WEBVTT - The Fed Weaponized The Dollar To Crush Other Countries | Brent Johnson 0:00:00.120 --> 0:00:04.200 All right, Brent Johnson, Santiago Capital on Twitter. I always 0:00:04.240 --> 0:00:07.000 love sitting down, hanging out with you and catching up, 0:00:07.040 --> 0:00:09.920 and I'm excited what we have to talk about today. 0:00:10.000 --> 0:00:11.880 So let's just get right into it if you want 0:00:11.920 --> 0:00:13.840 to get to a philosophical level, but even just like 0:00:13.880 --> 0:00:17.480 a realistic level, like the whole world is based off 0:00:17.480 --> 0:00:20.720 of energy, Like the whole world is based off of energy. 0:00:21.120 --> 0:00:25.079 And it seems like through disastrous policy decisions over the 0:00:25.120 --> 0:00:28.760 last decade of shutting down energy throughout Europe and even 0:00:28.760 --> 0:00:31.960 the United States UM, and through inflationary policies, we've kind 0:00:31.960 --> 0:00:35.360 of created this perfect storm UM and it seems that 0:00:35.400 --> 0:00:39.680 it's put a lot of pressure onto UM the sovereigns, 0:00:39.680 --> 0:00:42.720 if you will. Right, So, now you have Germany, for example, 0:00:42.760 --> 0:00:44.400 that's been a net exporter, but now they're a net 0:00:44.440 --> 0:00:46.760 importer or their energy costs are so high now they're 0:00:46.760 --> 0:00:50.000 having to shut their manufacturing down, which is bad, that's 0:00:50.120 --> 0:00:54.400 long term effects of d industrialization. But they're also now 0:00:54.480 --> 0:00:56.360 it looks like a lot of nations are being forced 0:00:56.360 --> 0:00:59.600 to dump maybe US treasuries to get the money to 0:00:59.720 --> 0:01:04.480 bring in the energy UM. And at the same time, 0:01:04.560 --> 0:01:07.600 it looks like the Fed is trying to fight inflation, 0:01:07.760 --> 0:01:12.000 which most of inflation is being caused by energy. So 0:01:12.040 --> 0:01:16.040 it seems like this energy, it seems like energy and 0:01:16.080 --> 0:01:19.360 this inflationary system is like at the center, the epicenter 0:01:19.400 --> 0:01:21.800 of this entire storm the world is is kind of 0:01:21.800 --> 0:01:23.679 facing right now. I mean, it's it's the end of 0:01:23.720 --> 0:01:26.880 this debt cycle, potentially the sovereign long term debt cycle. 0:01:27.240 --> 0:01:29.760 But then you have energy that's maybe the pin pricking 0:01:29.800 --> 0:01:32.480 the bubble. How would you how would you look at 0:01:32.480 --> 0:01:36.080 that now? I I think they're I think that's absolutely right. 0:01:36.120 --> 0:01:38.320 Like energy is a huge part of what's going on 0:01:38.400 --> 0:01:42.720 now for a couple of reasons. Um. Number one, you know, 0:01:42.800 --> 0:01:46.440 anybody who's seeing dune right knows that the spice must 0:01:46.480 --> 0:01:49.240 flow right. And in many ways, you know, oil is 0:01:49.280 --> 0:01:52.200 the spice that keeps the global economy running. So to 0:01:52.280 --> 0:01:54.760 think that we could talk about all these big macro 0:01:54.840 --> 0:01:57.200 events that are going on and that somehow energy wasn't 0:01:57.200 --> 0:01:59.800 a part of it would be kind of silly. Um. 0:01:59.840 --> 0:02:04.000 So I think whether it's a byproduct of everything else 0:02:04.000 --> 0:02:06.200 that's going on, or if that's the cause, I I 0:02:06.240 --> 0:02:09.919 don't really know, but I know it's a huge factor. Um. 0:02:09.960 --> 0:02:13.799 And to your point. You know, these these uh all 0:02:13.880 --> 0:02:16.200 use the word disastrous. People can use whatever the report 0:02:16.280 --> 0:02:19.760 that they want. These these these kind of disastrous energy 0:02:19.800 --> 0:02:24.640 policies and green mandates, um that have been put in 0:02:24.680 --> 0:02:27.200 place before we were ready to have any kind of 0:02:27.240 --> 0:02:31.400 a transition is kind of exacerbating it, right and so 0:02:32.280 --> 0:02:34.200 and and of course, the way I always come out, 0:02:34.240 --> 0:02:36.200 I I always come at from the big picture down 0:02:36.320 --> 0:02:38.600 and I and you know, my focus is on currencies. 