Mind Pump: Raw Fitness Truth - 1580: Economy Crash 2021 With Peter Linneman

Episode Date: June 21, 2021

In this episode Sal, Adam & Justin speak with economist Peter Linneman about whether the economy is doomed and how to navigate the financial uncertainty of 2021. How the money will eventually find a home. The impact of the Fed injecting money into the economy. (4:48) Why inflation is one of the most misunderstood ideas. (10:00) Why asset price inflation is a wonderful thing when you own assets. (11:43) Has the Fed gone too far? What are the consequences of that? (18:30) Did we see inflation in the cost of rent? (25:30) Could we run into a shortage of places for people to live due to rent control? (34:08) Why he believes the world is in a race to devalue itself. (38:08) The importance of focusing on social fabric issues. (44:43) Isn’t the price of things going down a good thing? (48:35) The evolution of interest rates and the impact of expanding capacity. (53:34) His prediction for demand in the real estate market for the coming years. (1:01:30) The economics and impact of people buying up single-family homes to rent out. (1:10:11) His advice for the person living paycheck to paycheck investing for their future. (1:14:45) His opinion on Bitcoin and cryptocurrency. (1:18:28) Will the financial bubble burst? (1:20:40) What books does he recommend? (1:22:51) Related Links/Products Mentioned June Promotion: MAPS Prime, Prime Pro, and the Prime Bundle 50% off!  **Promo code “JUNEPRIME” at checkout** Visit Legion Athletics for the exclusive offer for Mind Pump listeners! **Code “mindpump” at checkout** Mind Pump #1270: Peter Schiff On The Post COVID-19 Economy & How To Thrive Commercial Real Estate | United States | Linneman Associates Milton Friedman - Free To Choose (1980, PBS) Episodes 1-10 The Great Contraction, 1929-1933 Whip inflation now - Wikipedia Penn Medicine to Require All Health System Employees to Receive COVID-19 Vaccine The Linneman Letter | Linneman Associates Free to Choose: A Personal Statement The Rational Optimist: How Prosperity Evolves Factfulness: Ten Reasons We're Wrong About the World--and Why Things Are Better Than You Think Hans Rosling: 200 years in 4 minutes - BBC News Robinson Crusoe The Karla Trilogy Digital Collection Featuring George Smiley: Tinker, Tailor, Soldier, Spy, The Honourable Schoolboy, Smiley's People HumanProgress Milton Friedman - I, Pencil Mind Pump Podcast - YouTube

If you want to pump your body and expand your mind, there's only one place to go. MIND, MIND, MIND, MIND, MIND, MIND, with your hosts. Salda Stefano, Adam Schaefer, and Justin Andrews. You just found the world's number one fitness health and entertainment podcast. This is Mind Pump, right? In today's episode, we talk about the economy. Is it going to crash in 2021? That's this year.

So we've obviously come out of a pandemic. Inflation seems to be growing at pretty rapid rates. A lot of indicators show us that things are not like they usually are. So in this episode, we talked to Peter Linman. He's an economist, a very good economist. And at one point, he was named one of the most powerful people in New York real estate.

This was according to the New York observer. And one of the 25 most influential people in commercial real estate by Realtor Magazine. He's at one point he learned from the Chicago School of Economics. This was under Milton Friedman and also taught there. So this guy knows what he's talking about. So we asked him all about the economy, real estate,

we asked him about cryptocurrency. If you're interested in how to invest your money or how to protect yourself in 2021, do not miss this episode. Now it's brought to you by our sponsor, Legion. Legion makes some of the best athletic performance enhancing supplements you'll find anywhere. This includes protein powders and pre-workout supplements. Great stuff. Go check them out. Use the Mind Pump code for a discount. So head over to buyleagin.com forward slash Mind Pump. Use the code Mind Pump and get 20% off your

first order. If you're returning customer, you get double rewards points. Also, all month long, maps prime, maps prime pro and the prime bundle are all 50% off. Go check them out at mapsfitinusproducts.com. Just use the code, June prime with no space for the discount. And so Peter, the way we'll do this, it's a very conversationalist between all of us.

I'll give you a little background. Well, although we're a health and fitness podcast, we talk about financial health all the time. We've had, yes, we had Peter shift on here a few months back. And so we've had economists come on here and talk. And one of the things that I loved about you, I found you on the Walker webcast a little over a year ago. So that's how I came across your content.

And one of the things that drew me in about your content was a lot of times when I listened to economists talk about stuff, I feel like they're very biased or they have an agenda whether they're trying to sell gold or they have a political agenda. I don't know, you can argue or debate that, but I feel that you do not come off that way. I feel like you're very non-biased and so I wanted to introduce you to our audience. Well, that's nice of you to say. I have this funny thing, I'm 70 years old and my career is typified by Democrats or convinced I'm a Republican and Republicans are convinced I'm a Democrat. So I think it goes to what you're saying and I started pride myself on that.

None of us always succeed in being free of whatever, but I try. And to your physical fitness, you know, 70 years old, I did 80 minutes on the stationary bike this morning, lifted weights for an hour and walked 10 miles while working. Wow, you're doing pretty good, right on, but you're doing pretty good, right on. Yeah, and you did some work at the Chicago School, right?

So you're like a Milton Friedman fan, if I'm not mistaken. Yeah, Milton was one of my major professors back then. And I did my graduate work there, and I stayed on the faculty there a couple of years. And then went to the University of Pennsylvania's Wharton School of Business in 1979. And I guess I retired from there 10 years ago and I've since

folk I had Lennon and Associates which is a financial advisory firm I started in 1979. And I continue doing that in my boards and my investing and my charities. So anybody interested you could go to Linnemann Associates and you'll see about what we do in our publications and our charity and so forth. So I'm not retired, but I'm retired to the university world. Now that's awesome. Milton's series, Free to Choose, had a huge impact on me and I became a huge fan of economics after that.

I do wanna ask you to open this up one big question. Now, I read recently that the majority of dollars, the majority of money that exists got created recently. And I remember what the number was, but it was something insane. Like, when you look at the total amount of money that we've created, it was something like 90% of it was made in the last few years.

Number one is that true. And number two, does that a problem? Could that potentially cause problems for us? So it is absolutely true. I'm now gonna do numbers off top of my head. But as we came to the beginning of the financial crisis in very late 2008, the total amount of what's called high-powered money or the money stock, whatever you want to call it, was, and I'm doing this from memory about 800 billion.

And over the next four or five years, QE1, QE2, QE3 took it from 800 billion to about four trillion. That's a big jump. If you think about all of the history of the United States took it basically from nothing to 800 billion and then in a matter of four years it went to four trillion. And then what I call QE infinity, which has happened with the Fed injections associated with the COVID and the COVID lockdown have got it up to some number. And again, I'm doing off the time I had six trillion. So in a matter of months,

we grew it more than in 200 years, just to put a context on it. So you're absolutely right. And again, anybody really wants to see that figure. You can go to Lennonman Ladder, and it's in there. It's public. It's Federal Reserve data. So. Okay. And what does it mean?

So what does it mean? Good. I got. What it means is that money will eventually find a home. And whatever. I, you guys kind of the right age. Remember, Beavis and Bud Heads? Oh yeah, of course, love them.

