Speaker 1: Hello, and welcome to another episode of the Mark Moss Show,
Speaker 1: where we talk about, of course, the decentralized revolution, which
Speaker 1: is the way the world is breaking apart. Of course,
Speaker 1: we look at it through the lens of politics, finance,
Speaker 1: and technology, so we can bring context to what's going
Speaker 1: on in the world. If you look at him in isolation,
Speaker 1: it seems confusing. When you look at him together, it
Speaker 1: paints a very clear picture. Of course, technology changes the
Speaker 1: way the world works, change the way we organize and communicate,
Speaker 1: and of course the technologist driving change is Bitcoin, the
Speaker 1: decentralized protocol that's changing the world. You know. I like
Speaker 1: to bring to you some education so you can learn
Speaker 1: to look at these situations differently. So latest breaking news
Speaker 1: and of course some interesting guests. You don't have to
Speaker 1: listen to me talk all the time. And that's what
Speaker 1: I got for you today. I am sitting down with
Speaker 1: returning guest and a good friend, James Lavish, and we
Speaker 1: are coming to you from Jackson Whole, Wyoming, where we
Speaker 1: are here for a Bitcoin ski Week. Pretty fun event. James,
Speaker 1: thanks for taking the time sit down with me. Yeah,
Speaker 1: of course, thanks for having me. Mark. Always good to
Speaker 1: talk to you. I know, I pulled you out of
Speaker 1: those means over there anything good going on over there today?
Speaker 1: All I could say is there's a lot of signal here.
Speaker 1: I mean, it's like the exact opposite of the FED
Speaker 1: meeting in the spring, right, Yeah, Yeah, we have what's
Speaker 1: been imposed is Chatham House rules, which means sort of
Speaker 1: like fight club first rule about fight clubs. Don't talk
Speaker 1: about fight club and so we're not supposed to talk
Speaker 1: about what's going on in there. You know, we kind
Speaker 1: of have this privacy as a couple hundred people of
Speaker 1: some of the you know, movers and shakers in the
Speaker 1: industry would just say that, and so we kind of
Speaker 1: have this, We have this kind of privacy things we
Speaker 1: can't really talk about what's going on, but there is
Speaker 1: a lot of signal, you know. It's it's good to
Speaker 1: see all the things that are being developed and built
Speaker 1: and kind of see the progress that's going on. But
Speaker 1: I think, you know, I gave a talk yesterday at TVP,
Speaker 1: which is a channel Venture Partners is a venture capital fund,
Speaker 1: and they wanted me. They told me what they want
Speaker 1: me to talk about, and they said it was the
Speaker 1: uncertainty of the global macro economic picture and I gave
Speaker 1: a talk and I said, you know what, you wanted
Speaker 1: me to talk about the uncertainty, but I'm want to
Speaker 1: talk about the certain of the act the macro economic picture.
Speaker 1: I see where you're going, you know, I said, I
Speaker 1: want to talk about the certainty of that. And so
Speaker 1: I said, you know, there's no sustaining as life as certainties.
Speaker 1: There's probabilities, but this is about as close to probabilistic
Speaker 1: certainty that we have. And so I gave this kind
Speaker 1: of talk, which mirrors a talk that you gave it
Speaker 1: in Cabo a few weeks ago. And I started off
Speaker 1: first because I was talking to this room of VC
Speaker 1: sorry venture capitalist investors as well as developers building on that,
Speaker 1: and I said, what are we all doing here? Are
Speaker 1: we building a road to nowhere? Like okay, we're building
Speaker 1: all this stuff, but like will it go anywhere? And
Speaker 1: so let's talk about the certainty of that. And so,
Speaker 1: like I said, I used some of the couple data
Speaker 1: points that you you had given in that talk. I
Speaker 1: started with talking about how the FED has been fighting inflation,
Speaker 1: and they went from not thinking about thinking about raising
Speaker 1: raids too. Then it's going to be transitory to oh, crap.
Speaker 1: We have a problem, and now they're committed to crushing
Speaker 1: demand to bring inflation down. But the problem is they
Speaker 1: haven't brought inflation down and instead they've crushed the treasury. Yeah,
Speaker 1: is that kind of what was happening here? That's absolutely fair.
Speaker 1: I mean, look that the US is not alone. All sovereigns,
Speaker 1: all FIAT backed by sovereigns they have, they have a
Speaker 1: debt problem, they have they have a spending problem. But
Speaker 1: if we just focusing on the US, you know, the
Speaker 1: issue is that quite honestly, exactly what you said is
Speaker 1: this is a certainty. And the if if the United
Speaker 1: States Government, if the Treasury was a public company trading
Speaker 1: on the New York Stock Exchange, we would define it
Speaker 1: as a zombie company. And the reason for that is
Speaker 1: that they do not generate enough revenues, okay, to pay
Speaker 1: off the debt that they have on their balance sheet.
Speaker 1: They don't generate enough revenue annually to pay the interest
Speaker 1: on their debt. The only way for them to pay
Speaker 1: that interest off and pay that that gap off is
Speaker 1: to issue more debt, which only makes the problem worse.
Speaker 1: It's a zombie company. If they would, they would be
Speaker 1: rated junk status and h and be struggling to issue
Speaker 1: that debt. Now you should that they don't make enough
Speaker 1: revenue to cover the interest on the debt. They make
Speaker 1: enough revenue if they didn't pay other expenses. Well, well,
Speaker 1: first you'll agree with me on this. The US government
Speaker 1: doesn't really make any revenue. They collect it. They collect
Speaker 1: from the productive citizens of the United States, right, so
Speaker 1: now they're collecting these revenues through taxes and uh. And
Speaker 1: it's exactly what you said. And so basically if you
Speaker 1: look at and you break it down there, you know
Speaker 1: there's three main mandatory expenses that you have for the
Speaker 1: for the US treasury. One of them is your your entitlements,
Speaker 1: which is like Social Security, Medicare, Medicaid and all that. Well,
Speaker 1: that adds up to three point eight tillion dollars okay annually.
