i rarely do this kind of video you know this this calling out of somebody in particular uh i'm just not into that kind of drama but i'm doing this video about tom nash tom nash is a youtube analyst he's got a couple hundred thousand subscribers and he's a big boy he's a financial analyst who's become a youtuber and he's very successful at it good good on him but i just have to say that he just put out a video just now that is so colossally full of [ __ ] that i just have to call him out i i just have to say it i mean myself my intellectual self-respect demands that that i call him out because he's claiming that there isn't going to be any hyperinflation and anybody who claims that there might be is completely wrong and doesn't know anything about macroeconomics and is a complete and utter fool and that he gives absolutely no reason for his conclusions yeah he's just basically positing that there isn't going to be any hyperinflation and the reason that he gives it is the most idiotic i mean he does give a reason and he claims that the reason that there isn't going to be a hyperinflation of the u. s dollar that the dollar is always going to be rock steady is because jerome powell who is currently the chairman of the federal reserve board well he will never raise interest rates he he will always you know uh uh know exactly when and if to raise interest rates and he's already said that he's not going to pull the trigger too early in terms of raising interest rates to halt the galloping inflation that we currently are experiencing yeah because at this time see the united states dollar is inflating at uh roughly four percent at least officially now you go over and talk to say john williams at shadow stats and he's going to give you a completely different number shadow stats by john williams uh he's a guy you know uh sets up this website that basically analyzes prices based on the old basket of goods and services because the basket of goods and services changed back in the 90s i believe because they wanted to not have to readjust social security as quickly as inflation so they basically tweaked the inflation numbers so that a registered inflation would not be so high okay and therefore the social security payments would not have to be readjusted so much it was basically a way to save something like uh i don't know something like 300 billion dollars over 10-year period that was basically the rationale for that but that's not important the important thing is that see different people reasonable people think that inflation is a lot higher now the fact of the matter is we see in certain goods goods and services that inflation is galloping along we see it insofar as lumber prices gasoline prices i myself have been noticing this among my friends now i've spoken to three friends who work white collar jobs a couple of bankers and one in a high-end consulting firm and they've all been offered bumps in their salary and not just little bumps i'm talking like 50 the consultant was offered a bump to jump ship to another uh consulting firm and the bump was 40 net salary plus a signing bonus and uh these investment banks same thing it was 50 and 60 respectively plus signing bonuses okay and these are buddies that were kind of like surprised that they were getting these offers huh i mean basically uh higher wages are on the way and we're seeing it not not only on high-end wages but we're also seeing it in so far as low wages and we're seeing the problem of a lot of fast food joints restaurants and whatnot are not able to hire any people because nobody wants to take the jobs because they're getting paid to stay at home and so labor prices are rising across the board okay those are realities on the ground that tom nash doesn't even talk about okay but what he does talk about is that he says that the um uh chairman of the federal reserve board jerome powell he isn't going to raise interest rates and he's told the markets that he's uh very aware of how sensitive they are to hikes in interest rates well yeah of course he's going to say that but the fact is he's very aware that at this time the u. s federal government spends on a yearly basis as of 2021 it spends uh roughly well it depends how you measure it but between 300 and 350 billion dollars per year on interest payments okay and the interest rates are at historic lows what would happen to the federal budget if interest rates rose and the yields on all that debt were to rise would they be able to meet those obligations no they would not in point of fact the federal government would be in a position of potentially defaulting on its debt the treasury bond the benchmark debt instrument of the economy would default and that's truth so you see it's not that jerome powell is claiming that he's not going to raise interest rates until just the right moment it's that he can't he cannot raise interest rates and this is what tom nash doesn't seem to get in in his [ __ ] little video he claims that anybody who claims that the dollar might hyperinflate into oblivion doesn't know what they're talking about oh contrera tom i know exactly what the [ __ ] i'm talking about and the fact is jerome powell cannot raise interest rates because if he were to do so he would bankrupt the us federal government the u.
