Peter St. Onge, an economist at the Heritage Foundation, has become something of a phenom on TikTok, where he has 96,000 followers. In this episode, St. Onge explains why he expects a severe global recession in the coming months, why he’s bullish on gold and Bitcoin, why the “alt-energy agenda” will be “crippling” for Western economies, why the Constitution is America’s “superpower” and why despite the many challenges ahead, he remains bullish on the United States. (Recorded June 26, 2023.)
Robert Bryce 0:04
Hi, everyone. Welcome to the power hungry Podcast. I'm Robert Bryce and this podcast we talk about energy, power, innovation and politics. And I think we're going to spend a lot of time talking about politics and the politics of money. I'm pleased to welcome Peter St. Onge. He is an economist at the Heritage Foundation, a prolific writer, a prolific tick talker. Peter, welcome to the power hungry podcast.
Peter St. Onge 0:26
Thanks. Thanks for having me on, Robert.
Robert Bryce 0:28
So I didn't warn you, I'm gonna surprise you with a couple of things. The first one is that guests on my podcast introduce themselves. I've given you a bit of an introduction there. But imagine you've arrived somewhere you have 60 seconds to introduce yourself, no one knows you at the party. Please tell us who you are.
Peter St. Onge 0:44
I'm an economist. I work at Heritage Foundation, also a fellow at the Mises Institute. And I have been writing about the economy liberty, I'm an Austrian economist. And so writing also about money and Bitcoin for about 15 years. And I do daily videos now on economics and freedom. I didn't plan to do it. My wife, you know, I kept talking to my wife said, Well, I'll just shoot it. And I said, No, it's not good enough. And she said yes to it. And so that turned out good enough for the internet. So here we are.
Robert Bryce 1:20
Well, and I'll just briefly mention you're on Tik Tok. You have 93,000 followers. Yeah, maybe I'm just jealous. I have 7000 in something and wasn't my wife who goaded me to do it was my daughter. So But nevertheless, I really liked what you're doing. Let me jump into it on your substack you say that you are what you start your substack page, you say freedom, Austrian, economics and Bitcoin? What's next? And what to do about it? Let's start there. What's next? And what should we do about it? How bad are things in the economy, both in the US and around the world?
Peter St. Onge 1:55
They are bad. There are a number of factors that are sort of hiding some of the effects at the moment. But you know, we've had about a 300 year pattern where you have these boom, bust cycles that are launched by central banks manipulating interest rates, and we're in the middle of probably the biggest one since certainly since the 1970s, maybe even since the 1930s. And the effects haven't hit us yet. Because they just started hiking rates, really, they didn't get restrictive until about eight or nine months ago. And you know, central bankers know that it typically takes about a year or two for rates to really hit. So we're, it's sort of a hurricane that's coming for us. And we're just getting sort of the first breezes here where, you know, potted plants start falling over in the backyard. I think that there's a lot more to come. Well,
Robert Bryce 2:52
so talk about that, then, because I've seen some, you know, some economists, some non economists lately saying, Oh, well, things aren't so bad, the prices and prices of eggs is falling. You know, energy prices have been, you know, flat or relatively down energy as a sector. As you know, the prices are terrible stock prices on energy have been going down. But you just in the piece I saw today, in fact, I just looked at avid following you on Tik Tok, about Central Bank's raising rates across you know, all all around the world, and that this is going to then mean Nesic does this necessarily mean economic slowdown?
Peter St. Onge 3:28
It's always tricky, because an economy is an aggregate of a whole lot of things happening all at once. And so you've got this kind of boom bust cycle coming out of the interest rates for the tight at the same time to get a lot of other things happening. So, you know, if you take China, for example, China was closed a lot longer for the pandemic than most of the rest of the world. And then China opened, you know, whatever, nine months or 12 months later than most other countries. And so, you know, if you look at the world economy, it's sort of got these little spikes and dips happening for random things. Now, oil or energy prices in general, those specifically tend to go down when you have a recession coming. Right. So that's a little tricky. I think in 2008, it was very dramatic. I want to say it was over $100 That went down to like $18, or something absurd.
Robert Bryce 4:21
100 It touched 150. And duration. Remember, this was right before the Beijing Olympics. And so the theory was, China was buying up every gallon of diesel that they could find because they wanted to make sure the lights didn't go off. And then after that, things fell apart.
Peter St. Onge 4:36
Yeah, and two other really big pieces of noise that we've had over the past couple of years. One of them was the supply chain crisis. And that locked out you know, you had a shortage of cars and houses which are generally the two biggest sort of big ticket items that families buy. And both of those for a couple of years though it was real hard to get a hold of them. So be people held on to their car longer than they would they stayed in houses longer than it would houses have an additional issue where because rates came up so fast, there are a lot of people who normally they would be selling their house, like maybe it's the house, their kids grew up in their grids, kids headed off to college. Normally, they would sell that, you know, four bedroom house, and they would downgrade to a condo in Florida or something. What's happening right now is that mortgage rates are seven or 8%. And they had been 3% for the past couple of years. And so something like half of Americans have those who have a mortgage, they have a mortgage that's priced around 3%. So if you go from a 3% mortgage to seven and a half percent mortgage, you're talking something like $1,500 a month for the, for the median house in America.
Robert Bryce 5:50
So there's an additional cost and additional interest costs and additional costs.
Peter St. Onge 5:53
It's exactly so most people don't have that kind of money, right? Just lying around. So you've got all these kind of funny factors that are freezing things. So like in a normal recession, housing and cars are two the biggest hits on GDP. But right now for a sort of idiosyncratic reasons, those are holding up surprisingly well. You know, so people are finally replacing their car, like, you know, maybe they normally replace their car every three to five years. This one is actually eight years old, because you know, you couldn't get cars a couple of years ago, and so they're just replacing it. Now, you have a final sort of big idiosyncratic factor at the moment, which is that, you know, governments printed up something like $9 trillion to bribed voters into accepting lock downs. And a lot of that money was saved. So in the US, at one point, there was about 2.3 trillion socked away in the bank. And so, you know, again, there is lower income people blew through that really fast, but middle and higher income people generally just saved it all. And so, you know, again, compared to his standard recession, you got an extra cash cushion, lying around now that we wouldn't necessarily want to do that all the time. Of course, we could sit increase national debt. And you know, we're on track for about a trillion dollars in debt interest on that national debt. So it's not necessarily a good thing. But in terms of looking at the numbers and sort of trying to read the tea leaves of the recession, you know, that is one more factor that is making it look like things are normal, when they're actually recessionary under the hood. And the problem there now.
Robert Bryce 7:30
Sorry to interrupt, if you don't mind. So no, no, please, as I hear you saying this, it's kind of we're, we're working through some things, there's an overhang of factors that are that haven't made that recession bite as quickly as it might have other inveterately and other and other times. Well, let's talk about the interest on the debt because this is a point you made on one of your I think it was on your substack and by the way, Peter is on substack at a prof. St. Onge PR o f s, t o n g e.com. That the interest rates because now interest rates are going up with the US government had been borrowing money for its debt service for a long time and two or 3%? Well, now they're facing four or five 6%. So that the that the payments on the monthly basis or annual basis? Are we looking at a doubling of that? Because I mean, people have been concerned about the national debt for a long time. But now, I mean, this time, it's serious. Is it? Is it serious this time, because we're facing a double whammy of not only a larger deficit to overall total debt of what 31 trillion, but then our debt service on that is now going to be one of the biggest parts of the national budget, is that right? As is the discretionary budget.
