Speaker 1: Why the Federal Reserve has no control over the markets. Now,
Speaker 1: I know that's a big statement. We're all waiting on
Speaker 1: every word from the Federal Reserve. Are they going to
Speaker 1: lower rates, are they going to increase rates, will they
Speaker 1: stimulate the markets, or where they continue to hike and
Speaker 1: cause the markets to crash. But today's guest says that
Speaker 1: the Federal Reserve has actually no control over the markets.
Speaker 1: It's completely out of their control. And he's not just nobody,
Speaker 1: he's one of the most respected voices when it comes
Speaker 1: to the US dollar and the bigger problem, which is
Speaker 1: the euro dollar. I'm talking about Jeff Snyder from Your
Speaker 1: Euro Dollar University podcast. He's also with Markets Insider pro
Speaker 1: and Portfolio shield dot net. And we talked about why
Speaker 1: he says the Federal Reserve has no control over the markets,
Speaker 1: why the story of Paul Volker under Reagan hiking interest
Speaker 1: rates to tame inflation is a complete myth, how it
Speaker 1: had nothing to do with that. We're gonna talk about
Speaker 1: the reality of inflation and the FED having no control
Speaker 1: to affect that. We're gonna talk about what the end
Speaker 1: game of all this is what he thinks happens. In
Speaker 1: his best guests. Of course, we're gonna talk about sound money,
Speaker 1: We're gonna talk about bitcoin, We're gonna talk about uh
Speaker 1: reasons why it may or may not work, what happened
Speaker 1: throughout history, so many more topics with the absolute legend.
Speaker 1: Jeff Snyder was an amazing interview. Let's go ahead, just
Speaker 1: jump right into it. Jeff, thank you so much for
Speaker 1: your patients, and I appreciate you showing up today. Big
Speaker 1: fan of work. I'm I'm excited again here Mark, thanks
Speaker 1: for having me on. I love the set. It looks
Speaker 1: absolutely terrific. Thanks. Thanks. Yeah, it's my first year, my
Speaker 1: first guest with the new set here. So um uh
Speaker 1: our guess about a month ago we were both speaking
Speaker 1: at a mutual friends conference, George Gammon's conference, Rebel Capitalist Live,
Speaker 1: and you gave a great presentation. I took a lot
Speaker 1: of notes, um, and so I've been excited to talk
Speaker 1: to you ever since. And Um, the thing that you
Speaker 1: were talking about, and I think that you're a little
Speaker 1: bit mad about and they want to scream to the
Speaker 1: whole world about, is that the Federal Reserve has no control.
Speaker 1: Is that right? Yeah? If you want to boil it
Speaker 1: down into a single idea. That's probably the best way
Speaker 1: to describe it. So the Federal Reserve is UH, I
Speaker 1: think at the time of this recording, which by the way,
Speaker 1: is UH July. I think the tomorrow they're expected to
Speaker 1: come up with another rate hike. The markets are betting
Speaker 1: it's going to be point seven five. Some people think
Speaker 1: it would be be one point Probably doesn't really matter
Speaker 1: either way. It seems that since they've announced their rate
Speaker 1: hikes in November of last year, the risk on assets
Speaker 1: sold off first. We saw the NASDAC and bitcoin kind
Speaker 1: of sold off the same day, SMP lagged. Um. It
Speaker 1: seems like their rate hikes have caused a lot of
Speaker 1: problems in the markets, but yet they have no control.
Speaker 1: So maybe he kind of frame that up for us
Speaker 1: a little bit. Yeah, And I think that's the issue,
Speaker 1: is what control do they have? Control is probably not
Speaker 1: the right word. It's more of like more like along
Speaker 1: the lines of influence. And so if you look at
Speaker 1: what the FET actually does, let's just let's just get
Speaker 1: it all the way from the beginning. They don't print money.
Speaker 1: There is no money printing. They create balance sheet space,
Speaker 1: they create bank reserves, but many people believe they print
Speaker 1: money and as long as people believe they print money,
Speaker 1: they act as if they have. And one of the
Speaker 1: ways that that manifests is in the financial services industry
Speaker 1: in certain asset markets. For example, in when J. Powell
Speaker 1: got on TV and told you he lied to your
Speaker 1: damn face and said that he printed digital dollars and
Speaker 1: flooded the world with him, that was a message he
Speaker 1: intended to send to asset managers to say, I've got
Speaker 1: your back, don't worry about it, no matter what's going
Speaker 1: on in these dark, dark times of COVID, the Federal
Speaker 1: Reserve has got your back. If it doesn't have your back,
Speaker 1: but if enough people actually believe it, it becomes a
Speaker 1: self fulfilling prophecy. And so risk managers by risky assets
Speaker 1: because they think, well, hell, J. Powell is doing something.
Speaker 1: I don't know what he's doing, but he's doing something.
Speaker 1: So therefore I have I can call my clients and
Speaker 1: tell them we're buying stocks and we're buying risky assets
Speaker 1: because the FED is doing some stuff. And so that's
Speaker 1: what happens the FED. The FED has it a sentimental
Speaker 1: effect or a psychological effect, primarily through the financial services industry,
Speaker 1: but also in other places, and then you get to
Speaker 1: November of one where the FED says we're not going
Speaker 1: to do the same stuff we've been doing before. Suddenly
Speaker 1: financial services managers they don't have that protection, they don't
Speaker 1: believe they have the same protection from J. Paul. So
Speaker 1: you have that sentimental effects start to reverse and it
Speaker 1: becomes self fulfilling and self realizing in the the opposite
Speaker 1: direction and the from the way that it had had
Speaker 1: gone in one. So without the ability to feel like J.
Speaker 1: Powell has got your back because are gonna be hiking
Speaker 1: interest rates and they're gonna be cutting back and scale
Speaker 1: it and running off their balance sheet. There the FED
Speaker 1: isn't isn't my buddy anymore. Suddenly asking assets look a lot,
Speaker 1: a lot more risky than they had before. So this
Speaker 1: is one area where UM, I have a little bit
Speaker 1: of disagreement with UM a lot of economists, UM, because
Speaker 1: I think they can be factually correct, but maybe a
Speaker 1: little intellectually dishonest. I don't know if that's the right
Speaker 1: way to say it. So, UM, you talk about they
Speaker 1: didn't really do anything, but they had a psychological effect,
Speaker 1: Well that is something, all right. So then then it's
Speaker 1: like you're starting to split hairs. Um. At George's last event,
Speaker 1: he had a professor. Uh uh, I'm drawn up like
Speaker 1: now the German uh economist who does all the talks
Speaker 1: all the central bank stuff. Uh is it Wolf anyway,
Speaker 1: I'm dronna blank. Sorry. But he gave this great talk
Speaker 1: about how all this central bank printing through two thousand
Speaker 1: eight and wasn't inflationary. But I said, but stock indexes
Speaker 1: are up at all time highs and and house prices
Speaker 1: are altimized. Well, that's assets, that's assets, that's not consumer prices.
Speaker 1: And so it's like it's kind of like splitting hairs
Speaker 1: a little bit to me. No, but there is a
Speaker 1: real monetary issue there, and the real monetary issues that
Speaker 1: the credit creation that underpinned or supported the previous housing
Speaker 1: bubble and the credit bubbles of the pre crisis era
Speaker 1: just disappeared. So what happened in asset prices post crisis
Speaker 1: was I mean, you can call it inflation if you want,
Speaker 1: I don't really care. There was definitely an effect there,
Speaker 1: but it was non monetary. Was something else entirely. So
Speaker 1: the real economy has been deprived of credit and money,
Speaker 1: even if asset prices have done really well, certain asset
Speaker 1: classes obviously done better than others, which has only led
Speaker 1: to more problems because you have stocks, for example, at
Speaker 1: all time highs, or they were at all time highs
Speaker 1: not that long ago, while the economy is in the toilet,
Speaker 1: and not just in the US, all across the world,
Speaker 1: the economic growth has fallen off substantially, not coincidentally, ever
Speaker 1: since this credit credit machine broke down more than a
Speaker 1: dozen years ago. So you have the psychological impact where
Speaker 1: there is less friction for psychology to work in certain
Speaker 1: asset classes and asset prices all based on a misconception
Speaker 1: of what it what it is the Federal Reserve does,
Speaker 1: so it's not really spitting splitting hairs. It's a categorical
Speaker 1: difference that explains a lot about explains everything about the
Speaker 1: world that we're actually living at why everybody is so
Speaker 1: damned piste off about everything because you have the rich
Speaker 1: people getting richer and the poor people can't find a job.
Speaker 1: And that's really the issue here, is that without monetary growth,
Speaker 1: without credit growth, the economy stuck. And no matter what
Speaker 1: the Federal Reserve has done over the last twelve years,
Speaker 1: it's not just a fed the ECB, the Bank of
Speaker 1: Japan has been doing it has been failing even longer
Speaker 1: with their psychological manipulation tactics. It hasn't worked there either,
Speaker 1: So you have a divergence between what the real econo
Speaker 1: of he's doing because psychology doesn't work in any any
Speaker 1: real sense. It does work in asset markets like stocks,
Speaker 1: because there's no real fundamental tie to any tangible asset
Speaker 1: or in tangible outcome. So again you have this major
Speaker 1: divergence between where assets went where the real economy went,
Speaker 1: which is nowhere. Good. Well, let's let's and let me
Speaker 1: talk about one other things. You said that they don't
Speaker 1: actually print money, which is true. So the Federal Reserve
Speaker 1: gives banks reserves and they set the interest rate, but
Speaker 1: the bank charges their interest rate on top of that
Speaker 1: whatever they want, and they can decide whether they want
Speaker 1: to loan money on or not. Right, So I think
Speaker 1: that's kind of your point. Right. However, um, through the
Speaker 1: bank's reserves and through their MBS policies and stuff, they
Speaker 1: take toxic debt off the books and then replaced No. No,
Speaker 1: see that's the thing. That's another misconception. That was not buying.
Speaker 1: I mean, the FED buys us treasuries and nbs, and
Speaker 1: then they're not buying subprime mortgages. They're not buying subprime
Speaker 1: mortgage bonds or leverage loans or some other financial products,
Speaker 1: certainly not buying clos like they've made people believed either
Speaker 1: in March, the FED is buying assets the market already wants.
Speaker 1: In fact, the FED knows this. They talk about it
Speaker 1: all the time. The fact that you know famous quote
Speaker 1: from Richard Fisher in two thousand eleven, and why are
Speaker 1: we buying assets that the market is fleeing toward? Central
Speaker 1: banks are supposed to be buying, like you said, they're
Speaker 1: supposed to be buying toxic assets that people don't want.
Speaker 1: But that's not what quantitative easing has been. It's not
Speaker 1: what quantitative easing has ever been, which is one reason
Speaker 1: why it doesn't ever work. And really, you know, we
Speaker 1: stop and think about what QUEWI is supposed to bes
Speaker 1: and as opposed to what it actually is. Everybody looks
Speaker 1: at it from the perspective of the federal reserve. What
Speaker 1: is the FED doing when you need to look at it,
Speaker 1: as you just said, Mark, from the perspective of the
Speaker 1: commercial bank. You can create all the reserves in the
Speaker 1: world that you want. But if banks aren't going to
Speaker 1: be lending, it doesn't matter. That's just an accounting fiction
Speaker 1: that's created by monetary policy. Think about it this way. Before,
Speaker 1: before Lehman Brothers in two thousand and eight, there were
Speaker 1: hardly any bank reserves in the in the entire global
Speaker 1: system that spans trillions upon trillions of dollars, there were
Speaker 1: no bank reserves. Yet credit was created. We had asset
Speaker 1: bubbles through the roof. You had all sorts of money
Speaker 1: everywhere around the world with no bank reserves. Suddenly we
Speaker 1: get to the other side of the crisis. There are
Speaker 1: trillions and bank reserves, but no credit girls, no expansion,
Speaker 1: no money. How is that possible? Because the FED isn't
Speaker 1: creating usable money. It's responding to breakdowns in the actual
Speaker 1: monetary system through this psychological tactics, through the through the
Speaker 1: act of buying bonds that the market already wants anyway.
Speaker 1: So the way that you were explained to me, though,
Speaker 1: it sounds like there's direct and indirect influence the FED
Speaker 1: has so a lot of times I think maybe you're
Speaker 1: saying that. So, look, they didn't do anything. They said
Speaker 1: they're gonna do something but they didn't do anything, so
Speaker 1: there was no result. But at the same time, just
Speaker 1: them saying it, or sometimes we might call it job
Speaker 1: owning actually does do something. Would we agree on that
Speaker 1: they kent? Yes, And most of those psychological impacts are
Speaker 1: sentimental impact acts are short term in nature. They don't
Speaker 1: have a lasting impact certainly in any real sense. Asset
Speaker 1: prices a different thing. Uh, certain asset markets is a
Speaker 1: different story. But in terms of the real economy, there's
Speaker 1: really not much impact whatsoever. Okay, Now, Um, another thing
Speaker 1: that you had talked about at this at this event
Speaker 1: to the Rebel Capitalist Live, you talked about the Vulcan myth,
Speaker 1: and so everyone is wondering, now if the Fed can,
Speaker 1: if they'll have the stomach to tame inflation, will they
Speaker 1: raise rates high enough to stomach, you know, to to
Speaker 1: to finally put an end to this high inflation that
Speaker 1: we have. Um, like Vulker did in the eighties where
Speaker 1: he went from ten um and you had a whole
Speaker 1: piece saying that that was a complete myth, which continues
Speaker 1: to back up what you're saying and why the Federal
Speaker 1: Reserve really has no controls. So let's talk about that
Speaker 1: Vulcan myth and why you think that actually isn't true.
Speaker 1: He isn't the one that stopped inflation. If if I'm
Speaker 1: saying that right, if I'm not putting words in your mouth. Yeah,
Speaker 1: that's where the Volker myth actually comes from, the idea
Speaker 1: that it was Paul Wolker who skyrocketed interest rates in
Speaker 1: seventeen starting in nineteen seventy nine, and that's the reason
Speaker 1: why the great inflation suddenly stopped. And the funny thing is,
Speaker 1: if you had if your time travel back to nineteen
Speaker 1: seventy nine, he would be shocked. And by he, I
Speaker 1: mean Paul Woker. They had no idea what they were
Speaker 1: doing in seventy nine. And this is not something you
Speaker 1: have to take my word for it. I gotta do
Speaker 1: is read the transcript from the FOMC meetings at the time.
Speaker 1: These people had no clue what they were doing. And
Speaker 1: the idea that Faull Volker raising rates, that's not what
Speaker 1: he did either. But the idea, the idea of the
Speaker 1: myth that he raised rates and tame Great inflation UHS
Speaker 1: was something that was invented afterwards to try and explain
Speaker 1: what happened in late from the late seventies into the
Speaker 1: middle nineteen eighties, it was sort of like, we have
Speaker 1: no idea what really happened. So maybe it was this
Speaker 1: thing that Vocer did that created this the end of
Speaker 1: the Great Inflation, And that's been the myth that we've
Speaker 1: been told that was reinforced through the quote unquote great
Speaker 1: moderation by Alan Greenspan, the Maestro, all that stuff in
Speaker 1: the nineties and into the two thousand's. But if you
Speaker 1: actually go back and look at what happened in the
Speaker 1: late seventies and early nineteen eighties, it was a whole
Speaker 1: bunch of clueless bureaucrats just throwing ship at the wall
Speaker 1: hoping something stuck. So why did he raise rates so high?
Speaker 1: Because I didn't know what else to do. Paul Voker,
Speaker 1: you gotta give the guy at least some credit. Unlike
Speaker 1: his predecessor, Arthur Burns, Voker at least knew that the
Speaker 1: Great Inflation was tied to the money supply. Burns with
Speaker 1: thought it was fiscal deficits. He convinced governments. He went
Speaker 1: off into a neo Kenzie and Funk, And so you know,
Speaker 1: the Federal Reserve was looking in the wrong place. For
Speaker 1: the reason why inflation was so out of control, as
Speaker 1: Milton Friedman said, As Milton Friedman showed conclusively inflation is always,
Speaker 1: at everywhere a monetary phenomenon, so at least Volker Volker
Speaker 1: at least knew that much. However, his plan to stop
Speaker 1: inflation was sort of a we don't know what else
Speaker 1: to do because the federal reserve. All we have in
Speaker 1: our toolkit are these bank reserves, and bank reserves have
Speaker 1: a very narrow limited use, which is you have a
Speaker 1: reserve requirement that's imposed upon the banking system by governments.
Speaker 1: And so what happened. What the theory was was that
Speaker 1: if the Federal Reserve undervoc or made bank reserves scarce,
Speaker 1: he would make bank reserves expensive and the bank the
Speaker 1: bank reserves became expensive. That would make depository money expensive.
Speaker 1: Because if you're a commercial bank and you create a
Speaker 1: loan in a a corresponding deposit money liability against it,
Speaker 1: that creates a reserve requirement that you must meet, and
Speaker 1: you have to you can meet it through vault cash,
Speaker 1: or you can meet it through bank reserves held it
Speaker 1: the Fed. So the idea was, if we make bank
Speaker 1: reserves scarce, that will make that will increase the cost.
Speaker 1: The rate will go up, as it did, the federal
Speaker 1: funds rate will go up, and that will that will
Speaker 1: then make banks reconsider their creation of loans and depository money,
Speaker 1: therefore restrict economic activity, and that's the end of the inflation.
Speaker 1: That's not how it worked. First of all, the Federal
Speaker 1: Reserve panicked as soon as they started this, this restricting
Speaker 1: reserve regime in nineteen seventy nine. Immediately the federal funds
Speaker 1: rate skyrocketed to more than which nowadays people think, well, yeah,
Speaker 1: that was the point, But no, at the time they panicked.
Speaker 1: They actually did a repot programs starting in October of
Speaker 1: nineteen nine to put reserves back into the system because
Speaker 1: they thought they had gone too far. But either way
Speaker 1: it didn't matter, because no matter what the Federal Reserve
Speaker 1: did in terms of depriving the system or not depriving
Speaker 1: the system of bank reserves, it had no impact whatsoever
Speaker 1: on depository money, had no impact on M three, had
Speaker 1: no impact on the real money, which is the shadow
Speaker 1: money across the Euro dollar system. That's not what happened.
Speaker 1: So after it became clear that restricting bank reserves was
Speaker 1: having no effect on either monetary aggregates, or the real
Speaker 1: economic outcomes. They sort of invented another kind of myth,
Speaker 1: which was that, Okay, maybe restricting bank reserves didn't cause
Speaker 1: the end of the end of the Great Reflation. Maybe
Speaker 1: it was the collateral consequence of having interest rate rise,
Speaker 1: the federal funds rate rise, that had some kind of
Speaker 1: impact that we can't explain because it didn't have any
Speaker 1: kind of monetary impact. It didn't impact the monetary system whatsoever.
Speaker 1: So maybe the fact that interest rates short term federal
Speaker 1: fund ray in particular one up. That's the reason why
Speaker 1: the economic outcomes that we all wanted ended up happening.
Speaker 1: It's simply looking at correlation and implying causation that isn't
Speaker 1: actually there. Because again, the FED at the time realized
Speaker 1: they couldn't even define, let alone measure, let alone control
Speaker 1: the monetary system. Now, uh, let's jump I want to
Speaker 1: talk about where we're at today. But before we jump
Speaker 1: to there, um and I guess the part of the
Speaker 1: reason why you say they can't really control the monetary
Speaker 1: system is that the FED only can control basically the
Speaker 1: dollars bank reserves. That's it. That's that's the one tool
Speaker 1: that they have. And in the nineteen seventeen. Before the
Speaker 1: nineteen seventies, banks invented ways to circumvent the reserver fronments
Speaker 1: invented new ways of doing monetary transactions, things like repo,
Speaker 1: things like eurodollars, things like currency swaps, that they could
Speaker 1: just manipulate both the asset and liabilities side, regardless of
Speaker 1: whatever constraints that FED tried to impose on them. And
Speaker 1: in fact, that's one of the things that happened in
Speaker 1: ninety The FED tried to make these reserves expensive, therefore
Speaker 1: making depository money expensive, and so banks just encourage their
Speaker 1: customers to shift their assets from their deposit accounts into
Speaker 1: money market funds. Money market funds don't have a reserve requirements,
Speaker 1: and so they went into so as the customer deposits
Speaker 1: moved from the commercial bank that created this reserve requirement,
Speaker 1: they moved to a money market fund. The bank was
Speaker 1: done just borrow the funds back from the money market fund.
Speaker 1: In wholesale markets. Banks had created all sorts of ways
Speaker 1: to be able to manipulate their assets and liability these
Speaker 1: monetary forms that just rendered the federal reserves tools completely obsolete,
Speaker 1: except for if they don't believe the Fed's going to
Speaker 1: be find them supporting them, then they'll get into they'll
Speaker 1: get out of those risky assets, which is where we're
Speaker 1: at today, which is a completely different animal. It's a
Speaker 1: different animal. So the tools that they're FED is using
Speaker 1: don't really do much. But the support that the psychological
Speaker 1: effect of the support, either having it or not having it,
Speaker 1: does have an effect in yeah, in certain markets. It
Speaker 1: certainly doesn't have any impact in anything that has a
Speaker 1: fundamental link to the real economy. So fixed income you
Speaker 1: don't see any real psychological impact from the FED whatsoever.
Speaker 1: It's really about manipulating the short end of the yield
Speaker 1: curve and hoping the rest of the curve goes along.
Speaker 1: So we've seen the FED hike rates over the last
Speaker 1: few months. The short end of the yield curve goes out,
Speaker 1: because of course it would if you're owning a two
Speaker 1: year US tragedy for example, if the FED is hiking
Speaker 1: you know these reverse repo rate, you have an alternative
Speaker 1: rate that you can get a return on. So the
Speaker 1: FED is able to influence the short end of the
Speaker 1: yeel curve, but even that is somewhat illusory because over
Speaker 1: time they lose control. Really really quickly too. And that's
Speaker 1: that's assuming that the long end of the Yolk curve
Speaker 1: actually falls in line, which as we see now that's
Speaker 1: not the case either. That's why the curves are inverted
Speaker 1: because the long end of the yeld curve is fighting
Speaker 1: against the Feds, right heikes at the short end. H Yeah, Now, um,
Speaker 1: the the yield curve is gotten pretty screwed up. I mean,
Speaker 1: a lot of this, I would imagine has to do
Speaker 1: with the continued manipulation they have with printing more currency
Speaker 1: and manipulating the their FED funds rate. At some point,
Speaker 1: because it's been accurate predicting recessions, which I guess for
Speaker 1: the for the White House, we're not in a recession
Speaker 1: anymore technically they've changed, true, but the recession is still coming. Okay,
Speaker 1: So the yield curve is predicting that there's a recession coming,
Speaker 1: and it's been predicting that for a while. Right there.
Speaker 1: Yield curve was predicting that since two thousand nineteen. Well,
Speaker 1: the yo curve predicted the recession that probably would have
Speaker 1: happened in two thousand twenty had it not been for COVID.
Speaker 1: So the yel curve had inverted in twenty nineteen. In fact,
Speaker 1: parts of it inverted as early as eighteen. Your Dollar
Speaker 1: futures curve inverted in June, which was a bet that
Speaker 1: the Fed was going to end up cutting rates before
Speaker 1: they continued hiking rates, which is actually proven to be true.
Speaker 1: These markets have been have proven in general terms, incredibly
Speaker 1: accurate over each of these particular cycles. And so the
Speaker 1: your Dollar futures curve inverted back in December of last year,
Speaker 1: which was a bet despite the feds ultra hawk is
Speaker 1: stance and growing ultra hal care stance that eventually the
Speaker 1: FED was going to have to stop hiking rates and
Speaker 1: maybe start is turn around and start cutting them before
Speaker 1: the FED realized it it. Ever, since December, the inversion
Speaker 1: of your at All the futures has grown to two
Speaker 1: thousand eight proportions. Uh. It is comcredibly inverted at the
Speaker 1: as we speak right now, which is the market betting
Speaker 1: that the FED only has a couple maybe more rate
Speaker 1: hikes left this year before something happens. We don't know
Speaker 1: what we can guess before something happens, and the FED
Speaker 1: has to turn around, stop hiking rates, and turn around
Speaker 1: and start cutting them aggressively. Maybe as soon as this year,
Speaker 1: probably next early next year at the latest, and then
Speaker 1: the Yeal curve is essentially agreeing with the premise behind
Speaker 1: the rod dollar futures inversion, which is that there's probably
Speaker 1: something like like recession, if not nasty recession, still in
Speaker 1: front of us. So think about it that way. We've
Speaker 1: already had two straight quarters, likely we'll find out Thursday,
Speaker 1: but we'll likely have had two straight quarters of negative
Speaker 1: GDP to start the year, and the markets are all
Speaker 1: uniformly saying, that's not the thing we're worried about. We're
Speaker 1: worried about what comes after. We've already had a technical recession,
Speaker 1: as so many you believe that that's the definition. So
Speaker 1: the markets are all positioned for a deflationary monetary condition
Speaker 1: on top of what might be a pretty nasty recession too.
Speaker 1: When you go back and and look through history, which
Speaker 1: I know you have many times, um, it seems like
Speaker 1: it's not the it's not the reversal. So when they've
Speaker 1: been lowering lower and lower and then they go back
Speaker 1: to raising, which they're on right now, it's when they
Speaker 1: reverse back off of that which seems to be kind
Speaker 1: of the trigger. Is that kind of what you're saying,
Speaker 1: the markets are kind of seeing that in the in
Speaker 1: the in the forefront, and that's the trigger that they're
Speaker 1: aways the longer, longer to these curves are simply ignoring
Speaker 1: the Fed entirely. What the you know, Irving Fisher decomposition
Speaker 1: of yields into growth and inflation expectations. A longer long
Speaker 1: end treasury yield is essentially building upon the short end
Speaker 1: interest rates, so the money alternatives, but then implying growth
Speaker 1: and inflation expectations on top of them. And so what
Speaker 1: the what the curves are telling us, and they have
Speaker 1: been telling us all years. They disagree with the very
Speaker 1: premise behind the FEDS rate hikes to begin with, that
Speaker 1: the economy is not overheating, the labor market is not
Speaker 1: in any great situation, and that the rate hikes to
Speaker 1: quote unquote end inflation aren't necessary because the recession that
Speaker 1: the market is afraid of is the instrument that will
Speaker 1: end inflation, that will end consumer prices. It will likely
Speaker 1: result in renewed disinflation, if not deflation, at least in
Speaker 1: the intermediate term. So the markets, and especially along into
Speaker 1: the curves, outside of the Fed's window, out of the
Speaker 1: same thing with your or dollar futures that the markets
Speaker 1: have been betting against rate hikes from the very beginning.
Speaker 1: M Now, I want to get into this end game,
Speaker 1: the few hikes before it breaks. You said, we can
Speaker 1: guess at what breaks and what we'll get back to that.
Speaker 1: But um, you had also talked about how really what
Speaker 1: we have is a problem. Um that that signals these uh,
Speaker 1: these crashes, these recessions, is these dollar shortages that happen
Speaker 1: all over the world. And I think that's probably we're at.
Speaker 1: We'll have a dollar shortage right now, which is why
Speaker 1: the Dixie is shooting so high. So explain this dollar
Speaker 1: shortage over the world to us. That's the hardest part
Speaker 1: for people to come to terms with because, as you said, Mark,
Speaker 1: I mean, you see the Fed's balance sheet go up.
Speaker 1: You see there's trillions upon trillions of bank reserves, and
Speaker 1: you assume the bank reserves are useful money. In fact,
Speaker 1: some people call them base money. And if you see
Speaker 1: the Fed's balance sheets skyrocket, you see all these trillions
Speaker 1: of reserves suddenly appear out of thin air. You think
Speaker 1: a lot of money has been printed. So how in
Speaker 1: the world can we possibly have a dollar shortage when
Speaker 1: the FET has created all these dollars. And the answer
Speaker 1: is simply when you realize that bankerserves are not useful
Speaker 1: money and the FET is simply created there just a
Speaker 1: byproduct of quantitative easing, UM, then you can okay, the
Speaker 1: FETE isn't part of the monetary system. Bank reserves are
Speaker 1: not really useful money. What actually is useful money is
Speaker 1: telling you that there is nothing. There's a dollar shortage,
Speaker 1: and it's getting worse and worse all the time. And
Speaker 1: we see this in any number of ways. UM. We
Speaker 1: don't have any direct insight into the uh Euro dollar
Speaker 1: system as a whole, but these markets, these curves, you know,
Speaker 1: the tarasury market, German global bond markets, UM. The dollars
Speaker 1: exchange it's a good one too. When the dollars exchange
Speaker 1: values goes up, that's a bell weather for global financial conditions.
Speaker 1: In US dollars, it's telling you there are not enough dollars.
Speaker 1: The price of participating in the global monetary system has
Speaker 1: gone way up because there aren't enough of them available
Speaker 1: to be used around the world. So we see all
Speaker 1: of these signals from the monetary system itself telling us
Speaker 1: there must be a not a dollar shortage, but not
Speaker 1: just a dollar shortage, but growing in a more severe
Speaker 1: one as we go through this year. That's why these
Speaker 1: curves are so distorted, so inverted, because the markets aren't
Speaker 1: just thinking about recession. They're thinking about what happens when
Speaker 1: you have a recession plus a possible deflationary breakdown in
Speaker 1: terms of another monetary event like maybe March of maybe
Speaker 1: something on the lines, not in the same way, but
Speaker 1: something similar to the two thousand eight crisis. We want.
Speaker 1: We're not gonna see banks failure. We're not gonna see
Speaker 1: bank failures and banks failure like they did in two
Speaker 1: thousand and eight. But that doesn't mean we can't have
Speaker 1: a liquidity squeeze or a deflationary monetary event of similar
Speaker 1: type of proportions. So the markets are worried about this already.
Speaker 1: They're telling you from inside the monetary system that there
Speaker 1: are not enough dollars around the world and has nothing
Speaker 1: to do with the Fed. It's all about the monetary
Speaker 1: system itself. Now, when you say the bank, the FED
Speaker 1: gave bank reserves, which is not useful money, Um, does
Speaker 1: it give them confidence? Is that an indirect benefit to
Speaker 1: the market. Does it give the banks confidence to loan
Speaker 1: more money out. It doesn't. I mean it does for
Speaker 1: portfolio managers looking to buy stocks. That has absolutely no
Speaker 1: effect whatsoever on the actual banking system and credit creation.
Speaker 1: And this is, you know, quantitative easing is the most
Speaker 1: empirically tested program maybe in human history. It's been used
Speaker 1: over and over and over again, and the the results
Speaker 1: are uniformly the same. They're just not what you hear
Speaker 1: on on mainstream media. And again you don't have to
Speaker 1: take my word for it. Just read the academic scholarship
Speaker 1: that's been written by the QWI people themselves UM Bank
Speaker 1: of Japan. A number of studies that have shown quantitative
Speaker 1: easing has no effect in any of the three proposed
Speaker 1: channels that it's opposed to. The Federal Reserve studies the
Speaker 1: same thing. The last study I think from the FED
Speaker 1: UM or maybe it was a researcher associated of the FED,
Speaker 1: I forget, just going off the top of my head,
Speaker 1: they said that a six hundred billion dollar QUEI program
Speaker 1: that targeted specifically U S Treasury buying would we maybe
Speaker 1: should expect about fifteen basis points of effect on the
Speaker 1: ten year U S treasury. Think about that six hundred
Speaker 1: billion in treasury buying lowers the tenure treasury by fifteen
Speaker 1: basis points. That's basically a rounding error if it's statistically
Speaker 1: significant at all. So what I'm saying is that quantitative
Speaker 1: easing has no effect on the real economy because it
Speaker 1: has no effect on banks. The banking system is constrained
Speaker 1: by its own internal as well as external parameters that
Speaker 1: have been doesn't matter what the FED does. There's no
Speaker 1: no amount of jab booning or psychological manipulation or you know,
Speaker 1: the FED being your best friend because it's buying bonds
Speaker 1: has been able to get banks in the US, in Europe,
Speaker 1: in Japan for thirty years out of the same rut.
Speaker 1: Credit creation does not correspond to bank reserves or federal
Speaker 1: reserve policies, which is the very lesson that Paul Voker
Speaker 1: learned forty years ago. Bank reserves just don't care. If
Speaker 1: banks want to do something, it doesn't matter if they
Speaker 1: have reserves or not. They'll create the liquidity to do it.
Speaker 1: It's really about the commercial banking system. So, um, so
Speaker 1: if if quantitative easing isn't inflationary, and what I'm trying
Speaker 1: to do is I'm trying to um I understand the
Speaker 1: academic and factually correct argument. But then like what does
Speaker 1: it mean to the average person? And so like, how
Speaker 1: do we see this? So since two we've had massive
Speaker 1: QUEI for the last decade or a dozen years, and
Speaker 1: we've seen stock markets and and real estate go to
Speaker 1: all time highs. And so even if that hasn't affected
Speaker 1: the commercial banks to create more money, um, has it
Speaker 1: led into a wealth effect Where my stock account, my
Speaker 1: retirement accounts higher, my house is higher, I spend more money.
Speaker 1: That's inflationary. Today we're seeing the opposite of that, even
Speaker 1: though they haven't really done anything. People feel less wealthy today,
Speaker 1: they're spending less money. So if we if we if
Speaker 1: we don't look at just the purely you know, like
Speaker 1: I said, um effects, or if we take the total
Speaker 1: effects together, I mean, is there some causation or correlation there?
Speaker 1: There should be, And that's one of the theoretical channels
Speaker 1: for quantitative easing. And that's one of the reasons why
Speaker 1: the Federal Reserve and all central banks pay attention to
Speaker 1: the stock markets because they believe they can manipulate stocks
Speaker 1: and they're correct about that into creating, as you said,
Speaker 1: mark the wealth effect. But there's no correlation between the
Speaker 1: stock prices and actual spending in any in any economy.
Speaker 1: It's simply a theoretical idea you talk about academics. The
Speaker 1: wealth effect is is more of an economic idea than
Speaker 1: any real phenomenon. There's no evidence for it whatsoever, And
Speaker 1: of course why would there be, just because that's your
Speaker 1: your four oh one K goes up. You can't spend
Speaker 1: a four oh one k until you actually retire. But
Speaker 1: now you might think, well, my four oh one K
Speaker 1: is up, so I can spend other money because I
Speaker 1: don't have to save it. But that doesn't happen. There's
Speaker 1: no evidence, there's no data the shows. And first, and
Speaker 1: more than that, the economic growth since two thousand eight,
Speaker 1: since the FEDS started on quantitative easing, has been materially
Speaker 1: different than it had been before the precrdy. Materially different,
Speaker 1: I mean much much worse. So if there is a
Speaker 1: wealth effect, then it is is not only undetectable, it's
Speaker 1: led us into worse situations than we would have been
Speaker 1: had nothing happened in two thousand and eight. I I
Speaker 1: don't know if I agree with that, and some of
Speaker 1: it is just gut right. So like myself included like
Speaker 1: I'm not going to retire for a long time, but
Speaker 1: right now, the way the markets are right now, like
Speaker 1: I'm second guessing vacations, I'm second guessing added onto my
Speaker 1: house like I was going to because like, oh we,
Speaker 1: like you said, the Yolk curve showing there could be
Speaker 1: something there, I'm spending less money. So how do we
Speaker 1: measure that? I don't know, but I do know there
Speaker 1: is some measurement. So for example, we saw last year,
Speaker 1: we saw record amounts of job quits, record amounts, and
Speaker 1: we broke it month after month. And why were those
Speaker 1: people quitting jobs? Well, a lot of polls should they
Speaker 1: were going to trade options on robin hood and trade
Speaker 1: cryptocurrencies and so that, Yeah, that did cause a wealth effect,
Speaker 1: and that wasn't measurable, right, And that's an anecdote. It's
Speaker 1: not acttionally that Okay, Um, yes there were you know.
Speaker 1: The sad fact of the matter is the labor market
Speaker 1: is not as robust as it would seem from that
Speaker 1: metric because according to the Establishment Survey or any of
Speaker 1: the survey the labor market that data, we have fewer
Speaker 1: jobs today than we did in February. Um, so you
Speaker 1: can blame that on the Great resignation and so called
Speaker 1: Great resignation, but it also could be and I think
Speaker 1: it is consistent with what markets are telling us. Not
Speaker 1: stock markets, but other markets are telling us that there
Speaker 1: was no wealth effect and that we're picking and choosing
Speaker 1: anecdotes that fit preconceived narratives, the idea that the FED
Speaker 1: created this bubble, when the FED really didn't do much
Speaker 1: of anything. The real economy suffered for the breakdown. I mean,
Speaker 1: of course it did. We put how many small businesses
Speaker 1: out of work are out of business in Do we
Speaker 1: really think that we're going to have a robust recovery
Speaker 1: from that just on that alone, um, And so that's
Speaker 1: what the markets are telling us, and that's what the
Speaker 1: data tells us. With the fact that we have fewer jobs,
Speaker 1: the participation rate took another leg down. These are similar
Speaker 1: types of results that we saw in the aftermath of
Speaker 1: the first financial crisis in two thousand nine and two
Speaker 1: thousand ten. So what we're seeing is that that process
Speaker 1: is being repeated for the second time. And so some
Speaker 1: of these other ancillary anecdotes are just inconsistent or seemingly
Speaker 1: inconsistent with the data, which tells US. There was no
Speaker 1: wealth effect. There's no widespread wealth effect. It certainly had
Speaker 1: an effect on certain certain proportions of the population, but
Speaker 1: that wasn't enough to create an overall environment that was
Speaker 1: actually consistent with a booming economy. Yeah. I know, with
Speaker 1: these complex systems, it's it's hard to like pull things out.
Speaker 1: But like say, let's say, for example, supply chains have
Speaker 1: been overtaxed and we've had massive supply chain problems. Everybody
Speaker 1: knows that. Now why, Well, there's a there's a trillion
Speaker 1: reasons why. But one of the reasons why is excess demand,
Speaker 1: and one of them is not enough product. Right, So
Speaker 1: supply chains broke down, COVID shut them down, turn back on, etcetera.
Speaker 1: People quit. There's all that. But I look at some
Speaker 1: data that showed that our imports had were twenty sent
Speaker 1: more than they were previously on average, So we were
Speaker 1: buying more stuff. We were ordering more stuff. I know
Speaker 1: people with in industries, Um, how are there There's record
Speaker 1: sales in outdoor equipment and products and things like that, So, um,
Speaker 1: there were record amounts of buying. We did order more stuff,
Speaker 1: which overtaxed the supply demand equation of the equilibrium of
Speaker 1: the supply chain. So there was some of that. We
Speaker 1: can't quantify that, no, we can, but that's a that
Speaker 1: was a reallocation of resources. Because Americans were locked in
Speaker 1: their homes, they went not spending money on Amazon, which
Speaker 1: meant we were buying goods from overseas producers. That only
Speaker 1: made things worse because we couldn't move goods around. As
Speaker 1: you said, Mark, there was supply bottlenecks and things like that.
Speaker 1: But what people don't realize is that as Americans were
Speaker 1: spending goods and record amounts, that's absolutely true, in record
Speaker 1: amounts on goods, they were not spending on services. So
Speaker 1: the goods economy made it seem like everything was terrific,
Speaker 1: if not overheating. But then you look at services that
Speaker 1: forgotten as the forgotten part of the whole thing because
Speaker 1: it's not sexy, because it wasn't exciting. We've spent less
Speaker 1: on services over the last couple of years than than
Speaker 1: and and before we're in real terms, the spending on
Speaker 1: services is still not back where it was before the
Speaker 1: COVID crisis. Let me say that again, we're two years later,
Speaker 1: we're spending less on services than we did before the
Speaker 1: before the recession. In so if you look only at goods,
Speaker 1: you look only at the prices of goods, it looks
Speaker 1: like the economy went completely crazy. Because it did. It
Speaker 1: was insane in that one part of the economy, but
Speaker 1: the rest of the economy, which explains why job creation
Speaker 1: hasn't been as robust as some of the numbers make
Speaker 1: it seems because the whole economy, the entire system as
Speaker 1: a whole, didn't really recover. So what happened in one
Speaker 1: as the demand curve was artificially shifted to the right,
Speaker 1: it was only artificially shifted to the right for part
Speaker 1: of the economy, and so that created the imbalance, a
Speaker 1: reallocation imbalance that led to consumer prices going up, in
Speaker 1: oil price and gasoline, everything else that you just mentioned.
Speaker 1: That exacerbated supply problems from the pandemic and everything else, shipments,
Speaker 1: logistical issues all over the economy. But it didn't address
Speaker 1: the lack of spending, the really seriously serious and alarming
Speaker 1: lack of spending on the services. So if you look
Speaker 1: at those combined and aggregate, we didn't actually increase that much.
Speaker 1: That would just shifted from you if you actually draw mark,
Speaker 1: if you draw a line from you know, where services
Speaker 1: or where personal consumption expenditures as a whole, goods and
Speaker 1: services together would have been had there been no great
Speaker 1: no COVID recession. That's right where we are right now.
Speaker 1: So essentially all the money that was spent on goods
Speaker 1: that would have been or all the money that would
Speaker 1: have been spent on services was just spent on goods
Speaker 1: for a while. Okay, I was going to ask you
Speaker 1: about the endgame, which you had alluded to. You think
Speaker 1: there's potentially a few more hikes coming before something breaks.
Speaker 1: We don't know what it is, we'll guess, and then
Speaker 1: the reverse course. I'm gonna come back to that in
Speaker 1: a minute, but before we jump into that, I want
Speaker 1: to talk about this inelasticity of the money supply. So
Speaker 1: you talked about one of the failures of gold, specifically
Speaker 1: going into the Great Depression, was that the inelasticity of
Speaker 1: the money supply and then the need to kind of
Speaker 1: put the credit on top of that. Um Am, I
Speaker 1: framing that up correctly. Yeah, what you've seen throughout history
Speaker 1: was that in elastic money supplies always led to periods
Speaker 1: of hoarding. Well, first you got risk taking, bubble type behavior,
Speaker 1: that eventually leads to hoarding with no ability to have
Speaker 1: elastic money supply. That causes bank panics, destruction, economic destruction,
Speaker 1: demand destruction, deflation, and then depression. That happened repeatedly throughout
Speaker 1: history when whenever we got into these uh, these deflationary periods,
Speaker 1: and that's the reason why many countries turned to central banks,
Speaker 1: hoping that a public utility could provide an element of elasticity.
Speaker 1: Of course, that that didn't prove to work very well,
Speaker 1: certainly in the Great Depression with the the brand new
Speaker 1: Federal Reserve only fifteen years into its history and it
Speaker 1: leads to the worst economic calamity in history. So that
Speaker 1: didn't really settle the elasticity question either. But that's still
Speaker 1: in a fixed money or hard money system, we always
Speaker 1: have this defect where it leads to pooling and hoarding
Speaker 1: that produces some of the worst economic consequences. Well, it
Speaker 1: seems though to me, is that it's one I would say,
Speaker 1: booms and bus are natural part of the world, right,
Speaker 1: we have seasons in life, and we were we're humans
Speaker 1: and so um we like neon colors and none. Next
Speaker 1: thing you know, they're out of fashion and we just
Speaker 1: want white and black for example, right, and people made
Speaker 1: too many of the neon clothes, and then fidget spinners
Speaker 1: are popular, and then people bought too many fidget spinners,
Speaker 1: and like it just happens. Right. So there's like natural cycles,
Speaker 1: and it seems like it's the creation of the money
Speaker 1: supply that creates this this artificial boom, and then it's
Speaker 1: the restriction of the supply and not continuing to grow
Speaker 1: at the same pace, almost like a Ponzi scheme, that
Speaker 1: then seem to crash it. And so maybe on a
Speaker 1: hard money system we would still have booms and bus
Speaker 1: which we've seen throughout hundreds of years of history, but
Speaker 1: those booms and bus are small in comparison to the
Speaker 1: ever growing booms and bus that we have now under
Speaker 1: these artificially stimulated bubbles. Yeah, I don't that's a tough question.
Speaker 1: It's in some In some ways it's a counter factual
Speaker 1: because you can't go back and redo historical depressions and
Speaker 1: see how it will worked out under different circumstances. But
Speaker 1: as you said, Mark, that there is a in eight
Speaker 1: human boom and bus cycle built within us, and I
Speaker 1: don't think we'll ever ever solve that problem because there
Speaker 1: is no way to solve that problem unless humans can
Speaker 1: start working from perfect future information. Unless we do get
Speaker 1: crystal balls where we can tell the future. There's always
Speaker 1: gonna be as you said, there's always gonna be six
Speaker 1: cycles and fashions. There's gonna be cycles and building. Uh,
Speaker 1: there's gonna be too much risk taking whatever. And I
Speaker 1: think and I fear most people nowadays have confused and
Speaker 1: conflated an elasticity or elasticity with something like too big
Speaker 1: to fail, which is, you know, sort of the quasi
Speaker 1: haphazard program that Ben Bernanke's fed tried to put together
Speaker 1: in the wake of the first financial crisis. That's not elasticity.
Speaker 1: That was something else. Entirely elasticity is that when we
Speaker 1: go into a bust cycle, that we don't end up
Speaker 1: with a monetary shortage that then produces deflation. You can
Speaker 1: still have a bus cycle without the deflation that leads
Speaker 1: to the necessary um a creative destruction a Shompeter called it.
Speaker 1: We still want that to happen. We still want bad
Speaker 1: banks that have bad ideas to give out bad loans
Speaker 1: to bad people. We want them to go out of business.
Speaker 1: But we don't want to have happened, and what does
Speaker 1: happen during these deflationary depressions is that when bad banks
Speaker 1: go out of business, it leads to good banks going
Speaker 1: out of business and good businesses going out of business
Speaker 1: at the same time. Because money becomes too dear, everybody
Speaker 1: holds onto money and there's not enough liquidity in the
Speaker 1: economy that bad banks and good banks alike end up
Speaker 1: going out of business, which harms the economy not just
Speaker 1: in the short run but the long run. So the
Speaker 1: idea behind elasticity, the real idea behind elasticity not too
Speaker 1: big to fail, is that we sort the good from
Speaker 1: the bad. And the only way to do that is
Speaker 1: to make sure the good, good firms and good banks
Speaker 1: have enough money, have enough liquidity available that they can
Speaker 1: survive any bust cycle. That's what Walter Badgett was talking
Speaker 1: about in the nineteenth century from the Bank of England.
Speaker 1: You know, you lend freely at high rates on good collateral.
Speaker 1: That was that was that was the central bank dictum
Speaker 1: of elasticity and currency. Now central banks nowadays don't do
Speaker 1: that because they can't They can't even define elasticity, or
Speaker 1: they can't even define liquidity, let alone create elasticity. But
Speaker 1: still that's the idea that I think that we need
Speaker 1: to be come to terms with is that elasticity doesn't
Speaker 1: mean too big to fail. It means limiting the downside
Speaker 1: to only those who made big mistakes. Where would you
Speaker 1: put yourself? Um, from an economist viewpoint like on Austria
Speaker 1: an economist view and then maybe the opposite, being a
Speaker 1: Kinsian kind of view. Where do you? Where would you say?
Speaker 1: Are you somewhere in the middle? Are you would you
Speaker 1: consider yourself Austrian Kinsian? Or how how do you think
Speaker 1: about that? I've first of all, I'm not an economist.
Speaker 1: I'm just talking about your view. I'm talking about your
Speaker 1: view that. Yeah, I'm not economist either, but I aligned
Speaker 1: with the Austrians, but I'm not ECONOMI No, that's I
Speaker 1: think being not being an economist is actually helpful because
Speaker 1: part of the problem is that you find yourself in
Speaker 1: a box. I've been accused of being a Kinsian, a Monitorist,
Speaker 1: and Austrian, a Marxist, pretty much anything around around the spectrum.
Speaker 1: I would I would like to think of myself as
Speaker 1: just a realist. UM. I started out with Austrian sympathies,
Speaker 1: hard money, gold standard free market capital. Is it mean
Speaker 1: you just can't get over the history of what happens
Speaker 1: when you get into these deflationary depressions, which is the
Speaker 1: worst of the worst case. So for I, you know,
Speaker 1: I disagree with most of what Keene said about some
Speaker 1: of the implications and what what government should do in
Speaker 1: the wake of deflationary crisis. But yet you can't argue
Speaker 1: with how Keens framed at least the deflationary disease you
Speaker 1: call what the worst evil there is because in a
Speaker 1: deflationary depression, the deflation, the consequences of that deflationary depression
Speaker 1: depression fall mostly on workers. So the poorest members of
Speaker 1: society are the ones who suffer in these worst cases.
Speaker 1: So we have a very vested interest as a society
Speaker 1: in the system to make sure that we don't have
Speaker 1: deflationary depression. So if that makes me a monitorist, I
Speaker 1: don't care if that makes me, uh, certainly not an Austrian.
Speaker 1: But you know, sympathies for some of these other schools
Speaker 1: and doctrines. I think most of them have have at
Speaker 1: least some good ideas that you should listen to. But
Speaker 1: I really think part of the problem here is that
Speaker 1: everybody gets very rigidly doctrinaire and ideological and stops thinking
Speaker 1: about and thinking about things in terms of evidence and
Speaker 1: actual history. Yeah. Just you had said that in you know,
Speaker 1: you do believe banks should be able to fail and
Speaker 1: wash out the bad ones and creative destruction. I agree
Speaker 1: with that. But then you talked about the in a
Speaker 1: in a deflationary event, that the good banks go out
Speaker 1: of business with the bad banks. And we just recently
Speaker 1: saw this in the crypto markets right where well we
Speaker 1: saw in two thousand and eight obviously when with the
Speaker 1: investment banks, and recently in the crypto markets, and a
Speaker 1: lot of that is because the contagion that's taken so
Speaker 1: too much leverage built up in the system, the contagion
Speaker 1: because they're all um, you know, doing loans with each other,
Speaker 1: and so when one goes down, then they lose that
Speaker 1: those assets and dominoes the whole thing and so um.
Speaker 1: In a it's the leverage that seems to be the problem.
Speaker 1: And so in a system where we didn't have all
Speaker 1: this in uh in monetary inflation, um, and we didn't
Speaker 1: have all this leverage that built up, and we had
Speaker 1: banks that were on full reserve for example, then those
Speaker 1: banks wouldn't go out of business, they wouldn't be subject
Speaker 1: to the mistakes at those and you would never have
Speaker 1: economic growth because of the inelasticity of the money. Yeah,
Speaker 1: because they're That's the thing I think that's the other
Speaker 1: part of this that we're forgetting is that, you know,
Speaker 1: we live in a dynamic world where demand for money
Speaker 1: is not static. Demand for money changes, and I'm talking
Speaker 1: about legitimate demand, not just speculative demand. Legitimate demand rises
Speaker 1: and falls, and we're supposed to be able to to
Speaker 1: u to get a sense of that by the you know,
Speaker 1: interest rates. For example, if there's a legitimate demand for money.
Speaker 1: I know, legitimate is a sort of a weasel work here,
Speaker 1: and it's doing a lot of work, but legitimate demand
Speaker 1: for money goes up. You know, do we really want
Speaker 1: the price of money to skyrocket because it's fixed. If
Speaker 1: there's legitimate demand for money for legitimately productive and sustainable purposes,
Speaker 1: why wouldn't we want the dynamic money supply on the
Speaker 1: supply side to be able to meet that demand for
Speaker 1: money without causing frictions and harms and inefficiencies. So if
Speaker 1: you have a fixed money system where you don't dynamically
Speaker 1: meet demand. Two things happen. One thing is you'll get
Speaker 1: lack of economic growth, and the second thing is the
Speaker 1: commercial system will invent new ways of new forms of
Speaker 1: money to circumvent the hard money, uh, the hard money
Speaker 1: cap so to speak. Let's this happened throughout I mean
Speaker 1: the Euro dollar system itself was an answer to Triffin's paradox,
Speaker 1: because Triffin's paradox wasn't really a paradox. It was simply
Speaker 1: the the international reserve system under Breton Woods was incapable
Speaker 1: of re of meeting rising global demand for money in
Speaker 1: a dynamic setting. So I don't you know, I don't
Speaker 1: agree that demand for money or the supply of money
Speaker 1: needs to be fixed in order to make sure that
Speaker 1: we don't ever have an asset bubble, because, like I said,
Speaker 1: I think business cycles happen anyway. They're gonna happen regardless
Speaker 1: of whether or not there's fixed money or not. You
Speaker 1: saw that, I'll throughout the nineteenth century, on the best
Speaker 1: of the best, the classical gold standard, there were bubbles everywhere.
Speaker 1: It happens. It's it's it's a flaw and human nature
Speaker 1: not in the monitor. And I would agree with that
Speaker 1: they happen. And that's the problem that we see all
Speaker 1: throughout the world today. Um. For example, with a look
Speaker 1: at the rise of antidepressants US, especially in the United
Speaker 1: States for example. Well like, uh, you need you know,
Speaker 1: without we we can't always just be happy humbers at
Speaker 1: the time, like we have to have pain in order
Speaker 1: to know joy for example, right, And how how do
Speaker 1: we know the happiest time of our life if we
Speaker 1: don't have sad times and things like that, and so
Speaker 1: a lot of that. But but jumping back, stay staying
Speaker 1: on track here with the money supply, so um, like
Speaker 1: with bitcoin you've mentioned many times and I've seen your
Speaker 1: interviews with one of my good buddies, Robert Breedlove Um,
Speaker 1: and you mentioned, now bitcoin has some superior attributes transparency,
Speaker 1: lack of asymmetric things like that, but it's the inelasticity
Speaker 1: with that because of bitcoin of course has a fixed
Speaker 1: mon terary supply and over more than twenty one million,
Speaker 1: then you think that leads us back into the Triffan's
Speaker 1: dilemma paradox kind of thing, um, and then back into
Speaker 1: some sort of a euro dollar or some sort of
Speaker 1: a new emergence of a credit based system. Yeah, I
Speaker 1: think that's the primary drawback. You're right, because I think
Speaker 1: bitcoin is an elegant idea, an elegant step in the
Speaker 1: right direction, because one of the problems with the Euro
Speaker 1: dollar system is that it is a distributed ledger, virtual currency,
Speaker 1: digital currency technology, but it's maintained by just the banking
Speaker 1: system them and it's completely opaque. We don't really know
Speaker 1: what goes on inside of it, which has privileged the
Speaker 1: banks even that much more. An Austrian concept called cantilling effects,
Speaker 1: which if you're able to create money more than if
Speaker 1: you're able to create money and nobody else's you get
Speaker 1: the benefits first, which of course then leads to over financialization,
Speaker 1: if not hyper financialization, which we saw in the pre
Speaker 1: crisis era. So Bitcoin, in a lot of ways was
Speaker 1: a step in the right direction, certainly in terms of transparency,
Speaker 1: but also in terms of just simplicity. Um, we don't
Speaker 1: need an overly complicated monetary system. In fact, we don't
Speaker 1: want an over overly complicated monetary system because money is
Speaker 1: supposed to be a commercial tool. It's not wealth, it's
Speaker 1: not anything else. It's supposed to allow a modern capitalist,
Speaker 1: free market economy to do what it does best, and
Speaker 1: that's that's we focus on productive uses of our time.
Speaker 1: We're not hiring all sorts of accountants and lawyers and
Speaker 1: attorneys and banks to hedge our financial risk. We should
Speaker 1: not think about money whatsoever. It's one of those things
Speaker 1: you should just be in the back of your mind
Speaker 1: and you never really have to deal much, you know,
Speaker 1: I never have to think much about it. And that's
Speaker 1: one of the problems with the system that we have
Speaker 1: is we spend so much time talking about this stuff
Speaker 1: and worrying about this stuff and watching it go crazy,
Speaker 1: that we've kind of lost focus here on the real economy,
Speaker 1: which is what's supposed to so Bitcoin I think represented
Speaker 1: at least a couple of good steps in the right direction.
Speaker 1: I worried though, that it didn't take enough of them
Speaker 1: in the right direction, and it leaves us in the
Speaker 1: same sort of inherent flaws that we had before. And again,
Speaker 1: the an elasticity problem is that yes, we're gonna have pain,
Speaker 1: we're gonna have business cycles. They're gonna be good times
Speaker 1: and bad times, but there really is no reason for
Speaker 1: the bad times to be so bad that it endangers
Speaker 1: the long run future, which is what we saw in
Speaker 1: the nineteen thirties or in three but we didn't see
Speaker 1: it in nineteen o seven because there was elasticity in
Speaker 1: the banking system created by the banking system itself. So, yes,
Speaker 1: boom bus cycles will happen, but we don't need to
Speaker 1: have the worst of the worst case present to be
Speaker 1: presented with the worst of the worst case when we
Speaker 1: do get into the bud But if we hadn't, if
Speaker 1: we hadn't built the money supply up so big, Um,
Speaker 1: the boom wouldn't have gotten so big, wouldn't, And then
Speaker 1: it would have made the bus so fall so bad.
Speaker 1: So if I'm walking on a one foot wall and
Speaker 1: I fall off, it's not that bad. If I'm walking
Speaker 1: on a hunter football and I fall off, it's really bad.
Speaker 1: And so if we look at if we look at
Speaker 1: it from that perspective. So for example, um, the problem
Speaker 1: that we're in today, right, So they the last couple
Speaker 1: of years, and to the point you're saying, I mean
Speaker 1: the creation of the money supply. This increased the money supply,
Speaker 1: the Fed Fed Treasury stimulus of the last two years.
Speaker 1: I'm not going to dig into the intricacies of that,
Speaker 1: but we saw a rise in stock market at home,
Speaker 1: prices have doubled, etcetera, etcetera, and so the average person, um,
Speaker 1: if they don't participate in that, they get left behind.
Speaker 1: So I'm a contractor. You know, I work on homes,
Speaker 1: and let's say that. You know, I have all these jobs,
Speaker 1: and it's like, well, I need to take on these
Speaker 1: additional jobs. I need to hire more employees, I need
Speaker 1: to go finance more vehicles, I need to move into
Speaker 1: a new office to keep up with that demand. Now
Speaker 1: I could choose not to and I could just store
Speaker 1: my money, to your point and not have to worry
Speaker 1: about it, which is, I agree, is the way it
Speaker 1: should be. But if I play that game, I'm just
Speaker 1: gonna put my money to banking and ignore it. I'm
Speaker 1: not going to scale my business to keep up with demand.
Speaker 1: Then I get left behind. So I'm forced to play
Speaker 1: that game. But then all of a sudden, let's just
Speaker 1: suck the money out of the system, and then everything crashes,
Speaker 1: and now I'm stuck with all these trucks and these
Speaker 1: extra buildings because I had played in that game, and
Speaker 1: so um, if we didn't have this boom that I
Speaker 1: had to I was forced to play along with and
Speaker 1: keep up and then the inevitable bus that now crushes me. Um,
Speaker 1: it doesn't seem like the worst thing in the world.
Speaker 1: That we'd stop booms and bus but they wouldn't be
Speaker 1: so massive, and I could just store my wealth. But
Speaker 1: under the terms that you've dictated. But isn't that what's
Speaker 1: happened is true. But that's not how it That's not
Speaker 1: what actually happened. What we actually happened was we had
Speaker 1: a legitimate economic growth before the pre crisis, before the
Speaker 1: crisis UH showed up. Yes, there were bubbles, there were
Speaker 1: imbalances in certainly US real estate, but you look around
Speaker 1: most of the rest of the world emerging markets, China,
Speaker 1: for example, backwards communist subsistence agriculture. China turned into a
Speaker 1: global powerhouse, which we all benefited from. By the way,
Speaker 1: in some ways some people more than others. Obviously was
Speaker 1: at the expense of certain parts of the US. I
Speaker 1: grew up in the rust belt, so I knew exactly
Speaker 1: where all those jobs went. They certainly went to China.
Speaker 1: But by and large, the the growth cycle, certainly from
Speaker 1: the nineteen eighties forward, was a legitimate growth cycle, and
Speaker 1: you can make it. I would make a strong case
Speaker 1: that that wouldn't have never that would never would have happened.
Speaker 1: In a restrained fixed money system, we never would have
Speaker 1: had that growth, and so it's difficult to prove the
Speaker 1: counter factual that, hey, um, maybe we shouldn't have had
Speaker 1: that growth to begin with. I don't know. I think
Speaker 1: the world is a better place because of the globalization
Speaker 1: that certainly showed up from the nineteen fifties four as
Speaker 1: soon as the euro dollars started really producing, you know,
Speaker 1: these virtual dollars in in in excess. That's really I
Speaker 1: think there was a very real benefit to that, and
Speaker 1: had it not happened, the world would have looked very
Speaker 1: differently than it does today, or at least in two
Speaker 1: thousand eight. And the problem was not that we printed
Speaker 1: money after the crisis, is that we didn't that we
Speaker 1: didn't fix the monetary issue in two thousand eight, we
Speaker 1: didn't create elasticity, and that has led to a permanent change,
Speaker 1: at least so far permanent change in economic growth. So
Speaker 1: that we are over the last fifteen years, we are
Speaker 1: seeing what the global economy would have looked like had
Speaker 1: it not had enough money, and it looks increasingly ugly
Speaker 1: by the year. There's a reason why we were witnessing social, political,
Speaker 1: and economic upheaval all over the world. It's because of
Speaker 1: we're seeing what happens in in an economic system that
Speaker 1: is deprived of any monetary elastics. Well, I certainly agree
Speaker 1: with that. I think a lot of the upheavals that
Speaker 1: we're having around the world is also because of other
Speaker 1: bad policies such as restricting energy, whostend, restricting enough food.
Speaker 1: But those are different topics for it difer in time.
Speaker 1: But sticking back on this topic of the inelasticity of
Speaker 1: the money supply, um, I would agree that. I would
Speaker 1: think that we both agree that we don't need money.
Speaker 1: Nobody wants money. What we want is the things that
Speaker 1: money buys us, which is back to the point, we
Speaker 1: made goods and services, right, That's what economy makes, goods
Speaker 1: and services. So I don't want the money. I want
Speaker 1: the goods and services. Now I would ask people typically
Speaker 1: when they say, well, doesn't the money so I always
Speaker 1: need to increase or expand, I would say, um, wouldn't
Speaker 1: you rather? And to the point that you made, which
Speaker 1: I agree with Like a brain surgeon, the world, the
Speaker 1: world blew up into prosperity because of specialization right, and
Speaker 1: now I could be the best brain surgeon. I could
Speaker 1: focus on brain surgery, and I should just focus on
Speaker 1: curing cancer or whatever that is, finding perpetual energy. Focus
Speaker 1: on that, and then my money should just go sit
Speaker 1: and it should just I shouldn't have to think about
Speaker 1: it to the point that you made I agree, And
Speaker 1: so then I would just ask the average person, wouldn't
Speaker 1: you or would you rather your money that you've saved
Speaker 1: today buy you more goods and services in the future
Speaker 1: or less? And I think everybody agrees they would want
Speaker 1: their money to buy them more goods and services, not less.
Speaker 1: But through an inflationary system, the money continues to buy
Speaker 1: us less and less goods and services. And so if
Speaker 1: we look at what we really want is goods and services,
Speaker 1: the money is a proxy of that, so a minium
Speaker 1: exchange for that. So we have all the wealth of
Speaker 1: the world, all the goods and services of the world,
Speaker 1: divided by the money. And if we're trying to keep
Speaker 1: the money at one, then all the value goes to
Speaker 1: the goods and service, so everything gets more expensive. But
Speaker 1: if we had a fixed money supply, then the value
Speaker 1: could accrue to the money and the goods and services
Speaker 1: would go down? Am I seeing that right? In theory theory? Yes,
Speaker 1: the problem is that leads to all these similar boom busts,
Speaker 1: but not if we not if we don't sure it
Speaker 1: looks good and in terms of prices, but what happens
Speaker 1: when everybody's thrown out of work. That's really the issue
Speaker 1: here is that, Yeah, okay, so my money buys me
Speaker 1: more on the other side of a crisis, but I
Speaker 1: also don't have a job today, So that's not a
Speaker 1: really good trade off by any stretch of the imagination,
Speaker 1: particularly when those who are thrown out of the work
Speaker 1: are the most vulnerable in society. And you do that
Speaker 1: enough times and then you end up with what we're
Speaker 1: seeing now, which is increasing discontent, extremism, and anarchy. Okay,
Speaker 1: And to your point, we don't we don't know, We
Speaker 1: don't have a we we don't have an A B
Speaker 1: test to really run, although we do have five thousand
Speaker 1: years of history without a Fiat money system, so we
Speaker 1: do kind of have that. And to your point, there
Speaker 1: are booms and bus because cycles change, creative destruction happens,
Speaker 1: but we don't have the massive amount of misallocation that
Speaker 1: we would have today. Um, but again we don't really
Speaker 1: have that. I guess what I would say then, is, um,
Speaker 1: what problems would a bitcoin underwritten capital market need to
Speaker 1: solve in order to be viable in your mind? Well,
Speaker 1: first of all, it has to have a wide enough base,
Speaker 1: so it's wide enough it could be used in a wide,
Speaker 1: widespread Uh, it needs to be. That's really what a
Speaker 1: global reserve currency. And that's what we're talking about, right Mark.
Speaker 1: You look at it bitcoin not just for a niche use.
Speaker 1: You want it to be a medium of exchange, not
Speaker 1: just a or value, but a medium, a useful medium
Speaker 1: of exchange that can be used in enough places that
Speaker 1: it becomes a useful medium of exchange. And so it's
Speaker 1: sort of like a self fulfilling prophecy there. That's what
Speaker 1: a global reserve currency actually means. It means it's available,
Speaker 1: freely usable, and widely used in all in as many
Speaker 1: places and as many circumstances as it can possibly do.
Speaker 1: And a fixed monetary system makes that incredibly difficult, especially
Speaker 1: when it's not widely distributed. And let's face it, money,
Speaker 1: money is always going to pool, It's always gonna tend up,
Speaker 1: It's always gonna end up in fewer and fewer hands,
Speaker 1: because that's how free market capitalism works. Successful people are
Speaker 1: going to end up with more money in their hands.
Speaker 1: And what ends up happening in that situation is you
Speaker 1: need some form of financialization to get that money moving
Speaker 1: back into the real economy. So you can't escape financialization
Speaker 1: unless you're willing to go back to a completely commodity
Speaker 1: physically owned system or the digital equivalent of that, which
Speaker 1: means you're actually reducing the potential of that economics system.
Speaker 1: So bitcoin, I think, has a couple of problems, including
Speaker 1: what happens when it's hoarded, as well as is there
Speaker 1: enough of it to be used any widely, widely used
Speaker 1: across enough places in the real economy. And of course
Speaker 1: geography is another part of another. So a couple of things.
Speaker 1: So one to your point, sure, it has to be
Speaker 1: widely accepted, right, So money has to have a bunch
Speaker 1: of attributes, five of them that I really like the
Speaker 1: key on. But one of them of course is sailable, right,
Speaker 1: you know, recognizable people have to be able to day
Speaker 1: take it. And so to your point today, right, I
Speaker 1: mean it's it's very small, but we're a dozen years
Speaker 1: into it, So I believe money is like an evolution.
Speaker 1: If we look through the history of money, it's evolutionary,
Speaker 1: it's emergent, right, So we use rocks and feathers and
Speaker 1: seashells and all these things, but one emerged as the
Speaker 1: best because I had the best money properties. Um, and
Speaker 1: so I think, you know, there's like a store, like
Speaker 1: a collectible. Oh this is kind of cool, like I'll
Speaker 1: hang onto this feather, this rock, and then eventually maybe
Speaker 1: that collectible maybe evolves into a store of value. So
Speaker 1: we see the wealth holding fine art and cars and
Speaker 1: things like that, but those don't have money attributes, and
Speaker 1: so maybe a store value could then evolve to need
Speaker 1: him of exchange. And I'm happy to admit I don't
Speaker 1: think bitcoin is the best medium exchange today. It's certainly
Speaker 1: too volatible. Were paying your bills with on a monthly basis,
Speaker 1: and and it hasn't reached that wide scale adoption to
Speaker 1: your point. So I think there's an evolutionary path, but
Speaker 1: it does have the attributes I think for it. The
Speaker 1: one thing I would just point out, and I'm sure
Speaker 1: you're probably aware, but uh, you know, one one of
Speaker 1: the many things with bitcoin is that it's the first uh,
Speaker 1: first asset, the first commodity that doesn't need debt to
Speaker 1: reach velocity. Right. So gold is very slow, right, it's
Speaker 1: not portable. I can't send it to England very or
Speaker 1: over over zoom to you right now. And so we
Speaker 1: had to add the debt on top of it in
Speaker 1: order to get the velocity. But bitcoin has velocity with
Speaker 1: a bare instrument, which is which is pretty interesting. But anyway,
Speaker 1: so back to the question. So, I guess you answered
Speaker 1: my question so that what it would need to solve
Speaker 1: was it would need to be more widely accepted. I
Speaker 1: guess was the point more widely US and and usual
Speaker 1: meaning more people are able to use it? Right, it's
Speaker 1: it's friendly enough and easy enough. Yeah, not just the
Speaker 1: more people, people in all kinds all types of use cases,
Speaker 1: got it? Yeah? Okay, good um. Now let's jump back
Speaker 1: to the final uh discussion here that you had set
Speaker 1: up earlier. It wasn't on my list of questions, but
Speaker 1: you talked about you know, maybe or I'm framing up
Speaker 1: as as this endgame. So you said the yield curves
Speaker 1: are predicting, predicting that you know, there's probably one more
Speaker 1: pivot in front of us. That's where they're really worried. Um,
Speaker 1: you had said that maybe there's a few rate hikes
Speaker 1: before something breaks. Um. I don't know if you had
Speaker 1: said or maybe this is where I think, but probably
Speaker 1: before the end of this year, we'll probably see that
Speaker 1: before something breaks and then they reverse course. We don't
Speaker 1: know what that is. We can only speculate. What would
Speaker 1: you what do you think is the base case of
Speaker 1: the speculation? I know we're only talking in terms of
Speaker 1: probabilities here, Um, credit markets dry up or what do
Speaker 1: you what do you see there? Yeah, there's a lot
Speaker 1: of potential potential sparks or potential shot that we could
Speaker 1: go through, and I think we already did when oil
Speaker 1: prices skyrocketed in early March. I think that was the
Speaker 1: trigger for what we're seeing in terms of a base
Speaker 1: case recession. So the first half of the year technical recession.
Speaker 1: As you said, Mark, that's that's that's completely a distraction.
Speaker 1: That's not really Markets are not worried about what's already happened.
Speaker 1: They're worried about what's coming next. And what's coming next
Speaker 1: looks like, okay, we start with the recession, but there
Speaker 1: are also any number of problems from geopolitics to money itself.
Speaker 1: A big part of the monetary system is repo and
Speaker 1: collateralized transactions and derivative things like currency swaps, and believe
Speaker 1: it or not, there's just not enough good quality collateral
Speaker 1: to go around, and so we get into these situations
Speaker 1: where dealers in particularly become risk averse, certain junk quality
Speaker 1: collateral becomes less negotiable. It acts every bit as if
Speaker 1: monetary system was being tightened from the inside. And so
Speaker 1: I think one of the things that is forcing these
Speaker 1: curves to be and as inverted as they are, is
Speaker 1: cancerns about a collateral run as we saw in March
Speaker 1: of and again in two thousand seven and two thousand
Speaker 1: and eight, because we've been stuck in this collateral shortage
Speaker 1: situation for the last fifteen years and it has never
Speaker 1: really been handled, and it is lee it leaves the
Speaker 1: system and I mean the global financial system as well
Speaker 1: as the economy, and it precarious situation when it becomes
Speaker 1: you know, when we get into these risk averse situations
Speaker 1: where collado becomes scarce. So I think collateral shortages, which
Speaker 1: are prominent in every marketplace that we see, especially something
Speaker 1: like treasury bills repot fails, and again the US dollar skyrocketing.
Speaker 1: Why is it going up Because there's problems in the
Speaker 1: in the collateral system. That's part of what's going on.
Speaker 1: And then, um, the other part of it is something
Speaker 1: like geopolitics. What if the Russians do turn off gas
Speaker 1: to Europe? What is that gonna look like for the world.
Speaker 1: I mean, that's something that I if I was, you know,
Speaker 1: running a massive portfolio of hundreds and hundreds of billions,
Speaker 1: I would probably want to hedge against something like that happening.
Speaker 1: Or not just gas to Europe, how about food to
Speaker 1: the Middle East. I mean, so there's any number of
Speaker 1: real potential shocks that could make a already bad situation worse.
Speaker 1: And I think that's really the issue here, is that
Speaker 1: we're heading into the second half of this year all
Speaker 1: sorts of potential concerns in front of us, and we're
Speaker 1: starting off the second half of the year on the
Speaker 1: wrong foot anyway. So, I mean, I can understand why
Speaker 1: curves are priced the way they are in ways that
Speaker 1: we haven't seen since two thousand eight, because the risks
Speaker 1: as well as the reality are that on appealing. And
Speaker 1: you you highlighted a number of those and we have
Speaker 1: even more. There's all types of land mines out there
Speaker 1: that could that could blow up on us. So, UM, now,
Speaker 1: I guess the last question we'll just kind of end
Speaker 1: it with. And maybe it's not a big one, but
Speaker 1: if the FED has no control, uh, the euro dollar
Speaker 1: market is much bigger. Um. Let's say that we have
Speaker 1: this uh you know, they end they end up with
Speaker 1: a few more hikes, they stop. We have any of
Speaker 1: these signal again events that could happen to the points
Speaker 1: you said with the food crisis the energy crisis, those
Speaker 1: are two big looming ones of another potential pandemic lockdown.
Speaker 1: That's it seems to be rearing its head again potentially. Um,
Speaker 1: then the FED would have to reverse its course and
Speaker 1: would try to do something, which to your point, maybe
Speaker 1: they can't. But if it was whatever seven billion in
Speaker 1: two thousand and eight, it was six seven trillion, and
Speaker 1: I mean, is the next one ten twenty trillion? And
Speaker 1: will that have any effect? Can they even keep the
Speaker 1: bubble from d leveraging? I think the next one is
Speaker 1: I think that what the FED will look at is
Speaker 1: not so much size, sort of take a playbook. Because
Speaker 1: everybody follows the Bank of Japan anyway. I think what
Speaker 1: they do is to take a page out of the
Speaker 1: Bank of Japan's book where they say, okay, we've bought treasuries.
Speaker 1: If nbs in the past I didn't really have much
Speaker 1: of an effect. Maybe this time we're going to actually
Speaker 1: buy corporate bonds. I know they pretended to into didn't
Speaker 1: actually buying many actually buy corporate bonds. They'll start buying
Speaker 1: et still, start buying different asset classes, because this is
Speaker 1: all about psychologist, is all about trying to shock the
Speaker 1: system in ways that the FED wants the system to
Speaker 1: be shocked. So I think rather than rather than seeing
Speaker 1: an increase in size of quantitative easing, you'll see like
Speaker 1: Japan where they'll they'll add to the target of the
Speaker 1: list of targets for asset purchasing. Okay, all right, more
Speaker 1: strategic or just again just like vocal throwing something against
Speaker 1: the wall and hoping it works. Well, man, there's so
Speaker 1: much more we could go on with, but we've we've
Speaker 1: gone super long. I appreciate you taking the time and
Speaker 1: to everyone listening. We had some some frustrations with my
Speaker 1: on my own the recordings. Appreciate your patience with that.
Speaker 1: Jeff UM, I know you do the euro Dollar University
Speaker 1: podcast which I listened to, and uh, I recommend everybody
Speaker 1: check that out. Will link to that below. Markets insider
Speaker 1: pro dot com and portfolio portfolio shield dot net I believe,
Speaker 1: or two other projects you're working on will link to those. Um,
Speaker 1: anything else that you want to call out. I writed
Speaker 1: a different places to real clear markets epic time times,
Speaker 1: so you know you can find the research anywhere around
Speaker 1: the research writing commentary. You are all over the internet
Speaker 1: right now, and it's never been been more important to
Speaker 1: understand how that works. So anyway, Jeff, we'll go ahead
Speaker 1: and in it with that. Thanks so much for for
Speaker 1: coming on today. My pleasure, Mark, thanks for the invitation.
Speaker 1: I really appreciate it. All Right, that's a wrap. Thanks
Speaker 1: for listening to this interview with Jeff Snyder. We've covered
Speaker 1: a lot of topics, a lot of topics that are
Speaker 1: maybe not so much conspiratorial or controversial, but definitely outside
Speaker 1: the mainstream view. The vulkar myth the FED has no
Speaker 1: control of course. Check him out Jeff Snyder at the
Speaker 1: euro Dollar University Podcast. We'll have all his links down below.
Speaker 1: And that's what I got for you today. All right
Speaker 1: to your success. I'm out.