1 00:00:13,600 --> 00:00:16,279 Speaker 1: Hey, everyone, Welcome to another episode of the Market's Disruptor Show, 2 00:00:16,280 --> 00:00:19,200 Speaker 1: and today I'm joined by Luke Grumman for another time. UM. 3 00:00:19,200 --> 00:00:21,520 Speaker 1: He is the founder and president of f F T 4 00:00:21,520 --> 00:00:24,360 Speaker 1: t UH. He's it's a financial newsletter, a great one, 5 00:00:24,360 --> 00:00:26,240 Speaker 1: by the way, one that I subscribe to. I'll make 6 00:00:26,239 --> 00:00:28,480 Speaker 1: sure you'll link it down below. But man, he has 7 00:00:28,520 --> 00:00:30,560 Speaker 1: so many good insights that really match up a lot 8 00:00:30,600 --> 00:00:32,839 Speaker 1: with what I have to say. But he's got so 9 00:00:32,920 --> 00:00:34,400 Speaker 1: much more insight I want to dig into a day. 10 00:00:34,400 --> 00:00:36,040 Speaker 1: So Luke, thanks, thanks so much for taking time to 11 00:00:36,040 --> 00:00:38,400 Speaker 1: come with sit down with us. Absolutely thanks for having 12 00:00:38,400 --> 00:00:40,839 Speaker 1: me on again. Mark, It's great to be here. Yeah, Luke, 13 00:00:40,960 --> 00:00:44,159 Speaker 1: so um, yeah, I know, you know, you have a 14 00:00:44,400 --> 00:00:46,560 Speaker 1: you have a worldview that I think is is unique, 15 00:00:46,600 --> 00:00:49,560 Speaker 1: but it's one that kind of aligns with what I have. UM, 16 00:00:49,600 --> 00:00:51,160 Speaker 1: and I and you know, I follow you on Twitter 17 00:00:51,159 --> 00:00:52,519 Speaker 1: and I get your newsletter, and so I kind of 18 00:00:52,520 --> 00:00:54,320 Speaker 1: see the stuff that you're putting out. UM, I know 19 00:00:54,480 --> 00:00:56,920 Speaker 1: you're you're you're definitely in deeper than you don't do 20 00:00:56,960 --> 00:00:58,760 Speaker 1: a lot of this stuff than I am. UM. A 21 00:00:58,800 --> 00:01:00,720 Speaker 1: couple of things that you've been taught kin about lately 22 00:01:00,920 --> 00:01:03,520 Speaker 1: or you know, inflation and deflation, which of course are 23 00:01:03,560 --> 00:01:08,039 Speaker 1: big topics and um, disinflation or whatever. But even you know, 24 00:01:07,880 --> 00:01:09,480 Speaker 1: and I know you've been starting to talk about like 25 00:01:09,640 --> 00:01:13,039 Speaker 1: stock assets and even alternative assets, gold, bitcoin, et cetera. 26 00:01:13,120 --> 00:01:15,319 Speaker 1: So I want to cover all that stuff, but maybe 27 00:01:15,319 --> 00:01:18,000 Speaker 1: why don't we start with kind of uh, where we're 28 00:01:18,040 --> 00:01:20,080 Speaker 1: at right right now? I know in your newsletter you 29 00:01:20,120 --> 00:01:23,480 Speaker 1: have talked about like inflation is picking up sharply, and 30 00:01:23,520 --> 00:01:26,160 Speaker 1: so let's start with inflation. Um. It seems like a 31 00:01:26,240 --> 00:01:29,520 Speaker 1: very nuanced argument. Obviously the FED tries to give us 32 00:01:29,560 --> 00:01:31,680 Speaker 1: their c P I UM. I like to say, that's 33 00:01:31,720 --> 00:01:34,320 Speaker 1: kind of like a political tool. Um. But at the 34 00:01:34,319 --> 00:01:36,880 Speaker 1: same time, we're seeing lumber, you know, go crazy, and 35 00:01:36,920 --> 00:01:40,679 Speaker 1: steel and concrete, and I mean everything else is going up. Um, 36 00:01:40,760 --> 00:01:43,240 Speaker 1: So tell us, tell us what you mean by inflations 37 00:01:43,240 --> 00:01:44,880 Speaker 1: picking up sharply. What are we looking at right now? 38 00:01:45,959 --> 00:01:49,960 Speaker 1: I think, I think when when I wrote that, I'm 39 00:01:50,000 --> 00:01:51,680 Speaker 1: just looking at the prices of stuff, and the chart 40 00:01:51,720 --> 00:01:54,600 Speaker 1: it's almost all the same chart. It is limit up, 41 00:01:54,840 --> 00:02:00,720 Speaker 1: limit up, copper, corn, uh, lumber, Uh, you're the in shrinklation. 42 00:02:00,760 --> 00:02:02,120 Speaker 1: You know. Someone had a tweet the other day show 43 00:02:02,160 --> 00:02:04,000 Speaker 1: in the same paper tells at Costco six months later, 44 00:02:05,120 --> 00:02:08,880 Speaker 1: smaller package. Um, I think the price of stuff is 45 00:02:08,880 --> 00:02:13,400 Speaker 1: going up a lot, and I think ultimately, uh, the 46 00:02:13,480 --> 00:02:15,799 Speaker 1: FED is in a bit of a bind because I 47 00:02:15,840 --> 00:02:19,240 Speaker 1: think as I read a lot of of of other 48 00:02:19,280 --> 00:02:22,399 Speaker 1: work out there and listen to the financial media, to me, 49 00:02:22,760 --> 00:02:29,320 Speaker 1: it remains poorly understood and rarely discussed that once the 50 00:02:29,400 --> 00:02:31,239 Speaker 1: depth of GDP is as high as it is in 51 00:02:31,280 --> 00:02:35,840 Speaker 1: the US at you're out of options. You have to there. 52 00:02:35,919 --> 00:02:41,239 Speaker 1: There's only three options. It's it's it's it's default, it's inflate, 53 00:02:41,560 --> 00:02:44,840 Speaker 1: or it's hyper inflate. That's it what you're kind of 54 00:02:44,880 --> 00:02:47,760 Speaker 1: the same exactly, It's yeah. I mean hyper inflation is 55 00:02:47,760 --> 00:02:50,200 Speaker 1: a little bit more of a political phenomenon. And to me, 56 00:02:51,040 --> 00:02:52,959 Speaker 1: you hear some of the great ones in history, like 57 00:02:52,960 --> 00:02:55,400 Speaker 1: like bym our Germany, etceter. I don't think that's on 58 00:02:55,440 --> 00:02:57,240 Speaker 1: the table for the US for a number of reasons. 59 00:02:57,800 --> 00:03:00,480 Speaker 1: Hey guys, let me just interrupt this interview quick, just 60 00:03:00,520 --> 00:03:03,880 Speaker 1: to plug the show sponsor, and that is block Fi. Now. 61 00:03:03,919 --> 00:03:07,720 Speaker 1: Block five is doing amazing things in the bitcoin finance space. 62 00:03:07,840 --> 00:03:09,639 Speaker 1: As a matter of fact, they've cracked some really big 63 00:03:09,639 --> 00:03:12,520 Speaker 1: news by bringing on the x C f tc UM 64 00:03:12,600 --> 00:03:15,440 Speaker 1: chair Chris gian Carlo UM and they are one of 65 00:03:15,480 --> 00:03:19,519 Speaker 1: the most transparent, most heavily regulated UM companies inside the 66 00:03:19,560 --> 00:03:22,040 Speaker 1: United States, which gives me a lot of trust into 67 00:03:22,080 --> 00:03:24,280 Speaker 1: what their services are. Now, I've recently did a video 68 00:03:24,360 --> 00:03:27,720 Speaker 1: talking about how to retire off bitcoin, and you can 69 00:03:27,760 --> 00:03:31,160 Speaker 1: do that by leveraging debt and interest against bitcoin. And 70 00:03:31,280 --> 00:03:34,640 Speaker 1: Block five is the number one company in the United 71 00:03:34,680 --> 00:03:36,720 Speaker 1: States or maybe in the world to go to and 72 00:03:36,840 --> 00:03:39,760 Speaker 1: use UM. They are leading the charges there paying interest 73 00:03:39,800 --> 00:03:41,400 Speaker 1: on your bitcoin if you park it with them, or 74 00:03:41,520 --> 00:03:43,680 Speaker 1: you can borrow against it. Now, as I broke down 75 00:03:43,680 --> 00:03:46,280 Speaker 1: in that video, you can borrow against your bitcoin, and 76 00:03:46,280 --> 00:03:49,160 Speaker 1: when you take debt against it, it's not taxable. It's 77 00:03:49,200 --> 00:03:50,960 Speaker 1: not a taxable event. You can use that debt for 78 00:03:51,000 --> 00:03:53,120 Speaker 1: anything that you want, including to live off of to 79 00:03:53,240 --> 00:03:56,320 Speaker 1: leverage up and buy more, or roll it into another asset. UM. 80 00:03:56,360 --> 00:03:58,480 Speaker 1: You can do something like I've done recently, like sell 81 00:03:58,560 --> 00:04:01,440 Speaker 1: some real estate put that money into bitcoin. Now, as 82 00:04:01,480 --> 00:04:04,000 Speaker 1: that bitcoin price has risen, I'm able to borrow against 83 00:04:04,040 --> 00:04:06,040 Speaker 1: it and go back and buy the same real estate 84 00:04:06,080 --> 00:04:09,040 Speaker 1: or something similar, and I still own the bitcoin, and 85 00:04:09,160 --> 00:04:11,680 Speaker 1: I also own the new asset as well. Lots of 86 00:04:11,720 --> 00:04:14,000 Speaker 1: ways you can do this. Um and block five is 87 00:04:14,040 --> 00:04:16,800 Speaker 1: the company that I recommend. Down in the description, I 88 00:04:16,839 --> 00:04:18,400 Speaker 1: have a link that you can click on. If you 89 00:04:18,480 --> 00:04:19,800 Speaker 1: choose to use that link, you can earn up the 90 00:04:19,760 --> 00:04:22,600 Speaker 1: two fifty dollars in bitcoin just for using that link. 91 00:04:22,720 --> 00:04:26,039 Speaker 1: So check out blockline now. But I do think that 92 00:04:26,120 --> 00:04:27,440 Speaker 1: you know you say, okay, so we're not going to 93 00:04:27,520 --> 00:04:31,360 Speaker 1: default on treasuries and entitlements nominally. And hyper inflation is 94 00:04:31,440 --> 00:04:34,240 Speaker 1: highly and like at least a currency destroying hyper inflation 95 00:04:34,320 --> 00:04:37,960 Speaker 1: is as is classically defined as sort of fifty per 96 00:04:38,080 --> 00:04:40,880 Speaker 1: month or more of inflation, and so it leads you 97 00:04:41,160 --> 00:04:44,839 Speaker 1: inflation and bring that all back to the point that 98 00:04:45,040 --> 00:04:47,719 Speaker 1: once you're at a hundred thirty percent, that to GDP 99 00:04:48,640 --> 00:04:52,080 Speaker 1: you you don't have any other option. They they the 100 00:04:52,160 --> 00:04:56,040 Speaker 1: only FED policy they really have is is basically playing 101 00:04:56,040 --> 00:04:58,200 Speaker 1: a game of these aren't the droids you're looking for? 102 00:04:58,480 --> 00:05:01,479 Speaker 1: And you're seeing that for the FED. You're seeing that 103 00:05:01,520 --> 00:05:04,000 Speaker 1: from Powe's right, you have you have Warren Buffet, who 104 00:05:04,000 --> 00:05:07,320 Speaker 1: owns whatever you know. Berkshire Hathaway owns a wide swath 105 00:05:07,360 --> 00:05:09,640 Speaker 1: of the US economy. He's been doing this for ninety years, 106 00:05:10,279 --> 00:05:12,200 Speaker 1: uh or he's ninety years old. He's been doing this 107 00:05:12,240 --> 00:05:16,440 Speaker 1: for eighty seventy of those years on some level. And 108 00:05:16,520 --> 00:05:19,120 Speaker 1: he comes out and says, inflation is going crazy across 109 00:05:19,160 --> 00:05:22,719 Speaker 1: all of our businesses, and like two hours later, Janet 110 00:05:22,800 --> 00:05:25,880 Speaker 1: yell And said, I don't think Biden's policies are leading 111 00:05:25,920 --> 00:05:28,080 Speaker 1: to any inflation. And so it's like who you're gonna 112 00:05:28,120 --> 00:05:31,360 Speaker 1: believe you know me or you're you're lying eyes. And 113 00:05:31,440 --> 00:05:35,040 Speaker 1: so I think when I say inflation is really picking up, uh, 114 00:05:35,440 --> 00:05:39,359 Speaker 1: the what we have seen is the prices of of 115 00:05:39,480 --> 00:05:43,400 Speaker 1: lots of stuff rising rather rapidly. Uh. And then the question, 116 00:05:43,960 --> 00:05:47,040 Speaker 1: of course becomes as a transitory or not um, And 117 00:05:47,080 --> 00:05:48,920 Speaker 1: that's that's a whole separate discussion. But when I say 118 00:05:48,960 --> 00:05:51,359 Speaker 1: inflation is picking up, I'm just I'm just watching the 119 00:05:51,360 --> 00:05:55,080 Speaker 1: prices of stuff go up really rapidly. Yeah, somebody, somebody 120 00:05:55,160 --> 00:05:57,400 Speaker 1: couple a couple of good things in there. One. Um. Yeah. 121 00:05:57,440 --> 00:05:59,200 Speaker 1: It seems like everywhere we look in the media, like 122 00:05:59,240 --> 00:06:01,520 Speaker 1: they're like trying to tell us that we're not seeing 123 00:06:01,520 --> 00:06:04,279 Speaker 1: things that we're seeing. I was commented on someone's post 124 00:06:04,320 --> 00:06:07,920 Speaker 1: earlier today about Biden and his rambling, and like everybody 125 00:06:07,960 --> 00:06:10,520 Speaker 1: knows he's like losing his mind. But the but the 126 00:06:10,600 --> 00:06:12,520 Speaker 1: but the media continues to tell us that he's not. 127 00:06:12,960 --> 00:06:15,400 Speaker 1: But the world leaders they all know, like everyone knows, 128 00:06:15,400 --> 00:06:17,679 Speaker 1: like Putin called him out, like I mean, like everybody 129 00:06:17,800 --> 00:06:19,839 Speaker 1: like they're telling us, and same thing with the with 130 00:06:19,880 --> 00:06:21,960 Speaker 1: the inflation. They're trying to tell us as no inflation, 131 00:06:22,000 --> 00:06:23,960 Speaker 1: but like everybody knows prices are going up. I mean, 132 00:06:24,000 --> 00:06:25,480 Speaker 1: just look at gas and look at meat or look 133 00:06:25,480 --> 00:06:27,760 Speaker 1: at me. I mean, you name it. Um and so, 134 00:06:28,240 --> 00:06:31,480 Speaker 1: because it's like this nuanced argument, Um, it seems like, 135 00:06:32,040 --> 00:06:33,920 Speaker 1: you know, depend on where you live in the country, 136 00:06:33,920 --> 00:06:36,560 Speaker 1: real estate has gone up really inflated or it hasn't 137 00:06:36,600 --> 00:06:38,360 Speaker 1: inflated that much, so it kind of depends on what 138 00:06:38,400 --> 00:06:43,200 Speaker 1: you're buying. Um