Peter St. Onge 8:45
Right, like as a category and on the budget now, debt interest, it's already soaring. So you know, we're looking at about a trillion that would put it bigger than military bigger than social security. So it is it is on track to gobble up the budget. And of course, what they'll do is then have to issue fresh new debt for that. So that power point, you get this compound, you know, where you are borrowing money to pay off the debt that you've already borrowed, and, you know, the thing can sort of run away from you. And, you know, the trick has always in these kinds of situations is that you are loading the camel, you know, on sort of brick after brick you put on the bricks and you know, somebody on the sidelines saying you know, sooner or later as soon it's gonna break, you're gonna break down or things back. And of course, there's always people who say, Well, look, you know, I put her on another brick, nothing happens, right? But on another one look, nothing happened.
Robert Bryce 9:43
But just out camera we have there we know we're that's exactly
Peter St. Onge 9:45
what it is. And you know, every time when it finally breaks, people say God who could have seen it coming who could have predicted. So that's the concern at that point. We are clearly on an unsustainable path. And you know, some of the factors I was talking about earlier that are that are sort of From hiding the effects of the recession, one of the risks we're running into now is that central banks, they know that hiking rates causes recessions, every school of economics knows this. Even the Keynes Ian's know it, certainly Austrians or classical economists know it. So they know that what they've done is going to cause recession, but then they look around and they say, well, but But you know, consumers are still spending, because consumers are spending companies are still making profits. So stock prices are still holding up. So maybe we can get away with it this time. Okay. And once they start thinking that way, you know, to a central bank, their main goal in life, they, they manufacture inflation for a living, that's the purpose of setting up a central bank, they create inflation and low inflation factors. But the key for them, it's like being a gasoline thief, okay, it's a very good gig, if you take a half gallon off everybody every night, all right, they're never gonna figure it out. What you really don't want to do is drain the tank. Alright, and the Fed or the ECB or the rest of the central banks, when they see five or 6%, inflation, they know that will end the gig, right? So they are desperate to fight that inflation. And so if they're looking, you know, if they're seeing these illusions from pent up, you know, supply chain demand, or leftover pandemic era savings. Alright, so if that's hiding the severity of the recession to them, then the risk is that they go ahead and just keep hiking into it and figure well, you know, maybe the camera will make it this time. Maybe this time is different. So I think that they are setting us up for a potentially pretty major and sort of global crash. Notably, it wouldn't be Asia because Asia did not buy the lockdowns, the way that the West did. You know, Canada, Australia, Europe, US, Latin America, they all played off the exact same script, which was spent in what it takes. And so all of them are in the same problems. But if you look at Japan, Korea, Taiwan, even China, they don't have these problems. These are uniquely Western problems.
Robert Bryce 12:04
And when you say uniquely Western and that this, there's massive amounts of debt debt interest that they're going to have to pay. And so well, let me ask the question then that way, because I asked this a lot of my guests so I know you mentioned crypto before you mentioned Bitcoin. So let me ask a lot of my guests this so what's the you've given me the narrative right? You know, what is the how you see the world? So if you're a smart guy, if you're you know, somebody old and in this dosage like me, will you put the money under the mattress or is holding greenbacks? A bad idea? The buy gold? Do you buy natural resources? Do you buy oil? What? What what asset class makes sense?
Peter St. Onge 12:43
Yeah, thankfully, we've got the 1970s You and I lived through the 70s. And it was not that much fun at the time. I think we stagflation Yeah, it was horrible. Yeah, you had you had unemployment. You had the cities collapsing, you had pretty much every problem we have today. We thought it was horrible at the time, interest rate and
Robert Bryce 13:02
the interest rates at 20%. I mean, it was Yeah, hard to even imagine that today. It sounds almost like Oh, come on. 20%. No, it was, but your money in a money market? You make you know, you're handsome return on it.
Peter St. Onge 13:13
Yeah, and you know, one of the more shocking things, I guess, if you live long enough, you see a lot of shocking things, but one of them has been, you know, I'm seeing the style gent now for the 1970s. In the 1970s, we did a static for that. So that's how hard we've fallen. But what's useful about the 70s is that the 70s are a test case, you know, the economy largely looked, then the way it does. Now, you had pretty much the same asset classes, we're not talking, you know, the 1300s or something. And so we can go back and look at how different assets performed and you know, far and away the winner in the 1970s, of course, was gold. I want to say went up five or 6x over the course of the decade. I mean, it was it was very big movements. And that was really when the gold bug movement started. You know, this entire community built around gold stocks actually held up fairly well. Better than cash. And this might seem weird, because most people think of the stock market as as a casino, which is true in many ways. But at the same time stocks generally represent real things. Right? They represent factories or brand new assets. Yeah. Yeah, exactly. So stocks held up pretty well. Housing also held up in the 1970s bit tricky because housing has gone up so much at this point that, you know, it's I think it's quite likely there's going to dip a bit. But if you do have extreme inflation, housing being a real thing holds up. There comes a point of inflation is bad enough that even consumer goods become stores of value things like cars or furniture in Weimar Germany, people would, you know, buy extra pianos that they didn't need, because that was a form of it. A savings account. But yeah, fundamentally hard assets. Oil is a little bit tricky just because it interacts with recessions, right? So oil tends to go down with the recession. And so if you've got stagflation, then you've kind of got a tug of war where on the one hand, the inflation itself is making commodities go up, including oil. On the other hand, the stag part of that is dragging it down. So give us
Robert Bryce 15:26
if I gave you $10,000 And I'm not going to but if I did, and I said, Okay, Peter, put this anywhere you want anywhere in the world, any asset class, you mentioned, Asia, you mentioned Japan, I was in Japan earlier this year. It's amazing country, you know, they have demographic issues. China has demographic issues. Okay. So if you have $10,000 to put where you want it, where would you put it?
Peter St. Onge 15:47
I would put a big chunk into gold. You can also buy bitcoin Bitcoin, the economics of Bitcoin function very closely to gold, right? The trick with Bitcoin is that if you don't know it, don't buy it. Right? Okay. Because the problem with Bitcoin is that it fluctuates so much, it can lose half its value in like a week, it can double in a week. It's very exciting, and you got to be into that kind of thing. You also have to understand, like, you know, if you buy it, you don't really know the asset. Like if you put 10,000 into Bitcoin and it crashes 50% You're going to sell it, this is human nature, you have to be realistic, you're gonna sell it, you're gonna lose your five and you're never going to be there for the recovery. Right? So I think the caveat on Bitcoin is that if you're thinking about it, and you don't know it very well, then you know, buy like 100 bucks goof around with it, right? Just accept that that money is going to be gone okay? Just play around with it buy stuff, you know, buy a little bit of Bitcoin watch it. Alright, so with that caveat, so according to taste and comfort level, either gold or Bitcoin or some mixture of them. The other chunk of it, I would probably honestly just park in the market. You want to
Robert Bryce 17:01
into an exchange, s&p 500 Index Fund.
Peter St. Onge 17:04
Yeah, yeah. Okay, so
Robert Bryce 17:06
just curious because I've asked this I was in Denver a week or so ago and I met a financial advisor and I asked what the same thing to him. Okay, so and he mentioned gold he also said CDs right? He doesn't trust anything. He's like, I don't know what your world is crazy. I'm gonna put it into a CD and leave it there. Okay, so gold you're buying equities? You buy gold mining stock? Do you buy physical gold do you how do you do that?
