WEBVTT - The Global Monetary System Is a Trap, Here’s How to Escape | Peruvian Bull 0:00:00.200 --> 0:00:03.600 Every time that we've seen a substantial weakening of the dollar, 0:00:04.160 --> 0:00:07.760 we actually see redollarization. If the dollar becomes weaker against 0:00:07.760 --> 0:00:11.000 your domestic currency, you can now borrow more dollars and 0:00:11.039 --> 0:00:13.520 that old debt that you have is easier to pay off. 0:00:13.680 --> 0:00:15.560 Did you ever think it was realistic that, of course 0:00:15.560 --> 0:00:17.520 we're going to two hundred percent tariffs against China and 0:00:17.520 --> 0:00:18.680 that was never going to come off, we'd never do 0:00:18.680 --> 0:00:20.759 traders in again, or was it always that was going 0:00:20.800 --> 0:00:23.920 to be sort of that negotiation point, the anchoring, if 0:00:23.920 --> 0:00:25.560 you will, to allow us to come back off of 0:00:25.600 --> 0:00:26.599 that into some negotiation. 0:00:26.800 --> 0:00:30.520 We've offshored our industrial base, and so if you're going 0:00:30.560 --> 0:00:34.360 to impose massive terrorists, you know that transition period could 0:00:34.400 --> 0:00:38.559 definitely cause a very severe recession. Gold and bitcoin have 0:00:38.880 --> 0:00:43.040 worked to, you know, hedge against debasement, against inflation for decades, 0:00:43.040 --> 0:00:46.080 and of course gold has been theorized to be suppressed. 0:00:46.240 --> 0:00:48.800 That's been suppressed by central banks and by bullion banks 0:00:48.800 --> 0:00:51.239 for the last twenty thirty years. But that suppression is 0:00:51.280 --> 0:00:52.279 finally coming to an end. 0:00:52.440 --> 0:00:55.440 Do you think we end twenty twenty five higher than 0:00:55.440 --> 0:00:58.360 we are now? Gold s and P five hundred and bitcoin. 0:00:58.200 --> 0:01:00.680 Yes, to all three. The reason why is because. 0:01:00.480 --> 0:01:06.160 The fact, all right, peb, you've been warning that Trump's 0:01:06.200 --> 0:01:08.800 tariffs could be the final nail in the dollar's coffin 0:01:08.840 --> 0:01:13.280 as the world reserve currency. You've talked a lot about 0:01:13.280 --> 0:01:17.319 bitcoin potentially taking its place over what time frame do 0:01:17.360 --> 0:01:18.920 you see these types of things happening? 0:01:19.280 --> 0:01:21.679 You know, that's a difficult question to answer, and a 0:01:21.680 --> 0:01:24.679 lot of people have posed that same question to me, 0:01:24.800 --> 0:01:27.520 especially when I've given talks in person, like I did 0:01:27.520 --> 0:01:30.960 just a few weeks ago in Vancouver, Canada. But it 0:01:30.959 --> 0:01:33.720 really depends on, you know, the geopolitical chess match that 0:01:33.760 --> 0:01:37.000 all these different players play, right, what are the moves 0:01:37.000 --> 0:01:40.520 that they're going to make? The fundamental issue that is 0:01:40.560 --> 0:01:43.680 that you know question here, right, is the actual structure 0:01:43.680 --> 0:01:46.920 of the global monetary system, which is basically subject to 0:01:46.959 --> 0:01:51.000 something called Triffan's dilemma. And this dilemma basically implies that 0:01:51.040 --> 0:01:54.080 the US has to export dollars in order to fund 0:01:54.120 --> 0:01:56.400 the global economy or to provide enough liquidity to the 0:01:56.400 --> 0:02:00.120 global economy to allow trade to occur and now, and 0:02:00.200 --> 0:02:02.800 for those dollars comes from many different sources, from the 0:02:02.800 --> 0:02:07.200 euro dollar market, from international trade and settlement, from foreign 0:02:07.280 --> 0:02:12.079 exchange and currency reserves for foreign central banks as well 0:02:12.080 --> 0:02:14.840 as obviously the petro dollar system. And so all this 0:02:14.960 --> 0:02:19.480 external dollar demand essentially needs to be supplied with dollar liquidity, 0:02:19.520 --> 0:02:21.519 and this means the US has to choose whether they're 0:02:21.520 --> 0:02:23.880 going to supply that supply that liquidity or not. Now, 0:02:23.880 --> 0:02:26.000 if they don't do