Share This Episode

Peter Nolan on the Economy

Peter Nolan on the Economy

Barry, the Ambassador of JOY, invites Peter Nolan one of America’s leading businessmen to discuss: SOB: State Of Business. Get ready for inside information on where we’re going. Peter founded Nolan Capital, Inc. for his family office to make long term investments in growth-oriented companies. Peter is Senior Advisor to Leonard Green & Partners (“LGP”)  with over $40 billion in assets. Peter also acted as advisor to entities such as adidas AG, the Government of Mexico, Saatchi & Saatchi PLC, Televisa S.A., Metromedia and Orion Pictures. Peter presently serves as Chairman for Diamond Wipes, Fresh Brothers, and Ortega National Parks. He currently serves on the Board of Directors of Activision, Inc. and AerSale Holdings, Inc. Peter serves as a trustee of the United States Olympic and Paralympic Foundation.

Listen to the podcast here:

BROUGHT TO YOU BY HONESTPETS.CO

Show Notes:

  • 00:45 – Barry’s rousing introduction
  • 14:17 – Peter Nolan on the Economy
  • 24:40 – How to invest in other businesses?
  • 41:55 – How to lead a purpose driven life?
  • 52:21- Barry’s Interesting Wrap-up

Important Links:

Barry Shore:

I can’t think of anybody that inspires noble deeds that I want to share with you at this very moment than our dear friend, the amazing Peter Nolan. Peter, say hello to 358,722 people around the world. Say hello.

Peter Nolan:

Hello, everyone. It’s Valentine’s Day so Happy Valentine’s Day.

Barry Shore:

Oh yes. VD. Did you catch VD? Now, when I was growing up VD had a different connotation than it does today. By the way just as a data point because it is February 14th [unintelligible: 0:08:35] announced the year because it’s going to be important. Because Peter has what we call the keynote address. Note stands for Nolan on the economy. So when Peter speaks people listen. Now, of course, most of the people in our audience, Peter, are under the age of 35 so have no idea what we just said. That was an inside-baseball reference or something. So it is February 14, 2022. And this show is going to go up very soon on Apple and Spotify and wherever people listen to it, and there’ll be hundreds of thousands, millions of people downloading it and sharing it because it does touch on your money. I want to emphasize again, a couple of things about Peter just so you should know. I’m going to say it now and might even repeat some of the things. But it’s important to understand that when I asked Peter Nolan to be on the show it’s not just because he’s a friend of mine, and I’m jealous of his wavy hair and his good looks and such and just his success in life. But the interesting thing is that Peter has utilized all of his skills to be able to be a benefit to many, many others making people billions of dollars in return as a senior advisor at Leonard Green Partners, which now I think manages some almost $50 billion in assets. He sits on the board of Activision Blizzard, which is one of the most famous game makers in the world. He is a graduate of all levels of undergraduate and graduate school at Cornell. He has given recently a very large amount of money to perpetuate business and capitalism at Cornell, which is under siege but we won’t go there. He founded his own private equity firm, which is called the Family Office for those in the know. And the reason I mentioned that specifically is because that means he puts his money where his mouth is, he invests his own money, he’s not just managing other people’s money. He allows partners to come in but he puts his money on the line looking for opportunities in businesses that he can help grow and nurture and really ride out the storms of unease as it is in the marketplace. And as I say, one of the most interesting things about Peter is that he was an Eagle Scout. And I think that stands him in good stead over the decades since he was, or maybe I guess when you are you’re never not. He’s a husband, he’s a father, and he’s a friend to many. And I’m honored to call him friend, I think he calls me friend also. So by that introduction, what I’d like to do is just jump right in and start talking right away about the word that is on everybody’s mind, on people’s lips, and even being talked about by the White House, and the press secretary, and the Fed and all of the governmental institutions that have to deal with it because it affects the economy of the United States of America, and therefore the world. So Peter, would you please just jump in, and educate us and share with us your insights into inflation, where it is, where it may be going, what it is, and what we can do to protect ourselves?