s federal government would not have the means to meet its interest payments on its current debt now tom nash also talks about the fact that he grew up in russia i actually know russia i live here in ukraine you know literally a stone's throw away from russia and i'm going to be going there shortly on business and whatnot but the point he talks about how in the early 90s there was hyperinflation in russia which is true now he talks about it but he doesn't draw any lessons from it now in my own case my family is from chile and i grew up with all kinds of stories about hyperinflation in chile in the early 70s when we had a communist government it's socialist communist it's not important but the thing is see they crash the economy like all these [ __ ] socialists always do and uh not only did they crash the economy they crashed the currency and uh the uh escudo as it was called in chile well it suffered at the end it was something like 120 inflation year over year i mean it was a [ __ ] disaster and people in the end they had to resort to using dollars because that was the hard currency uh they couldn't depend on the escudo because some months you know the inflation was so high that it was just not worth it and not only was inflation high but there weren't any goods and services available except on the black market so in many ways the official inflation was just 110 per year but the unofficial rate since you had you could only buy on the black market well it was closer to 250 to 350 percent per year okay now i personally didn't live at that time because we were living outside the united states outside of chile at the time but uh you know as soon as we moved back to chile i heard all these stories i grew up with these stories it was traumatic okay and so i remember that story and the other story i remember very well is that the 1980s the early 1980s see i was born in 1968 i was born the son of a banker and in 1979 we were living in new york my dad was working in uh down in manhattan of course and then january of 79 the shah of iran was overthrown and that meant the interruption of the supply of oil and because of that oil shot up precipitously and this started this sparked an inflation a wave of inflation that i remember very clearly because my dad since i was at the time what 11 12 year old boy my dad would tell me all about it the blow by blow i was as it was happening retrospectively i realized what was going on my dad was telling me all that was going on as a way to for him to talk his way through how he was going to handle this crisis because it was a huge [ __ ] crisis and what happened was that see the dollar started to inflate away in 79 and into 1980 and the only way the only reason rather the only reason that the dollar did not break in 1980 and 81 was because of paul volcker the chairman of the federal reserve board at that time paul volcker realized what was going on and so he pulled the trigger in tom nash's phrase he hiked interest rates and he hiked them by a lot inflation was at that time as nash correctly points out roughly 15 but that doesn't tell the whole story what was going on was that see the dollar was circling the drain it was spiraling out of control prices were rising precipitously uh month by month week by week the fact that uh the hunt brothers at the time tried to corner the silver market but gold shot to the moon precisely because of these inflation fears the whole thing was starting to collapse the dollar was starting to collapse and so what did paul volcker do he raised interest rates to 21 the fed funds rate was raised to 21 and that cut inflation in its [ __ ] tracks and it broke the economy the united states economy went into a severe recession because of it because when you hike up uh interest rates credit dries up because people can't afford to take out loans at 21 it's just too much their businesses don't yield enough to cover such an interest rate and since they can't take out loans to start new businesses they don't start new businesses and so they start to you know either holding steady or more likely cutting out people to save money to pay for these higher interest rates in in whatever aspect of their business they currently have okay you hike interest rates to that kind of a level and it's just slamming the foot brakes and the hand brakes on the economy hitting them with full force and that was the only way that paul volcker could halt the runaway inflation that was afflicting the u. s dollar now of course he could do this because the united states wasn't so indebted the federal government i mean the united states federal government was in in deficit spending of course and had a debt was carrying a debt but it was not that severe the united states right now has between 300 and 350 billion dollars in interest payments per year what is the interest payment percentage-wise well interest rates right now are historic lows the yield on the 10-year bond is what one and a half percent see at a trivial interest rate the federal government has to shell out between 300 and 350 billion per year to just service its debt now what do you think would happen if inflation starts to run away and somebody like paul volcker with the balls of paul volcker were to hit the brakes full on and and just raise interest rates enough to halt that inflation raise it say as paul walker did at least 500 basis points above the current pace of inflation which is basically what volcker did what would happen to the federal government would it be able to make its interest payments no it would not it would not be able to right now at 300 to 350 billion per year at a trivial interest rate yeah i mean it's quite a chunk out of the federal federal revenues if i recall correctly the numbers and correct me if i'm wrong i do believe that the interest payments account for at this time something like nine percent of federal government uh income roughly five percent of federal government outlays right that's what we're talking about okay and at a trivial interest rate so if interest rates had to be raised in order to halt inflation the u.