So imagine the Fed gave $4 trillion in four years to Beavis and Bud Heads and their friends, doing intellectual experiment. What would have gone up in prices? What would have gone up in prices though? And your answer would be whatever bevison but had spent money on beer and head metal. So I'm not sure stock prices would go up. I'm not sure home prices would have gone but skateboard prices would have skyrocket you got the point right? So in the 70s are when the Fed gave money to the banking system of that time was very fragmented by today's standards and they gave thousands of dollars to millions of people to buy bread and Coca-Cola and a car and so forth.

And by the way, when they created money, it chased those. And that's where you saw mostly the inflation. What happened in the financial crisis and after, really after, they gave the money to the big banks and the big banks lent money mostly to asset buyers. Either homeowners, right? That's an asset buyer. Or corporations to buy other corporations,

or to buy stock, people to buy stocks, or bonds, or gold, or whatever. So what we saw from 2009 to 2019 was that money, as it came out, didn't chase goods and services so much. It chased assets. So the price of homes went up, big time, the price of stocks went up, big time, price of bonds, price of gold, real estate and so forth. So now you say, okay, they put a whole bunch more money into the system, ask the Beavis and Buckhead question, what are those banks going to lend it to?

And they're going to lend it, I think, primarily to asset buyers of yet. Because come on, a big, big bank is set up to lend in big ways. Not to give you guys $6. Now they might give you a line of credit. They might give you credit card loan. I'm not saying nothing. But they're set up to write a check for $80 million, $100 million, $200 million. So I think we're set up for another decade of moderate consumer price inflation

And very high asset price inflation again, so it'll be a great time to own assets not every day Right, but in general it would be a great decade don't assets again. Now Peter I've heard you say that inflation is one of the most misunderstood ideas. Can you explain what you mean by that? Yeah. You mentioned Milton Friedman, but the definition of inflation is the on-average movement of prices in the economy. Well, that includes the price of bubblegum, and that includes the price of gold. That includes the price of houses. That includes the price of bubblegum and that includes the price of gold. That includes the price of houses. That includes the price of stocks. That includes, you name it, right?

When we measure inflation, simply by looking at consumer prices, which is what we tend to do because it's easy. Only because it's easy. We're set up to do it. They send little checkers out to see how much bread is this week versus last week, right? They're set up to do it We're missing huge numbers of prices in the economy namely asset prices

and so when you see no consumer in price inflation, that doesn't mean no consumer prices are going up. We know medicals going up. We know universities have gone up. Those are consumers. But it also ignores asset prices have gone up. And we need to think more broadly the fed should think more broadly they they know this at the fed they just don't know what to do about it it's like you may know you've got a kid who who who can't do their homework knowing it is one thing doing something about it is more challenging okay so let's take a step back real quick,

because somebody listening may hear what you're saying and they may think, well, what's necessarily wrong with more money, isn't money okay? Like if someone gave me $10,000, that would be a good thing. Like explain the difference between money connected to goods and services and money just not connected to anything, just more of it existing but not connected to those goods and services. What's the difference between the two?

Okay, so I'll take a very simple, I'll take two very simple examples. One, bread. If bread prices rise, the seller of bread benefits. Right? And yes, their cost may be going up. So they may not benefit as much as the first appears. Who gets hurt by that inflation? The consumer. Right. And by the way, their wages may be going up, but not all consumers have wages. And so you can get the spirit as complicated in that regard. Okay now think of asset prices and I'll take the simplest asset price. Home prices go up. Let's just say that what it causes is inflation and home prices. The money that comes out is lent to people and they chase a pretty fixed number of homes, right?

We have, what, all those nine times the amount of money and we have, what, 12% more houses. That's got to be a bit of an imbalance. So who gets helped and who gets hurt when a lot of money chases home prices? I got help. Why? I already owned my home. I live in a condo, but at the same point, right? I got help because that money chased homes

and bit it up. Who got hurt? The people who got hurt are the ones that didn't know in homes yet and still wanted to buy them. And they just saw those homes moving out of affordability. Right? They didn't have enough money for a down payment because as fast as they said, home prices were rising, requiring an even bigger down payment.

So the simplest way to say it is, asset price inflation is a wonderful thing if you own assets. And not a wonderful thing if you don't. So if you think about society, young people in general don't own assets. When I was young, I had nothing. I had just put myself through high school. I had put myself through college.

I had net negative worth because I borrowed a bit to go to college, right? And so asset price inflation wouldn't help me because I didn't know any assets. Today asset price inflation helps me because I own some assets. I'm older, I had a time to accumulate. because I own some assets. I'm older. I had a time to accumulate. So if you think about it, what it does is so, how should I say, so's, um, disparity, but the disparity is it interestingly not about income, right? It's about, have you accumulated assets? If you have a high income, but you spend it all, you don't have any assets to benefit from. So think of it that way. I'll give you a variant. The Fed's policy of very low interest rates. Who's that help? Who's that hurt?

It helps anybody who wants to borrow. It hurts anybody who is saving safely, safely like government bonds, bank accounts, etc. So I was talking the other day to an English professor who's 79 years old. She's been teaching for 51 years. She put in her money into her life savings account and during the financial crisis she took it all out of the stock market and put it all in CDs. Okay? And for the last decade, so first of all she did it at the bottom. Rule number one, don't panic, right, and sell at the bottom. So she sold at the bottom. She converted her life savings into CDs, certificates of deposits at the bank. How much interest did she get on that over the last 12 years? Not very near. Zero, right? So, okay, we made it easier for somebody who was borrowing and we wiped her out. Because for 12 years, she said no income on her life savings.

And she's terrified. So she has a decent, I mean, she has a university, she wasn't a big time university professor, she has them, you know, I don't know, she has been nothing spectacular, right? But no income that's breaking and Even though she had assets they didn't appreciate because they were cash So what's happened by all this is a lot of arbitrary Young people getting hurt people who saved safe being her People who borrowed a lot being helped

By the way, who's the biggest borrower in the world? You are far. US government. So what we've done by low interest rate policies is give money essentially free to the US government and you go wow we've taken and made money free, which right away is going to distort things to one of the least efficient spenders in the world. And one of the least productive spenders in the world that has to slow down growth, because you've made borrowing free to them. Isn't surprising if you made borrowing free to them isn't surprising if you made

borrowing free to somebody they'll try to borrow a whole lot more that's what the US government has done over the last decade they borrowed a whole lot more because it is basically free and because it's the US government people will buy it why will people buy your debt your credit is not as it's the US government, people will buy it. Why will people buy your debt? Your credit is not as good as the US government because the US government can print money to pay it off. So these deficits, yes, it has something to do with COVID and yes, it has not saying none, but you've given a profligate spender free money. That can't be a good thing. That just can't in general.

That doesn't mean everything is wrong. Can't be a good thing. Okay, so let's go back for a second too. When we started this kind of printing bananza of money, but this is after the financial crisis, right? Let's say we didn't do that. Let's say we left it. We didn't print tons of money.

We allowed, you know, what some people would say for the market to correct itself. Would those consequences have been better than the ones that we may be getting in the future or what like in other words there's a risk versus reward. Did they make the right decision or was it somewhere in the middle or should they have left things alone? So my no will never know, right? We'll never know. It's like with your kid. If you hadn't told their kid, they were grounded for a week, would they have been better or worse?