Peter Nolan:

Well, thank you, my friend, Barry. I appreciate all those kind words. You’re very good at it. Barry and I were talking before we came online, and if you go back and look at our prior podcasts, way back, nine months ago, when the government was calling inflation transitory or temporary, we said we didn’t see that. It was just announced a couple of days ago that the inflation rate is seven and a half percent. And I think that most people realize that real inflation is much higher than that. And so what’s going on? A lot of stuff is going on but here’s just my opinion, and I’m not a monetary expert. It’s a terrible graph, and I apologize for it. So Barry, tell me if you can see it but I’m going to hold up a graph.

Barry Shore:

Okay. Move it just a little bit more to the middle. Oh, that’s excellent. Okay, so here’s what I see, Peter. I see a starting point of 4011 in 2019. And a number of 20,553 in the year 23, I believe.

Peter Nolan:

No, that’s the end of 2021 beginning of 22.

Barry Shore:

Oh my gosh, that makes it even more ominous, I think.

Peter Nolan:

This isn’t inflation. This is the money supply, and these numbers are in the trillion. So 4 trillion to 20 trillion is the money supply, the currency that’s in circulation, and also bank deposits. But what happens is, right here is when Coronavirus hit. So that’s 2019. But when Coronavirus hit the government, the Federal Reserve basically started printing money and you see this enormous jump,

Barry Shore:

It’s a fivefold increase in two years.

Peter Nolan:

In two years it’s a fivefold increase. And as you can see is it continues to grow. And this is historical. This is not a prediction. This is what actually has happened. And again, I couldn’t find a better graph of it. This is from Bloomberg. But this shows you what’s happened. So, if the amount of money in circulation to buy goods and services, if that amount increases by fivefold, do your numbers, that’s a little bit more than 7%. I understand that in 2020 when they shut the economy down because of the Coronavirus, the government said we needed to do things to keep the economy from collapsing. And so, what they did was they started printing as much money as they could. And they also offered money and assistance to both businesses and people. And because of the shutdowns, you can argue whether or not it was necessary or not, we’ll argue it for decades. But let me just say that move made sense. But it never stopped. And so, the government kept printing money and the amount of money in supply increased by a multiple of five, the M 1 money supply. And when you have that coupled with the other factors, you had wage growth, people were taken out of the economy because the government paid them not to work. And because they could make more money staying home and collecting enhanced unemployment benefits the supply of labor declined. So, as the supply of labor declines the price of the labor that’s willing to work, of course, will go up. And then you had on top of that these so-called famous supply chain interruptions as a result of manufacturing issues as a result of the pandemic. And those supply chain issues persist even today. And one of my concerns is that if the shooting ever starts it could get worse. So what we’re seeing, and I think anyone that has a car realizes that the growth in the price of gas over a year ago is not up 7%, it’s up 30, 40%. And if you go to the grocery store pick your items proteins, various items you get at the grocery store, they’re not up 7%. And so, we’re in this, what we used to call when I first started on Wall Street, the wage-price spiral. A spiraling increase in wages, prices, and inflation is a terrible tax because it falls the hardest on people at the bottom end of the wage scale. Let’s say you were making 10 bucks an hour, and now you’re making 12, 13, 14 dollars an hour, it kind of doesn’t matter because your overall spending power has gone down. Now, the government says it’s gone down by seven and a half percent. I think it’s solidly into the double digits. The other thing that is very concerning to me, and it doesn’t get a lot of discussions, is as of January it’s my understanding that the so-called Child Tax Credit where you’re paid $300 a month for how many kids you have, and I think it’s almost regardless of your income level if you apply for it, that ended. And that affects, again, disproportionately people at the lower end of the wage scale. So, I think we’re in for a difficult time. I think the Federal Reserve has done a great job for about six months in 2020 to combat the shutdowns that occurred because of COVID. But they never stop. And it just goes to show you how experts are frequently wrong. So, when someone says well, I’ve talked to 20 economists and they all agree on blah, blah, blah, blah, blah. I always look and say so what. And experts are frequently wrong. And I think the Federal Reserve has done just a horrific job in handling this economy by continuing to print money, and not backing off when inflation was already basically on our shores six, eight months ago. And so, there’s going to be a big hangover and it’s difficult to predict. When I first started in the financial world in 1982, 40 years ago, it was terrible. It was 10% unemployment, the Dow was at 800. Today, the 10-year treasury is at 2%. I could look it up. But the 10-year treasury was probably over 10% back in 1982. And what happens is that freezes the economy. So we have enough things. If you look at it we have inflation, interest rates are going to rise, they have to rise, the Federal Reserve is finally woken up and smelled the coffee and they’re starting to address the inflation issue, they’re going to go ahead and start raising rates, and they’re going to stop injecting as much currency into the market. And then you have all sorts of geopolitical risks that could happen. Ukraine to start with could happen in the next several days. I have no idea if it’s going to happen or not. And then what happens with China after the Olympics are over China. China would love to have Taiwan. And if you think we have a material supply chain issue, if China decides to go after Taiwan, Taiwan is a major supplier of computer chips to the United States among other things. And if China all of a sudden decides they’re going to make a move on Taiwan it could be a brutal year.

