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Economist Peter St. Onge reveals how Trump’s second term could reshape the Fed, skyrocket (or sink) gold, and shake up your investments in 2025.

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Ben Nadelstein:

Welcome back to the Gold Exchange Podcast. My name is Ben Nadelstein. I am joined by Peter St. Onge. Peter is a fellow at the Mises Institute, a former MBA professor, and in my opinion, one of the best people in the world to talk to regarding the fiscal and monetary issues that are facing us today. Peter, welcome to the show.  

Peter St Onge:

Thanks for having me on, Ben.

Ben Nadelstein:

Peter, it has been a wild 2024. 2025 is shaping up to be potentially even more crazy. Let’s start with what is on everyone’s mind. We have a new president being sworn in very soon. What are your thoughts on the new administration, some of the policies potentially coming forward in 2025? Let’s talk about what you see as a bright spot and some things that potentially investors should be worried about.

Peter St Onge:

Yeah, I think it’s a fascinating time for investors, specifically for gold investors, because we’re on the knife’s edge in a number of ways. So for one, on recession, in many ways, Joe Biden was kind of sleepwalking us into a recession. If you look at the betting odds, for example, on a recession coming in 2025, implicitly, they were going about 80% odds if Kamala had won.

Kamala, of course, the expectation was that she would continue Joe Biden’s policies. So reading between the lines, we were queued up for a recession with Biden. And then if you look at those odds, they immediately flipped literally on the election. And they’re now down to about 18, 1.8% odds for a recession in the coming year. So what betting markets are saying, for starters, is that Trump stands a very good chance of pulling us out of this recession.

Now, this actually, interestingly, it looks a lot like a repeat of 2016. OK, so we forget now, but in 2016, during the election, the economy was an issue because we had had this recovery from the 2008 crisis and it was very, very slow. It was an anemic recovery. I think it was the worst recovery since postwar.

And, you know, that was Obama’s policies. He was terrible on regulation, on taxes. The ACA, Obamacare, was causing a lot of trouble for smaller businesses. The jobs picture was not good. And so Trump 1.0 comes in, and he just turned it on a dime. It was fairly shocking. We had the best economy since Ronald Reagan. And he did that by cutting taxes massively. He cut corporate taxes, which is one hell of a political lift. Normally you can’t cut corporate taxes because the median voter hates corporations. So the fact that he even tried to do that to me was just absolutely stunning, but he did it, right? He massively cut corporate taxes. That was a huge boost to markets. It was a boost to the economy.

And what’s heartening, I think what’s encouraging markets right now in terms of recession is that Trump 2.0 is, if anything, more extreme than 1.0. Right. 1.0, he kind of came in with this almost a naive Mr. Smith goes to Washington like, you know, I’ve got some solid ideas about how to run this country and by gum, we’re going to try them out. And God bless him. But he ran into a wood chipper.

I think he underestimated just how bad Washington is, just how it chews you up and spits you out. Hollywood’s got nothing on D.C. And this time around, having gone through all the stuff he did in the past four years, not least the lawfare, now I think he’s ready. Now I think he’s doubled down. So I think that what markets are expecting is another big tax bill.

Possibly, you know, some of the things he talked about during the campaign were no tax on tips, no tax on overtime, no tax on Social Security. He floated when he was on with Joe Rogan. He talked about getting rid of the entire stinking income tax and just replacing it with tariffs like we did 100 years ago, which I love. But at any rate, so he’s definitely interested in cutting taxes on regulations. If anything, I think he’s going to do a heck of a lot more. And a big reason for that is Doge.

Right. So Elon Musk, Vivek, they are very, very focused on regulations to the extent that Elon has talked about what they’re sort of preparing on Doge. It looks like a huge focus on regulation. We can talk more about that, but essentially enacting a series of recent Supreme Court decisions that said that the vast majority of federal regulations are, in fact, unconstitutional.

So we’ve got a couple of just huge, huge factors here that if those happen the way I think they will, we could pull out a recession. And then the other question at that point is the inflation, right? So inflation expectations have already been going up.

