WEBVTT - Mark Talks Crypto With James Lavish 0:00:00.080 --> 0:00:02.680 Hello, and welcome to another episode of the Mark Moss Show, 0:00:02.680 --> 0:00:06.280 where we talk about, of course, the decentralized revolution, which 0:00:06.360 --> 0:00:08.320 is the way the world is breaking apart. Of course, 0:00:08.360 --> 0:00:10.760 we look at it through the lens of politics, finance, 0:00:10.960 --> 0:00:13.680 and technology, so we can bring context to what's going 0:00:13.720 --> 0:00:15.320 on in the world. If you look at him in isolation, 0:00:15.440 --> 0:00:17.720 it seems confusing. When you look at him together, it 0:00:17.800 --> 0:00:21.040 paints a very clear picture. Of course, technology changes the 0:00:21.040 --> 0:00:24.120 way the world works, change the way we organize and communicate, 0:00:24.200 --> 0:00:26.840 and of course the technologist driving change is Bitcoin, the 0:00:26.920 --> 0:00:30.280 decentralized protocol that's changing the world. You know. I like 0:00:30.320 --> 0:00:32.080 to bring to you some education so you can learn 0:00:32.080 --> 0:00:34.960 to look at these situations differently. So latest breaking news 0:00:34.960 --> 0:00:37.280 and of course some interesting guests. You don't have to 0:00:37.280 --> 0:00:38.760 listen to me talk all the time. And that's what 0:00:38.800 --> 0:00:41.080 I got for you today. I am sitting down with 0:00:41.680 --> 0:00:46.000 returning guest and a good friend, James Lavish, and we 0:00:46.040 --> 0:00:48.960 are coming to you from Jackson Whole, Wyoming, where we 0:00:49.000 --> 0:00:52.760 are here for a Bitcoin ski Week. Pretty fun event. James, 0:00:52.760 --> 0:00:54.320 thanks for taking the time sit down with me. Yeah, 0:00:54.360 --> 0:00:56.480 of course, thanks for having me. Mark. Always good to 0:00:56.520 --> 0:00:58.800 talk to you. I know, I pulled you out of 0:00:59.480 --> 0:01:02.360 those means over there anything good going on over there today? 0:01:02.640 --> 0:01:04.720 All I could say is there's a lot of signal here. 0:01:04.760 --> 0:01:06.800 I mean, it's like the exact opposite of the FED 0:01:06.880 --> 0:01:11.440 meeting in the spring, right, Yeah, Yeah, we have what's 0:01:11.440 --> 0:01:15.360 been imposed is Chatham House rules, which means sort of 0:01:15.360 --> 0:01:18.200 like fight club first rule about fight clubs. Don't talk 0:01:18.200 --> 0:01:19.640 about fight club and so we're not supposed to talk 0:01:19.640 --> 0:01:21.399 about what's going on in there. You know, we kind 0:01:21.400 --> 0:01:24.080 of have this privacy as a couple hundred people of 0:01:24.160 --> 0:01:26.280 some of the you know, movers and shakers in the 0:01:26.319 --> 0:01:27.960 industry would just say that, and so we kind of 0:01:28.000 --> 0:01:30.880 have this, We have this kind of privacy things we 0:01:30.880 --> 0:01:32.960 can't really talk about what's going on, but there is 0:01:33.000 --> 0:01:35.560 a lot of signal, you know. It's it's good to 0:01:35.600 --> 0:01:37.560 see all the things that are being developed and built 0:01:37.560 --> 0:01:40.000 and kind of see the progress that's going on. But 0:01:40.080 --> 0:01:44.399 I think, you know, I gave a talk yesterday at TVP, 0:01:45.080 --> 0:01:47.680 which is a channel Venture Partners is a venture capital fund, 0:01:48.240 --> 0:01:50.440 and they wanted me. They told me what they want 0:01:50.480 --> 0:01:52.280 me to talk about, and they said it was the 0:01:52.440 --> 0:01:56.440 uncertainty of the global macro economic picture and I gave 0:01:56.480 --> 0:01:57.720 a talk and I said, you know what, you wanted 0:01:57.720 --> 0:01:59.120 me to talk about the uncertainty, but I'm want to 0:01:59.160 --> 0:02:02.840 talk about the certain of the act the macro economic picture. 0:02:03.000 --> 0:02:05.080 I see where you're going, you know, I said, I 0:02:05.080 --> 0:02:07.320 want to talk about the certainty of that. And so 0:02:08.600 --> 0:02:10.679 I said, you know, there's no sustaining as life as certainties. 