Speaker 1: And this this just came out in a credit in
Speaker 1: a that's mandatory expensive. These are this is mandatory, they're
Speaker 1: signed into legislation. This is this just came out in
Speaker 1: the in the Congressional Budget Office, and they put out
Speaker 1: a report um semi periodically. Just a couple of weeks ago,
Speaker 1: they put out the report that that defines what their
Speaker 1: projections are and let me let me say these projections
Speaker 1: are they're they're pretty optimistic. Yeah, as bad as they are.
Speaker 1: They're super optimistic, which is super troumbling. So the government's report,
Speaker 1: the CBO, Congressional Budget Office, this is the government's own report, right,
Speaker 1: So it's super troubling. Right. So okay, so you got
Speaker 1: three point eight million trillion dollars of entitlements spending. That's
Speaker 1: that's written into law for this year. That's money they
Speaker 1: owe to people. That's a retirement pensions, Medicare, Medicaid, yeah,
Speaker 1: and expected unemployment costs all that, right. And then you've
Speaker 1: got eight hundred billion dollars of defense spending. And this
Speaker 1: is what has been earmarked for defense. This isn't including
Speaker 1: any extra expenses for Ukraine or anything else that's going on, right,
Speaker 1: So this is just marked for it. But those are
Speaker 1: long term contracts. They can't get out of them. They
Speaker 1: have to pay them, right. So that's the second thing.
Speaker 1: So now we're at what four point six trillion dollars.
Speaker 1: Then you've got what they expect to be this year.
Speaker 1: Remember this is this was just put out and they
Speaker 1: expect the net interest to be seven hundred billion dollars
Speaker 1: on the debt that the Treasury has has issued. So
Speaker 1: so the government owes thirty one and a half trillion
Speaker 1: dollars to the FED, and they have to pay interest
Speaker 1: on that thirty one and a half trillion. Yeah, and
Speaker 1: to the Fed, and and to private citizens, to whoever
Speaker 1: is exactly so. And so now now add that all up,
Speaker 1: and we're at five point three trillion dollars of expenses.
Speaker 1: What does the US Treasury expect to take in in
Speaker 1: in tax revenues this year four point eight trillion. So
Speaker 1: you don't have to be a math genius. And as
Speaker 1: our good friend Greg Foss likes to say, it's it's
Speaker 1: not even a great eleven math. This is like great
Speaker 1: four math, right elementary school. These are mandatory expenses. So
Speaker 1: then when you add in all the other expenses on
Speaker 1: top of it, so you're at you're at a five
Speaker 1: hundred billion dollar hole. But when you add in all
Speaker 1: the other expenses market you're at one point four trillion.
Speaker 1: That's expected this year. We're expected to to to have
Speaker 1: a deficit of one point four trillion dollars then, and
Speaker 1: that's based off of their expectations of how much money
Speaker 1: they expect or I should say hope and pray to
Speaker 1: receive exactly. And so that's also based off of the
Speaker 1: interest being what it is and not going to higher.
Speaker 1: That's right, that's right. And so but when you when
Speaker 1: you when you add in certain when you add in
Speaker 1: certain adjustments and UH and programs and UH, and then
Speaker 1: you add in the major problem is what you what
Speaker 1: you defined before, is that the Fed is putting the
Speaker 1: Treasury in a very difficult position. Why is that, Well,
Speaker 1: the Treasury issues their debt okay, at um, and we
Speaker 1: have about thirty one point five trillion dollars outstanding and
Speaker 1: to keep it simple, about fifth percent of that debt
Speaker 1: is being retired in the next one to three years. Okay,
Speaker 1: So what does that mean, Well, that that debt matures. Well,
Speaker 1: how do they that matures then, because because for everyone listening,
Speaker 1: what that means is that the debt isn't just all
Speaker 1: owed next year or in thirty years. It's six months,
Speaker 1: two years, five years, ten years, thirty years, etc. Different maturity.
Speaker 1: And as it matures, they have to give the debt owner,
Speaker 1: the one who bought the debt, they have to give
Speaker 1: them the principal back. Well, the Treasury doesn't have that money,
Speaker 1: So what do they do to give the principal back.
Speaker 1: They issue more debt, so essentially they're replacing that old
Speaker 1: debt with new debt. The problem is the interest rates
Speaker 1: on the new debt are about three to four percent
Speaker 1: higher than the old debt. So it is creating this
Speaker 1: massive hole in the balance sheet of the treasury because
Speaker 1: now that now they are owing way more interest than
Speaker 1: they owe just last year because of the higher interest
Speaker 1: cost on the new yet so it just becomes a
Speaker 1: self fulfilling spiral. It's called the debt spiral. And this
Speaker 1: is what we're in. If you're just tuning in, you're
Speaker 1: listening to the Mark Moss Show, coming to you from
Speaker 1: Jackson Hole, Wyoming. I'm sitting down with James Lavish. You
Speaker 1: can check him out on Twitter at James Lavish. Check
Speaker 1: out the Bitcoin Opportunity Fund as well. You can google that.
Speaker 1: We're talking about the inevitability of what's going to happen
Speaker 1: with the global macroeconomic picture, some of the interesting stuff.
Speaker 1: You don't want to miss this. We're gonna uncover this
Speaker 1: and unpack it more. Don't go away, We're gonna be
Speaker 1: right back, all right, Welcome back. If you're just tuning in.