Really, inflation started turning somewhere around six months ago, where it had gone up a bunch during COVID, came back down because they stopped printing so much money. In fact, monetary growth was negative. And then it had been creeping up again over the last six months. So that’s really one to watch. Some of the things that Trump plans on doing are going to be deflationary. Like growth, for example, in the long run tends to be deflationary because you have more stuff for money to chase. But in the short run, a lot of those things can be inflationary because prices are sticky. You can get price movements in the near term. So things like tariffs, economic growth itself, that encourages bank lending. Banks effectively print the money. So in terms of inflation, it’s as if you’ve expanded the money supply. So there’s a lot of things in there that inflation could actually run away.

If it does, then the Fed presumably is going to jump in, crank rates back up to choke off the private economy. And then we’ve got this tug of war between Trump, who wants growth at any cost. He’s probably willing to sacrifice inflation for it, is my guess. And the Fed, which, if anything, is happy to sabotage Trump. And they certainly they’re graded on inflation as opposed to growth. Maybe that’s not how it should be, but that is how it is. So the Fed is going to be much more responsive to any kind of move in inflation, even at the cost of higher unemployment and slower growth.

Ben Nadelstein:

So let’s talk about the Fed momentarily. Some have said having central bank independence is a must-have if you’re going to have a central bank. There should be no meddling by the executive branch into things like monetary policy. Fiscal policy, have at it, but monetary policy for some reason is sacred. You’re one of the few commentators other than maybe CEO Keith Weiner who says this independence has largely been a myth from the start. Where do you rank this central bank independence? Do you think it’s important? Do you think people are overstating it? And where do you see Trump on that independent scale?  

Peter St Onge:

Yeah, so I think it is a myth. If you look at the central bank, it responds fundamentally to Congress, but like everything that D.C. touches, it tends to respond to the permanent bureaucratic state. So it serves the sort of center-left coalition that runs America, meaning that it tends to disobey Republicans. It never, ever disobeys Democrats.

So, you know, central bank independence, I think, really translates into a central bank that obeys the deep state as opposed to obeying the retail politicians who are actually answering to voters. So I would agree with Keith on that count. Trump, like most presidents, you know.

The presidents sort of represent the people side of that equation as opposed to the deep state side, at least most of them. And like most presidents, Trump is putting pressure on the Federal Reserve to allow more growth, right? He wants lower rates. That would generally increase inflation.

Personally, I would just as soon get rid of central bank independence altogether. You know, it’s unconstitutional in the first place to have a Federal Reserve. There is no constitutional role for the government to run around, you know, manipulating the economy, sort of dialing up the growth, dialing down the money. There is nothing in the Constitution that delegates that power.

Aside from the fact that the Fed is like a private organization, which is really bizarre. But so there is no role for it. If the Fed is answering to the deep state, it means that it’s not answering to the people. At that point, like who’s exactly running the government, right? In theory, we’re supposed to have a democracy and it’s supposed to be serving the people, right?

If you have the single most important organization in the entire country, the Federal Reserve, and that is answering to an unelected branch of bureaucrats, it starts to look a little bit like an occupying army. So on both sort of moral grounds, on constitutional grounds, and in terms of economic management, the buck needs to stop here, and that stops with politicians. And ultimately, people pay a heck of a lot more attention to the president than they do to Congress.

And so, you know, if Congress is completely running the Fed, if it obeys Congress, then I think you can get away with a lot of shenanigans. On the other hand, if it is directly controlled by the president, if the president actually has to answer to the people for these screw ups that the Fed makes for the inflation, for the unemployment, then I think that that is a much better outcome on all counts.  

But yeah, so I would definitely vote for more Fed dependents, but specifically on the executive branch, which is the one that’s most answerable to voters.  

Ben Nadelstein:

So let’s talk about something that is now potentially on the table, which is ending the Fed entirely. So lots of people in Trump’s cabinet have talked about this. Do we need a Fed? Do we need a central bank? First of all, where do you put the odds of this actually happening? And for those who say this is a monumental task, more difficult than almost anything Trump has done in his first term, how do you answer those critics?