0:02:39.240 --> 0:02:42.280 It's important to to understand that there's a couple of 0:02:42.320 --> 0:02:46.919 dynamics that affect currencies that that are that are directly 0:02:46.960 --> 0:02:50.960 a tied that are directly tied to energy, right um. 0:02:51.160 --> 0:02:54.160 And then this plays into geopolitics and military issues that 0:02:54.160 --> 0:02:56.760 are going on with Russia and China and Ukraine and Europe. Right. 0:02:56.800 --> 0:02:59.200 So it's all kind of interconnected. It's hard to it's 0:02:59.240 --> 0:03:01.880 hard to talk about just oil without seeping into these 0:03:01.880 --> 0:03:06.720 other areas. But but you know, obviously the big issue 0:03:06.760 --> 0:03:10.440 with oil and with many other commodities is that they're 0:03:10.520 --> 0:03:14.160 priced and typically traded in dollars, and you know, whether 0:03:14.200 --> 0:03:16.720 you're doing business in the United States, that's typically the case. 0:03:17.200 --> 0:03:19.880 That's changing a bit on the edges, But by and large, 0:03:19.960 --> 0:03:24.040 the world still trades on dollars, and energy trade around 0:03:24.040 --> 0:03:28.480 the world takes place in dollars. Part of the issue 0:03:28.520 --> 0:03:33.200 that's happening now is that over the last let's just 0:03:33.240 --> 0:03:38.400 call it ten years, UM, the US has become more 0:03:39.080 --> 0:03:42.880 self sufficient in energy terms. Now again, I think there 0:03:42.920 --> 0:03:44.320 was a couple of years where we were actually a 0:03:44.360 --> 0:03:47.160 net exporter. I think in the last year we're kind 0:03:47.160 --> 0:03:50.960 of maybe a march back to being a marginal net importer. Um. 0:03:51.000 --> 0:03:53.840 It kind of depends on whether shales currently pumping or not. 0:03:54.040 --> 0:03:57.360 But but this is important for a couple of reasons 0:03:57.680 --> 0:04:04.080 because as the US becomes more energy self sufficient and 0:04:04.440 --> 0:04:08.040 is not it does not need to buy oil from 0:04:08.080 --> 0:04:11.720 the Middle East or Venezuela or Russia or wherever it is. 0:04:12.840 --> 0:04:16.240 Um that that not only helps their domestic industry, but 0:04:16.279 --> 0:04:19.080 it also ends up meaning that less dollars are getting 0:04:19.120 --> 0:04:22.600 distributed outside the United States. Right, for years and years 0:04:22.600 --> 0:04:25.600 and years, we were a huge net oil importers. So 0:04:25.640 --> 0:04:27.800 we would the oil would come in and the dollars 0:04:27.800 --> 0:04:30.479 would go out, and then those dollars would exist in 0:04:30.480 --> 0:04:33.000 the eurodollar market and it would provide liquidity for the 0:04:33.000 --> 0:04:38.200 eurodollar market. But as the US has become more energy 0:04:38.200 --> 0:04:41.320 self sufficient. They don't have to export dollars for as 0:04:41.400 --> 0:04:43.640 many imports of energy as they used to and so 0:04:44.440 --> 0:04:46.599 but but a big part of it is that a 0:04:46.640 --> 0:04:49.640 lot of the US dollar debt that exists in the 0:04:49.680 --> 0:04:53.560 eurodollar market was extended or put in place. However, you 0:04:53.600 --> 0:04:57.680 want to think about that while the US was exporting 0:04:57.720 --> 0:05:00.120 a lot of dollars. So you have a situation and 0:05:00.200 --> 0:05:02.520 where a lot of credit was extended and a lot 0:05:02.560 --> 0:05:04.160 of debt was taking on when there was a lot 0:05:04.160 --> 0:05:08.559 of liquidity. But now moving forward, due to the fact 0:05:08.600 --> 0:05:12.640 that we're exporting fewer dollars and that the US is 0:05:12.720 --> 0:05:16.919 tightening monetary policy, it just means that there's less dollars circulating, 0:05:16.920 --> 0:05:18.760 not just in the United States, but especially in the 0:05:18.760 --> 0:05:22.599 euro dollar market. And so then it just becomes this 0:05:22.760 --> 0:05:25.800 vicious cycle. And you know, we've talked about this several times, right, 0:05:26.120 --> 0:05:29.640 but now you have a situation where UM due to 0:05:29.720 --> 0:05:35.040 these UM energy policies, due