that, then we have a global 0:02:26.040 --> 0:02:29.480 recession like you know two thousand and eight or even 0:02:29.520 --> 0:02:33.160 before in the nineteen nineties, if the US decides to 0:02:33.200 --> 0:02:36.440 not fund global liquidity enough. But if we do decide 0:02:36.440 --> 0:02:39.359 to fund that global liquidity, we print too many dollars, 0:02:39.760 --> 0:02:42.440 as Triffin said, under our gold reserve ratio, and that 0:02:42.520 --> 0:02:44.800 causes us to break the gold pig, which we obviously 0:02:44.840 --> 0:02:48.440 eventually did. So our system switched from a gold based 0:02:48.480 --> 0:02:51.400 reserve system to what I would call a treasury based 0:02:51.440 --> 0:02:54.680 reserve system. Right, the dollar is the reserve currency, but 0:02:54.720 --> 0:02:58.560 the treasury is now the reserve asset. Now, this kind 0:02:58.600 --> 0:03:02.040 of quasi balance was able to hang for as long 0:03:02.080 --> 0:03:06.480 as the treasury bond remains money good in real terms. Right, 0:03:06.600 --> 0:03:09.359 if you're earning real returns on your treasure bonds and 0:03:09.480 --> 0:03:11.640 eure a foreign central banker, it makes sense for you 0:03:11.680 --> 0:03:14.480 to hold these things. But the minute that the FED 0:03:14.560 --> 0:03:17.560 decides to hike rates in a very very rapid fashion 0:03:17.600 --> 0:03:20.040 to defeat inflation like they did in twenty twenty two, 0:03:20.200 --> 0:03:23.360 you start to see negative real returns on the treasure bonds. 0:03:23.720 --> 0:03:26.240 And not only that, like you said earlier, the teriffs 0:03:26.240 --> 0:03:30.239 that Trump has announced in the escalating wars essentially economic 0:03:30.280 --> 0:03:32.639 war that has been playing out over the month of 0:03:32.680 --> 0:03:36.720 April has basically meant that the stability and structure of 0:03:37.280 --> 0:03:40.480 this monetary system has now been called into question. And 0:03:40.520 --> 0:03:42.880 it's pretty clear if you look at global central banks 0:03:43.200 --> 0:03:47.800 on net they're funding much much less global of treasury 0:03:47.840 --> 0:03:50.720 issuers than they were in twenty eight to twenty fifteen, 0:03:51.320 --> 0:03:53.560 and if you look at even private entities, they're not 0:03:53.640 --> 0:03:56.040 buying at the same pace that they were in years prior. 0:03:56.680 --> 0:03:59.680 The marginal funder for US debt therefore has to eventually 0:03:59.720 --> 0:04:02.280 become the fat, which is what I've said before in 0:04:02.360 --> 0:04:04.920 dollar endgame, right like we'll have to do QB again 0:04:05.000 --> 0:04:07.960 on a larger scale. And so all this means that 0:04:08.680 --> 0:04:12.280 I think the tariffs and Trump's response to other countries 0:04:12.880 --> 0:04:19.200 instituting retaliated retaliatory teriffs means that the equity markets, the 0:04:19.200 --> 0:04:22.000 bond markets, everything starts to trace very very rapidly. And 0:04:22.000 --> 0:04:24.719 that's why Trump had to basically recant a lot of 0:04:24.760 --> 0:04:28.080 the insane terror phraates that he was proposing of, like 0:04:28.120 --> 0:04:31.080 two hundred and three hundred percent on China and other countries. 0:04:32.920 --> 0:04:35.800 Perfect framed it up very very well, all right. I 0:04:35.839 --> 0:04:37.360 took lots of notes, lots of places for us to 0:04:37.400 --> 0:04:40.200 dig in on that. Thank you for setting the stage 0:04:40.200 --> 0:04:42.159 for that. So let's let's dig into some of the 0:04:42.160 --> 0:04:44.280 pieces of this. So let's talk about Triffin's dilemma, which, 0:04:44.520 --> 0:04:48.480 to the point that you made ended in nineteen seventy one. Basically, right, 0:04:48.560 --> 0:04:50.280 Nixon took us off the gold standard, and now we're 0:04:50.320 --> 0:04:53.479 in this free floating Fiat era treasury system or whatever 0:04:53.520 --> 0:04:55.600 you want to call it. And you talked about the 0:04:56.720 --> 0:05:01.039 need for the US to continue to supply dollar liquidity, 0:05:01.080 --> 0:05:02.680 but you also mentioned. 