Speaker 1: All right, Brent Johnson, Santiago Capital on Twitter. I always
Speaker 1: love sitting down, hanging out with you and catching up,
Speaker 1: and I'm excited what we have to talk about today.
Speaker 1: So let's just get right into it if you want
Speaker 1: to get to a philosophical level, but even just like
Speaker 1: a realistic level, like the whole world is based off
Speaker 1: of energy, Like the whole world is based off of energy.
Speaker 1: And it seems like through disastrous policy decisions over the
Speaker 1: last decade of shutting down energy throughout Europe and even
Speaker 1: the United States UM, and through inflationary policies, we've kind
Speaker 1: of created this perfect storm UM and it seems that
Speaker 1: it's put a lot of pressure onto UM the sovereigns,
Speaker 1: if you will. Right, So, now you have Germany, for example,
Speaker 1: that's been a net exporter, but now they're a net
Speaker 1: importer or their energy costs are so high now they're
Speaker 1: having to shut their manufacturing down, which is bad, that's
Speaker 1: long term effects of d industrialization. But they're also now
Speaker 1: it looks like a lot of nations are being forced
Speaker 1: to dump maybe US treasuries to get the money to
Speaker 1: bring in the energy UM. And at the same time,
Speaker 1: it looks like the Fed is trying to fight inflation,
Speaker 1: which most of inflation is being caused by energy. So
Speaker 1: it seems like this energy, it seems like energy and
Speaker 1: this inflationary system is like at the center, the epicenter
Speaker 1: of this entire storm the world is is kind of
Speaker 1: facing right now. I mean, it's it's the end of
Speaker 1: this debt cycle, potentially the sovereign long term debt cycle.
Speaker 1: But then you have energy that's maybe the pin pricking
Speaker 1: the bubble. How would you how would you look at
Speaker 1: that now? I I think they're I think that's absolutely right.
Speaker 1: Like energy is a huge part of what's going on
Speaker 1: now for a couple of reasons. Um. Number one, you know,
Speaker 1: anybody who's seeing dune right knows that the spice must
Speaker 1: flow right. And in many ways, you know, oil is
Speaker 1: the spice that keeps the global economy running. So to
Speaker 1: think that we could talk about all these big macro
Speaker 1: events that are going on and that somehow energy wasn't
Speaker 1: a part of it would be kind of silly. Um.
Speaker 1: So I think whether it's a byproduct of everything else
Speaker 1: that's going on, or if that's the cause, I I
Speaker 1: don't really know, but I know it's a huge factor. Um.
Speaker 1: And to your point. You know, these these uh all
Speaker 1: use the word disastrous. People can use whatever the report
Speaker 1: that they want. These these these kind of disastrous energy
Speaker 1: policies and green mandates, um that have been put in
Speaker 1: place before we were ready to have any kind of
Speaker 1: a transition is kind of exacerbating it, right and so
Speaker 1: and and of course, the way I always come out,
Speaker 1: I I always come at from the big picture down
Speaker 1: and I and you know, my focus is on currencies.
Speaker 1: It's important to to understand that there's a couple of
Speaker 1: dynamics that affect currencies that that are that are directly
Speaker 1: a tied that are directly tied to energy, right um.
Speaker 1: And then this plays into geopolitics and military issues that
Speaker 1: are going on with Russia and China and Ukraine and Europe. Right.
Speaker 1: So it's all kind of interconnected. It's hard to it's
Speaker 1: hard to talk about just oil without seeping into these
Speaker 1: other areas. But but you know, obviously the big issue
Speaker 1: with oil and with many other commodities is that they're
Speaker 1: priced and typically traded in dollars, and you know, whether
Speaker 1: you're doing business in the United States, that's typically the case.
Speaker 1: That's changing a bit on the edges, But by and large,
Speaker 1: the world still trades on dollars, and energy trade around
Speaker 1: the world takes place in dollars. Part of the issue
Speaker 1: that's happening now is that over the last let's just
Speaker 1: call it ten years, UM, the US has become more
Speaker 1: self sufficient in energy terms. Now again, I think there
Speaker 1: was a couple of years where we were actually a
Speaker 1: net exporter. I think in the last year we're kind
Speaker 1: of maybe a march back to being a marginal net importer. Um.
Speaker 1: It kind of depends on whether shales currently pumping or not.
Speaker 1: But but this is important for a couple of reasons
Speaker 1: because as the US becomes more energy self sufficient and
Speaker 1: is not it does not need to buy oil from
Speaker 1: the Middle East or Venezuela or Russia or wherever it is.
Speaker 1: Um that that not only helps their domestic industry, but
Speaker 1: it also ends up meaning that less dollars are getting
Speaker 1: distributed outside the United States. Right, for years and years
Speaker 1: and years, we were a huge net oil importers. So
Speaker 1: we would the oil would come in and the dollars
Speaker 1: would go out, and then those dollars would exist in
Speaker 1: the eurodollar market and it would provide liquidity for the
Speaker 1: eurodollar market. But as the US has become more energy
Speaker 1: self sufficient. They don't have to export dollars for as
Speaker 1: many imports of energy as they used to and so
Speaker 1: but but a big part of it is that a
Speaker 1: lot of the US dollar debt that exists in the
Speaker 1: eurodollar market was extended or put in place. However, you
Speaker 1: want to think about that while the US was exporting
Speaker 1: a lot of dollars. So you have a situation and
Speaker 1: where a lot of credit was extended and a lot
Speaker 1: of debt was taking on when there was a lot
Speaker 1: of liquidity. But now moving forward, due to the fact
Speaker 1: that we're exporting fewer dollars and that the US is
Speaker 1: tightening monetary policy, it just means that there's less dollars circulating,
Speaker 1: not just in the United States, but especially in the
Speaker 1: euro dollar market. And so then it just becomes this
Speaker 1: vicious cycle. And you know, we've talked about this several times, right,
Speaker 1: but now you have a situation where UM due to
Speaker 1: these UM energy policies, due to the military conflicts and
Speaker 1: geopolitic political conflicts that are going on, and due to
Speaker 1: UM you know, the tightening of the money supply in
Speaker 1: the United States, you've already got UM oil rising in
Speaker 1: all terms, but even more so in other country terms. Right,
Speaker 1: so if you think about the euro and the yen
Speaker 1: or even the yuan, um, you know, their currencies are
Speaker 1: down in the in the UK, their their currencies are
Speaker 1: down anywhere from five this year. Well, if oil is
Speaker 1: you know, ninety bucks or whatever, eighty eight bucks or
Speaker 1: whatever it is today, and then and then and oil
Speaker 1: prices are going higher, and then your currency is losing
Speaker 1: value versus the dollar. That's another ten or percent kicker
Speaker 1: on top of it. And then you get into the
Speaker 1: supply chain issues where energy could gap up even higher.
Speaker 1: You know, you've kind of got this perfect storm for um,
Speaker 1: you know, chaos really lack of a better words. But
Speaker 1: but in short, I think I think oil and energy
Speaker 1: is a huge, huge part of this, and energy is
Speaker 1: in many ways driving the geopolitical conflicts right now, right
Speaker 1: between Russia and Ukraine or in you know, Europe and Russia.
Speaker 1: Yeah you can't, you can't. Really, These are very sticky
Speaker 1: situations or interconnected situations. You can't really look at one
Speaker 1: without the other. Now, um, it seems that you know,
Speaker 1: this whole war with Russia is really being a you know,
Speaker 1: who knows where it started or whatever. But I mean,
Speaker 1: it's really about the energy right now, right, And it
Speaker 1: seems like Putin has come out and said that the uh,
Speaker 1: what do you say, the economy is of fake imaginary
Speaker 1: wealth are being inevitbly replaced by the economies of real
Speaker 1: assets or whatever, right, And I think he's talking about
Speaker 1: the fake FIAT system is being replaced with real commodities.
Speaker 1: And he said what he was like trolling. He's like, um,
Speaker 1: what are you gonna do heat your homes with social
Speaker 1: media companies? He said something to that effect. You know, Um,
Speaker 1: but I mean he he has some very good points.
Speaker 1: I mean, you know, I think Putin is one of
Speaker 1: the smarter world leaders that there is. And and you know,
Speaker 1: I think to a certain extent he's played his cards
Speaker 1: pretty well. I don't necessarily think he's a three DHS genius.