to the military conflicts and 0:05:35.080 --> 0:05:39.200 geopolitic political conflicts that are going on, and due to 0:05:40.560 --> 0:05:43.000 UM you know, the tightening of the money supply in 0:05:43.040 --> 0:05:48.520 the United States, you've already got UM oil rising in 0:05:48.600 --> 0:05:53.640 all terms, but even more so in other country terms. Right, 0:05:53.720 --> 0:05:56.480 so if you think about the euro and the yen 0:05:57.880 --> 0:06:01.360 or even the yuan, um, you know, their currencies are 0:06:01.400 --> 0:06:03.599 down in the in the UK, their their currencies are 0:06:03.640 --> 0:06:07.560 down anywhere from five this year. Well, if oil is 0:06:07.720 --> 0:06:10.280 you know, ninety bucks or whatever, eighty eight bucks or 0:06:10.279 --> 0:06:11.960 whatever it is today, and then and then and oil 0:06:12.000 --> 0:06:14.719 prices are going higher, and then your currency is losing 0:06:14.800 --> 0:06:18.000 value versus the dollar. That's another ten or percent kicker 0:06:18.080 --> 0:06:20.480 on top of it. And then you get into the 0:06:20.520 --> 0:06:23.600 supply chain issues where energy could gap up even higher. 0:06:24.120 --> 0:06:29.120 You know, you've kind of got this perfect storm for um, 0:06:29.279 --> 0:06:32.479 you know, chaos really lack of a better words. But 0:06:32.480 --> 0:06:34.839 but in short, I think I think oil and energy 0:06:34.920 --> 0:06:37.720 is a huge, huge part of this, and energy is 0:06:37.720 --> 0:06:40.640 in many ways driving the geopolitical conflicts right now, right 0:06:41.600 --> 0:06:45.320 between Russia and Ukraine or in you know, Europe and Russia. 0:06:46.480 --> 0:06:49.279 Yeah you can't, you can't. Really, These are very sticky 0:06:49.320 --> 0:06:53.120 situations or interconnected situations. You can't really look at one 0:06:53.160 --> 0:06:57.120 without the other. Now, um, it seems that you know, 0:06:57.200 --> 0:07:01.159 this whole war with Russia is really being a you know, 0:07:01.160 --> 0:07:03.120 who knows where it started or whatever. But I mean, 0:07:03.120 --> 0:07:06.240 it's really about the energy right now, right, And it 0:07:06.279 --> 0:07:09.840 seems like Putin has come out and said that the uh, 0:07:10.160 --> 0:07:12.200 what do you say, the economy is of fake imaginary 0:07:12.240 --> 0:07:15.239 wealth are being inevitbly replaced by the economies of real 0:07:15.760 --> 0:07:17.960 assets or whatever, right, And I think he's talking about 0:07:18.120 --> 0:07:22.560 the fake FIAT system is being replaced with real commodities. 0:07:22.880 --> 0:07:26.360 And he said what he was like trolling. He's like, um, 0:07:26.400 --> 0:07:28.360 what are you gonna do heat your homes with social 0:07:28.360 --> 0:07:32.440 media companies? He said something to that effect. You know, Um, 0:07:32.480 --> 0:07:34.200 but I mean he he has some very good points. 0:07:34.200 --> 0:07:37.320 I mean, you know, I think Putin is one of 0:07:37.320 --> 0:07:40.760 the smarter world leaders that there is. And and you know, 0:07:41.680 --> 0:07:44.120 I think to a certain extent he's played his cards 0:07:44.200 --> 0:07:48.280 pretty well. I don't necessarily think he's a three DHS genius. 0:07:48.320 --> 0:07:52.080 But um, you know, you can't credit him or you 0:07:52.120 --> 0:07:55.000 can't discredit him for the moves he's made so far. Yeah, 0:07:55.240 --> 0:07:57.600 So if you know, we have the situation going on 0:07:57.640 --> 0:08:00.280 to your point, um, gold priced in euros or yen 0:08:00.480 --> 0:08:02.600 is way is a way bigger problem than it is 0:08:02.600 --> 0:08:05.880 priced in dollars. Um, So I'm saying, uh, kind of 0:08:05.960 --> 0:08:07.680 kind of like back to this this war, if the 0:08:07.680 --> 0:08:10.520 fence trying to fight inflation, um part of keeping the 0:08:10.560 --> 0:08:13.480 dollar propped up or making the dollar stronger than it 0:08:13.560 --> 0:08:16.160 helps offset that inflation that we're seeing versus other nations 0:08:16.160 --> 0:08:19.360 that are forced to buy oil with with a d 0:08:19.640 --> 