Peter St Onge:

Yeah, I think the odds are extraordinarily low. Historically, an organization that’s so embedded and so powerful as the Federal Reserve, you can generally only get rid of it if there’s some massive crisis. The 1970s was bad enough that people started talking about getting rid of the Fed.

As you know, that was kind of the birth of the gold bug movement. A lot of people got interested in gold and, you know, which is sort of another side of getting interested in how bad the Fed is. But to actually get rid of it, traditionally, you need a monumental screw up, which hopefully is not on the horizon here. But if by some miracle we could proactively end it before it blows up, then I don’t think it’s nearly as difficult as people think. We actually—Andrew Jackson, in the 1830s—ended the second central bank of the United States. And it was not disruptive in the least. Probably the biggest change for most people would be that if you don’t have a Fed, then what is governing money printing? And that would presumably be a gold standard because that’s worked well in the past. But even there, it’s not nearly as disruptive as it looks. So, you know, you can essentially take the federal stockpile, and you could price that at the current market price of gold, call it $2,600, and then sell it on the open market, or offer to sell it on the open market. And the enforcement mechanism is that you have a law that says if gold is draining out of Treasury, then Treasury has to go out on the open market and rebuy the gold before they pay one dime of interest on the national debt. By doing that, you line up all of the incentives so that ultimately the Treasury has to do everything—or the federal government has to do everything—it can to prevent inflation. Because if there’s inflation, the price of gold goes up, gold drains out, they’re not making any money on it because they have to go back and buy it again. So that would be my ideal scenario.

Murray Rothbard talks a little bit about a scenario very similar to that. But you could actually shift over to gold very, very easily. In terms of the Fed itself, it’s actually a good deal easier than that. The main actions that the Fed engages in are manipulating interest rates and bailing out banks. And then you’ve got some supervisory functions of banks. The supervisory functions can absolutely go to Treasury. There’s no reason on earth that those need to be in the Fed. They’re not particularly good at it.

In fact, there was a Fed official sitting on the board of Silicon Valley Bank. So they’re demonstrably terrible at bank oversight. So sure, that one’s out. That one’s useful, but that one’s trivially easy to give to somebody else like Treasury. The other two really shouldn’t be happening, right? So you do not—there is no need for an organization to manipulate interest rates. The market can find those interest rates on their own. And in terms of bank bailouts, that’s offensive to everybody. It holds, I don’t know, 5% of Americans who want bank bailouts.

Why on earth are countries engaging in bank bailouts when no voters want it? Again, that’s supposed to be government by the people. So I think very clearly we should get rid of that. And, you know, if you go back to the history of central banks, that was really one of the main functions of them. So the classic book in central banking is Walter Bagehot’s Lombard Street. And he is just obsessed up and down with, you know, what are the conditions for a bank bailout? It’s got to be punitive. It’s got to be this and that. In theory, that might have worked. But of course, bankers are very, very good at political donation. So it’s never punitive. But the bottom line is that bailouts, bank bailouts, is one of the main reasons for having a central bank. It’s why the Federal Reserve started. You know, the mega bankers got together on a secret railroad car on Jekyll Island because they got sick of bailing each other out. So I would say just across the board, any small supervisory role, give that to somebody else. The rest of it, good riddance.

Ben Nadelstein:

Very interesting. And I always wondered about that. So Walter Bagehot is famous for the “Bagehot rule,” which says that if you are going to lend to these institutions who are in trouble in, let’s say, a bank run, you have to lend at high interest rates and very punitively, which is quite funny because it’s supposed to be on good collateral as well. And obviously, we have strayed quite far from this Bagehot rule. So, OK, I want to ask you a question in terms of the Fed.

There’s now talks about a strategic Bitcoin reserve. This has been floated by Senator Cynthia Loomis, as well as President Donald Trump, and even RFK Jr. So first of all, how serious do you think these strategic Bitcoin reserve proposals are? Do you think this was just to get on the campaign trail and get some votes? Or do you think this is actually a serious policy that the administration is thinking about implementing?

Peter St Onge:

I think there’s a very good chance of it happening to a certain degree. And the reason is because whether you like or hate Trump, Trump is very, very loyal to his people. He respects his campaign promises to a freakish degree for a national-level politician.