0:05:02.480 --> 0:05:05.120 Like the euro dollars, So the euro dollars. 0:05:04.839 --> 0:05:09.800 Are outside of the US's control, right, so there is 0:05:09.920 --> 0:05:12.120 dollar equity being created that the FED is not doing. 0:05:13.400 --> 0:05:17.039 We also have now stable coins US dollar stable coins, 0:05:17.040 --> 0:05:19.720 which are sort of another euro dollar standard. I would 0:05:19.760 --> 0:05:22.880 say we could argue that and both of those things 0:05:22.960 --> 0:05:25.520 could provide dollar liquidity to the world without the FED 0:05:25.720 --> 0:05:28.000 necessarily having to do that upfront, right or. 0:05:28.040 --> 0:05:30.240 No, Yes and no. 0:05:30.680 --> 0:05:30.840 Right. 0:05:31.880 --> 0:05:34.040 If you study the euro dollar system, and if you've 0:05:34.080 --> 0:05:36.640 read Jeff Snyder's work, you'll come to understand that the 0:05:36.680 --> 0:05:40.400 Euro dollar system is essentially synthetic dollars, and same with right, 0:05:40.960 --> 0:05:44.039 you know, ustt stable coins, these kinds of things, because 0:05:44.200 --> 0:05:46.159 unless they show proof of reserves, unless we know for 0:05:46.160 --> 0:05:47.800 a fact that they are backed one to one by 0:05:47.839 --> 0:05:51.480 real dollars, we can, you know, basically assume that this 0:05:51.520 --> 0:05:54.520 functions similarly to the Euro dollar system, which is basically 0:05:54.640 --> 0:05:59.160 entirely synthetic dollars. Now, those synthetic euro dollars, right, they 0:05:59.160 --> 0:06:01.919 are backed by a portion of real US dollar reserves 0:06:01.960 --> 0:06:04.880 held that correspondent banks in the United States. So it's 0:06:04.920 --> 0:06:09.000 not to say that the system is complete fabrication. But 0:06:09.440 --> 0:06:12.440 if let's say twenty percent of them are held as 0:06:12.560 --> 0:06:16.000 US dollars and the system grows substantially every single year, 0:06:16.200 --> 0:06:20.120 then that obviously increases real dollar demand, which is why 0:06:20.160 --> 0:06:23.240 the US has to export dollars, i e. They have 0:06:23.279 --> 0:06:25.480 to do the opposite of the trade balance, which means 0:06:25.520 --> 0:06:29.160 import goods and create a trade deficit in order to 0:06:29.200 --> 0:06:32.400 sustain the global economy. And I've seen people on Twitter, 0:06:32.880 --> 0:06:35.040 like Parker Lewis and others who have claimed, you know, 0:06:35.120 --> 0:06:37.400 this isn't how the system works. We don't actually need 0:06:37.400 --> 0:06:40.839 to export dollars. That's all a lie. And to them, 0:06:40.880 --> 0:06:44.600 I would show them the chart of the US central 0:06:44.600 --> 0:06:47.800 bank liquidity swap lines that the FED opened post two 0:06:47.800 --> 0:06:50.719 thousand and eight and post twenty twenty in the aftermath 0:06:50.760 --> 0:06:54.320 of obviously the Great Financial Crisis and COVID nineteen. And 0:06:54.560 --> 0:06:57.440 those charts are pretty telling because you see very quickly 0:06:57.480 --> 0:06:59.520 how the FED has to offer hundreds of billions of 0:06:59.560 --> 0:07:03.120 dollars in liquidity swaps basically meaning a US dollar for 0:07:03.279 --> 0:07:06.440 their domestic currency swap to all these regional banks. And 0:07:06.520 --> 0:07:10.360 why because they need their own banks, right, all these 0:07:10.360 --> 0:07:15.360 central banks, correspondent banks, these smaller commercials need liquidity. They 0:07:15.440 --> 0:07:18.160 need real US dollars to back up the euro dollar 0:07:18.480 --> 0:07:20.640 basically like fake dollars that they've created. 0:07:21.480 --> 0:07:23.560 And just to put some numbers on that for the audience, 0:07:23.600 --> 0:07:28.280 we have the real problem is approximately three hundred trillion 0:07:28.360 --> 0:07:31.800 dollars of US dollar denominated debt and only about one 0:07:31.880 --> 0:07:36.480 hundred trillion dollars of dollars, right, and so we need 0:07:36.520 --> 0:07:38.720 more dollars to pay off the dollar denominated debt. It's 0:07:38.760 --> 0:07:41.640 going to demand the dollars to pay that off the 0:07:41.760 --> 0:07:43.800 US dollars table coins. I can understand you saying that 0:07:43.800 --> 0:07:45.520 because in order to get the stable coin you have. 0:07:45.480 --> 0:07:46.800 To have a dollar. You have to pledge a dollar 0:07:46.880 --> 0:07:47.720 to get a dollar. 