0:02:10.680 --> 0:02:14.559 There's probabilities, but this is about as close to probabilistic 0:02:14.600 --> 0:02:16.880 certainty that we have. And so I gave this kind 0:02:16.880 --> 0:02:18.880 of talk, which mirrors a talk that you gave it 0:02:19.360 --> 0:02:23.520 in Cabo a few weeks ago. And I started off 0:02:23.560 --> 0:02:25.200 first because I was talking to this room of VC 0:02:26.160 --> 0:02:29.840 sorry venture capitalist investors as well as developers building on that, 0:02:30.280 --> 0:02:32.320 and I said, what are we all doing here? Are 0:02:32.320 --> 0:02:35.959 we building a road to nowhere? Like okay, we're building 0:02:35.960 --> 0:02:38.120 all this stuff, but like will it go anywhere? And 0:02:38.160 --> 0:02:40.359 so let's talk about the certainty of that. And so, 0:02:40.639 --> 0:02:43.560 like I said, I used some of the couple data 0:02:43.560 --> 0:02:46.120 points that you you had given in that talk. I 0:02:46.160 --> 0:02:50.000 started with talking about how the FED has been fighting inflation, 0:02:51.000 --> 0:02:53.720 and they went from not thinking about thinking about raising 0:02:53.800 --> 0:02:56.000 raids too. Then it's going to be transitory to oh, crap. 0:02:56.040 --> 0:03:00.560 We have a problem, and now they're committed to crushing 0:03:00.720 --> 0:03:03.639 demand to bring inflation down. But the problem is they 0:03:03.680 --> 0:03:08.040 haven't brought inflation down and instead they've crushed the treasury. Yeah, 0:03:08.520 --> 0:03:10.840 is that kind of what was happening here? That's absolutely fair. 0:03:10.880 --> 0:03:15.160 I mean, look that the US is not alone. All sovereigns, 0:03:15.760 --> 0:03:20.160 all FIAT backed by sovereigns they have, they have a 0:03:20.160 --> 0:03:23.320 debt problem, they have they have a spending problem. But 0:03:23.360 --> 0:03:26.919 if we just focusing on the US, you know, the 0:03:27.400 --> 0:03:31.520 issue is that quite honestly, exactly what you said is 0:03:31.680 --> 0:03:35.760 this is a certainty. And the if if the United 0:03:35.800 --> 0:03:40.320 States Government, if the Treasury was a public company trading 0:03:40.320 --> 0:03:43.120 on the New York Stock Exchange, we would define it 0:03:43.160 --> 0:03:46.560 as a zombie company. And the reason for that is 0:03:46.600 --> 0:03:51.000 that they do not generate enough revenues, okay, to pay 0:03:51.000 --> 0:03:54.080 off the debt that they have on their balance sheet. 0:03:54.400 --> 0:03:57.480 They don't generate enough revenue annually to pay the interest 0:03:57.560 --> 0:04:00.920 on their debt. The only way for them to pay 0:04:01.000 --> 0:04:04.800 that interest off and pay that that gap off is 0:04:04.840 --> 0:04:07.880 to issue more debt, which only makes the problem worse. 0:04:08.080 --> 0:04:10.880 It's a zombie company. If they would, they would be 0:04:11.080 --> 0:04:15.960 rated junk status and h and be struggling to issue 0:04:16.000 --> 0:04:19.080 that debt. Now you should that they don't make enough 0:04:19.160 --> 0:04:22.080 revenue to cover the interest on the debt. They make 0:04:22.200 --> 0:04:27.200 enough revenue if they didn't pay other expenses. Well, well, 0:04:27.200 --> 0:04:30.080 first you'll agree with me on this. The US government 0:04:30.080 --> 0:04:32.760 doesn't really make any revenue. They collect it. They collect 0:04:32.880 --> 0:04:35.800 from the productive citizens of the United States, right, so 0:04:36.400 --> 0:04:40.520 now they're collecting these revenues through taxes and uh. And 0:04:40.600 --> 0:04:43.200 it's exactly what you said. And so basically if you 0:04:43.240 --> 0:04:46.000 look at and you break it down there, you know 0:04:46.240 --> 0:04:50.440 there's three main mandatory expenses that you have for the 0:04:50.600 --> 0:04:54.719 for the US treasury. One of them is your your entitlements, 0:04:54.720 --> 0:04:58.640 which is like Social Security, Medicare, Medicaid and all that. Well, 0:04:58.720 --> 0:05:01.560 that adds up to three point eight tillion dollars okay annually. 