Peter St. Onge 17:30
I generally buy physical gold just because if there's an investment thesis I like doing the pure thesis as we buy
Robert Bryce 17:36
the coins the crude Krugerrands or something like that. But yeah, so let me ask you about Bitcoin because my son Michael is very clever young man and he's been mining Aetherium and he holds Aetherium and we've talked Bitcoin many many times and I've never kind of I've never I just don't quite understand this. Okay, so Bitcoin what we've seen federal government actions sec and others on Bitcoin on crypto in general that and Bloomberg who's on substack is very successful. He's He's a critic, I think it would be a fair way to put it about crypto. The question is well, so what's the what prevents the government just saying Nope, we have the fiat currency screw you guys. We're gonna shut you down what you're you're you're bullish on Bitcoin because I hear you saying it. What? What prevents the government from just coming in and Bigfoot bigfooting everybody in Bitcoin is saying GAME OVER fellas, this isn't gonna work. Sorry.
Peter St. Onge 18:29
Yeah, that's specifically why Bitcoin was created for that seizure risk. So the guy who created Bitcoin was a huge Gold Bug, you can tell this because every element of it is programmed to exactly imitate gold. And the tricky thing with gold is that so gold superpower is that it's real. Right? You can drop it on your foot. Okay, it's got intrinsic value. But that's also gold's fatal flaw. Because it's real. It has to be stored somewhere. Right? And you have to have security like so you're gonna have a large right Yeah, right. It's kind of walls around it with you know, sharks with laser beams. And any kind of facility sharks.
Robert Bryce 19:05
Peter St. Onge 19:06
remember that from?
Robert Bryce 19:08
I thought they had shotguns? No, they either high powered rifles. Never heard
Peter St. Onge 19:14
hours. I'm showing my age here with an Austin Powers or friends.
Robert Bryce 19:18
That one but anyway, laser beam classic.
Peter St. Onge 19:21
Yeah. And so right. So the problem there is that the government, of course can therefore find those facilities, and they can sit you down and have a conversation about what they'd like you to do with that gold. So this is why FDR was able to see so much gold because so much in the US had been centralized in the financial system, right? So the problem with gold is that in this day and age, like if we were operating with physical gold coins, you know, how do you pay the power bill? How do you buy something on Amazon? How do you do DoorDash? Right, so what percent of your transactions are hand to hand? almost zero. And so the only way way that you can have a gold based system is that it has to be intermediated, that gold has to be located somewhere once that gold is located somewhere it is controlled opposition, the government can tell it exactly what they'd like it to do, because they can put the custodians in prison. And so that's specifically the problem, or it's one of the problems that Bitcoin was created to solve. Is that Bitcoin? Metaphorically, it is like a list. Okay? It's like a list of who owns what. And as long as there's one copy of that list, as long as everybody knows that it's the correct list. And it's a long story. How do they cryptographically prove this, but there are the top crypto graphic minds on earth when they first heard of Bitcoin, they said, This is ridiculous. Let's break it. And there are a number of guys who I mean, these are top Blackhat hackers, they tried to break it, they could not break it, a number of guys came back and said, Wow, this thing is incredible. At any rate, it is a secure list of who owns what it's also pseudonymous, meaning that like a Swiss bank account, and it's it's linked to a number, it's not necessarily linked to you. So as long as a copy of that list is floating around, which means that as long as there's strictly speaking one human on Earth, who has the list, then your your Bitcoin cannot be seized. Okay, so that's, that's one of the key points there. So even if the US government decided that, you know, Bitcoin is boiling the oceans, and they have to get rid of it? Well, first off, they cannot seize it. I mean, it's not located anywhere. They were the way that it's structured.
Robert Bryce 21:33
But they could prohibit transactions on it. Incorrect buddy in the US, or they can try. I mean, that was one of the things that I don't know, what was the ransomware that they paid. And they, they tracked the guys down right there. I think it was some Russian hackers or something that, you know, it was like, Well, yeah, you might think you're anonymous, but you know, the FBI is pretty clever, too, you know, and they tracked him down. So I understand, I take I hear what you're saying, and what you said, don't make sense to me. And I've heard this all before. But what about the long arm of the law? And let me know doesn't why? If Bitcoin got big enough, what's to prevent the Feds from stepping in just as they would in the gold market? Because you're if you're making it illegal for Americans to hold it, and to do transaction overseas? Well, that's pretty big hammer.
Peter St. Onge 22:18
Right. So and that brings it to the second part, which is that they're so in. First off, of course, there's there's, you know, 200 countries in the world. So if the US were to ban it, that it was simply mean that Americans, they would still own it, because it can't cease it. But you know, if they did like a transaction ban, that's realistically how they would do it, they would hit the the off ramps and the on ramps, so that would mean that Americans wouldn't be able to transact in Bitcoin, they could still transact with foreigners. Right? Because that, that that aspect of it could still go on. Now, foreigners would also, you know, continue owning Bitcoin, the network would keep functioning. And at that point, what would happen in practice, I wrote an article on this about a year and a half ago, sort of game down what exactly what happened if they did that kind of a transaction? Bam. And what's kind of fun is that the concentration of Bitcoin would move towards the people who are the most extreme. Right, so you know, some some dabbling, you know, middle manager who just owns a little bit, because maybe it'll go up, he might exit it, because he doesn't want the IRS scrutiny. But what will happen among Americans is that Bitcoin will get concentrated progressively In more extreme hands. And then the question at that point becomes, well, what's the long term prospect of Bitcoin? And I mean, for me, Bitcoin, it's kind of a one off thing, like it's solved a problem in a very elegant way, once it's created, it will always be there, governments can try to hold it down. But as soon as they stop actively holding it down, it pops back up. And so the answer is right. In the near term, however long the US government is going out of its way to hunt down, like if it goes che six style and tries to hunt down every Bitcoin and or he can do that, but historically, it's not gonna be doing that for very long, okay, it's gonna be a couple of weeks, maybe a couple of months that it's, you know, trying to make sure everybody understands, just stay away from the Bitcoin. And then it's going to take all those human resources, you know, it's not going to go hunt down every last Bitcoin user, because it's got other priorities. Governments want lots of things in life. And so they're gonna pull that off. And at that point, you kind of have this gray market among Americans, of course, overseas, they will continue using Bitcoin all this time. The Bitcoin price initially will take a dip, but it would actually come back. I think, very quickly, because the current bitcoin price already includes expectations that governments are going to hunt it in earnest, which governments have not so far, by the way, I mean, us, like in the Bitcoin community, ever since really the beginning, everybody assumed that governments were going to go to war against and amazingly they have not. But anyway, at some point in the future, as that pressure releases, of course, you know, many foreign countries would not play along. And so Bitcoin itself would continue functioning. And then at the end of that process, the only thing that you would have done is to concentrate Bitcoin ownership, ie concentrate the sort of inherent tour money to fiat, you will have concentrated that into the hands of the most extreme, like the most and cap nut jobs, which I mean, to me wouldn't necessarily be a bad thing. So I think that it
Robert Bryce 25:29
would be it would be then concentrated and it would just move it would result of the US crackdown, that it would move that Bitcoin as those Bitcoin assets would be aggregated and other countries around the world, not necessarily monk friendly people. But let's move on because I know you're well. So have you made money in Bitcoin?
Peter St. Onge 25:47
Ah, I did it. I have but not much. I didn't buy into it early. First off, because I thought they would ban it. I was convinced that the US government would see it as a threat and that they would immediately go after it. And then when it looked like they were not going to ban it, my wife kept telling me to buy into it because she was like you like it? You think it'll be money, right? I said, Sure. And then she said, Well buy it. And I said, Well, no, it'd be too distracting. I'm gonna watch the price.
Robert Bryce 26:17
So you're an expert who's only a dabbler then so?