0:07:47.480 --> 0:07:50.240 Back, So it's somewhat of like a one for one, 0:07:50.280 --> 0:07:53.000 if you will. The euro dollar market is not backed 0:07:53.960 --> 0:07:57.400 by anything other than the confidence in the banking system overall. 0:07:58.880 --> 0:08:00.800 But I guess that's that's a whole other. 0:08:00.680 --> 0:08:02.960 Issue that we can get into. But you did speak 0:08:03.000 --> 0:08:06.440 about the FED doing less treasury issue and how it's 0:08:06.480 --> 0:08:10.360 gone down, and so the FED has been less involved, 0:08:10.440 --> 0:08:12.679 but yet US treasuries are still being sold. 0:08:12.720 --> 0:08:12.840 Now. 0:08:12.880 --> 0:08:15.880 We do know that if you look at like central 0:08:15.880 --> 0:08:19.320 banks net purchases, that they've been going up in golden 0:08:19.320 --> 0:08:23.000 down in US treasuries, but it's almost like at the 0:08:23.040 --> 0:08:26.240 same time the demand has stayed there. So it just seems, 0:08:26.280 --> 0:08:29.400 like you said, it depends on how bad this like 0:08:29.680 --> 0:08:32.840 system degrades, if you will, right, But it seems like 0:08:32.880 --> 0:08:35.000 it's been holding pretty good. 0:08:35.360 --> 0:08:36.520 All things considered. 0:08:38.240 --> 0:08:40.679 Yeah, I would say it has been. But the main 0:08:40.760 --> 0:08:44.640 reason's been holding together, you know, so to speak, is 0:08:44.720 --> 0:08:47.320 because of actions behind the scenes that the central bankers 0:08:47.360 --> 0:08:50.400 and the monetary authorities have been doing. So just like 0:08:50.480 --> 0:08:53.160 what you described right there, right, the FED has been 0:08:53.320 --> 0:08:57.199 tapering off their treasury supply right essentially doing QT. If 0:08:57.240 --> 0:08:59.720 you actually look behind the hood or below the hood, 0:09:00.120 --> 0:09:03.360 you see that all things aren't really equal in terms 0:09:03.400 --> 0:09:07.640 of prior quantitative tightening cycles. The FED in this cycle 0:09:08.040 --> 0:09:11.680 did not sell on net anything past ten years, meaning 0:09:12.320 --> 0:09:14.760 you know, during the kiwi's run up, they bought a 0:09:14.760 --> 0:09:16.640 ton of bills, they bought a ton of notes, they 0:09:16.679 --> 0:09:18.520 bought a ton of bonds, ten year, twenty year, and 0:09:18.520 --> 0:09:21.120 thirty year bonds. And then during the taper and I 0:09:21.120 --> 0:09:22.600 have a chart for this and I can send it 0:09:22.600 --> 0:09:23.800 to you if you want to display it on the 0:09:23.800 --> 0:09:28.440 screen now, where when they started the taper everything past 0:09:28.520 --> 0:09:30.680 ten years they actually did not sell. In fact, they 0:09:30.800 --> 0:09:33.120 kept increasing their holdings of the ten year, twenty year 0:09:33.120 --> 0:09:35.880 and thirty year bonds while they decreased their holdings of 0:09:35.960 --> 0:09:38.680 bills and notes. And so this meant that on the surface, 0:09:38.760 --> 0:09:41.640 while their overall size of their balance sheet continued to decrease, 0:09:42.080 --> 0:09:47.000 the actual holdings of bonds remained high and continued to climb, 0:09:47.000 --> 0:09:49.800 and so that meant that, in my opinion, right, the 0:09:49.840 --> 0:09:52.319 Fed understood that they could not lay off this amount 0:09:52.360 --> 0:09:55.679 of bonds without causing yields to completely blow out, and 0:09:55.760 --> 0:09:58.760 so they did this intelligent you know, behind the scenes, 0:09:58.960 --> 0:10:02.480 you'd call it STEALTHI liquidity, where while they were tapering, 0:10:02.520 --> 0:10:04.360 they just ensured that they didn't sell any of the 0:10:04.400 --> 0:10:07.120 long term bonds and in fact bought more to provide 0:10:07.160 --> 0:10:09.120 support for the bond market. And the reason why this 0:10:09.160 --> 0:10:11.560 is important, of course, is because of duration risk. Right, 0:10:12.200 --> 0:10:14.679 banks can much more easily hedge against a short duration 0:10:14.760 --> 0:10:16.760 bond than a long duration bond, just because a long 0:10:16.840 --> 0:10:19.319 duration bond has much more interest rate risk than a 0:10:19.880 --> 0:10:20.800 bill for example. 