Our Money Is Dying | Lawrence Lepard

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**Lawrence Lepard** (1:00)
The interest rate ought to balance the supply of savings against the demand for capital. That's what the interest rate should be. It should be set in the free market full stop. But of course, what we have is a bank and government cartel that sets it. And that's why we have all these problems. I mean, look at it, Adam, you have percent interest rates, which makes everybody who can borrow wealthy. Or you have 20 percent interest rates that almost banked on my dad. And in 1980, when we were eating tuna fish sandwiches for dinner for weeks on end, I mean, it's just an up and down system that's very painful because it's run by a cartel, the banks and the governments.

**Adam Taggart** (1:45)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. In my opinion, the easiest macro trend to forecast is that our fiat currencies will continue to lose purchasing power in the years ahead, likely at an accelerating rate. Today's guest not only agrees, but rings that same bell even more loudly than I do. For an update on his outlook for inflation, asset prices, the economy, the dollar, and what to expect next in this current fourth turning, we're fortunate to welcome back to the program investor and sound money advocate Lawrence Lepard, author of the book The Big Print, What Happened to America and How Sound Money Will Fix It. Lawrence, thanks so much for joining us today.

**Lawrence Lepard** (2:27)
Good to be back with you, Adam. I really enjoy you and your show, so looking forward to this.

**Adam Taggart** (2:31)
Well, right back at you. This is your second appearance on the show. Your first one got a lot of great feedback, Lawrence, so looking forward to doing this on a regular basis with you.
First off to you, I want to thank you. We're recording this on Labor Day. You're letting me ruin your Labor Day festivities here. I had some schedule rejiggering this week, and you were kind enough to be flexible to record today, so thank you very much. Look, you got a lot of questions here for you, but you have done me the kindness of watching a couple of my recent videos, one with Lacey Hunt and one with Steve Henke. Both of whom are predicting disinflation in the case of Henke or really outright deflation in the case of Lacey. And I think there's some things that they've said that you agree with, and there might be some things that they said that maybe you have a different opinion on. So can we start from-

**Lawrence Lepard** (3:31)
I thought they were two of your really best interviews recently, and I learned a lot and I like both gentlemen a lot, have a lot of respect for both gentlemen, although in Henke's case, I'm not real wild about his view on Bitcoin, but we'll set that aside. He started working in 1970, so it's harder for older folks sometimes to get it. Let's start with Henke. I mean, and I understand that just the whole notion that we could have disinflation or deflation. I mean, yes, of course, when you build up a lot of debt and you get way out of your skis, you're bringing consumption forward. And so that debt, if it starts to unwind, that's a deflationary event. I mean, a perfect example of this was in 1929, there was a ton of debt, there was a ton of growth, there was a huge bubble, and as it unwound, we had massive deflation. So don't get me wrong, it's not as if we have to have inflation forever. And in fact, deflation usually follows massive inflations. However, we've got to consider the policy response, and we'll get to that in just a minute. But let's look at Hanke. I thought what he said was extremely interesting, where I really kind of disagree that we could have a disinflationary period, where I really kind of disagreed with him was partly how he's measuring inflation. We all know that the numbers are not really true. And I think he kind of accepts what they tell us as the accurate numbers. And I think you have to kind of read outside the box and realize that no, that the numbers are reporting aren't true. But even for the sake of argument, let's say they are true. You know, he said something in his interview with you that I just found kind of stunning and I disagreed strongly with, where he said, well, yes, I mean, we need money supply right now is growing between 4.2 and 4.6 percent. And if you look at that, Bill Ollo just had some great charts that he sent out, shows M2 has now hit a record high and it's growing at 4.8 percent, he says. And Hanke said, oh, look, it's growing at this rate, but that's not fast enough to keep the 2 percent inflation mandate. He made the point and said, he believes that M2 needs to grow at 6 percent to have the inflation target of 2 percent get hit. And my brain kind of exploded when I heard that, because I was just like, hang on a second. M2 by definition is the underlying definition of inflation. Now, of course, it shows up in different places, at different times, at different speeds. I mean, insurance costs are high right now. I mean, look, inflation is not an even thing. And then he went on to say, well, yeah, notice how we took rates down to zero and post the GFC, and we had a problem keeping inflation at 1 or 2 percent. And I was like, well, yeah, dude, but look at asset inflation in that time frame.