Speaker 1: But um, you know, you can't credit him or you
Speaker 1: can't discredit him for the moves he's made so far. Yeah,
Speaker 1: So if you know, we have the situation going on
Speaker 1: to your point, um, gold priced in euros or yen
Speaker 1: is way is a way bigger problem than it is
Speaker 1: priced in dollars. Um, So I'm saying, uh, kind of
Speaker 1: kind of like back to this this war, if the
Speaker 1: fence trying to fight inflation, um part of keeping the
Speaker 1: dollar propped up or making the dollar stronger than it
Speaker 1: helps offset that inflation that we're seeing versus other nations
Speaker 1: that are forced to buy oil with with a d
Speaker 1: de valued currency. But on top of it, then they're
Speaker 1: being forced well not maybe being forced, but like Japan
Speaker 1: is like trying to maybe prop up their currencies at
Speaker 1: the same time as they're having to import oil at
Speaker 1: these crazy levels, right, so they're down at the same
Speaker 1: time that they're doing to yield curve control on their bonds,
Speaker 1: which so they're there, they have they have a bunch
Speaker 1: of cross currents going at the Bank of Japan here. Yeah,
Speaker 1: so you're obviously the dollar milkshake guy. The theory is
Speaker 1: that the dollar will suck up the liquidity from all
Speaker 1: the other currencies and be the last one standing. We're
Speaker 1: definitely witnessing that plane. But this is kind of all
Speaker 1: part of that, right, So as Japan is forced to
Speaker 1: defend it, I mean, they're going to continue to value.
Speaker 1: So my so my thesis has always been that whether
Speaker 1: the Fed wants it or not, ultimately the dollar will
Speaker 1: get away from them to the upside. And the reason
Speaker 1: I say get away from them is I think currently
Speaker 1: they want a stronger dollar, and we should probably talk
Speaker 1: about that. But even I think that before this is
Speaker 1: all said and done, um, the dollar will go higher
Speaker 1: than they want it to go. And it doesn't mean
Speaker 1: it's going to go on a straight line, and there
Speaker 1: will no doubt be periods of dollar weakness along the way.
Speaker 1: But you know the well, even though the Fed might
Speaker 1: want a stronger dollar in the short term, they don't
Speaker 1: want a dollar that's rising so fast that it's out
Speaker 1: of control because that will literally wreck the entire monetary system.
Speaker 1: You know, the monetary system wasn't set up for a
Speaker 1: for a for a continually increasing dollar. It will literally
Speaker 1: cause the system to crash. So while they may want
Speaker 1: the dollar higher in the short term, I don't think
Speaker 1: they want it significantly higher in the long term. But
Speaker 1: ultimately I think that will happen. Now in the short term,
Speaker 1: I think that that they actually do want a stronger
Speaker 1: dollar because a stronger dollar right now accomplishes several things,
Speaker 1: and I think some of these things they would admit to,
Speaker 1: and some of them I think they would not admit to.
Speaker 1: And some others they may vehemently deny even though really
Speaker 1: they do want it. Um but you know, right now,
Speaker 1: for better for worse. Even though they want inflation, a
Speaker 1: small amount of inflation over time that allows them to
Speaker 1: inflate away the debt, they don't want double digit inflation
Speaker 1: year over year. And the reason they don't want that
Speaker 1: high of inflation year over years because that is very
Speaker 1: politically hard to handle. UM. It causes too much stress
Speaker 1: in the in the in the local economy, it causes
Speaker 1: citizens to push back on business leaders, government leaders, officials, etcetera, etcetera.
Speaker 1: So the government would love to get three or four
Speaker 1: that they say they're their target is too. I think
Speaker 1: they would love three or four percent inflation for you know,
Speaker 1: five or ten years and they inflate the dead away.
Speaker 1: I think they would absolutely love that. The problem is
Speaker 1: it's very hard to get three or four percent consistent inflation.
Speaker 1: What you what you get is this, you know, very lumpy,
Speaker 1: you know, crazy inflation that we've had over the last
Speaker 1: college year or two years. And so because of the
Speaker 1: political pushback that they're getting and because of um, what's
Speaker 1: going on in the global economy with all this inflation,
Speaker 1: they are trying to dial it back down, not the
Speaker 1: least of which is their reputation, right. They don't want
Speaker 1: to blow up their reputation, and they're very embarre. The FED,
Speaker 1: I'm talking about the Fed's very embarrassed that inflation came
Speaker 1: in so high and they and they were they were
Speaker 1: wrong on the transitory nation nature of it, and so
Speaker 1: they want to get it back down for a few reasons.
Speaker 1: They want to get it back down in order to
Speaker 1: restore their reputation, but they also want to get it
Speaker 1: back down so that, you know, the pushback economically and politically,
Speaker 1: UM is less um. And the way that they're trying
Speaker 1: to do that is by killing demand. Right. They don't
Speaker 1: really have control over the supply side of the equation,
Speaker 1: but they think they have control over the demand side
Speaker 1: of the equation. And if you tighten monetary supply, which
Speaker 1: means you know, you're taking liquidity out of the system,
Speaker 1: either through open market operations of the FED or through
Speaker 1: raising interest rates, tighter monetary supply should lead to less growth,
Speaker 1: and it should, you know, push demand down. And so
Speaker 1: they're everybody broken. Then nobody buys anything, right, Well, I mean,
Speaker 1: here's here's the funny thing mark. It's not funny, it's
Speaker 1: actually tragic. But you know, I think again, for better
Speaker 1: for worse. I think Powell has been about as clear
Speaker 1: as clear a speaking central banker as I've ever heard.
Speaker 1: All year, he has come out and said, we need
Speaker 1: to get inflation under control. It's our primary concern. We're
Speaker 1: going to raise rates, and whenever the market has misinterpreted him,
Speaker 1: he's come out a few days later, a few weeks
Speaker 1: later and said, hey, hey, hey, I want to be clear.
Speaker 1: You guys aren't listening to me. I'm going to raise rates,
Speaker 1: and we are going to have some pain. And that
Speaker 1: means that people are gonna have to get paid less,
Speaker 1: they're gonna have to lose their jobs, and house prices
Speaker 1: are gonna have to come down. And even though those
Speaker 1: are bad things, that will be less bad than letting
Speaker 1: inflation run hot. I mean, he's been very very clear
Speaker 1: about it. Now, you might think he's lying, you might
Speaker 1: think that he's wrong, you might think he's misguided. That's fine,
Speaker 1: but there's really no confusion in what his words are saying.
Speaker 1: And so, you know, and so I think that raising
Speaker 1: rates and getting the dollar stronger is what they are
Speaker 1: trying to do in order to get inflation down. Now
Speaker 1: ironically or an ironically, depending on I guess where you're sitting.
Speaker 1: Is that by trying to tampen down inflation domestically by
Speaker 1: raising the dollar, they're actually exacerbating inflation overseas. And what
Speaker 1: I mean by that is is if the dollar is
Speaker 1: going up ten or fiftcent, that means other currencies are
Speaker 1: going down ten or right. And so if we already
Speaker 1: have high levels of inflation in the US and now
Speaker 1: those same goods are even more expensive in euro terms
Speaker 1: or end terms or Australian dollars or whatever it is, um,
Speaker 1: you know, and it's causing those other countries to support
Speaker 1: their currencies because their currencies are losing value too much.
Speaker 1: And those other countries, in addition to trying to support
Speaker 1: their currencies, they're also trying to support their bond markets.
Speaker 1: UM through some form of QE. You get into a
Speaker 1: situation where you're exacerbating the the same issues that the
Speaker 1: FETE is fighting domestically are being exacerbated outside the United States.
Speaker 1: And I think we've talked about this before, but this
Speaker 1: whole situation, UM, there's a name for it. It's called
Speaker 1: Triffin's dilemma. And Triffin was an economist back in the
Speaker 1: sixties and heat coined to this term, and he said,
Speaker 1: if an individual countries currency is used as a domestic
Speaker 1: currency and simultaneously used as the global currency, at some
Speaker 1: point along the way, it will come into con the
Speaker 1: needs of the domestic economy will come into conflict with
Speaker 1: the needs of the global economy. And and that's literally
Speaker 1: right exactly where we're at. Um, you know, the rest
Speaker 1: of the world, because it trades in dollars, and because
Speaker 1: the dollar is higher, their local currencies are worthless. It's
Speaker 1: making their funding costs higher, it's causing their economies to slow,
Speaker 1: and it's just a real mess, right, And so you know,
Speaker 1: we're right in the heart of this Triffan's dilemma where
Speaker 1: the US needs one thing and the global economy needs
Speaker 1: the other, and the FED and the other central banks
Speaker 1: around the world are trying to thread this very very
Speaker 1: small needle hole. Yeah, the proverbial soft landing, right. Um, Yeah,
Speaker 1: I was saying, how I think that's just such a
Speaker 1: horrible analogy where you kind think that like they're this
Speaker 1: fighter jet with a million controls, but really it's like
Speaker 1: a hot air balloon. Right. All they can really do
Speaker 1: is like the soft landing is when you're both you
Speaker 1: and your friend are both thrown out of a third
Speaker 1: story window. He it's the ground and you land on him,
Speaker 1: so for you it's a little softer. But I mean
Speaker 1: that's essentially what it is. Um you know. And then
Speaker 1: there's one other part of this that I didn't mention yet,
Speaker 1: and I don't remember if we've talked about this before
Speaker 1: or not. We probably have, um I put I personally
Speaker 1: believe that there's another thing that's going on here that,
Speaker 1: while not the direct reason that they're raising rates, is
Speaker 1: a is a byproduct that they don't mind, and that
Speaker 1: is that I think that part of the reason that
Speaker 1: they raise rates is it at least in the short term.