Speaker 1: You are listening to the Mark Moss Show. Of course,
Speaker 1: we're always talking about the decentralized revolution, and right now
Speaker 1: we're talking about the way the money is decentralizing because
Speaker 1: it's breaking up hearts as the FED is trying to
Speaker 1: crush inflation. It's going nowhere, but instead they're crushing the government.
Speaker 1: I'm sitting down with James Lavish. You can check him
Speaker 1: out on Twitter at James Lavish. Also he writes an
Speaker 1: amazing newsletter, The Informationist. It's free. I think you still
Speaker 1: have a free version. There's a free version. There's a
Speaker 1: free version. You should definitely check it out, packed with information.
Speaker 1: Check that out and check out the Bitcoin Opportunity Dot
Speaker 1: Fund as well. But James, so we are going through
Speaker 1: basically how the treasury has to pay interest on the debt.
Speaker 1: But some of the interest is some of the debt
Speaker 1: needs to be rolled over or turned over in the
Speaker 1: next year, and someone has to be in thirty years.
Speaker 1: But the problem is when does it have to be
Speaker 1: refinanced and at what rate and what will that do
Speaker 1: to the amount that's owed. Exactly, So, the current yield
Speaker 1: on the average yield on all the treasures that are
Speaker 1: outstanding right now is one point seven percent. As you
Speaker 1: retire that debt which was issued most of it was
Speaker 1: issued earlier, which means it's lower rate. Okay, so it's
Speaker 1: under that average. Well, fifty percent of that matures the
Speaker 1: next three years. You have to replace that with new debt,
Speaker 1: and now you're talking about replacing it somewhere between three
Speaker 1: and a half and five percent. Problem, let me ask
Speaker 1: you a question about that. First of all, fifty percent
Speaker 1: in the next three years sounds really bad. What's even
Speaker 1: worse is it's thirty percent in one year. Yeah. Now,
Speaker 1: when you say it has to get it'll get a
Speaker 1: new rate of between three and a half to five percent.
Speaker 1: Will it be at the rate of what the Fed
Speaker 1: funds rate is? So right now it's going to be
Speaker 1: five percent. Where do you get to three and a
Speaker 1: half to five Yeah, exactly. So the short term, you know,
Speaker 1: anywhere from three months, six months, one year, two years
Speaker 1: would be much higher rates. And then as you go
Speaker 1: flurt the route you go to the five year, ten year. Okay,
Speaker 1: they're at they're at lower rates. So but it's and
Speaker 1: here's the problem, to simplify it for everyone, It's like
Speaker 1: a single parent who is has their mandatory expenses. You've
Speaker 1: got your more reagi, get your car payment, You've got
Speaker 1: food you've got to put on the table for the kids.
Speaker 1: You've got to pay your energy bill. You want to
Speaker 1: keep the heat on. These are things that you have
Speaker 1: to pay. Right. So, if you're if you're working two jobs,
Speaker 1: you don't have any more time to work and you're
Speaker 1: just not meeting the margin, what do you do? Well,
Speaker 1: you take out a credit card. And it's an obvious thing,
Speaker 1: you know. So you take out the credit card and
Speaker 1: you start charging food and some gas and other expenses
Speaker 1: on your credit card. And let's say hypothetically that's you
Speaker 1: get like this introductory low interest rate, and then the
Speaker 1: low interest rate goes away, and suddenly it spikes up
Speaker 1: from zero percent or five percent up to you know,
Speaker 1: you're seventeen eighteen, twenty two, twenty eight percent, right, okay?
Speaker 1: So and then eventually your interest payments on that credit
Speaker 1: card are so big that now you've maxed out that
Speaker 1: credit card, and you what do you have to do?
Speaker 1: You take out another credit card, and it happens, and
Speaker 1: then you take out another credit card. The problem is
Speaker 1: as you take out more and more credit cards. Your
Speaker 1: credit score goes down, the interest rate on all those
Speaker 1: credit cards goes up, the problem comes becomes worse, and
Speaker 1: that's the debt spiral. That's simply what we're doing the
Speaker 1: United States. And I'm not saying that the United States
Speaker 1: is going to go it's going to go bankrupt, and
Speaker 1: I mean it is bankrupt, but it's not it's not
Speaker 1: going to disappear the default. It's not paying. Yeah, it's
Speaker 1: not going to default. You can't. It wouldn't default because
Speaker 1: we can print our own money and we can buy
Speaker 1: our own bonds. And that's the inevitability. And that's the inevitability.
Speaker 1: So that's the point, right. So I saw I saw
Speaker 1: President Biden or whoever writes his tweets I think it
Speaker 1: was yesterday, said the US has never defaulted on its debt.
Speaker 1: Let me be clear, you know, we're not going to default.
Speaker 1: We're gonna get this debt ceiling raised or whatever, something
Speaker 1: to that effect. I don't remember exactly. And I was
Speaker 1: going to reply to it, actually, I might started saying
Speaker 1: to my drafts, but I was like, someone should probably
Speaker 1: tell him, maybe he maybe just tell him that they
Speaker 1: have we have defaulted. Yeah, that's what I was gonna say, like, hey,
Speaker 1: someone should probably tell him, like we've already actually defaulted,
Speaker 1: Like if you have to take on more debt to
Speaker 1: pay old debt, like I thought that was like a
Speaker 1: Ponzi or something. You kind of like that. Yeah, So,
Speaker 1: I mean it's pretty simple. You operating a deficit, You
Speaker 1: issue debt to cover that deficit at higher interest rates,
Speaker 1: causing larger deficits, leading to more debt, leading to higher
Speaker 1: interestry payments, leading to larger deficits, and then more debt.
Speaker 1: It's just a spiral you can't get out of. And
Speaker 1: that's where we are. So so to frame this up,
Speaker 1: the inflation got out of control, so the FED decided
Speaker 1: to jack the rates higher and faster than timent history.
