Carol Roth: America's Broken Fiscal Foundation & Why Inflation Is Coming
Summary
Macro Outlook: The guest argues the U.S. has a broken fiscal foundation with debt-to-GDP over 120% and persistent large deficits, implying continued financial fragility.
K-Shaped Economy: Asset owners benefit from nominal asset inflation while middle and working-class households face rising living costs, stressing consumer balance sheets.
Monetary vs Fiscal: The Fed’s traditional tools are less effective amid fiscal dominance; rate cuts aren’t transmitting well and inflation is likely the “release valve.”
Gold Thesis: Strong, sustained bullish view on gold and precious metals as a hedge against dollar debasement, fiscal stress, and shifting global financial order with central banks accumulating gold.
Allocation Approach: The guest favors a barbell with cash/metals and market exposure, using physical holdings, ETFs, miners, and royalty companies, and recommends dollar-cost averaging into metals.
Potential Catalysts: Notes possibility of a future gold revaluation and policy shifts (e.g., yield curve control) that could support metals and stoke inflation.
Housing & Policy: Highlights affordability challenges and suggests reforms like easing zoning and enabling assumable/portable mortgages to unlock supply and mobility.
Geopolitics & 2026 Risks: Expects rising volatility, potential decoupling from Europe, and turbulence around a new Fed chair and midterms, reinforcing the case for hedging.
Transcript
the inflation that has leaked into cost of living. Um that really has created a very different outlook for the middle and working class. And so we have this growing non-mmeritbased divide between the halves and the have nots that has been driven by policy. And I think that that is going to continue to accelerate unless we see major policy shifts which are harder to affect because of that macro outlook. Carol Roth, a twotime New York Times bestselling author and also a recovering investment banker. It is so wonderful to welcome you back to the show. Great to see you as always, Carol. I have missed you. This audience loves you. So, just thrilled to have you back on. >> Yes, so great to be back with you. I feel sad when we don't have an opportunity to chat. I feel like this year just went by like that. >> I know. It certainly has gone by just like that. And since it's been a while, let's start where we always start, Carol, and that is with that big picture, more of that macro view of how you're thinking about the economy. We can throw markets in there. I just because it's been so long, I just want to hear the latest from you, how you're thinking about things. What are you seeing? Um, and what is more of your outlook as it relates to that more of that big picture view? >> Well, I always start with a macro thesis and I'm in the same place that I've been in. and I think every single time we've spoken so very consistent with that which is that we have a very fraught and broken fiscal foundation here in the United States and no matter what sort of happens on the fringe the fringe that underpins everything the fact that we have debt to GDP at over 120% you know basically an emerging market in crisis balance sheet that only hasn't been a crisis because we have been the world's reserve currency although that has started to shift a little bit. Um, our debt to GDP or excuse me, our deficits to GDP, you know, still running probably close to 6% which is a recession or wartime level amount when we aren't technically in a war or technically in a recession. Um, and you know, no real uh political will as we have seen to stop the spending. we have interest expense now that is exceeding our defense spending. So, uh we have been able to sort of maneuver around this and you know play a lot of um you know shell games but eventually that comes to roost. you know, I've been talking to you forever that, you know, that was a thesis for why people should hedge with gold and precious metals, which I think that we've seen over the past um, you know, 6 to 12 months. You know, that thesis has really come to play and and I think that continues to play out. So, you know, I don't see that changing. I don't see um, you know, the fact that we have these shifts going on in the global financial order and the global world order. Um I think that that is going to continue to accelerate and so that's going to underpin um a lot of what has happened and you know what will continue to happen and it really has informed you know this macro outlook has informed the micro of the K-shaped economy. Again, another thing that I brought up to you years ago when nobody was talking about it and now has become the buzzword and it was very clear that if you were an asset holder, somebody who has a home in a portfolio that you were going to at least on a nominal basis continue to do well um you know because of that asset inflation. But the inflation that has leaked into cost of living um that really has created a very different outlook for the middle and working class. And so we have this growing non-mmeritbased divide between the halves and the have nots that has been driven by policy. And I think that that is going to continue to accelerate unless we see major policy shifts which are harder to affect because of that macro outlook. Yeah, what a great frame up to the conversation, Carol. There are so many areas I'd love to explore further with you. Let's bring up this like the notion of this like K-shaped recovery. Just something I kind of observe maybe more anecdotally. It's it seems like when it comes to the economy and we have this conversation about how is it really there's quite the debate and I noticed this a lot in the comments section. I'll also even bring up um maybe you saw this from Mike Green around I'm sure you saw it, right? The um >> the poverty the real poverty line is at put it at 100,000 to 140,000 depending where you live for a family. Um >> so maybe that's a two-part question. Let's just kind of start with what do you make of like this debate around the economy? Do you think there is that? Is that maybe I'm totally off here, but it does feel quite divided. It absolutely is divided. Um, and you're seeing it play out because when you see numbers and averages, you know, averages are often brought up by big spending uh, for example, you know, on the, uh, higher end uh, from very wealthy people. I wrote a piece um, for Fox several weeks ago that kind of fit into the second part of where we're going with this that talked about this wealth paradox that we have uh, in the US today. So if you know you were a time traveler from a hundred years ago and you showed up in 2025, you would wouldn't believe it, right? It would we are we're in an incredibly blessed time in so many ways. We have so much abundance. We have luxury goods that you know sort of everybody has access to. We have medical advancements. We have a supercomput that we carry around in our pocket that has all the information in the world that's ever been created and allows us to create new information. I mean, we do have all of this abundance. But wealth, you know, not only is it supposed to buy you, you know, access to goods and services and potentially luxuries, but what it's supposed to do is buy you freedom of flexibility and at its core, it's supposed to take away your stress. Right? that's the best reason to be wealthy is so that you don't have to worry about, you know, day-to-day spending and worry about money. And I feel like that's just not the case. If you look at the cost of housing, not just the headline cost, not just the interest expense, but things like property taxes, um insurance, all the carrying costs for a house. When you look at the cost of education um which is just you know completely for most of the majors not delivering any sort of ROI at all. Uh you look at things like health care the the things that wealth should be bringing you that comfort and and you know shield from stress that is not happening. So, yes, I can go out and I can access Door Dash and have food brought to me on demand and I can buy a pair of Michael Jordan sneakers and I can access these things, but at its core, the basic needs for our living and our development are making the average American very stressed. And you I mean, you you don't have to even believe it anecdotally. You can just look at the numbers and run them yourself. And while I don't think the poverty line, which I think has been dispelled, is at, you know, 140 or $100,000, it could certainly be very stressful when you're getting at that level. And so we really do have um this very strange paradox going on with wealth. And you know, if you want to go out and just have a dinner in a restaurant, the nominal cost of that and the cost as a percentage of somebody's wages is just getting out of control. And that not only affects personal balance sheets, but that's going to affect the lay of the land in terms of, you know, these these uh businesses who rely on middle and workingass people uh as their customer base. >> That's a good point, too. And I will say this, you are someone who has that pulse of what's going on in the small business community as well. That is the backbone of the American economy. And you're right, like if they pull back from going to restaurants, then that also that's mom and pop running the restaurant in a lot of those instances. Um, you make a really interesting point to just I will link your piece from Fox News that you published on December 2nd. So, you really kickstarted this conversation that as you point out a lot of this financial stress is self-inflicted like some of the choices we make, but then there's a lot of like the structural stuff I guess the structural economic problems. Where do you see the line like between the two? Yeah, this is the the part that is just um I think it's what's making the discourse so difficult because anytime I talk to boomers and boomers, not to throw you under the bus >> and they watch the show, but do it. It's okay, >> but and and I love you and I think you're amazing, but there is absolutely no compassion for younger people. And yes, some of this is self inflicted. You know, door dashing is a luxury behavior. If you have debt, you should not be door dashing. you not should not be spending $100 for Taco Bell when you can walk there and get it for seven. You know, it it doesn't it doesn't make a lot of sense. Um but that being said, when you look at the basics and how they have been bastardized, we continue to have this wealth transfer that's gone on between young people and administrators and workingclass people and administrators. The administration class has gotten completely out of control. So whether you're looking at the education that we're paying for K through 12, whether you're looking at higher education, whether you're looking at, you know, hospital costs, the cost that you had when you were younger, the structure has been completely blown up mostly by government interference. Um, and yes, you know, with a home, I agree, you know, back in the 1950s, the median home was around a thousand square feet, and now, you know, the median home is like 23 2400 square ft. But the problem is that we can't get builders to build at 1,000 square ft because for them, it doesn't make sense. If they have land, they want to build 24,00. It's easier and they can get more money. So unless we see the market shift and open it up and you know get rid of these these restrictions, yes, it's different when you were younger, but you still need to have compassion that things have changed. And so we do need better behaviors for younger people, which again, >> we're paying for the education, so why is that not happening? That should be, you know, front and center. And you know there is um you know sort of some level of delusion you know that comes along with the in Instagram lifestyle. But there are things that are very very real. And if you do not start to have compassion you end up putting in socialists and