He thinks that Bitcoiners are his people, and he’s going to do what he can to help them. I think the main things he’s going to do for them are regulatory, a lot of clarification, things like self-custody. But that was a clear promise of his. It’s fairly easy to swing off a couple of billion dollars and start up a Bitcoin treasury. It’s not a huge cost for Treasury. So I think that it’s going to happen in some form. I don’t think it’s going to approach anywhere close to, say, the gold reserves.

But, you know, conceptually, I think he’s going to pay his people back. In terms of what that sort of does for the country, I personally encourage any sorts of reserves whatsoever, because any dollar that the feds get their grubby little hands on, they’re either going to piss it away on some spending, they’re going to give us some donors, some activists, or they’re going to buy something that has some kind of potential future value. So I’m perfectly fine with them buying gold, buying Bitcoin, buying anything that has some sort of likely value in the future.

Ben Nadelstein:

Let’s now transition to gold. Obviously, listeners of the Gold Exchange podcast are interested in the shiny metal. So let’s talk about gold for a little bit. Where do you think gold prices are going to be headed in 2025? I know price predictions maybe aren’t necessarily have to be accurate, but let’s talk at least about the direction. Do you think that because of a stronger economic growth, which most investors are pricing in under a Trump administration, do you think that’ll hurt gold, especially if interest rates fall, where usually gold doesn’t pay interest other than at Monetary Metals. Where do you think people who are gold owners should be allocating or thinking about allocating their gold holdings?

Peter St Onge:

Yeah, I think that there’s kind of three moving parts right now in gold. One of them is the recession, the other one is inflation, then the other one is international affairs. And I think that gold’s had a really nice run here because Biden was so bad at plunging the world into World War III. I think that a lot of that premium is going to come off over time. The media is going to hype Trump as this chaos agent, you know, they’re going to pump out that line continually.

But if we look at what’s happening in international relations in Israel, in Russia, a lot of places in the world, there was sort of a potential conflict brewing up in East Asia. I think that all that is going to be relatively negative for gold prices. I think that the world’s going to calm down a little bit. But then that is potentially overwhelmed by what’s going to be happening in inflation, right? And so, yeah, I think it’s really hard to say at this point. There’s definitely a tug of war there between recession and boom, and then that’s going to feed into this tug of war on inflation. I think that my personal sort of base case is that Trump is going to manage to get the economy growing pretty quickly. If that’s the case, then I think that inflation is going to take off. You’re going to see money creation by banks.

They’re going to be lending for businesses, for consumers, and that could drive up inflation expectations. I think we go back to three, three and a half percent, maybe even higher. That I think is going to overwhelm that geopolitical risk decline for gold. So I would expect gold to go up for here.  

Ben Nadelstein:

And quickly, what about silver? So obviously silver moves a bit differently than gold prices do. Gold usually has that premium in terms of risk. Silver sometimes has that industrial angle as well. Where do you see silver as compared to gold?

Peter St Onge:

Silver has been fascinating to me. Logically, silver should be an industrial metal, right? It should behave like copper. And, you know, if you look at the flow ratios, the stock-to-flow, and what’s sort of been fascinating to me anyway is that silver has so closely tracked gold. So, you know, I think

I had historically been very skeptical of silver. In other words, if you’re doing an inflation play, do gold. If you’re doing an industrial play, do copper. They’re both sort of more pure. Silver is this mix. But honestly, looking at the price movement, I think it’s fine to diversify between the two. But sort of my mental model for silver is that it’s essentially gold. It’s sort of a turbocharged gold. Maybe it moves a little bit more.

Bitcoin would be 100x turbo gold. Silver might be a two or three turbo gold. But I mean, I would expect silver to continue more or less tracking what gold’s done. The biggest theoretical industrial risk to silver, I think, would be a China slowdown. That’s already happened at this point. If anything, it’s priced in. There’s a possibility that China kind of finds its footing. The sort of deep state in China is a good deal more competent than the one that we have in the United States.