Barry Shore:

Let’s unpack some of what you’ve said. I want to emphasize a couple of things, as we unpack some of the remarkably important information that you provided here. And again, data alone is not the key, it’s what you do with data that really makes a difference in life. The warnings that Peter is issuing here, not issuing, discussing with us are not dire in the sense that he’s doing this to be dire. We’re looking at items, and we’re analyzing and not afraid to speak the truth. See, from the perspective of the political class, let’s say the White House and spokespeople, people in power, the Democrats and the people out of power at the moment, the Republicans who’s trying to get back into power, so they all have a political edge to themselves. We’re talking about human beings, we’re talking about people, and whether your portfolio is $1,000 or 1000 million dollars, which is a billion, it doesn’t matter. You need to be aware of these things. Because the classic situation that Peter described of money supply, increasing fivefold in 24, 28 months is the classic definition of too much money chasing too few goods, that’s inflation. And as he said, If the established rate is seven and a half, you can literally bet and win that the real rate is somewhere between 12 and 15. And we can back it up with numbers, just as he has told us about the supply, amount of money increasing 5%. I saw just a few statistics in preparation for this. Use cars and trucks, which by the way, represent a lot of cars and trucks. They are up 22.9%, let’s call it 23, 23% in the past 12 months because new cars are not readily available because as you mentioned computer chips, which primarily do come from China, in other words, we as a country made ourselves dependent upon a power that is not working towards our best interest. At the best of times, it would be neutral. In the worst of times, it’s a malign influence, and it will do anything and everything it can to hinder the United States from maintaining what we call hegemony and influence around the world. Because once the dollar is unseated as the basket currency that everybody wants to run to then you have a very shaky, unstable world without even a shot being fired. It’s the currency, the United States currency that really makes the difference in the world. Am I correct on this, Peter?

Peter Nolan:

Yeah, The United States currency for all my life has been considered the reserve currency of the world. What happens with governments that aren’t well managed is they try to inflate their way out of their spending issues. And so, what they do is they just start printing money. And if you look at places like Germany, right after World War 1, the Weimer Republic started printing money, and that’s what caused the tremendous recession in that country. And it led to a dictator being elected in that country, and a lot of blame put on particular ethnic groups for the country’s problems by the population. And it was not a good thing. I’ve spent my whole life in the finance world and it’s not fun to try to figure out what’s going on with the money supply and what’s going on with the Federal Reserve. You can kind of gloss over, and you’re hearing everyone talk. And particularly the people that follow the Federal Reserve and the Federal Reserve itself they speak like they’re Oracles and they don’t necessarily speak terribly clearly. And so, you just tune it out. What we try to do is we try to pay attention to the impact of all this and what’s going to happen. Now, why the stock market was on such a run? It’s because, yes, we were bouncing back from the shutdowns as a result of the pandemic, that’s made the stock market bounce back. But it was the money that was flooded both into the economy by printing money, and then also by the government handing people checks. They handed businesses checks, the PPP, where if you kept your business open, and you retain your employees, the loans from the government from the Small Business Administration in 2020 would be forgiven. I actually think that was a good thing to do if you’re going to force the economy to shut down the way these governments forced the economy to shut down. But then you have to back off of that as soon as you can. It’s a little bit like shooting up heroin.