communists and dictators who are going to take all of your money and ruin the lives of these young people who don't know better. So get a little compassion or at least play along a little bit because otherwise that is going to come to roost for you because when you have the have and have nots in society historically that has not worked out so well for anybody. >> That's a that's an interesting point too. I I didn't think about it as like the administrative class but that makes so much sense especially like um the first example that came to mind for me was the universities the college campuses and the crazy tuition now. Um it's even I wasn't even in college that long ago but well 15 years and it's just even gone up from there. >> Well yeah I mean let's just talk about I mean the fact that you have schools that you know academically are not that stellar and are not creating that great of um outcomes for people where it's 60 or $70,000 a year and you have to go for four years. >> How do you plan to get a return on investment from that? And we know from looking at the numbers and I think that this is it's in one of my books. I think it's in You Willow Nothing. Um but if you look into that, it does not it's not going into the classrooms. It's not going into better teaching. It's not going to better outcomes. It's going into administrators and those are the people who are getting wealthy. So, it is this wholesale wealth transfer from young people who don't know any better, who have don't have the experience, who by the way shouldn't be allowed to sign for anything. I mean, it's really hard to get a loan even as a business owner or as anyone else. Now, we've got people who are just coming out of high school and you're going to give them five and six figures worth of loans. Like, it's obscene. And this is an outgrowth of the government getting involved nationalizing a large part of the student um lending in this country. And that has enabled just like it has in healthcare. Same thing that happened this huge administrative class where those are the people who are sucking up the wealth but not giving us any better outcomes. And that's the problem. You know, it's no problem if people are getting wealthy because they're creating innovation and driving better outcomes, but it's literally just going into this administrative class. 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Visit van.com/remxjiulia to learn more. You know, another um central part of your piece that you put out in Fox News is also around housing affordability, too. I think we spoke about this earlier, but it is it's a huge I don't know. I feel like such a huge challenge right now. Like I I don't own a house yet. I'm kind of waiting, Carol. I don't know if there's going to be a correction or anything on the horizon, but maybe what do you make of the housing market today? Are there changes or reforms that would make sense or better incentives or is it just going to be one of those things like suck it up, save and you know figure it out? Well, I mean there are many things that can be done and it the question is where like at what level do they have to be done? Certainly on the state and local level, getting rid of, you know, some of the zoning requirements and the red tape and creating incentives that make it easier um to build, especially, you know, housing that is more in line with that 1,000 square footprint or maybe a 1500 footprint instead of the 2500 and up square footprints. Um, you know, that could certainly help. Um, but something that, you know, I've talked about, which I think is starting to get some traction, things like making the mortgage loans portable. Um, you know, that's something that, you know, with the VA and and with some loans, there is portability of of your interest rate from one one place to another or an assumability of it. Um, so if you know if you have that assumability, it's great, but only about 25% or less of all loans have that assumability. Now, you're going to say, because I know you're smart and you're going to push back on me, but why would the banks want that? Why would they want that, you know, low rate to be assumable? Well, a, nothing's going on in the market. So, at least if you open it up, not only do you have more movement in the market, someone assumes that, but they're not assuming the full amount of the purchase price. So, there will still be an incremental amount that you can underwrite at current rates and get a blended rate and get your origination fees and have more business. So, that seems like a win-win kind of scenario. Um the other piece from my perspective is that the banks have done really well um at the expense of the taxpayers. So having a little push back there isn't necessarily a bad thing. I think that even though I'm a you know generally a free markets person, this is an area where we have not seen a lot of free market um activity. We've seen a lot of taxpayer bailouts. And so having uh somebody be able to assume a lower rate for a portion of the cost and maybe put in a little bit more that has a a higher rate associated. That can start to free up this lockdown that's happened because of the change the whipssaw change in interest rates in a very easy way that used to again happen all of the time. So, you know, I think there are small tweaks that can be made and I do think this is a temporary problem. I mean, I do think 10 or 15 years from now, given demographics and all of the older individuals who are going to change their needs and desires for housing or pass or whatnot, that is going to change the dynamics here. But that doesn't help people for the next 10 or 15 years. And that's a really long time. And if that whole group of people misses a window again, it's going to get really ugly for our country. We want the American dream to be available to everybody. >> Yeah, that's Yeah. Okay. I kind of want to go back to more of the macro again with you. Um we have a broken fiscal foundation here in the US. Are you hopeful that it'll be fixed or were you hopeful that it might be fixed? I'm thinking about like the Trump administration specifically. >> No. Okay. I am not. Um, I I've said, you know, many times that I thought that he inherited, you know, a a very challenging problem and I don't understand why anybody would want to be president, you know, with this underpinning. Um, and not that he's entirely blameless. You know, what happened during COVID certainly added to the situation that we are very meaningfully um where we are today very meaningfully. Um and then certainly Biden took the situation and just you know absolutely made it uh you know impossible to come back from almost. So I do think what's going to happen is that we are going to get some breathing room and I think you've seen the administration start to try different things which you know we can argue about whether they're working or not working. I think if you look at the tenure, you're going to say they're not working um quite yet, but they're going to continue to try different things to buy us the breathing room to um you know, maybe get our debt refinanced at a lower rate. Um you know, with the the release valve for that being inflation, you know, things like that. They could write up gold, you know, and and you know, buy down some debt. I think that there is breathing room to be had to put us on a path to fixing our our fiscal foundation because it can be fixed. But I don't believe that we have the political structure or will to do that. And you saw that, you know, with Doge and the effort to just try to combat things that are common sense like fraud and waste and the amount of push back from Congress that no, we don't want people to push to to you know look into the fraud and waste because that helps us out in some way, shape or form. And so if you know if we can't do those basic things, let alone get reforms to entitlements and the things that we need to do to really fix the the fiscal foundation, I just think we're going to end up buying ourselves some breathing room and then we're going to be back in the same place in a certain number of years. Which is why I think it's so important, you know, as you know, you're thinking about what's going to happen. When I think about the markets, you know, the markets have to go up on a nominal basis for us to not be in crisis. If you think about the amount of money that we get both from capital gains as well as from the wealth effect, right, the the fact that your 401k is up and so as a consumer, you're willing to go out and to spend more. And so, not only does that give us receipts, but it also supports the GDP. If that goes down and we get fewer receipts and our GDP is lower, that is going to completely blow out the deficits, it's going to completely continue to make deficits to GDP continue to rise and we are going to see everything just, you know, debt spiral, you know, completely implode. So, I think, you know, we we h the politically I don't see why they would let that happen. I think the most likely situation is that they inflate their way out of the bad position that they're in. And you know, we have the the repercussions of that, which is why, you know, again, we saw precious metals doing so well um over the last, you know, 12 months, and I think we'll continue to do so. >> So, we'll need some inflation to inflate ourselves out of the debt problem. I I I think it is the release valve for the the undertakings that they're going to have to do to keep you know this really teetering situation from completely toppling over so to speak. >> This is just more of a curiosity on the markets. What do you make of like the government taking stakes in publicly traded companies? you know, it's uh it depends which side you look at it from. Um, in general, you know, I don't think that the US government is a venture capital firm and should be um taking stakes and picking winners and losers, I think it's a bad thing. However, if we have a situation like we've had this year where there was a bailout or an incentive that was put in place and then we say, "Well, we're doing this anyway, so we might as well get something from it. I'd rather get a benefit than, you know, not get anything. So, I don't think it's a good p practice in theory, but if you're going to do it, you might as well get something on the other end. I do think that there are areas um that it from a defense standpoint, from a national security standpoint, it does make sense uh for the government to be investing in in some way, shape or form. you know, we can argue about, you know, does a direct stake make sense or is there sort of a more palatable way to do that? But then you're also, you know, there should be some sort of a committee that's making sure that this is on the up and up and that we're not picking winners and losers and that it's being done strategically for those best outcomes and not just to, you know, enrich certain cronies and the like. So, it's very easy for that to go sideways. Um, from a philosophical and moral standpoint, I don't like it. But from a practical standpoint, I can see practically why, you know, in some cases it it has made sense and will continue to make sense. >> Let's talk about monetary policy. We've had the Federal Reserve do three 25 basis point rate cuts. Um, do rate Maybe I want to get more of your big picture take on the Fed. Um, and do rate cuts really like help the everyday American, the folks that you really represent when you when you write your books? Well, so it dep depends when and how and what's going on. Um the challenge that we have now and you've seen it based on where the 10year was when those rate cuts started. I think it was like 38 or something and you know after the you know most recent rate cut I think it was at 42. So as as we've seen rates go down um obviously the Fed has completely lost control of the the long end of the curve and we've actually seen that have the opposite impact. So places like um you know mortgages and credit cards that have