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Speaker 1: What the death of the US dollar looks like. Now

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Speaker 1: you've seen headlines for years now talking about the death

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Speaker 1: of the dollar, the US dollars ending, they say, but

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Speaker 1: maybe it's not just happening just yet, and there's three

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Speaker 1: reasons why. So I'm gonna be joined with a special

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Speaker 1: guest today, someone who's been back on the channel multiple times,

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Speaker 1: to break down what the death of the dollar really

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Speaker 1: looks like, what three components have to be there in

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Speaker 1: order for a new one to pop up, what we

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Speaker 1: should be watching for, and then we'll get into some

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Speaker 1: other stuff. We're gonna talk about which countries might have

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Speaker 1: the best alternative, and then we're gonna talk about the Fed,

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Speaker 1: the US FED, what they're doing with rates, what's happening

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Speaker 1: with the US dollar here at home, what you should

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Speaker 1: be expecting in the stock markets, the economy, and yes,

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Speaker 1: even with your real estate if you're hoping to buy

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Speaker 1: a home or potentially refinance with lower rates. We have

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Speaker 1: it all here with Nick Botia, a returning guest to

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Speaker 1: the show. It's a great conversation. Let's go ahead, just

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Speaker 1: jump right into it, all right, Nick, thanks for joining

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Speaker 1: me today, back again to the show. I think I

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Speaker 1: don't know two or three times. Always loved talking to you.

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Speaker 1: Thanks for taking the time, Thanks for having me back

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Speaker 1: mark so you know, I love the work that you do.

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Speaker 1: The book that you've written, Layered Money. I reference it often.

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Speaker 1: Everyone should check out that book, Layered Money. And also

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Speaker 1: the Bitcoin Layer, the news layer you've been writing. I

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Speaker 1: was talking about before he started recording, how impressed I

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Speaker 1: am with how well of a job you've been doing.

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Speaker 1: So everybody listening and check out his newsletter of the

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Speaker 1: Bitcoin Layer. And what we're gonna be talking about today

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Speaker 1: is something that he wrote about on this and something

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Speaker 1: that I've been working about in some other research that

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Speaker 1: I've been doing as well. And so let's see where

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Speaker 1: this matches up. And for everybody listening, we're gonna be

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Speaker 1: talking about the death of the dollar. Now, we've been

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Speaker 1: talking about the death of the dollar for a long time,

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Speaker 1: and as Nick points out, it has been dying for

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Speaker 1: a long time. But the article that he put out

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Speaker 1: says that the reports of the dollars death have been

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Speaker 1: greatly exaggerated. So you've heard me talking about the death

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Speaker 1: of the dollar. You've heard thousands of other people talked

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Speaker 1: about the death of dollar. And he's here to say

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Speaker 1: that it's been greatly exaggerated because the US dollar is

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Speaker 1: deeply entrenched in global financial plumbing, and the notion that China, Russia, bricks, whatever,

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Speaker 1: could dethrone it is far from reality, That's what you said, Nick,

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Speaker 1: So frame that up for us. Yeah, it's really there

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Speaker 1: are two sides of this coin, mark, you know. One

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Speaker 1: side is the fact that we have thirty trillion in debt.

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Speaker 1: We're well above one hundred percent debt to GDP, and

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Speaker 1: historically for nations that has been a dangerous zone. Right.

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Speaker 1: It's something that we talked about together when we were

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Speaker 1: in person last year. It's on front of mine, I

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Speaker 1: think for Americans that understand the implications of that. That's

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Speaker 1: one side of the coin. The other is that the

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Speaker 1: dollar is entrenched and it's in a position that is

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Speaker 1: so interwoven into how we do business that unwinding the

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Speaker 1: current dynamic of a dollar centric financial system isn't It's

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Speaker 1: not a viable project yet, even though we have different

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Speaker 1: nations dreaming it up, let's say, the actual process of

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Speaker 1: unwinding the dollar at the center, it's nowhere to be seen.

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Speaker 1: And so those are the two sides right there. It

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Speaker 1: doesn't mean that people and nations aren't preparing for it.