Peter St. Onge 26:20
Okay. Yeah, correct. Well, yeah, and like I started writing on it in 2014. And so people assume that a millionaire and no, I am now not only am I not a millionaire, but my wife, like the normal pattern is that the guy wants to buy bitcoin and the wife is like, You're crazy. And I was actually opposite. My wife was telling me to buy it and I did not so she, she's trying to
Robert Bryce 26:44
get you on on Tik Tok. So there's that you can
Peter St. Onge 26:47
she pushes me to take risks, apparently. So yeah, I said, Listen to her more.
Robert Bryce 26:51
It's a good thing. So what about the dollar? Yeah. There, you know, there. Has you talked about D dollarization. A lot of people have been talking about D dollarization. Well, now Russia looks awful shaky. And you know, Putin is suddenly his mercenaries and decided, well, we don't we can work for. We're not necessarily loyal to you, man. So love you, but not so much. Yeah. You talked about Janet Yellen testimony before Congress, as well, which I thought was really quite interesting in terms of the future of the dollar. Right. Well, so we've enjoyed this long run as Americans with the dollar as the reserve currency. Do you think that era is ending? And if it if it is, what does that mean? Because we we've talked about what holds, you know, again, this is about what do you trust? What narrative Do you believe? What's the story that you believe in? Do you still believe? Or it sounds though, like you're long the dollar Still, despite what you've been talking about D dollarization? Is that true?
Peter St. Onge 27:51
I'm only I'm definitely not long the dollar to the extent that I have dollars, that's just because I spend dollars, so yeah, I mean, that's if I were living in Mexico, I would own pesos as well. But that's not an endorsement of pesos as an asset. Yeah. But yeah, D dollarization. is tricky. It's sort of a game theory where, you know, you go through the reaction functions, and you ask, okay, so you know, this is happening, and then what do I expect the government to do? And then what will happen in response, and I think that on that the US government has really been coasting on fumes for a long time. Ever since Nixon, the US dollar has not really had a strong sort of value story. It's just one of many Fiats. It's the largest one. And you know, you get network effects and financial markets just because of transaction costs. And so the US dollar has sort of been coasting. But I think if it can only survive it, because the other currencies of the world are all Fiat at the moment. So every other currency is extremely weak. Many of them are pegged to the US dollar, the euro, or the yen. You know, they, when they decide monetary policy, one of the things they pay attention to is what's the exchange rate, the dollar, so they're all kind of chasing each other. And even with that, you know, even with the dollar sort of built in network effects, what's amazing to me is that it is losing share pretty pretty quickly. I think it lost about eight points. It's according to Steven Jen, formerly at I want to say Morgan, and he's, you know, noted Forex analysts, so the US dollar plunged and really what's it had been when you say
Robert Bryce 29:32
it lost 8% It lost 8% of global trade transactions, what was the 8% Sorry,
Peter St. Onge 29:39
and lost 8% of reserve share? Okay. So that's one of the big metrics as sort of weighing a reserve currency is when countries are holding foreign exchange assets or holding central bank assets. What are they holding it in? Long time ago, they did it in gold. Now they typically do in foreign exchange. So the US dollar lost money A percent share of that
Robert Bryce 30:02
over the over the last year over what time period over the last year? Yeah. And then so is that going into Swiss francs? Is it going what other currencies is going into because the yuan is pegged to the Chinese yuan is pegged to the dollar, right. So that would certainly wouldn't put it in yuan, because it's the same thing, right? So, money be flowing into yen and to British pounds, euros francs, what
Peter St. Onge 30:23
some of it's basically going to diversify away from the dollar. So some of it is going into gold, some of it is going into other foreign currencies. So you know, the yen and the euro are generally the number two and number three currencies. And the other area where the dollar is also losing shares, and trade. So those, those are kind of the two big metrics and the US dollar is down to just over 50% of world trade, which is pretty rough, because the US is 26% of the world economy. And so being at, you know, 50% of trade is pretty pathetic for a reserve currency. So, I mean, honestly, at this point, the US dollar is not a solid reserve currency. I mean, if we look at historical reserve currencies, they are going to be a lot more dominant than 50%. That's pretty, that's pretty rough.
Robert Bryce 31:14
Well, if that's the case, then why wouldn't you buy me just because the following one, what you're saying then, if that's the case, and the dollar continues to slide, then why if you're, if equities, as we talked about, before they make sense, then why wouldn't you buy stock in European companies then or an EU index? Right, as a way to hedge against the dollar? Would that be a sensible strategy as well? I mean, that just pops in my head is one way to, if we're, if the dollar is going to lose the battle on inflation, why not then park your money into equities in foreign and that are denominated in foreign currencies like the euro or the yen?
Peter St. Onge 31:50
You could the trick in the world right now is that every shirt is dirty. So the EU is, you know, has a lot of its own issues. Right. I had a video the other day just talking about their their almost Soviet, you know, the Soviet Union had these five year plans where they, you know, pour out these massive stimulus projects, and the EU has really gone there. And, of course, the difference historically has been that the so called free world was pouring money, but at least it was pouring it into an economically viable thing is unlike the Soviet Union, which was building useless crap. And now, particularly with ESG, and the green energy, and that, I think that a lot of the stimulus payments are going out, you know, the EU has done I mean, just trillions and trillions in the past decade. And it's got an ongoing QE program. It's got the, what do they call it? The next gen, they've they've just got these endless quantitative easing. Yeah, sorry, quantitative easing, where the, the central bank just basically prints up a bunch of money and goes out and buys anything, which is super, if you're rich, that's part of the reason why the rich get richer is central banks. But anyway, the US just poured enormous amounts into it, their government or their their economy is progressively turning into I mean, really Soviet, in other words, the the economic activity is responding to the stimulus programs as, as opposed to responding to one interesting
Robert Bryce 33:11
point because I think I see that as well, right, more centrally planned. I mean, we're even seeing some of this here in the US and I was at a conference just the other day where one of the guys who was one of the speakers said that the inflation Reduction Act is actually Marxism in America. Right? And he
Peter St. Onge 33:25
said, Sure, it is and that name. Yeah, it was it was literally you can actually find it in the bill, you know, because in Congress they've got the little the little bill page where you can track the thing while it's passing. And it was literally called it was the bill back better act, which everybody knew was Marxist garbage. Right. And you can see it right on the bill there it says Bill history build back better build back better build back better all of a sudden now it's called the inflation Reduction Act. Right? Which, you know, that was such a ridiculous name for Marxism. What are you talking about? Which I mean, to me, it kind of scared me because, you know, in the past politicians did not lie so bold, so boldly, right? They would at least try and you know, sort of connect things to reality so that the media wouldn't go after them. But apparently now we have a pet media. But what
Robert Bryce 34:19
that but let me follow up on the energy part of this because it's such a critical part of the economy, obviously, the most critical and I write about I've been writing about energy and power for a very long time. But I think you're right, I know you're right about the Europeans and the amount of money they're putting, they're just pouring into the the what they call clean green, it's alternative energy. I don't call it clean. I don't call it green anymore. It's all energy right? But it's incredibly expensive and it's a drag on the economy. The energy is not better the electron that that comes out of the winter is no better or worse than the electron that comes out of the coal fired power plant. But is that just creating then a drag on both the US and European economies because I look at where China I know China permitted two new coal plants a week. Oh, yeah. Last year, right? India's boosting their coal production, Vietnam is boosting their coal production. So there seems to be a bifurcation in the world between the developing countries and the men, the rich countries and the rich countries, as I see it are just kind of busying themselves, Oh, we're gonna solve climate change and do spin, spin, spin spin spin on all this stuff. That's not going to be accretive to the economic growth, while the developing countries are saying, Yeah, we're gonna burn coal baby. I mean, is that too simple? How do you see this? Because you mentioned energy in one of your recent substack. So how do you? How does energy figure into this macro economic, I'll say a narrative or you how to your macro economic view of what's happening and how its energy and energy policy is being formulated in the US and Europe versus the rest of the world?