You'll never know, right? You'll literally never know. It's an unknowable. And by the way, people can argue either way. I give you all I can give you is my own view. I think the good news is both in the financial crisis and now during COVID. The Federal Reserve learned the lesson Milton Friedman taught about the Great Depression. He and Anna Schwartz wrote the definitive book. It wasn't until the 1960s.

So the Great Depression was in the 30s and it wasn't until the 1960s that the definitive book is written. And what they found was that it would have been a recession, but it became the depression because in a matter of about a year and a half, the money supply shrunk by about 35%. And what did that do? That is because they let it try to find its own

bottom. And then you went out of business as a bank. Since you went out of business, you couldn't pay your depositors. Since you couldn't pay your depositors, they couldn't pay there to buy food or whatever, and it cascaded in a negative way. And Friedman's admonition was they should have not shrunk the money supplied, and they probably should have increased it to maintain liquidity and hard times. That's what they did in the financial crisis,

and that's what they did during COVID. Now, that part I fully agree with. Then you're only talking about how much, so I told you I think it went from 800 billion to 4 trillion in a matter of a couple of years. Maybe they should have only gone to a trillion and a half. Maybe they should have gone to one point two. No one will ever know. Should you have grounded your kid for three days or three weeks or not at all? You'll never know the right answer, the really right answer, right? You'll never know. What you do know is we avoided the great depression because we didn't let the

money supply fall. And again, certainly with COVID, my gut is they went too far. That's my gut. But I'm not sure of that. And nobody has ever done a study and you can make interesting arguments. Now, what are the consequences of going too far? What should we see? Yeah. Yeah. Going too far, amounted to, you started the largest wealth redistribution and income redistribution

in the history of the United States. That's what it did because that money that went in, if they'd given it to beb us in Butthead, beb us in Butthead became rich. They gave it largely to asset buyers, and those asset buyers and the people they bought assets from got wealthier because of that, right? Just mechanically. And that was a huge wealth transfer. And the reverse, not the reverse, the other side of that coin is low interest rates, transferred studying amounts of money from people like the English professor I was talking about to borrowers and

The US government and I said to US government whatever the US government spent on So the wealth transfers that it created were staggering and Do I know that the whole social whatever you want to call of today is because of that? I don't know. I have a gut that a whole bunch of people think of the English professor. Think of young people who can't afford a home because the asset price keeps going out of reach. They're saying we're getting screwed somehow and I don't even remember a vote. I don't even remember a debate because remember it was done without any congressional debate, right, it was all done by the Fed.

Stagging the largest well-three distributions in history. If you'd have walked into Congress, instead we're going to redistribute $5 trillion, $45 trillion. Remember GDP is only 21 trillion. I think that that would have been one of the most contentious debates in American history. It occurred with no external debate. And I think people didn't realize it happened, but they knew something happened to them. And the losers particularly realized something happened to them. One other interesting thing, people sometimes say, the really poor got hurt. And that turns out not to be true from this, you know why? The kind of

permanently really poor never had any assets, never will have any assets. So the fact that assets got more expensive didn't affect them. If you don't use heroin and heroin prices go up, it doesn't affect you, right? And so, the really, the kind of, when I say poor, I mean, the kind of permanently low skilled low earners, they didn't have assets before, they didn't have assets after. That didn't hurt them. The ones that have really hurt were what I would call on the make young people, right? Probably a lot of your viewers, I would bet. And they got hurt because in the normal scheme of things,

they would get a promotion, they would get a kid, they would want to buy a house. Oops, I can't afford it because home prices are up. And they got hurt. Right, so a follow up question to that would be, because you have asset inflation. So houses and properties are going up and getting much more expensive.

But people have to rent those properties in order to live in them. Obviously, a lot of people buy these properties to live in them, but a lot of them are also investments, and you charge rent on these. And as the prices of these properties continue to go up, I would imagine rent would go up as well. Are we seeing or did we see any inflation in the cost of rent that would follow along the cost of the value of these assets? the value of these assets. Great question. We saw two things, interestingly, on the rental side.

Over the last decade, one was, absolutely, you're right. The value of apartments went way up, because there was just a lot more money chasing it. And by the way, rents were going up. And rents were going up, we'll come back to that. Rents were going up. But the interesting thing is, values rose faster than rents went up. So it's not like rents didn't go up, but values rose even faster.

Another way of saying it, the cash return of owning an apartment building actually went down, the cash return, the total return, including the factor asset went up and value went up. But you were getting less of it from cash, more of it from appreciation. In other words, cap rates went down. One of the things that cap rates went down.

One of the remarkable sociological things of the last, let's just say since 2000, is that we, the United States, have under-produced single-family housing by any normal bench bar, by 3.5 to 4 million houses, and we've under-produced multi-family rental housing by around a half a million. That means in the last 20 years we've under-produced housing by about 3.5%. And some of that is not in my backyard, right? Some of that is values have gone up, construction costs. There's a lot of complicated reasons. People don't have down payments because even though if they bought the home they'd win,

they don't have a down payment to buy the home. And so we have fundamentally under-produced housing for 20 years. Is it a surprise that rents went up and home prices went up and apartment prices went up? What happened during COVID shutdown was stunning. and home prices went up, and apartment prices went up. What happened during COVID shutdown was stunning. And I got it wrong originally. In March of last year, I said, housing's gonna get clobbered.

People are gonna try to maintain their lifestyle. They're gonna lose their job. They're gonna try to keep maintaining their lifestyle. They'll have no money, they're not going to have confidence, they're not going to buy a home. Well what happened was their lifestyle got changed for them. So you normally still try to go to the movies. You still try to buy that nice pair of shoes for your kids.

You still try to go to Disney. But since you don't have as much money, your savings go down, you scrimm, and housing is an easy one to put off for a couple of years, right? I mean, I don't need it today. What happened this time is the savings rate for somebody earning a hundred thousand went $7,000 a year to $33,000 a year. Wow. Now, since come down a bit, it's down to about $14,000. So if you said over 12 months, starting April last year, because it bounced around a little,

somebody who would normally have saved $7,000 out of $100, saved about $23,000 out of 100 saved about 23,000 out of 100 over the course of the year. Why? Why? What were you going to spend it on? You're going to spend it on your trip to Paris or Disney or your Sixer's Tickets or your concert tickets or eating out, all that got wiped out. Plus, you got distributions from the government, right? And a whole bunch of people didn't lose their job. A lot lost their job, but not everybody. Suddenly, people had down payment. Think of the following. You're saving $7,000 a year, but $4,000 of that's your retirement.

You can't touch it. So you're only saving $3,000 a year for a home. You wanna buy a $300,000 of that's your retirement. You can't touch it. So you're only saving 3,000 a year for a home. You want to buy a $300,000 home. You need a 30,000 down payment that takes 10 years. Fair enough. Now imagine you're making a $100,000 a year. You've already saved for five years. So you have 15,000, 3,000 a year for five years. And now you save 25,000 in a year. You have plenty of down payment after about six months. And by the way, the same thing's happening to your parents. So suddenly people said, Oh, I have a down payment. I can buy a home and interest rates are low.