and so. Um do you think almost 139 00:06:43,240 --> 00:06:45,240 Speaker 1: is it a better way to look at like, I mean, 140 00:06:45,440 --> 00:06:48,120 Speaker 1: is it helpful for I guess individual investors to kind 141 00:06:48,120 --> 00:06:50,440 Speaker 1: of abandon like that CPI metric and maybe look at 142 00:06:50,480 --> 00:06:57,880 Speaker 1: like M one, M two type numbers as inflation. Yeah, 143 00:06:58,000 --> 00:07:03,080 Speaker 1: it might be. It might be. I think ultimately, I 144 00:07:03,120 --> 00:07:06,920 Speaker 1: think it's important for individual investors to just understand the 145 00:07:07,000 --> 00:07:09,880 Speaker 1: context of where we are where it has been a 146 00:07:09,880 --> 00:07:13,080 Speaker 1: long long time since the Western world broadly the US 147 00:07:13,120 --> 00:07:18,360 Speaker 1: and in particular has been in this position where they 148 00:07:19,280 --> 00:07:21,560 Speaker 1: they need to lie to you. They're going to lie 149 00:07:21,600 --> 00:07:24,720 Speaker 1: to you. Um, And it's fascinating. It's really a fascinating 150 00:07:24,760 --> 00:07:28,680 Speaker 1: study in in in sociology or human psychology, where if 151 00:07:28,720 --> 00:07:30,480 Speaker 1: you get the right people to lie to you, people 152 00:07:30,480 --> 00:07:34,000 Speaker 1: will believe you believe it, and if you repeat the 153 00:07:34,040 --> 00:07:36,120 Speaker 1: lie often enough, people will believe it. And so I 154 00:07:36,200 --> 00:07:39,800 Speaker 1: just think it's important for people, for individual investors to 155 00:07:39,880 --> 00:07:42,880 Speaker 1: think independently and and look at the context. There is 156 00:07:42,960 --> 00:07:47,240 Speaker 1: no way out unless they inflate. They have to inflate, 157 00:07:47,640 --> 00:07:50,360 Speaker 1: and given the high level of debt to GDP, it's 158 00:07:50,400 --> 00:07:53,560 Speaker 1: going to have to be a pretty significant inflation to 159 00:07:53,640 --> 00:07:57,720 Speaker 1: draw so that phenomenal GDP can grow rapidly while yields 160 00:07:57,760 --> 00:08:02,400 Speaker 1: don't respond, because they inflation without yields responding, so that 161 00:08:02,440 --> 00:08:05,920 Speaker 1: they can basically delever the government balance sheet from a 162 00:08:06,680 --> 00:08:11,240 Speaker 1: percent today to something far south of a in the 163 00:08:11,280 --> 00:08:14,120 Speaker 1: not too distant future. So you know, they've got to 164 00:08:14,120 --> 00:08:16,480 Speaker 1: get from point A to point B. You know, the 165 00:08:16,520 --> 00:08:18,520 Speaker 1: only way that you know that they can really do 166 00:08:18,600 --> 00:08:22,480 Speaker 1: it is is via inflation at some rate. And so 167 00:08:22,600 --> 00:08:26,800 Speaker 1: I think you just have to really, um, be independent, 168 00:08:27,360 --> 00:08:30,920 Speaker 1: be willing to think independently, and just you know, trust 169 00:08:31,000 --> 00:08:32,959 Speaker 1: your own lying eyes. You know, when you kill the 170 00:08:33,000 --> 00:08:34,800 Speaker 1: grocery store and you buy the same stuff, and it 171 00:08:34,800 --> 00:08:38,719 Speaker 1: goes up a bunch, Uh, that's inflation. And they can 172 00:08:38,760 --> 00:08:41,200 Speaker 1: say it is. They can when your kids go through 173 00:08:41,240 --> 00:08:43,960 Speaker 1: the stuff faster because the packages are smaller, it's inflation. 174 00:08:44,000 --> 00:08:48,120 Speaker 1: And for me, I don't get upset about it per se. 175 00:08:48,240 --> 00:08:50,560 Speaker 1: It is what it is. I think it's just important 176 00:08:50,559 --> 00:08:52,440 Speaker 1: to to take a step back from it, look at 177 00:08:52,440 --> 00:08:55,240 Speaker 1: it objectively. The world's been here before. It's happened over 178 00:08:55,280 --> 00:08:57,440 Speaker 1: and over and over. It's just for the last thirty 179 00:08:57,520 --> 00:08:59,959 Speaker 1: to forty years, it's only happened in emerging markets, primarily 180 00:09:00,080 --> 00:09:02,160 Speaker 1: the Western world. We've not had to experience this in 181 00:09:02,440 --> 00:09:05,000 Speaker 1: quite some time. So I think it's really just about 182 00:09:05,040 --> 00:09:10,480 Speaker 1: them positioning your assets in those um in those sectors 183 00:09:10,480 --> 00:09:14,200 Speaker 1: that do well with where where inflation is greater than 184 00:09:14,320 --> 00:09:17,880 Speaker 1: anticipated or greater than reported. Because really, if you say 185 00:09:17,920 --> 00:09:21,000 Speaker 1: inflations three and it's actually six, how that's going to 186 00:09:21,040 --> 00:09:23,319 Speaker 1: show up? As it means every company by and largest 187 00:09:23,360 --> 00:09:27,920 Speaker 1: gonna report they're getting a three percent free revenue pickup. Uh. 188 00:09:27,920 --> 00:09:31,440 Speaker 1: For companies relative to their funding costs, which are pegged 189 00:09:31,440 --> 00:09:33,120 Speaker 1: at the at the lower rate that are based on 190 00:09:33,160 --> 00:09:36,000 Speaker 1: the c p I. So they're borrowing at the you know, 191 00:09:36,720 --> 00:09:38,960 Speaker 1: they're borrowing at the I don't want to say fraudulent, 192 00:09:38,960 --> 00:09:42,720 Speaker 1: but they're borrowing at the understated rate. They're they're reporting 193 00:09:42,720 --> 00:09:46,960 Speaker 1: revenues at the real rate, or or their revenues are 194 00:09:47,000 --> 00:09:50,080 Speaker 1: benefiting from the real rate. And because they have leverage 195 00:09:50,120 --> 00:09:52,240 Speaker 1: on their books, generally speaking, given the broad state of 196 00:09:52,559 --> 00:09:57,079 Speaker 1: corporate corporate borrowing up, those earnings are going to drop 197 00:09:57,160 --> 00:10:01,000 Speaker 1: down to the pretext line? Are those so that inflation 198 00:10:01,000 --> 00:10:03,560 Speaker 1: pickups going to pick and drop right to the pretext line? Um, 199 00:10:03,679 --> 00:10:07,000 Speaker 1: So that's a good environment. All those equal for corporate America, 200 00:10:07,000 --> 00:10:10,360 Speaker 1: it's all so equal. It's a good environment for stocks. Um, 201 00:10:10,440 --> 00:10:12,560 Speaker 1: you know, certain stocks more than others, and you can 202 00:10:12,559 --> 00:10:14,240 Speaker 1: get into that. But I think it's also good for goal. 203 00:10:14,280 --> 00:10:18,720 Speaker 1: I think it's good for bitcoin. Um. Basically sectors that 204 00:10:19,160 --> 00:10:23,760 Speaker 1: have assets that can you know, they can more accurately 205 00:10:23,800 --> 00:10:27,679 Speaker 1: reflect what's actually going on. And you say that's good 206 00:10:27,720 --> 00:10:30,520 Speaker 1: for those assets certain stocks or gold or bitcoin or whatever, 207 00:10:30,920 --> 00:10:34,000 Speaker 1: And is it good for those assets because people realize 208 00:10:34,040 --> 00:10:37,520 Speaker 1: they're losing purchasing power to the inflation, and so they're 209 00:10:37,559 --> 00:10:39,960 Speaker 1: basically forced to get out of the dollar. A man, 210 00:10:40,000 --> 00:10:41,960 Speaker 1: it's hot potato, right, So they're just trying to find 211 00:10:41,960 --> 00:10:43,679 Speaker 1: any other asset they can go into to try to 212 00:10:43,760 --> 00:10:45,920 Speaker 1: keep up with the purchasing power or the rate of inflation. 213 00:10:46,520 --> 00:10:49,240 Speaker 1: I think it really comes down to, Uh, there's the 214 00:10:49,240 --> 00:10:52,400 Speaker 1: global bond market is a hundred thirty trillion dollars and 215 00:10:52,440 --> 00:10:56,319 Speaker 1: I think that bond market, you're basically watching the bond 216 00:10:56,360 --> 00:10:59,920 Speaker 1: market try to squeeze into all these other asset classes 217 00:11:00,000 --> 00:11:01,240 Speaker 1: at the end of the day, is really what we're 218 00:11:01,240 --> 00:11:04,160 Speaker 1: talking about. I think that's really the playbook. Is. The 219 00:11:04,240 --> 00:11:06,320 Speaker 1: last time we had a global sovereign debt bubble burst 220 00:11:06,400 --> 00:11:08,640 Speaker 1: was in the immediate aftermath of World War One. And 221 00:11:08,720 --> 00:11:11,600 Speaker 1: when you look then, the six major industrial powers were 222 00:11:11,640 --> 00:11:16,320 Speaker 1: the US, the UK, Germany, France, Russia, Japan, and over 223 00:11:16,400 --> 00:11:19,120 Speaker 1: a twelve year time horizon, give or take twelve to 224 00:11:19,400 --> 00:11:23,079 Speaker 1: twelve to thirteen year time horizon, the sovereign debt of 225 00:11:23,080 --> 00:11:27,960 Speaker 1: those six nations fell against the neutral reserve asset at 226 00:11:27,960 --> 00:11:31,440 Speaker 1: the time, which was gold um and so uh and 227 00:11:31,480 --> 00:11:33,439 Speaker 1: that was all out of the currency. So you you 228 00:11:33,640 --> 00:11:35,839 Speaker 1: you know how they're going to run the playbook. After 229 00:11:35,920 --> 00:11:38,079 Speaker 1: World War One to the last time we saw this, 230 00:11:38,679 --> 00:11:41,000 Speaker 1: the US debt to GDP went from a ten percent 231 00:11:41,040 --> 00:11:44,320 Speaker 1: to fifty in five years, and a big part of 232 00:11:44,360 --> 00:11:46,400 Speaker 1: that was for the first year year and a half 233 00:11:46,440 --> 00:11:49,120 Speaker 1: after the war, US real rates were negative fourteen percent. 234 00:11:49,240 --> 00:11:53,080 Speaker 1: So basically your Q lost you know whatever, fourteen percent 235 00:11:53,120 --> 00:11:55,040 Speaker 1: compounded for a couple of years, and then that the 236 00:11:55,080 --> 00:11:58,520 Speaker 1: negative real rates declined, got got less negative over the 237 00:11:58,520 --> 00:12:01,400 Speaker 1: course of that time. But basically, uh, you had real 238 00:12:01,480 --> 00:12:03,480 Speaker 1: you had real growth, but then you also had very 239 00:12:03,520 --> 00:12:07,239 Speaker 1: significant inflation, and so your nominal GDP growth was really high. 240 00:12:07,400 --> 00:12:09,960 Speaker 1: Your yields were kept by the FED in that particular 241 00:12:09,960 --> 00:12:14,240 Speaker 1: period of time, and uh, basically you delevered over the 242 00:12:14,280 --> 00:12:16,040 Speaker 1: backs of the real value of bonds. And so I 243 00:12:16,080 --> 00:12:18,080 Speaker 1: think what we're watching is just when I say those 244 00:12:18,120 --> 00:12:21,800 Speaker 1: assets are good or benefit from it. Uh, this is 245 00:12:21,840 --> 00:12:24,679 Speaker 1: this is this growing realization amongst the hundred thirty trillion 246 00:12:24,679 --> 00:12:27,800 Speaker 1: dollar global bond market that this is the only way out. 247 00:12:27,840 --> 00:12:29,839 Speaker 1: And if that's the only way out, then allocations to 248 00:12:29,920 --> 00:12:33,240 Speaker 1: bonds are too high. Almost without fail, what's your allocation? 249 00:12:33,280 --> 00:12:37,520 Speaker 1: It's you know, there's almost no answer that isn't too high, 250 00:12:37,559 --> 00:12:41,040 Speaker 1: and as more people realize that, now there's there's you 251 00:12:41,080 --> 00:12:43,000 Speaker 1: know that the bonds are held for other reasons than 252 00:12:43,120 --> 00:12:45,160 Speaker 1: just an investment income. Of course, right, there's clad, Oh, 253 00:12:45,160 --> 00:12:49,080 Speaker 1: there's duration matching, liability matching, there's other things going on there. 254 00:12:49,080 --> 00:12:51,240 Speaker 1: But at the end of the day, some big chunk 255 00:12:51,280 --> 00:12:55,479 Speaker 1: of the bond market can't compensate you for what authorities 256 00:12:55,520 --> 00:12:57,400 Speaker 1: have to do to get out of this, to avoid 257 00:12:57,440 --> 00:13:00,400 Speaker 1: nominal the fault you've talked to you know, you keep 258 00:13:00,440 --> 00:13:04,080 Speaker 1: talking about that dath to GDP, and you know, I 259 00:13:04,080 --> 00:13:06,679 Speaker 1: think about like the Kinsey and multiplier, like whenever a 260 00:13:06,800 --> 00:13:09,480 Speaker 1: nation gets over ninety, they're not getting enough growths like 261 00:13:09,600 --> 00:13:11,320 Speaker 1: not not not a one to one, and so the 262 00:13:11,400 --> 00:13:13,000 Speaker 1: chance of them being able to grow out of it 263 00:13:13,080 --> 00:13:15,960 Speaker 1: is is uh is very difficult. Um. And it seems 264 00:13:16,000 --> 00:13:18,280 Speaker 1: like that one thirty is also kind of a number 265 00:13:18,280 --> 00:13:19,880 Speaker 1: where like you know, maybe it's kind of like the 266 00:13:19,920 --> 00:13:22,000 Speaker 1: point in overturn, right, we've seen like Greece school over 267 00:13:22,000 --> 00:13:24,120 Speaker 1: one thirty, they're not able to kind of really pull 268 00:13:24,200 --> 00:13:27,400 Speaker 1: back from that. Um. You said, at one point the 269 00:13:27,480 --> 00:13:29,320 Speaker 1: US got over to one fifty. So I mean, do 270 00:13:29,360 --> 00:13:31,280 Speaker 1: you think there's still hope to grow out of a 271 00:13:31,440 --> 00:13:33,560 Speaker 1: one thirty deficit at the rate we're going with the 272 00:13:33,640 --> 00:13:35,240 Speaker 1: with the rate of growth that we have in front 273 00:13:35,280 --> 00:13:38,160 Speaker 1: of us, not on a real basis, No, I don't 274 00:13:38,160 --> 00:13:42,040 Speaker 1: think so. I mean I always leave out the the 275 00:13:42,040 --> 00:13:45,240 Speaker 1: the the caveat that. If we get some sort of 276 00:13:45,280 --> 00:13:49,679 Speaker 1: economic productivity miracle, right, So we get I don't know, 277 00:13:49,880 --> 00:13:56,560 Speaker 1: nuclear fusion that's commercially developable, developable and and commercializable on 278 00:13:56,559 --> 00:13:59,560 Speaker 1: a decentralized basis rolled out over the next three years, right, Okay, 279 00:13:59,640 --> 00:14:02,480 Speaker 1: then yeah, I think we're gonna have a huge productivity pickup. 