But if I still lived in the United States, I would pay 37% tax on the management fee that I charge to manage money. Why should a hedge fund that charges a fee a different way pay 20% We should all be taxed the same. Now, of course, any hedge fund manager that wants to move to Puerto Rico, well, can have the same tax treatment as me. That's why a lot of my neighbors run hedge funds, right? A lot of people have come down there. So that's the legitimate way to get out from under these high taxes. But even if they were to get rid of it, it's not going to amount to anything. When people are talking about inflation, I'm going to get into inflation a lot after this break. But when people are talking about the inflation threat, it's not coming from tariffs. Yes, tariffs are going to make all sorts of goods more expensive, but they'll end up making a lot of services less expensive, which, of course, is bad news if you're providing those services and you're an American, right? Because we don't import our services. We do that domestically, but we import all the goods, a lot of the goods. And so they're going to be more expensive. The real inflation threat is coming from the much bigger budget deficits that are going to be the result of tax cuts and a failure to reduce spending. We're going to have bigger deficits. We're going to have more money printing. We're going to have more quantitative easing. And that's the reason we're going to have a lot more inflation, not the tariffs, even though I don't really think they're going to get imposed to that degree, because I think inside the Trump administration, they realize the harm they do domestically. And they've already seen the reaction in the market. You know, it's like, you know, the trial balloon ends up being the Hindenburg. You know, you back away. Anyway, we got a quick commercial break. I got a lot to discuss on this podcast. So stick around. Coming right back. 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Stagflation is the one thing that their tools don't work with, right? Because they can either fight inflation or try to stimulate the economy and the tools are opposite. So if there's too much inflation, what do they do? Well, they raise interest rates or they do quantitative tightening, right? What do they do if the economy is weak, if the labor market is weak? They do the opposite of that. They cut interest rates and they do quantitative easing. Well, if you have a weak economy, rising unemployment and rising inflation at the same time, the Fed's got nothing. You can't ease and tighten simultaneously. It's like you can't push and pull on the same thing because you go nowhere. So if the Fed gets stagflation, they're out of ammo. They got nothing, right? And in fact, earlier this week, I think was it, well, maybe Thursday, not that early in the week, the Fed announced the results of its stress tests. Every year they come out with these stress tests for the bank. And what do you know? The bank's passed, right? They passed the stress. I think they passed them. But they did not test at all for stagflation. The most adverse scenario, this is the worst possible thing the Fed could think of. The worst case scenario was a recession where stock market went down, like real estate market went down, but inflation went way down and interest rates went way down. So wait a minute, this is supposed to be the worst thing that can happen. And in the worst possible thing, interest rates go down and inflation comes down. Well, why is that bad? Isn't that what everybody wants? Like we got all this debt. Everybody is loaded up with debt. And the Fed is saying, imagine how bad it's going to be if interest rates go down. Well, wait a minute. That's a relief. We all want interest rates to go down. Certainly Donald Trump wants interest rates to go down. So according to the Fed, this would be a disaster. This is such a horrible thing if interest rates go down and inflation comes down. But wait a minute. Don't we want inflation to come down? I mean, it's been so high for so long. Why would inflation coming down be part of the worst case scenario that the banks are testing for? Because that's because the Fed just assumes that if we have a severe recession, well, we're going to get rewarded with low interest rates and low inflation. Well, I can think of a far more adverse scenario than that one. And that's the scenario where we have a recession, but interest rates go up and inflation goes up. And in fact, it's because inflation goes up that interest rates go up. isn't that worse right why doesn't the fed test for that why doesn't the fed say okay all you banks i want you to run a stress test and imagine the stock market goes down the real estate market goes down but interest rates and inflation go up. So run a test for that. The reason that Powell is not asking the banks to do that test is he knows that every single major bank will fail. If we have that type of scenario where we have inflation and recession at the same time, and the result is rising, not falling interest rates, that's it, right? Everything comes crashing down. And so that's the reason there's no stress test for stagflation. That's the reason that the Fed has no plan for stagflation, right? But that's why we're going to have stagflation. You know, Murphy's got this law. Obviously, Powell doesn't know Murphy's law, but it says anything that can go wrong will go wrong. And stagflation is the worst thing that can go wrong. And it eventually will go wrong. In fact, it's probably already going wrong. So let me get to the data that we got this week that evidences stagflation, right? And nobody is talking about this, you know, in the mainstream media, the mainstream financial media. I mean, maybe there are some other podcasts that talk about, I can't watch everybody's podcast. I'm sure there's some other guys that get it, but this is where, uh, the, um, the is coming from. It's not coming from conventional media. It's coming from podcasts, right? So anyway, so we got the jobs numbers today. But before I get into the non-farm number, talk about the jolts number that we got on jobs earlier this week. out on Tuesday. A big job drop in job openings down to 7.6 million from 8 million, actually from 8.156 million. They were looking for 8 million job openings and we only got 7.6. So that was a very disappointing number. And it shows that companies are, you know, they're not hiring as much. And I think that the job openings will continue to contract in the months