Speaker 1: They've done that, and they haven't really had much of
Speaker 1: an effect on inflation, but with the interest rates going
Speaker 1: up so high, they have caused the treasure to pay
Speaker 1: more interest on the debt, which they can't afford to do.
Speaker 1: On top of that, and I don't think you talked
Speaker 1: about this yet, I mean, but on top of that,
Speaker 1: by what they're trying to crush demand. What they've done
Speaker 1: is trying to crush demand, make people poor and they've
Speaker 1: done a pretty good job with that. And when people
Speaker 1: are poor, then they don't spend as much, which means
Speaker 1: there's not as much tax income coming into the treasury. Right,
Speaker 1: and that's exactly right. So as we're seeing some indicators
Speaker 1: and they're kind of mixed. But when if you if
Speaker 1: you tighten credit enough, you will run into an issue
Speaker 1: where you're going to go into a recession. It means
Speaker 1: that your your productivity contracts, which means that you're the
Speaker 1: revenues generated for the company's contract and the multiples on
Speaker 1: those securities that trade, and the stock market contract. Everything
Speaker 1: just feeds on itself and so it just equals less
Speaker 1: tax revenue for the government. Okay, So again, like what
Speaker 1: are their choices? What can they do? They're trying to
Speaker 1: get inflation down because they can't let it get out
Speaker 1: of control because if inflation is out of control then
Speaker 1: and what what sane investor is going to buy a
Speaker 1: bond that's based in a in a currency that's deflating, inflating,
Speaker 1: meaning it's debasing um in perpetuity and at a rate
Speaker 1: that it just doesn't make sense. It's it's called a
Speaker 1: negative interest rate, a negative real rate. So but what
Speaker 1: are their choices, like, what are the what are the
Speaker 1: government's choices? Right, So you can either have austerity, yeah,
Speaker 1: which means live on a budget, live within your means. Right,
Speaker 1: so you can cut programs, you can cut spending, you
Speaker 1: can cut government spending. That's a political suicide. Noe. Neither
Speaker 1: party is going to do that, you know, both parties
Speaker 1: going to try to get the other one to do it.
Speaker 1: It's a trick, you know, um no, no, no one's
Speaker 1: ever going to be elected running on a campaign to
Speaker 1: take money away from people. Correct. And or you could
Speaker 1: raise taxes also not you know, politically it was only
Speaker 1: so high. You can go exactly and a fifty percent
Speaker 1: about it, and then the people revolt. People revolt, and
Speaker 1: it actually ultimately worsens your It lowers GDP, it impacts
Speaker 1: your productivity negatively, and so you get the same result.
Speaker 1: You're going to have lower tax revenue. And or there's
Speaker 1: a third option is issue more debt, which is the
Speaker 1: obvious one, which which is what we've been doing, debasement.
Speaker 1: But there that's the fourth option. Right, So the fourth
Speaker 1: option is to two one one is the default, right,
Speaker 1: or you're not going to default, right, you're going to
Speaker 1: issue more debt. Okay. So, but and then one derivative
Speaker 1: from that is your point is debasement, which is allow
Speaker 1: inflation to run hotter than they admit to. Imagine that
Speaker 1: you know, the CPI. We've seen how the CPI is
Speaker 1: is has been You've done videos about that. Sow the
Speaker 1: CPI is manipulated. How they're kind of lying about how much, um,
Speaker 1: how they just change the way they calculated. They're kind
Speaker 1: of hiding how much. But the point is that it
Speaker 1: allows them to generate a GDP, generate revenue that the
Speaker 1: government can collect taxes on that's at a higher It's
Speaker 1: just it's just more dollars, right, because it's inflated. And
Speaker 1: then they pay down old debt, that debt that they're
Speaker 1: paying down there, they're paying down old debt with cheaper dollars. Yeah.
Speaker 1: So it's it's called debasement, and it's called inflating away
Speaker 1: the debt. And they're going to do this for as
Speaker 1: long as they possibly can. And that's the point that
Speaker 1: why this all matters is that money is being taken
Speaker 1: out of people's pockets every day in order to keep
Speaker 1: this ponzi going. Period. Yeah, why does it matter. That's
Speaker 1: like always a question I try and come back to
Speaker 1: and to me, why it matters is trying to get
Speaker 1: the direction right. Trying to get the direction right because
Speaker 1: I think if we zoom out, we'll figure that out.
Speaker 1: Oh man, there's so much to dig into. I can't
Speaker 1: wait to dig in more. If you're just tune in
Speaker 1: and you're listening to the Mark Moas Show, I'm sitting
Speaker 1: down with James Lavish. Check them out on Twitter at
Speaker 1: James Lavish and check out Bitcoin Opportunity Dot Fund for
Speaker 1: more info there as well. I want to dig into
Speaker 1: some of the constraints and the walls that we're gonna hit.
Speaker 1: We're already seeing that a whole lots of unpack. We're
Speaker 1: gonna be back with more in a minute. Don't go away,
Speaker 1: We'll be right back, all right, Welcome back. If you're
Speaker 1: just tune in, you are listening to the Mark Moss Show,
Speaker 1: I'm sitting down with James Lavish and we are talking
Speaker 1: about the certainty in life. There's no such thing as certainty.
Speaker 1: Is there's probabilities, but the probability is very high that
Speaker 1: we know which direction we're going. And we're talking about that.