0:05:01.600 --> 0:05:04.320 And this this just came out in a credit in 0:05:04.360 --> 0:05:07.279 a that's mandatory expensive. These are this is mandatory, they're 0:05:07.279 --> 0:05:09.599 signed into legislation. This is this just came out in 0:05:09.360 --> 0:05:12.400 the in the Congressional Budget Office, and they put out 0:05:12.400 --> 0:05:16.159 a report um semi periodically. Just a couple of weeks ago, 0:05:16.200 --> 0:05:18.640 they put out the report that that defines what their 0:05:18.680 --> 0:05:21.520 projections are and let me let me say these projections 0:05:21.520 --> 0:05:26.000 are they're they're pretty optimistic. Yeah, as bad as they are. 0:05:26.120 --> 0:05:30.239 They're super optimistic, which is super troumbling. So the government's report, 0:05:30.320 --> 0:05:33.160 the CBO, Congressional Budget Office, this is the government's own report, right, 0:05:33.160 --> 0:05:35.440 So it's super troubling. Right. So okay, so you got 0:05:35.440 --> 0:05:38.600 three point eight million trillion dollars of entitlements spending. That's 0:05:38.680 --> 0:05:40.600 that's written into law for this year. That's money they 0:05:40.600 --> 0:05:45.240 owe to people. That's a retirement pensions, Medicare, Medicaid, yeah, 0:05:45.360 --> 0:05:49.279 and expected unemployment costs all that, right. And then you've 0:05:49.320 --> 0:05:52.120 got eight hundred billion dollars of defense spending. And this 0:05:52.320 --> 0:05:55.800 is what has been earmarked for defense. This isn't including 0:05:55.800 --> 0:05:59.160 any extra expenses for Ukraine or anything else that's going on, right, 0:05:59.240 --> 0:06:01.400 So this is just marked for it. But those are 0:06:01.440 --> 0:06:03.159 long term contracts. They can't get out of them. They 0:06:03.200 --> 0:06:05.880 have to pay them, right. So that's the second thing. 0:06:05.960 --> 0:06:08.080 So now we're at what four point six trillion dollars. 0:06:08.920 --> 0:06:11.400 Then you've got what they expect to be this year. 0:06:11.480 --> 0:06:13.960 Remember this is this was just put out and they 0:06:14.040 --> 0:06:17.800 expect the net interest to be seven hundred billion dollars 0:06:17.960 --> 0:06:21.440 on the debt that the Treasury has has issued. So 0:06:21.600 --> 0:06:23.839 so the government owes thirty one and a half trillion 0:06:23.880 --> 0:06:26.440 dollars to the FED, and they have to pay interest 0:06:26.560 --> 0:06:28.200 on that thirty one and a half trillion. Yeah, and 0:06:28.279 --> 0:06:31.159 to the Fed, and and to private citizens, to whoever 0:06:31.839 --> 0:06:34.800 is exactly so. And so now now add that all up, 0:06:35.040 --> 0:06:38.680 and we're at five point three trillion dollars of expenses. 0:06:39.600 --> 0:06:42.440 What does the US Treasury expect to take in in 0:06:42.680 --> 0:06:45.720 in tax revenues this year four point eight trillion. So 0:06:45.839 --> 0:06:47.600 you don't have to be a math genius. And as 0:06:47.600 --> 0:06:49.960 our good friend Greg Foss likes to say, it's it's 0:06:50.000 --> 0:06:51.880 not even a great eleven math. This is like great 0:06:51.960 --> 0:06:57.120 four math, right elementary school. These are mandatory expenses. So 0:06:57.200 --> 0:06:59.280 then when you add in all the other expenses on 0:06:59.400 --> 0:07:01.920 top of it, so you're at you're at a five 0:07:02.000 --> 0:07:04.240 hundred billion dollar hole. But when you add in all 0:07:04.279 --> 0:07:06.520 the other expenses market you're at one point four trillion. 0:07:06.600 --> 0:07:09.760 That's expected this year. We're expected to to to have 0:07:10.120 --> 0:07:14.600 a deficit of one point four trillion dollars then, and 0:07:14.760 --> 0:07:17.240 that's based off of their expectations of how much money 0:07:17.280 --> 0:07:19.760 they expect or I should say hope and pray to 0:07:19.840 --> 0:07:23.560 receive exactly. And so that's also based off of the 0:07:23.680 --> 0:07:26.640 interest being what it is and not going to higher. 