280 00:14:02,520 --> 00:14:06,760 Speaker 1: You're basically a free energy forever for everybody. Yeah, okay, 281 00:14:06,800 --> 00:14:09,160 Speaker 1: and we probably can grow out of it. But failing 282 00:14:09,240 --> 00:14:14,880 Speaker 1: some sort of really enormous productivity enhancement like that, Um, 283 00:14:14,920 --> 00:14:18,480 Speaker 1: it's unlikely now nominally nominal growth to get out. It's 284 00:14:18,520 --> 00:14:20,240 Speaker 1: just a policy choice. And that's what I think people 285 00:14:20,240 --> 00:14:24,400 Speaker 1: don't realize. It's just a policy choice. Um, Like Biden 286 00:14:24,440 --> 00:14:26,720 Speaker 1: does you know whatever, six trillion in spending these announced, 287 00:14:26,720 --> 00:14:28,320 Speaker 1: and he does another six trillion in the back half, 288 00:14:28,360 --> 00:14:30,040 Speaker 1: another six trillion in the first half and next year, 289 00:14:30,040 --> 00:14:32,040 Speaker 1: another six trillion in the back half next year, and 290 00:14:32,080 --> 00:14:34,520 Speaker 1: the Fed buys enough of all of it. Uh, Look, 291 00:14:34,560 --> 00:14:36,360 Speaker 1: we could wake up and have US g d P 292 00:14:36,960 --> 00:14:40,440 Speaker 1: at know what is it today? Trillion? We could be 293 00:14:40,480 --> 00:14:43,960 Speaker 1: at forty trillion U s GDP in two years nominally. 294 00:14:44,000 --> 00:14:46,680 Speaker 1: Now inflation is going to go nuts, and you know, 295 00:14:46,800 --> 00:14:49,000 Speaker 1: the Fed might have to do yield curve control. In fact, 296 00:14:49,000 --> 00:14:51,480 Speaker 1: they probably would, as argue. But the point is is 297 00:14:51,520 --> 00:14:53,480 Speaker 1: that we could wake up an US debt to GDP 298 00:14:53,760 --> 00:14:57,360 Speaker 1: might be you know, instead of one thirty, it might 299 00:14:57,360 --> 00:14:59,280 Speaker 1: be down to ninety, it might be down to eighty. 300 00:14:59,320 --> 00:15:01,280 Speaker 1: And at that point then you can start talking about 301 00:15:01,440 --> 00:15:06,280 Speaker 1: different normalization of policy. Uh. Now that basically bond holders 302 00:15:06,280 --> 00:15:09,320 Speaker 1: will have lost a lot of money on a real basis. Yeah. 303 00:15:09,360 --> 00:15:12,880 Speaker 1: The problem that I see with that though, is that, um, 304 00:15:12,920 --> 00:15:16,200 Speaker 1: that's government spending picking up, right, So like we need 305 00:15:16,280 --> 00:15:18,800 Speaker 1: like private sector like real growth. Right, It's like I 306 00:15:18,880 --> 00:15:20,880 Speaker 1: like to say that the government cannot give something that 307 00:15:20,960 --> 00:15:24,240 Speaker 1: has not taken so um as we've seen the government, 308 00:15:24,280 --> 00:15:27,400 Speaker 1: you know, public spending going up. Used to be like 309 00:15:27,440 --> 00:15:29,480 Speaker 1: private sector jobs were the best. Now the government jobs 310 00:15:29,480 --> 00:15:31,640 Speaker 1: are the best. The government's like picking up that slack. 311 00:15:32,000 --> 00:15:33,600 Speaker 1: And if it was just that easy, then why not 312 00:15:33,640 --> 00:15:37,000 Speaker 1: just go dump trententionillion dollars out this year, but like 313 00:15:37,120 --> 00:15:40,280 Speaker 1: that's not real spending. That's just uh, you know, it's 314 00:15:41,200 --> 00:15:42,920 Speaker 1: you know, it's it's from one pocket to the other 315 00:15:42,960 --> 00:15:45,120 Speaker 1: sort of sort of thing. So it almost didn't. I mean, 316 00:15:45,640 --> 00:15:47,840 Speaker 1: not all spending is good spending, right, I mean debt, 317 00:15:48,120 --> 00:15:49,600 Speaker 1: the debt spending at the end of the day, is 318 00:15:49,600 --> 00:15:51,520 Speaker 1: going to lower the growth that we have in front 319 00:15:51,560 --> 00:15:55,240 Speaker 1: of us or no, it I think it the short 320 00:15:55,280 --> 00:15:58,240 Speaker 1: answers yes. The longer version I think is that ultimately 321 00:15:58,280 --> 00:15:59,800 Speaker 1: it depends on what you spend it on. If you 322 00:16:00,000 --> 00:16:05,520 Speaker 1: spend a bunch of money on things like unfortunately entitlements 323 00:16:05,760 --> 00:16:09,120 Speaker 1: very low productivity, um, you know where you're you're that's 324 00:16:09,120 --> 00:16:12,520 Speaker 1: just the nature of healthcare broadly speaking. I think if 325 00:16:12,560 --> 00:16:15,640 Speaker 1: you spend it on you know, dropping bombs in Iraq 326 00:16:15,720 --> 00:16:19,000 Speaker 1: to to basically ensure that China gets access to a 327 00:16:19,080 --> 00:16:22,080 Speaker 1: rock oil supply, as we've done for twenty years in 328 00:16:22,160 --> 00:16:25,720 Speaker 1: a really a very big own goal and that's being 329 00:16:26,160 --> 00:16:29,640 Speaker 1: generous and polite, Uh, then yeah, that's that's probably not 330 00:16:29,720 --> 00:16:36,040 Speaker 1: very helpful. But I think if you do things that, um, 331 00:16:36,160 --> 00:16:38,200 Speaker 1: that do have a productivity enhancement, right, you know, the 332 00:16:38,200 --> 00:16:41,160 Speaker 1: the U S government. Building the Eisenhower Highway System was 333 00:16:41,400 --> 00:16:46,560 Speaker 1: enormously productivity enhancing. Um, if you did, you know five 334 00:16:46,680 --> 00:16:50,560 Speaker 1: G roll out across the US and rural America and 335 00:16:50,560 --> 00:16:55,280 Speaker 1: and and and boosted educational UH investment for young people 336 00:16:55,320 --> 00:16:59,400 Speaker 1: across the country. There is over time and enormous productivity payback. 337 00:16:59,440 --> 00:17:02,120 Speaker 1: And so I think it really depends on where you 338 00:17:02,200 --> 00:17:05,399 Speaker 1: spend the money. And but to your point, it does 339 00:17:05,520 --> 00:17:07,639 Speaker 1: imply that now that we've gotten to this point, you 340 00:17:07,640 --> 00:17:09,879 Speaker 1: know there's a reason why China keeps doing more and 341 00:17:09,920 --> 00:17:11,960 Speaker 1: more and more and more. Once the government's the center 342 00:17:12,000 --> 00:17:15,200 Speaker 1: the economy is you can't there, there's no The more 343 00:17:15,280 --> 00:17:18,119 Speaker 1: the government gets involved, the less the more atrophies or 344 00:17:18,200 --> 00:17:21,640 Speaker 1: that private sector muscle becomes in terms of being able 345 00:17:21,640 --> 00:17:23,840 Speaker 1: to spend as much as you need to drive the growth. 346 00:17:23,880 --> 00:17:26,720 Speaker 1: So that's why, you know, people think, well, this is 347 00:17:26,720 --> 00:17:29,199 Speaker 1: transitory and don't worry, the government's gonna back back up. 348 00:17:29,560 --> 00:17:32,399 Speaker 1: I don't think people realized this is we basically COVID 349 00:17:32,440 --> 00:17:34,920 Speaker 1: has basically shifted the US to a U S economy 350 00:17:34,920 --> 00:17:38,200 Speaker 1: with Chinese characteristics model. And anytime the government doesn't do 351 00:17:38,320 --> 00:17:41,800 Speaker 1: enough for the fazeeable future, UM, it's gonna be a 352 00:17:41,880 --> 00:17:44,640 Speaker 1: tough economy. Yeah, yeah, it makes me think. I mean 353 00:17:44,680 --> 00:17:46,920 Speaker 1: for sure, as you said, like there's certain spending that 354 00:17:47,000 --> 00:17:49,199 Speaker 1: could be better and something that could be worse. In 355 00:17:49,240 --> 00:17:51,440 Speaker 1: the World Wars, we saw the US spend a lot 356 00:17:51,440 --> 00:17:55,119 Speaker 1: of money on education to bring you know, people into 357 00:17:55,160 --> 00:17:57,560 Speaker 1: technology and things like that, and I think that paid 358 00:17:57,560 --> 00:17:59,880 Speaker 1: off dividends for US, and so that would be one 359 00:18:00,040 --> 00:18:01,520 Speaker 1: good way to do that. The other thing I was 360 00:18:01,560 --> 00:18:04,440 Speaker 1: saying is that, Um, to your point, you know, as 361 00:18:04,960 --> 00:18:07,359 Speaker 1: any company or government gets bigger and bigger, it just 362 00:18:07,400 --> 00:18:09,399 Speaker 1: starts to move slower and slower and slower. And so 363 00:18:09,440 --> 00:18:12,480 Speaker 1: that's that's kind of there. Um. And then to your point, 364 00:18:12,520 --> 00:18:13,800 Speaker 1: you had said that, you know, if we came out 365 00:18:13,840 --> 00:18:18,240 Speaker 1: with fusion tomorrow, like that could be a big productivity boom. Unfortunately, Uh, 366 00:18:18,320 --> 00:18:20,480 Speaker 1: in your other comparisons, we can see kind of where 367 00:18:20,520 --> 00:18:23,240 Speaker 1: that money is going, and it kind of helps predict 368 00:18:23,320 --> 00:18:26,560 Speaker 1: kind of where we're going. Um. Now, moving on, you 369 00:18:26,600 --> 00:18:29,320 Speaker 1: had talked about yields and real yields and then you 370 00:18:29,359 --> 00:18:32,480 Speaker 1: even mentioned yield curve control real quick. Um, So let's 371 00:18:32,480 --> 00:18:35,480 Speaker 1: talk about that, right. So, like, if growth stays down 372 00:18:35,600 --> 00:18:37,840 Speaker 1: and debt continues to pick up, I mean the only 373 00:18:37,840 --> 00:18:40,600 Speaker 1: way to do that is through uh, you know, probably 374 00:18:40,600 --> 00:18:42,720 Speaker 1: to control that through yield curb control. Talk about that 375 00:18:42,760 --> 00:18:47,119 Speaker 1: real quick. But also, um, if the government's already buying 376 00:18:47,200 --> 00:18:51,520 Speaker 1: the bonds, which they are, isn't that already yield curve control. 377 00:18:52,119 --> 00:18:54,200 Speaker 1: I mean, they haven't come out and officially said we're 378 00:18:54,200 --> 00:18:57,280 Speaker 1: doing it, but they are, right, yeah, I would say 379 00:18:57,320 --> 00:18:59,560 Speaker 1: we've we've said we've called it yield curb management. Right, 380 00:18:59,600 --> 00:19:03,840 Speaker 1: So they're not saying they're not saying, hey, the tenure 381 00:19:03,920 --> 00:19:07,000 Speaker 1: ain't going over too. That's our that's our line in 382 00:19:07,040 --> 00:19:09,520 Speaker 1: the sand. And I think they will avoid that as 383 00:19:09,520 --> 00:19:11,639 Speaker 1: long as they can, and they hope they never have 384 00:19:11,760 --> 00:19:15,360 Speaker 1: to do that, because once they do that, they're never 385 00:19:15,400 --> 00:19:18,199 Speaker 1: getting out of that in my view, because basically the 386 00:19:18,320 --> 00:19:21,200 Speaker 1: entire bond market will get sold to them and their 387 00:19:21,240 --> 00:19:24,760 Speaker 1: balance sheet will go from eight trillion to ten trillion 388 00:19:25,280 --> 00:19:28,800 Speaker 1: trillion to forty trillion very rapidly in my view, you know, 389 00:19:29,000 --> 00:19:33,280 Speaker 1: six to twelve months, eight months. Um. But but the 390 00:19:33,359 --> 00:19:38,040 Speaker 1: but the broader point stands in terms of um, they 391 00:19:37,840 --> 00:19:41,720 Speaker 1: they are effectively managing that process, and that's that's sort 392 00:19:41,720 --> 00:19:44,960 Speaker 1: of that's that's sort of where it's you know, they're 393 00:19:45,040 --> 00:19:47,760 Speaker 1: they're they're trying to sort of still ride two horses 394 00:19:47,760 --> 00:19:49,480 Speaker 1: with one ass. As I've been saying, is they want 395 00:19:49,800 --> 00:19:53,040 Speaker 1: they want that stimulus, they want that growth. UH, they 396 00:19:53,119 --> 00:19:55,920 Speaker 1: don't want to get trapped by into yield curve control. 