Barry Shore:

I have to interrupt you only because we’re so in sync. I was just thinking to myself, the word attic. I want you to continue. But yes, this is addictive behavior.

Peter Nolan:

Right. It’s addictive. Maybe a better example is opioids. Opioids have a medical use under certain circumstances. But if you don’t, basically tail off of them then you can become an addict. And as you become an addict it can really mess you up. And I think what happened was there were a number of programs put in place as a result of the shutdown, and those programs continued on much longer than they should have been. And they chased people out of the economy, people stopped working, it was hard to get employees, it’s hard to get businesses going. Now, there are a lot of good things happening. I think the politicians have discovered that shutdowns are not politically popular anymore. And restrictions aren’t politically popular anymore. So, now the science is telling us that they can reopen.

Barry Shore:

I love the smile on his face. Those of you who are only listening you’re missing out on the great deadpan with Peter Nolan and this wry smile at the moment as he’s discussing this. Yes.

Peter Nolan:

Right. So, the political class has discovered that, gosh, maybe we don’t need to be shut down as much as we did because it’s incredibly politic. There was the fear, and now there is the fatigue. And the fatigue has reached a point where people could lose their jobs as politicians. So, they’re discovering that maybe we don’t have to wear masks as often and maybe the economy can be more open and then maybe kids can go to school and maybe kids don’t have to wear masks. All this other stuff. And those are, in my opinion, again, also long overdue and good things. You saw the Super Bowl this weekend, you had a hard time finding a mask. And that was 75,000 people here in Los Angeles at the Super Bowl. I didn’t go to the Super Bowl but I went to an event around the Super Bowl with 5000 people there wasn’t a mask in sight. 

Barry Shore:

The masquerade is over. 

Peter Nolan:

And by the way, I’m in California and California is at the extraordinarily restrictive end. But even our governor who’s been very, very restrictive, decided tomorrow that….by the way, I never understand it. If I discovered that masks weren’t necessary why would you even set a date a month from now? It’s not necessary to just stop using them today.

Barry Shore:

Because science has given us and opened up the skies and said February 14th, it’s over.

Peter Nolan:

Right. Except for Los Angeles County because who knows why.

Barry Shore:

By the way, on that note, only because we love capitalism, we have sponsors, so everybody hang in there because Peter’s coming back. I mean, this is so good because it’s informative, transformative, and it’s about your money. So, we’ll be right back after a couple of brief breaks. 

Advertisement

(Ad Roll)

Barry Shore:

Good day beautiful, bountiful, beloved, immortal beings and good-looking people. Remember you’re good-looking because you’re always looking for and finding the good, good in abundance, our cup runneth over with good. His name is Peter Nolan. And take note because this show is called “The Note man.” This is Nolan on the economy. And he’s here to give us insight into things that really make a difference to you because it’s your money and people all over the world care about their own money. We left our intrepid heroes on the edge of a precipice. We were talking about too much money, chasing too few goods, the government hasn’t handled it well, we had a lockdown, and now the politicians are realizing that people don’t like lockdowns. They went from fear to fatigue as Peter said so nicely. And now we’re going to discuss, with your permission Peter, this really difficult issue that the Fed says, this is also quite interesting by the way, they announced that in March, which is just next month, they’re going to begin raising rates. And there are a number of banks and people who are fed watches as they call them, who predict that over the next 12 months maybe even less, the Fed will be raising rates 7 times in the next 12 months or less. I don’t care if you raise it a quarter-point each time that’s a lot of points to add to interest rates, which of course, everybody wants to hope dampens inflation, and yet it adds to our money woes because you can get into a terrible place called stagflation. We won’t go there. But I’d like you to speak about the Fed raising rates, what it means and how it affects the United States debt. We just passed, as you know, Peter $30 trillion in debt. In other words, an impossible number to contemplate because when Obama took office in 2008 it was 17 million everybody was pulling the hair out. And now it’s 13 trillion more. And Elon Musk recently wrote an article and said, hello, everybody wake up, it’s not 30 trillion, it’s probably double that because it doesn’t take into account all the unfunded liabilities. Much like you were talking about inflation. It’s not seven and a half it’s probably closer to 12 to 15. So, please speak to us about what you think is going to be the result of what the Fed will do, and what it means for the debt and our debt ratio.