0:07:26.840 --> 0:07:28.920 That's right, that's right. And so but when you when 0:07:28.960 --> 0:07:31.800 you when you add in certain when you add in 0:07:31.840 --> 0:07:36.560 certain adjustments and UH and programs and UH, and then 0:07:36.600 --> 0:07:40.600 you add in the major problem is what you what 0:07:40.760 --> 0:07:45.040 you defined before, is that the Fed is putting the 0:07:45.120 --> 0:07:47.600 Treasury in a very difficult position. Why is that, Well, 0:07:47.640 --> 0:07:51.800 the Treasury issues their debt okay, at um, and we 0:07:52.360 --> 0:07:55.920 have about thirty one point five trillion dollars outstanding and 0:07:57.000 --> 0:08:01.120 to keep it simple, about fifth percent of that debt 0:08:01.280 --> 0:08:04.400 is being retired in the next one to three years. Okay, 0:08:04.520 --> 0:08:08.160 So what does that mean, Well, that that debt matures. Well, 0:08:08.480 --> 0:08:12.720 how do they that matures then, because because for everyone listening, 0:08:13.680 --> 0:08:16.520 what that means is that the debt isn't just all 0:08:16.800 --> 0:08:19.840 owed next year or in thirty years. It's six months, 0:08:20.040 --> 0:08:23.160 two years, five years, ten years, thirty years, etc. Different maturity. 0:08:23.200 --> 0:08:26.320 And as it matures, they have to give the debt owner, 0:08:26.400 --> 0:08:27.800 the one who bought the debt, they have to give 0:08:27.880 --> 0:08:31.760 them the principal back. Well, the Treasury doesn't have that money, 0:08:31.800 --> 0:08:33.760 So what do they do to give the principal back. 0:08:34.440 --> 0:08:37.560 They issue more debt, so essentially they're replacing that old 0:08:37.640 --> 0:08:40.680 debt with new debt. The problem is the interest rates 0:08:40.720 --> 0:08:43.760 on the new debt are about three to four percent 0:08:43.920 --> 0:08:47.880 higher than the old debt. So it is creating this 0:08:48.240 --> 0:08:51.680 massive hole in the balance sheet of the treasury because 0:08:52.160 --> 0:08:56.440 now that now they are owing way more interest than 0:08:56.520 --> 0:08:59.000 they owe just last year because of the higher interest 0:08:59.120 --> 0:09:01.439 cost on the new yet so it just becomes a 0:09:01.559 --> 0:09:04.959 self fulfilling spiral. It's called the debt spiral. And this 0:09:05.120 --> 0:09:06.760 is what we're in. If you're just tuning in, you're 0:09:06.800 --> 0:09:09.040 listening to the Mark Moss Show, coming to you from 0:09:09.240 --> 0:09:12.000 Jackson Hole, Wyoming. I'm sitting down with James Lavish. You 0:09:12.080 --> 0:09:15.040 can check him out on Twitter at James Lavish. Check 0:09:15.080 --> 0:09:18.559 out the Bitcoin Opportunity Fund as well. You can google that. 0:09:19.080 --> 0:09:22.360 We're talking about the inevitability of what's going to happen 0:09:22.440 --> 0:09:25.280 with the global macroeconomic picture, some of the interesting stuff. 0:09:25.280 --> 0:09:26.760 You don't want to miss this. We're gonna uncover this 0:09:26.960 --> 0:09:28.559 and unpack it more. Don't go away, We're gonna be 0:09:28.679 --> 0:09:31.480 right back, all right, Welcome back. If you're just tuning in. 0:09:31.600 --> 0:09:33.520 You are listening to the Mark Moss Show. Of course, 0:09:33.559 --> 0:09:36.000 we're always talking about the decentralized revolution, and right now 0:09:36.040 --> 0:09:39.200 we're talking about the way the money is decentralizing because 0:09:39.240 --> 0:09:41.520 it's breaking up hearts as the FED is trying to 0:09:41.600 --> 0:09:45.559 crush inflation. It's going nowhere, but instead they're crushing the government. 0:09:45.880 --> 0:09:47.880 I'm sitting down with James Lavish. You can check him 0:09:47.880 --> 0:09:50.200 out on Twitter at James Lavish. Also he writes an 0:09:50.240 --> 0:09:54.440 amazing newsletter, The Informationist. It's free. I think you still 0:09:54.440 --> 0:09:56.000 have a free version. There's a free version. There's a 0:09:56.040 --> 0:09:59.679 free version. You should definitely check it out, packed with information. 0:10:00.120 --> 0:10:02.840 Check that out and check out the Bitcoin Opportunity Dot 0:10:03.000 --> 0:10:05.760 Fund as well. But James, so we are going through 0:10:06.240 --> 0:10:08.680 basically how the treasury has to pay interest on the debt. 0:10:09.120 --> 0:10:10.960 But some of the interest is some of the debt 0:10:11.120 --> 0:10:14.360 needs to be rolled over or turned over in the 0:10:14.440 --> 0:10:16.160 next year, and someone has to be in thirty years. 