397 00:19:56,040 --> 00:19:59,800 Speaker 1: But ultimately, UH, post COVID, the debt got to this 398 00:20:00,040 --> 00:20:02,840 Speaker 1: level where you know, we we wrote about it last 399 00:20:02,840 --> 00:20:05,280 Speaker 1: week bar and some data from UH from a letter 400 00:20:05,280 --> 00:20:09,800 Speaker 1: from Herschman Capital that they published last year that of 401 00:20:09,800 --> 00:20:12,000 Speaker 1: the time when a nation gets to a percent that 402 00:20:12,119 --> 00:20:15,919 Speaker 1: the g d P, they default, and it's mostly the 403 00:20:16,000 --> 00:20:18,760 Speaker 1: inflation and the one the one time it hasn't happened 404 00:20:18,760 --> 00:20:21,520 Speaker 1: in Japan, and there's a number of reasons why the 405 00:20:21,600 --> 00:20:25,000 Speaker 1: US is not like Japan at all. Um So that 406 00:20:25,080 --> 00:20:27,520 Speaker 1: again it comes back and I'm still not seeing this. 407 00:20:27,640 --> 00:20:30,960 Speaker 1: People are still discussing everything we're discussing in this recovery 408 00:20:31,000 --> 00:20:34,199 Speaker 1: as if as if we're not at a that the 409 00:20:34,200 --> 00:20:36,679 Speaker 1: g P, as if we're just like we were in 410 00:20:36,960 --> 00:20:40,040 Speaker 1: the eighties and the nineties when we're at the g 411 00:20:40,200 --> 00:20:43,160 Speaker 1: P sixty and it's it's night and day that you are, 412 00:20:43,240 --> 00:20:46,680 Speaker 1: you are in a different operating environment. And so you know, 413 00:20:46,760 --> 00:20:49,000 Speaker 1: to me, that tells me to that that that's a 414 00:20:49,040 --> 00:20:51,960 Speaker 1: signpost the fact that nobody's talking about that yet, they're 415 00:20:51,960 --> 00:20:53,640 Speaker 1: going to be talking about it, and when they talk 416 00:20:53,720 --> 00:20:56,120 Speaker 1: about it, I suspect the prices of things like bitcoin 417 00:20:56,160 --> 00:20:57,840 Speaker 1: and gold and equities are going to be a lot 418 00:20:57,920 --> 00:21:01,480 Speaker 1: higher than they are today. Yeah, so let's let's transition 419 00:21:01,480 --> 00:21:03,040 Speaker 1: into that, because that's actually the thing that kind of 420 00:21:03,080 --> 00:21:05,919 Speaker 1: sparked this conversation. You could put out a tweet um 421 00:21:05,920 --> 00:21:08,439 Speaker 1: where you had said that gold is going to fifty 422 00:21:08,520 --> 00:21:12,080 Speaker 1: thousand or bitcoin going to one million. We didn't say 423 00:21:12,080 --> 00:21:14,120 Speaker 1: it's going to but you said gold going to fift 424 00:21:14,240 --> 00:21:16,720 Speaker 1: k or bitcoin going to one million is not a 425 00:21:16,760 --> 00:21:19,800 Speaker 1: threat to us D. So most people think that m 426 00:21:20,000 --> 00:21:22,000 Speaker 1: ray Daliocamans said they're gonna shut it down because it's 427 00:21:22,000 --> 00:21:24,160 Speaker 1: a threat to USD. You're saying that it's not. You said, 428 00:21:24,200 --> 00:21:26,679 Speaker 1: it's the only way the US can win the so 429 00:21:26,800 --> 00:21:30,080 Speaker 1: called Great Power competition. If they don't go to the Moon, 430 00:21:30,880 --> 00:21:34,080 Speaker 1: US loses to China. That's a that's a I think 431 00:21:34,119 --> 00:21:35,840 Speaker 1: that probably blows everyone out of the wire, Like, what 432 00:21:35,880 --> 00:21:39,200 Speaker 1: the heck does that mean? Can you unpack that for us? Sure? Yeah, 433 00:21:39,280 --> 00:21:43,879 Speaker 1: So I think there's I think there is a a 434 00:21:44,240 --> 00:21:49,320 Speaker 1: civil war of sorts in Washington amongst policymakers as we speak. 435 00:21:50,080 --> 00:21:54,320 Speaker 1: And I think that civil war are those that are 436 00:21:54,440 --> 00:21:58,240 Speaker 1: quite frankly fighting the last war, um, which is that 437 00:21:58,359 --> 00:22:01,439 Speaker 1: those are the sort of the US treasury and dollar 438 00:22:01,560 --> 00:22:05,920 Speaker 1: hegemony crowd. You know that US dollar and and treasury 439 00:22:05,920 --> 00:22:08,719 Speaker 1: are critical to US dollar hegemony, and that is the 440 00:22:08,760 --> 00:22:15,280 Speaker 1: post nine in particularly post nineteen eighty world order. Um. 441 00:22:15,359 --> 00:22:19,280 Speaker 1: And that's those are the people generally speaking that say, 442 00:22:19,359 --> 00:22:23,119 Speaker 1: if if bitcoin or those viewpoints, that viewpoint leads to 443 00:22:23,200 --> 00:22:29,639 Speaker 1: a this this, uh, you know, the postulation that gold 444 00:22:29,680 --> 00:22:31,880 Speaker 1: going to fifty thousand or bitcoin going to a million 445 00:22:31,960 --> 00:22:34,480 Speaker 1: or so high number, pick your number, is really bad 446 00:22:34,520 --> 00:22:37,439 Speaker 1: for the dollar. It's a threat to dollar hegemony. And 447 00:22:37,440 --> 00:22:42,639 Speaker 1: and critically on the merits of that argument, if the 448 00:22:42,720 --> 00:22:45,360 Speaker 1: status quo of the post seventy one dollar status quot 449 00:22:45,480 --> 00:22:48,639 Speaker 1: stays as it is, Uh, those people are right that 450 00:22:48,760 --> 00:22:51,760 Speaker 1: it is a threat to that hegemony. You're you're right now. 451 00:22:52,440 --> 00:22:54,200 Speaker 1: The other side of this, what I would say, civil 452 00:22:54,240 --> 00:22:57,760 Speaker 1: war that's going on. And and I really gets to 453 00:22:57,800 --> 00:23:03,520 Speaker 1: the crux of this argument is, Um, I don't the 454 00:23:03,880 --> 00:23:07,280 Speaker 1: that that side of the art argument ignores what the 455 00:23:07,359 --> 00:23:10,520 Speaker 1: U S Defense establishment US intelligence establishment have been saying, 456 00:23:10,960 --> 00:23:16,960 Speaker 1: which is that system is a critical and acute threat 457 00:23:17,000 --> 00:23:20,200 Speaker 1: to US national security. We are seeing it as we speak, 458 00:23:20,240 --> 00:23:22,959 Speaker 1: as we're hearing about semiconductor shortages. The Defense Department has 459 00:23:22,960 --> 00:23:25,760 Speaker 1: been warning about the hollowing out of US manufacturing supply 460 00:23:25,840 --> 00:23:28,800 Speaker 1: chains for going on ten years publicly and probably longer 461 00:23:28,840 --> 00:23:32,640 Speaker 1: than that privately. And that's because of the hemogy. Yeah 462 00:23:32,720 --> 00:23:35,960 Speaker 1: that the the old this this system that if you 463 00:23:36,080 --> 00:23:38,000 Speaker 1: only look at it as it relates to the dollar, Yeah, 464 00:23:38,000 --> 00:23:41,720 Speaker 1: that's true. But what that system requires is the US 465 00:23:41,760 --> 00:23:44,000 Speaker 1: to run ever greater depth. So it's hollow out more 466 00:23:44,040 --> 00:23:47,560 Speaker 1: and more of its manufacturing base to places like China 467 00:23:47,600 --> 00:23:51,560 Speaker 1: in particular. It's it's it's working class, it's middle class. Uh. 468 00:23:51,600 --> 00:23:53,280 Speaker 1: And so what you end up as you end up 469 00:23:53,280 --> 00:23:55,960 Speaker 1: with this politically toxic environment as you off shore at 470 00:23:56,000 --> 00:23:59,280 Speaker 1: least these good jobs that that generally correlate very well 471 00:23:59,320 --> 00:24:04,480 Speaker 1: with social ability, uh, these manufacturing union middle class jobs. Uh, 472 00:24:04,560 --> 00:24:08,800 Speaker 1: it leads you to a position where your military becomes 473 00:24:08,800 --> 00:24:13,120 Speaker 1: critically dependent on components made by your most likely adversary 474 00:24:13,160 --> 00:24:18,159 Speaker 1: and any upcoming conflict China, um and and and it 475 00:24:18,400 --> 00:24:22,879 Speaker 1: it so you basically are in this this environment where Okay, 476 00:24:24,280 --> 00:24:28,040 Speaker 1: if we continue with this, the terminal outcome of this 477 00:24:28,320 --> 00:24:32,880 Speaker 1: is China has the dollars to buy up the world's 478 00:24:33,000 --> 00:24:37,480 Speaker 1: finite resources on the chief protected by the US military. 479 00:24:37,600 --> 00:24:39,960 Speaker 1: China can use those dollars to build their own military 480 00:24:39,960 --> 00:24:43,040 Speaker 1: to rival the US. As military, China will gain control 481 00:24:43,040 --> 00:24:46,840 Speaker 1: of critical supply chains like semiconductors, pharmaceuticals, et cetera, which 482 00:24:46,840 --> 00:24:52,040 Speaker 1: we have seen in real time, and UH ultimately be 483 00:24:52,119 --> 00:24:53,760 Speaker 1: able to call the shots they will build. They'll be 484 00:24:53,800 --> 00:24:56,080 Speaker 1: a bigger economy, they'll be growing faster, they will have 485 00:24:56,080 --> 00:24:58,600 Speaker 1: the intellectual property, they will be able to have the 486 00:24:58,640 --> 00:25:01,640 Speaker 1: geopolitical and econom MC cloud. And so there's that's why 487 00:25:01,640 --> 00:25:04,720 Speaker 1: I say these the dollar hegemony. People looking at it 488 00:25:04,880 --> 00:25:10,199 Speaker 1: strictly from that standpoint are fighting in the last war. UH. 489 00:25:10,600 --> 00:25:13,320 Speaker 1: The dollar as structured postey one has become a burden, 490 00:25:13,440 --> 00:25:16,160 Speaker 1: and the defense and the intelligence establishments have been telling 491 00:25:16,240 --> 00:25:19,680 Speaker 1: us that. So the question then is is that you 492 00:25:19,760 --> 00:25:21,679 Speaker 1: often get, is okay, well, if the dollar, if we 493 00:25:21,720 --> 00:25:24,600 Speaker 1: need to change the dollar system. I'm not saying you've 494 00:25:24,600 --> 00:25:28,000 Speaker 1: gotta end dollar reserve status, but what you need to 495 00:25:28,040 --> 00:25:30,000 Speaker 1: do is instead of having a system where the dollar 496 00:25:30,080 --> 00:25:32,000 Speaker 1: is the global reserve currency in the U S. Treasury 497 00:25:32,000 --> 00:25:36,240 Speaker 1: bond is the primary reserve asset where these imbalances are stored. 498 00:25:36,600 --> 00:25:39,720 Speaker 1: You need to replace the treasury bond with something else 499 00:25:39,760 --> 00:25:44,080 Speaker 1: as your primary reserve asset. That's really the problem here. Hey, 500 00:25:44,080 --> 00:25:46,520 Speaker 1: sorry to interrupt this video just one more time. I'm 501 00:25:46,560 --> 00:25:49,360 Speaker 1: not running Google ads, so it's actually way less interruption 502 00:25:49,359 --> 00:25:51,480 Speaker 1: than I normally would have on a video, and that's 503 00:25:51,480 --> 00:25:55,080 Speaker 1: because it's sponsored by block five um. They are opening 504 00:25:55,160 --> 00:25:58,000 Speaker 1: up the world of bitcoin and financial products offering to 505 00:25:58,040 --> 00:26:01,239 Speaker 1: pay you interest on your bit pin um. Better than 506 00:26:01,280 --> 00:26:03,119 Speaker 1: own in a rental property that you have to manage 507 00:26:03,119 --> 00:26:04,800 Speaker 1: and control and have the risks. You can just earn 508 00:26:04,880 --> 00:26:07,400 Speaker 1: interest on it, or you can leverage against it. Now, 509 00:26:07,680 --> 00:26:10,879 Speaker 1: I plan to hold my bitcoin forever and literally never 510 00:26:11,200 --> 00:26:13,200 Speaker 1: sell my bitcoin. So how do you do that? Well, 511 00:26:13,440 --> 00:26:15,639 Speaker 1: if I need money, I don't want to sell that bitcoin. 512 00:26:15,640 --> 00:26:17,760 Speaker 1: I'm gonna pay tax on it, all right, I'm gonna 513 00:26:17,840 --> 00:26:20,080 Speaker 1: end up with less and I don't have the bitcoin anymore. 514 00:26:20,200 --> 00:26:22,240 Speaker 1: So a better way to do it is to borrow 515 00:26:22,400 --> 00:26:25,280 Speaker 1: against the bitcoin. So I've put all my money into bitcoin. 516 00:26:25,520 --> 00:26:27,160 Speaker 1: If I want to buy a car, or I want 517 00:26:27,160 --> 00:26:29,760 Speaker 1: to buy a house, I can borrow against it at 518 00:26:29,960 --> 00:26:32,879 Speaker 1: very very low competitive rates, get my house, get my car, 519 00:26:33,000 --> 00:26:35,760 Speaker 1: whatever that may be, and get to keep the bitcoin. 520 00:26:35,840 --> 00:26:38,320 Speaker 1: I've done a whole video on this. You can find it. 521 00:26:38,320 --> 00:26:40,280 Speaker 1: I'll link it down to the description below, how to 522 00:26:40,440 --> 00:26:42,800 Speaker 1: retire off a bitcoin without paying taxes and you can 523 00:26:42,840 --> 00:26:45,320 Speaker 1: do that with block five services. A link to the 524 00:26:45,400 --> 00:26:47,000 Speaker 1: video down below. I'm also going to put a link 525 00:26:47,040 --> 00:26:48,760 Speaker 1: to block Fight. If you choose to click on that 526 00:26:48,800 --> 00:26:50,399 Speaker 1: link to check them out. You can earn up to 527 00:26:50,359 --> 00:26:53,280 Speaker 1: two fifty dollars in free bitcoin just for using that link. 528 00:26:53,560 --> 00:26:55,159 Speaker 1: And that's it. Let's go ahead and get back to 529 00:26:55,240 --> 00:26:59,119 Speaker 1: the interview. So the question I always get then is 530 00:26:59,359 --> 00:27:02,040 Speaker 1: is okay, well, who's going to replace it? And there's 531 00:27:02,080 --> 00:27:04,920 Speaker 1: really only two regions or countries that are big enough 532 00:27:04,920 --> 00:27:07,400 Speaker 1: and economically power and full enough to do that. It's 533 00:27:07,400 --> 00:27:11,160 Speaker 1: the Eurozone or it's China. Japan is not big enough, 534 00:27:11,720 --> 00:27:13,439 Speaker 1: the UK is not big enough. And those are the 535 00:27:13,440 --> 00:27:16,960 Speaker 1: other two in the in the SDR basket. Nobody else 536 00:27:17,000 --> 00:27:21,120 Speaker 1: is big enough. The problem is is neither Europe nor 537 00:27:21,320 --> 00:27:25,960 Speaker 1: China wants the the the burden of of having their 538 00:27:26,080 --> 00:27:29,560 Speaker 1: sovereign debt be the reserve asset of the world because 539 00:27:29,560 --> 00:27:33,840 Speaker 1: it requires them to hollow out their manufacturing sector, offshore 540 00:27:33,880 --> 00:27:36,960 Speaker 1: their middle and working class jobs. Uh And again it 541 00:27:37,600 --> 00:27:42,960 Speaker 1: particularly for China, politically toxic uh and and and weakens 542 00:27:43,000 --> 00:27:45,600 Speaker 1: the nation over time, and the Chinese, unlike the US, 543 00:27:46,040 --> 00:27:53,600 Speaker 1: plan longer term than we do. Uh So, once you realize, okay, a, 544 00:27:54,320 --> 00:27:57,640 Speaker 1: if we keep the status quo system going, we're going 545 00:27:57,680 --> 00:28:01,320 Speaker 1: to be basically beholden to China, not able to defend ourselves. 