Speaker 1: Now we can probably have a big argument of how
Speaker 1: this ends up in the long run, but in the
Speaker 1: short term it cements the United States position as then
Speaker 1: on the top of the mountain. And what I mean
Speaker 1: by that is if the whole world is slowing down
Speaker 1: a can omically and having these these uh, these problems,
Speaker 1: but the US is in a relatively better place, and
Speaker 1: by raising rates in the US because that's what the
Speaker 1: US needs, but by not but by you know, but
Speaker 1: also hurting other countries in the process. Even if everybody
Speaker 1: is going down, those other countries are coming under more
Speaker 1: pressure than the United States is, so on a relative basis,
Speaker 1: the US is securing its spot on top of the mountain.
Speaker 1: The other part that it does is I think that
Speaker 1: it if it will force countries to choose sides. And
Speaker 1: what I mean by that is, I think we can
Speaker 1: probably all agree that, you know, Whereas for the last
Speaker 1: twenty or thirty years, the whole world was kind of
Speaker 1: moving towards one globalized economy and you know, peaceful, you know,
Speaker 1: one world, you know, over the last couple of years
Speaker 1: that that started the fracture. And now we're we're going
Speaker 1: away from globalization more towards the globalization, and we're gonna
Speaker 1: have rather than have one supply chain, we're gonna have
Speaker 1: to or multiple supply chains. Countries are going to have
Speaker 1: to try to become more self sufficient rather than relying
Speaker 1: on others. And in that whole you know, in that
Speaker 1: whole dynamic, there's you know, East versus West, China versus
Speaker 1: the United States, Russia versus the United States, Russia versus Europe.
Speaker 1: So there's all these geopolitical um you know issues as well.
Speaker 1: And I think by putting countries that are maybe on
Speaker 1: the margin, you know, they're not quite sure whether they
Speaker 1: would be better off to go with the East or
Speaker 1: the West, or with the U S or not with
Speaker 1: the U S. If the U S can put them
Speaker 1: in a vulnerable spot, UM, it could then force them
Speaker 1: or try to force them or at least, you know,
Speaker 1: manipulate that country um into join in the US and
Speaker 1: you know, maybe the USS something like, you know, we
Speaker 1: will help you out with your funding needs, or we'll
Speaker 1: give you a swap line, or we'll help you on
Speaker 1: some trade deals, give you a break on some prices,
Speaker 1: but in in exchange, we're gonna need you to vote
Speaker 1: with us at the u N on this thing, or
Speaker 1: we're gonna need you to sign this trade agreement or
Speaker 1: whatever it is. But I think only forward where in
Speaker 1: the past we've you know, handed out swap lines, are
Speaker 1: you know, been more willing to use dollar policy to
Speaker 1: help the global economy. I think now we're going to
Speaker 1: be more focused on using the dollar to help the
Speaker 1: U S specifically, and then helping our friends where where
Speaker 1: where we think it's most advantageous to do so yeah, no,
Speaker 1: I agree with that. I think, um, what's interesting though,
Speaker 1: is back to as I said that Putin's comment before
Speaker 1: about the the fake economy versus the real economy. If
Speaker 1: you're a third world nation that you desperately need whatever commodity,
Speaker 1: wheat or you know, energy inputs or whatever, what is
Speaker 1: the US can offer you dollars? That doesn't solve your problem, right,
Speaker 1: because if a dollar is only a medium exchange, what
Speaker 1: I need is the commodities. I need the inputs. So
Speaker 1: Russia says, hey, here's the inputs, and and the U says, well,
Speaker 1: here's the dollars, Like which one you're you need the inputs, right,
Speaker 1: And so that that kind of creates it. I think
Speaker 1: there's a I think it's a little bit of both.
Speaker 1: So I I understand the point you're making, and I'm
Speaker 1: an energy basis and maybe like a fertilizer basis and
Speaker 1: a lot of these other resources. I totally get you
Speaker 1: in and I think we're in agreement there. Where I
Speaker 1: think that maybe that view is a little bit overplayed
Speaker 1: is again, if everybody goes to this, right, if if
Speaker 1: everybody now goes to self sufficiency and you know, no
Speaker 1: more trading and you know, only trading with your friends.
Speaker 1: I think the US is probably, on an overall basis
Speaker 1: the most self sufficient country in the world. And while
Speaker 1: we might not manufacture iPads and tractors and all that
Speaker 1: kind of stuff, would do manufacture more food and you know,
Speaker 1: the world in the US than anywhere else in the world.
Speaker 1: And if we get into this energy crisis, that then
Speaker 1: translates into a food crisis. Right. I think the food
Speaker 1: that we create here will be pretty be valuable and
Speaker 1: will be in in need, and that itself could be
Speaker 1: a bargaining tool. Um. But but I do get your point,
Speaker 1: and this is what makes it so interesting, right, Um.
Speaker 1: I think to a an extent, we both agree that
Speaker 1: the end of FIAT or or the or the what's
Speaker 1: the right way, that the end of the monetary system
Speaker 1: as we know it is probably on the horizon. Um.
Speaker 1: And whether that is successful or not successful, I think
Speaker 1: the transition or the lack of transition will probably be chaotic. Yeah,
Speaker 1: And the question is how how far can they keep
Speaker 1: kicking the can? But we know at some point that
Speaker 1: can and absolutely we I don't know about you, but
Speaker 1: I've thought, like a lot of other people, thought that
Speaker 1: it would have come already, but they can pull more
Speaker 1: magic tricks out than you have to guilty, guilty, many more,
Speaker 1: to be honest, that that's what I mean. I would
Speaker 1: have guessed this would have happened ten years ago, you know,
Speaker 1: between two thousand eleven and after after everything we went
Speaker 1: through in the global financial crisis, I thought we would
Speaker 1: have another crisis by two thousand eleven and two thousand
Speaker 1: fourteen at the end, at at the forest, right, And
Speaker 1: we did start to have a crisis in the Eurozone
Speaker 1: in two thousand eleven twelve. But you know, Mario Droggy
Speaker 1: kicked that can down the road better than anybody I've
Speaker 1: ever seen. And so here we are. And that's kind
Speaker 1: of how these big, big, you know, macro trends, they
Speaker 1: always take longer than you think that they're going to take.
Speaker 1: And you know, and that's why I've started saying that,
Speaker 1: you know, I mean, this could last another three years,
Speaker 1: maybe last another five years, ten years, I don't really know.
Speaker 1: But what I do think, and I think you agree,
Speaker 1: is that you know, we were not only are we
Speaker 1: coming up on the cans in the road, but there's
Speaker 1: more than one can, right we we we we we've
Speaker 1: not only kicked economic problems down the road. We've kicked
Speaker 1: social problems down the road, We've kicked political problems down
Speaker 1: the road, We've kicked geopolitical problems down the road. And
Speaker 1: the other thing is it's not just us, Like, you know,
Speaker 1: Europe's kicked all these cans down the road, and uh,
Speaker 1: China's kicked all these cans in Japan, and also you know,
Speaker 1: all of these countries have kicked all these cans down
Speaker 1: the road. And now the whole I feel like the
Speaker 1: whole world is converging on this intersection, and this intersection
Speaker 1: is just filled with cans. Yeah, and you know it's
Speaker 1: gonna be very hard to clear all those cans out
Speaker 1: of the way without somebody getting hurt. And you know,
Speaker 1: it just I don't know what will happen. I just
Speaker 1: don't think it will be smooth. And and so that's
Speaker 1: kind of where I come down. I think the US
Speaker 1: still has the longest road ahead of us, you know,
Speaker 1: but I think to the to the point you were making,
Speaker 1: I would agree with I think, uh, you know, we
Speaker 1: go into a multipolar world. We probably have three or
Speaker 1: four kind of economic trade zones. The US is more
Speaker 1: isolated probably just maybe northern hemisphere, northern southern hemisphere kind
Speaker 1: of thing like that. But I want to jump back
Speaker 1: to what you were talking about with the maybe the
Speaker 1: FED kind of fighting back weaponizing the dollar kind of
Speaker 1: a thing. Um. I know, I remember in Miami we
Speaker 1: were hanging out by the pool that day and we
Speaker 1: were kind of talking about that topic specifically. But I
Speaker 1: thought I had seen you on Twitter also saying that
Speaker 1: you don't think the FED. Anyone who thinks the FED
Speaker 1: needs to defend the dollar doesn't understand it or something
Speaker 1: to something that something that effect, right, So like the
Speaker 1: FED would you were kind of like taking the position
Speaker 1: like what do you mean the FET needs to protect
Speaker 1: the all the fect to have to protect anything? Um,
Speaker 1: But now you're saying the FED might be actually trying
Speaker 1: to fight back. Well, so maybe we have a definition
Speaker 1: of terms problem. Right. I view what the FET is
Speaker 1: doing as offense. I don't view it as a defense. Right.