0:08:22.960 de valued currency. But on top of it, then they're 0:08:23.000 --> 0:08:26.560 being forced well not maybe being forced, but like Japan 0:08:26.800 --> 0:08:29.960 is like trying to maybe prop up their currencies at 0:08:30.000 --> 0:08:31.760 the same time as they're having to import oil at 0:08:31.800 --> 0:08:36.840 these crazy levels, right, so they're down at the same 0:08:36.880 --> 0:08:39.360 time that they're doing to yield curve control on their bonds, 0:08:39.400 --> 0:08:41.320 which so they're there, they have they have a bunch 0:08:41.320 --> 0:08:44.400 of cross currents going at the Bank of Japan here. Yeah, 0:08:44.760 --> 0:08:47.680 so you're obviously the dollar milkshake guy. The theory is 0:08:47.720 --> 0:08:49.520 that the dollar will suck up the liquidity from all 0:08:49.559 --> 0:08:51.640 the other currencies and be the last one standing. We're 0:08:51.679 --> 0:08:55.200 definitely witnessing that plane. But this is kind of all 0:08:55.240 --> 0:08:57.760 part of that, right, So as Japan is forced to 0:08:57.800 --> 0:08:59.720 defend it, I mean, they're going to continue to value. 0:09:01.640 --> 0:09:05.280 So my so my thesis has always been that whether 0:09:05.320 --> 0:09:09.480 the Fed wants it or not, ultimately the dollar will 0:09:09.480 --> 0:09:11.680 get away from them to the upside. And the reason 0:09:11.679 --> 0:09:15.160 I say get away from them is I think currently 0:09:15.200 --> 0:09:17.319 they want a stronger dollar, and we should probably talk 0:09:17.360 --> 0:09:20.920 about that. But even I think that before this is 0:09:20.960 --> 0:09:24.199 all said and done, um, the dollar will go higher 0:09:24.200 --> 0:09:26.360 than they want it to go. And it doesn't mean 0:09:26.360 --> 0:09:27.679 it's going to go on a straight line, and there 0:09:27.679 --> 0:09:30.760 will no doubt be periods of dollar weakness along the way. 0:09:31.760 --> 0:09:34.240 But you know the well, even though the Fed might 0:09:34.280 --> 0:09:36.160 want a stronger dollar in the short term, they don't 0:09:36.200 --> 0:09:39.200 want a dollar that's rising so fast that it's out 0:09:39.240 --> 0:09:42.600 of control because that will literally wreck the entire monetary system. 0:09:42.679 --> 0:09:44.960 You know, the monetary system wasn't set up for a 0:09:45.040 --> 0:09:49.160 for a for a continually increasing dollar. It will literally 0:09:49.200 --> 0:09:51.880 cause the system to crash. So while they may want 0:09:51.920 --> 0:09:54.160 the dollar higher in the short term, I don't think 0:09:54.160 --> 0:09:56.840 they want it significantly higher in the long term. But 0:09:57.000 --> 0:10:01.440 ultimately I think that will happen. Now in the short term, 0:10:01.480 --> 0:10:05.600 I think that that they actually do want a stronger 0:10:05.600 --> 0:10:09.160 dollar because a stronger dollar right now accomplishes several things, 0:10:09.480 --> 0:10:11.440 and I think some of these things they would admit to, 0:10:11.559 --> 0:10:14.280 and some of them I think they would not admit to. 0:10:14.400 --> 0:10:17.880 And some others they may vehemently deny even though really 0:10:17.920 --> 0:10:21.920 they do want it. Um but you know, right now, 0:10:23.120 --> 0:10:27.840 for better for worse. Even though they want inflation, a 0:10:27.920 --> 0:10:30.480 small amount of inflation over time that allows them to 0:10:30.640 --> 0:10:34.319 inflate away the debt, they don't want double digit inflation 0:10:34.400 --> 0:10:37.920 year over year. And the reason they don't want that 0:10:38.040 --> 0:10:40.720 high of inflation year over years because that is very 0:10:40.760 --> 0:10:46.400 politically hard to handle. UM. It causes too much stress 0:10:46.480 --> 0:10:49.240 in the in the in the local economy, it causes 0:10:49.559 --> 0:10:54.920 citizens to push back on business leaders, government leaders, officials, etcetera, etcetera. 