0:10:16.480 --> 0:10:18.480 But the problem is when does it have to be 0:10:18.600 --> 0:10:20.959 refinanced and at what rate and what will that do 0:10:21.040 --> 0:10:24.480 to the amount that's owed. Exactly, So, the current yield 0:10:24.600 --> 0:10:27.000 on the average yield on all the treasures that are 0:10:27.280 --> 0:10:29.439 outstanding right now is one point seven percent. As you 0:10:29.520 --> 0:10:32.400 retire that debt which was issued most of it was 0:10:32.480 --> 0:10:35.040 issued earlier, which means it's lower rate. Okay, so it's 0:10:35.160 --> 0:10:38.520 under that average. Well, fifty percent of that matures the 0:10:38.600 --> 0:10:41.080 next three years. You have to replace that with new debt, 0:10:41.200 --> 0:10:43.679 and now you're talking about replacing it somewhere between three 0:10:43.679 --> 0:10:47.000 and a half and five percent. Problem, let me ask 0:10:47.000 --> 0:10:49.199 you a question about that. First of all, fifty percent 0:10:49.280 --> 0:10:51.600 in the next three years sounds really bad. What's even 0:10:51.720 --> 0:10:55.240 worse is it's thirty percent in one year. Yeah. Now, 0:10:55.280 --> 0:10:57.800 when you say it has to get it'll get a 0:10:57.840 --> 0:10:59.920 new rate of between three and a half to five percent. 0:11:00.559 --> 0:11:02.559 Will it be at the rate of what the Fed 0:11:02.640 --> 0:11:04.199 funds rate is? So right now it's going to be 0:11:04.280 --> 0:11:05.640 five percent. Where do you get to three and a 0:11:05.679 --> 0:11:08.439 half to five Yeah, exactly. So the short term, you know, 0:11:08.640 --> 0:11:11.600 anywhere from three months, six months, one year, two years 0:11:11.679 --> 0:11:13.839 would be much higher rates. And then as you go 0:11:13.920 --> 0:11:17.040 flurt the route you go to the five year, ten year. Okay, 0:11:17.160 --> 0:11:20.480 they're at they're at lower rates. So but it's and 0:11:20.640 --> 0:11:24.000 here's the problem, to simplify it for everyone, It's like 0:11:24.080 --> 0:11:27.520 a single parent who is has their mandatory expenses. You've 0:11:27.520 --> 0:11:29.160 got your more reagi, get your car payment, You've got 0:11:29.200 --> 0:11:30.800 food you've got to put on the table for the kids. 0:11:31.880 --> 0:11:33.599 You've got to pay your energy bill. You want to 0:11:33.679 --> 0:11:35.160 keep the heat on. These are things that you have 0:11:35.360 --> 0:11:39.320 to pay. Right. So, if you're if you're working two jobs, 0:11:39.360 --> 0:11:41.720 you don't have any more time to work and you're 0:11:42.000 --> 0:11:44.120 just not meeting the margin, what do you do? Well, 0:11:44.200 --> 0:11:46.480 you take out a credit card. And it's an obvious thing, 0:11:46.679 --> 0:11:48.079 you know. So you take out the credit card and 0:11:48.160 --> 0:11:52.160 you start charging food and some gas and other expenses 0:11:52.160 --> 0:11:54.480 on your credit card. And let's say hypothetically that's you 0:11:54.559 --> 0:11:57.199 get like this introductory low interest rate, and then the 0:11:57.360 --> 0:11:59.800 low interest rate goes away, and suddenly it spikes up 0:12:00.160 --> 0:12:03.120 from zero percent or five percent up to you know, 0:12:03.280 --> 0:12:06.360 you're seventeen eighteen, twenty two, twenty eight percent, right, okay? 0:12:06.520 --> 0:12:10.839 So and then eventually your interest payments on that credit 0:12:10.920 --> 0:12:13.880 card are so big that now you've maxed out that 0:12:13.960 --> 0:12:16.000 credit card, and you what do you have to do? 0:12:16.120 --> 0:12:18.640 You take out another credit card, and it happens, and 0:12:18.679 --> 0:12:20.599 then you take out another credit card. The problem is 0:12:20.679 --> 0:12:22.720 as you take out more and more credit cards. Your 0:12:22.760 --> 0:12:26.199 credit score goes down, the interest rate on all those 0:12:26.200 --> 0:12:29.400 credit cards goes up, the problem comes becomes worse, and 0:12:29.559 --> 0:12:31.920 that's the debt spiral. That's simply what we're doing the 0:12:32.000 --> 0:12:33.800 United States. And I'm not saying that the United States 0:12:33.920 --> 0:12:36.719 is going to go it's going to go bankrupt, and 0:12:37.200 --> 0:12:38.839 I mean it is bankrupt, but it's not it's not 0:12:38.960 --> 0:12:42.079 going to disappear the default. It's not paying. Yeah, it's 0:12:42.080 --> 0:12:44.600 not going to default. You can't. It wouldn't default because 0:12:44.720 --> 0:12:46.520 we can print our own money and we can buy 0:12:46.559 --> 0:12:49.520 our own bonds. And that's the inevitability. And that's the inevitability. 