Speaker 1: You know, as we break this down, just kind of
Speaker 1: think about, like we're trying to think about the direction
Speaker 1: things are going. So this doesn't tell us what's going
Speaker 1: to happen next week or next month, but I feel
Speaker 1: pretty good about what is going to happen over the
Speaker 1: next five years. Right, And so the longer you zoom out,
Speaker 1: I think that the clearer the picture gets. And so
Speaker 1: we want to be right directionally, So just kind of
Speaker 1: think about that. And I think it's also one reason
Speaker 1: why you see even though Jeroan Powell keeps going, hey, markets,
Speaker 1: you don't understand pain, pain, pain, We're gonna crush you.
Speaker 1: We're gonna come down. But the markets are like, yeah, right,
Speaker 1: we know where that limit is. And so every time
Speaker 1: time um inflation comes in hotter than they expected it too,
Speaker 1: it's more sticky than they wanted. The unemployment rate is
Speaker 1: staying low, wages are staying high, all these things. All
Speaker 1: the people on TV are like, well, higher, they got
Speaker 1: a high higher higher, higher, for longer higher. It's like
Speaker 1: this parrot, right, higher, higher, higher, But like how high
Speaker 1: and how long can it really go? That's right? I mean,
Speaker 1: if they can. There's a lot of calls that have
Speaker 1: been going around over the last number of months, and
Speaker 1: and you hear Chairman Powell talk about he's kind of
Speaker 1: invoking them the Vulcar era, and he's going to be
Speaker 1: Vulcar like. He's kind of wants to embody that he's
Speaker 1: wants to be seen as the hawk that that tamed inflation.
Speaker 1: And the reality is that was at a time where
Speaker 1: debt to GDP was a fraction of what it is now, right,
Speaker 1: So what does that mean? That means that our debt
Speaker 1: was thirty percent of our GDP now it's one hundred
Speaker 1: and thirty percent. So he can't he literally cannot do
Speaker 1: that without distres drawing the treasure. We would have to
Speaker 1: we would have to debate so rapidly, we would have
Speaker 1: to print so much. He can't do that because of
Speaker 1: exactly what we just said. Raise if you raise rates, okay,
Speaker 1: if you raise rates to ten percent or twelve percent
Speaker 1: or fifteen percent, there's no way you could get to
Speaker 1: twenty percent. It's just not it's it's mathematically um it's
Speaker 1: a mathematical suicide for the currency. We would we would
Speaker 1: destroy the currency. So again, what's their choice just to
Speaker 1: just to keep inflation running a little bit hotter? Than
Speaker 1: they may want to admit to. Maybe a lot hotter,
Speaker 1: maybe a lot hotter, and uh and and inflate away
Speaker 1: that debt. That's that's what it is. But look, Mark,
Speaker 1: we have we've raised the debt limit twenty two times
Speaker 1: since nineteen ninety seven, and we're gonna do it again.
Speaker 1: We're gonna do it again and again and again. That's
Speaker 1: an absolute certainty. We're gonna keep doing it. The Treasury
Speaker 1: put out a chart. It's crazy. This is the craziest thing.
Speaker 1: They actually put out a report recently. And the report
Speaker 1: was it was titled um uh, it was titled an
Speaker 1: Unsustainable Fiscal Path. Yeah, the US Treasury put this out
Speaker 1: and they put out this this um this chart of
Speaker 1: what they what they think the percentage of debt um
Speaker 1: held by the public is going to be right, And uh,
Speaker 1: it looks like a hockey stick. As a percentage of GDP,
Speaker 1: it looks like an absolute hockey stick. So like when
Speaker 1: you get in out to years twenty, twenty fifty, twenty sixty,
Speaker 1: it's like we're nearing a thousand percent. They're expecting the debt,
Speaker 1: the debt to just keep going and it's goes straight up.
Speaker 1: It's it's actually it's unnerving to see that they First
Speaker 1: of all, they that they admitted it. They see it,
Speaker 1: they know it. But this proves that they know there's
Speaker 1: just no way out. They as there's just no way out,
Speaker 1: and so eventually the US will likely be the last
Speaker 1: currency to fail. But this just there's just no way
Speaker 1: for them to get out of this problem. Yeah, so
Speaker 1: and a couple other things. So there's no way to
Speaker 1: get out of the problem. The only way they can
Speaker 1: keep service in the debt is to take on more debt.
Speaker 1: Biden tweets as much they I mean, he says it
Speaker 1: in his tweets that they put their reports out and
Speaker 1: they tell us that, So like, this is not James
Speaker 1: and I sitting here and we're thinking speculation. This is
Speaker 1: what they're saying. And this is the math, right, And
Speaker 1: then you throw in things like well, printing more money
Speaker 1: causes inflation, so there's gonna be more inflation, and they're
Speaker 1: having to print at the same time, which is a problem.
Speaker 1: But then if we even look globally, and the one
Speaker 1: thing I want to jump from is that, and I
Speaker 1: think you had talked about this. This is not just
Speaker 1: a United States problem. This is a global problem. Yeah, right,
Speaker 1: all the governments of the world, in central banks of
Speaker 1: the world are in the same basic predicament. Yeah, I
Speaker 1: mean you can see the cracks appearing all over the place,
Speaker 1: Like Japan. Japan's an interesting one because they they've they've
Speaker 1: been they've been running a high debt to GDP for
Speaker 1: a very long time. They have a different decker demographic.
Speaker 1: Theyre a net exporter, we're net import It is a
Speaker 1: different beast. However, what they've been doing recently is they've
Speaker 1: been trying to get inflation hotter. Well why are they
Speaker 1: doing that? They keep saying, we need inflation, we need inflation,
Speaker 1: we need inflation. Well, because their debt to GDP is
Speaker 1: two hundred and fifty percent already. Remember US is only
Speaker 1: running about one hundred and thirty percent. There's two hundred
Speaker 1: and fifty already, only one hundred and thirty. Really, the
Speaker 1: the kill zone if you're a climbing Mount Everest, I
Speaker 1: think they call it the kill zone if you could
Speaker 1: go above it, and the kill zone is like ninety percent.