0:10:21.200 --> 0:10:24.240 Right, Yeah, I definitely saw that this week. We can 0:10:24.280 --> 0:10:25.520 see some of the reports on that. 0:10:26.920 --> 0:10:29.720 Now that's the dilemma, that's sort of where we're at, 0:10:29.840 --> 0:10:31.439 and we can just frame it up with the rock 0:10:31.480 --> 0:10:34.160 of the hard place, right do we keep printing? 0:10:34.280 --> 0:10:36.120 Do we keep manipulating? If so, like how long can 0:10:36.200 --> 0:10:36.679 that last? 0:10:37.160 --> 0:10:39.600 But maybe that leads us into the next big topic, 0:10:39.640 --> 0:10:42.640 which is the tariffs that we have so far. A 0:10:42.640 --> 0:10:45.120 couple of things that you mentioned. One was that, you know, 0:10:45.160 --> 0:10:47.520 we had these insane tariffs, you know, one hundred and 0:10:47.520 --> 0:10:49.640 forty five percent against China and then two hundred and 0:10:49.679 --> 0:10:52.160 forty five percent against China and things like that, And 0:10:52.240 --> 0:10:54.600 you mentioned I forget the exact word you use, but 0:10:55.600 --> 0:10:58.000 you know, Trump backtracking or coming off of that, right. 0:11:00.080 --> 0:11:02.760 A lot of the mainstream media headlines that you would 0:11:02.800 --> 0:11:06.720 see or like he's caving or things like that. But 0:11:06.800 --> 0:11:11.760 from an analyst perspective, I mean, did you ever think 0:11:11.760 --> 0:11:13.319 it was realistic that, of course we're going to have 0:11:13.320 --> 0:11:15.040 two and fift percent tariffs against China and that was 0:11:15.040 --> 0:11:16.319 never going to come off, we'd never do trade with 0:11:16.400 --> 0:11:18.240 him again. Or was it always that was going to 0:11:18.240 --> 0:11:21.600 be sort of that negotiation point, the anchoring, if you will, 0:11:21.640 --> 0:11:23.240 to allow us to come back off of that into 0:11:23.280 --> 0:11:24.000 some negotiation. 0:11:25.760 --> 0:11:28.160 I think it was. I mean, I think it was. 0:11:28.320 --> 0:11:32.960 It was basically like a retaliatory, almost like show of force. Right. 0:11:33.040 --> 0:11:36.920 It was a chicken game, if you will have two 0:11:36.960 --> 0:11:39.280 cars racing at each other, right, And Trump thought that 0:11:39.360 --> 0:11:42.240 he held a much much stronger hand than he actually does. 0:11:42.679 --> 0:11:47.000 Because again, the issue comes when you realize the implications 0:11:47.040 --> 0:11:49.679 of Triffin's alma as well as obviously the results of it. 0:11:50.240 --> 0:11:53.240 The implication is that we need to fend out dollars 0:11:53.240 --> 0:11:57.400 on net to the global economy to fund basically global trade. 0:11:57.679 --> 0:12:01.200 But the other implication, obviously is that we've shorter industrial base, 0:12:01.640 --> 0:12:05.720 and so if you're going to impose massive terrorists in 0:12:05.840 --> 0:12:08.400 the you know, desire to move us back to an 0:12:08.480 --> 0:12:13.360 autarcic economy, basically an economy that's self sufficient, that doesn't 0:12:13.520 --> 0:12:16.280 need to have maybe much import export, that can basically 0:12:16.280 --> 0:12:19.520 provide everything that it that it needs just by itself. 0:12:20.040 --> 0:12:22.520 It's going to take a lot of time to reshore 0:12:22.520 --> 0:12:25.760 industrial bases, to retrain American workers, and then there's obviously 0:12:25.800 --> 0:12:31.640 like the cost implications for high end manufacturing iPhones, consumer electronics, cars. 0:12:31.320 --> 0:12:31.760 Et cetera. 