Speaker 1: When when an emerging markets currency is plumbing and they
Speaker 1: raise rates in order to save it from following to zero,
Speaker 1: you know, and too attract capital, to me, that is
Speaker 1: defending a currency. But if you're if you're already the
Speaker 1: strongest currency and you continue to raise rates even though
Speaker 1: money is already flowing into your currency. To me, to me,
Speaker 1: that's you walking around to these other countries and cutting
Speaker 1: their heads off with a sword. That's not your standing
Speaker 1: behind your shield, ducking down hoping that you don't get mauled, right,
Speaker 1: and so from a position is not a position of weakness. Yeah, exactly, exactly. Now,
Speaker 1: could you say that they're using their offensive weapon in
Speaker 1: order to defend their overall position. I suppose you could. Sure,
Speaker 1: you know, if we we're looking at it from that perspective,
Speaker 1: I I can see where you're coming from. Um, But
Speaker 1: you know, to me, this is not an accident. Um.
Speaker 1: To me, this is is being deliberately done. Well, I
Speaker 1: know Powel is doing it deliberately in order to crush inflation.
Speaker 1: I mean, he has very clearly said that, and you know,
Speaker 1: I don't. I think that's about the only tool he
Speaker 1: has to try and crush inflation. You know that the
Speaker 1: FED has no control over supply chains, right, So I
Speaker 1: do believe him when he says that, But I also
Speaker 1: believe there's these other factors that they probably would not
Speaker 1: admit that they also don't mind that are happening. Now.
Speaker 1: M talking about this fighting back or this war. Um, obviously,
Speaker 1: who are seeing it happen all over the world. Let's
Speaker 1: talk about a couple ones here. So, Um, Trump started
Speaker 1: economic war. I've often said that World War three is
Speaker 1: probably over economic and information. It's like more than a
Speaker 1: kinetic war, hot war at least. Maybe I'm just I'm
Speaker 1: optimistic and hopeful, but maybe Trump started this economic war
Speaker 1: with China with these with these tariffs, right, it was
Speaker 1: like a trade war. And then he started he started
Speaker 1: attacking their tech with Huawei and even trying to ban TikTok.
Speaker 1: The Biden administration just kept those right in place, which
Speaker 1: is surprising. I thought the Biden and his son were
Speaker 1: in the back pocket of the Chinese, but either way,
Speaker 1: they seemed to keep that in place. And now was
Speaker 1: it last week like Biden the Biden administration like dropped
Speaker 1: the hammer on China with the whole chip saying, I
Speaker 1: mean just and then there was something subsequent to that
Speaker 1: as well. But yeah, sorry I'm interrupted, but yeah, I
Speaker 1: agree with you. So just like out of nowhere, it's like, hey,
Speaker 1: by next week, any American is gonna lose their citizenship
Speaker 1: if they don't come back to the United States and
Speaker 1: they're just cut off completely. I mean, that seems like
Speaker 1: this big escalation in this economic war. What was the
Speaker 1: other thing that led to that? You think, Well, so
Speaker 1: the other thing that happened was when was I think
Speaker 1: this was on Monday. Um. A lot of people didn't
Speaker 1: see it, and it didn't get much press coverage, but
Speaker 1: the Department of Justice came out and had a big
Speaker 1: press conference with you know, the Attorney General, the Attorney
Speaker 1: General of New York, all these different people, you know,
Speaker 1: six or seven people at this press conference, and they
Speaker 1: arrested I can't remember if it was five or eight
Speaker 1: Chinese nationals and for spying in the United States. And
Speaker 1: and typically when something like this happens or or or
Speaker 1: historically when something like this has happened, the US has
Speaker 1: kind of treated it with kid gloves. They would often say,
Speaker 1: you know, they would never say it was the Chinese government.
Speaker 1: It would they would say it was someone from China,
Speaker 1: but maybe they were acting on their own or whatever
Speaker 1: it is. But they were. They not only didn't use
Speaker 1: kid gloves, but they went out of their way at
Speaker 1: this press conference to make it very clear that this
Speaker 1: was a Chinese government operation and that China's government was
Speaker 1: trying to influence political and legal decisions in the United Dates.
Speaker 1: So to me, that was just another signal that, you know,
Speaker 1: the gloves are kind of off, or if they're not off,
Speaker 1: they're they're being rapidly pulled off. Right, And because I
Speaker 1: just you just haven't typically seen it be that that
Speaker 1: that overt um, and considering all that's going on in
Speaker 1: the world, I guess it's it's it's not shocking, you know,
Speaker 1: before I forget, I should say, you touched on Trump
Speaker 1: started this kind of this economic war with China, I
Speaker 1: would I would say this, And I know because Trump
Speaker 1: is such a hot button issue for many people, I
Speaker 1: hope that you can put whatever personal feelings you have
Speaker 1: for Trump aside if you just focus on two things,
Speaker 1: If you focus on the fact that he very clearly
Speaker 1: pointed out that our relationship with China was perhaps not
Speaker 1: quite as friendly or should not be quite as friendly
Speaker 1: as everybody else UM thought it should be, and that
Speaker 1: they were in many ways taking advantage of our relationship.
Speaker 1: I think he was the first one to very publicly
Speaker 1: declare that without worrying about the political ramifications of doing so. UM,
Speaker 1: and he did it in a very clever way. I
Speaker 1: thought he did it in a way that he said listen,
Speaker 1: I like z. I think, jeez, he's really smart. If
Speaker 1: I was him, I would probably do the same thing.
Speaker 1: You know, he's been out negotiating our guys. So he
Speaker 1: did it. He did it in a way that wasn't
Speaker 1: necessarily attacking China, but he was just showing weakness in America.
Speaker 1: But regardless of how you view that, you know that
Speaker 1: that was the beginning of of bringing all this stuff
Speaker 1: to the fore and and and showing that it's not
Speaker 1: it has been somewhat of a one way of relationship
Speaker 1: that needs to be addressed. Um So, so I think
Speaker 1: that's pretty interesting. Um. The other thing that I was
Speaker 1: going to say was that, um, I think also with
Speaker 1: shout you know what now, I can't remember this other point.
Speaker 1: I was gonna say it was something it was something
Speaker 1: else related to China. But I think the fact that
Speaker 1: he's brought it forward, and then the fact that that
Speaker 1: Biden didn't just like you said, turn around and squash it,
Speaker 1: and and oh I know what I was gonna say,
Speaker 1: it has to do with with this chips thing, right
Speaker 1: like this. The point here is that you know, Trump
Speaker 1: made the point that, listen, we're still America. You know,
Speaker 1: we still have a lot of things that we can do.
Speaker 1: We don't just have to back down to China and
Speaker 1: do whatever China wants. And so part of my thesis
Speaker 1: has been the despite all the mistakes we've made, and
Speaker 1: despite the fact that we maybe are not held in
Speaker 1: as great of a steem as we used to be,
Speaker 1: that we are still a global power and there are
Speaker 1: still a few tricks up our sleeve that we can use.
Speaker 1: And to your point, this thing with the chips, and
Speaker 1: you know, I thought that was a pretty clever way,
Speaker 1: you know, for the US to pull some of its
Speaker 1: own tricks. You know, to me, that's as much as
Speaker 1: a three D chess move as anything else that's happened
Speaker 1: right now. Does it have some back blow blowback on
Speaker 1: the U s Yeah, potentially, But you know, if all
Speaker 1: these workers leave China that that's not exactly great for
Speaker 1: China either, right, So to me, it's it's just another
Speaker 1: way that you know, the global hedgemont is showing that,
Speaker 1: you know what, we may not be quite as strong
Speaker 1: as we used to be, but we're also not just
Speaker 1: going to roll over and walk away. Yeah, the one
Speaker 1: benefit that the US has. Well, there's many, um, but
Speaker 1: one big one is that, um, the US could We
Speaker 1: don't make the iPads here, but we could we design
Speaker 1: them here. Right. Uh. We don't make all the chips here,
Speaker 1: but we design of them, right we So we could
Speaker 1: make all that stuff here if we want it, because
Speaker 1: we design it. But but most importantly, we are the consumers.