Speaker 1: So we're way above the kill zone. Yeah, way above
Speaker 1: so um. But in Japan, they they've had they've gotten
Speaker 1: to the point where they're they're holding their ten year
Speaker 1: treasury at at a fifty basis point yield, which means
Speaker 1: that they're standing there and buying as many treasures as
Speaker 1: anybody's selves to be sure that that interest rate doesn't
Speaker 1: go over fifty basis points. So they're monetizing their own debt.
Speaker 1: What are they doing. They're printing in and buying bonds.
Speaker 1: And now the Bank of Japan is the largest owner
Speaker 1: of all issued jgbs Japanese government bonds in the world. Yeah,
Speaker 1: so if we look at it like the globe, the
Speaker 1: globes having the same problem. And then if you look
Speaker 1: at this, then we have wars going everywhere. So now
Speaker 1: the US is trying to get into war with China
Speaker 1: and Russia and Ukraine, and war is very inflationary. Supply
Speaker 1: chains breakdown even more. And I wouldn't say that most
Speaker 1: of our inflation that we had is not demand side,
Speaker 1: which is why the Fed's losing its supply side, and
Speaker 1: so war is going to create more problems and supply side,
Speaker 1: it's also going to create more demand as well. Right, So,
Speaker 1: now we saw the US doesn't have enough communitions for
Speaker 1: one week in the Taiwan straight and so we were
Speaker 1: running out of munitions to send the Ukraines. We have
Speaker 1: to resupply. And I think what we're seeing is Zoltan
Speaker 1: Posar had this theory of going back to this commodity
Speaker 1: based money, and so where people don't want to hold dollars,
Speaker 1: they want to rather hold the commodities in the ground.
Speaker 1: I saw this week Russia said they're going to reduce
Speaker 1: their oil production because they'd rather keep the oil in
Speaker 1: the ground. It makes sense, and that pushes the price
Speaker 1: of oil up, which is more inflation. Yeah. Energy, like
Speaker 1: every all productivity relies on energy, right, Um, we go,
Speaker 1: just put it all the pieces together. Debt in itself
Speaker 1: is not inherently bad. You can pull future productivity into
Speaker 1: the now. But when you when you issue too much
Speaker 1: debt and again you get over your ski tips as
Speaker 1: we say, um in the investment world. Then I'm a
Speaker 1: dirt biker. We say over the handlebars, and you get
Speaker 1: over there. You go. I like that even better, you
Speaker 1: get over your handlebars. And but that's the problem. Um
Speaker 1: and uh so yeah, so that that and they're they're
Speaker 1: in lies the issue, right, So exactly what you're saying,
Speaker 1: Ludwig von Misas arguably the godfather of the Austrian school
Speaker 1: of economics. He calls it the crack up boom, and
Speaker 1: he says, and then suddenly everybody realizes inflation is both
Speaker 1: intentional and permanent, and then nobody wants it, and so
Speaker 1: they're quickly trying to exchange it for goods and services
Speaker 1: as fast as they can, and that leads to this
Speaker 1: hyperinflationary boom. And so I think we're seeing that. You know,
Speaker 1: back to Russia, they'd rather keep the oil on the ground.
Speaker 1: Central banks bought the most gold on record last year.
Speaker 1: So the last couple years have been buying more than
Speaker 1: since nineteen twenty one. No, now they bought the most
Speaker 1: on record. General Motors invested six hundred and fifty million
Speaker 1: in the US lithium. Mind, they'd rather have the lithium
Speaker 1: in the ground than the money Volvo did, LG did.
Speaker 1: And so this is like a really really really strong
Speaker 1: trend that's happening. Now. I want to kind of talk
Speaker 1: about what do we do about all this? What do
Speaker 1: we do about it this? So the first thing is
Speaker 1: if we look at a couple of examples. I use
Speaker 1: this chart in my in my presentation yesterday. If you
Speaker 1: look at the Zimbabwe stock market from twenty twelve to
Speaker 1: twenty twenty. It kind of it kind of meandered down
Speaker 1: a little bit and then it shot up like a skyrocket.
Speaker 1: We know if if the Turkish lira has lost eight
Speaker 1: ninety percent of its value to the US dollar over
Speaker 1: the last five years. So if we were in Turkey
Speaker 1: five years ago, if we had a time machine, what
Speaker 1: would we have done, Yeah, you buy your turket stocks.
Speaker 1: We would have not wanted to hold Turkish lira. We
Speaker 1: would have wanted to get into something else, and then
Speaker 1: maybe we'd want to take debt. Yeah, exactly. So then
Speaker 1: you would go, well, the well, I'm gonna tell you
Speaker 1: the rest. We gotta take a break. I'm gonna leave
Speaker 1: you on a cliffhanger there. We're gonna talk about what
Speaker 1: we should do with the benefit of hindsight and what
Speaker 1: options and opportunities we have available to us today. If
Speaker 1: you just tune in and listening to the Mark Moas Show,
Speaker 1: I'm sitting down with James Lavish. Check him out at
Speaker 1: James Lavish and I'm at one Mark Moss check us out.
Speaker 1: Check out Bitcoin Opportunity Dot Fund for more info on that.