Peter Nolan:

Here’s the challenge, the Fed has boxed itself in and it really has no choice at this point other than to taper the monetary stimulus by raising rates. So they’re going to raise rates, and basically, debt will become more expensive. And demand for dollars should decline because the value of the dollar declines. And my concern is it’s too little too late. I understand why they don’t want to just do it all at once because then you could just have this…

Barry Shore:

That would be cardiac arrest. 

Peter Nolan:

Yeah, a shock to the system. And so, what they’re doing is they’re telegraphing what they’re going to do. And then what actually happens we’ll see. And I’m not a Fed watcher. I look at this as just a layman that is involved in the markets and involved in businesses. So, I don’t know what the Feds are going to do or not do, why they’re going to do it, and how much they’re going to raise rates. I have no idea. All I know is everyone’s in a difficult position. And the thing is that you really don’t have any monetary tools in the event something bad happens, and you need to have a monetary tool to deploy. And that’s what happened in 2020. They took a bazooka out in 2020 and basically shot money at everyone because of the shutdowns. Now, if we have all of a sudden, let’s say something really bad happens with China, Ukraine, I think the base assumption is that’s a goner. Whether that escalates beyond that, who knows. And one thing you learn is that all this stuff is extraordinarily difficult to predict, and you’re usually wrong. So, the thing that happens is the Fed raises rates, the cost of borrowing goes up, and so what is that impact going to have on assets. If you look at the value of the stock market, or the value of houses, or even the value of used cars, part of that value has been driven by very cheap and easy debt. Where if your mortgage is at 2, 3% and some people even lower, that also imputes into the value of a home. And the same thing is true with the value of a company and that’s the stock market. If you can borrow at, call it one and a half percent [inaudible: 0:39:53] percent…

Barry Shore:

You’d be crazy not to. 

Peter Nolan:

As I’ve seen some people call it it’s free money. And if you can go out and invest that in plant equipment or buying other businesses and earn 10% you’re going to make a lot of money. So we’re seeing that effect on the stock market. We’ll see if it has an impact on real estate, I think it will. I’m just very, very concerned that our leadership all the way from the agencies to the Federal Reserve to the federal government is in a real mess right now. And markets don’t like uncertainty. And so, the question is going to be Barry, where do you put your money? And I really have no idea. 

Barry Shore:

I was just going to ask you, Peter. People want to know, where do they put money? Again, whether you have $1,000, or you have $100 million, where do you put your money?

Peter Nolan:

That is the problem. And that’s the conundrum is, is it when you have inflated values for assets, and there’s more downside than upside, where is there a bargain, where’s a good place to put your money? If you put your money in the bank, let’s say you put $1 in a bank a year ago, and you probably earned no interest because rates are so low for the past year, that dollar today according to the government is worth 92 and a half cents. That’s what your dollars’ worth by sitting there doing nothing. If you believe what I’ve been saying maybe that dollar is worth somewhere in the 80s. And so, if the inflation rate is 15% you’ve lost basically 15% of your money by just having cash. Put it in a mattress. People used to go into gold in times like this but interestingly enough gold hasn’t been a great performer. Why is that? I think people that would otherwise have gone into gold have gone into crypto. And they’ve gone into cryptocurrencies, and there’s a variety of cryptocurrencies that one can go into because they want to hedge themselves against declines in the dollar, and they don’t trust the government. And then there’s also a whole bunch of people that want to basically have a currency that’s outside the view of the government. And that includes, by the way, bad people.