Peter St. Onge 35:47
Yeah, I think you're absolutely right, the alt energy I like that agenda, I think is crippling Western economies. It's really,
Robert Bryce 35:57
it seems like as much as it seems that again, because crippling
Peter St. Onge 36:02
the the alt energy agenda is crippling Western economies. I think it's even more than that it's really kind of the left in general in the West has become the very anti economy, anti growth, I think they even explicitly fetishize, you know, returning to a simpler time before electricity and running water. And I think where this comes from, is that there's, you know, one of the problems in general central banking. So remember, the US didn't go off the gold standard, fully until 1970, or 7071. And one of the most dangerous things I think, that Fiat does is that historically, you have this sort of synergy between the private sector and government where government wants the economy to do well, so that I can get more tax revenue. Right, right. And so even if you know, the government doesn't like business, or you know, it's got no particular sympathies. Still, it wants the economy to do well, so that I can have more taxes than I can buy more boats. And, you know, this this relatively healthy system. I mean, yes, it's parasitic. But then that, I think, has gotten replaced over the past couple of decades, with a system now where governments are essentially self funding via the central banks. And partly that's Nixon's fault. Of course, FDR before him, partly in the 2008 crisis, central banks in the West really innovated a whole bunch of new ways that they can print money. Essentially, what that's converted the system now into, is one where the government sort of doesn't need us anymore. Right? It doesn't need businesses, it doesn't need taxes, they think they're just going to print it all up. And we saw this in living color and COVID. And it really shocked people, you know, early on, I was living in Quebec, and they closed down the entire economy, like everybody else. And there was the Department of Revenue, or whatever it is, in Quebec, they did a calculation, they estimated that tax revenue was going to decline by half think it was 40%. Okay. And now ask yourself, right, under a traditional system, if tax revenues dropped by half, and they could not go to the money printers, well, if your government you just lost lost half your revenue, you have to cut spending by half, right. So you will lay off a lot. And you know, you can just kind of imagine, like if some junior government worker came in, and he said, Okay, guys, don't worry about it, we can shut down the entire economy. And, you know, or whatever, 40% of the economy will lose the tax. Right. But it's okay, we can lay off government workers, you know, we can cut the Social Security payments, right? I mean, he would be, you know, them, they would exile him to the Arctic, right, his career would be over.
Robert Bryce 38:55
But first rule of bureaucracies is to preserve the bureaucracy. Right? This is
Peter St. Onge 38:59
absolutely how it works. Absolutely. So, you know, in under a system without a central bank, you have this sort of? It's Yes, it's parasitic, but it's at least not predatory. Right. So governments and businesses both want the economy to do well. Now, if you look at places like China, or India or Vietnam, you know, in these places, they are, you know, China doesn't like businesses, she arrests, you know, any businessman who gets kind of a public profile, he'll go ahead and arrest him or the guy will disappear for a couple months. They don't actually like business. But they think that business is useful because it creates prosperity, and that creates taxes that they can then build battleships and they can buy boats and they can, you know, pay off people so that they don't riot in the street. So it's parasitic, yes, but it's not predatory. And I mean, in fact, that's the model that China's pushing on the whole world is that, you know, when they go to Africa, for example, they show up with a big fat textbook. And yes, they have a list of things that they'd like you to do. One of them is to move away from the dollar. But their pitch in, say, Africa is, okay, we want your economy to grow, because we want you to buy Chinese stuff. And we also want to, you know, access your natural resources. You know, there's a lot of natural resources in Africa that are currently stranded. Because, you know, you don't have a rule of law or capital markets. So China comes in and says, Okay, we want you to be rich. And what we're going to, you know, really, we think the way that you do this is that you squash all political dissent. Okay, because political dissent is problematic. You know, you get activists you get, what is it color revolutions, you know, sort of the standard pattern is you have protests in the main campus in the Capitol, and then they, you know, egg, the security forces under shooting three, four people become martyrs. I mean, it's, it's almost, it's like a process at this point. And China spots that, and China feels very strongly that these countries should avoid that. Right. And then, so that, I think, you know, yes, it makes these countries prosperous. Of course, you know, it's also a catastrophic for genuine human rights. But now up against that, now, you've got the West, who shows up, and the West is, if anything, empowering those activists, because the activists are in control in the US, right, you've got these people pushing
Robert Bryce 41:24
energy. And to be clear, right? So it's the old energy climate activists who are saying capitalism is bad, we need more effectively central planning, right? We're seeing this don't push absolutely Washington, what's going on? You know, the Fed saying, oh, we need we, you know, floating eminent domain for high voltage transmission projects, or, yeah, we see this at the state level, right in New York, California, Illinois, effectively saying the state is effectively saying we're gonna big flip the local so you don't like the solar wind project? Well, that's just too bad. But who wins? Who wins in those cases? As I see it, Peter, it's the big banks, the big law firms and big business. That's exactly it. It's the I don't like this word fascism, because way overused, but it is the it's the it's the alliance of government and business to further the alliance of government and business. Right that then Yep. Is that Is that too extreme and analysis to put it in that term? Or to use that word, or what is that? What is the right? No,
Peter St. Onge 42:16
that's, that's, that's precisely what it is. We don't use the F word. Just because it is so overused, but yeah, you know,
Robert Bryce 42:24
it's better when I've used climate corporatism or corporate climate is
Peter St. Onge 42:28
yes, the the cleaner word or anyway, the word that won't offend people is corporatism Corp. Yeah, public private partnership, they've all got all kinds of elegant.
Robert Bryce 42:41
It's not quite crony capitalism, because that seems to be something that involves really, friends, where this is just interests, right? Its profits, right? So in any climate,
Peter St. Onge 42:51
crony cronyism inevitably gets shot through with it, you know, this is the problem in general is, you know, anytime that a government gets power, the powerful people in society are going to control that. So to to, to give an example, I used to work in a think tank, and we were pushing for, for Canada to have more competition in healthcare so that people grow up in private clinics. And one of the case studies that we looked at was France. And what happened in France is all of the hospitals were public. And then they pushed to this reform to allow private hospitals. And what everybody predicted while the activist predicted was that you're going to have these private hospitals that were going to serve only rich people. And then you're gonna have this this to speed system where rich people could get treated immediately and poor people would have to go to the underline what happened is that the new hospitals that came in were in the poor areas, specifically the suburbs of Paris, which are the poor areas of Paris, right? And the reason is, because and we see it here with public schools to rich people know how to use the government. In fact, if you compare a school in a rich area and a poor area of the US, the budgets are actually very similar Detroit or Baltimore have similar budgets to all schools nationwide. Why are they so bad? Because the rich know how to use the system. The poor do not. Right. And so the moral of the story here is that once government has some power, like the power to decide where to locate a hospital, it will always be corrupt. And particularly when that's just corrupt, because the rich you know, I went to school with the guy who knows the guy, there's, there's a million ways and people right find to influence the political process. And so on top of that, now, if you're talking about something that is explicitly involving a private business, like say, banking in Ghana, well, you can be darn sure that's going to be abrupt immediately. So you know, it's not necessarily built as crony capitalism often it As it's not necessarily built as crony, but it will always become crony anyway. Anytime,
Robert Bryce 45:06
because you're because use private parties this this is the nature of government that it ultimately gets taken over in that way. Always. Well, so you wrote about this. We're talking about the Fed, we're talking about kind of economic policy, in large part, right. When you recently wrote, I'm going to read this because I think it's a, I think, a pretty good summary of what you what we've been talking but you said so what's effectively you're saying what's the way forward in the Fed disband the Federal Reserve, disband the ministries of planning from Treasury to the Council of Economic Advisers and dozens in between, in the deficits that destabilize the economy to buy votes restore the separation of economy and state that built this country, which is what we're just talking about, that made America into the model for the world before Wilson, then FDR took it apart and handed control to central planners, who, by their own admission, still don't know what they're doing after a century of trying instead, trust the American people to run their affairs, not the central planners whose only talent is how to break things and lie about it. It's it seems to me that paragraph pretty well sums up your your worldview there, isn't it? I mean, but how do we do that then? Because I don't necessarily disagree with any part of that. But can we move past this creeping government ism corporatism, because it just seems like we're, you know, we're facing this situation, Republican democratic, like, Trump talked a big game, but government just exploded on its spending exploded under his administration. So what's the ya know, for sure. What's your outline? The practical way forward? is, are we going to need that kind of populist president says, Okay, enough, you know, we got to turn this thing around. What will it take to make what you just that paragraph right there? What will it take to make it happen?