you know more relation to what's going on at the longer end of the curve um it's not benefiting and you know what's what's kind of tough is you're not seeing a benefit there and you're also if you're a saver you're losing at the short end because if you're in a a money market fund or something like that now all of a sudden you're getting paid less interest on your savings. So, I think, and I've been advocating and talking about this for years, is that based on where we stand today, the Fed's basic monetary tools are irrelevant. So many of our problems have not been, oh, we need to stimulate demand. They have been supply side problems. And I don't think that anything that we're doing is stimulating, you know, they don't print more housing. they don't, you know, print more labor. They don't they don't do the things that we need them to do in terms of policy, right? They move move stuff around. And I just don't think um you know, I think we're in this fiscal dominance period where the fiscal foundation, the fiscal policy is really setting the reality of what's happening in the markets um to some extent more than the Fed. Now, that being said, when we get to a scenario where they may be forced into doing something that looks like yield curve control, um particularly uh when President Trump puts somebody in as Fed chair and you know, maybe they have enough influence, you know, on the the group of people there to to do some things um you know, to keep markets functioning. Uh yeah, that will have an impact on people. But, you know, sitting around and going 25 basis points, you know, does that have much of an impact on my life? You know, most mostly my savings. Mostly my savings. >> Do you think it could also just create more inflation? Can the Fed really do anything about inflation? Can they? >> Well, I mean, yeah, they can certainly, you know, if they go cut too fast, they can cause a lot of inflation, right? >> Can they can they bring Can they actually bring inflation down? Like, I don't know. Well, I you know it it's a question. If you are somebody who believes that this is you know due to the money supply then it in then the question is you know how are they impacting the money supply with their policy? Um you know doing moving rates alone doesn't necessarily get that done. Um and then you know for people who are not just like straight up monitorists um you know there are certain things that the Fed does in terms of adding liquidity to the market that I think does um you know create things that you know look like more inflation more maybe more velocity of money going through the system. So yeah, they definitely have some sort of an impact, but I think that the most important thing is that the Fed does not have the tools today that it would if our fiscal foundation was where it was, you know, 20 years ago. And that's why um and also by the way, you know, 15 years of ZERP and near ZERP completely like just disrupted the whole market, right? It changed what risk meant. It changed the dynamics. So coming out of that, you know, in terms of demand for debt, whether it is, you know, from a a consumer standpoint or a business standpoint, and you know, how interest rate policy is going to influence that looks very different after 15 years of being able to access debt for basically no cost. So we have to look at the Fed in 2025 and 2026 very differently than it has been throughout our history be based on the just absolutely insane policies that we've seen over the last you know 15 16 17 years >> because of that fiscal fragility that that we're sitting on >> right which has been driven in part by the Fed allowing that to happen right if you didn't have the Fed willing to stand by and and eat up uh you know trillions upon trillions upon trillions of dollars during co uh you know that that policy doesn't get passed but they knew that that that was enabled. So the the bad be behavior of our fiscal policy has been enabled by the Fed but now it's at the point where it basically whatever is done on a fiscal standpoint is going to overtake the Fed. So it's been very very linked over time but in terms of what is is more important right now I think that the fiscal foundation and fiscal policy is much more relevant to what happens absent as I said you know some of these big big changes that we may see um and things that you know look like uh keeping keeping yields down so that we have an opportunity to refinance our debt which will if if that works probably drive up inflation. probably give us some breathing room and then, you know, Congress is just going to respend again and we're going to be having the same discussion again in 5 or 10 years. >> Yeah. You talk about gold. Um, you've mentioned precious metals. This is a topic that comes up on this channel quite a bit. Um, I haven't talked to you in a while about your views on gold or like how much you think you should have allocated, but I maybe I'll do a question here of what do you make of the performance we've seen in gold of late? um how are you thinking about it from an investment perspective and like how much you want to be allocated to just more of like your big picture views on the precious metal. >> Yeah. So, you know, if you think about what gold is, it is a hedge. Um you know, it is an insurance policy. It's a way to to have some sort of sound money from all of the these earnings and investments that you've created that we have seen erode um in terms of their purchasing power. And if you believe the conversation that we've just had here in terms of what's likely to continue to happen um given the fiscal situation and the options that are available and that inflation is that likely release valve, I think that is a huge piece of it. Um this year they came up with a cute name for the debasement trade. Um but it's the same principle that many of us have been talking about for several years. Uh and some people even longer than that for sure. And then there's the shifting of the global financial order. Um, which is also a real thing where we've seen over the past 10 or 11 years that central banks have not on net been buying our treasuries. They have been actually net sellers of our treasury over that period of time. And what they've done in their holdings instead of going and finding another currency, they are going back to gold. and gold has really become um this center that's being built up of the changes that are going on um geopolitically and you're seeing China obviously very active um you know they're offering uh you know net settlement in gold you know as a as a way to say if hey if you're trading with us and you don't want our currency you can have gold instead so I think both of those drivers um there's nothing that I that is going to change the trajectory back from that right back towards the the US dollar and a strong fiscal foundation. I think that those thesis are going to continue to accelerate. So, um, we, my my husband and I, in our own personal portfolio, we have, um, you know, continued to up our holdings and our exposure and how we're exposed to precious metals, both gold and silver and otherwise. Um, in turn in including holding it physically, um, holding ETFs, holding miners, uh, holding companies that, you know, do royalty streams and the like. so that we have sort of a broad range of exposure within that sort of hedge or alternative holding. Um but for us you know it has continued to be a larger percentage of our portfolio and um you know we kind of look at it as a as a barbell is that you have the sort of the cash and the the metals piece and then you have um you know the market piece because as I said I think on a nominal basis the market's going to have to continue to accelerate in order to continue to boost GDP in order to continue to boost receipt seats so that we don't have a deficit explosion. Um, but again, you know, that is the the nominal basis on a real basis. You I don't know how that ends up looking. So, you want to make sure that you have something anchored on the other side that's taking account for that. And uh, you know, knock on wood so far that's that's served us well. >> Do you think gold's been just sniffing out like this kind of story we've been talking about these underpinnings? Well, I think the people who understand gold um and certainly, you know, the central banks around the world and the people who are involved at a very high level have understood this for a while. There's a challenge. The gold market gets suppressed by the paper market, right? It's not, you know, how much is there actual physical demand for gold. There's a lot of this paper trading that I think has been a huge overhang on the price of gold. >> Do you mean like the ETFs? >> Yeah. Mhm. Okay. >> Absolutely. And so I think that over time um you know as the this debasement trade has you know come to to the forefront you know there are fewer people who are betting against gold. They're seeing the reasons why this is happening and so some of that's starting to open up. I do think there is not necessarily a probability but a possibility that we will see um you know before the Trump administration leaves office that we will see a revaluation of gold you know they hold gold on their balance sheet at something like $42 an ounce. So whether they mark that to actual market you know as it stands today or whether there's some sort of global you know agreement amongst countries that raises it even higher as a way to kind of reset the playing field um you know I think that is a poss a good a good enough possibility not necessarily a probability good enough possibility and I think if that happens that may be a catalyst um for gold to to really like you know overnight kind of make a make a move but I do think just in terms of a steady state, what I've been, you know, advising people is dollar cost averaging. You know, it's it's very hard to time the market on any of these things, particularly with these metals. And so just having a program on, you know, whether it's a a weekly, a semi-weekly, a monthly basis, you know, however you do it, bi-weekly, um, you know, you go in, you continue to build up your holdings, you get an average cost over a period of time. And, you know, if that's foundational to your thesis, that's going to make a lot of sense for you. And um if you talk you particular if you have a financial advisor, there's some really good platforms out there where you're not getting um you know some of the crazy spreads that you see uh and markups that you see at retail. So I think there are different ways again that you can play it. But I I would definitely um consider it and look at it in your goals of and objectives if it's not something that you have done and if it is and this thesis if you believe in this thesis um you know this this is going to make a lot of sense to you. Hey there I just want to take a quick moment to thank you for watching this video and I would really love for you to subscribe to this channel if you like this content. Over 70% of our viewers are not yet subscribed and we are on a mission to hit 100,000 subscribers. So, if you could just take a quick moment, hit subscribe. Thank you so much for your support. We appreciate you. And back to the video. Carol, you wrote You Will Own Nothing back in 2023. We had you on the podcast talking about it. At the time, we were talking about this kind of World War F. World War F, as you put it, like a financial war where you're effed since you've written I love it. But since you've written this book, what has changed? What has changed? What has gotten worse and more worrisome for you? And what has changed and has gotten better for you? >> Yeah, I mean, unfortunately, ab it has been proven to be a very preient book. Um, you know, that's I have a a good track record of being a bit ahead of the curve on things and uh so I wrote in 2022, it came out in 2023 and now we're sitting in 2025 and go, "Oh yeah, that looks that looks pretty smart." Um, but you know, you can see these patterns