be very, very
deflationary. Very, very deflationary and very, very negative for the economy.
On the other hand, if that happens, the United States can’t pay down their debts because if
rates go up, the United States have been borrowing on the short end, they won’t be able to pay
down the debts except if they raise taxes. And if they raise taxes to the extent they can pay
down the debt, it’s going to again, be very deflationary, very depressionary. So, the choices at
Federal Reserve, are they honest and they want to have real money and they don’t want the
fiat money to be strong, what do they say? Listen, we can’t allow a government to go bankrupt
and can’t allow a government to raise taxes to 60, 70, 80% to cover their debts, and we’re going
to increase money supply.
So, it depends on what the Fed does, but it’s a choice. Either we have strong inflation in the
future if they’re a dishonest Fed, or you have an inflationary period or a deflationary period if
they really want to have sound money in the United States.
Ed D’Agostino:
I think this leads into an asset class that I think confuses a lot of people, and that’s gold. It really
hasn’t performed as well as, I think, most people would expect in an inflationary environment.
Is that really a function of the strength of the dollar up until now—or is there another reason
why you feel gold maybe is lagging a little bit? And what’s your forecast?
Milton Berg:
I believe that gold has acted very, very well. If you look at the history of gold, there’s no
retained assets in gold. There’s no retained earnings. The price of gold is not the price of a
stock. It’s not a price of a stock like Apple. A company like Apple Computer, they manufacture
things, they make money, and they retain their earnings, and they pay earnings to
shareholders. Gold is an asset that should maintain its inflationary value, maintain its value over
the years, over the decades. And gold has.
In fact, going back 100 years or so, gold returned more than 3% per annum... 3–4% per annum,
which is above the inflation rate over that period. That’s all gold is supposed to do. Now, gold is
very cyclical, and therefore you have big moves up and big moves down in gold. But the fact
that you have inflation now does not tell you that gold has to move up in price right now.

A prime example is, from 1980 to the year 2000, gold collapsed from $850 per ounce to $250
per ounce while the CPI doubled. Again, CPI doubled, gold is cut more than in half. Gold does
not track inflation on a year-to-year basis. But over the long term, gold maintains its value in an
inflationary environment.
That is why people who are smart and want to keep their assets for themselves and for their
children or grandchildren, keep it in gold. Because if it’s in gold, it’s in your safe deposit box. Or
if it’s in your safe, it will not be taxed. You don’t pay interest on the income. It won’t go
bankrupt. But it’s going to maintain its value.
So, if you want to buy your child a Lamborghini, and you want to put $300,000 worth of gold in
a safe deposit box. You tell my six-year-old grandson, “When you’re 36 years old, just take this
gold, you’ll buy a Lamborghini then.”
In other words, it’ll retain its value. You can’t say that with any other currency. And I’m not sure
you can say that with Bitcoin either, because I don’t think Bitcoin is actually a currency. It’s just
my opinion as well. But gold has been a great method of maintaining long-term value. And
again, you don’t pay taxes on it.