0:10:55.320 --> 0:10:57.600 So the government would love to get three or four 0:10:57.760 --> 0:11:00.199 that they say they're their target is too. I think 0:11:00.240 --> 0:11:03.679 they would love three or four percent inflation for you know, 0:11:04.080 --> 0:11:08.560 five or ten years and they inflate the dead away. 0:11:08.679 --> 0:11:10.920 I think they would absolutely love that. The problem is 0:11:11.000 --> 0:11:14.960 it's very hard to get three or four percent consistent inflation. 0:11:15.040 --> 0:11:17.680 What you what you get is this, you know, very lumpy, 0:11:17.840 --> 0:11:21.160 you know, crazy inflation that we've had over the last 0:11:21.559 --> 0:11:26.040 college year or two years. And so because of the 0:11:26.080 --> 0:11:29.880 political pushback that they're getting and because of um, what's 0:11:29.920 --> 0:11:32.280 going on in the global economy with all this inflation, 0:11:32.840 --> 0:11:36.120 they are trying to dial it back down, not the 0:11:36.200 --> 0:11:39.480 least of which is their reputation, right. They don't want 0:11:39.480 --> 0:11:42.079 to blow up their reputation, and they're very embarre. The FED, 0:11:42.080 --> 0:11:45.199 I'm talking about the Fed's very embarrassed that inflation came 0:11:45.240 --> 0:11:47.400 in so high and they and they were they were 0:11:47.400 --> 0:11:50.960 wrong on the transitory nation nature of it, and so 0:11:51.520 --> 0:11:53.839 they want to get it back down for a few reasons. 0:11:53.880 --> 0:11:55.200 They want to get it back down in order to 0:11:55.240 --> 0:11:57.360 restore their reputation, but they also want to get it 0:11:57.400 --> 0:12:02.280 back down so that, you know, the pushback economically and politically, 0:12:02.720 --> 0:12:06.640 UM is less um. And the way that they're trying 0:12:06.679 --> 0:12:10.720 to do that is by killing demand. Right. They don't 0:12:10.720 --> 0:12:13.640 really have control over the supply side of the equation, 0:12:14.080 --> 0:12:16.560 but they think they have control over the demand side 0:12:16.559 --> 0:12:20.520 of the equation. And if you tighten monetary supply, which 0:12:20.600 --> 0:12:23.319 means you know, you're taking liquidity out of the system, 0:12:23.400 --> 0:12:27.480 either through open market operations of the FED or through 0:12:27.559 --> 0:12:32.240 raising interest rates, tighter monetary supply should lead to less growth, 0:12:32.280 --> 0:12:36.040 and it should, you know, push demand down. And so 0:12:36.320 --> 0:12:40.679 they're everybody broken. Then nobody buys anything, right, Well, I mean, 0:12:40.760 --> 0:12:42.880 here's here's the funny thing mark. It's not funny, it's 0:12:42.880 --> 0:12:47.880 actually tragic. But you know, I think again, for better 0:12:47.920 --> 0:12:51.280 for worse. I think Powell has been about as clear 0:12:52.480 --> 0:12:55.480 as clear a speaking central banker as I've ever heard. 0:12:55.800 --> 0:12:58.120 All year, he has come out and said, we need 0:12:58.200 --> 0:13:01.920 to get inflation under control. It's our primary concern. We're 0:13:01.920 --> 0:13:06.400 going to raise rates, and whenever the market has misinterpreted him, 0:13:06.440 --> 0:13:08.160 he's come out a few days later, a few weeks 0:13:08.200 --> 0:13:11.400 later and said, hey, hey, hey, I want to be clear. 0:13:11.880 --> 0:13:14.680 You guys aren't listening to me. I'm going to raise rates, 0:13:15.080 --> 0:13:17.600 and we are going to have some pain. And that 0:13:17.679 --> 0:13:19.800 means that people are gonna have to get paid less, 0:13:19.840 --> 0:13:22.120 they're gonna have to lose their jobs, and house prices 0:13:22.360 --> 0:13:24.800 are gonna have to come down. And even though those 0:13:24.840 --> 0:13:26.960 are bad things, that will be less bad than letting 0:13:27.000 --> 0:13:29.600 inflation run hot. I mean, he's been very very clear 0:13:29.640 --> 0:13:31.959 about it. Now, you might think he's lying, you might 0:13:32.000 --> 0:13:35.440 think that he's wrong, you might think he's misguided. That's fine, 0:13:35.559 --> 0:13:39.240 but there's really no confusion in what his words are saying. 