Speaker 1: We buy it. Right, So our companies could make it
Speaker 1: and we could buy it where China can keep making it,
Speaker 1: But who's gonna buy it? I'm so glad. I'm so
Speaker 1: glad you brought this up. And I didn't have to
Speaker 1: bring this up because a lot of times when I
Speaker 1: bring this up, people say, oh, no, the middle class
Speaker 1: and China is growing very fast and they're gonna overtake us,
Speaker 1: And you know, maybe, but as of right now, that's
Speaker 1: not the case. And again to your point, our consumer
Speaker 1: class or consumer society, many people see it as a negative,
Speaker 1: and I understand those arguments, but it is also that
Speaker 1: consumer society is the engine that he or it's the
Speaker 1: it's the lubrication that runs the engine of the world. Right.
Speaker 1: If you don't have a market to sell into, that
Speaker 1: doesn't help you to make all these products, um, and
Speaker 1: so on a relative basis the US. You know, again,
Speaker 1: we don't have to have all these iPads. Um, you
Speaker 1: have to have food, right, So well, you don't have
Speaker 1: to have an iPad, you probably do need to eat.
Speaker 1: And if it really got down to brass tacks, I
Speaker 1: think we could probably feed ourselves better than anywhere else
Speaker 1: in the world. Oh yeah, we have more arable land
Speaker 1: in the United States and river and water than anybody. Um.
Speaker 1: I was just I was telling you. I was just
Speaker 1: down in Mexico and they don't have a consumer market
Speaker 1: there and so because of that, there's no opportunity. And
Speaker 1: there's this town called portost Candido that we've been going
Speaker 1: to for years, and this one section of town has
Speaker 1: gotten really you know, all these digital nomads have come in.
Speaker 1: A lot of Europeans come there, and the locals aren't
Speaker 1: super happy because now it's gotten all touristed out and
Speaker 1: there's a lot of people. But I was telling my daughters,
Speaker 1: just kind of trying to explain this to him. I said,
Speaker 1: but look at now all these businesses, restaurant shops that
Speaker 1: have opened up. Hundreds or even thousands of people are
Speaker 1: now employed, and now they're making money, they can go
Speaker 1: spend money, and so yeah, you need the consumers and
Speaker 1: otherwise is an opportunity. Uh. Now, let's let's jump over
Speaker 1: to another war, and that's now with Saudi. And I
Speaker 1: think this one's even bigger because to the point we're
Speaker 1: making earlier with the oil. Oil has been priced in
Speaker 1: dollars and uh, we we can speculate about what's going on. Potentially,
Speaker 1: it seems like Biden went over there to beg for oil.
Speaker 1: They said no, they thought they had this backdoor deal
Speaker 1: that wasn't there. And Saudi has come out two things publicly.
Speaker 1: They said. One was that you're manipulating the market by
Speaker 1: these spr reserve releases. You're manipulate in the market, and
Speaker 1: so we'll just cut production. We can go harder than you.
Speaker 1: But then their energy secretary came out and said, uh,
Speaker 1: something to the effect of it's not going to be
Speaker 1: good for you without reserves this winter or something to
Speaker 1: that effect. Right. Um, and then there's the president I
Speaker 1: believe of South Africa, which is the s in the bricks,
Speaker 1: said that Saudi is going to join the bricks. Uh.
Speaker 1: We could speculate about that, but it looks like it's
Speaker 1: there's a good probability that could happen. What would be
Speaker 1: the implications to the dollar if that were to happen? So, look,
Speaker 1: I think I think the headline of that, Let's say
Speaker 1: that if Saudi Arabia came out and said we are
Speaker 1: joining the bricks and we are no longer selling our
Speaker 1: product in dollars, my guess is just the headline of
Speaker 1: it would probably make the dollar initially fall potentially, although
Speaker 1: that would also be seen as a potentially an active war,
Speaker 1: which could send the dollar much higher. But but the
Speaker 1: point I'll make is is if if if they stop
Speaker 1: selling oil in dollars, that means there's even less trade
Speaker 1: taking place in dollars than there was before. And I
Speaker 1: already explained the fact that we're not importing as much
Speaker 1: as we used to means we're sending less dollars out.
Speaker 1: If they're not even selling oil in dollars anymore, then
Speaker 1: there's even less dollars circulating. But all of that dollar
Speaker 1: debt and all that dollar credit that's been extended in
Speaker 1: the euro dollar market still exists. So now you've got
Speaker 1: an even tougher time servicing all that and paying for
Speaker 1: all that. Now I know many people will say, yeah,
Speaker 1: but now they don't they don't have to pay those
Speaker 1: debts anymore, so they'll just default. Okay, that's fine. But
Speaker 1: here's the issue is those dollar debts outside the United
Speaker 1: States are also dollar assets out the United States. In
Speaker 1: that situation, you're not defaulting on the United States. You're
Speaker 1: defaulting on whoever you did business with outside the United
Speaker 1: States that that that invoiced it in dollars. Turkey defaulting
Speaker 1: to France, and it's Japan defaulting to Brazil, and it's
Speaker 1: you know, Saudi Arabia defaulting to or whoever it is, right, yeah,
Speaker 1: and can can you start trading in gold or can
Speaker 1: you start bartering and stuff? Sure you can, but it
Speaker 1: will not be a it will not be a easy
Speaker 1: or or smooth or efficient process. So and and while
Speaker 1: that would certainly if they stopped selling dollars or so
Speaker 1: oil in dollars, of course, in the long term overall picture,
Speaker 1: that would probably be bad for and they were able
Speaker 1: to maintain that, right, that would probably be bad for
Speaker 1: the dollar. But I actually believe that the that the
Speaker 1: chaos that that would cause on a global basis would
Speaker 1: cause the dollar to go higher, at least in the
Speaker 1: medium term until that all those kinks and um intricacies
Speaker 1: and efficiencies were worked out. That's an unpopular opinion, but
Speaker 1: that's what I think. When you say it would be
Speaker 1: bad for the dollar, what does that mean? What would
Speaker 1: bad be? Well, I mean, part of the reason that
Speaker 1: the dollar enjoys um it's status in the world is
Speaker 1: it's the biggest network in the world. Right. The reason
Speaker 1: everybody uses dollars is because everybody uses dollars, right, just
Speaker 1: like the reason everybody uses twitters because everybody uses Twitter.
Speaker 1: Everybody uses Facebook because everybody uses Facebook. And even though
Speaker 1: you know, there's been competing sites and platforms that have
Speaker 1: popped up and tried to drop people away from Twitter
Speaker 1: and Facebook, you know, yeah, a few people go over there,
Speaker 1: and it's happening at the margins, but Twitter and Facebook
Speaker 1: still dominate. It's kind of the same thing here. You know,
Speaker 1: the dollar dominates global trade. And yeah, there's a few
Speaker 1: countries that trade amongst themselves in another currency, but those
Speaker 1: platforms aren't nearly as big as the Facebook and the twitters.
Speaker 1: And but but if everybody, you know, or you know,
Speaker 1: if a big portion of people leave Facebook and go
Speaker 1: somewhere else, you know, it starts to hurt and if
Speaker 1: and if they don't come back, you know, it will
Speaker 1: over time mean that Facebook will fail. And so if
Speaker 1: everybody left the dollar over time, it would mean the
Speaker 1: dollar would fail. And what does that mean? The dollar
Speaker 1: just continues to lose purchasing power. Yeah, I think it
Speaker 1: would just continue to lose purchasing power, and it would
Speaker 1: maybe and it would maybe no longer be the global
Speaker 1: reserve currency. Right, And therefore, you know, for the for
Speaker 1: the most part, Americans don't have to think in two currencies, right,
Speaker 1: they don't have We've grown up just thinking about the
Speaker 1: dollar because you know, we buy whatever we need in dollars.
Speaker 1: But people all over the world grow up thinking in
Speaker 1: two different currency terms, their local currency terms and dollar terms,
Speaker 1: because that's what they need to operate. Um. And so
Speaker 1: you know, a lot of people have called having the
Speaker 1: global reserve currency the exorbitant privilege for that exact reason.
Speaker 1: You can print money in order to go buy oil
Speaker 1: or these goods and these that and that that that's
Speaker 1: called the exorbit and privilege. You know. Now in the
Speaker 1: last few years there's been to come upas thing. Yeah,
Speaker 1: but it has long term detriments too. So it's you know,
Speaker 1: it's an exorbitant burden. Um, you know, it's a double
Speaker 1: edged sword. But you know, one of the analogies I've
Speaker 1: used is having the global reserve currency is kind of
Speaker 1: like being a vampire. Right, Yeah, there's downsides, but the
Speaker 1: flip side is that you're really strong and nobody can
Speaker 1: kill you, and you can run around and just you know,
Speaker 1: pretty much do whatever you want. And so, um, you know,
Speaker 1: maybe this would be if everybody left the dollar, or
Speaker 1: if a big portion of people left the dollar, that
Speaker 1: would be you know, the rest of the world driving
Speaker 1: a stake through the vampire's heart. Yeah, you know, and
Speaker 1: I they might eventually get him and kill the vampire.