Barry Shore:

Mostly bad people.

Peter Nolan:

Well, I wouldn’t say it’s mostly bad people. I don’t know how it breaks down the full participants and stuff like Bitcoin but there are a lot of speculators in Bitcoin. In certain parts of the world, Bitcoin is used as a currency because they don’t trust their governments. I’m not saying you should go into Bitcoin. Look, do I understand it? I absolutely don’t. Do people who think they understand it? I don’t know. I ask a lot of people who participate in that sector of the market, and when you really pin them down no one fully understands where Bitcoin should be valued. But you could argue where should the dollar be valued, and the value of the dollar is declining. And that leads to a very, very troubling situation for our economy. And if it doesn’t stop soon, for our world. It can really lead to some bad things. And the government is losing its tool chest. They don’t have the Federal Reserve as a tool chest anymore. Big-spending was passed last year, what was it, Barry? Trillion three? 

Barry Shore:

1.7 trillion dollar bill.

Peter Nolan:

Right. So there’s 1.7. And then the build back better.

Barry Shore:

Right. Oh, that was going to be another two-plus trillion.

Peter Nolan:

No, I think it was more than that. Because a lot of those programs had basically tenure or revenues against one year of disbursements, which was really, in my opinion, highly deceptive. But in a lot of ways, I think it’s very good that that didn’t pass. To say that that’s going to cure inflation is probably one of the biggest lies of our time.

Barry Shore:

I want you to repeat that word. It was not just gee, I don’t know better, I think it was a lie.

Peter Nolan:

Yeah. I looked at that and said, are you kidding me? Again, why does inflation occur? Too many dollars chasing too few goods. If all of a sudden you flush, flush maybe the wrong word, but basically distribute another 2, 3 trillion dollars into the economy, how does that alieve too many dollars chasing too few goods? The number of goods doesn’t increase by that much. They will eventually but not by that much. So I’ll tell you the other interesting thing. I own a company, it’s a company that’s a retail store. It’s a chain of stores. And I was at the trade show in Arizona last week, and the vendors, the companies that sell stuff into this channel were at the tradeshow selling their goods, and I would ask them, well, how much have your prices increased in the last 12 months to the retailers? And I would say on average, it was probably about 15 to 20%. 

Barry Shore:

That’s huge. 

Peter Nolan:

And cat food was up 30%?

Barry Shore:

How much was that?

Peter Nolan:

  1. So I also asked them, well, are you planning any future increases? Every single vendor and I think there were about 1300 vendors, I didn’t talk to 1300. But every single vendor that I happen to talk to randomly said, yes, we have another price increase slated for this summer. 

Barry Shore:

This is an industry that a lot of regular households…

Peter Nolan:

Yeah, it’s a farm supply business based in the Pacific Northwest. So, they sell apparel, pet food, horse food, farm supplies, they sell tools. Almost like a general store. But you look at that and I just think that they will say that inflation has slowed, the rate of increase has slowed. It does have to, I think in the near term, I think it will slow. But it’s with us, and it’s going to continue. I know Elizabeth Warren and others in Washington say, well, these companies are just being greedy. That’s nonsense. This is companies going, all my costs have gone up. We haven’t talked about other costs. The cost of fuel has gone up, the cost of employees has gone up, the cost of insurance has gone up, the cost of raw materials has gone up, the cost of everything has increased, and unless I raise prices I’ll lose money. And so it’s really terrible. When you look at the typical worker in the country, yes, they did get a raise but that raise was taken from them by inflation. And that’s why the country is in a sour mood. And there’s really very little that you can do and Washington fix it other than you have to stop spending, you have to stop printing money. And we have to take our medicine and work our way through this. Just today, oil is approaching $100 a barrel, it’s up 50% in the last year, 50%. And so, you contrast and oil is fundamental to so many things other than just transportation. Of course, you use it for your car, you use it for trucks, you use it for trains, and you use oil for hydrocarbons for plastics. There are so many things that have lubricants, there are so many things up and down the supply chain that have oil in them that you don’t even think about. We still generate a tremendous amount of our electricity because of oil. And that’s not going to change anytime soon. And so, that is a real bellwether for what’s going on. And the other reason oil is going up is there are a lot of concerns that if things happen in Ukraine, and gosh, I’d hate to see what happens if something happens with Taiwan, it could go even higher.