0:13:40.080 --> 0:13:43.199 And so, you know, and so I think that raising 0:13:43.320 --> 0:13:46.640 rates and getting the dollar stronger is what they are 0:13:46.679 --> 0:13:50.280 trying to do in order to get inflation down. Now 0:13:50.360 --> 0:13:55.160 ironically or an ironically, depending on I guess where you're sitting. 0:13:55.880 --> 0:13:59.319 Is that by trying to tampen down inflation domestically by 0:13:59.400 --> 0:14:05.360 raising the dollar, they're actually exacerbating inflation overseas. And what 0:14:05.400 --> 0:14:07.400 I mean by that is is if the dollar is 0:14:07.480 --> 0:14:10.960 going up ten or fiftcent, that means other currencies are 0:14:11.000 --> 0:14:14.160 going down ten or right. And so if we already 0:14:14.160 --> 0:14:16.160 have high levels of inflation in the US and now 0:14:16.200 --> 0:14:19.720 those same goods are even more expensive in euro terms 0:14:19.800 --> 0:14:24.680 or end terms or Australian dollars or whatever it is, um, 0:14:24.720 --> 0:14:28.640 you know, and it's causing those other countries to support 0:14:28.720 --> 0:14:31.960 their currencies because their currencies are losing value too much. 0:14:32.040 --> 0:14:35.360 And those other countries, in addition to trying to support 0:14:35.360 --> 0:14:38.160 their currencies, they're also trying to support their bond markets. 0:14:38.920 --> 0:14:41.960 UM through some form of QE. You get into a 0:14:42.000 --> 0:14:45.760 situation where you're exacerbating the the same issues that the 0:14:45.800 --> 0:14:50.760 FETE is fighting domestically are being exacerbated outside the United States. 0:14:51.320 --> 0:14:54.280 And I think we've talked about this before, but this 0:14:54.640 --> 0:14:57.800 whole situation, UM, there's a name for it. It's called 0:14:57.800 --> 0:15:01.360 Triffin's dilemma. And Triffin was an economist back in the 0:15:01.400 --> 0:15:03.200 sixties and heat coined to this term, and he said, 0:15:03.880 --> 0:15:08.160 if an individual countries currency is used as a domestic 0:15:08.160 --> 0:15:12.200 currency and simultaneously used as the global currency, at some 0:15:12.320 --> 0:15:15.600 point along the way, it will come into con the 0:15:15.600 --> 0:15:17.960 needs of the domestic economy will come into conflict with 0:15:18.000 --> 0:15:20.360 the needs of the global economy. And and that's literally 0:15:20.440 --> 0:15:24.000 right exactly where we're at. Um, you know, the rest 0:15:24.000 --> 0:15:27.320 of the world, because it trades in dollars, and because 0:15:27.440 --> 0:15:30.880 the dollar is higher, their local currencies are worthless. It's 0:15:30.880 --> 0:15:34.520 making their funding costs higher, it's causing their economies to slow, 0:15:35.040 --> 0:15:38.960 and it's just a real mess, right, And so you know, 0:15:39.000 --> 0:15:41.440 we're right in the heart of this Triffan's dilemma where 0:15:41.480 --> 0:15:44.760 the US needs one thing and the global economy needs 0:15:44.760 --> 0:15:47.080 the other, and the FED and the other central banks 0:15:47.080 --> 0:15:50.080 around the world are trying to thread this very very 0:15:50.080 --> 0:15:56.440 small needle hole. Yeah, the proverbial soft landing, right. Um, Yeah, 0:15:56.520 --> 0:15:58.200 I was saying, how I think that's just such a 0:15:58.200 --> 0:16:01.080 horrible analogy where you kind think that like they're this 0:16:01.240 --> 0:16:04.160 fighter jet with a million controls, but really it's like 0:16:04.160 --> 0:16:06.520 a hot air balloon. Right. All they can really do 0:16:06.640 --> 0:16:11.240 is like the soft landing is when you're both you 0:16:11.280 --> 0:16:12.920 and your friend are both thrown out of a third 0:16:12.960 --> 0:16:15.240 story window. He it's the ground and you land on him, 0:16:15.280 --> 0:16:17.600 so for you it's a little softer. But I mean 0:16:17.640 --> 0:16:20.520 that's essentially what it is. Um you know. And then 0:16:21.000 --> 0:16:23.240 there's one other part of this that I didn't mention yet, 0:16:23.280 --> 0:16:25.200 and I don't remember if we've talked about this before 0:16:25.280 --> 0:16:29.200 or not. We probably have, um I put I personally 0:16:29.240 --> 0:16:33.240 believe that there's another thing that's going on here that, 0:16:33.400 --> 0:16:36.200 while not the direct reason that they're raising rates, is 0:16:36.240 --> 0:16:39.280 a is a byproduct that they don't mind, and that 0:16:39.440 --> 0:16:41.960 is that I think that part of the reason that 0:16:42.000 --> 0:16:47.239 they raise rates is it at least in the short term. 0:16:47.280 --> 0:16:49.560 Now we can probably have a big argument of how 0:16:49.560 --> 0:16:51.040 this ends up in the long run, but in the 0:16:51.080 --> 0:16:55.160 short term it cements the United States position as then 0:16:55.280 --> 0:16:56.920 on the top of the mountain. And what I mean 0:16:57.000 --> 0:16:59.640 by that is if the whole world is slowing down 0:16:59.680 --> 0:17:02.680 a can omically and having these these uh, these problems, 0:17:03.480 --> 0:17:07.320 but the US is in a relatively better place, and 0:17:07.640 --> 0:17:11.159 by raising rates in the US because that's what the 0:17:11.240 --> 0:17:13.920 US needs, but by not but by you know, but 0:17:14.160 --> 0:17:17.959 also hurting other countries in the process. Even if everybody 0:17:18.040 --> 0:17:20.119 is going down, those other countries are coming under more 0:17:20.160 --> 0:17:23.000 pressure than the United States is, so on a relative basis, 0:17:23.040 --> 0:17:25.560 the US is securing its spot on top of the mountain. 0:17:25.840 --> 0:17:28.399 The other part that it does is I think that 0:17:28.520 --> 0:17:33.119 it if it will force countries to choose sides. And 0:17:33.160 --> 0:17:35.840 what I mean by that is, I think we can 0:17:35.880 --> 0:17:38.760 probably all agree that, you know, Whereas for the last 0:17:38.760 --> 0:17:40.639 twenty or thirty years, the whole world was kind of 0:17:40.640 --> 0:17:44.959 moving towards one globalized economy and you know, peaceful, you know, 0:17:45.040 --> 0:17:47.440 one world, you know, over the last couple of years 0:17:47.520 --> 0:17:49.640 that that started the fracture. And now we're we're going 0:17:49.680 --> 0:17:54.119 away from globalization more towards the globalization, and we're gonna 0:17:54.119 --> 0:17:56.280 have rather than have one supply chain, we're gonna have 0:17:56.320 --> 0:17:59.320 to or multiple supply chains. Countries are going to have 0:17:59.400 --> 0:18:02.120 to try to become more self sufficient rather than relying 0:18:02.160 --> 0:18:05.399 on others. And in that whole you know, in that 0:18:05.480 --> 0:18:09.800 whole dynamic, there's you know, East versus West, China versus 0:18:09.800 --> 0:18:12.800 the United States, Russia versus the United States, Russia versus Europe. 0:18:13.000 --> 0:18:18.159 So there's all these geopolitical um you know issues as well. 0:18:18.800 --> 0:18:21.840 And I think by putting countries that are maybe on 0:18:21.920 --> 0:18:24.239 the margin, you know, they're not quite sure whether they 0:18:24.240 --> 0:18:25.800 would be better off to go with the East or 0:18:25.800 --> 0:18:27.800 the West, or with the U S or not with 0:18:27.840 --> 0:18:30.159 the U S. If the U S can put them 0:18:30.200 --> 0:18:34.200 in a vulnerable spot, UM, it could then force them 0:18:34.280 --> 0:18:36.840 or try to force them or at least, you know, 0:18:37.280 --> 0:18:41.600 manipulate that country um into join in the US and 0:18:41.920 --> 0:18:44.439 you know, maybe the USS something like, you know, we 0:18:44.480 --> 0:18:46.640 will help you out with your funding needs, or we'll 0:18:46.640 --> 0:18:48.399 give you a swap line, or we'll help you on 0:18:48.440 --> 0:18:51.160 some trade deals, give you a break on some prices, 0:18:51.200 --> 0:18:53.800 but in in exchange, we're gonna need you to vote 0:18:53.800 --> 0:18:55.719 with us at the u N on this thing, or 0:18:55.720 --> 0:18:58.359 we're gonna need you to sign this trade agreement or 0:18:58.400 --> 0:19:01.879 whatever it is. But I think only forward where in 0:19:01.920 --> 0:19:04.680 the past we've you know, handed out swap lines, are 0:19:05.040 --> 0:19:09.199 you know, been more willing to use dollar policy