546 00:28:02,000 --> 00:28:04,760 Speaker 1: Be we need to change the syste struct structure of 547 00:28:04,760 --> 00:28:06,919 Speaker 1: the system so that treasuries are no longer the primary 548 00:28:06,960 --> 00:28:11,480 Speaker 1: reserve asset. Then see, we know the Europeans don't want it, 549 00:28:11,520 --> 00:28:14,000 Speaker 1: the Chinese don't want it, and the others can't have it. 550 00:28:14,440 --> 00:28:16,400 Speaker 1: So we come to the conclusions you have to have 551 00:28:16,520 --> 00:28:19,880 Speaker 1: some sort of neutral reserve asset. Basically, it's something that's 552 00:28:19,920 --> 00:28:23,280 Speaker 1: nobody's issuance. And you come to the conclusion that's gold, 553 00:28:23,320 --> 00:28:25,960 Speaker 1: that's bitcoin. And after that the list gets very short, 554 00:28:26,000 --> 00:28:29,760 Speaker 1: and I think, quite frankly, gold is um I think 555 00:28:29,760 --> 00:28:31,960 Speaker 1: on a number of levels amongst the central banking community 556 00:28:32,480 --> 00:28:37,040 Speaker 1: in in particular, that's the best option. You've seen the 557 00:28:37,080 --> 00:28:39,320 Speaker 1: movements of gold, You've seen central bank buying of gold. 558 00:28:39,320 --> 00:28:43,320 Speaker 1: Since two thousand and eight, you've seen um movements to China, Russia, 559 00:28:43,360 --> 00:28:47,680 Speaker 1: et cetera, elsewhere um. And that's what I said. But 560 00:28:47,720 --> 00:28:50,520 Speaker 1: the problem is is gold at sevent bucks with a 561 00:28:50,600 --> 00:28:52,640 Speaker 1: giant paper market attached to it can't do the job. 562 00:28:53,120 --> 00:28:55,520 Speaker 1: It needs to be made much bigger to settle trade 563 00:28:55,560 --> 00:28:58,720 Speaker 1: and in particular sell commodity trade. Because when you really 564 00:28:58,720 --> 00:29:02,240 Speaker 1: look at what creates the aalances in the global economy, 565 00:29:02,280 --> 00:29:06,040 Speaker 1: it's these commodity and particularly oil and gas trade and balances. 566 00:29:06,040 --> 00:29:09,720 Speaker 1: So you would need to make gold or bitcoin much 567 00:29:09,880 --> 00:29:13,200 Speaker 1: much bigger relative to global trade and energy trade in 568 00:29:13,200 --> 00:29:16,640 Speaker 1: particular to serve the role as a neutral reserve asset. 569 00:29:16,640 --> 00:29:18,600 Speaker 1: And so when you sort of walk through this daisy 570 00:29:18,680 --> 00:29:21,720 Speaker 1: chain of events, which you realize is that if if 571 00:29:22,280 --> 00:29:25,240 Speaker 1: if the US actually transition to the system, gold goes 572 00:29:25,280 --> 00:29:26,760 Speaker 1: to the moon, or bitcoin goes to the moon, or 573 00:29:26,800 --> 00:29:28,800 Speaker 1: they both go to the moon, we will have made 574 00:29:28,800 --> 00:29:31,560 Speaker 1: a transition from where we are now, where we are losing, 575 00:29:31,600 --> 00:29:35,160 Speaker 1: we are getting creamed, we are being hollowed out to 576 00:29:35,360 --> 00:29:39,120 Speaker 1: a system where we can line up and compete, where suddenly, 577 00:29:39,120 --> 00:29:42,200 Speaker 1: if the neutral reserve asset, the systems compete on their merits, 578 00:29:42,200 --> 00:29:43,800 Speaker 1: who's got the better rule of law, who's got the 579 00:29:43,880 --> 00:29:46,560 Speaker 1: better scientists, who's got the better universities, who's got the 580 00:29:46,600 --> 00:29:49,760 Speaker 1: more attractive capital markets, who's got all the things that 581 00:29:49,840 --> 00:29:54,840 Speaker 1: made and got America to where we were, uh, post 582 00:29:54,880 --> 00:29:57,560 Speaker 1: World War Two? Suddenly we're allowed to bring into play 583 00:29:57,560 --> 00:30:00,000 Speaker 1: again because right now we're basically like fighting Mike Tie 584 00:30:00,320 --> 00:30:02,800 Speaker 1: with both hands strapped behind our back. It's it's crazy. 585 00:30:03,200 --> 00:30:05,840 Speaker 1: And this what's strapped our hands behind our back is 586 00:30:05,880 --> 00:30:10,640 Speaker 1: this post system. And and so because it's our job 587 00:30:10,760 --> 00:30:12,840 Speaker 1: is to run depth sits and supply China with the 588 00:30:12,880 --> 00:30:15,560 Speaker 1: dollars to buy up the world. That's it. And so 589 00:30:16,040 --> 00:30:21,680 Speaker 1: that's when I say, if if those if those assets 590 00:30:21,680 --> 00:30:24,120 Speaker 1: go to those prices, that's a great sign for America. 591 00:30:24,280 --> 00:30:27,920 Speaker 1: That's great for America. Um, you've got a balance system. 592 00:30:28,000 --> 00:30:29,920 Speaker 1: We can actually begin to reinvest. You know, when you 593 00:30:29,960 --> 00:30:32,560 Speaker 1: have the CEO of Intel come on sixty minutes last 594 00:30:32,640 --> 00:30:35,240 Speaker 1: night and say, look, not that long ago thirty seven 595 00:30:35,600 --> 00:30:38,280 Speaker 1: aglow with semiconductor manufacturing was done in the US. It's 596 00:30:38,320 --> 00:30:40,880 Speaker 1: twelve now, and it's going lower in the midst of 597 00:30:40,920 --> 00:30:42,680 Speaker 1: a semi conductor shortage. And then he says, oh, by 598 00:30:42,680 --> 00:30:45,200 Speaker 1: the way it might last for another two years, like 599 00:30:45,400 --> 00:30:49,640 Speaker 1: we are seeing real time what the real cost of 600 00:30:49,680 --> 00:30:52,280 Speaker 1: this is. So yeah, if you you know, if you're 601 00:30:52,280 --> 00:30:54,960 Speaker 1: in favor of of you know, having to basically be 602 00:30:55,000 --> 00:30:58,680 Speaker 1: at China's you know, China's uh, you know, wishes and 603 00:30:58,840 --> 00:31:02,680 Speaker 1: by their leave on my conductors, on antibiotics, on pharmaceuticals 604 00:31:02,720 --> 00:31:05,160 Speaker 1: more broadly, then yeah, great, Hey, keep the dollar system 605 00:31:05,200 --> 00:31:07,040 Speaker 1: as is, and you know, and you know, oh, by 606 00:31:07,040 --> 00:31:09,320 Speaker 1: the way, wealth and equality will keep exploding in the 607 00:31:09,400 --> 00:31:12,560 Speaker 1: United States, social unrest will keep exploding in the United States. 608 00:31:12,680 --> 00:31:15,720 Speaker 1: Political extremism will keep exploding in the US. That's great, 609 00:31:15,800 --> 00:31:17,920 Speaker 1: let's keep that system. But if those aren't things you're 610 00:31:17,960 --> 00:31:21,080 Speaker 1: really interested in, and personally I'm not, I have kids, Uh, 611 00:31:21,840 --> 00:31:24,960 Speaker 1: we have to move to this other system. And as 612 00:31:24,960 --> 00:31:28,200 Speaker 1: I've said before, I think it's critical there are elements 613 00:31:28,200 --> 00:31:31,440 Speaker 1: of the defense establishment and the intelligence establishments that understand 614 00:31:31,520 --> 00:31:35,800 Speaker 1: this intimately, that this connection between this hollowing out, the 615 00:31:36,040 --> 00:31:39,760 Speaker 1: threat to this hollowing out of operational and operational readiness 616 00:31:39,760 --> 00:31:42,920 Speaker 1: and national security and the dollar system. So I think 617 00:31:42,920 --> 00:31:46,440 Speaker 1: it's it's that's the fully flushed out, unpacked version of 618 00:31:46,480 --> 00:31:49,760 Speaker 1: that tweet. Yeah, So I think what you're describing is 619 00:31:49,800 --> 00:31:53,000 Speaker 1: the Triffin's dilemma, right, And we knew that. I mean 620 00:31:53,200 --> 00:31:55,600 Speaker 1: we were told that a long time ago. Um. And 621 00:31:55,640 --> 00:31:58,240 Speaker 1: what you're saying is not hypothetical. It's exactly what we're 622 00:31:58,280 --> 00:32:00,920 Speaker 1: facing right now, ex happening as we speak to your point, 623 00:32:00,960 --> 00:32:03,200 Speaker 1: as we found out how how fragile our supply chains 624 00:32:03,200 --> 00:32:05,880 Speaker 1: were when the pandemic broke out. Um, obviously lots of 625 00:32:05,920 --> 00:32:09,120 Speaker 1: things are antibiotics, that's a big problem. But um, the 626 00:32:09,240 --> 00:32:12,080 Speaker 1: rare earth elements that we need, the military needs those 627 00:32:12,120 --> 00:32:14,959 Speaker 1: to fight, and I think that's what you're hinting to. Um, 628 00:32:15,000 --> 00:32:18,040 Speaker 1: the military cannot fight without those, and they come from China. 629 00:32:18,120 --> 00:32:19,720 Speaker 1: So how can we go to war against China? And 630 00:32:19,720 --> 00:32:22,200 Speaker 1: when we can't even run our military? So um, yeah, 631 00:32:22,200 --> 00:32:25,719 Speaker 1: it's pretty amazing. And Um, you also talked about, you know, 632 00:32:25,880 --> 00:32:28,600 Speaker 1: the US having to offshore those dollars, and so we've 633 00:32:28,640 --> 00:32:31,240 Speaker 1: we've given those dollars to China and you you hint 634 00:32:31,280 --> 00:32:32,960 Speaker 1: it to it be again, it's not it's not theoretical, 635 00:32:33,040 --> 00:32:35,680 Speaker 1: it's happening. They've taken those dollars and now they've built 636 00:32:35,720 --> 00:32:39,440 Speaker 1: out the Belt and Road initiative all over Europe. Um, 637 00:32:39,440 --> 00:32:41,520 Speaker 1: my parents took a vocation to Antigua here in the 638 00:32:41,560 --> 00:32:45,280 Speaker 1: Caribbean a couple of months ago, and there's giant Chinese 639 00:32:45,320 --> 00:32:49,360 Speaker 1: military bases being built there, and they told them that 640 00:32:49,440 --> 00:32:52,360 Speaker 1: it's not even local people working there. They the Chinese 641 00:32:52,400 --> 00:32:54,560 Speaker 1: bring their own people in to work on the basis 642 00:32:54,600 --> 00:32:56,800 Speaker 1: and so, um, it seems like what I've seen is 643 00:32:56,840 --> 00:32:59,600 Speaker 1: that China has used the dollars to basically take over 644 00:32:59,640 --> 00:33:02,680 Speaker 1: the world. Um. And then what I've seen it seems like, 645 00:33:02,760 --> 00:33:04,440 Speaker 1: and correct me if I'm wrong, or expand on this, 646 00:33:04,520 --> 00:33:06,920 Speaker 1: But then when those countries aren't even able to pay 647 00:33:06,960 --> 00:33:10,680 Speaker 1: back those dollar denominate debts, then the US opens up 648 00:33:10,680 --> 00:33:13,480 Speaker 1: swap lines to build those countries out, as opposed to 649 00:33:13,520 --> 00:33:17,280 Speaker 1: letting China take take it in the shorts on that absolutely, 650 00:33:17,320 --> 00:33:19,240 Speaker 1: what we do is what we did in March last year. 651 00:33:19,320 --> 00:33:21,160 Speaker 1: People say, well, well, we didn't give the swap lines 652 00:33:21,200 --> 00:33:24,880 Speaker 1: to China, so we're cutting them off. Well, we're given 653 00:33:24,920 --> 00:33:27,560 Speaker 1: the swap lines to China's creditors. So those dollars will 654 00:33:27,600 --> 00:33:29,880 Speaker 1: literally flow into those countries and then right into the 655 00:33:29,880 --> 00:33:32,960 Speaker 1: pocket of China because those loans are secured by hard 656 00:33:32,960 --> 00:33:36,680 Speaker 1: asset collateral. So China's either get to the dollars they're owed, 657 00:33:36,800 --> 00:33:41,040 Speaker 1: or they get the hard asset collateral that they wanted anyway. Um, 658 00:33:41,080 --> 00:33:44,720 Speaker 1: and so yeah, they have absolutely used this dollar system 659 00:33:44,880 --> 00:33:48,280 Speaker 1: against US, and it's incredible. You have a former anonymous 660 00:33:48,320 --> 00:33:50,560 Speaker 1: US government official righte about this about about a month 661 00:33:50,640 --> 00:33:53,680 Speaker 1: or two ago, saying, look, the Chinese came out to 662 00:33:53,920 --> 00:33:56,760 Speaker 1: two and said, we have with the US now distracted 663 00:33:56,760 --> 00:33:58,440 Speaker 1: in the Middle East, we have a twenty year period 664 00:33:58,440 --> 00:34:00,720 Speaker 1: of time where we can eies and they won't be 665 00:34:00,720 --> 00:34:03,720 Speaker 1: able to deal with US. And they were right, we 666 00:34:03,720 --> 00:34:07,160 Speaker 1: were and they did, and hey, good on them. They 667 00:34:07,560 --> 00:34:10,680 Speaker 1: actually planned, they executed a plan. I'm sure things it 668 00:34:10,719 --> 00:34:12,960 Speaker 1: didn't go entirely according to plan, but by and large, 669 00:34:13,520 --> 00:34:16,640 Speaker 1: you compare the relative power of China to the US 670 00:34:16,719 --> 00:34:20,440 Speaker 1: across economics, geopolitics, military, anyway you want to look at 671 00:34:20,480 --> 00:34:24,279 Speaker 1: it now versus two thousand two, there's no doubt who 672 00:34:24,360 --> 00:34:26,880 Speaker 1: won over the last twenty years, and it's China. And 673 00:34:26,920 --> 00:34:29,200 Speaker 1: they've leveraged this dollar system to do so. And so 674 00:34:29,239 --> 00:34:31,879 Speaker 1: it's COVID was a really important moment because I think 675 00:34:31,920 --> 00:34:34,440 Speaker 1: there was there were there were small elements I think 676 00:34:34,480 --> 00:34:38,160 Speaker 1: in defense and intelligence establishments that understood this going into COVID. 