Peter St. Onge 46:49
Yeah, I think we're eventually going to get there, either the easy way or the hard way. Right. And the hard way is that the whole thing collapses under its own weight. You know, so the restructuring forced upon us, that that's what happens. And we get like a Soviet outcome where, you know, the the inertia in the system, the Soviet Union was so enormous that I imagined, you know, people that want this could ever change. And so, you know, sadly, Gorbachev started just trying to reform it. And he didn't go far enough, fast enough. And so the thing ultimately collapse under its own weight, at which point they throw out the entire rulebook. And they start over. Now, the, you know, I think what's unique about the US is that the Constitution, I think, is fundamentally, it's really the only thing in my mind that distinguishes America. It's our only superpower, the respect that we have for the Constitution, really, and you know, lots of other countries, Australia, Canada, you know, they're very, they're very friendly, they're hardworking, they're entrepreneurial, they're independent minded, but they don't have the Constitution. And that is, I think, the difference. So I think there's a risk there. But I think that given American culture, even if we, quote unquote, throw out the rulebook, I'm certain that we're not thrown out the Constitution. And so if we throw out the rulebook, you know, what do we go back to? And there have been periods in American history where the economy worked very, you know, radically differently than it does today. Specifically, one of the era This is most fascinating to me, is the Lochner era ello, ch, ner. And that was previous to well, it was basically about the 1820s to about 1880s. To about the 1910s. World War One really broke the world. And in that era, so let's call that the Victorian era, or in US terms, it's sometimes called the Gilded Age, really, it's the Golden Age gilded as a socialist, journalist, slander, printing, right in that golden age. You the, your economic rights were co equal to your political rights. Okay, so you had the right to work at any wage, you have the right to start any business, you want to just like you have your free speech rights or any other human rights, you have another code under under the Bill of Rights. And so governments could not regulate, okay, that they like the the entire regulatory state, what we now think of, you know, you licensing was not constitutionally there was explicitly a case that pronounced that licenses are unconstitutional. You do not have to ask permission for government to do things. Why? Because you have an inherent, you have property rights. You have under the Fifth Amendment, the right of contract, you have the right to private property. So it's surprisingly easy to get there. If we had a Supreme Court who, you know, was sympathetic to the Lochner era. Now.
Robert Bryce 49:42
I'm sorry, I've never heard that. Yeah, Lochner. Where does that come from? I know I'm worse with the Golden Age. Yeah, the Gilded Age, which is often vilified, right is the rage of the robber barons and so on. But anyway, the Lochner where does that work from where does that name come?
Peter St. Onge 49:57
Yeah, that's a specific case that that sort of launched the standard name of the era and I can remember it's something like Lochner V. New York or something. Okay. So
Robert Bryce 50:06
it's a Supreme Court case. Okay. All right. Yeah. Yeah, it
Peter St. Onge 50:09
was a specific case. And then when you know, court historians are talking about different sort of legal eras in the US, they'll often refer to quote unquote, the Lochner era. So, so. So it's a famous era, and especially for an economist, it's significant. Just because you had so much freedom, you know, so to to give an example. So there was a ballpark a baseball park in Philadelphia called shine Park, and the walls were low. So if you went up on top of a roof nearby, you could sit and watch the game. Right. Okay, so what all the house has? Did, they put up a bunch of bleachers on the roof, right? And then each house had a kitchen, of course, and so they would, they would cook up something or other. All right, and then and then they would, you know, try to sell it to the people sitting up on the bleachers, and they would sell tickets, they reinforced the whole thing. Okay, so just to kind of paint a picture of what America looked like, right before the regulatory state took over. You could do whatever, whatever you darn well wanted. If it was your property, you could start a business, you could, you know, as long as you weren't hurting somebody, if you were hurting somebody, then you were liable for damages. And that's that's long standing common law since 1000s. of years. But in terms of, you know, you didn't have to ask for permission. Of course, you didn't. You didn't have an income tax. In the early part of it, the government had no business, knowing what you make, or what you do as a business had nothing to do with them. And so in that era, right, your your you had your economic rights just as much as your political rights. So we couldn't go back to that. That era ended. I mean, really, the it was sort of suspended temporarily during World War One because they called it an emergency as they do. And then in you know, FDR really put a nail in that with the new deal. He went through a court packing, essentially, the Supreme Court was a strike down the entire New Deal. And then he there was this enormous pressure from FDR and from the Democrats at the time to pack the court to put I think, up to three additional justices, and the Supreme Court unfortunately, caved. And so they they Greenlight at it. But you know, there have been many Supreme Court decisions where the court has gone back and said those were badly decided, or those were decided under duress, for example, the Dred Scott decision, or Roe v. Wade recently. So it is within reason that the court could go back, you know, and in fact, be pivotal.
Robert Bryce 52:37
Because I think, you know, the key here is this is this is the thing that I see, particularly lately, and I do mean, under the Biden administration, I'm not a partisan, I'm not a Democrat. I'm not a Republican. I'm disgusted. Right. But this, this, you know, the the rise of the administrative state and these draconian rules, exactly, by the EPA, without any approval from Congress, oh, we're going to effectively shut down potentially 90% of the power plants in America. Oh, when we're going to force all automakers to produce two thirds of their cars have to be electric vehicles. Yep. without so much as you know, how do you do from Congress? I mean, I think this is very dangerous in terms of the overall just individual liberty right. But I found the Lochner decision, Lochner versus New York, landmark decision of the US is Wikipedia from the US Supreme Court holding that a New York State statute that prescribed maximum working hours for Baker's violated the Baker's right to freedom to contract under the 14th. Amendment decided in 95.