Top-level politicians are pretty useless, guys like President Xi, and then the people who sort of run the guts of the state are a lot better at it. So I think that there’s an upside potential there if China does find its footing.

Ben Nadelstein:

And what about a surprise asset class going into 2025? Obviously, all the Bitcoin people say Bitcoin’s the best performing asset pretty much ever. But what about something that might be a surprise? Obviously, commercial real estate could be hitting lows. But in Peter St. Onge land, where’s an asset you think that might be a little bit underpriced at the moment?

Peter St Onge:

I think the companies that I’m most interested in at the moment are high-growth companies. I think that if you are looking for ballast, then more or less, like if you’re doing inequities, just park your money in SPY, Standard & Poor ETFs, and just leave it there forever.

So, you know, in terms of like sort of focusing on and thinking about what’s coming next, I’m really interested in some of the tech plays. AI, right? So companies like Nvidia, the companies that are kind of making the—what do they call it? The pickaxes for the gold miners. They may be overpriced, but anyway, there’s a lot of interesting movement there. The other one that I think people aren’t talking about a lot yet is robotics, right?

So AI—I think all of us have been shocked how quickly AI moved our entire life. Everybody talked about how AI was going to be a big deal. It was never a big deal. It was kind of a lot. I mean, it was like a, you know, like a punch line, like, yes, AI will be something someday. It never amounted to anything. And then over the past, what, 12, 18 months, I think it’s just shocked pretty much all of us.

AI is moving so quickly and a lot of people are focused on the AI applications. But the thing is, we are very, very close to robots that have human capabilities or better and marrying that AI to the robot, right? In a sense, that’s what Tesla already does, right? They marry AI to a sort of robot on wheels. And so I think that that’s really going to be a surprise area.

That probably the market leader there is Tesla. So there’s probably a lot of Tesla longs who are listening right now, given the demographics. So I think that you’ll probably have a good year on Tesla. Having said both AI, robotics, Tesla itself, I think all those spaces, given the tug of wars going on in the economy, I think that there’s going to be a lot of drama in there. I think that a lot of those are going to move closer to Bitcoin—sort of huge jumps, huge crashes—than they have historically.

Ben Nadelstein:

And let’s talk about head of Tesla, Elon Musk. Obviously, big push for him in this year, 2024 and in 2025. What do you think of this Department of Government Efficiency? I know we talked about it in the beginning. How realistic do you think these plans are for Doge? Do you think that, hey, this is actually going to get something done? Or do you think it’s more of a marketing push to get some big people on the team?

Peter St Onge:

I’m actually optimistic, and there’s a couple reasons why. So there have been many attempts in Washington to cut spending, and many of them to great fanfare, and this is going to be the commission to end all commissions. We’re following it and cut spending. And they’ve all failed, and I think the reason they’ve failed is because they were generally populated by people who live in Washington, are Washington creatures. They care about the cocktail parties they get invited to, right? They essentially serve the deep state. And so they all get sort of contaminated by the Washington Borg. And in this case, Elon, I think demonstrably does not care about Washington. He gets invited to all the cocktail parties, no matter what he says. So he’s good to go on that count.

And I think he’s very passionate about this. So with him leading it, I’m very confident that they’re going to pull people in there who are not beholden to Washington. They’re actually focused on the mission. And then the other thing that I think really gives us hope this time is that the Supreme Court has turned it on something called the Chevron Doctrine—or I’m sorry, Chevron Deference Doctrine—which is the idea that when the regulatory state makes some random decision, basically pulls some law out of their rear end, that judges are supposed to go along with that and pretend that it’s real. And the Supreme Court has basically put on notice that that’s no longer the case. So that’s the case I referred to earlier, Loper Bright being the biggest one and West Virginia being another, West Virginia versus EPA.

And if those are sort of translated into reality using the resources of Doge, I think that there we stand the chance to absolutely slash a number of regulations. If you slash a number of regulations, you get the economy growing massively. Anybody who owns a business, anybody who works in a business in a senior role is going to understand how massively constraining regulations are. So I think you get a ton of growth out of there. What you also get out of there is that if you’re eliminating essentially entire functions,

Right. You take something like the SEC. Almost nothing the SEC does has actually been sanctioned by Congress, has not actually been in a law passed by Congress. SEC just, you know, Gary Gensler takes a shower—it’s a disturbing image—and he comes up with stuff and then it just happens. So if you were to get rid of 90 percent of these organizations, not only the economy that’s growing, you have 90 percent leftover headcount.