occurring and it's just a matter of time. It's very hard to predict exact timing, but you know, it it's very obvious to see how these patterns emerge, particularly since human nature is undefeated and people act the way that they're going to act. they at least have that that underpinning. Um so the things that I spoke about um things like uh you know the the global financial order shifting the damage that the Fed has caused to non-asset holders the costs of education and healthcare tech um renting your life back to you as a subscription or a service. All of those things have happened and continue on a worse trajectory. If I had to pick one area that has gotten better since I wrote the book, um, that would be the greenwashing and all of the the the scammer. >> You don't really hear ESG anymore. >> No, you don't because everybody has it's been uncovered as a scam. The people who were behind it have stepped away from it. Um, not to say, by the way, that it's not going to come back under another name. I think it probably will, but for the time being, it has been, you know, the the the wizard has been unveiled. behind the curtain and everyone goes, you know, there's no there there. And so you've seen an absolute complete retreat. Um you saw, you know, recently Ford make this right down um related to its F-150 EVs. You've seen, you know, uh Bill Gates go away from, you know, some of the heavy investing he's doing around climate to other areas. You've seen even Larry Frink walk back from the name ESG at least. Um, so I think that's the one area where, you know, we we we we're part of the course of a very large number of people who are saying, you know, this is a scam and a money grab. And I do think it's been uncovered and there has been a push um, you know, to to really look at energy in a different way to understand how important that is. Certainly, a lot of that's being driven by AI. Um and so I think the timing there is not um coincidental. I think that having wealthy, smart, politically connected people who understand the needs for energy at least from their own perspective if it's not from a altruistic perspective um was a benefit in this particular moment. And so you know that that's the one place that I do think has um you know has gotten better. But the tenants there, the tenant of oh we need to come up with something and say that it's a huge crisis and that you know man's fate hate hangs in the balance and we need to serve you and make that into a money grab that will never change. So even if the implementation of it has gotten better, you know that playbook is going to be rerun with something else next time and uh whether it's energy related or related to something else uh that will not go away. Mhm. If you could add a new chapter to it, um, what would that be? Or are you writing anything? I feel like you're right. You are always ahead of the curve. So, so what I'm writing right, I wrote a historical fiction book that I'm trying to get published right now. I needed to take a break. Like I wanted like I wrote Warren Small Business and You Will Own Nothing back toback. And it was honestly so depressing. And I'm a very happy person and a generally optimistic like person on a day-to-day basis. And I'm like, I got to do something fun. So, you know, I I wrote this kind of fun and frothy historical fiction book that hopefully will find a home pretty soon. >> Oh, what's the time period? Can you give us a hint? >> Yeah, it's actually it's a it's about Jackie Kennedy and her sister um and like kind of the sisterly dynamic there. If you think about like in the crown, Princess Margaret and Queen Elizabeth's dynamic, you know, Jackie Kennedy and her sister Lee Radzel, they were like the original influencers and they were kind of groomed kind of like Chris Jenner grooms the the Kardashians like to be, you know, these these these women of influence throughout the globe. And uh there's it's a really cool dynamic. So, I hope it it ends up finding a publisher, but it was a lot of fun to to research and to write and whatnot. So, I just I went totally rogue. Um, but it's been hard. You know, I talk to my publisher all the time and there are so many things that are changing right now, you know, with AI, with the global financial order, um, you know, with the kind of the halves and have nots with kind of this, you know, reemergence in certain places of socialism that when you write something, you know, it you do have to really project it out um, a year or two for it to be relevant by the time that it comes to market. and you go and talk to to you on your podcast and and whatnot, it still has to make sense. >> Oh, because things move so fast. >> Yeah. So, I think that we're in this really this crazy period of disruption where things, you know, from a macro standpoint, they're still going on the same you will nothing trajectory, but some of the the minations could turn out in a few different ways. So, it's actually pretty difficult. Um, and my publisher says that I'm not the only author that has, you know, kind of struggled with, you know, how does what does that look like? So, um, you know, I I unless I have conviction about something, I'm not writing just uh for the sake of writing because it's a pretty low ROI endeavor. >> Interesting too. What do you what do you think of using AI as a writer? Do you like it or you like just using your own voice and having your own taste? So, you know, there are a lot of people who ghost write and I write like everything myself. Um, I think that, you know, AI from a a creative standpoint is is horrible. Um, the whole point that you if you're going to read somebody, you want to read their perspective. You want to hear it in their voice. Um, you know, having read my books, like it's exactly how I talk. >> It's how you talk. Exactly. >> I mean, it's like you you can actually hear me um saying it. And so, you know, that's kind of the whole point of writing a book is to to get, you know, my take or some other author's take on it. Um, so I don't think, you know, AI is is good from I think a research and a factchecking. You know, I will sometimes, you know, go to to it. I I use Grock uh because I'm on Twitter all the time and for me workflow, if I'm somewhere, I'm just going to use whatever's there. I've tried to use all the others and it's just I'm I'm in in Grock so, you know, I might as well use it. And so I'll use I'll I'll double check my accuracy. It's a good way to say, "Hey, can you find me, you know, additional sources to back that up or are there things that I may have missed?" Um, or like I'm struggling like I'm trying to get across this concept. Is there a way you can say it? But if it puts something back to me, I'm never going to take the way that it put it back to me. I'm gonna go, okay, now that I see where I missed it, now I'm gonna reexplain it in my own language. Um, and I think that's what people are gonna want, right? And they want the authenticity. They want the human. They don't want the AI slop, right? They want to know what your take is. That's the whole point. >> And yeah, I like having like someone's voice. Um, okay. as we head or as we wrap here and we head into 2026. Um these are our last few episodes of the year. I think you're the second to last. Um >> the penalties. >> Any predictions for 2026? Anything that's like top of mind for you, >> Laura? I think it's going to be wild. I think um you know and again year-wise is always difficult but one of the things that I've been talking about um you know I I started talking about a couple years ago and I sort of resurrected is the fact that um our allies in Europe are these paper tigers right there are these these these former football players that were you know really big and popular that are still trading off their glory years and going and doing a promotion at the local car dealership or something. Um, but really at the end of the day like their glory years are way behind them. And if you think about Europe, like what do they what do they offer? Like they're not innovative. They are not leaders in energy. They've given up a lot of, you know, their knowhow. They're bringing in, you know, it it mass immigration that doesn't share their values. So I think the people and the countries that we have been allied with in the past are going to become very irrelevant and I think you're going to see a shifting as the as the global order shifts and the US no longer is the sole hegeimon in the in the world and we get these different factions. I think there's going to be a really big surprise that we really decouple from Europe and start to to focus in different areas. And while I don't know that that wholesale happens in 2026, I think you can look for breadcrumbs of that and more places where there are issues and tension um and you know sort of like not the same um you know closeness that we normally had with the these historical allies. So, I think that's going to happen. Um, I predict that when we get this new Fed chair, and obviously the odds keep shifting on whether it's going to be Hasset or Worsh or Waller, um, I think that that's going to create a lot of chaos and uh, and so I think, you know, that the Fed is going to turn into, you know, some sort of afternoon soap opera. And um I do think that whether it comes from the Fed or from Treasury, we're going to see some very outofthebox policies. Um we thought that, you know, the 2025 was weird with Liberation Day and whatnot. And I think that we're going to see um you know, some strange things come about where things could shift, you know, in a in an overnight scenario. So, um buckle up, folks. Hedge yourself. And uh this should be, you know, you'd like to think that this is going to be a calm year, but it's also a midterm year. So, >> I was going to ask about the midterms and if that's going to be part of it, too. >> Yeah, it is. It's just it's going to I wish I could just say, oh, like you could just kind of like finally we get some breathing room. I don't think so. I don't think so. So like stock up whatever the vice is if it's you know your alcohol or meditation or like your sauna like whatever it is have that like you know area that you can go to for calm next year because I think it's going to be wild. >> Oh goodness. Um Carol before I let you go um some parting thoughts for this audience. Let folks know where they can find you and support your work. I know you have a newsletter coming out an end of the year um newsletter on the economy. I signed up, but anything that you'd like to leave this audience to think about or plug, the floor is all yours. >> Yeah, so my my newsletter is the best value going because it's free right now. So, you can sign up at carolroth.com/news uh with about 20,000 people who are reading it currently. So, it's fantastic and it's fun because people will send me emails and I can actually kind of interact. Um, you know, ex Twitter, whatever you want to call it. Um, still tends to be my home. I go back and forth with it because my account's been throttled like crazy, but then every once in a while something like unthrottles and then it goes back. But Carol JS Roth there and uh yeah, those are kind of like the best places to find me these days. And uh yeah, I'm going to go back and you know, focus on my historical fiction for a moment until I get hit over the head with the next big thesis. >> I love it. Well, Carol, I am so grateful for you. It's been so wonderful having you back on the show. Carol Roth, two-time New York Times bestselling author, recovering investment banker, a certain c certainly a friend of this show. Really, really appreciate you. Thank you for being so generous with your time, all of your knowledge, helping us all learn and get better and I hope you have a wonderful and happy holiday season with your family. >> Thank you too, Julia. You're the best. Merry Christmas. Happy New Year to everyone. Happy Hanukkah if you're still celebrating and uh we'll look forward to having wild times with you in 2026. >> Exactly.