677 00:34:38,280 --> 00:34:41,160 Speaker 1: Post COVID, when the politicians have to stand up and 678 00:34:41,160 --> 00:34:43,839 Speaker 1: start explaining to their constituencies why they have to beg 679 00:34:43,960 --> 00:34:47,560 Speaker 1: China for ppe and for drugs, et cetera. That I 680 00:34:47,600 --> 00:34:50,360 Speaker 1: think started to shift the mindset. And it's great to 681 00:34:50,360 --> 00:34:52,520 Speaker 1: see because it's for a long time. I would take 682 00:34:52,520 --> 00:34:54,600 Speaker 1: a lot of gufer people, Oh, China could never win, Luke, 683 00:34:54,719 --> 00:34:56,160 Speaker 1: China could never win. It's been one of the big 684 00:34:56,200 --> 00:34:58,880 Speaker 1: advantages that do in Macro and Cleveland, Ohio. The people 685 00:34:58,960 --> 00:35:01,880 Speaker 1: telling me China could never when we're usually in Washington 686 00:35:02,040 --> 00:35:04,920 Speaker 1: or New York or on the West coast San Francisco. 687 00:35:05,520 --> 00:35:09,600 Speaker 1: I'm in Cleveland. It's not speculation. China one they killed us. 688 00:35:10,000 --> 00:35:13,960 Speaker 1: The jobs are gone, the factories have gone. Um And 689 00:35:14,120 --> 00:35:17,160 Speaker 1: I think post COVID it finally hit home on the 690 00:35:17,200 --> 00:35:19,799 Speaker 1: coasts and so it's very interesting to see. But that 691 00:35:19,960 --> 00:35:24,160 Speaker 1: is why it is. It's Triffin's dilemma. They've brilliant You 692 00:35:24,400 --> 00:35:27,600 Speaker 1: losed the dollar system against us because again we're so 693 00:35:27,680 --> 00:35:31,360 Speaker 1: busy the Fed in particular putting out fires. Oh, something 694 00:35:31,400 --> 00:35:33,480 Speaker 1: happens to the asset markets. We have to smooth over 695 00:35:33,480 --> 00:35:38,719 Speaker 1: the asset markets. Um And I get it, but you know, 696 00:35:38,719 --> 00:35:41,200 Speaker 1: when you have one party to this transaction planning out 697 00:35:41,239 --> 00:35:43,080 Speaker 1: a long time and the other party putting out fire 698 00:35:43,080 --> 00:35:45,920 Speaker 1: after fire after fire, and every time you put out 699 00:35:45,960 --> 00:35:47,959 Speaker 1: that fire it benefits the other party with the longer 700 00:35:48,080 --> 00:35:50,640 Speaker 1: term planning. Uh, at some point you get to where 701 00:35:50,640 --> 00:35:55,279 Speaker 1: we're at. Yeah, I recently, I think just well, at 702 00:35:55,280 --> 00:35:56,400 Speaker 1: the time of this recording, I think it was a 703 00:35:56,440 --> 00:35:57,920 Speaker 1: couple of days ago put out or last week put 704 00:35:57,920 --> 00:35:59,920 Speaker 1: out a video on kind of how why am I 705 00:36:00,080 --> 00:36:03,279 Speaker 1: or how the unraveling the inflation in Weimar actually kind 706 00:36:03,280 --> 00:36:04,960 Speaker 1: of uh mirrors where we're at, and you kind of 707 00:36:05,000 --> 00:36:06,719 Speaker 1: put ot a tweet kind of similar about that. And 708 00:36:06,719 --> 00:36:08,080 Speaker 1: when I was doing some research on that, I was 709 00:36:08,080 --> 00:36:10,400 Speaker 1: looking at like Radalio said, there's like four ways a 710 00:36:10,440 --> 00:36:12,840 Speaker 1: country gets out of it, um, and so you talked 711 00:36:12,880 --> 00:36:15,080 Speaker 1: on a couple of those, but he said the first 712 00:36:15,120 --> 00:36:19,160 Speaker 1: one could be austerity and then inflate, then then transfers 713 00:36:19,160 --> 00:36:23,040 Speaker 1: like taxes inflation, and then default. But the austerity right, 714 00:36:23,080 --> 00:36:25,000 Speaker 1: and of course nobody wants that. Nobody wants to like 715 00:36:25,239 --> 00:36:27,680 Speaker 1: nobody wants to suspend less and live on a budget. 716 00:36:28,080 --> 00:36:30,640 Speaker 1: But it makes me think of like, um, if the if, 717 00:36:30,680 --> 00:36:33,919 Speaker 1: if the whatever government policy were to willingly go back 718 00:36:33,960 --> 00:36:37,280 Speaker 1: to like revaluing gold to to a cent. So basically, 719 00:36:37,280 --> 00:36:38,879 Speaker 1: what I think you're kind of saying is you would 720 00:36:38,880 --> 00:36:41,719 Speaker 1: take all the money in the world, take all the debt, 721 00:36:41,880 --> 00:36:43,480 Speaker 1: or all the gold in the world, come up with 722 00:36:43,520 --> 00:36:47,239 Speaker 1: a reserve or and then you come up with a 723 00:36:47,239 --> 00:36:49,879 Speaker 1: new gold price. Um. But didn't that like going back 724 00:36:49,880 --> 00:36:51,680 Speaker 1: to austerity kind of in a sense like now we 725 00:36:51,719 --> 00:36:54,719 Speaker 1: have to live on that budget. I think it depends 726 00:36:54,760 --> 00:36:58,520 Speaker 1: on how you would structure. I wouldn't structure the new 727 00:36:58,600 --> 00:37:01,200 Speaker 1: system that way for exactly that reason. I don't think 728 00:37:01,200 --> 00:37:04,360 Speaker 1: anyone would agree to that austerity or being on a budget, 729 00:37:04,840 --> 00:37:07,480 Speaker 1: and it wouldn't work in my view. I think what 730 00:37:07,520 --> 00:37:12,120 Speaker 1: they would do is is effectively say gold is the 731 00:37:12,200 --> 00:37:18,879 Speaker 1: new UH reserve asset for all oil transactions. And if 732 00:37:18,960 --> 00:37:21,920 Speaker 1: you say the value of that gold is a thousand 733 00:37:21,920 --> 00:37:25,720 Speaker 1: barrels of oil perounds of gold, and now every nation, 734 00:37:25,760 --> 00:37:28,920 Speaker 1: you just decentralized the entire economics. It's no longer on Washington. 735 00:37:28,920 --> 00:37:34,800 Speaker 1: You decentralized it. If the US wants seventy oil for shale, 736 00:37:36,040 --> 00:37:38,040 Speaker 1: because it's good for our economy, it's good for our 737 00:37:38,080 --> 00:37:44,120 Speaker 1: international or independence. UH, it's good for manufacturing, etcetera. Then 738 00:37:44,360 --> 00:37:47,200 Speaker 1: gold is going to be seventy dollars in the US dollar. 739 00:37:48,160 --> 00:37:51,080 Speaker 1: If Russia has nothing but oil and they want to 740 00:37:51,080 --> 00:37:54,319 Speaker 1: subsidize their domestic industry by having cheap oil, Let's say 741 00:37:54,360 --> 00:37:56,560 Speaker 1: they say we're gonna make you know, ten dollar oil 742 00:37:56,600 --> 00:38:02,880 Speaker 1: in Russia. UM. So by that same at that same point, 743 00:38:03,480 --> 00:38:09,160 Speaker 1: you would have oil gold in our ten ruble oil 744 00:38:09,320 --> 00:38:14,200 Speaker 1: in Russia, and through the gold link, the dollar would 745 00:38:14,239 --> 00:38:18,480 Speaker 1: collapse against the ruble. Every nation state or every currency 746 00:38:18,520 --> 00:38:22,759 Speaker 1: block would UM have a choice to make do they 747 00:38:22,760 --> 00:38:25,319 Speaker 1: want expensive oil or do they want cheap oil? And 748 00:38:25,320 --> 00:38:27,479 Speaker 1: if they have expensive oil, they're gonna have expensive gold 749 00:38:27,480 --> 00:38:29,880 Speaker 1: and a weak currency. And if they have cheap oil, 750 00:38:29,960 --> 00:38:33,760 Speaker 1: they're going to have cheap gold and and a strong currency. 751 00:38:33,880 --> 00:38:37,440 Speaker 1: And that will then balance out this system where basically 752 00:38:37,440 --> 00:38:40,640 Speaker 1: everybody takes advantage of this dollar system. Uh. And we 753 00:38:40,680 --> 00:38:42,480 Speaker 1: take advantage of the dollar system. And when I say we, 754 00:38:42,600 --> 00:38:44,840 Speaker 1: I mean Washington takes advantage of the dollar system, and 755 00:38:44,880 --> 00:38:48,560 Speaker 1: everybody else does too. So it's basically the US offshoring 756 00:38:48,680 --> 00:38:52,160 Speaker 1: jobs to these other places. UM. That would end we 757 00:38:52,200 --> 00:38:56,360 Speaker 1: would actually you would see UH inflation explode. Now you 758 00:38:56,480 --> 00:38:59,840 Speaker 1: basically be devaluing global debt and and and sort of 759 00:39:00,000 --> 00:39:05,839 Speaker 1: sterilyzing on some level, uh, global debt, devaluing it through 760 00:39:05,880 --> 00:39:09,120 Speaker 1: this process. But I think that's more than how it 761 00:39:09,160 --> 00:39:12,680 Speaker 1: would go, rather than saying, um, you know, hey, we're 762 00:39:12,719 --> 00:39:16,040 Speaker 1: gonna we're gonna reserve gold sort of a traditional gold standard. 763 00:39:16,360 --> 00:39:19,040 Speaker 1: This way, it's pretty straightforward. It's like, listen, you you 764 00:39:19,080 --> 00:39:21,239 Speaker 1: get a bunch of oil, You're gonna settle it in 765 00:39:21,280 --> 00:39:24,200 Speaker 1: a bunch of gold. And you know you can direct 766 00:39:24,239 --> 00:39:25,719 Speaker 1: policy that way. Hey, you want to you want a 767 00:39:25,719 --> 00:39:28,680 Speaker 1: green new deal, great, make make oil really expensive, make 768 00:39:28,760 --> 00:39:32,120 Speaker 1: making guests really expensive. I guarantee you'll get you know, 769 00:39:32,320 --> 00:39:36,239 Speaker 1: But if you make champ on China, settle all of you, 770 00:39:36,320 --> 00:39:38,320 Speaker 1: you know, set up all of your your your solar 771 00:39:38,320 --> 00:39:41,920 Speaker 1: panels for you. Now you're gonna be basically paying gold 772 00:39:41,960 --> 00:39:44,360 Speaker 1: for those two at sort of the you know, a 773 00:39:44,400 --> 00:39:47,239 Speaker 1: couple of times removed, so you're basically it's gonna get 774 00:39:47,280 --> 00:39:49,920 Speaker 1: really expensive for all this. You're gonna see inflation in 775 00:39:49,960 --> 00:39:53,160 Speaker 1: the US and these nations, you know, the destit nations, 776 00:39:53,160 --> 00:39:55,400 Speaker 1: the biggest of which is the US. You'll see it explode. 777 00:39:55,440 --> 00:39:59,239 Speaker 1: But as it explodes, dollar will fall, it will incent 778 00:39:59,320 --> 00:40:02,759 Speaker 1: production jobs will come back, you'll basically have a big debt. 779 00:40:02,840 --> 00:40:04,320 Speaker 1: You believe the FED is going to have to basically 780 00:40:04,360 --> 00:40:07,200 Speaker 1: cap yield at some point in that process, and and 781 00:40:07,200 --> 00:40:14,839 Speaker 1: and you that holders lose mm hmm. So it seems like, maybe, well, 782 00:40:14,880 --> 00:40:17,959 Speaker 1: well let's let's tiptoe into politics a little bit. People 783 00:40:18,000 --> 00:40:20,000 Speaker 1: don't like to talk about politics, but you can't understand 784 00:40:20,000 --> 00:40:23,120 Speaker 1: macro and money without understanding politics. And it seems like 785 00:40:23,480 --> 00:40:25,040 Speaker 1: we don't have to talk about being good or bad. 786 00:40:25,080 --> 00:40:27,600 Speaker 1: But it seems like we obviously have a uh you know, 787 00:40:27,600 --> 00:40:30,800 Speaker 1: we're back into the Paris Accord. Uh per the Paris Accord, 788 00:40:30,920 --> 00:40:34,000 Speaker 1: each nation commits what they decide they want to do. 789 00:40:34,400 --> 00:40:37,040 Speaker 1: So the US has committed to reducing another thirty percent. 790 00:40:37,040 --> 00:40:38,960 Speaker 1: We've already reduced thirty percent in the last twenty years 791 00:40:39,040 --> 00:40:42,680 Speaker 1: or whatever. UM. India has agreed to UM not increase 792 00:40:42,719 --> 00:40:44,920 Speaker 1: as a percentage of GDP, so all they gotta do 793 00:40:44,960 --> 00:40:46,600 Speaker 1: is ra GP and they don't have to commit anything. 794 00:40:46,600 --> 00:40:48,880 Speaker 1: And China has agreed to not cut anything and actually 795 00:40:48,920 --> 00:40:55,000 Speaker 1: to peak in UM. So that doesn't seem super competitive. UM. 796 00:40:55,040 --> 00:40:57,440 Speaker 1: And to your point, well, the kind of point that 797 00:40:57,480 --> 00:40:59,560 Speaker 1: you just made about the solar panels and the oil 798 00:41:00,000 --> 00:41:02,920 Speaker 1: talking about trading in oil UM. In addition to putting 799 00:41:02,960 --> 00:41:05,000 Speaker 1: us back in the into the Paris Accord and saying 800 00:41:05,040 --> 00:41:06,839 Speaker 1: that we're going to reduce another thirty percent on top 801 00:41:06,840 --> 00:41:09,560 Speaker 1: of the thirty cent we already reduced, we're gonna also 802 00:41:09,719 --> 00:41:14,120 Speaker 1: stop all natural gas and oil production or at least 803 00:41:14,120 --> 00:41:17,560 Speaker 1: on public lands. UM. So that means we have to 804 00:41:17,640 --> 00:41:19,840 Speaker 1: onshore more of it or import more of it. And 805 00:41:19,880 --> 00:41:24,120 Speaker 1: then to that last point you just made, which was, UM, 806 00:41:24,200 --> 00:41:26,640 Speaker 1: we want to switch everything renewables, but we're not going 807 00:41:26,719 --> 00:41:29,160 Speaker 1: to make those renewables here, so we're gonna be buying 808 00:41:29,160 --> 00:41:31,799 Speaker 1: those from China. So we're technically importing energy, if you 809 00:41:31,800 --> 00:41:34,759 Speaker 1: want to call it that. And I think I did 810 00:41:34,840 --> 00:41:38,319 Speaker 1: another video on this where really not not exactly, but 811 00:41:38,400 --> 00:41:41,600 Speaker 1: like money is energy, right, money is stored energy that 812 00:41:41,640 --> 00:41:43,279 Speaker 1: allows me to use that energy at a later date. 813 00:41:43,560 --> 00:41:45,200 Speaker 1: And it looks like the wealth of a nation has 814 00:41:45,200 --> 00:41:47,960 Speaker 1: always been tied to that energy. UM I used in 815 00:41:47,960 --> 00:41:49,839 Speaker 1: this video, I said that I think the recovery after 816 00:41:49,880 --> 00:41:51,759 Speaker 1: two thousand and eight was actually the oil boom, that 817 00:41:51,840 --> 00:41:55,200 Speaker 1: we had more than the than than the FED intervention. 