Interest rates being low didn't matter if you don't have a down payment, but it's the down payment that's the key, right? And I'll give you one more morbid, bizarre, whatever you wanna call it. One of the big ways that people get a down payment is from their grandparents, I'm thinking of younger people, right? In their thirties, they is from their grandparents. I'm thinking younger people right in their 30s.

They get from the grandparent. Go back to my English professor. When interest rates were zero, she had wealth to distribute to them but no income. So she kept telling her grandkids, sorry, sorry, sorry. If the interest rate had been 4%, she would have been able to give each of them 10, 15,000 a year for a couple of years for a down payment. And that's one of the reasons home purchases over the previous decade, 2010, 2020 was very low. People didn't have the down payment and they didn't want to adjust their lifestyle. Suddenly their lifestyle got adjusted for them. They ran to buy homes and about 150,000 people, 70 years an old grandma, your grandparents, died earlier by a number of years then they normally would have died. Why does that matter? Let's say a third of those 150, so 50,000 had nothing, had no money to give to

their grandchildren or children, doesn't help them at all. 50,000 of them died and left it to their spouse, right? Doesn't do anything for the grandchildren of the children. 50,000 of them left it to their two children and their four grandchildren. Divide 300,000 by six, 50,000 people. Suddenly, we're giving six people, 50,000, whether a lot of those people do with that request by home with money that they would have never gotten absent COVID. And so a lot of strange things.

And the number that you use to prove this point is the the national savings average. Is that correct? I've heard you say that it's staggering to me. It was I think we we average like three trillion or something and we're three x that is that correct? We're like three x the normal. Yeah, we're actually closer to yeah, about a little over three x at the moment. Yeah, it's saying now this this death phenomena is not about that. That's about how much I had saved. By the time I was 75, I got COVID, I died.

I was going to live until I was 85. Suddenly my children and grandchildren got an inheritance. If I had anything to leave them years earlier and scrambled to buy it home. So Peter, I wanna kinda go down the line of, you know, affect and then consequence, right? So, property values going up, potentially rents can go up, typically when this starts to happen,

especially when a segment of the population is having trouble affording these types of things. States and cities, usually cities will enact laws that control rent, right? So this, okay, property value is going up. Rent's going up. Uh-oh, people can't afford it. Let's put some laws here that say you can't raise rent anymore. Could we potentially run into a, and you also said that we're building far less

than we had in the past, could we potentially run into a situation where there's just a shortage of places for people to live in because, you know, rent is stuck so nobody wants to leave, people are not investing in building new properties because of the rent control, could we run into that in the future with this? Absolutely, and we've already seen bits of it. And in fact, a comment that was made a very insightful comment of question was the question about, well, why do we care if there's a whole lot of money out there?

And your question underscores why? It creates all sorts of strange social stresses that get reacted to by politics. So absolutely. There's no doubt that you're seeing more political demand for rent control than you saw 15, 20 years ago. Right. Why? Because the asset prices are going up faster than income prices, even for well-paid millennials, even for well-paid millennials. I don't need billionaire millennials, but even for a well-paid millennial whose wage has gone up pretty effectively over the 10 years or 15 years since they came out of a college, home prices went up faster. So it's undue and better, but it's getting farther away. It becomes a political strain, you gotta do something. Now as you

suggest, the something will end up being more destructive than the problem But it will happen It will happen and interestingly the And of course what happens if you threaten rent controls Am I gonna build more apartments or fewer apartments? fewer Right Even if they don't get introduced even if the rent controls don't get introduced, you know you're going to discourage somebody from building an apartment.

And you've seen it in Seattle, you've seen it in Portland, you've seen it in Calcostal, California. Those concerns have dampened. By the way, you don't see it in Houston. You don't see it in Dallas. You see different issues, but you don't see that. Wire homes very affordable and Houston and Dallas, even though the population in Houston and Dallas has grown far faster than the population

of the Bay Area in California. It's not about demand, it's all about supply. Houston and Dallas make it very easy to build homes. They don't threaten rent controls. They don't have a lot of fancy rules. They don't have a lot of fancy taxes. It's pretty easy to build. Not unsafe.

Just easy, process wise and dollar wise. California is the exact opposite. California prices are crazy. And yeah, I'm paid more in California than I am. I'm paid twice as much in California as I am in Texas, but home prices are four times higher. I'm not better off. Hence the rent control, why don't we do something? Was there meaning the less housing? Was there make it even worse? No, I have a question just mainly about this redistribution of wealth and back to kind of the inflation talk.

How can you explain to me if this is going to affect the overall value of the dollar, if it's like in a sense, it doesn't really affect it. Okay, that's a great question. You guys are clever. It's a great question. The value of a dollar is clearly depreciating every year in terms of what it'll buy, right? So even if the inflation rate in the US is only 2%. You have to have 102 next year to buy the same things you bought for 100 this year. So that's devaluing the dollar, but I don't think that's what you have in mind. What you mean is versus the euro, or versus the Yen or versus the U.S. Okay? We'll think about what's happening. The dollar getting weaker or stronger is, yep, we're devaluing our currency compared to last year, but so's your up. Yeah. But so is your up. So is China.

So is every place else. And so the value of the dollar depends on how fast you erode your value, compared to how fast they erode their value. So if it only cost us 2% more, and it cost them 5% more, we strengthen. Even though it's by the way, again, you say you have a health orientation on this, I am in much worse physical condition at the age of 70 than I was when I was 20. However, compared to other 70-year-olds, I'm in massively better shape compared to my peers today than I was when I was 20. And I was in decent shape, I played a little intercollegiate ball, but you know, there were studs,

there were real studs. Today, just being in any kind of shape puts me in the top half a percent of 70 year olds, right? So it's similar to that. So if I came back to your question, I would say that the world is in a race to devalue itself. And as a result, in not way we probably get stronger relatively, even though we're weaker in an absolute sense. Right, but it's interesting, but will this negatively affect investment or the allocation of resources because the market signals are getting a little bit skewed, right? Absolutely. Because of all the interventions. So what are the consequences

of the world devaluing its currency? Does it result in less innovation? Does it result in malinvestment? All these other things. I think it really means that the US gets even more money cheaply from abroad. So when I was your age, foreigners provided, I don't know, 10% of the US debt, government debt, today they provide about 50% of it, 5.0. Why? Because kind of what you're saying,

and I'll do a little quiz, how many of you would rather be investing your money in Uzbekistan right now? Right. I don't think so. How many, and by the way, if you're in Uzbekistan, would you try to get your money out of Uzbekistan and the world is crazy as it is today and into the US? Even if the US is getting worse, you of course. And what about Kenya? I have a big charity effort in Kenya, my wife and I do. And I can tell you, they're trying to get their money here, not there. Because if you think it's tough here, it's really tough there, and it could truly get stolen. How about China? You want to have your money? How many of you have sent a lot of money to China in the last month? How many of you woke up today saying, yep, how many of your listeners woke up saying, yep,

I need to invest more money in China. I know a whole lot fewer than Chinese that woke up today saying, damn, we get more and more authoritarian. I have no influence on it. They take on Jack Ma very publicly. They take on I'm a lie. I'm not maybe mispronouncing his name in Hong Kong. What did they think twice about me if they're going to take on Jack Ma? I think if I could get my money in the US. So what it means if you go around the world, Saudi Arabia would you rather have your money in Saudi Arabia now or in the US now and given all the things that are going on? And so as honestly it may seem, we're getting more money from these places because even though we're not wonderful, relatively or. I'll take a good

example. You guys remember, made off, made off stole real money, right? That's a normal occurrence in lots of countries. Here, it's a rare event, right? It's a rare event. I'm not trying to, but here we're shocked that somebody had a mass of Ponzi scheme. In Romania, they're not shocked. In Saudi Arabia, it's not a Ponzi scheme, it's the government. Remember when the Prince imprisoned in the, what was it, the Ritzkart, or the Four Seas in the hotel, four or five, four years ago, 70 of the wealthiest until he extracted the money he wanted. Does that make you want to have your money in Saudi Arabia or here?