0:12:49.640 --> 0:12:52.360 So that's the point, right. So I saw I saw 0:12:52.440 --> 0:12:55.000 President Biden or whoever writes his tweets I think it 0:12:55.080 --> 0:12:59.520 was yesterday, said the US has never defaulted on its debt. 0:12:59.640 --> 0:13:02.600 Let me be clear, you know, we're not going to default. 0:13:02.600 --> 0:13:05.240 We're gonna get this debt ceiling raised or whatever, something 0:13:05.280 --> 0:13:07.000 to that effect. I don't remember exactly. And I was 0:13:07.040 --> 0:13:08.960 going to reply to it, actually, I might started saying 0:13:09.000 --> 0:13:12.480 to my drafts, but I was like, someone should probably 0:13:12.520 --> 0:13:15.200 tell him, maybe he maybe just tell him that they 0:13:15.280 --> 0:13:17.960 have we have defaulted. Yeah, that's what I was gonna say, like, hey, 0:13:18.040 --> 0:13:20.320 someone should probably tell him, like we've already actually defaulted, 0:13:20.400 --> 0:13:22.240 Like if you have to take on more debt to 0:13:22.240 --> 0:13:24.079 pay old debt, like I thought that was like a 0:13:24.320 --> 0:13:26.520 Ponzi or something. You kind of like that. Yeah, So, 0:13:26.640 --> 0:13:28.800 I mean it's pretty simple. You operating a deficit, You 0:13:28.920 --> 0:13:32.040 issue debt to cover that deficit at higher interest rates, 0:13:32.240 --> 0:13:35.880 causing larger deficits, leading to more debt, leading to higher 0:13:35.920 --> 0:13:39.960 interestry payments, leading to larger deficits, and then more debt. 0:13:40.160 --> 0:13:42.280 It's just a spiral you can't get out of. And 0:13:42.400 --> 0:13:45.040 that's where we are. So so to frame this up, 0:13:45.120 --> 0:13:47.480 the inflation got out of control, so the FED decided 0:13:47.480 --> 0:13:49.760 to jack the rates higher and faster than timent history. 0:13:50.360 --> 0:13:53.120 They've done that, and they haven't really had much of 0:13:53.160 --> 0:13:56.880 an effect on inflation, but with the interest rates going 0:13:57.000 --> 0:14:00.600 up so high, they have caused the treasure to pay 0:14:00.679 --> 0:14:03.120 more interest on the debt, which they can't afford to do. 0:14:03.679 --> 0:14:05.480 On top of that, and I don't think you talked 0:14:05.480 --> 0:14:07.839 about this yet, I mean, but on top of that, 0:14:08.040 --> 0:14:11.400 by what they're trying to crush demand. What they've done 0:14:11.679 --> 0:14:15.040 is trying to crush demand, make people poor and they've 0:14:15.040 --> 0:14:16.600 done a pretty good job with that. And when people 0:14:16.600 --> 0:14:19.000 are poor, then they don't spend as much, which means 0:14:19.080 --> 0:14:22.160 there's not as much tax income coming into the treasury. Right, 0:14:22.280 --> 0:14:25.160 and that's exactly right. So as we're seeing some indicators 0:14:25.200 --> 0:14:28.200 and they're kind of mixed. But when if you if 0:14:28.200 --> 0:14:30.640 you tighten credit enough, you will run into an issue 0:14:30.680 --> 0:14:32.480 where you're going to go into a recession. It means 0:14:32.520 --> 0:14:36.600 that your your productivity contracts, which means that you're the 0:14:37.120 --> 0:14:42.240 revenues generated for the company's contract and the multiples on 0:14:42.320 --> 0:14:45.400 those securities that trade, and the stock market contract. Everything 0:14:45.480 --> 0:14:48.560 just feeds on itself and so it just equals less 0:14:49.120 --> 0:14:53.120 tax revenue for the government. Okay, So again, like what 0:14:53.200 --> 0:14:55.560 are their