0:12:32.400 --> 0:12:35.600 And that you know, that transition period could definitely cause 0:12:35.800 --> 0:12:38.640 a very severe recession. But even more importantly than that, 0:12:38.720 --> 0:12:40.920 obviously it would cause an unwind of a lot of 0:12:40.920 --> 0:12:43.520 these carry trade and pro liquidity effects that have taken 0:12:43.559 --> 0:12:46.920 place with regards to this Tripan's dilemma that's been playing 0:12:46.920 --> 0:12:49.440 out for the last thirty to fifty years. And so 0:12:49.520 --> 0:12:52.560 that means that equity markets and bond markets are going 0:12:52.640 --> 0:12:55.720 to fall, you know, substantially. And I don't think Trump 0:12:55.800 --> 0:12:58.840 was ready for that amount of economic pain. And I'm 0:12:58.840 --> 0:13:01.120 not saying that, you know, whether it's right or wrong 0:13:01.160 --> 0:13:04.600 that we should move back towards a more self sufficient 0:13:04.800 --> 0:13:09.280 and more reshort industrial economy, or if we should let 0:13:09.320 --> 0:13:12.200 our manufacturers move overseas and basically ship away all of 0:13:12.200 --> 0:13:15.920 our jobs. But there's always trade offs, right. This is 0:13:15.960 --> 0:13:18.280 a world of nuanced there's never anything simple, and so 0:13:18.320 --> 0:13:21.720 if you want to do that, that path you're going 0:13:21.800 --> 0:13:23.920 to cause, you know, incur a lot of economic pain. 0:13:23.960 --> 0:13:26.840 And so yeah, I think that two forty five percent 0:13:27.000 --> 0:13:31.040 was just a almost like a bloviating show move, if 0:13:31.080 --> 0:13:33.280 you will. That was just meant to scare people. But 0:13:33.720 --> 0:13:35.920 in reality that that kind of thing would not hold 0:13:35.960 --> 0:13:38.560 long term if you want to basically retain our global 0:13:38.559 --> 0:13:39.600 monetary system as it is. 0:13:39.840 --> 0:13:41.360 And I don't think that was ever the plan, right, 0:13:41.400 --> 0:13:43.000 I mean, obviously he wrote the book Art of the Deal, 0:13:43.000 --> 0:13:45.320 which is anchoring, right, you go high, you set a low, 0:13:45.559 --> 0:13:47.840 so it opens the door for negotiations. 0:13:48.720 --> 0:13:50.680 I think a couple of things in that as well 0:13:50.720 --> 0:13:51.320 that I think. 0:13:51.160 --> 0:13:55.400 About is that you know, Stephen Moran, who's his economic 0:13:55.400 --> 0:13:58.439 Trump's economic advisor, wrote a paper before Trump became president 0:13:58.960 --> 0:14:01.600 and basically coined the term mar Alago Accords. And so 0:14:01.679 --> 0:14:05.920 he sort of laid out this playbook that seems to 0:14:05.960 --> 0:14:08.640 be sort of what the Trump administration is following down now, 0:14:08.679 --> 0:14:10.560 this playbook into this mar A Lago Accords. 0:14:11.280 --> 0:14:12.000 Maybe not exactly. 0:14:12.040 --> 0:14:14.480 I think maybe he's moved more aggressively than was laid 0:14:14.480 --> 0:14:18.960 out in the paper. But I think also in that 0:14:19.040 --> 0:14:21.160 so the two hundred and forty five percent was much 0:14:21.200 --> 0:14:24.480 more aggressive. There's been a lot of talk about this 0:14:24.840 --> 0:14:26.840 potential game of chicken. I think as you called it, 0:14:26.840 --> 0:14:29.360 I would agree with that. Forming like this game of chicken, 0:14:29.360 --> 0:14:32.880 like who could go longer China or the US? Realistically, 0:14:32.920 --> 0:14:35.280 neither of us could survive without each other. I mean 0:14:35.520 --> 0:14:38.880 it'd be very rough if we did, right, And I thought, man, 0:14:38.920 --> 0:14:41.560 I mean, China welded people in their frigging houses during 0:14:41.600 --> 0:14:44.200 the pandemic, like they can go through a lot of pain, 0:14:44.280 --> 0:14:45.720 Like the US isn't going to put up with that. 0:14:45.840 --> 0:14:49.840 Right as of like yesterday and today, though, it looks 0:14:49.840 --> 0:14:52.640 like China is like caving like super fast. Right, they 0:14:52.680 --> 0:14:55.680 already switched to easing. They're like begging for a meeting. 