Speaker 1: But my guess is that he'll kill a few people
Speaker 1: along the way before that happens. Now, when we talk
Speaker 1: about all these currencies losing value, Um, you know, the Euro,
Speaker 1: the end down, the Turk, you mentioned Turkey. The Turkish
Speaker 1: layer is down eighty I don't know over the last
Speaker 1: five years to the US dollar. Right, So if you
Speaker 1: look at the Turkish lira over five years is down
Speaker 1: whatever it is at this point. Um, other currencies are down,
Speaker 1: you know, whatever amounts they're down Argentina's down more probably,
Speaker 1: but that's all compared to the dollars. So you your theory,
Speaker 1: the milkshake theory is always the dollars getting stronger, which
Speaker 1: it is right, um, but it's getting stronger to other currencies.
Speaker 1: But if we look at the same five year period,
Speaker 1: the dollars down to the SMP five D, it's down
Speaker 1: forty percent to media in real estate since January. So
Speaker 1: the dollars getting stronger to currencies, but it's also getting
Speaker 1: weaker two assets at the same time. How do you think, Well,
Speaker 1: that's that's you know, that is kind of the theory.
Speaker 1: You know, I have the dollar. Milkshake theory has never
Speaker 1: said you should just buy dollars, leave it in cash
Speaker 1: and just sit there and buy everything when it's really cheap, right.
Speaker 1: The theory has always been that we will ultimately get
Speaker 1: into a situation where the US dollar and US dollar
Speaker 1: denominated assets rise versus the rest of the world. So, um,
Speaker 1: you know, I've always said that we'll get into a
Speaker 1: situation where we will have the dollar, gold, and the
Speaker 1: Dow all rising together and I potentially US real estate too,
Speaker 1: and you know, and that that is a situation where
Speaker 1: maybe everybody's printing maybe maybe the whole world is doing QWI,
Speaker 1: including the US. But all of that money that's being
Speaker 1: printed comes into the United States. It goes into stocks,
Speaker 1: that goes into gold, it goes into houses, that goes
Speaker 1: into commercial real estate or land or whatever it is. Right,
Speaker 1: and so you get this situation where equities are going higher,
Speaker 1: land is going higher, gold is going higher, the dollar
Speaker 1: is going higher. Um, but those those assets are going
Speaker 1: higher versus the dollar, but the dollar is going higher
Speaker 1: versus all the other currencies. So UM, I mean that
Speaker 1: that's that's ultimately what the milkshake is. I don't think
Speaker 1: that people should just be sitting in cash. So just
Speaker 1: using the all or as your unit of account, your
Speaker 1: measuring stick. Yeah, exactly, exactly in the US market as
Speaker 1: your safe haven. Yeah. Alright to two more things I
Speaker 1: wanted to talk about one. Uh man, Uh do you
Speaker 1: always see on Twitter people say I can't believe there's
Speaker 1: app is free? Um? I would imagine, um, a lot
Speaker 1: of people love you and Luke going back and forth.
Speaker 1: Oh yeah, it's great, it's great. I know it's friendly.
Speaker 1: Uh what would you say that you disagree on and
Speaker 1: not who's right or wrong? But what do you think
Speaker 1: is that main disagreement there? Well, the first thing I'll
Speaker 1: say is for anybody who has anybody who's watching this
Speaker 1: and has seen Luke and I go back and forth
Speaker 1: on Twitter, Twitter, I think sometimes loses context. And when
Speaker 1: Luke and I are going back and forth at each other,
Speaker 1: I guarantee you he's trying to sing me, and I
Speaker 1: guarantee you I'm trying to sing him. But what you
Speaker 1: don't see is maybe we're smiling behind the screen. You know,
Speaker 1: I not there like pounding the table saying I hate
Speaker 1: Luke and he's really stupid. You know, he's a bad guy,
Speaker 1: And that's why I'm responding, right, And so if it
Speaker 1: comes across as mean on Twitter, I can absolutely guarantee
Speaker 1: you it's not mean behind the scenes. But I will
Speaker 1: also say that part of the reason that I have
Speaker 1: pushed back as hard as I have against his views
Speaker 1: is because I think there's a lot of people who
Speaker 1: will read his work and will say, Wow, that's really interesting,
Speaker 1: that's really smart. I can see that plane out and
Speaker 1: Luke says it in such a convincing way, in such
Speaker 1: a certain way that I think they they then assign
Speaker 1: a higher probability of those things happening than I think deserve.
Speaker 1: And I've seen this with retail investors before, where they
Speaker 1: have a hunch and they buy a bunch right. And
Speaker 1: so the reason I've pushed back as hard as I
Speaker 1: have is I said, oh, hold on a minute, these
Speaker 1: might be probabilities, or they might be possibility, they may
Speaker 1: even be probabilities, but what you're talking about is not
Speaker 1: necessarily a high probability. And so I don't think everybody
Speaker 1: should run out sell all their dollars put it all
Speaker 1: on something else, because I don't want people to get hurt.
Speaker 1: And a part of the reason I've pushed I think
Speaker 1: to us and I don't. I would say this if
Speaker 1: Luke was here, and so if he disagrees with it,
Speaker 1: If he hears us and he disagrees with this and
Speaker 1: he wants to tell me that I'm wrong, that I
Speaker 1: will absolutely accept that. But I tend to think that
Speaker 1: Luke talks about the way he thinks things should be
Speaker 1: or the way things could be, whereas I try to
Speaker 1: take a more kind of real politic, hard nosed this
Speaker 1: is what's actually going to happen point of view, whether
Speaker 1: I like it or not. But what What is that though?
Speaker 1: Is that is that he thinks he thinks he thinks
Speaker 1: like hard assets like gold, energy, and maybe bitcoin are
Speaker 1: really going to move to the forefront, and currencies are
Speaker 1: are being replaced. But you think that that's not happening
Speaker 1: so fast. I think that I think that's not going
Speaker 1: to happen. I think I think our system is in
Speaker 1: real trouble. I think the powers that be will do
Speaker 1: everything that they possibly can and use every tool and
Speaker 1: deceitful method to defend it. Right, So I don't think
Speaker 1: this movement to a non fiat hard asset system will
Speaker 1: be as easy or smooth or as likely as as
Speaker 1: I think he thinks if that does happen. If I
Speaker 1: am wrong and that does happen, I think that the
Speaker 1: US has a better portfolio of hard assets than any
Speaker 1: country in the world. Now, sure there's a few others
Speaker 1: that have good portfolios as well, but if you're taking
Speaker 1: just hard assets and real goods and all of that
Speaker 1: stuff put together, I don't think if I had my
Speaker 1: choice out of all the countries, I would choose the
Speaker 1: United States in that type of an environment. So, even
Speaker 1: if he is correct on that, I don't think that
Speaker 1: necessarily a bad thing for the United States. UM. And
Speaker 1: then I think the other thing is that, UM, some
Speaker 1: of these geopolitical realignments that he has spoken about being possible.
Speaker 1: Of course, anything is possible. But the idea that the
Speaker 1: Europe was going to just give up on it's decades
Speaker 1: old relationship with the United States and their defense umbrella
Speaker 1: of NATO and all of these longstanding institutional relationships and
Speaker 1: side with Russia over the United States, to me, while
Speaker 1: maybe it made sense from an energy perspective, just wasn't
Speaker 1: going to happen. And so that's probably why I pushed
Speaker 1: back on stuff like that as as hard as I do.
Speaker 1: I mean, these these things, these things that that we're
Speaker 1: talking about changing, they may very well change, and I
Speaker 1: think we're in the type of an environment where those
Speaker 1: things can change, but they aren't going to change without
Speaker 1: a lot of volatility. And when I say volatility, I
Speaker 1: don't just mean economically, I mean economically, socially, militarily, all
Speaker 1: of these different things. To me, this is this is
Speaker 1: the big, big game, right And what I mean by
Speaker 1: that is, you know, we often when we're talking about
Speaker 1: China and Russia and the United States and Europe, it's
Speaker 1: always chess versus checkers, and I don't know, I think
Speaker 1: that is the completely wrong analogy. I literally think this
Speaker 1: is the game of thrones. I think this is you know,
Speaker 1: this is all the big boys and girls are out
Speaker 1: there and they're fighting for the top spot, and I
Speaker 1: think they will use all the dirty tricks and methods
Speaker 1: that they have at their disposal to do that. And
Speaker 1: so regardless of whether and when I look back at
Speaker 1: the last fifty years, whenever there's been a crisis, the
Speaker 1: dollar has gotten stronger, I don't think it's different this time.