So things like made off, occur here, horrible things occur here, stupid court decisions occur here, people steal here, they do it professionally and daily in these other places, and that's the best thing we have going for us, so it actually will help our productivity in a perverse way. Okay, now going back to the comment you made about the Great Depression and how, had we loosened the money supply, we made it, we might have put ourselves in a recession and so that we'll apply that to what happened in 2008, we loosened the money supply and some people would argue

that prevented a depression. We were in a recession. Lots of other people were saying, this is never going to end. They're going to continue to kick the can down the road until we and we're going to blow this thing up until the correction is so big that there's nothing that we can do. What do you say to those people? What do you say to people who say, look, here's a deal, you're right, we would have had more harsh consequences in 2008, but what we've done now is we've just put ourselves on the cycle of printing and at some point, it's going to be far worse.

We have way more pain because we've increased malinvestment because we've inflated the money supply so much and it's not going to stop. So, I have two answers. I'm a healthy 70 and I think my life expectancy is a healthy male. H70 is to what? 86 or something like that. So that's sound about right. So as long as it happens 16 years from now, I'm giving it down.

You guys, you guys can sort it out. Piss on you, Peter. Good luck. Just keep kicking it for another, you know, so I'm joking, but you get the points. Interestingly, you could, we can kick the can down the road. I don't know if we can do it infinitely, but we can do it a long time. If we're willing to deal with those distortions, like you were talking about rent controls, social concern, about, gee, how did those people suddenly end up a whole lot, just a whole lot richer?

Just think of what we saw in the stock market in the last what year? How did those people end up a whole lot richer? I'm not richer. Is what some people are saying, right? That didn't have any assets. So the people without assets are saying, how did they get richer? And I didn't get richer. That can't be fair, right? And I'm not even going to say what is fair. But that's a social thing you got to deal with that has political ramifications. If as long as we can deal with those social and political, whatever you want to call them, we can keep kicking the can down the road. As long as we're better than everybody else. We're better than everybody else. So Europe has been kicking the can down much more than we have,

you know, Italy, right? Greece, etc. They've been kicking the can much more than us, and many other countries. So we can kick it down the road as long as where else you're going to go is true, and as long as you're willing to deal with all these social fabric issues that arise. Remember, there are always social fabric issues. So we have all the normal social fabric issues.

Plus, the social fabric issues created by this. Yeah, because you'll look at statistics and it'll show over the last 20 years, this top quadrant of the economy increased their wealth by this ridiculous amount and the bottom didn't at all or very, very little. And some of that is due to what you're talking about with this where people at the top, they have a lot of the money tied up in investments.

And they see this and they can invest in things seeing that the prices are going to go up. One of the challenges I tend to have with people oftentimes is, and this is a, I think, and I'd love to ask you about this is, we don't know what would have happened. And what I mean by that, I'll give you an example where, let's say a city raises their minimum wage, they pass a law, it goes up by $5. And then at the end of the year, they do a study and they say, hey, look, we added 500 jobs. So there you go, it didn't hurt any jobs.

But what we don't know is how many jobs would have been added, had they not done that in the first place. Could we have potentially seen prices drop in goods and services? We're seeing some inflation, but would we have seen maybe deflation and is deflation bad? I've heard economists talk about deflation as a bad thing, but it's always confusing to me. Like isn't the price of things going down a good thing? Depends which side of the desk you're on, right? If I'm a buyer, price is going down. That's a great thing.

So, I like hotel prices, not prices, hotel room rates going down as a room rate person. The problem is, for the hotelier, their income is going down. That means they may not have enough money to pay their taxes, to pay their debt, to pay their lenders, their employees. Oh, that's a problem. So as long as those things are kind of in balance, and when they get way out of balance, it can be a disaster.

And we saw it with way out of balance on price drops can be a real disaster. It's not like inflation is a good thing, it is a good thing to some people, and a bad thing to others, and it just depends on who you are, where you are in the economy. It's very interesting. People haven't really focused on this. You know you correctly make the comments about wealth going up for those that own assets. That's, it's interestingly less, quote, the top 10% or 2% or whatever, it's if you own assets.

It went up, right? Interestingly, the people who never had assets, think about what happened during COVID, just as a real example. If you were living in public housing and you were living on food stamps and you were living on various government programs and you weren't employed and I'm not making any judgment, your income was unchanged. You literally had no change in your status, economic status, right? through one of the most crazy times ever, you went through unaffected by the way,

a lot of retirees went through unaffected. So security and their pension plans, they just kept paying them, they went through unaffected, some of them. Others got clobbered, right? Young employees got clobbered. If you were cleaning rooms at a, so the impacts across people,

of big changes are hard to predict. And so by not letting the economy fall apart, which is probably what we did during the financial crisis by injecting some amount of that money, I don't know if we need it at all. I've on record saying we didn't need it all. We went too far, but we'll never know. And again, this time, I think we injected too much, but we'll never know if it was too much or not. We'll never know. Why do I think it's too much? It's all these social stresses that it creates that I worry about by too much, right?

And why is it so social that then translate into political, etc. The rent control is being a great example. I'll give you another example that I worry about. I worry about why don't we reduce the typical down payment from 10 or 20% to 2%. And when things get very unaffordable, you start hearing that again. And why don't we have Freddie and Fannie,

the government agencies be required to do one in 2% mortgages, but one or 2% down mortgages. That can't be smart. That can't be smart to say I'm going to give somebody a $300,000 asset and all they have to come up with is $3,000. That can't be, I mean, it just doesn't make intuitive sense. Well, that's part of what led to the problem with the OA. I don't know. part of what led to the problem in the way. I don't know. And that's what led to the, actually,

two, two, two, two, two, six, which then manifested in an away, go nine. Yes. Now in the late 70s, we saw inflation going up quite a bit, some huge numbers. And the way that they tried to fix it was by dramatically increasing interest rates. Is that still a tool that they could use today

if things start to get a little bit too hot? Can they raise interest rates and what would that look like? Okay, do you know how they really first tried to stop inflation back then? Under a Republican administration, they had a wage and price control board. A wage and price control board. We weren't the only country. Many of these were put up in many countries, Israel and Dan Brazil and Argentina all around the world. Wage and price controls. Literally, government agencies that were

micro-managing wages and prices, if you were gonna raise the price of certain things, you had to go to the government. And in fact, Gerald Ford, who was a Republican president, went during one of his addresses to the nation. I think was in 75, could have been in early 76 Went on with a little button That said win

White letter, you know the kind of campaign buttons or smiley face button that kind of button He had that kind of button on that said win with inflation now that said, win. Whip inflation now. With wage and price controls. And of course, too much money created all these social stresses. By the way, by 1974, five, six huge lines just to buy gasoline.