Barry Shore:

Again, Peter is not being dire, he’s looking at things as they are. I love your story about being at a trade show and dealing with real vendors, selling into a marketplace that sells to real human beings as the end result. Something you mentioned here you talked about a particular senator. And I don’t think she’s alone, unfortunately, I think she represents a particular wing of the current Democratic Party that is not only anti-capitalism in the way we have it now but as a fundamental part of our country. There’s literally a socialist wing but I don’t want to go into the politics of it. I want to mention something else. I think you know as well as anybody that when government produces a program, an entitlement program, let’s call it, it’s very rare that any entitlement program either gets cut back or gets eliminated, even if it doesn’t serve its purpose anymore. And I think, unfortunately, that tends to happen with pricing. In other words, once businesses have reached a new threshold of pricing, where consumers will say, okay, yes, I’ll go there and they may not go beyond it. But as long as they continue to raise their prices to protect themselves it’s much more difficult to lower those prices again. And if they do get lowered it doesn’t happen overnight like mask mandates. Oh, okay mask mandates are gone on Monday. No, it may take years before prices, let’s say oil, the oil needs to go back down to $30 a barrel. Well, that doesn’t look possible right now, does it?

Peter Nolan:

Well, never say never, you never know. During the pandemic, they couldn’t give oil away, there was a period of time when oil actually went to a negative value. Today a barrel of oil is $94.70. I’m looking at it right now on the market. In 2020, there was a period of time where it was negative, where you paid people to take your oil because demand had stopped. But keen on your point, Barry, if you had an employee working for you in any business, and you were paying that employee pre-2020, paying that employee, let’s say $15 an hour, and you take that employee up to 20 bucks an hour because it’s hard to find employees for $22 an hour, you never really go and tell that employee, by the way, we’re going to take you back to 15. It just doesn’t happen. It does not happen. It almost feels immoral to do that. So, what do companies do is, one thing they will do is they’ll try to figure out how to eliminate that employee, the need for that employee because as the price of labor goes up the price of substituting labor, for example, with technology comes down and makes it more cost-effective to invest for example, in technology where maybe you don’t necessarily need as many people at the checkout stand. And maybe take the theft risk of having people check out their own items as you see in many grocery stores or Home Depots or Lowes. That’s all tied to labor. So labor is very sticky, price is very sticky, and deflationary periods usually accompany bad things. Now, what we’ve had over the years, which has been really interesting is we’ve had low inflation because productivity has gone up tremendously. And people don’t talk about that. It’s basically technology, manufacturing efficiencies, competition, and overseas competition that has kept prices in check on so many items. I have my cell phone, here’s my cell phone. When the first cell phones came out, this is a long, long time ago, they were like $2,000. And today you can get an intro model cell phone for not a lot of money. Probably you can get one for 100 bucks. I haven’t shopped for a cell phone in a while. That’s all technology. That’s technological advancement. And so that’s what’s happened. If you look at 2019 we had full employment, we had price stability, and we had a lot of good things going which really helped the economy. And then what we had was the pandemic. And the pandemic threw a big wrench into the whole machine. And I would say that the political response to the pandemic has made things even worse.

 

Barry Shore:

I think on that interesting note, again, Nolan on the economy, we’re going to have to pause here because of time and such, even though I’d like to go on for another hour or so. But we do have a slot that we fall into and that people like to hear and I’m going to ask you two quick questions wonderful, Peter. The first question is, will come back again?