Speaker 1: So I think when we get into this crisis, I
Speaker 1: think that means the dollar rises. I don't think it
Speaker 1: means it falls. And so that's I think that's that's
Speaker 1: how I understand the difference. He might think differently, and
Speaker 1: you know, there's no guarantee I'm right on this, but
Speaker 1: I think he would say something similar. I think this
Speaker 1: will go into the last last topic, but I think
Speaker 1: it goes into time frames. So yeah, absolutely, no, no question.
Speaker 1: A lot of times I see two people that completely
Speaker 1: disagree at my at my at my conference, I had
Speaker 1: Stephen van Meter and Greg FoST there. One loves bonds
Speaker 1: and one hates bonds, but when you got them there together,
Speaker 1: they actually agreed more than they did exactly. That's true.
Speaker 1: I was there for that. I remember that you were there, right,
Speaker 1: And so it's like, well, Stephen is talking about for
Speaker 1: the short time frame. Greg's thinking of over a long
Speaker 1: time frame, right, So a lot of it's that, but
Speaker 1: I think, so let's let's talk about that a little bit.
Speaker 1: So well, you know, just really before I forget, let
Speaker 1: me let me make this point because this kind of
Speaker 1: came up recently with Luke and I were talking back
Speaker 1: and forth, and again, I kind of hate talking Luke
Speaker 1: when he's not here. I like to kind of always
Speaker 1: do it when the person is there. But I'm pretty
Speaker 1: sure that we would have a similar conversation if we
Speaker 1: were together. Is that, um, you know, the whole you know,
Speaker 1: actually happening versus wanting it to happen. Right. I think
Speaker 1: there's this. I think that there is this and I'm
Speaker 1: not saying that this is for Luke, but I think
Speaker 1: when Luke writes this stuff that you know, the U.
Speaker 1: S isn't potentially in trouble for these things. To me,
Speaker 1: there's this kind of this zeit geist in the United States.
Speaker 1: And I call them the self loathing Americans, and that's
Speaker 1: maybe a bad way to say it, but it's the
Speaker 1: people who are woke enough to realize that maybe we're
Speaker 1: not the best, you know, person or the best country
Speaker 1: in the world, and maybe we've kind of overplayed our
Speaker 1: role as the hedgeman, and maybe we're actually the cause
Speaker 1: of a lot of these problems rather than the solver
Speaker 1: of a lot of these problems. And you know, we've
Speaker 1: spent all this money, we can never pay it back.
Speaker 1: And there's almost this there's this romantic version or idea
Speaker 1: that the US needs to get what's coming to it right.
Speaker 1: And so then when they when they see somebody write
Speaker 1: something or say something that sounds like it's going to
Speaker 1: be bad for the US, they want to latch onto
Speaker 1: that because that's what they think needs to happen from
Speaker 1: kind of this moral perspective and um and and as
Speaker 1: a result, I think people will often ascribe a higher
Speaker 1: probability to an event than the and is actually warranted.
Speaker 1: Um And there was another point I was gonna make
Speaker 1: on the end of that, and I can't remember what
Speaker 1: it is now, but I agree with you. I mean,
Speaker 1: I agree with all that all the stuff that we've
Speaker 1: talked about, and I think, uh, um to it. You know,
Speaker 1: America's hands down, no doubt about the best country in
Speaker 1: the world still today. Now. Uh, the trajectory that we're
Speaker 1: on is disappointing, but it's still America's to lose. We
Speaker 1: have the land, we have the energy, we have the industry,
Speaker 1: we have the creativity, we have the consumer base, we
Speaker 1: have like we have everything. Um, it's our it's ours
Speaker 1: to lose. Um, and so UM. You know, hopefully the
Speaker 1: trajectory changes. UM. But uh so let's let's talk about
Speaker 1: the time frame and base cases and we'll kind of
Speaker 1: end it with that. But uh, you know, I like
Speaker 1: that you talk like that. I think, yeah, And I
Speaker 1: think that the whole time frame is the thing I think.
Speaker 1: I think Luke and I probably agree that ultimately the
Speaker 1: US is going to pay for all these PROFLI good,
Speaker 1: you know endeavors Um. No, but he stays on top forever.
Speaker 1: Everything comes going to end. We all know that. UM.
Speaker 1: But the timing I think is much different. UM. I
Speaker 1: happen to think. I think he thinks it comes much earlier. UM.
Speaker 1: I think it comes much later. And I think that
Speaker 1: if it does happen. Um, it won't necessarily happen in
Speaker 1: the way he thinks it will happen. Well, I tend
Speaker 1: to think I tend to think that the next system
Speaker 1: will be another fiance system. I think that and my fear,
Speaker 1: this is my fear. My fear is that you know,
Speaker 1: we are going to have some kind of military conflict
Speaker 1: that will resolve this, and whoever is the winner of
Speaker 1: that military conflict will not necessarily see the world as
Speaker 1: a place that they want to treat very nicely. They
Speaker 1: may want to treat it the way they think is
Speaker 1: the best for them, right, And whether that's the US
Speaker 1: or somebody else, I don't know, Um, but I I
Speaker 1: I think that they would then institute a new you know,
Speaker 1: Fiat standard or Fiat style system rather than going to
Speaker 1: some kind of a free market bitcoin or gold or
Speaker 1: some something else. I don't see somebody winning this big
Speaker 1: battle and then just handing over the power to somebody else.
Speaker 1: That very very rarely happens. Let's let's back up just
Speaker 1: a little bit and then we'll come back to that.
Speaker 1: So earlier you had said, you know, how far can
Speaker 1: to kick the can down the road? You maybe there's
Speaker 1: another three five eight years, Like you don't know, right,
Speaker 1: so three f eight years, Um, it seems like right now,
Speaker 1: the FED keeps saying we're gonna crush inflation and crush inflation,
Speaker 1: raise rates, raise, raise rates rates. But the markets are
Speaker 1: almost like calling their bluff because they like, no, like, look,
Speaker 1: you're only like, we know you're committed, but if the
Speaker 1: whole system sees is up, you're gonna be forced to change.
Speaker 1: So will the market sees up before the Fed gets
Speaker 1: inflation down? And so the markets are kind of calling
Speaker 1: their bluff. Uh, this can is coming to this proverbial
Speaker 1: and at some point I think you kind of said
Speaker 1: the whole world too and quei together and everything got
Speaker 1: melting up. So do you think this happens? You know,
Speaker 1: maybe the FED hits that proverbial wall in the next
Speaker 1: twelve months, then over the next five years we qui
Speaker 1: meilt up together. Yeah, So I'll make a prediction. And
Speaker 1: here's the funny thing is a lot of people say
Speaker 1: you should never make predictions because you know, you get
Speaker 1: that you can never get to get the time probabilities.
Speaker 1: The thing is, I don't. I don't. The reason I
Speaker 1: don't mind making predictions is I don't mind being wrong.
Speaker 1: I mean the idea. I mean, our job is essentially
Speaker 1: to predict the future and then put assets in a
Speaker 1: way that's gonna benefit from that. Right. I can't think
Speaker 1: of anything more arrogant than to think that you can
Speaker 1: predict the future with perfect accuracy. So if what I'll say,
Speaker 1: what I think is gonna happen, and if it doesn't happen,
Speaker 1: that's gonna be funny. I I promise you I will
Speaker 1: get through it. But my my thought is that we
Speaker 1: will probably make a new low sometime in the first
Speaker 1: quarter of next year, and then after that, I think
Speaker 1: the FED will pivot and what what what exactly the
Speaker 1: pivot means whether they just slow hikes or stophikes or
Speaker 1: go back to I don't know, um, but I think
Speaker 1: a crisis will be required to pivot. I don't think
Speaker 1: that they are going to pivot when inflation is still high,
Speaker 1: unemployment is still low, and asset prices are still higher
Speaker 1: than they were in March. I mean, that's what you
Speaker 1: got to remember, right, Like, markets are down anywhere from
Speaker 1: fift you know, this year, but they're still up from
Speaker 1: where they were two years ago. Right, So the fact
Speaker 1: that asset prices have come down a little bit. I
Speaker 1: don't think necessarily bothers the FEDS will the FED pivot.
Speaker 1: The FED will absolutely pivot, because that's their job. The
Speaker 1: whole reason the central banks are in existence is to
Speaker 1: step in and save the system when it comes under threat.
Speaker 1: But they're not necessarily put in position to save the
Speaker 1: market when it's not needed. And for all those reasons
Speaker 1: I talked about earlier, about him being embarrassed and they
Speaker 1: got inflation wrong, and they need to protect their reputation,
Speaker 1: I think necessitates the crisis before they come back in.
Speaker 1: And so you know, when I see markets the way
Speaker 1: they are up today, I understand why they're up, and
Speaker 1: it makes sense to me why they're up, But I
Speaker 1: don't think it's right. I don't. I don't think the
Speaker 1: markets making the right decision. I don't think that they
Speaker 1: I don't think the FED has already decided to pivot,
Speaker 1: and they're gonna pivot next week. Now. If they do,
Speaker 1: and I'm wrong, that'll be fine too, right, Like I'll
Speaker 1: just have to react to that and deal with it um.