Just to buy gasoline. Go on Google search, gasoline lines. My wife and I was in graduate school, we had a tiny little apartment and we looked out at a gas station. And there would be a two hour line there every day because you're only allowed to buy like four gallons, because they were rationing and they were keeping the price artificially low. If you were to drive from Chicago to Ohio, you had to carefully play in, and you would then have to stop probably three times to not fill your tank, but to, you know, get, it was crazy.

So that was the first way they tried to do it. Then finally, in 81, Paul Volker became the new Fed chairman and said, we just got to make it more expensive to get access to money for borrowers. And the interest rate went way up. Bar will suddenly stop borrowing as much. And whether they were consumer borrowers or business borrowers suddenly stopped borrowing as much and whether they were consumer borrowers or business borrowers and that effectively started dampening inflation. That's what really happened. Including by the way, the government, it's not a church chance that when interest rates

went up in the early 80s, late 70s, early 80s, is not her chance that the government had to face, we can't buy everything we want because money isn't free. We got to tax them. And taxing is a harder thing to do than printing money. Right, so do you think that they would do that now, that they would raise interest rates now, or do you think that they're like that's that's a hard thing to pass So let's just keep printing If you really made me guess

We're not going to have much consumer inflation over the next four years We are going to have a lot of asset inflation especially Three and four years from now, takes a little while for that money to come out. It would not shock me. Remember I said it was a Republican administration that introduced wage and price controls. If we started to see what we're seeing now, like lumber and some of these other items where the prices are running, really running.

It wouldn't surprise me at all that the government agents creates an agency to mandate prices on select essential items. Because if the Republicans did in the 70s, I don't find it hard to believe the Democrats would do it in 2020s intellectually. I don't find that hard to believe. And of course, what they'd say, we're only going to do temporarily, we're only going to do it on essential things. And we're only going to do it where we think people are being gouged, right? That's the slope. So I wouldn't be shocked if late this year, early next year, I don't think it'll happen, but I wouldn't be shocked if late this year, early next year, I don't think it'll happen, but I wouldn't

be shocked if it would, that you start seeing freezes. That's how it starts, put on certain items. So, and what's really happening is very simple. What's really happening on those prices? Look, I'm on corporate boards. I advise corporate boards. I advise. And I can tell you, in March 2020, April, May, June of 2020, every board of worth their

merit or every executive worth their merit said, shrink capacity. Otherwise we're going to get crushed and we're going to have to go out of business. Shrink capacity frees all expansion of capacity, especially in cyclical businesses, you sat there going, well, if it was bad, then, and it was bad then, and if it was bad, then, it's going to be horrible now. Because normally, at the start of a downturn, you don't even know it's a downturn yet, right? You don't really know it's a downturn until you're in it. Four, five, six, eight months? By trust me, last year, everybody, you didn't have to be a genius to sit there

by the end of March last year, early April saying, this is not gonna be good in the near term. And so they reduced capacity by 10 to 40%. That meant capacity went to levels of something like 2000, year 2000 2000 or year 2010 What do you think happens if capacity got slashed so those businesses didn't go out of business and let's just take you're at 2000 year 2000 capacity and Demand suddenly grows back to 2020 to me to 2019 demand

Prices are going to go through the ceiling. Yeah So and that's what's happening not everywhere But in select places and those select places Make things very challenging Now what will happen you You know capacity will come back on just a matter of when. In the meantime, they're making a lot of money and saying, well, I don't want to expand my capacity because nobody can steal my customers anyway. But you know it's only until next week somebody's going to say,

I got a better idea. I'm going to keep prices up to my customers. I'm going to expand my capacity a little bit and steal their customers. And that will start the process. But it'll take six to 24 months for that to unwind. And during that period it is possible we would get price controls of some type in curious. So I hope I'm wrong. I hope I'm wrong. So let's, I mean, real estate is your expertise. So I like to speculate with you.

What do you think is going to happen in multi-family, single family, commercial over the next, you know, 12, 12 plus months? What are we going to see over the next couple of years in those areas? What's your prediction? By and large, good thing like hotels. The supply is shrunk by about 10%. Right? So a bunch of hotels just went out of business or were shuttered. So I'm going to do nationally, 10% reduction in hotel supply. And I think by the end of next year

With the possible exception of international travel Demand will be back to 2019 So you're going to have 2019 demand with 10% lower capacity That's a great time for the hotel sector, right? Doesn't take a genius to figure that out. Office, I think what happens is that the next year is challenging, but people are going to come back to work. Right now, they're under no competitive disadvantage, not going to work, working virtually. But once somebody starts coming back to work, the competitive pressure picks up. It's like the difference between shooting

around before a game and having real defenders. It's a whole different thing. And I said to somebody the other day who has two children and was complaining to me about how awful virtual schooling is. And I believe it is. Was complaining to me about what a disaster it is for their kids. And then he said to me, separate conversation, he says, I don't think people are going to go back to the office. And I said, what makes you believe that work productivity isn't just as adversely affected as school

productivity is by virtual. And he stopped in his tracks and he said, I never thought of it that way. I said, of course, how do you build a culture? You can do this session with me because you're not trying to build a culture around the four of us. You've got the culture of the three of you and I just jump in, right? And if I'm an asshole, you deal with it, right? And if I'm in your culture, you deal with it.

But yeah, it's very hard to build a culture and to grow a company. So office people will come back, but it will take a little time. And you'll see improvement, although the supply is not shrunk much. So there, the supply is still about 2019 levels, and it'll take a couple of years for demand to get back to 2019 levels. Industrial properties, warehouses, the supply cannot keep up with the demand. This was true before COVID, because this is roughly, if you got that shirt online,

and let's say it took one square foot of warehouse space to deal with you buying that, let's say it took three square feet in a warehouse to deal with that selling to you online, it only takes one foot if you buy it in a store, one foot. So it's a three to one. Well, now if you have online growing fast and it's a three to one factor, not a one to one factor. It's very hard to overbuild it. So what happened in warehouses, the supply demand fundamentals are, gee, we're going to build 2% Surely that will take care of the demand in 2017. Demand grew by 5% rents went up. Then in 18, same thing, they went up to doing a half percent

new supply. Demand grew by 4.5% rents went up. Same thing in 19. Rents went up. Rents went up. The fundamentals there, so I think rents in warehouses keep going up even as they build more and more Because people don't understand this three to one phenomena

The people in particular that don't understand it are lenders What did I forget apartments apartments? solid solid the biggest run of people Solid, solid, the biggest run of people getting instant down payment money will be over by the end of this year. Why do I say that? Because as we go back to the ball games, as you go back on holidays, as you go back out to eat, that savings disappears that we were talking about, goes back down to 7%, So people don't have this massive down payment capacity. And by the way, people over 70 are done dying abnormally fast. They're dying, but not abnormally fast.