818 00:41:55,560 --> 00:41:59,440 Speaker 1: But if we if we UM, we reduce, our reduce 819 00:41:59,480 --> 00:42:02,560 Speaker 1: our output. By we cut all of our energy, so 820 00:42:02,600 --> 00:42:04,720 Speaker 1: we have to import it. And then we switched to renewals. 821 00:42:04,719 --> 00:42:08,160 Speaker 1: We we're importing that as well. I mean, that's that. Now, 822 00:42:08,200 --> 00:42:09,919 Speaker 1: that's like a political thing. I mean, that's just gonna 823 00:42:09,960 --> 00:42:14,719 Speaker 1: hamstring us even more. It's interesting when when I have 824 00:42:14,760 --> 00:42:16,560 Speaker 1: two thoughts and both of which I'm gonna try to, 825 00:42:18,200 --> 00:42:21,760 Speaker 1: I don't know, politically correct on some levels, politically correct 826 00:42:21,800 --> 00:42:25,560 Speaker 1: for me. How's that What you just laid out sounds 827 00:42:25,600 --> 00:42:28,200 Speaker 1: like terms of surrender to me, um, surrender to what 828 00:42:28,320 --> 00:42:30,400 Speaker 1: I don't know, surrender to whom I don't know. But 829 00:42:30,520 --> 00:42:35,480 Speaker 1: that's like it's it sounds like people got together and 830 00:42:35,480 --> 00:42:38,600 Speaker 1: then you know, the Crystal Palace and Versailles and decided Listen, 831 00:42:38,600 --> 00:42:41,640 Speaker 1: the Americans are gonna shrink and the Chinese are gonna 832 00:42:41,680 --> 00:42:45,040 Speaker 1: keep flattening, so you know, not not flattening. They've agreed 833 00:42:45,080 --> 00:42:50,520 Speaker 1: to increase through peak. And that's and that's interesting too, 834 00:42:50,520 --> 00:42:55,200 Speaker 1: write because in theory climate change is what they the 835 00:42:55,239 --> 00:42:58,160 Speaker 1: anthropomorphic Is that the word right, It's it's humans. Humans 836 00:42:58,160 --> 00:43:00,919 Speaker 1: are causing it. Okay, that's so we need to cut 837 00:43:00,960 --> 00:43:03,320 Speaker 1: that back. Just came out the other day that China's 838 00:43:03,320 --> 00:43:06,440 Speaker 1: population declined for the first time since nine and so 839 00:43:06,560 --> 00:43:10,520 Speaker 1: I just find fascinating the inconsistency of the contradiction between 840 00:43:10,520 --> 00:43:13,840 Speaker 1: the same people who tell me humans are causing carbon 841 00:43:14,120 --> 00:43:16,920 Speaker 1: and I'm not gonna this isn't a science debate the science. 842 00:43:17,200 --> 00:43:19,960 Speaker 1: This is just the contradiction that I see in front 843 00:43:19,960 --> 00:43:22,120 Speaker 1: of my face every day and then last week in particular, 844 00:43:23,239 --> 00:43:25,920 Speaker 1: humans cause climate change, we need to do something about it. 845 00:43:26,400 --> 00:43:30,280 Speaker 1: China is not doing anything about it, China's populations declining, 846 00:43:30,600 --> 00:43:33,600 Speaker 1: and then China's you know, those same people are like, well, 847 00:43:33,640 --> 00:43:37,000 Speaker 1: China screwed because the population is declining. Economically, they're they're 848 00:43:37,000 --> 00:43:39,520 Speaker 1: a dead nation. And I kind of go, you know, 849 00:43:39,640 --> 00:43:41,439 Speaker 1: it's like the the you know, the gift from John 850 00:43:41,480 --> 00:43:44,600 Speaker 1: c Riley where he's like, look like it okay, if 851 00:43:44,440 --> 00:43:47,040 Speaker 1: if if we need a reduction in climate you know, 852 00:43:47,080 --> 00:43:54,719 Speaker 1: in human generated carbon emissions and China's populations declining, like 853 00:43:55,880 --> 00:43:59,440 Speaker 1: that's in theory, Like like that's as good as it gets, right, 854 00:43:59,480 --> 00:44:01,479 Speaker 1: That's what that's what you want you if you're humans 855 00:44:01,520 --> 00:44:04,239 Speaker 1: are going to generate less carbon. But then the same 856 00:44:04,360 --> 00:44:07,480 Speaker 1: like in the very next breath, these same people will say, well, 857 00:44:07,560 --> 00:44:09,959 Speaker 1: China's economy is screwed. They're done as a nation because 858 00:44:09,960 --> 00:44:14,520 Speaker 1: their population, they're in demographic decline. And I I don't 859 00:44:14,560 --> 00:44:17,160 Speaker 1: know what to make of it all. Quite frankly, I don't. 860 00:44:21,040 --> 00:44:23,080 Speaker 1: It's yeah, I don't. I don't know what to make 861 00:44:23,080 --> 00:44:25,480 Speaker 1: of it all. It's I'm left scratching my head. Who's 862 00:44:25,520 --> 00:44:28,640 Speaker 1: making the decisions? Why are they making those decisions? Um, 863 00:44:28,760 --> 00:44:32,080 Speaker 1: it's above my pay grade. Yeah. Well, and again I'm 864 00:44:32,120 --> 00:44:33,600 Speaker 1: not not even trying to get into the science of 865 00:44:33,640 --> 00:44:35,160 Speaker 1: it all. In that video that I made about that, 866 00:44:35,200 --> 00:44:36,799 Speaker 1: I didn't talk about the science. So I just talked 867 00:44:36,840 --> 00:44:39,200 Speaker 1: about the agreement. And I got a bunch of comments 868 00:44:39,200 --> 00:44:40,919 Speaker 1: that said, Mark, you're an idiot. You don't aything about science. 869 00:44:40,920 --> 00:44:42,480 Speaker 1: And I said, hey, this wasn't about science. I was 870 00:44:42,480 --> 00:44:44,360 Speaker 1: just talking about the agreement that was made. I know 871 00:44:44,400 --> 00:44:48,280 Speaker 1: about agreements, have done done a bunch of them. Um. 872 00:44:48,320 --> 00:44:51,960 Speaker 1: But um, so you know, just again with that macro lens, 873 00:44:52,080 --> 00:44:55,080 Speaker 1: especially kind of looking out over the next decade. So 874 00:44:55,920 --> 00:44:57,919 Speaker 1: I had this working thesis, I'm gonna work, I'm gonna 875 00:44:57,920 --> 00:45:00,920 Speaker 1: present in Miami. But uh, you know about these cycles 876 00:45:00,920 --> 00:45:05,760 Speaker 1: converging political cycles, economic cycles, and technology cycles, and it, uh, 877 00:45:06,000 --> 00:45:10,520 Speaker 1: China's peaking in twenty we're going down. Um, you know 878 00:45:10,840 --> 00:45:13,799 Speaker 1: we have uh, we have we have all these competing things. 879 00:45:13,880 --> 00:45:15,680 Speaker 1: We have the you know, the NGOs and world like 880 00:45:15,760 --> 00:45:18,000 Speaker 1: a mcforum saying that we'll own nothing and we'll be happy. 881 00:45:18,440 --> 00:45:20,880 Speaker 1: Obviously we see but we you know, we understand kind 882 00:45:20,920 --> 00:45:24,200 Speaker 1: of where that's going. Uh, we have the Triffins dilemma 883 00:45:24,200 --> 00:45:27,400 Speaker 1: where we're kind of shooting ourselves in the foot. Um 884 00:45:27,440 --> 00:45:30,279 Speaker 1: and without energy, we really don't stand a chance. And 885 00:45:30,400 --> 00:45:34,319 Speaker 1: we're getting rid of our energy at the same time. So, um, 886 00:45:34,320 --> 00:45:37,439 Speaker 1: like what's the endgame here? Like, where do you see 887 00:45:37,440 --> 00:45:40,879 Speaker 1: this over the next you know, several years kind of going? 888 00:45:40,920 --> 00:45:43,480 Speaker 1: I mean, we we can't grow out of the debt um. 889 00:45:43,520 --> 00:45:45,439 Speaker 1: A lot of people are talking about obviously this great 890 00:45:45,480 --> 00:45:48,799 Speaker 1: reset like a debt jubilee possibly. I mean, do you 891 00:45:48,800 --> 00:45:51,120 Speaker 1: think it that. I mean, I get what you're saying 892 00:45:51,160 --> 00:45:54,160 Speaker 1: about going back to you know, energy, oil or gold. 893 00:45:54,480 --> 00:45:56,319 Speaker 1: But if we're not going to have any energy, that's 894 00:45:56,320 --> 00:46:01,640 Speaker 1: not really in play. So I mean is well, I 895 00:46:01,680 --> 00:46:04,399 Speaker 1: think you would have energy, but what you would lose 896 00:46:04,560 --> 00:46:07,000 Speaker 1: is basically what the what what What the US had 897 00:46:07,080 --> 00:46:11,440 Speaker 1: under seven from to present was basically the ability to 898 00:46:11,480 --> 00:46:14,720 Speaker 1: print energy. It was it was a violation of physics. 899 00:46:14,760 --> 00:46:17,000 Speaker 1: It was we were printing money for oil and the 900 00:46:17,040 --> 00:46:19,040 Speaker 1: Russians had the Soviets had to lift it out of 901 00:46:19,080 --> 00:46:22,480 Speaker 1: the ground. And at the crux of why we won 902 00:46:22,520 --> 00:46:25,120 Speaker 1: the Cold War, we couldn't run out of money. They could. 903 00:46:25,480 --> 00:46:27,920 Speaker 1: They had to get their capital out of reel and 904 00:46:27,960 --> 00:46:33,160 Speaker 1: we could just created willy nilly. UM. When you talk 905 00:46:33,239 --> 00:46:37,000 Speaker 1: about the great reset you need to deliver, I think 906 00:46:37,000 --> 00:46:39,360 Speaker 1: you've got to go back to you. If they don't 907 00:46:39,520 --> 00:46:43,160 Speaker 1: get the debt to GDP down, this system will collapse, 908 00:46:43,239 --> 00:46:45,800 Speaker 1: this debt back system. And this is in the interests 909 00:46:45,840 --> 00:46:48,960 Speaker 1: of UM. You know, it's their system, right, the global 910 00:46:49,000 --> 00:46:52,000 Speaker 1: central banks, it's their system. It will collapse. They've got 911 00:46:52,000 --> 00:46:54,080 Speaker 1: to get that the GDP down. You can't just keep 912 00:46:54,080 --> 00:46:57,200 Speaker 1: doing this. And I think post COVID they reached that 913 00:46:57,360 --> 00:47:00,600 Speaker 1: point where the can can't be kicked any further. And 914 00:47:00,680 --> 00:47:03,480 Speaker 1: so if you're going to do that, you're gonna need 915 00:47:03,560 --> 00:47:08,560 Speaker 1: to really screw over bondholders on a real basis, UM. 916 00:47:08,600 --> 00:47:14,520 Speaker 1: But you're gonna need some sort of unifying event or 917 00:47:14,560 --> 00:47:18,360 Speaker 1: events that makes people not question it. Right, So in 918 00:47:18,480 --> 00:47:21,240 Speaker 1: World War Two, bond holders got killed on a real basis, 919 00:47:21,280 --> 00:47:24,640 Speaker 1: but nobody complained because it would be considered unpatriotic to 920 00:47:24,680 --> 00:47:30,560 Speaker 1: do so. Um And so you know, who can complain 921 00:47:30,600 --> 00:47:33,279 Speaker 1: against build back better from COVID its COVID relief? You 922 00:47:33,280 --> 00:47:35,319 Speaker 1: can't like, so what if you lose all your money 923 00:47:35,320 --> 00:47:36,560 Speaker 1: on your but you know, if you lose your you 924 00:47:36,600 --> 00:47:38,160 Speaker 1: know a lot of money on a real basis, on 925 00:47:38,200 --> 00:47:40,200 Speaker 1: your bonds. This is bigger than that. This is COVID, 926 00:47:40,239 --> 00:47:43,480 Speaker 1: This is recovery. This is build back better. And then 927 00:47:43,719 --> 00:47:45,920 Speaker 1: you know why waiting in the wings we you know, 928 00:47:46,040 --> 00:47:48,719 Speaker 1: and this is gonna sound conspiratorial, I know, but I'm 929 00:47:48,760 --> 00:47:51,120 Speaker 1: just watching what I'm watching. Waiting in the wings. We 930 00:47:51,200 --> 00:47:54,000 Speaker 1: have climate change, the climate emergency. We need to spend 931 00:47:54,040 --> 00:47:57,280 Speaker 1: a lot to address the climate emergency. We have central 932 00:47:57,280 --> 00:48:02,520 Speaker 1: banks talking about um man acro prudential impacts to the 933 00:48:02,560 --> 00:48:08,560 Speaker 1: banking system of like they like, these guys haven't done 934 00:48:08,560 --> 00:48:10,560 Speaker 1: the best job managing the economy. Now they're going to 935 00:48:10,640 --> 00:48:13,879 Speaker 1: take on this climate science to like they really they're 936 00:48:13,880 --> 00:48:17,480 Speaker 1: going to cool the earth with money. Right So to 937 00:48:17,640 --> 00:48:20,480 Speaker 1: my eyes, as through my macro LANs, what I see 938 00:48:20,640 --> 00:48:25,160 Speaker 1: are two emergencies that make it very hard. I mean, 939 00:48:25,200 --> 00:48:28,080 Speaker 1: who can be against climate emergency? Don't you have a heart, 940 00:48:28,120 --> 00:48:30,880 Speaker 1: don't you have kids? You know, So when they start queueing, 941 00:48:31,040 --> 00:48:33,240 Speaker 1: you know, when they start issuing and then queueing climate 942 00:48:33,280 --> 00:48:36,880 