Peter St. Onge 53:34
So yeah, they were they weren't here
Robert Bryce 53:36
is defending the Fed disbanding the administrative state. But I mean, is that going to take a populace president just kind of bring it back to, you know, what is the what's the solution? Because I think we're on the same page on a lot of these issues. You're talking about it? I'm very, I really loved what you just said about the Constitution as our superpower. And I'll just add one quick thing. It was GK Chesterton, who said that the US is the only country ever founded on a creed. And that that is the I think that is the superpower of the United States. And I think that that is something that no other country, you know, we talked about the Bill of Rights all the time, my oath First Amendment, so second amendment, Fifth Amendment as part of our everyday speech, this Clintus constitution thing that you mentioned. Right? And that that is something that binds America and makes it more have a spree to core that is in the in the in the rest of the world, right. And we believe our own BS, I guess, to put it bluntly, right. But I've
Peter St. Onge 54:33
talked to tons of Europeans who are envious, that we have this north star in our culture that we can look to and I mean, they're always they're always amazed that we'll have debates Americans, and we'll be like, well, you know, you got the Fifth Amendment. You got the Seventh Amendment. I mean, they are stunned. They think it's really cool. And, you know, because the Constitution I mean, it's it's so skeptical of government. I mean, for me as a have, you know, as a conservative libertarian, I mean, I just absolutely love it. Like the Constitution is built on the assumption that all these people are lying scum balls who are trying to survive and what do you know, 250 years later the darn things nail on the head? But yeah, I mean, in terms of practical things, probably the single biggest change, and really what, what ended the Gildan, the Gilded Age, more broadly, something called the Pendleton Act. And I believe that was 1880 or so. You may have wiki there. But anyway, it's around then. And what Pendleton Act did was it created in civil service rules. Right. The rule before then was that when the President comes in, he can fire? Anybody. Right? Who's in the federal government? Why? Because the President is the representative of the people, he is speaking for the people, right. And so of course, the people can fire anybody in the government, they work at our pleasure, right? We don't work for them, they work for us. So that was conceptually and you know, the media at the time was left wing. And so it just to this, I mean, if you thought the Obama Care push was big, like multiply that by, you know, 10, what they push to get Pendleton Act put in what Pendleton Act ended up doing was, it essentially created the deep state, okay, it meant that the government was a self licking ice cream cone, it could run itself. And they had all these quote unquote, rights. And remember, if a government union has a right, who doesn't have a right against against us, the people, the sovereign, this is our country, this is only our country. So that would probably be the single biggest thing. Trump unfortunately did not get into that I think he didn't have enough respect for understand, if you want to fix something, you have to understand it first. And I think that he had a correct level of contempt for Washington. I think he was right about that. Unfortunately, if you want to change Washington, you do actually have to sit down and understand it. And you have to figure out what are the
Robert Bryce 57:08
and he could, you know, he couldn't be troubled with that.
Peter St. Onge 57:10
Right? It was too big, essentially. Yeah. And,
Robert Bryce 57:13
by the way, it was passed by the 47th. Congress, signed into law by Chester Arthur, January of 1918 83. provided federal government jobs be awarded on the basis of merit and the government employees be selected through competitive exams, also made it unlawful to fire or demote for political reasons, employees who were covered by the law. So it created I see what you're saying is it created this unaccountable bureaucracy that would be entrenched and not couldn't replace no matter how bad but see that right? Because it worries me so much about the EPA to return just to bring it pull it back down for sure if the energy side of things if this is the key input for the economy, right? And what do I see now? Electricity prices soaring all over the country, electricity grid becoming less and less reliable, the challenges of expanding the grid and adding more transformers more line, but all these things in the expense is going to be unbelievable. And yet there's no sure no comprehension, or even no kind of historical reference point for any of these things being connected to each other. Instead, it's just promulgation of more rules, because they can it seems to me, I say that without being no delight in it at all. But as I just report on it, that's how I see it. How dangerous is that part? Just if you look at the energy, part of it, in terms of the energy inputs into the economy, being the key drivers,
Peter St. Onge 58:37
I think is tremendous. You know, the problem is that it's very easy for them to come up with new loot new laws, new rules, when there are 1000s of new rules that are put out every year. And they never ever go away. Right, right. So you just got a fundamental problem here, there is no mechanism that is ever removing rules. And in fact, once you get a new rule, the companies invest money to comply with that rule. And then at that point, they don't want the rule change because they've already spent the money. But any newcomer has not spent the money. And so they can use that rule as a way to shut out competition. So yeah, I agree the the the system is getting worse and worse, is getting more sclerotic, particularly in energy. You know, the kinds of fantasies that they're imposing by these rules are, I mean, they're just science fiction. They're just insane. Now, there's some point where reality does intrude. So we're seeing some of that in Europe now. So Finland and Sweden, just recently are now pushing for nucular to be included as a renewable or at any rate to be to be part of the energy mix clean resource. Yeah. Right. And there have been I mean, one of the weirder things out of Europe has been that they defined tree pellets, right where you basically take trees and grind them up and then you burn that. Well, I mean, that It's like going back to the 15th century in terms of energy. But anyway, they call that renewable because trees grow. So
Robert Bryce 1:00:06
don't don't I mean, on the biomass Peter, you're gonna call for sure.
Peter St. Onge 1:00:10
But you know, the, the moral of the story here is that they, they keep pushing it until it breaks, when it breaks, you know, there are some sort of, they tend to step out of the system and pretend you know, so like, in this case, pretending that burning trees is suddenly green or something. So, I mean, there are certain things that will try to step out of the system. But of course, that entire, like, it'd be a lot better not to break in the first place to just sort of accept that, you know, fossil fuels are pretty darn amazing. And you know, they've got another 500 years to go before. Wow, I don't know that. Anyway, they've got another 50 to 100 years before solar is actually going to be genuinely competitive. And just, like, stop breaking it, man, like, move on to some other questions. There's something
Robert Bryce 1:00:54
Peter St. Onge 1:00:55
Robert Bryce 1:00:56
So let me quick station break. My guest is Peter St. Onge. He's an economist at the Heritage Foundation. He's also a tick tock legend. You can find him on tick tock. He's on Twitter. Prof. St. onge.com, is where you can find him on substack. You can subscribe to him there. So I just want to ask this question again. Because I know I just so $10,000 just to give me the quick answer. This is a lightning round a quick answer you put I gave you $10,000. As they go make money on this, you'd put it in the US equities, some summon equity, summon gold summon crypto.
Peter St. Onge 1:01:32
Yes, I would put 50% in either gold or Bitcoin and then 50% in equities, I don't have a strong feeling about us or not us. Generally speaking, buy equities. Wherever you spend your money. You probably know the place best and you know, plus, if you know, if the currency changes significantly, your spending has also changed significantly. So but it's
Robert Bryce 1:01:56
okay, so correlation is inflation is here to stay you wrote recently in the OECD, it's stuck at 7%. It's been at 7%. Now, which means prices are going to double in 10 years and roughly about rule of 72 at 7%. Right then. So then you need to be thinking long term about making sure that your whatever you put your investment in is going to be somewhat a hedge against that inflation.
Peter St. Onge 1:02:20
Yeah. And that's the subtext on that allocation, right, is that I do think that inflation is going to continue, I think that they are not in everything governments are doing right now is making the economy worse, the regulations, we just talked about energy, they're doing that kind of thing across the board, whether it's diversity, or
Robert Bryce 1:02:37
the central bank's hiking and hiking interest rates,
Peter St. Onge 1:02:41
right, so central banks have to hike interest rates because they let inflation get away from them by basically financing, the lockdowns by all these governments. And, you know, the problem at this point is that there are two ways to fix a sick economy, one of them is that you could reform as he can put in different policies that encourage entrepreneurs, you could lower taxes, you get rid of regulations, none of those are on the menu, and I don't think they're gonna be on the menu for a long time. I think on the contrary, the activists are in charge. And so they're gonna go to plan B, which is that they're going to try to print their way out of it. And so every single thing, you know, all of those economic interventions are breaking things, one by the next, like we're seeing it in banks, we saw it in British pensions late last year, every single time they break something, the only thing that they have to fix it is that they shoot it with another trillion dollars again, and again and again. And so where we are at the moment, I think that the global economy, it has already gotten, especially in the West, there's so much intervention that I think that it is going to continue slowing. And things are going to be breaking partly because of the economy slowing but partly because of the interest rates because of central banks trying to cancel out their inflation. So you put those together, and I think that we are over the next, say, five or 10 years, I think that we are definitely going to have higher inflation than normal just because that's that's the only thing left in their toolbox to just pump out more money. I think we've also got another shoe to drop, which is that the next crisis that comes here, whether it's a recession or whether they make up a new crisis, global warming, who knows the next crisis, they are going to try to push in a UBI and virtual basically become a universal basic income. They have been pushing that for a long time. I it's been.