So that other phenomenon I was talking about is not completely gone because it takes a few months to settle in the state. So this year still has some of that. So multi-family will do fine. Multi-family will do just fine. Lot of capital chasing it. And single-family will do well the rest of this year, but I actually look for it to slow as we go to next year because of this down payment phenomenon and this affordability phenomenon that this

plod of down payment money availability will be gone. And now we're going to be just facing people saying, oh my god, how do I afford it? You know, I don't have a down payment. Everybody who had a down payment has already done it. So now you're into those who don't have a down payment. So it becomes more of a challenge. Single families, I think it's softens a bit. Did I cover everything that way?

More or less. Senior housing has a serious problem. It's two problems. One is people can't do math. Basically people don't start moving into senior housing until they're 78 to 8. They're exceptions, but in big way. And so people keep saying that the baby boom, the baby boom, the baby boom, well the baby boom is not going to be 78 to 80 for another 5 to 7 years, the front edge up. And in fact, the people who are at the right age to move into senior housing were the ones born during World War II. And there weren't as many because 43% of the American males

were in the military during World War II. By the way, I was just looking, there were 300,000 births in Great Britain to American servicemen during the war. 300,000. I mean, those were births that could have happened here, so they might have a surgeon in England, but not here. We weren't here. The second problem they have, I think they'll solve, is this data I've seen shows that only about 60% or 60% of caregivers are getting vaccinated. You could say that's good or bad and personal freedom and all that.

Do you really want your grandma, even if she's been vaccinated, around a bunch of caregivers who aren't vaccinated? And yeah, I read the press and it's 90, whatever, 97% effective. You want grandma to not only be effective, but you want everybody around you to be effective. And so far, they have not mandated that caregivers get vaccinated. University of Pennsylvania, which is a large medical system, not senior care, just announced this week that they're going to require all employees to get vaccinated. They make them get flu shots.

So they're going to require them to get vaccinated. We'll see how that goes. But if you're a senior care owner, that is a problem of, are you looking to put grandma in a place where you think 40% of the caregivers aren't vaccinated? I don't know. Peter, I want to go back to the single family homes because historically, the vast majority of single family homes were purchased by people wanting to live in these houses, right?

People who have families. But from what I've been reading, it looks like more and more, you're seeing these investment groups, which historically would buy multi-family apartment complexes, doplexes, more and more, they're recognizing this opportunity with single-family homes, and they're buying multiple single-family homes as investments. You see them doing this with like Airbnb where they're renting them out.

That way. Do you see that continuing to grow? And what kind of impact will do you think that'll have? I think it will grow, but that mainly because I'm doing this from memory. There's something like 16 million single-family homes that are rented out and the big guys, you know the kind of invitation homes American home for rent etc.

There are only some number like 2 million of those and I think what will happen is it just keeps for Festualizing it's always been there, you know your uncle Phil On two homes that he rented out right in your aunt's cell bought one fixed it up she rented it out, or your grandmother died, and you inherited it, and rather than selling it, you've been renting it out, right? So it's always been there. And I think largely what has happened, largely, is institutionalization and professionalization of more and more of them buying the home that your uncle Phil had or the six homes that your uncle Phil had the

economics are very interesting and that basically if you buy one or two homes you deal with it with the back of the pickup truck, you don't get audited financials, you just keep your own little pickbook. And so forth, you almost have to make money. You just almost have to make money. It's hard not to make money if you do one or two or four, six, when it's hard is when you take institutional money, and maybe you have 300 of them or 500 of them because now I have to get audited by a big firm. And now I've got to have a Wharton MBA get reports to those investors.

Well that overhead becomes crushing, just becomes crushing. If I got big enough, if you have 3,000 homes, 4,000 homes, you can spread that overhead. And it works again. So it's this very on-phenomenal where you can almost have to make money very small and you have to make money very large. And so the big guys just try to get bigger to spread the overhead and to reduce the financing costs. There is another niche people are playing and that is we own some land and if I said I have enough land for 300 homes,

single family homes, to be purchased and he asked me at a typical market, that takes five years to sell 60 homes a year, it's a big velocity. I mean, that's a big velocity, that's 15 homes a week. You're kicking along, right? On the other hand, if I said, rent up 300 apartments, you'll do that in 10 months. And so there is a bit of an arbitrage that if I rent homes, I can lease them up with an apartment rent or speed. But I buy the land as if it's got a low velocity of single family. So it's a bit of an arbitrage there. But it's a nice little niche,

and it's a good big niche, and it's a pain in the ass in between. We got up to about 330 homes, and the overhead just kills you. Just kills you. Peter, I have an investment, another overhead just kills you. Just kills you. Peter, I have another investment question for you. So we're gonna create two avatars and I would love your advice for these two people. Let's say you have a $100,000 saved, knowing what we know about the next five to 10 years,

what would you do with that money? And then let's talk about another avatar. You're a wage earner, you're saving a little bit of money, but you pretty much live no assets. Pay check to pay check, you don't own the assets. What does that person do knowing what we know, you know, moving forward? So those two people, what would you think?

So I would take, I've got a new book coming out at the end of the year, National Geographic is the publisher with, and it's a not combination of Albert Ratner, who's 91, and Mike Royzen, who's head of wellness at Cleveland Clinic and Me, who would, and we've got this book about living a long time. And my advice to the latter, namely, you make a living, you have a job, you will

earn a bit more three years from now than you do today. You'll earn a bit more, excuse me, ten years from now than you will three years from now. If I were to say, do move heaven and earth and save 5% a year? Save 5% a year? What do you put it in? I'm not promoting Vanguard, but put it in something like a Vanguard index fund, state street, a no-load index fund, and forget about it. Just put it in there. And if you can do it. You know, just put it in there.

And if you can do it through a retirement, like a 401k or an IRA, even better. And just put it in there. Don't sell it. Don't trade it. Don't look. Just put your 5% a year. And by the way, if you can figure out how to do 7% a year, even better, just put it in. We've can figure out how to do 7% a year even better just put it

in, move heaven and hell to do it. That's my advice to them which is I don't know if it's a great time now to invest, I don't know if it's a bad time now to invest, but I know that over a long term there'll be more good times than bad with hindsight to have invested and just do that. Don't try to be sophisticated. The biggest mistake, I think that one of the biggest mistakes we all make in life is thinking we know things we don't know. It's one thing that not know stuff, but if you act on stuff you don't know, stuff. But if you act on stuff you don't know, it kills you. Like my friend, the English teacher, who thought she knew how stocks would move in the future had no idea. She's an English teacher. Why did you sell at the bottom? Why did you never go back in? If she would have just left it untouched, she'd have been all right. She did it all right. She was a real more

Standomy and I'm not picking on her. I'm just using her example. So for normal people and I come from normal people I mean my father didn't graduate from high school. My mother graduated from high school. My father was a laborer at standard oil of Ohio and then worked for the local little city government in a kind of job. Mother worked in a little perfume store counter, so I know what real people are. I was a real person. I remember we won food stamps and so forth. Don't try to outthink things.

Simple, simple, safe, safe, safe. If I had the avatar that has more assets, more resources, I would say pretty much the same, though I would then have a little report folio probably, you know, and maybe a little gold from a diverse, I'm not a gold bug, but the little gold and I'd avoid Bitcoin. And the reason I'd avoid Bitcoin is, and I don't mean this the way to stop, if I can't figure it out, how the hell can most And if you learn musk, thought he had it figured out one week and then three days later said oops, I was wrong It just says it's not easy to figure out and if people get really rich off of Bitcoin, God bless.