Carol Roth: America's Broken Fiscal Foundation & Why Inflation Is Coming
Summary
Transcript
the inflation that has leaked into cost of living. Um that really has created a very different outlook for the middle and working class. And so we have this growing non-mmeritbased divide between the halves and the have nots that has been driven by policy. And I think that that is going to continue to accelerate unless we see major policy shifts which are harder to affect because of that macro outlook. Carol Roth, a twotime New York Times bestselling author and also a recovering investment banker. It is so wonderful to welcome you back to the show. Great to see you as always, Carol. I have missed you. This audience loves you. So, just thrilled to have you back on. >> Yes, so great to be back with you. I feel sad when we don't have an opportunity to chat. I feel like this year just went by like that. >> I know. It certainly has gone by just like that. And since it's been a while, let's start where we always start, Carol, and that is with that big picture, more of that macro view of how you're thinking about the economy. We can throw markets in there. I just because it's been so long, I just want to hear the latest from you, how you're thinking about things. What are you seeing? Um, and what is more of your outlook as it relates to that more of that big picture view? >> Well, I always start with a macro thesis and I'm in the same place that I've been in. and I think every single time we've spoken so very consistent with that which is that we have a very fraught and broken fiscal foundation here in the United States and no matter what sort of happens on the fringe the fringe that underpins everything the fact that we have debt to GDP at over 120% you know basically an emerging market in crisis balance sheet that only hasn't been a crisis because we have been the world's reserve currency although that has started to shift a little bit. Um, our debt to GDP or excuse me, our deficits to GDP, you know, still running probably close to 6% which is a recession or wartime level amount when we aren't technically in a war or technically in a recession. Um, and you know, no real uh political will as we have seen to stop the spending. we have interest expense now that is exceeding our defense spending. So, uh we have been able to sort of maneuver around this and you know play a lot of um you know shell games but eventually that comes to roost. you know, I've been talking to you forever that, you know, that was a thesis for why people should hedge with gold and precious metals, which I think that we've seen over the past um, you know, 6 to 12 months. You know, that thesis has really come to play and and I think that continues to play out. So, you know, I don't see that changing. I don't see um, you know, the fact that we have these shifts going on in the global financial order and the global world order. Um I think that that is going to continue to accelerate and so that's going to underpin um a lot of what has happened and you know what will continue to happen and it really has informed you know this macro outlook has informed the micro of the K-shaped economy. Again, another thing that I brought up to you years ago when nobody was talking about it and now has become the buzzword and it was very clear that if you were an asset holder, somebody who has a home in a portfolio that you were going to at least on a nominal basis continue to do well um you know because of that asset inflation. But the inflation that has leaked into cost of living um that really has created a very different outlook for the middle and working class. And so we have this growing non-mmeritbased divide between the halves and the have nots that has been driven by policy. And I think that that is going to continue to accelerate unless we see major policy shifts which are harder to affect because of that macro outlook. Yeah, what a great frame up to the conversation, Carol. There are so many areas I'd love to explore further with you. Let's bring up this like the notion of this like K-shaped recovery. Just something I kind of observe maybe more anecdotally. It's it seems like when it comes to the economy and we have this conversation about how is it really there's quite the debate and I noticed this a lot in the comments section. I'll also even bring up um maybe you saw this from Mike Green around I'm sure you saw it, right? The um >> the poverty the real poverty line is at put it at 100,000 to 140,000 depending where you live for a family. Um >> so maybe that's a two-part question. Let's just kind of start with what do you make of like this debate around the economy? Do you think there is that? Is that maybe I'm totally off here, but it does feel quite divided. It absolutely is divided. Um, and you're seeing it play out because when you see numbers and averages, you know, averages are often brought up by big spending uh, for example, you know, on the, uh, higher end uh, from very wealthy people. I wrote a piece um, for Fox several weeks ago that kind of fit into the second part of where we're going with this that talked about this wealth paradox that we have uh, in the US today. So if you know you were a time traveler from a hundred years ago and you showed up in 2025, you would wouldn't believe it, right? It would we are we're in an incredibly blessed time in so many ways. We have so much abundance. We have luxury goods that you know sort of everybody has access to. We have medical advancements. We have a supercomput that we carry around in our pocket that has all the information in the world that's ever been created and allows us to create new information. I mean, we do have all of this abundance. But wealth, you know, not only is it supposed to buy you, you know, access to goods and services and potentially luxuries, but what it's supposed to do is buy you freedom of flexibility and at its core, it's supposed to take away your stress. Right? that's the best reason to be wealthy is so that you don't have to worry about, you know, day-to-day spending and worry about money. And I feel like that's just not the case. If you look at the cost of housing, not just the headline cost, not just the interest expense, but things like property taxes, um insurance, all the carrying costs for a house. When you look at the cost of education um which is just you know completely for most of the majors not delivering any sort of ROI at all. Uh you look at things like health care the the things that wealth should be bringing you that comfort and and you know shield from stress that is not happening. So, yes, I can go out and I can access Door Dash and have food brought to me on demand and I can buy a pair of Michael Jordan sneakers and I can access these things, but at its core, the basic needs for our living and our development are making the average American very stressed. And you I mean, you you don't have to even believe it anecdotally. You can just look at the numbers and run them yourself. And while I don't think the poverty line, which I think has been dispelled, is at, you know, 140 or $100,000, it could certainly be very stressful when you're getting at that level. And so we really do have um this very strange paradox going on with wealth. And you know, if you want to go out and just have a dinner in a restaurant, the nominal cost of that and the cost as a percentage of somebody's wages is just getting out of control. And that not only affects personal balance sheets, but that's going to affect the lay of the land in terms of, you know, these these uh businesses who rely on middle and workingass people uh as their customer base. >> That's a good point, too. And I will say this, you are someone who has that pulse of what's going on in the small business community as well. That is the backbone of the American economy. And you're right, like if they pull back from going to restaurants, then that also that's mom and pop running the restaurant in a lot of those instances. Um, you make a really interesting point to just I will link your piece from Fox News that you published on December 2nd. So, you really kickstarted this conversation that as you point out a lot of this financial stress is self-inflicted like some of the choices we make, but then there's a lot of like the structural stuff I guess the structural economic problems. Where do you see the line like between the two? Yeah, this is the the part that is just um I think it's what's making the discourse so difficult because anytime I talk to boomers and boomers, not to throw you under the bus >> and they watch the show, but do it. It's okay, >> but and and I love you and I think you're amazing, but there is absolutely no compassion for younger people. And yes, some of this is self inflicted. You know, door dashing is a luxury behavior. If you have debt, you should not be door dashing. you not should not be spending $100 for Taco Bell when you can walk there and get it for seven. You know, it it doesn't it doesn't make a lot of sense. Um but that being said, when you look at the basics and how they have been bastardized, we continue to have this wealth transfer that's gone on between young people and administrators and workingclass people and administrators. The administration class has gotten completely out of control. So whether you're looking at the education that we're paying for K through 12, whether you're looking at higher education, whether you're looking at, you know, hospital costs, the cost that you had when you were younger, the structure has been completely blown up mostly by government interference. Um, and yes, you know, with a home, I agree, you know, back in the 1950s, the median home was around a thousand square feet, and now, you know, the median home is like 23 2400 square ft. But the problem is that we can't get builders to build at 1,000 square ft because for them, it doesn't make sense. If they have land, they want to build 24,00. It's easier and they can get more money. So unless we see the market shift and open it up and you know get rid of these these restrictions, yes, it's different when you were younger, but you still need to have compassion that things have changed. And so we do need better behaviors for younger people, which again, >> we're paying for the education, so why is that not happening? That should be, you know, front and center. And you know there is um you know sort of some level of delusion you know that comes along with the in Instagram lifestyle. But there are things that are very very real. And if you do not start to have compassion you end up putting in socialists and communists and dictators who are going to take all of your money and ruin the lives of these young people who don't know better. So get a little compassion or at least play along a little bit because otherwise that is going to come to roost for you because when you have the have and have nots in society historically that has not worked out so well for anybody. >> That's a that's an interesting point too. I I didn't think about it as like the administrative class but that makes so much sense especially like um the first example that came to mind for me was the universities the college campuses and the crazy tuition now. Um it's even I wasn't even in college that long ago but well 15 years and it's just even gone up from there. >> Well yeah I mean let's just talk about I mean the fact that you have schools that you know academically are not that stellar and are not creating that great of um outcomes for people where it's 60 or $70,000 a year and you have to go for four years. >> How do you plan to get a return on investment from that? And we know from looking at the numbers and I think that this is it's in one of my books. I think it's in You Willow Nothing. Um but if you look into that, it does not it's not going into the classrooms. It's not going into better teaching. It's not going to better outcomes. It's going into administrators and those are the people who are getting wealthy. So, it is this wholesale wealth transfer from young people who don't know any better, who have don't have the experience, who by the way shouldn't be allowed to sign for anything. I mean, it's really hard to get a loan even as a business owner or as anyone else. Now, we've got people who are just coming out of high school and you're going to give them five and six figures worth of loans. Like, it's obscene. And this is an outgrowth of the government getting involved nationalizing a large part of the student um lending in this country. And that has enabled just like it has in healthcare. Same thing that happened this huge administrative class where those are the people who are sucking up the wealth but not giving us any better outcomes. And that's the problem. You know, it's no problem if people are getting wealthy because they're creating innovation and driving better outcomes, but it's literally just going into this administrative class. 