Robert Bryce 1:04:41
It's being tested in California now.
Peter St. Onge 1:04:43
It's being tested a lot of places, yeah, all over the country. And that's when they start doing these little tests. Of course, they're not really a testing. Like they're not really curious whether it works. Right. What they're doing is is funding the studies. The people who run the studies know what answer They're they're supposed to come up with, okay. And then you find these little things and you gather 1020 30 studies. And now you can go to Washington or wherever the Capitol and you say, look, we've got dozens of studies proving, whenever I want to prove, so you know, you have less domestic violence or, you know, kids brush their teeth more, whatever it is. And so that's, that's the process they're in. It's like, building a skyscraper. They're putting down the foundation right now, with all these UBI test cases. If they're, if things don't change on current trends, we are going to have a UBI people, you know, the trick and politics is that you don't really have to appeal to all voters, you just have to get 50.1% and 50.1% are going to love a UBI. Right? I know this because
Robert Bryce 1:05:48
we do. out of other people's money, right? Is that's the trick.
Peter St. Onge 1:05:52
Yeah. So you know, I was in Canada in early in COVID. And they did an effective nationwide UBI, the, was called the CRB crbc, I think. And that was massively popular paid a little bit more than then a lot of people were earning, you got to stay home. People love free money. And so I think that that's the next shoe to drop. And then of course, meanwhile, we've got this other new technology showing up of CBDCs. And you know, that too, they're very interested in pushing people hate them worldwide.
Robert Bryce 1:06:24
What is this? I'm sorry, what's the acronym I'm sorry,
Peter St. Onge 1:06:27
cbdc Central Bank digital currency. So that's the type of cryptocurrency where the government puts it out, they replace the US dollar with it. Now, instead of having dollars you have an entry on a spreadsheet, basically the central bank and so they can go in and they can swap your money around, they can stop you from buying, you know, a gun or you know, some climate unfriendly mill or whatever. Yeah, they probably won't stop you buying heroin. No, apparently this is, this is a new day and age probably be fine with you doing that. They can lock your money into a failing bank, they could force you to spend the money and time for the next election to stimulate the economy, etc. So your money, it kind of becomes permission money, it's just sort of a play thing. They can sit there with their giant spreadsheet they can say one race doesn't have enough money the other race has too much money, just the possibilities are endless. So a cbdc pulling on it Nate the really worldwide is like 20% Like nobody wants this piece of crap. Nobody wants the government to have control over them full surveillance over them but I mean, I know working in Washington there is a massive push for this thing. And it would be the you know, it'd be the deep states dearly held dream to have complete control over the entire economy basically, you'd have a push button central planning, right so you can carry
Robert Bryce 1:07:49
you carry you carry cash.
Peter St. Onge 1:07:53
Almost never No, I don't. No, no, no. Well, I've Bitcoin So Bitcoin is filling the psychological need for having some cash. But yes, if
Robert Bryce 1:08:02
your wallet you don't have any currency,
Peter St. Onge 1:08:05
I have a very small amount of currency. For in case my card doesn't work. Okay, so
Robert Bryce 1:08:10
yeah, so we've been talking for more than an hour now, Peter, and so I don't want to keep you too much longer. Would you comment? Your your call yourself an Austrian economist? I assume you follow Schumpeter? If I've got the pronunciation right. On my son? Yes. Yep. Yep. Do you like what modern economists do you follow? Who do you Who do you think has it kind of right these days? There, are there any of them?
Peter St. Onge 1:08:37
Uh, no, I'm trying to think of, I mean, the ones that I pay attention to these days are all Austrian. So sayfudine a moose? is good. He writes a letter on Bitcoin specifically. And
Robert Bryce 1:08:48
who is that? I'm sorry, I don't know that name. Sorry.
Peter St. Onge 1:08:51
sayfudine. If you look him up by his first name, he's better known by that. So sai F, E, D, E, A N. So safety is good. Mises Institute has a bunch of good economists. So pair be blue and Patrick Newman, Jonathan Newman, no relation. There a bunch of guys over there. In terms of who I read the most and sort of recommend the people if they want to learn more about economics. That would definitely be Murray Rothbard. He for me is the greatest modern economist. He died in the 90s. And his probably the best book to start with his is what does the government have done to our money? Which is about the Fed? I'm sorry. And then the case against the Fed is probably the clearest one, Ron Paul, essentially based in the fed on Rothbard the case against the Fed. So I'll start with that. There's also a very good one he talks about the progressive takeover of America and if you search for education, free income Paul certi I know that's one of the major essays in there, he talks about the government takeover of public schools or of schooling. And that that'll lead you to the rest of it. It's an essay, but it's like a like, the whole thing's book length, it's 140 or 180 pages, that I think if you read that, that absolutely lays out what happened, how the country got captured by the socialists. While really it was a union of the deep state, government workers and socialists.
Robert Bryce 1:10:30
So last few questions. Peter, what are you reading? What books are on top of your list now on top of your pile these days?
Peter St. Onge 1:10:37
Let's see. Currently, I'm reading American default, about FDR seizing the gold and the Forgotten Depression about the 1921 depression, which is interesting, because the government did nothing. And it fixed itself on its own.
Robert Bryce 1:10:54
Okay, last question, then we've talked about some very sobering things today, what gives you hope,
Peter St. Onge 1:11:00
odds, I have enormous hope, because the market that people always win it, the easy way to do it is that they just give up now, the hard way to do it is we have to go through the crisis first. But we freedom always wins. There is I can remember who said it, you can find it online. There's a beautiful quote, I think it's J S mill, to the fact that you can try to crush the truth over and over. But every time you stop holding it down, it pops up again and again. And there will eventually through history be some time when the moment is right, and the truth spreads like wildfire. So I am enormously optimistic our forefathers gave us you know, tools to organize, they gave us the Constitution, they gave us a representative system. It is very, very flawed at the moment. But we have it and this is much, much more than freedom fighters have had in the past. We have the internet. And you know, Elon has done amazing things. But even just the internet structurally, you know, if you compare it to freedom fighters in the past, we haven't so easy. The fact that you and I can talk like this that we can organize that we can reach 10s of 1000s of people. We really have it very goodness, champions of liberty, and I think we have a responsibility, you know, to our children, but also honestly to the people who built this for us to to use what we have.
Robert Bryce 1:12:26
Well, that's a good place to stop. My guest has been Peter St. Onge He's an economist at Heritage Foundation. He's all over the interweb and on substack on tick tock, Prof. St. Onge br o f. s t o n g. Peter, thanks. It's been fun, really fun to talk to you admire what you've been doing. And I'm following you on Tik Tok, and you just It's great stuff. So thanks for spending an hour or so with us on the power.
Peter St. Onge 1:12:53
Yeah, thank you, Robert. There's been a lot of fun.
Robert Bryce 1:12:56
And all you out there in podcast land, follow me on substack. And of course Twitter, although I'm not nearly so. have such a following as Peter does, but nevertheless I'm there and on Instagram and Twitter and all the rest of it. Thanks for tuning into this episode of the power hungry podcast until next time, see ya.