Speaker 1: bonds in two to five years, who can be against that? 943 00:48:36,920 --> 00:48:38,879 Speaker 1: They're acting in the best interests of the economy, they're 944 00:48:38,880 --> 00:48:42,120 Speaker 1: acting in the best interest of humanity and build back better. Hey, 945 00:48:42,200 --> 00:48:44,879 Speaker 1: we you know, COVID knocked us down. We're gonna come back. 946 00:48:44,920 --> 00:48:47,239 Speaker 1: Who can be against coming back from COVID? It's it's 947 00:48:47,320 --> 00:48:49,239 Speaker 1: it's wartime, right. How many times have we heard it's 948 00:48:49,280 --> 00:48:51,480 Speaker 1: like wartime. It's like war time. It's like wartime. So 949 00:48:51,520 --> 00:48:54,200 Speaker 1: I think, what when you talk about the great Reset 950 00:48:54,239 --> 00:48:57,360 Speaker 1: and that jubilee and what I think we've begun it, 951 00:48:57,440 --> 00:49:01,760 Speaker 1: And I think what we're talking about here is basic lee. Um, 952 00:49:01,800 --> 00:49:03,960 Speaker 1: you know, a bond fire. I think people that own 953 00:49:04,040 --> 00:49:06,320 Speaker 1: bonds are going to go from wearing diamonds to wearing 954 00:49:06,360 --> 00:49:09,600 Speaker 1: cubics or conia to wearing Crackerjack on a string. Um, 955 00:49:09,680 --> 00:49:13,120 Speaker 1: you know, to to paraphrase one of our rules phrases, uh, 956 00:49:13,200 --> 00:49:15,759 Speaker 1: over the next two years, five years, ten years, I 957 00:49:16,040 --> 00:49:18,000 Speaker 1: doubt it's I doubt it's ten years. I My guess 958 00:49:18,040 --> 00:49:20,520 Speaker 1: is it's probably within five years that the real the 959 00:49:20,600 --> 00:49:24,680 Speaker 1: real value of those bonds will deteriorate. You're seeing that already, 960 00:49:24,719 --> 00:49:28,800 Speaker 1: and you at any because there's a nominated in fiat 961 00:49:28,840 --> 00:49:31,480 Speaker 1: and and at any point in time, critically, if there 962 00:49:31,480 --> 00:49:34,040 Speaker 1: are policy airs, if the central banks don't do enough, 963 00:49:34,120 --> 00:49:37,040 Speaker 1: if there's not enough stimulus, if the stimulus stops, if 964 00:49:37,080 --> 00:49:39,080 Speaker 1: we go to austerity, those bonds are going to be 965 00:49:39,239 --> 00:49:42,400 Speaker 1: very valuable that for a period of time. Um, you know, 966 00:49:42,640 --> 00:49:44,720 Speaker 1: because again at a hundred three percent that the GDP 967 00:49:45,680 --> 00:49:49,360 Speaker 1: we're beyond, if they go into austerity, nominal default on 968 00:49:49,480 --> 00:49:53,400 Speaker 1: those bonds, sovereign debt even the United States will quickly 969 00:49:53,440 --> 00:49:56,799 Speaker 1: become well quickly put on the table. And so you know, 970 00:49:56,880 --> 00:49:59,640 Speaker 1: the odds that these that these Western nations are particular, 971 00:49:59,719 --> 00:50:03,160 Speaker 1: but sovereigns more broadly will default nominally on sovereign debt 972 00:50:03,920 --> 00:50:07,680 Speaker 1: for lack of printing money. Uh, it could happen. It 973 00:50:07,719 --> 00:50:10,839 Speaker 1: would be historically unique, and there's basically nobody that's ever 974 00:50:10,880 --> 00:50:15,160 Speaker 1: done that. M hm, well, that's good stuff. We've kind 975 00:50:15,160 --> 00:50:16,279 Speaker 1: of come to the end of the time. I do 976 00:50:16,320 --> 00:50:18,400 Speaker 1: want to ask one more question, though, and that is 977 00:50:18,680 --> 00:50:22,319 Speaker 1: you talked about replacing the bond, the treasury bond as 978 00:50:22,320 --> 00:50:24,560 Speaker 1: an asset, right, we did another reserve asset and you 979 00:50:24,600 --> 00:50:28,920 Speaker 1: threw out ums throughout golden bitcoin UM, which you know, 980 00:50:29,000 --> 00:50:31,520 Speaker 1: I think are both likely candidates. I I favor one 981 00:50:31,560 --> 00:50:35,040 Speaker 1: over the other. However, it seems like they maybe have 982 00:50:35,080 --> 00:50:37,040 Speaker 1: a third option that they're cooking up, and those are 983 00:50:37,080 --> 00:50:40,799 Speaker 1: the SDRs, and so it seems like they maybe want 984 00:50:40,840 --> 00:50:42,879 Speaker 1: to try to transition us to these SDRs. Are talking 985 00:50:42,880 --> 00:50:45,200 Speaker 1: about a six hundred fifty billion dollar str issues right 986 00:50:45,239 --> 00:50:49,080 Speaker 1: now UM, and maybe the SDR has become the new 987 00:50:49,160 --> 00:50:53,239 Speaker 1: treasury reserve asset UM, which seems kind of weird for 988 00:50:53,239 --> 00:50:56,200 Speaker 1: me to understand because the SDRs are made up of FIAT, 989 00:50:56,840 --> 00:50:59,440 Speaker 1: so like what's back in the fiat the SDR, well, 990 00:50:59,480 --> 00:51:01,200 Speaker 1: what's back in the star Fiat? And it's like this 991 00:51:01,280 --> 00:51:04,160 Speaker 1: like circular motion. But it seems like that's maybe what 992 00:51:04,200 --> 00:51:06,000 Speaker 1: they're gonna try. What do you think about that? And 993 00:51:06,120 --> 00:51:07,719 Speaker 1: is there any hope of that working or do you 994 00:51:07,719 --> 00:51:09,760 Speaker 1: think maybe that's like an interim step and then eventually 995 00:51:09,800 --> 00:51:12,520 Speaker 1: they have to go to a golder bitcoin. It depends 996 00:51:12,520 --> 00:51:14,640 Speaker 1: how they structure it. Um. If you go back to 997 00:51:14,719 --> 00:51:18,120 Speaker 1: two thousand eleven, early two thousand eleven, the I m 998 00:51:18,200 --> 00:51:20,600 Speaker 1: F was headed up by Dominique Strauss Khan or DSK 999 00:51:20,840 --> 00:51:23,560 Speaker 1: back then, and they did a white paper. It looked 1000 00:51:23,600 --> 00:51:28,320 Speaker 1: at pricing um oil and gold in SDRs instead of dollars. 1001 00:51:29,200 --> 00:51:33,000 Speaker 1: And if you did that, uh, that would work because 1002 00:51:33,040 --> 00:51:35,880 Speaker 1: now you can manage again there's that cross rate of 1003 00:51:35,880 --> 00:51:38,640 Speaker 1: oil and gold through the SDR. And if you want 1004 00:51:38,640 --> 00:51:42,840 Speaker 1: to import, if you want to import oil, you've got 1005 00:51:42,920 --> 00:51:44,680 Speaker 1: to come up with SDRs, which means you've got to 1006 00:51:44,719 --> 00:51:48,520 Speaker 1: sell domestic currency and buy up the other currencies in 1007 00:51:48,600 --> 00:51:51,520 Speaker 1: the basket in the requisite amounts to create a basket, 1008 00:51:52,000 --> 00:51:55,360 Speaker 1: which means you're gonna be weakening your currency buying the others, 1009 00:51:55,360 --> 00:52:00,279 Speaker 1: strengthening the others um. And then if it's convertible into goal, right, 1010 00:52:00,320 --> 00:52:02,960 Speaker 1: there's gonna be this ratio of goal olden oil and 1011 00:52:03,000 --> 00:52:06,800 Speaker 1: gold implied by str pricing of both, you would achieve 1012 00:52:07,080 --> 00:52:12,120 Speaker 1: largely the same thing as basically setting oil and gold 1013 00:52:12,760 --> 00:52:16,200 Speaker 1: to a ratio to each other, basically devaluing oil against gold. 1014 00:52:16,760 --> 00:52:19,880 Speaker 1: Uh and and maintaining that ratio. You know the problems 1015 00:52:19,920 --> 00:52:21,920 Speaker 1: with the currency systems over the last a hundred years. 1016 00:52:22,400 --> 00:52:25,320 Speaker 1: You first you paid the dollar to gold and you 1017 00:52:25,120 --> 00:52:28,360 Speaker 1: and you overprinted dollars. Then you paig the dollar to oil, 1018 00:52:28,680 --> 00:52:31,280 Speaker 1: and again it lasted longer, but then you overprinted dollars, 1019 00:52:31,840 --> 00:52:36,319 Speaker 1: and so the fix is really pegging oil to gold 1020 00:52:36,440 --> 00:52:39,160 Speaker 1: at a really big number, you know, basically making gold 1021 00:52:39,160 --> 00:52:40,719 Speaker 1: big enough to serve that role. So you could do 1022 00:52:40,760 --> 00:52:44,200 Speaker 1: it with SDRs UM you would get to the same place. 1023 00:52:44,280 --> 00:52:47,120 Speaker 1: It would be huge. You you would line up a 1024 00:52:47,239 --> 00:52:50,840 Speaker 1: chart of those countries running current account surpluses current account deficits, 1025 00:52:50,840 --> 00:52:53,160 Speaker 1: and the nations running big current account deficits would see 1026 00:52:53,200 --> 00:52:57,880 Speaker 1: their currencies collapse against those running big current account surpluses UM, 1027 00:52:58,000 --> 00:53:01,360 Speaker 1: and so suddenly domestic production in the US would be 1028 00:53:01,440 --> 00:53:04,120 Speaker 1: much more attractive relative to foreigm production. So you know, 1029 00:53:04,640 --> 00:53:06,680 Speaker 1: that Auti and that Porsche would you know, you know, 1030 00:53:07,160 --> 00:53:09,680 Speaker 1: a mid tiority would go from sixty grand two grand, 1031 00:53:10,320 --> 00:53:13,120 Speaker 1: and nice Cadillac would go from you know, sixty grand 1032 00:53:13,400 --> 00:53:16,680 Speaker 1: thirty grand, and all of a sudden, GM would say, wow, hey, 1033 00:53:16,760 --> 00:53:19,360 Speaker 1: let's let's make cars in the US again that let's 1034 00:53:19,480 --> 00:53:21,520 Speaker 1: let's make all of it in the US. And we 1035 00:53:21,560 --> 00:53:24,600 Speaker 1: need more chips. Hey, Intel, can you build three or 1036 00:53:24,640 --> 00:53:27,840 Speaker 1: four fabs? Yeah? Okay, you know, so there's there's a 1037 00:53:27,920 --> 00:53:31,560 Speaker 1: lead time there to it. But the SDR would would 1038 00:53:31,560 --> 00:53:35,560 Speaker 1: effectively be the same type of dynamic. And once you 1039 00:53:35,680 --> 00:53:38,120 Speaker 1: realize that, it would still imply that gold goes to 1040 00:53:38,160 --> 00:53:41,000 Speaker 1: the moon, Bitcoin goes to the moon. Uh, stocks likely 1041 00:53:41,040 --> 00:53:43,960 Speaker 1: go to the moon, Inflation takes off, bonds lose big 1042 00:53:44,000 --> 00:53:47,759 Speaker 1: time on a real basis. Got it. We'll wrap it 1043 00:53:47,840 --> 00:53:50,600 Speaker 1: up with that. So I guess the messages, Uh, lots 1044 00:53:50,600 --> 00:53:54,879 Speaker 1: of inflation in the future, get some hard assets. Yeah, 1045 00:53:54,880 --> 00:53:57,440 Speaker 1: I think so. I mean again, it's it's so political. 1046 00:53:57,480 --> 00:54:01,120 Speaker 1: That's the thing is, at any point in time, they 1047 00:54:01,120 --> 00:54:03,000 Speaker 1: could try austerity, and that's the thing you have to 1048 00:54:03,040 --> 00:54:04,600 Speaker 1: watch for as an investment. That's what I would tell 1049 00:54:04,640 --> 00:54:07,080 Speaker 1: people listening is is you've got to pay attention to 1050 00:54:07,120 --> 00:54:10,320 Speaker 1: the politics or you know, the the the the gridlock 1051 00:54:10,360 --> 00:54:13,680 Speaker 1: in Washington if it comes if there, if they can't 1052 00:54:13,719 --> 00:54:16,440 Speaker 1: do the stimulus, if we go back, then an austerity 1053 00:54:16,520 --> 00:54:19,160 Speaker 1: comes on to h you know, onto the on the 1054 00:54:19,200 --> 00:54:22,120 Speaker 1: table as an option for whatever reason. You want to 1055 00:54:22,120 --> 00:54:25,040 Speaker 1: own dollars and you want to own volatility and very 1056 00:54:25,080 --> 00:54:26,880 Speaker 1: little else because pretty much everything else is going to 1057 00:54:26,960 --> 00:54:32,600 Speaker 1: go down h for the But again, um, that's that's 1058 00:54:32,680 --> 00:54:35,080 Speaker 1: very it's not a politically palatable option, and you don't 1059 00:54:35,080 --> 00:54:37,279 Speaker 1: want to see what happens the next election cycle after 1060 00:54:37,320 --> 00:54:39,520 Speaker 1: that happens, because that's when you get you know, Trump 1061 00:54:39,640 --> 00:54:42,040 Speaker 1: wasn't Hitler as some people thought, you would start to 1062 00:54:42,120 --> 00:54:45,640 Speaker 1: actually get an actual Hitler potentially on the table if 1063 00:54:45,680 --> 00:54:49,120 Speaker 1: you do extend it austerity. Cool. All right, we're gonna 1064 00:54:49,120 --> 00:54:50,600 Speaker 1: ahead and wrap it up with that, Luke. That's a 1065 00:54:50,840 --> 00:54:52,839 Speaker 1: that's definitely enough to get us going for the day. 1066 00:54:52,880 --> 00:54:54,919 Speaker 1: Thanks so much for sharing that with us. Absolutely, thanks 1067 00:54:54,920 --> 00:54:57,520 Speaker 1: for let me try it again. Thanks for having me on, Mark, 1068 00:54:57,560 --> 00:55:00,200 Speaker 1: I appreciate it. Yeah, and I'm gonna make or we'll 1069 00:55:00,200 --> 00:55:02,279 Speaker 1: link to your newsletter and to your Twitter handle down 1070 00:55:02,280 --> 00:55:04,040 Speaker 1: below anything else that you want to direct people to 1071 00:55:04,120 --> 00:55:07,520 Speaker 1: that they should be watching. No, I just check us 1072 00:55:07,520 --> 00:55:10,000 Speaker 1: out at the at the website or at our Twitter handle, 1073 00:55:10,120 --> 00:55:12,759 Speaker 1: and uh, they'll they'll find out all they need to 1074 00:55:12,800 --> 00:55:16,319 Speaker 1: know either both of those places. Okay, thanks so much, Luke. 1075 00:55:16,360 --> 00:55:25,320 Speaker 1: All right, thank you, Mark,