ahead. Now, the unemployment rate is still low, but it's notching up. It went up to 219,000 for the week from 208,000 the prior week. It's still low, but it is heading in the wrong direction. And I expect it to continue to head in that direction. The jobs report, before I even get into the actual jobs report, the government came out and announced another like 600,000 jobs that were eliminated from last year, 2024. That's what? Almost 50,000 jobs per month. And remember, they've already revised heavily down all of those numbers. I mean, pretty much all of the job numbers that originally were reported as being beats where we got a number that was greater than was expected. It now turns out that those reports were misses. We were celebrating a beat when we should have been, you know, mourning a miss. And all the reports that were misses were actually much bigger misses than what was reported. So, I mean, all the market reactions, right, the stock market rallied because we had stronger than expected jobs. Well, it turns out the market shouldn't have rallied because a year later we find out that we actually had a weaker than expected job report. I mean, that's why I keep talking about the fact that the Fed says that it's data dependent and it depends on this data, which is completely unreliable. None of it means anything when it comes to these jobs. The government doesn't even know how many jobs were created. So many of these jobs are just made up based on the birth death model. And I also read up on Zero Hedge that all the jobs, I've been talking about this, but all the jobs that were created in 2024 went to illegals. There weren't any jobs created for legal Americans. It was all the illegals that were coming across the border. They got the jobs. Now we're going to try to kick them out. So, I mean, maybe there's going to be a lot of job losses. I wonder if that counts. If you kick out an illegal who's employed, does that count as a job loss? I guess he's not unemployed if he's no longer in the country anymore. But so the whole thing was a fake. I was saying that all year that the jobs numbers were going to be revised down. And I was predicting big revisions after the election. And we've got them. In fact, they started the revisions right before the election and we've gotten multiple downward revisions. And I think we got more coming. I mean, I still think they may revise enough data down to show that we were in a recession all of 2024. Right. And that might happen now that, you know, we got the Trump administration, maybe instead of, you know, being blamed for inheriting this great economy and causing a recession, if they can at least show that the recession started a year before Trump took office, he can't be blamed for creating a recession that he in fact inherited, right? So we may see that. But anyway, so let's get into the jobs number, the first job number of the Trump term, although Trump was not president for all of January. So, you know, maybe this is partial, but, you know, he's going to own the February number. They did revise up the December number from 256,000 to 307,000. But again, I don't, think it's meaningless, as is the number from today. But it was a miss. They were looking for $168,000, and the number came out at $143,000. The unemployment rate dropped to 4%. But I think that was a fluke based on changes made to the labor force, adjusting some numbers for immigration or whatever. And so it made the unemployment rate come down, even though very few jobs were created. And the labor force participation rate went up to 62.6% from 62.5%. But the more inflationary aspect of the numbers was average hourly earnings. They jumped by 0.5% for the month. The expected rise was 0.3%, so almost double and above the higher end of the range. And year over year, hourly wages went up 4.1%. And to add insult to injury, they revised up the average hourly earnings from the prior month from up 3.9 to up 4.1. So we're 4.1 in December and 4.1 in January. Doesn't sound like 2% inflation to me. Wages are going up 4.1%. The average hourly work week actually went down. So it may mean that people are earning less because they're working fewer hours. It dropped from 43.3. Oh, excuse me. Nope. I'm wrong. No, it dropped from 34.3. I'm not wrong. From 34.3 to 34.1. So it's costing employers more to hire people, but they're working fewer hours. Now, maybe because it costs more, so they're not buying as many hours, but that's not great for the worker because yes, he's getting a little bit more money, but if he's not working as many hours, he may have less money in his pocket, but it's still the labor costs that are the issue. So I think this is a weak report, right? We have a weaker than expected job growth, but more than expected upward pressure on the price of labor, which are wages. So stagflation in the jobs report, consumer sentiment came out today. Hold on. and it collapsed from 71.1 down to 67.8. This is a February number. The consensus was for an improvement in sentiment to 72. So consumers are way more pessimistic. Now, I think this is skewed towards the Democrats because, you know, Trump is president and they're worried. The Republicans are happy and the Democrats are worried. And I guess more independents are worried because, you know, we're down to 67.8. But that, again, shows that the economy is weakening and consumers are worried that it's going to get even weaker. But look what happened inflation expectations. They soared to 4.3%. That's the highest since mid-2008, just before the 2008 financial crisis. Now, if you look beneath the surface, it's mainly due to Democrats, where Democrats expect 5.1% inflation for 2025. Republicans expect zero. They just believe that inflation is going to go away because Trump is president. This is probably the one time where the Democrats got it right, and the Republicans got it wrong, because the Democrats expect higher inflation and the Republicans expect no inflation. The Republicans are dead wrong. The Democrats are right. It's going to go up. It may actually go up more than they think, but at least 5.1% is a decent estimate compared to zero. Now the independents were in between, but what's significant is that the average of Democrats, Republicans and independents is for a expectation of four point three percent inflation in 2025. Now, the Fed has got a two percent target. So that's double what the Fed's target is. But remember, Powell always says that they really key off of expectations. So they believe