Peter Nolan:

Barry for you, you’re the only one I’ll come back for.

Barry Shore:

And, of course, the 362,000 people that are now listening to us around the world, thank you so much. I’ve asked you before I’m going to ask you again, on this note, what is your most fervent desire?

Peter Nolan:

My most fervent desire, well, you know this, I say this every time, the health and happiness of my family. But my most fervent desire is nothing bad happens this year. Aside from that. Number one’s the family. But I am very concerned that the leadership vacuum we have right now in our country is opening a door to bad actors. And I’m very concerned about that. If you look at, for example, this Canadian trucker thing. I’m sure most people have seen the protests in Canada. If someone just pulled out a gun and started shooting how that could turn into just a real nightmare. Now it hasn’t, thank God but it could and it’s a very fine line. History shows us it’s a very fine line between a civilized society and anarchy. And it can be a very small catalyst. So, I just hope we don’t see the problems that we’ve seen for the last two years.

Barry Shore:

Thank you, and we all want your fervent desire to be realized that we make it through this. This will be a trying year, it’s a year of elections in the United States of America, which will affect not just the United States but the world. Because we are the beacon that people still look towards and are attracted to. Because if anything good is going to happen it’s going to emanate from us. And hopefully, the leadership vacuum will not be filled by even more less capable people. So as a wrap-up everybody on this wonderful high note, again, Nolan on the economy, he said he’s going to come back again, and we will hold them to that. So hopefully let me see, this is February, I’d say sometime in the summer we’ll invite Peter back again, so he can give us some insights on what’s going on, what has happened, and see how he’s done in his prognostications [crosstalk: 0:58:21]. And remember, you are listening to and enjoying The Joy of Living with your humble host, Barry Shore, and our amazing guest, Peter Nolan. And remember you tuned in consciously and conscientiously because you care the most in the entire world about you, YOU, you becoming the best you possible. And you do that by following the three fundamentals of life. Number one, life has purpose. You lead a purpose-driven life, you go mad, mad stands for make a difference. And the third is to unlock the power and the sequence of everyday words and terms, like www what a wonderful world. Smile, seeing miracles in life every day. Or as my eight-year-old niece says, seeing miracles in everyday life. Saying the two most powerful words in the English language consciously and conscientiously three times a day for the rest of your life. Those words are thank you. Thank you, thank you. Thanks stand for to harmonize and network kindness. And when you do this you’ll create the kind of world we all want to live in. Create stands for causing, rethinking, listen to Peter, rethink your position of where you are, where you want to be for yourself, your family, your friends, and the country and the world, causing, rethinking, enabling all to excel. And the result of this will be that you’ll be happier, healthier, and wealthier. Who doesn’t want that? So on this note, both Peter and I wish you a blessing. Our blessing is to go forth, live exuberantly, and spread the seeds of joy, happiness, peace, and love. Go mad. Go make a difference.

Outro  

Thank you for listening to this episode of The Joy of Living Podcast. Now, that’s another step towards your healthier, happier, and wealthier life. Never hesitate to do good in the world no matter what the situation. Join us for another upbeat discussion next time at barryshore.com. And be sure to leave a rating and subscribe to the show to get more conversations like this. And remember to share it with your family and friends, too. See you on the next episode.

About Peter Nolan

Peter Nolan founded Nolan Capital, Inc. in 2014 as the holding company for his family office to make long term investments in growth oriented companies.

Prior to founding Nolan Capital, Inc., Peter joined Leonard Green & Partners (“LGP”) as Managing Partner in 1997 along with Jon Sokoloff and John Danhakl. Under their leadership, the firm completed approximately 100 principal investments and grew Assets Under Management from $500 million in 1997 to over $38 billion today. In 2019, Leonard Green raised approximately $15 billion for its most recent funds. Peter transitioned to his current role as Senior Advisor to Leonard Green & Partners in 2014.

Learn more about Leslie: