Over the years we have found that there is a lot more to learn from John Brodersen than simply the fundamentals of the restaurant industry because he also has a wealth of insight into the economy and investing, two disciplines which he has been working hard to master over the decades. We recently asked John to advise on how he would improve our current system of fiat currency which seems to be sinking under the weight of the government’s unsustainable deficit spending. Read on for his illustrated insights…
John Brodersen started as fry cook in Chicago 1986, moved to Milwaukee with $35K and a dream. Built 73 restaurants in 5 states. Recently sold 53 businesses and is now seeking 1031 trades for the 53 fee properties. Currently owns/operates 20 Popeyes in Puerto Rico and looking for growth opportunities in that market. Also seeking distressed real estate and business opportunities in the States.
What would you suggest as the best way to improve/replace our current form of fiat currency? Would you link it to precious metals, commodities?
You could link it to lots of things, but that is not ever going to happen until the U.S. government goes completely broke. They would never ever, ever let the dollar be pegged to anything; how could they balance the budget? If the dollar were pegged to gold, they would need to dig up a trillion dollars of gold every year.
The deficit has been over a trillion dollars a year for the last 4 years and is increasing every year. Do you think any politician on either side (besides Rand Paul) would vote to peg the dollar to gold? Where would they get the money? How would they get reelected? It would be impossible to raise taxes enough to cover the shortfall. In less than 5 years, it is projected that they will be borrowing (printing) more than the value of all personal income taxes collected. They already print 4 times more than corporate taxes each year.
Unfortunately, the only solution at this point is to continue printing to cover the growing government expenses, until one day, all the first-world governments go broke together at the same time just like so many 3rd world countries have done over the past century (see photo below).
What is your outlook for the Greenback?
The value of the dollar declines faster and faster every year. The first world countries have the benefit of going broke slowly like a frog in boiling water, while the Zimbabwe’s of the world go broke all at once and have to buy things with real assets like the 1-liter petrol coupon at the top of the adjoining picture.
One day, a few decades away, it will all cave-in in a worldwide depression. Only then will new governments get recreated with politicians who run on a new policy of pegging their currencies to gold.
Very gloomy! Is there any hope?
The good news is that all debts in the world will be wiped out, all mortgages, all government debt, all home mortgages etc. There will be winners and losers, just like right now, the borrowers are winning slowly each year, and in the end, they win the lottery. I will never let my real estate debt get below $50 million for this reason.
Ok, we agree that gold is real money… How do you tie a currency to gold when it restricts your monetary growth to mining output anyhow?
I don’t believe you need monetary growth nor mining growth. If you keep the value constant, then you can achieve deflation, everything gets cheaper (economy gets bigger on the back of a constant dollar) similar to pegging everything to bitcoin.
Thanks John! We are going to get busy shopping for underground bunkers that we can finance with debt…