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Visit van.com/remxjiulia to learn more. You know, another um central part of your piece that you put out in Fox News is also around housing affordability, too. I think we spoke about this earlier, but it is it's a huge I don't know. I feel like such a huge challenge right now. Like I I don't own a house yet. I'm kind of waiting, Carol. I don't know if there's going to be a correction or anything on the horizon, but maybe what do you make of the housing market today? Are there changes or reforms that would make sense or better incentives or is it just going to be one of those things like suck it up, save and you know figure it out? Well, I mean there are many things that can be done and it the question is where like at what level do they have to be done? Certainly on the state and local level, getting rid of, you know, some of the zoning requirements and the red tape and creating incentives that make it easier um to build, especially, you know, housing that is more in line with that 1,000 square footprint or maybe a 1500 footprint instead of the 2500 and up square footprints. Um, you know, that could certainly help. Um, but something that, you know, I've talked about, which I think is starting to get some traction, things like making the mortgage loans portable. Um, you know, that's something that, you know, with the VA and and with some loans, there is portability of of your interest rate from one one place to another or an assumability of it. Um, so if you know if you have that assumability, it's great, but only about 25% or less of all loans have that assumability. Now, you're going to say, because I know you're smart and you're going to push back on me, but why would the banks want that? Why would they want that, you know, low rate to be assumable? Well, a, nothing's going on in the market. So, at least if you open it up, not only do you have more movement in the market, someone assumes that, but they're not assuming the full amount of the purchase price. So, there will still be an incremental amount that you can underwrite at current rates and get a blended rate and get your origination fees and have more business. So, that seems like a win-win kind of scenario. Um the other piece from my perspective is that the banks have done really well um at the expense of the taxpayers. So having a little push back there isn't necessarily a bad thing. I think that even though I'm a you know generally a free markets person, this is an area where we have not seen a lot of free market um activity. We've seen a lot of taxpayer bailouts. And so having uh somebody be able to assume a lower rate for a portion of the cost and maybe put in a little bit more that has a a higher rate associated. That can start to free up this lockdown that's happened because of the change the whipssaw change in interest rates in a very easy way that used to again happen all of the time. So, you know, I think there are small tweaks that can be made and I do think this is a temporary problem. I mean, I do think 10 or 15 years from now, given demographics and all of the older individuals who are going to change their needs and desires for housing or pass or whatnot, that is going to change the dynamics here. But that doesn't help people for the next 10 or 15 years. And that's a really long time. And if that whole group of people misses a window again, it's going to get really ugly for our country. We want the American dream to be available to everybody. >> Yeah, that's Yeah. Okay. I kind of want to go back to more of the macro again with you. Um we have a broken fiscal foundation here in the US. Are you hopeful that it'll be fixed or were you hopeful that it might be fixed? I'm thinking about like the Trump administration specifically. >> No. Okay. I am not. Um, I I've said, you know, many times that I thought that he inherited, you know, a a very challenging problem and I don't understand why anybody would want to be president, you know, with this underpinning. Um, and not that he's entirely blameless. You know, what happened during COVID certainly added to the situation that we are very meaningfully um where we are today very meaningfully. Um and then certainly Biden took the situation and just you know absolutely made it uh you know impossible to come back from almost. So I do think what's going to happen is that we are going to get some breathing room and I think you've seen the administration start to try different things which you know we can argue about whether they're working or not working. I think if you look at the tenure, you're going to say they're not working um quite yet, but they're going to continue to try different things to buy us the breathing room to um you know, maybe get our debt refinanced at a lower rate. Um you know, with the the release valve for that being inflation, you know, things like that. They could write up gold, you know, and and you know, buy down some debt. I think that there is breathing room to be had to put us on a path to fixing our our fiscal foundation because it can be fixed. But I don't believe that we have the political structure or will to do that. And you saw that, you know, with Doge and the effort to just try to combat things that are common sense like fraud and waste and the amount of push back from Congress that no, we don't want people to push to to you know look into the fraud and waste because that helps us out in some way, shape or form. And so if you know if we can't do those basic things, let alone get reforms to entitlements and the things that we need to do to really fix the the fiscal foundation, I just think we're going to end up buying ourselves some breathing room and then we're going to be back in the same place in a certain number of years. Which is why I think it's so important, you know, as you know, you're thinking about what's going to happen. When I think about the markets, you know, the markets have to go up on a nominal basis for us to not be in crisis. If you think about the amount of money that we get both from capital gains as well as from the wealth effect, right, the the fact that your 401k is up and so as a consumer, you're willing to go out and to spend more. And so, not only does that give us receipts, but it also supports the GDP. If that goes down and we get fewer receipts and our GDP is lower, that is going to completely blow out the deficits, it's going to completely continue to make deficits to GDP continue to rise and we are going to see everything just, you know, debt spiral, you know, completely implode. So, I think, you know, we we h the politically I don't see why they would let that happen. I think the most likely situation is that they inflate their way out of the bad position that they're in. And you know, we have the the repercussions of that, which is why, you know, again, we saw precious metals doing so well um over the last, you know, 12 months, and I think we'll continue to do so. >> So, we'll need some inflation to inflate ourselves out of the debt problem. I I I think it is the release valve for the the undertakings that they're going to have to do to keep you know this really teetering situation from completely toppling over so to speak. >> This is just more of a curiosity on the markets. What do you make of like the government taking stakes in publicly traded companies? you know, it's uh it depends which side you look at it from. Um, in general, you know, I don't think that the US government is a venture capital firm and should be um taking stakes and picking winners and losers, I think it's a bad thing. However, if we have a situation like we've had this year where there was a bailout or an incentive that was put in place and then we say, "Well, we're doing this anyway, so we might as well get something from it. I'd rather get a benefit than, you know, not get anything. So, I don't think it's a good p practice in theory, but if you're going to do it, you might as well get something on the other end. I do think that there are areas um that it from a defense standpoint, from a national security standpoint, it does make sense uh for the government to be investing in in some way, shape or form. you know, we can argue about, you know, does a direct stake make sense or is there sort of a more palatable way to do that? But then you're also, you know, there should be some sort of a committee that's making sure that this is on the up and up and that we're not picking winners and losers and that it's being done strategically for those best outcomes and not just to, you know, enrich certain cronies and the like. So, it's very easy for that to go sideways. Um, from a philosophical and moral standpoint, I don't like it. But from a practical standpoint, I can see practically why, you know, in some cases it it has made sense and will continue to make sense. >> Let's talk about monetary policy. We've had the Federal Reserve do three 25 basis point rate cuts. Um, do rate Maybe I want to get more of your big picture take on the Fed. Um, and do rate cuts really like help the everyday American, the folks that you really represent when you when you write your books? Well, so it dep depends when and how and what's going on. Um the challenge that we have now and you've seen it based on where the 10year was when those rate cuts started. I think it was like 38 or something and you know after the you know most recent rate cut I think it was at 42. So as as we've seen rates go down um obviously the Fed has completely lost control of the the long end of the curve and we've actually seen that have the opposite impact. So places like um you know mortgages and credit cards that have you know more relation to what's going on at the longer end of the curve um it's not benefiting and you know what's what's kind of tough is you're not seeing a benefit there and you're also if you're a saver you're losing at the short end because if you're in a a money market fund or something like that now all of a sudden you're getting paid less interest on your savings. So, I think, and I've been advocating and talking about this for years, is that based on where we stand today, the Fed's basic monetary tools are irrelevant. So many of our problems have not been, oh, we need to stimulate demand. They have been supply side problems. And I don't think that anything that we're doing is stimulating, you