to 0:19:09.240 --> 0:19:11.320 help the global economy. I think now we're going to 0:19:11.400 --> 0:19:14.280 be more focused on using the dollar to help the 0:19:14.359 --> 0:19:18.200 U S specifically, and then helping our friends where where 0:19:19.200 --> 0:19:22.560 where we think it's most advantageous to do so yeah, no, 0:19:22.600 --> 0:19:26.400 I agree with that. I think, um, what's interesting though, 0:19:26.440 --> 0:19:28.720 is back to as I said that Putin's comment before 0:19:28.760 --> 0:19:32.200 about the the fake economy versus the real economy. If 0:19:32.200 --> 0:19:36.440 you're a third world nation that you desperately need whatever commodity, 0:19:36.480 --> 0:19:39.600 wheat or you know, energy inputs or whatever, what is 0:19:39.600 --> 0:19:43.640 the US can offer you dollars? That doesn't solve your problem, right, 0:19:43.760 --> 0:19:45.679 because if a dollar is only a medium exchange, what 0:19:45.720 --> 0:19:48.399 I need is the commodities. I need the inputs. So 0:19:48.520 --> 0:19:51.439 Russia says, hey, here's the inputs, and and the U says, well, 0:19:51.440 --> 0:19:54.399 here's the dollars, Like which one you're you need the inputs, right, 0:19:54.440 --> 0:19:56.240 And so that that kind of creates it. I think 0:19:56.240 --> 0:19:57.720 there's a I think it's a little bit of both. 0:19:57.760 --> 0:20:00.119 So I I understand the point you're making, and I'm 0:20:00.119 --> 0:20:02.639 an energy basis and maybe like a fertilizer basis and 0:20:02.680 --> 0:20:04.720 a lot of these other resources. I totally get you 0:20:04.720 --> 0:20:07.800 in and I think we're in agreement there. Where I 0:20:07.840 --> 0:20:12.000 think that maybe that view is a little bit overplayed 0:20:12.119 --> 0:20:14.239 is again, if everybody goes to this, right, if if 0:20:14.240 --> 0:20:17.080 everybody now goes to self sufficiency and you know, no 0:20:17.160 --> 0:20:20.399 more trading and you know, only trading with your friends. 0:20:20.400 --> 0:20:24.280 I think the US is probably, on an overall basis 0:20:24.800 --> 0:20:27.560 the most self sufficient country in the world. And while 0:20:27.600 --> 0:20:31.719 we might not manufacture iPads and tractors and all that 0:20:31.800 --> 0:20:34.959 kind of stuff, would do manufacture more food and you know, 0:20:35.160 --> 0:20:37.600 the world in the US than anywhere else in the world. 0:20:38.200 --> 0:20:40.760 And if we get into this energy crisis, that then 0:20:40.760 --> 0:20:44.639 translates into a food crisis. Right. I think the food 0:20:44.680 --> 0:20:48.159 that we create here will be pretty be valuable and 0:20:48.160 --> 0:20:51.240 will be in in need, and that itself could be 0:20:51.280 --> 0:20:55.280 a bargaining tool. Um. But but I do get your point, 0:20:55.320 --> 0:20:58.560 and this is what makes it so interesting, right, Um. 0:20:59.119 --> 0:21:02.320 I think to a an extent, we both agree that 0:21:02.440 --> 0:21:06.720 the end of FIAT or or the or the what's 0:21:06.720 --> 0:21:08.520 the right way, that the end of the monetary system 0:21:08.560 --> 0:21:12.240 as we know it is probably on the horizon. Um. 0:21:12.280 --> 0:21:16.080 And whether that is successful or not successful, I think 0:21:16.560 --> 0:21:20.840 the transition or the lack of transition will probably be chaotic. Yeah, 0:21:21.000 --> 0:21:22.800 And the question is how how far can they keep 0:21:22.880 --> 0:21:24.600 kicking the can? But we know at some point that 0:21:24.720 --> 0:21:29.439 can and absolutely we I don't know about you, but 0:21:29.720 --> 0:21:31.720 I've thought, like a lot of other people, thought that 0:21:31.760 --> 0:21:34.640 it would have come already, but they can pull more 0:21:34.680 --> 0:21:38.280 magic tricks out than you have to guilty, guilty, many more, 0:21:38.560 --> 0:21:42.520 to be honest, that that's what I mean. I would 0:21:42.520 --> 0:21:44.679 have guessed this would have happened ten years ago, you know, 0:21:44.720 --> 0:21:47.840 between two thousand eleven and after after everything we went 0:21:47.840 --> 0:21:50.720