choices? What can they do? They're trying to 0:14:55.600 --> 0:14:57.280 get inflation down because they can't let it get out 0:14:57.320 --> 0:14:59.880 of control because if inflation is out of control then 0:15:00.000 --> 0:15:05.040 and what what sane investor is going to buy a 0:15:05.160 --> 0:15:10.720 bond that's based in a in a currency that's deflating, inflating, 0:15:10.880 --> 0:15:15.160 meaning it's debasing um in perpetuity and at a rate 0:15:15.320 --> 0:15:18.040 that it just doesn't make sense. It's it's called a 0:15:18.680 --> 0:15:22.160 negative interest rate, a negative real rate. So but what 0:15:22.320 --> 0:15:23.880 are their choices, like, what are the what are the 0:15:24.280 --> 0:15:29.680 government's choices? Right, So you can either have austerity, yeah, 0:15:29.920 --> 0:15:33.200 which means live on a budget, live within your means. Right, 0:15:33.280 --> 0:15:35.240 so you can cut programs, you can cut spending, you 0:15:35.240 --> 0:15:37.880 can cut government spending. That's a political suicide. Noe. Neither 0:15:38.000 --> 0:15:40.520 party is going to do that, you know, both parties 0:15:40.640 --> 0:15:42.040 going to try to get the other one to do it. 0:15:42.120 --> 0:15:45.240 It's a trick, you know, um no, no, no one's 0:15:45.280 --> 0:15:47.800 ever going to be elected running on a campaign to 0:15:48.040 --> 0:15:50.880 take money away from people. Correct. And or you could 0:15:50.960 --> 0:15:54.920 raise taxes also not you know, politically it was only 0:15:54.960 --> 0:15:57.320 so high. You can go exactly and a fifty percent 0:15:57.480 --> 0:16:00.600 about it, and then the people revolt. People revolt, and 0:16:00.920 --> 0:16:05.960 it actually ultimately worsens your It lowers GDP, it impacts 0:16:06.000 --> 0:16:09.960 your productivity negatively, and so you get the same result. 0:16:10.160 --> 0:16:14.360 You're going to have lower tax revenue. And or there's 0:16:14.440 --> 0:16:16.560 a third option is issue more debt, which is the 0:16:16.640 --> 0:16:19.560 obvious one, which which is what we've been doing, debasement. 0:16:20.240 --> 0:16:23.760 But there that's the fourth option. Right, So the fourth 0:16:23.840 --> 0:16:28.240 option is to two one one is the default, right, 0:16:28.520 --> 0:16:30.640 or you're not going to default, right, you're going to 0:16:30.640 --> 0:16:34.400 issue more debt. Okay. So, but and then one derivative 0:16:34.440 --> 0:16:38.000 from that is your point is debasement, which is allow 0:16:38.080 --> 0:16:41.520 inflation to run hotter than they admit to. Imagine that 0:16:42.080 --> 0:16:44.280 you know, the CPI. We've seen how the CPI is 0:16:44.560 --> 0:16:47.400 is has been You've done videos about that. Sow the 0:16:47.440 --> 0:16:51.840 CPI is manipulated. How they're kind of lying about how much, um, 0:16:53.000 --> 0:16:56.200 how they just change the way they calculated. They're kind 0:16:56.200 --> 0:16:59.040 of hiding how much. But the point is that it 0:16:59.160 --> 0:17:04.800 allows them to generate a GDP, generate revenue that the 0:17:05.280 --> 0:17:09.800 government can collect taxes on that's at a higher It's 0:17:09.840 --> 0:17:14.040 just it's just more dollars, right, because it's inflated. And 0:17:14.160 --> 0:17:16.560 then they pay down old debt, that debt that they're 0:17:16.560 --> 0:17:20.520 paying down there, they're paying down old debt with cheaper dollars. Yeah. 0:17:20.680 --> 0:17:24.600 So it's it's called debasement, and it's called inflating away 0:17:24.640 --> 0:17:26.200 the debt. And they're going to do this for as 0:17:26.320 --> 0:17:29.399 long as they possibly can. And that's the point that 0:17:30.160 --> 0:17:33.200 why this all matters is that money is being taken 0:17:33.240 --> 0:17:36.000 out of people's pockets every day in order to keep 0:17:36.040 --> 0:17:39.640 this ponzi going. Period. Yeah, why does it matter. That's 0:17:39.680 --> 0:17:41.320 like always a question I try and come back to 0:17:41.880 --> 0:17:45.639 and to me, why it matters is trying to get 0:17:45.720 --> 0:17:49.240 the direction right. Trying to get