So I think that Doge does stand a chance. Honestly, I think the most exciting part of it, like, I don’t really care if we keep all the workers and we keep paying them to do absolutely nothing but stare out the window all day. I’m fine with that. It’s not the money that I care about. It’s what all that money is being spent on, right? A federal government that spends $7 trillion—trillions of those are being spent to basically sit there and destroy your life, right? So if we don’t save a single dime, but we manage to slash 10,000 regulations, I’ll count that an absolute win.  

Ben Nadelstein:

I like the optimism there. Let’s quickly go to some potential negatives that we should be looking forward to. So the first one is economic nationalism, right? This kind of idea of onshoring, how that’ll affect trade as well as tariffs. So let’s talk about the potential negatives. Obviously, we’ve hit on some potential positives. How realistic are these negative scenarios?

Peter St Onge:

Yeah, so tariffs, being an economist, tariffs are negative. They are taxes on consumers. They function as sales taxes. Having said, I have been relatively benign in my criticism of the economic nationalism. And the reason is because I don’t think tariffs are that big of a deal.

If you look at East Asia, for example, you look at the development of Japan, Korea, China, Taiwan, they had very high tariffs. They were absolutely economic nationalists. And guess what? They did great. I think that a lot of what has caused our deteriorating trade position, I think a lot of it is self-induced wounds. Using regulations, things like the EPA, OSHA, the lawsuit industrial complex, we’ve crippled, let’s say, manufacturing. You really have to be insane. You have to be a masochist to actually want to produce things in the US. We’ve chased all of that overseas.

And so at that point, I’m sympathetic to the idea that we shouldn’t blame the Chinese. I mean, the Chinese are particularly bad. They’re predatory in their trade. But I don’t know, say Korea, that we shouldn’t blame them for making things cheaper than we do. But what I’d like to focus on is that we have all of these sort of self-induced wounds. If we can deregulate, if we can cut domestic taxes, if we can make it easier to start a business and run a business in the U.S., then I don’t think that we actually need the tariffs.

We are a massive market. I think that we can actually draw a lot of that manufacturing back. We talked earlier about robots. To the degree that factories automate, of course, you remove essentially any cost advantage that a China or an India might have. So I think that if we can get our own domestic production environment straight, then I think a lot of that’s going to come back anyway. In the meantime, if we’re using tariffs to speed that up, it’s net harmful for American consumers, but I also don’t think that it’s that big of a deal. I think it’s 10 or 100 times more important to get regulations and taxes right.  

Ben Nadelstein:

So now I want to go into a lightning round with you, Peter. I’m going to ask you a couple questions. I want to get your hot take. You can do a minute or less. Obviously, if you find something interesting, feel free to go much longer. All right, so let’s start with Canada. So our friends to the north, Trump has said he wants to potentially make them the 51st state. Trudeau is out. What do you think about the alliance between Canada and the U.S.? Do you think this is a serious thing that investors should be wary of?

Peter St Onge:

Yeah, so I think Governor Trudeau has been a disaster. I think a lot of Canadians are going to be encouraged if Pollieve gets in there. In terms of, you know, there’s kind of a couple of different levels. So obviously I don’t want Canada to be the 51st state, aside from Alberta, because they vote like pinkos. So I would actually prefer to give them California rather than take them in. But sort of more seriously on the economics of it, Canada needs the U.S. far more than we need them.

And this is true for essentially every country in the world. So this is from memory, but something like a quarter of Canada’s GDP is exported to the U.S. And something like 2% of ours goes to Canada. And this is pretty much the case across the board. It’s a case for Europe, it’s a case for China, it’s a case for everybody, especially for Mexico. Something like a third of Mexico’s economy is exporting to the U.S.