that inflation is a function of expectations. If people expect inflation, they'll get inflation. Because if they expect it, they'll build it into their wage demands, their price increases. Now, I think this is BS. I don't think people get inflation because they expect it. I think they expect inflation because they've got it. The government causes the inflation. The people just expect it to continue. But if the Fed really places a lot of weight on consumer expectations, and they keep talking about expectations have to stay well anchored at 2%. Well, clearly we lost that anchor. I mean, we're drifting way away from 2% when expectations are 4.3%. What's the Fed going to do about that? I don't think they're going to do anything about it because they can't. Now, when this number came out, gold was at an all-time record high. It was up $30 on the day. It was trading just over 2,885. It sold off to just a little bit negative. Ended up closing the down the day up about eight bucks. So another record high close, record high weekly close. I mean, gold's going up. But it would have been up a lot more if we didn't get this bad inflation news. But again, bad inflation news is good for gold. It's not bad for gold. But the traders still react to this news whenever they see hotter than expected inflation. The reaction is, OK, the Fed is going to have to delay the rate cuts. Delaying the rate cuts is programmed in the algorithms. Anything that delays the rate cuts is good for the dollar and bad for gold. So the dollar rallied and gold sold off. But these algorithms are an example of garbage in, garbage out, because whoever's programming them doesn't understand what's going on. Yes, inflation is worse than expected because the Fed is behind the curve. In fact, they've surrendered in the inflation war. They're wrong. Higher inflation just shows that the Fed lost. The Fed is wrong. The Fed keeps saying inflation is going to go down, but the data keeps proving that it's going in the other direction. And what's significant is not that the Fed is going to delay the cuts. What's significant is that they're not hiking. They should be hiking. The data argues for higher interest rates, yet they won't raise rates. There's no way they're going to raise rates. And of course, when Powell's term is over, whoever Trump nominates, right, there's no way that guy's going to raise rates, right, because, you know, we need lower rates. And so inflation that is rising that the Fed refuses to fight because it can't fight it is bullish for gold and it's bearish for the dollar. Now, gold is going to go up anyway because it's just going to keep on going up. The central banks are going to keep on buying. You know, I mentioned on my gold, you know, promotion that I did for Shift Gold on Tuesday, and I haven't checked today, but as of when I checked on Tuesday, there wasn't a single day in 2025 where there was net inflows into GLD. Every day, as gold was making record highs and rallying, Americans were selling. And not only are they selling their ETFs, they're selling their physical gold. Redemptions are way up at SHIFT gold. That's what's keeping us going. I mean, yeah, some people are buying, but we're getting a lot of people selling. And I checked around. The same thing is happening with gold firms all around the country. Americans are selling their gold. I mean, what idiots, right? They should be buying, right? The central banks are buying. And I mentioned on that video that the delivery notices on the London Metal Exchange and the COMEX have shot up dramatically, meaning that people are taking delivery of these 100-ounce bars of gold. These are not mom and pop guys who are buying gold in 100-ounce bars. There's some sophisticated money alongside of central banks that are buying up all the gold they can get their hands on. Meanwhile, unsophisticated retail investors are selling their gold to buy Bitcoin or Bitcoin ETFs. Look, who do you think has got it right? These central banks or people who are trading on Robinhood apps, right? So this is the best contrarian indicator I've ever seen that you've got all the smart money buying and all the dumb money selling. You you got to be loading the boat on gold. You got to be loading the boat on these gold stocks. I mean, yeah, I think, you know, they're up now about 20% this year. Gold's up about 9%, 10%. But they still haven't gotten back to their highs from October of last year, even though gold is 3% or so above those highs. So these things are a steal. People should be buying my gold fund, the Europe Pacific Gold Fund. I just think this is the greatest speculative trade I've seen. I think these stocks are going to explode and nobody is there. Nobody is going along for the ride, which is perfect. We've got a bull market and no one's going to go along. The public is completely in the dark. They're missing out. The financial media is leading them astray by refusing to cover this. And instead, nonstop coverage of fool's gold and no coverage of the real thing. They're missing what's going to be, I think, the biggest gold bull market in history. As of now, it's the most unloved bull market in history. That will change. I don't think it's going to change at $3,000 gold. And I think we'll be there before the end of the month. We may be there before the end of next week. We get a lot of inflation numbers next week. I think they're going to be bad. So we'll see. I mean, gold could react negatively to that initially. We get CPI and PPI. But I don't think $3,000 gold will do it, but maybe $4,000 or $5,000 will. And I think we're going to be there relatively soon. We could be there in 2025. But anyway, let me get back to this economic data. So the consumer sentiment number screams stagflation, right? Consumers are more pessimistic about the economy and more optimistic on high inflation, which is pessimism. And probably the reason that they're more pessimistic about the economy is because they realize that inflation is going to get worse. And that is the biggest problem that they are facing. 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Watch Vanta's products demo at vanta.com/shift. That's vanta.com/shift to see the product demo. Now also, we got the consumer credit that came out this afternoon. This was a real shocker. So this is December. And remember, we had a big trade deficit in December. It was an all-time record high. And how did Americans pay for all those imports? With credit. Consumer credit surged by $40.8 billion in one month.