know, they don't print more housing. they don't, you know, print more labor. They don't they don't do the things that we need them to do in terms of policy, right? They move move stuff around. And I just don't think um you know, I think we're in this fiscal dominance period where the fiscal foundation, the fiscal policy is really setting the reality of what's happening in the markets um to some extent more than the Fed. Now, that being said, when we get to a scenario where they may be forced into doing something that looks like yield curve control, um particularly uh when President Trump puts somebody in as Fed chair and you know, maybe they have enough influence, you know, on the the group of people there to to do some things um you know, to keep markets functioning. Uh yeah, that will have an impact on people. But, you know, sitting around and going 25 basis points, you know, does that have much of an impact on my life? You know, most mostly my savings. Mostly my savings. >> Do you think it could also just create more inflation? Can the Fed really do anything about inflation? Can they? >> Well, I mean, yeah, they can certainly, you know, if they go cut too fast, they can cause a lot of inflation, right? >> Can they can they bring Can they actually bring inflation down? Like, I don't know. Well, I you know it it's a question. If you are somebody who believes that this is you know due to the money supply then it in then the question is you know how are they impacting the money supply with their policy? Um you know doing moving rates alone doesn't necessarily get that done. Um and then you know for people who are not just like straight up monitorists um you know there are certain things that the Fed does in terms of adding liquidity to the market that I think does um you know create things that you know look like more inflation more maybe more velocity of money going through the system. So yeah, they definitely have some sort of an impact, but I think that the most important thing is that the Fed does not have the tools today that it would if our fiscal foundation was where it was, you know, 20 years ago. And that's why um and also by the way, you know, 15 years of ZERP and near ZERP completely like just disrupted the whole market, right? It changed what risk meant. It changed the dynamics. So coming out of that, you know, in terms of demand for debt, whether it is, you know, from a a consumer standpoint or a business standpoint, and you know, how interest rate policy is going to influence that looks very different after 15 years of being able to access debt for basically no cost. So we have to look at the Fed in 2025 and 2026 very differently than it has been throughout our history be based on the just absolutely insane policies that we've seen over the last you know 15 16 17 years >> because of that fiscal fragility that that we're sitting on >> right which has been driven in part by the Fed allowing that to happen right if you didn't have the Fed willing to stand by and and eat up uh you know trillions upon trillions upon trillions of dollars during co uh you know that that policy doesn't get passed but they knew that that that was enabled. So the the bad be behavior of our fiscal policy has been enabled by the Fed but now it's at the point where it basically whatever is done on a fiscal standpoint is going to overtake the Fed. So it's been very very linked over time but in terms of what is is more important right now I think that the fiscal foundation and fiscal policy is much more relevant to what happens absent as I said you know some of these big big changes that we may see um and things that you know look like uh keeping keeping yields down so that we have an opportunity to refinance our debt which will if if that works probably drive up inflation. probably give us some breathing room and then, you know, Congress is just going to respend again and we're going to be having the same discussion again in 5 or 10 years. >> Yeah. You talk about gold. Um, you've mentioned precious metals. This is a topic that comes up on this channel quite a bit. Um, I haven't talked to you in a while about your views on gold or like how much you think you should have allocated, but I maybe I'll do a question here of what do you make of the performance we've seen in gold of late? um how are you thinking about it from an investment perspective and like how much you want to be allocated to just more of like your big picture views on the precious metal. >> Yeah. So, you know, if you think about what gold is, it is a hedge. Um you know, it is an insurance policy. It's a way to to have some sort of sound money from all of the these earnings and investments that you've created that we have seen erode um in terms of their purchasing power. And if you believe the conversation that we've just had here in terms of what's likely to continue to happen um given the fiscal situation and the options that are available and that inflation is that likely release valve, I think that is a huge piece of it. Um this year they came up with a cute name for the debasement trade. Um but it's the same principle that many of us have been talking about for several years. Uh and some people even longer than that for sure. And then there's the shifting of the global financial order. Um, which is also a real thing where we've seen over the past 10 or 11 years that central banks have not on net been buying our treasuries. They have been actually net sellers of our treasury over that period of time. And what they've done in their holdings instead of going and finding another currency, they are going back to gold. and gold has really become um this center that's being built up of the changes that are going on um geopolitically and you're seeing China obviously very active um you know they're offering uh you know net settlement in gold you know as a as a way to say if hey if you're trading with us and you don't want our currency you can have gold instead so I think both of those drivers um there's nothing that I that is going to change the trajectory back from that right back towards the the US dollar and a strong fiscal foundation. I think that those thesis are going to continue to accelerate. So, um, we, my my husband and I, in our own personal portfolio, we have, um, you know, continued to up our holdings and our exposure and how we're exposed to precious metals, both gold and silver and otherwise. Um, in turn in including holding it physically, um, holding ETFs, holding miners, uh, holding companies that, you know, do royalty streams and the like. so that we have sort of a broad range of exposure within that sort of hedge or alternative holding. Um but for us you know it has continued to be a larger percentage of our portfolio and um you know we kind of look at it as a as a barbell is that you have the sort of the cash and the the metals piece and then you have um you know the market piece because as I said I think on a nominal basis the market's going to have to continue to accelerate in order to continue to boost GDP in order to continue to boost receipt seats so that we don't have a deficit explosion. Um, but again, you know, that is the the nominal basis on a real basis. You I don't know how that ends up looking. So, you want to make sure that you have something anchored on the other side that's taking account for that. And uh, you know, knock on wood so far that's that's served us well. >> Do you think gold's been just sniffing out like this kind of story we've been talking about these underpinnings? Well, I think the people who understand gold um and certainly, you know, the central banks around the world and the people who are involved at a very high level have understood this for a while. There's a challenge. The gold market gets suppressed by the paper market, right? It's not, you know, how much is there actual physical demand for gold. There's a lot of this paper trading that I think has been a huge overhang on the price of gold. >> Do you mean like the ETFs? >> Yeah. Mhm. Okay. >> Absolutely. And so I think that over time um you know as the this debasement trade has you know come to to the forefront you know there are fewer people who are betting against gold. They're seeing the reasons why this is happening and so some of that's starting to open up. I do think there is not necessarily a probability but a possibility that we will see um you know before the Trump administration leaves office that we will see a revaluation of gold you know they hold gold on their balance sheet at something like $42 an ounce. So whether they mark that to actual market you know as it stands today or whether there's some sort of global you know agreement amongst countries that raises it even higher as a way to kind of reset the playing field um you know I think that is a poss a good a good enough possibility not necessarily a probability good enough possibility and I think if that happens that may be a catalyst um for gold to to really like you know overnight kind of make a make a move but I do think just in terms of a steady state, what I've been, you know, advising people is dollar cost averaging. You know, it's it's very hard to time the market on any of these things, particularly with these metals. And so just having a program on, you know, whether it's a a weekly, a semi-weekly, a monthly basis, you know, however you do it, bi-weekly, um, you know, you go in, you continue to build up your holdings, you get an average cost over a period of time. And, you know, if that's foundational to your thesis, that's going to make a lot of sense for you. And um if you talk you particular if you have a financial advisor, there's some really good platforms out there where you're not getting um you know some of the crazy spreads that you see uh and markups that you see at retail. So I think there are different ways again that you can play it. But I I would definitely um consider it and look at it in your goals of and objectives if it's not something that you have done and if it is and this thesis if you believe in this thesis um you know this this is going to make a lot of sense to you. Hey there I just want to take a quick moment to thank you for watching this video and I would really love for you to subscribe to this channel if you like this content. Over 70% of our viewers are not yet subscribed and we are on a mission to hit 100,000 subscribers. So, if you could just take a quick moment, hit subscribe. Thank you so much for your support. We appreciate you. And back to the video. Carol, you wrote You Will Own Nothing back in 2023. We had you on the podcast talking about it. At the time, we were talking about this kind of World War F. World War F, as you put it, like a financial war where you're effed since you've written I love it. But since you've written this book, what has changed? What has changed? What has gotten worse and more worrisome for you? And what has changed and has gotten better for you? >> Yeah, I mean, unfortunately, ab it has been proven to be a very preient book. Um, you know, that's I have a a good track record of being a bit ahead of the curve on things and uh so I wrote in 2022, it came out in 2023 and now we're sitting in 2025 and go, "Oh yeah, that looks that looks pretty smart." Um, but you know, you can see these patterns occurring and it's just a matter of time. It's very hard to predict exact timing, but you know, it it's very obvious to see how these patterns emerge, particularly since human nature is undefeated and people act the way that they're going to act. they at least have that that underpinning. Um so the things that I spoke about um things like uh you know the