So I think one of the great mysteries of the past 30 years has been why does the U.S. run around begging and groveling like a dog to everybody in the world when we have essentially the only military on earth because all these losers force us to be the unpaid mercenaries. But more than that, we have such a massive economy. We import so much, so disproportionately, that every single country on earth should be dancing for our entertainment.

He can say anything the heck he wants and the Canadians are going to sit there and they’re going to crawl and they’re going to eat up whatever he serves. So I don’t think there’s going to be any disputes. I think, you know, there’s a lot of talk about Trump, sort of the art of the deal that Trump pushes things far to see what he can get. I think he’s going to get quite a bit out of Canada. He’s going to get a ton out of Mexico. I think Mexico is already talking about taking back migrants, even if they’re not Mexican, which is a heck of a thing to make a country do.

So I think the alliance is safe, and Canada’s gonna be doing a lot of things in the next four years that are gonna make Americans happy.  

Ben Nadelstein:

Okay, next one, Peter. Under Trump, do you think we see a stronger dollar or a weaker dollar?

Peter St Onge:

I think on net we’re going to see a stronger one. Tariffs are generally strong. They generally strengthen the dollar. The question is how many tariffs actually come through. So, you know, Trump’s going to threaten a lot more tariffs than he actually enacts because he’s using them as a negotiation tactic.

But beyond that, you know, my best guess is that American growth is going to pull in money from overseas. You’re also—if the economy is growing strongly, then I think that the Fed is going to keep rates relatively high. That is going to keep this delta between the U.S. dollar and the euro, or especially the yen. So we’re going to keep having money flood into the country. So if I had to guess, the dollar is actually—it’s really strong at the moment. I think it’s like the dollar index is like a 110, which is historically quite high.

But I think there’s a good chance it’ll actually go up from here.

Ben Nadelstein:

Okay, next one. So people in my age and my generation have seen high inflation, they’ve seen slow growth, they’ve even seen looming recessions, high housing costs, pretty much everything in terms of the financial wellbeing of this generation feels a little bit out left in the cold. So what advice do you give to people in my younger generation, other than maybe skip the Starbucks and the lattes, but what can we actually hear from someone who’s not part of the traditional corporate media outlets?

Peter St Onge:

Yeah, you guys really have. You’ve seen it all in about a five-year segment. I think not since World War I has anybody been treated to such a series of catastrophes. I’m not a huge fan of the whole “don’t spend Starbucks.” I think absolutely buy more Starbucks, because the focus needs to be on generating income. You need a side gig. You need skills. There is a great book by Cal Newport.

I can’t remember the name at the moment, N-E-W-P-O-R-T. And he talks about the fact that you sit down and decide what you want to be good at. You spend a lot of time on that. The better you get at something, the more you’re going to like it.

Don’t do this whole like, oh, wait a minute, do what you love. So I like pizza and video games. No, no. Choose what you’re going to be good at. Spend a crap load of time on it. As you get good, you’re going to absolutely love it. OK. And at that point, you’re going to be the world’s best at something that’s extremely valuable that you love. So my advice to anybody who’s young…

You got to get your own gig going. Do not go work for another person. That’s embarrassing. You need to be a model for your children. Stand up and be your own man. So get a gig going. Learn these side things. If you already have a full-time job, do it early in the morning. Get up at 5, 6 a.m. Use your best hours for you. Do not give them to the man. Use them to build your skills and build your business. And then I guess the only addition to that would be keep an eye out for what’s gonna be replaced by AI. Ideally, team up with AI and slaughter all the losers who are ignoring it.  

Ben Nadelstein:

Okay, that is my next lightning round question. AI, do you think this is a bubble overhyped? Do you think that the stocks like Nvidia that are kind of riding this AI train are a bubble? Or do you think that AI is actually underpriced?

Peter St Onge:

Yeah, so you can zoom out on two levels, right? If you look back at the dot-com era, so you had this huge explosion in internet stocks, and then they collapsed, and then they came back, and then they collapsed again, and da-da-da-da.