Speaker 1: But I think your reason is, your reasoning is right.
Speaker 1: The timing could change, but at some point, yeah, yeah, exactly,
Speaker 1: and it could sooner than you think. It could break
Speaker 1: it next next month, Right, we could run out of
Speaker 1: thee who knows, right, so that you could easy, it
Speaker 1: could happen in two weeks. Right, could wake up one
Speaker 1: morning and you know something happened and now they have
Speaker 1: to go, you know, Mark, I mean, here's the amazing thing, right.
Speaker 1: I don't know if you were watching um the markets yesterday,
Speaker 1: but after the close yesterday Apple reported earnings and Amazon
Speaker 1: reported earnings and the you know, markets were down three
Speaker 1: or four percent and after hours and now today they're
Speaker 1: up two or three percent. So there's a seven points
Speaker 1: swing in less than twenty four hours. I mean, markets
Speaker 1: are just really psycho right now. And I think anybody
Speaker 1: who has certainty and what's going to happen is a
Speaker 1: fool because nothing is certain right now. So I want,
Speaker 1: I want to jump back to where we were so
Speaker 1: I get it. Man, timing is impossible, but I think
Speaker 1: the trigger points are right, and could it does happen
Speaker 1: next month or early next year, we don't know. But
Speaker 1: I want to jump back to the last part, which
Speaker 1: is UM which kind of shocked me. Uh is another
Speaker 1: Fiat system on the back and and and the reason
Speaker 1: why that kind of shocks me is there's a theory
Speaker 1: I forget the guy's name what it's under, but it's
Speaker 1: basically says that, oh, it's like the theory value of
Speaker 1: money or whatever, right where like um. So, like when
Speaker 1: Zimbabwe blows up their currency, they get a new currency
Speaker 1: that's pegged to the dollar again, and then they blowed
Speaker 1: up again, they repack it to the dollar. So they
Speaker 1: have to create a new currency. It has to be
Speaker 1: pegged to something of real value. Um. And the dollar
Speaker 1: was created based off of a peg to the gold value.
Speaker 1: So how do you create a new fiat currency that's
Speaker 1: not anchored to anything? Okay, So the way I would
Speaker 1: describe this is two things. Even if they don't peg
Speaker 1: the new fiat system to something, that doesn't mean that
Speaker 1: gold won't go to five thousand or ten thousand dollars.
Speaker 1: So I'm a huge gold bowl long term. I think
Speaker 1: whatever the transition to a new system, I think we'll
Speaker 1: see gold be much much higher than it is today.
Speaker 1: So but that doesn't mean that it will be officially
Speaker 1: recognized as money. The other thing is it wouldn't shock
Speaker 1: me if they use gold as part of the new
Speaker 1: system or in some way use it to restore confidence
Speaker 1: in the short term. But I don't think we're going
Speaker 1: back to a to a situation where we will have
Speaker 1: a standard gold standard and it is used as the
Speaker 1: global money and the whole world just you know, agrees
Speaker 1: to it. Um. I think if anything was chosen that
Speaker 1: the whole world would accept, it would be gold. But
Speaker 1: I just don't think whoever wins this grand battle um
Speaker 1: is going to do that. The other thing I would
Speaker 1: say is it doesn't have to make sense for something
Speaker 1: to last. And what I will use as an example is, um,
Speaker 1: you know, the Russian ruble after the World War Two, Right, Um,
Speaker 1: the Russian ruble and the Russian of the whole Soviet economy, Um,
Speaker 1: from you know, nineteen forties to the nineteen nineties was
Speaker 1: nothing to be excited about. Right, didn't do a good
Speaker 1: job of protecting purchasing power, Their economy didn't thrive. Um.
Speaker 1: There was no free market principles there that guided its
Speaker 1: value up or down. But yet it lasted for fifty
Speaker 1: years because the Communist party. So if your Communist party
Speaker 1: said this is the way we're going to do it, right,
Speaker 1: this is the rule, And if you don't follow the rules,
Speaker 1: you end up in Siberia working in a labor camp
Speaker 1: for four years. Um. And I've my fears is that
Speaker 1: that could happen again. Um again, I don't want that
Speaker 1: to happen. That's not what I would choose to do.
Speaker 1: But the idea that we're gonna have this big grand
Speaker 1: battle and then after that we're going to have peace,
Speaker 1: love and harmony. I I love the idea and I hope,
Speaker 1: I hope that that happens. But I'm a little skeptical. Well,
Speaker 1: I'm rooting for peace, love and harmony, but I am too, man,
Speaker 1: we'll do it together. Yeah, yeah, yeah, alright cool, um yeah.
Speaker 1: You know. The bitcoiners hope is that it places restraints. Right. So, um,
Speaker 1: if I was having a party at my house and
Speaker 1: I started kicking everybody out of my house party, Um,
Speaker 1: I've lost control over them. They've gone to start their
Speaker 1: own party and I no longer have control. And enough
Speaker 1: people opt out of That's what happened with the fall
Speaker 1: of the USS. Are enough people opted out of the economies,
Speaker 1: created black markets, parallel markets, and then the uss are
Speaker 1: lost control, which is why nations always imposed capital controls.
Speaker 1: At the very end, they have to keep people and
Speaker 1: that's why black markets of always existed. Right. Yeah, so
Speaker 1: it's like if, if, if, and and even we've seen
Speaker 1: Christine the Guard talk about that we have to close
Speaker 1: the exits, she says, And so if enough people can
Speaker 1: get out of their system and into a new system
Speaker 1: that they can't control, then they just lose control and
Speaker 1: they just there's no way to get now, throw out
Speaker 1: of a gun. Right, they have monopoly on violence, I
Speaker 1: suppose to your point, and people would say, don't don't
Speaker 1: underestimate the amount of violence they have. But I think
Speaker 1: that's that's the hope, is that maybe there's a way
Speaker 1: that people can go get into a new system that works,
Speaker 1: and uh, there's no threat of violence, but we'll see,
Speaker 1: we'll see. Um, well, we'll wrap it up with that.
Speaker 1: I know that was a long conversation. I appreciate it. Uh.
Speaker 1: I wanted to get into your musical chair analogy, which
Speaker 1: I thought was great. But you have it on your Twitter,
Speaker 1: So people should just go check out your Twitter um,
Speaker 1: which is still an anonymous account kind of by the way.
Speaker 1: You know, you don't have your face or your name
Speaker 1: on there, but Santiago Capital will make sure to link
Speaker 1: that in the show notes down below. Um, anything else
Speaker 1: that people should be aware of other than your Twitter No,
Speaker 1: I think you know just I I do a number
Speaker 1: of these type of podcasts. I always annoyed talking to you. Um,
Speaker 1: you know, I've I've talked about this stuff a lot,
Speaker 1: you know, at conferences, interviews, uh, podcasts. Um. If you
Speaker 1: go on Google or YouTube and you type in Santiago
Speaker 1: Capital or dollar milkshake at this point, there is a
Speaker 1: lot of links that will come up, and um, on
Speaker 1: my my pen tweet on Twitter has like a little
Speaker 1: five minutes summary that kind of explains it in more
Speaker 1: detail as well. But listen, I think that the thing
Speaker 1: that I always tell people is number one, don't worry
Speaker 1: about being wrong, because everybody's wrong. Um, nobody gets it
Speaker 1: always right. And the other thing is don't there's a
Speaker 1: difference between certainty and conviction. It's totally fine to have conviction,
Speaker 1: but don't have certainty on anything because this is gonna
Speaker 1: get really crazy. And the one once you're certain about something,
Speaker 1: you know you're about ready to get hit in the
Speaker 1: head because nothing is certain anyway. I'll just leave it
Speaker 1: with that, all right, brand, Thanks thanks for your time,
Speaker 1: appreciate it. All right, thanks man, all right, that's a rap.
Speaker 1: Hopefully you enjoyed that conversation with Brent Johnson of Santiago Capital.
Speaker 1: Check them out on Twitter. Always insightful stuff. Man. We've
Speaker 1: covered a lot and hopefully I really want you to
Speaker 1: take away a couple of things. One, there is no
Speaker 1: such thing as certainties. There's only probabilities. As he said,
Speaker 1: we have convictions, and convictions are okay, but don't believe
Speaker 1: that things are certain. You need to be prepared for
Speaker 1: whatever is going to happen. Create your base case, set
Speaker 1: up your portfolio accordingly, and then always monitor the situation
Speaker 1: to understand when to pivot. Anyway, I'd love to hear
Speaker 1: what you think, and that's what I got to your
Speaker 1: success about