God bless. It's hard to think of an avatar that fits. And unless there's the obvious, and they're all starting to tumble to it. I've been saying to friends that Bitcoin, it's drug money, it's crime syndicate money, it's guys who refuse to pay taxes, it's people hiding money from their spouses and a divorce, it's all that kind of crap. And it's the perfect mechanism. by the way, I saw something that they believe twice the amount of money was used for illegal purposes, like rancents, as was used actually by stuff with cryptocurrency last year. That says a lot. Do you want to be in an item, where it's largely being used to ransom people, long-dirt drug

money. I don't think so. That's not for the little old lady from Pasadena, even if she has a lot of money. So, I would not go on a show, though. I would not go on a show. Okay. So, what I keep hearing from you is, if you've got some money, you said REITs, which is investments in property, that right now, property is probably a pretty good bet

because the prices are probably gonna keep going up because supplies low, it's getting lower, interest rates are low, it doesn't sound like you think they're gonna raise them anytime soon. So it's probably a good time to keep buying property. But is this going to be a bubble at some point? Are we going to see a large correction? How, I mean, how far can they keep going?

So, first of all, it could drop the day after you bought. Okay. Now, what you have to do is look at the last 20 year history of it, right? It could drop the day after you buy, but if you hold it seven, ten years, that is, don't look at it. You'll do okay. Just don't look at it. You'll do okay. Now, by quality, right, don't buy crap, don't go into the worst companies, go into the better companies, try to buy the better real estate. Good things tend to happen to good real estate. But and good things tend to happen to well manage companies that doesn't mean bad things never happened to good companies. And bad things happen to good real estate sometimes. But I would skew the quality, I would do it and be patient. And yeah, it's going to go up and down, it's going to be horrible, you're going to pull your hair out.

And yeah, 10 years later, 20 years later, you're going to be fine. And we've studied that. I've done research, we wrote it up in linemen letter. Actually, we're bringing it back out in the upcoming issue of linemen letter of returns over a 10 year hold, how they did. And, you know, you do okay. You don't keep become a billionaire, but you do okay. If you want to become a billionaire overnight, play the lotto. Peter, before one last question and then I'll let you go, I appreciate your level headedness. It's been a great conversation. I hope we do this again. Before we go, though, any books you recommend, what are some of your favorite books? Okay, so it's funny. I have a book club for my Kenya kits. We support a lot of orphans, although every element of their life, clothes, food, etc., etc., school, you know, you name it. We have them going from, I think, our youngest is seven and we have one getting as PhD, excuse me, at the University

of Georgia in the US. So we have everything in between. So you can imagine for the older ones, I've tried to get them to expand their minds. So we give you a topple from that. But the reason I stress them is I think they're formative items for thinking, okay? And you mentioned one of them, which is Milton Friedman's Free to Choose. You may love it, or by the way, it's also was a video series. So you could do the video series is, as you might imagine, not quite as nuanced in its

argument, but it's the same arguments made very well by Milton Friedman. So either the book or the video series, I think you can get the video on YouTube. It's there. That's right. It's free on YouTube. Yeah. So I would say free to choose. Now, you may hate it, but you'll learn the argument for real.

You may love it. And I mean, but it is a brilliant, it's just a brilliant statement in my mind. Second is a book, I think it's by Nicholas Ridley called The Rational Optimus. And it's probably about six years ago, a brilliant book that basically says that the world is getting better, is getting better. In fits and starts, all of its history, and for example, the sun came, Louis XIV of France, none of us would want to live like Louis XIV. Even though he lived more opulently than anyone in history, but they didn't know how to do antibiotics. So if he cut himself, there was a good chance he was going to die of an infection,

just they didn't have indoor plumbing, et cetera, et cetera. We would never want to live that. So I'd say the rational optimist, I would say there's a book by Hans Rossling who passed away just after he finished the book called Factfulness. I'm not even sure it's a real word, but factfulness in which he makes an important argument about how the world is improving, although it fits the start, and how all of us are captured by the world as it existed at the time we learned about it.

So we freeze in our mind how many girls finish high school in the world. At the time you were in high school or college when you learned it, and then you come back 20 years later, in my case, many more than 20 years, is radically different. And it's a wonderful book. He has, again on YouTube, there's a Hanss, Roskling, brilliant, probably about eight minutes,

seven minute video of like the economic history of the world in five minutes or whatever it is. I encourage people to see it. Now it's a little dated. It's about six years old or whatever. So it's not updated, but you'll get the theme. And it's brilliantly done. Those would be, and I'll tell you another book, you'll laugh at this. I never read Robinson Crusoe. Never read Robinson Crusoe. So I have essentially a German grandson

who's 12, and we read read books and he chooses one and it's invariably you know some fantasy like Harry Potter or you know people are half half animals or and so we read and and then when I pick you just treasure island three muskets so I'm doing these kind of classic. Well, I had never read Robinson Crusoe, which is written in 1719. And it's very interesting in a couple of ways. One, you realize it wasn't written for children. There was no audience for children's books. So you realize that's how you wrote for adults. Back then, if you wanted a big seller as an an adult that's what the level of reading and storytelling was other than religious. So that's one and the other is it's a fascinating story of what the hell

what I have done, how would I have done. The guy was a slave at one point and owned slaves at another point and he thought nothing about the incongruity that was life in 1719. And so it's useful for us to get out of our shell and understand how the world has changed. And on top of it, it's a ripping good story. So if I said for fun, I would read that. The last set I would do is if for fun, you've never read John Locca Ray who died what four months ago, five months ago, the great mystery writer. If you've never

read the smiley trilogy, read them. They're great fun as well. So I kind of gone the gamut in that regard. Awesome. Peter, this has been great. I'd like to add two things. HumanProgress.org is a great website, very similar along the lines of factfulness and some of the other books where you can read about the progress that we've made in the world with literacy and medicine and innovation. It's really phenomenal. And then if you wanna see a really short Milton Friedman video, cause Friedman chooses a long series,

just watch him talk about the pencil. I gotta do his type in, Milton Friedman the pencil, and you'll kinda get the gift of, you know, figure out what kind of what he talks about a little bit and see if you wanna keep going any further. I'll just do one more. I'll do one more. I'll do one more.

I started our charity effort in Kenya in very early 2003. At that time, we went over as tourists, right? And did, and I said, well, these animals are great, but what about? You know, what about people? And what about education? Because education matters a lot to me. And at that time, in 2003, there was no mandatory education in the country of Kenya.

Literature, no mandatory education. Now, today, it's not perfect education, it's not wonderful, but what was that 18 years later? You know, there is mandatory education, at least up to age 12, you may say, they should do more, and they're more schools, and it's not wonderful, the world evolves. So your progress, maybe not perfect progress,

but it's progress. Yeah, well, thanks again, Peter. This has been a great interview. Thank you very much. My pleasure and enjoy. Use Becca Stan when you go. Much appreciated. Well, I appreciate it. Thank you for listening to Mind Pump. If your goal is to build and shape your body, dramatically improve your health and energy, and maximize your overall performance, check out our discounted RGB Superbundle at MindPumpMedia.com

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