the direction right because 0:17:49.280 --> 0:17:51.360 I think if we zoom out, we'll figure that out. 0:17:51.560 --> 0:17:53.240 Oh man, there's so much to dig into. I can't 0:17:53.240 --> 0:17:54.760 wait to dig in more. If you're just tune in 0:17:54.800 --> 0:17:56.480 and you're listening to the Mark Moas Show, I'm sitting 0:17:56.480 --> 0:17:58.600 down with James Lavish. Check them out on Twitter at 0:17:58.680 --> 0:18:02.440 James Lavish and check out Bitcoin Opportunity Dot Fund for 0:18:02.560 --> 0:18:04.920 more info there as well. I want to dig into 0:18:05.400 --> 0:18:08.639 some of the constraints and the walls that we're gonna hit. 0:18:08.640 --> 0:18:10.320 We're already seeing that a whole lots of unpack. We're 0:18:10.320 --> 0:18:11.600 gonna be back with more in a minute. Don't go away, 0:18:11.600 --> 0:18:14.360 We'll be right back, all right, Welcome back. If you're 0:18:14.359 --> 0:18:16.600 just tune in, you are listening to the Mark Moss Show, 0:18:17.160 --> 0:18:19.200 I'm sitting down with James Lavish and we are talking 0:18:19.240 --> 0:18:23.040 about the certainty in life. There's no such thing as certainty. 0:18:23.080 --> 0:18:25.600 Is there's probabilities, but the probability is very high that 0:18:25.760 --> 0:18:28.000 we know which direction we're going. And we're talking about that. 0:18:28.560 --> 0:18:30.840 You know, as we break this down, just kind of 0:18:30.880 --> 0:18:32.959 think about, like we're trying to think about the direction 0:18:33.040 --> 0:18:35.000 things are going. So this doesn't tell us what's going 0:18:35.040 --> 0:18:37.560 to happen next week or next month, but I feel 0:18:37.600 --> 0:18:39.240 pretty good about what is going to happen over the 0:18:39.320 --> 0:18:42.639 next five years. Right, And so the longer you zoom out, 0:18:42.680 --> 0:18:44.080 I think that the clearer the picture gets. And so 0:18:44.160 --> 0:18:46.639 we want to be right directionally, So just kind of 0:18:46.640 --> 0:18:48.520 think about that. And I think it's also one reason 0:18:48.600 --> 0:18:53.000 why you see even though Jeroan Powell keeps going, hey, markets, 0:18:53.160 --> 0:18:55.320 you don't understand pain, pain, pain, We're gonna crush you. 0:18:55.400 --> 0:18:57.239 We're gonna come down. But the markets are like, yeah, right, 0:18:57.320 --> 0:18:59.960 we know where that limit is. And so every time 0:19:00.040 --> 0:19:03.959 time um inflation comes in hotter than they expected it too, 0:19:04.040 --> 0:19:07.000 it's more sticky than they wanted. The unemployment rate is 0:19:07.080 --> 0:19:11.400 staying low, wages are staying high, all these things. All 0:19:11.440 --> 0:19:14.439 the people on TV are like, well, higher, they got 0:19:14.520 --> 0:19:16.920 a high higher higher, higher, for longer higher. It's like 0:19:17.000 --> 0:19:20.280 this parrot, right, higher, higher, higher, But like how high 0:19:20.359 --> 0:19:22.919 and how long can it really go? That's right? I mean, 0:19:23.119 --> 0:19:26.480 if they can. There's a lot of calls that have 0:19:26.520 --> 0:19:28.760 been going around over the last number of months, and 0:19:28.920 --> 0:19:33.200 and you hear Chairman Powell talk about he's kind of 0:19:33.240 --> 0:19:37.520 invoking them the Vulcar era, and he's going to be 0:19:37.640 --> 0:19:40.440 Vulcar like. He's kind of wants to embody that he's 0:19:40.680 --> 0:19:43.480 wants to be seen as the hawk that that tamed inflation. 0:19:43.720 --> 0:19:47.200 And the reality is that was at a time where 0:19:47.440 --> 0:19:50.080 debt to GDP was a fraction of what it is now, right, 0:19:50.200 --> 0:19:52.000 So what does that mean? That means that our debt 0:19:52.160 --> 0:19:54.520 was thirty percent of our GDP now it's one hundred 0:19:54.520 --> 0:19:57.879 and thirty percent. So he can't he literally cannot do 0:19:58.080 --> 0:20:01.680 that without distres drawing the treasure. We would have to 0:20:01.880 --> 0:20:03.920 we would have to debate so rapidly, we would have 0:20:04.000 --> 0:20:06.800 to print so much. He can't do that because of 0:20:06.920 --> 0:20:10.120