Now, if you zoom out over the long run, I personally think that AI is going to be as big as the internet. I think it’s going to be very similar to the internet in a lot of ways. In other words, we’re going to get a lot richer. A lot of it’s not going to show up on paper. OK. Like there’s this—the great productivity paradox of the internet is that you can’t really find it in the productivity statistics, but we are obviously much, much richer. It just doesn’t show up. So I think AI is going to be very similar to that. So in terms of investing, you know, I think AI is absolutely real. If you buy into a bunch of AI stocks—which is kind of hard at the moment, there’s only a couple of them—but if you were to buy into them and then just hold them for 10 years, I think you’d be absolutely in great shape. But the question is, you know, if we sort of map AI out against dot-com, where are we exactly in that cycle? So if we take NVIDIA, for example, that had one heck of a run-up.

Most of the AI companies are not publicly traded, and that’s because of the SEC. It’s because you have all these regulations now on public companies, and so they don’t go public until they’re already mature. So sadly, you cannot buy into—it’s not like the dot-com era where you could buy into Netscape and Yahoo when they were really tiny. You just can’t do that anymore. So most of the AI companies are privately held, outfits like Anthropic, or they’re folded into other outfits. So for example, XAI, Elon’s AI.

And so you can’t really buy those directly. The best you can do is some of the chip makers. So Taiwan Semiconductor is making a play on that. They’re extremely respected, very high quality, really the top of the game for semiconductors in general. And then NVIDIA, which is also founded by a Taiwanese guy, Taiwanese American. They have had a heck of a run. I’ve owned them for most of the past two years and enjoyed the ride. At this point, I really have no idea whether they’re going to go up a whole bunch more.

You know, it’s like Bitcoin: if they doubled, I wouldn’t be surprised; if they dropped in half, I wouldn’t be surprised. I think they’re really that kind of asset at this point. So if you have a family, and you’re talking about, like, money that you actually need—like the children’s, you know, college fund—don’t necessarily go with NVIDIA. If you’re 23 and you’re an engineer, and you don’t have any dependents, go for it.

Ben Nadelstein:

Okay, next question. Fed nominees by Trump. In terms of likelihood at the moment, we have Kevin Warsh, Kevin Hassett, Larry Kudlow, Judy Shelton, Arthur Laffer, Jerome Powell even being the first nominee by Trump. Which of these do you like? Who do you not like? And obviously, who do you think is most likely to get the nod?

Peter St Onge:

OK, I like Kudlow, Laffer, and Shelton. Let’s see. In order: Shelton, Laffer, Kudlow. So I get nasty emails. I like them because they’re either hard money people or they are not sort of Fed worshippers. The rest of them—well, Powell, I think there’s absolutely no hope. I think that Trump regrets that.

In terms of Warsh and Hassett, I think Hassett’s a little bit more outside the box. I think Warsh is sort of a continuation candidate if you want to call markets. I think Trump’s already ticked that box with his Treasury pick. I can’t remember the guy’s name at the moment, Besant. I think he’s already kind of ticked the calm markets box. Besant was the relatively more mainstream candidate. And so I don’t think he actually has to do that with the Fed.

So that’s kind of the question of whether, you know, is Trump version 1.0 where he was just kind of coloring inside the lines, or is he 2.0 where he wants to shake it all up? So personally, I would love it if he gave the Fed chairmanship to Judy Shelton, who I know, but I would assign low odds of that.

Ben Nadelstein:

For those interested, they can watch my interview with Judy Shelton on the Gold Exchange podcast.  

Okay, Peter, we’re coming up towards the end here. What is a question I should be asking all future guests of the Gold Exchange podcast?

Peter St Onge:

When they think fiat is going to die, and when it dies, are we going directly to gold or are we going to have an interregnum with some other asset?  

That is a great question. Peter, where can people find you and more of your work?  

Peter St Onge:

I do stuff over on X, the artist formerly known as Twitter, at Profstonge. And then I do daily videos over there on freedom and economics and also do a sub stack over at PeterStonge.com.

Ben Nadelstein:

Peter, it’s been a pleasure talking to you. I know it’s going to be more interesting in 2025, and we’ll have to have you back on.  

Thanks so much.  

Peter St Onge:

It’ll be exciting. Thanks, Ben.

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