the global financial order shifting the damage that the Fed has caused to non-asset holders the costs of education and healthcare tech um renting your life back to you as a subscription or a service. All of those things have happened and continue on a worse trajectory. If I had to pick one area that has gotten better since I wrote the book, um, that would be the greenwashing and all of the the the scammer. >> You don't really hear ESG anymore. >> No, you don't because everybody has it's been uncovered as a scam. The people who were behind it have stepped away from it. Um, not to say, by the way, that it's not going to come back under another name. I think it probably will, but for the time being, it has been, you know, the the the wizard has been unveiled. behind the curtain and everyone goes, you know, there's no there there. And so you've seen an absolute complete retreat. Um you saw, you know, recently Ford make this right down um related to its F-150 EVs. You've seen, you know, uh Bill Gates go away from, you know, some of the heavy investing he's doing around climate to other areas. You've seen even Larry Frink walk back from the name ESG at least. Um, so I think that's the one area where, you know, we we we we're part of the course of a very large number of people who are saying, you know, this is a scam and a money grab. And I do think it's been uncovered and there has been a push um, you know, to to really look at energy in a different way to understand how important that is. Certainly, a lot of that's being driven by AI. Um and so I think the timing there is not um coincidental. I think that having wealthy, smart, politically connected people who understand the needs for energy at least from their own perspective if it's not from a altruistic perspective um was a benefit in this particular moment. And so you know that that's the one place that I do think has um you know has gotten better. But the tenants there, the tenant of oh we need to come up with something and say that it's a huge crisis and that you know man's fate hate hangs in the balance and we need to serve you and make that into a money grab that will never change. So even if the implementation of it has gotten better, you know that playbook is going to be rerun with something else next time and uh whether it's energy related or related to something else uh that will not go away. Mhm. If you could add a new chapter to it, um, what would that be? Or are you writing anything? I feel like you're right. You are always ahead of the curve. So, so what I'm writing right, I wrote a historical fiction book that I'm trying to get published right now. I needed to take a break. Like I wanted like I wrote Warren Small Business and You Will Own Nothing back toback. And it was honestly so depressing. And I'm a very happy person and a generally optimistic like person on a day-to-day basis. And I'm like, I got to do something fun. So, you know, I I wrote this kind of fun and frothy historical fiction book that hopefully will find a home pretty soon. >> Oh, what's the time period? Can you give us a hint? >> Yeah, it's actually it's a it's about Jackie Kennedy and her sister um and like kind of the sisterly dynamic there. If you think about like in the crown, Princess Margaret and Queen Elizabeth's dynamic, you know, Jackie Kennedy and her sister Lee Radzel, they were like the original influencers and they were kind of groomed kind of like Chris Jenner grooms the the Kardashians like to be, you know, these these these women of influence throughout the globe. And uh there's it's a really cool dynamic. So, I hope it it ends up finding a publisher, but it was a lot of fun to to research and to write and whatnot. So, I just I went totally rogue. Um, but it's been hard. You know, I talk to my publisher all the time and there are so many things that are changing right now, you know, with AI, with the global financial order, um, you know, with the kind of the halves and have nots with kind of this, you know, reemergence in certain places of socialism that when you write something, you know, it you do have to really project it out um, a year or two for it to be relevant by the time that it comes to market. and you go and talk to to you on your podcast and and whatnot, it still has to make sense. >> Oh, because things move so fast. >> Yeah. So, I think that we're in this really this crazy period of disruption where things, you know, from a macro standpoint, they're still going on the same you will nothing trajectory, but some of the the minations could turn out in a few different ways. So, it's actually pretty difficult. Um, and my publisher says that I'm not the only author that has, you know, kind of struggled with, you know, how does what does that look like? So, um, you know, I I unless I have conviction about something, I'm not writing just uh for the sake of writing because it's a pretty low ROI endeavor. >> Interesting too. What do you what do you think of using AI as a writer? Do you like it or you like just using your own voice and having your own taste? So, you know, there are a lot of people who ghost write and I write like everything myself. Um, I think that, you know, AI from a a creative standpoint is is horrible. Um, the whole point that you if you're going to read somebody, you want to read their perspective. You want to hear it in their voice. Um, you know, having read my books, like it's exactly how I talk. >> It's how you talk. Exactly. >> I mean, it's like you you can actually hear me um saying it. And so, you know, that's kind of the whole point of writing a book is to to get, you know, my take or some other author's take on it. Um, so I don't think, you know, AI is is good from I think a research and a factchecking. You know, I will sometimes, you know, go to to it. I I use Grock uh because I'm on Twitter all the time and for me workflow, if I'm somewhere, I'm just going to use whatever's there. I've tried to use all the others and it's just I'm I'm in in Grock so, you know, I might as well use it. And so I'll use I'll I'll double check my accuracy. It's a good way to say, "Hey, can you find me, you know, additional sources to back that up or are there things that I may have missed?" Um, or like I'm struggling like I'm trying to get across this concept. Is there a way you can say it? But if it puts something back to me, I'm never going to take the way that it put it back to me. I'm gonna go, okay, now that I see where I missed it, now I'm gonna reexplain it in my own language. Um, and I think that's what people are gonna want, right? And they want the authenticity. They want the human. They don't want the AI slop, right? They want to know what your take is. That's the whole point. >> And yeah, I like having like someone's voice. Um, okay. as we head or as we wrap here and we head into 2026. Um these are our last few episodes of the year. I think you're the second to last. Um >> the penalties. >> Any predictions for 2026? Anything that's like top of mind for you, >> Laura? I think it's going to be wild. I think um you know and again year-wise is always difficult but one of the things that I've been talking about um you know I I started talking about a couple years ago and I sort of resurrected is the fact that um our allies in Europe are these paper tigers right there are these these these former football players that were you know really big and popular that are still trading off their glory years and going and doing a promotion at the local car dealership or something. Um, but really at the end of the day like their glory years are way behind them. And if you think about Europe, like what do they what do they offer? Like they're not innovative. They are not leaders in energy. They've given up a lot of, you know, their knowhow. They're bringing in, you know, it it mass immigration that doesn't share their values. So I think the people and the countries that we have been allied with in the past are going to become very irrelevant and I think you're going to see a shifting as the as the global order shifts and the US no longer is the sole hegeimon in the in the world and we get these different factions. I think there's going to be a really big surprise that we really decouple from Europe and start to to focus in different areas. And while I don't know that that wholesale happens in 2026, I think you can look for breadcrumbs of that and more places where there are issues and tension um and you know sort of like not the same um you know closeness that we normally had with the these historical allies. So, I think that's going to happen. Um, I predict that when we get this new Fed chair, and obviously the odds keep shifting on whether it's going to be Hasset or Worsh or Waller, um, I think that that's going to create a lot of chaos and uh, and so I think, you know, that the Fed is going to turn into, you know, some sort of afternoon soap opera. And um I do think that whether it comes from the Fed or from Treasury, we're going to see some very outofthebox policies. Um we thought that, you know, the 2025 was weird with Liberation Day and whatnot. And I think that we're going to see um you know, some strange things come about where things could shift, you know, in a in an overnight scenario. So, um buckle up, folks. Hedge yourself. And uh this should be, you know, you'd like to think that this is going to be a calm year, but it's also a midterm year. So, >> I was going to ask about the midterms and if that's going to be part of it, too. >> Yeah, it is. It's just it's going to I wish I could just say, oh, like you could just kind of like finally we get some breathing room. I don't think so. I don't think so. So like stock up whatever the vice is if it's you know your alcohol or meditation or like your sauna like whatever it is have that like you know area that you can go to for calm next year because I think it's going to be wild. >> Oh goodness. Um Carol before I let you go um some parting thoughts for this audience. Let folks know where they can find you and support your work. I know you have a newsletter coming out an end of the year um newsletter on the economy. I signed up, but anything that you'd like to leave this audience to think about or plug, the floor is all yours. >> Yeah, so my my newsletter is the best value going because it's free right now. So, you can sign up at carolroth.com/news uh with about 20,000 people who are reading it currently. So, it's fantastic and it's fun because people will send me emails and I can actually kind of interact. Um, you know, ex Twitter, whatever you want to call it. Um, still tends to be my home. I go back and forth with it because my account's been throttled like crazy, but then every once in a while something like unthrottles and then it goes back. But Carol JS Roth there and uh yeah, those are kind of like the best places to find me these days. And uh yeah, I'm going to go back and you know, focus on my historical fiction for a moment until I get hit over the head with the next big thesis. >> I love it. Well, Carol, I am so grateful for you. It's been so wonderful having you back on the show. Carol Roth, two-time New York Times bestselling author, recovering investment banker, a certain c certainly a friend of this show. Really, really appreciate you. Thank you for being so generous with your time, all of your knowledge, helping us all learn and get better and I hope you have a wonderful and happy holiday season with your family. >> Thank you too, Julia. You're the best. Merry Christmas. Happy New Year to everyone. Happy Hanukkah if you're still celebrating and uh we'll look forward to having wild times with you in 2026. >> Exactly.