Speaker 1: We're gonna be back with more and tell you what
Speaker 1: we should do with the benefit of hindsight. Will be
Speaker 1: back with all that and more in a minute. Don't
Speaker 1: go away, We're back, all right, Welcome back. If you
Speaker 1: just tune in, you're listening to the Markmas Show and
Speaker 1: you have missed a lot, so you better go back
Speaker 1: and listen to it on the podcast. Just search Mark
Speaker 1: Mos Show on your favorite podcast player, or go to
Speaker 1: the Market Disruptors YouTube channel and you can come out
Speaker 1: over there. I'm sitting down with James Lavish when we're
Speaker 1: talking about the inevitability of the global financial system, the
Speaker 1: United States and every other government, and I was making
Speaker 1: the case what we want to do is we want
Speaker 1: to look at other experiences where we were in a
Speaker 1: similar time frame, or other time frames where we're in
Speaker 1: a similar experience, and what we would have done with
Speaker 1: the benefit of hindsight. And so we see the Turkish
Speaker 1: lira over the last five years lost ninety percent of
Speaker 1: its value, So we would have not wont to hold
Speaker 1: Turkish lera. We'd rather hold like US dollars, and so
Speaker 1: we don't. Now today we can see the US dollars
Speaker 1: lost sixty five percent to the sp five lost forty
Speaker 1: five percent to the median real estate. So the dollars
Speaker 1: also doing the same thing. So probably just what central
Speaker 1: banks are doing, just what GM, Volvo and LG just did,
Speaker 1: what Russia is deciding to do. We probably don't want
Speaker 1: to hold fiat and we'd rather hold commodities. Well, one
Speaker 1: of the biggest mistakes people make in these countries is
Speaker 1: they can't get out of their fiat, right, so what
Speaker 1: do they do? They go into the stock market. So
Speaker 1: you play that, you know they'll buy that stock. You'll
Speaker 1: see the stock market kind of melt up. Why because
Speaker 1: it's the easiest thing for them that they can buy
Speaker 1: fire fractions of things. They don't have to buy real estate.
Speaker 1: They can just buy a little bit of stock, and
Speaker 1: so you see the stock market run. But what happens
Speaker 1: when they need their money out They sell that and
Speaker 1: they get what Yeah, exactly, so and that's that they're
Speaker 1: in lies the issue. But if you get your money
Speaker 1: out of lira, yeah, so you know, uh, these companies
Speaker 1: GM bought a lithium mine. UM I can't buy a
Speaker 1: lithium mine. The problem with commodities is that UM commodities
Speaker 1: are very hard to own. I mean, you can own
Speaker 1: some gold. If you have too much gold, you can't.
Speaker 1: You have to have someone stored for you. Obviously, I
Speaker 1: can't date delivery of a barrel of oil. I can't
Speaker 1: have uranium in my house like right, And so commodies
Speaker 1: are very hard to own. Um the best commodity in
Speaker 1: the world, and best is a relative term. But I
Speaker 1: like bitcoin, right. Bitcoin is a commodity. And Gary Ginsler,
Speaker 1: the head of the SEC, has been coming out and
Speaker 1: repeating over and over and over with increasing frequency that
Speaker 1: bitcoin is a commodity and nothing else. And I saw
Speaker 1: Bloomberg Intelligence put out a piece last year and they
Speaker 1: said that bitcoin they expected bitcoin to move into a
Speaker 1: risk off asset, and I think we're starting to see
Speaker 1: that in some regards. And so I think about bitcoin
Speaker 1: as a commodity one that's going to be in massive demand.
Speaker 1: If this thesis is true, which let's actually not say
Speaker 1: the thesis. If what the government and the Treasury and
Speaker 1: the CBO is telling us is true, which I believe,
Speaker 1: then they're gonna print lots of money. And so then
Speaker 1: we want to not hold that we want to hold commodities.
Speaker 1: Bitcoin might be the best commodity and we can take
Speaker 1: custody of it and all those things, and potentially we're
Speaker 1: starting to move into this risk off asset which looks
Speaker 1: like it could be happening. So yeah, let's let's talk
Speaker 1: about that. So, um, first of all, going back to
Speaker 1: your your your main point, which is you want to
Speaker 1: own assets. Right, So, using some of Lyndall Alden's recent research,
Speaker 1: if you had, if you want to buy one barrel
Speaker 1: of oil back in nineteen thirteen, would have cost you
Speaker 1: just under a dollar, right, so that today one barrel
Speaker 1: of oil will cost you about eighty dollars. So if
Speaker 1: you had to held a barrel of oil all those years, right,
Speaker 1: you would exactly so. Or if you if you had
Speaker 1: an ounce of gold, it would have bought you about
Speaker 1: twenty two barrels in nineteen thirteen of oil, and today
Speaker 1: one ounce of gold would buy you about twenty four.
Speaker 1: So we kept your value. But there are so many
Speaker 1: problems with gold. Like you said, I have nothing against gold,
Speaker 1: but it's not the ultimate store of value, and it's
Speaker 1: it's not easily transferable. You can't transport it very easily,
Speaker 1: you can't cross borders with it very easily. But in
Speaker 1: an exact opposition to that, Bitcoin you, it's decentralized, it's
Speaker 1: it's immutable, it's scarce, it's easily transferable, and possibly most
Speaker 1: important of all, it's censorship resistant. Possibly, I would say
Speaker 1: it probably is. Now. I've been a commodities investor, mostly
Speaker 1: precious metals and energy for a long time. But again,
Speaker 1: like I can't really take a barrel of oil delivery,
Speaker 1: and so, like you know, I'm not I'm not the
Speaker 1: super advanced options traders, so I'm not playing a lot
Speaker 1: of gold, I'm sorry, oil futures things like that. But
Speaker 1: I like to invest through the oil ecosystem. So I
Speaker 1: like to buy pipelines and tankers. I like to buy drilling. Uh,
Speaker 1: you know, manufacturers are creating new drilling technologies things like that,
Speaker 1: and through the ecosystem. Um. Same with you know, other
Speaker 1: commodities and things like that. Um. It seems like the
Speaker 1: way the bitcoin is kind of setting up, we're starting
Speaker 1: to see this ecosystem full of opportunities as well. Yeah,
Speaker 1: it's massive, and you've you've talked about this before, and
Speaker 1: you hit on this really hard in Cabo, and it's
Speaker 1: about bitcoin being the sixth technological revolution, you know, and
Speaker 1: and you know we've we've had our hydro power. We
Speaker 1: had our steam power, you had electric power. You had
Speaker 1: um combustion, which the cars and automobiles and airplanes. Um.