0:14:56.440 --> 0:14:58.600 It's looking like they want to deal pretty quickly. I 0:14:58.640 --> 0:14:59.920 don't know if you've been paying attention to that. 0:15:01.480 --> 0:15:04.440 Yeah, no, and I'm not surprised that they do. You know, 0:15:04.480 --> 0:15:09.880 while the CCP can maintain basically, like you know, monetary 0:15:09.920 --> 0:15:15.360 and economic harsh conditions much longer than the US can, 0:15:16.000 --> 0:15:18.560 it does not behoove them to do that at this 0:15:18.640 --> 0:15:21.960 current juncture. Right, We've seen a Chinese economy for the 0:15:22.040 --> 0:15:24.720 last two or three years that's been in basically recession 0:15:24.840 --> 0:15:29.600 or complete contraction due to the real estate and banking 0:15:29.640 --> 0:15:34.000 sectors starting to fall from their massive shadow real estate 0:15:34.040 --> 0:15:37.280 bubble that's been imploding. We saw the you know, the 0:15:37.400 --> 0:15:41.360 bankruptcy of Country Garden and Evergrand and several other large developers, 0:15:41.400 --> 0:15:45.000 as well as defaults of major property developers all across 0:15:45.080 --> 0:15:47.720 China and their failure to pay dollar bonds as well 0:15:47.760 --> 0:15:51.360 as on shore yuan bonds, and so the Chinese economy 0:15:51.440 --> 0:15:54.800 essentially has kind of reached this I think severe inflection 0:15:54.840 --> 0:15:56.720 point where they now need to choose what they're going 0:15:56.760 --> 0:15:59.600 to go forward with a path of deflation and let 0:15:59.640 --> 0:16:03.000 their estate bubble basically burst in slow motion essentially like 0:16:03.040 --> 0:16:05.280 two thousand and eight, or are they going to reflate 0:16:05.280 --> 0:16:09.080 the bubble and print the yuan and let the UoN devalue. 0:16:09.400 --> 0:16:11.640 And that's a difficult decision to make because either way, 0:16:11.640 --> 0:16:15.320 obviously there's economic pain, but the winners and losers are 0:16:15.320 --> 0:16:19.560 different in each scenario. Right, If you choose the deflationary path, 0:16:19.720 --> 0:16:22.520 then obviously the equity holders and the bond holders are 0:16:22.560 --> 0:16:25.840 going to get wiped out, but you might be able 0:16:25.840 --> 0:16:29.600 to retain that yuan seven point three to the dollar 0:16:29.680 --> 0:16:31.880 peg for a lot longer. And then if you go 0:16:31.920 --> 0:16:33.800 the other way, obviously you're going to see a blood 0:16:33.840 --> 0:16:36.600 in your currency. But on the plus side, the exports 0:16:36.640 --> 0:16:41.280 become much more competitive, so China, and China has been 0:16:41.320 --> 0:16:43.960 trying to show this strong face, right, this poker face. 0:16:44.440 --> 0:16:46.520 But again, if you look at I mean even the 0:16:46.600 --> 0:16:49.720 data like I was looking at this yesterday. Ever since 0:16:49.840 --> 0:16:53.280 twenty twenty two, they've stopped publishing most of their economic 0:16:53.360 --> 0:16:56.680 data publicly. If you look at youth unemployment, you look 0:16:56.720 --> 0:17:00.720 at factory orders, you look at new homes and new 0:17:00.720 --> 0:17:03.400 home leases in China, all the figures just won't be 0:17:03.440 --> 0:17:06.399 reported anymore. By their version of the BLS and so 0:17:06.480 --> 0:17:09.120 that tells me that things are pretty bad there right now. 0:17:09.160 --> 0:17:11.520 They just don't want the US to know because obviously 0:17:11.560 --> 0:17:12.560 that would weaken their hand. 0:17:13.119 --> 0:17:15.920 Yeah. Yeah, but it is a game of chicken. 0:17:16.440 --> 0:17:18.879 The way I see it is back to these mariologue 0:17:18.880 --> 0:17:21.720 with chords was like obviously put pressure on China. And 0:17:21.760 --> 0:17:24.040 I think there's even in the Biden administration with sort 0:17:24.080 --> 0:17:27.440 of this stance on China trying to put them back. 0:17:27.280 --> 0:17:27.760 In their place. 0:17:27.800 --> 0:17:29.800 I think it's probably more from the intelligence community than 0:17:29.840 --> 0:17:32.280 just the Biden or Trump administration. But you know, Biden 0:17:32.359 --> 0:17:33.760 is the one that took away their ability to get 0:17:33.760 --> 0:17:37.399 microchips for example, right advanced microchips, right to limit their 0:17:37.920 --> 0:17:41.200 their technology, and then started the Chips Act to start 0:17:41.200 --> 0:17:43.000 bringing on shore and some of that back. 0:17:43.240 --> 0:17:45.960 And when you think about that, it's terrorists are really about. 