Speaker 1: And then you had communicating and storing information. You had
Speaker 1: the microchips, UM, you had in tell Microsoft software the
Speaker 1: things the Facebook, yeah, and and uh in the Internet, yeah,
Speaker 1: in the Internet. And now with bitcoin you have something
Speaker 1: that that communicates in stores of value. And that's and
Speaker 1: that is the that's the the revolution that will create
Speaker 1: all of the end will disrupt, it will it will
Speaker 1: disrupt and create new areas and industries and sectors. And
Speaker 1: so like you're saying, you you invest not just in
Speaker 1: oil and not just in bitcoin, but you invest in
Speaker 1: oil drillers, you know, oil services, tanks, tankers, anything that's
Speaker 1: that's around that business, and you diversify your investment and
Speaker 1: you can do the exact same thing in bitcoin. Yeah. Yeah,
Speaker 1: there's so many opportunities that are popping up. So I know, um,
Speaker 1: you know something I've been working with you on and
Speaker 1: a couple other people you mentioned Greg Foss earlier, Greg
Speaker 1: Foss and learn of the Part and Corey Clipston, David Foley,
Speaker 1: we're working on kind of trying to create well not
Speaker 1: create take advantage of opportunities that have been created based
Speaker 1: off of where we're at in the market cycle. Things
Speaker 1: like that. I want to talk about ways that maybe
Speaker 1: there's ways to get opportunities in the bitcoin space that
Speaker 1: you're kind of thinking about or focusing on. Yeah, I
Speaker 1: mean this last year mark, we've seen a tremendous amount
Speaker 1: As you and I have talked about quite a bit,
Speaker 1: we've seen a tremendous amount of damage done to the
Speaker 1: cryptocurrency world because of market cycles, market cycles, and but
Speaker 1: there was some there was some nefarious activity, there were
Speaker 1: and there was bad or no risk management, and that's
Speaker 1: bled into the bitcoin ecosystem just purely through contagion. Right, So,
Speaker 1: whether it's in finance or payment solutions, or social apps
Speaker 1: or wallets or nodes off whatever it in Lightning network,
Speaker 1: whatever it may be. There are these startup companies that
Speaker 1: are starting to build out all of these disruptive technologies
Speaker 1: on off of that bitcoin based layer that have gotten
Speaker 1: themselves into um into financial trouble. And they're called distressed companies.
Speaker 1: And some of these are great companies, they just again
Speaker 1: got over their handlebars and uh, and now they're in
Speaker 1: need of cash. They're trying to raise their next round
Speaker 1: of capital, whether it's a Series B or whatever it
Speaker 1: may be. And or there's some distressed miners that are
Speaker 1: publicly traded, some are privately traded. There's just a lot
Speaker 1: of opportunity in the space and there's there are ways
Speaker 1: that we can and that's why we started this whole fund.
Speaker 1: We literally started this Bitcoin Opportunity Fund in order to
Speaker 1: not just uh, not just take advantage of these opportunities,
Speaker 1: but they help these companies that we believe in that
Speaker 1: that need capital and will be vital going forward. And
Speaker 1: and that's it's just you're in that cycle right now,
Speaker 1: and the timing is right. So yeah, you know, Um,
Speaker 1: the saying is and you've all heard it. I mean
Speaker 1: there's variations of it, by when there's blood in the street,
Speaker 1: and um, you know, by when people are when people
Speaker 1: are sell when people are greedy, by when people are fearful.
Speaker 1: The problem is is, um, you know, when you see
Speaker 1: that there's a Black Friday seal, you're willing to wait
Speaker 1: in line all night to go get that discount. Right,
Speaker 1: people get trampled, literally, people get trampled and die trying
Speaker 1: to get a discount. But yet when a TV. Yeah,
Speaker 1: on a TV, right, But when financial assets go on sell,
Speaker 1: people send to tend to be afraid. So um, think
Speaker 1: about that. If you're interested in learn any more about
Speaker 1: the Bitcoin Opportunity Fund, check out Bitcoin Opportunity Dot Fund.
Speaker 1: You can check that out. You can request more information
Speaker 1: if you want to check it out, But either way,
Speaker 1: think about what bitcoin is going to do in this
Speaker 1: type of environment of what I would call almost certainty
Speaker 1: when when the government, the FED, the CBO, the Treasury
Speaker 1: tells us what is coming next, and that is lots
Speaker 1: of money printing in dbasement and you better figure out
Speaker 1: what type of lifeboat you want to be in when
Speaker 1: this inflation tide comes to wipe everybody out. I know
Speaker 1: which boat I'm in. I'm in the bitcoin boat. I'm
Speaker 1: in the Bitcoin ecosystem boat. So check that out. Check
Speaker 1: out at James Lavish, follow him, check out his Informationist newsletter.
Speaker 1: Of course, I am at one Mark Moss. If you
Speaker 1: missed any of this, you'd better go listen to the
Speaker 1: whole thing. You can check it out on the podcast
Speaker 1: just search the Mark Moss Show on any of your
Speaker 1: favorite podcast players. You can check it out on YouTube.
Speaker 1: Also at the Market Disruptors Channel, and that's what we got.
Speaker 1: Thanks so much for listening today, Get on that lifeboat
Speaker 1: till next time. Thanks for having me Mark