0:17:45.720 --> 0:17:48.960 Like more strategic moves, right. So it's like the US 0:17:49.040 --> 0:17:51.320 doesn't need to make T shirts and sneakers here, like 0:17:51.359 --> 0:17:53.000 we gave those jobs up a long time ago. But 0:17:53.040 --> 0:17:55.080 it's like there are strategic things that we should be 0:17:55.119 --> 0:17:58.200 doing here, like you know, rare earth elements having to 0:17:58.240 --> 0:18:00.119 steal in copper so we could actually make things. So 0:18:00.119 --> 0:18:02.320 I think there's like things that are strategic. It was 0:18:02.359 --> 0:18:04.840 never about bringing all the jobs back. It's like, what 0:18:04.880 --> 0:18:06.679 are the jobs that we need here, and let's just 0:18:06.720 --> 0:18:09.119 bring those back. We don't need to grow mangoes or 0:18:09.119 --> 0:18:11.040 coconuts like we can let other people do those things 0:18:11.040 --> 0:18:15.320 as well. And that seems to be happening at a 0:18:15.320 --> 0:18:17.280 pretty breakneck speed. As a matter of fact, if you 0:18:17.320 --> 0:18:20.639 saw the latest GDP numbers that came out, right, we 0:18:20.720 --> 0:18:25.320 had a negative print, but that was adjusted for what 0:18:25.359 --> 0:18:29.280 a forty one percent increase surgeon imports. But when you 0:18:29.320 --> 0:18:32.240 look at the investments that were going on in the US, 0:18:32.280 --> 0:18:35.480 I mean, Trump announced eight trillion dollars of investments going 0:18:35.480 --> 0:18:37.760 on in the United States, it looks like we're going 0:18:37.800 --> 0:18:40.480 into some sort of like a reindustrialization that we haven't 0:18:40.480 --> 0:18:41.960 seen since like the nineteen forties. 0:18:41.960 --> 0:18:46.639 Almost, Yeah, I mean, I would hope so, right, because again, 0:18:46.680 --> 0:18:50.280 the negative effects, right, the knock on effects of the 0:18:50.359 --> 0:18:54.480 offshoring of our industrial base are is pretty substantial. It's 0:18:54.560 --> 0:18:57.080 you know, pretty sad to see as well. Like the 0:18:57.760 --> 0:18:59.359 you know, in the rost belt States, one of the 0:18:59.440 --> 0:19:03.480 leading causes for death now is opioid detention and depression 0:19:03.640 --> 0:19:08.840 and basically economic malaise is now kind of common young 0:19:08.960 --> 0:19:12.040 young men, especially in those areas. And so when you 0:19:12.480 --> 0:19:14.879 destroy the ability of especially a large section of the 0:19:14.880 --> 0:19:17.919 middle class to make money and to provide for themselves, 0:19:18.240 --> 0:19:20.760 and you offshore that to foreign countries where they just 0:19:20.800 --> 0:19:22.840 do it cheaper, and they still don't treat their workers 0:19:22.840 --> 0:19:27.080 well obviously, right in Southeast Asia, that just demoralizes the people, 0:19:27.119 --> 0:19:30.680 and it obviously impacts the local economies very very severely. 0:19:31.040 --> 0:19:35.000 And so I think reindustrialization obviously should happen. But the 0:19:35.119 --> 0:19:37.320 question is, of course, like you said, what things should 0:19:37.359 --> 0:19:39.920 we bring back? And I think high technology things that 0:19:40.000 --> 0:19:44.680 are critical to defense, you know, lithium, copper, cadmium, things 0:19:44.680 --> 0:19:47.639 that are needed for battery and ev production obviously, but 0:19:48.359 --> 0:19:52.480 like you said, agricultural products, certain consumer goods, we don't 0:19:52.520 --> 0:19:54.639 necessarily need to produce those here. So I think it's 0:19:54.680 --> 0:19:55.480 a balancing act. 0:19:55.800 --> 0:19:56.480 The problem with. 0:19:56.440 --> 0:20:00.480 The tariffs as they're constructed now is that tru you know, 0:20:00.560 --> 0:20:03.399 came out guns blazing with this tariff policy, thinking that 0:20:03.520 --> 0:20:07.720