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Speaker 1: They definitely are, and they're making plans, but those plans

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Speaker 1: being put into action, and those action items actually getting

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Speaker 1: traction in global payments and international finance that is either

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Speaker 1: in its infancy or very early stages. So that's how

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Speaker 1: I see it. And I don't see anything imminent, meaning

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Speaker 1: in the next decade or two, that would unwind the

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Speaker 1: dollars system. And so how you know, making predictions, any

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Speaker 1: long term prediction really has to be taken with a

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Speaker 1: lot of considerations asterisks. But that's generally the way that

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Speaker 1: I see it that over the next couple decades, it's

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Speaker 1: just not gonna unwind fully, okay, And so I often

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Speaker 1: like to say it's a process, not an event. We

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Speaker 1: know that when the dollar took over the reserve status

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Speaker 1: of the British pound, it was about a thirty year process,

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Speaker 1: so kind of to your point, a couple decades, thirty

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Speaker 1: year process. And of course, in one of the charts

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Speaker 1: you use, the pound is still I think a top

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Speaker 1: three currency used today, So even though it lost its

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Speaker 1: status one hundred years ago, it's still the top three currency.

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Speaker 1: But let's let's let's back up just a little bit,

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Speaker 1: and let's take this down to a first principle level

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Speaker 1: so that everybody can start to build their own ideas

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Speaker 1: off of this conversation that we're having here. So you

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Speaker 1: wrote the book Layered Money, which takes everybody through the

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Speaker 1: history of money and helps them build that. Right. And

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Speaker 1: so if we look at the dollar, the dollar as money, right,

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Speaker 1: so we're talking about the dollar losing its status as money,

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Speaker 1: money being a medium of exchange, so we're using it

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Speaker 1: to exchange for goods and services and also a store

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Speaker 1: of value where we'd store our wealth in it, and

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Speaker 1: also maybe as a payment network or we can facilitate

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Speaker 1: payments across the world. So if we're talking about the

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Speaker 1: dollar and this global homogeney, this payment system is would

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Speaker 1: those be three of the buckets that you're we're kind

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Speaker 1: of talking about there. Yeah, generally speaking, yes, And when

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Speaker 1: we think about when I think about the replacement of

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Speaker 1: the dollar for any of those three, there's no clear challenger,

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Speaker 1: and there's no clear number two for any of the

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Speaker 1: use cases that you're describing. I think bitcoin has claims

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Speaker 1: to try to fight its way over the long term

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Speaker 1: on maybe all of those notes that you hit there,

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Speaker 1: but as of where it stands today, neither the Chinese

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Speaker 1: RENMN and B the euro or bitcoin are really a

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Speaker 1: legitimate challenger to the dollar in those aspects. Right, So

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Speaker 1: when I think about if we if we kind of

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Speaker 1: break those three down, and I think it's as helpful

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Speaker 1: as we kind of go through some of this, but

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Speaker 1: if we kind of break those down, we look at

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Speaker 1: like a medium of exchange. So nobody wants money, right,

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Speaker 1: what we want is the goods and services that money

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Speaker 1: buys us. So it's that medium of exchange piece. I

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Speaker 1: don't want to chuck e cheese token. As a matter

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Speaker 1: of fact, I may not play games there because I

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Speaker 1: don't want to get the tokens first, but I might

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Speaker 1: get the tokens in order to play the game. And

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Speaker 1: then then there's a store of value piece, which I

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Speaker 1: think most people at this point realize they probably shouldn't

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Speaker 1: or wealth and fiat currencies, so I think that most

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Speaker 1: people already kind of gotten, you know, past that. And

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Speaker 1: then there's the payment network, and I think that's a

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Speaker 1: big piece because of the um the way the banking

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Speaker 1: system is set up, the financial plumbing as you call it.

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Speaker 1: So those are kind of the three pieces that we're

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Speaker 1: talking about. Now. You said, quote, unless we experience the

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Speaker 1: complete abandonment of all existing financial plumbing, that's here to stay.

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Speaker 1: And so really in that in that quote, you're talking

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Speaker 1: about the dollar being this payment network of the world. Right,

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Speaker 1: it's so intrenched that there's just really no way to

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Speaker 1: just kind of up in that the network effects maybe

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Speaker 1: are too strong. It comes down to, you know, the

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Speaker 1: credit component of the dollar. What I'm describing there in

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Speaker 1: that sentence, it's not it's it's more the capital market

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Speaker 1: side of it. Mark, when we're talking about plumbing, it's

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Speaker 1: not payments per se. Payments use the dollar rails, right,

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Speaker 1: if we think about global payment solutions that are helping

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Speaker 1: people transfer dollars across the world. But what I'm talking

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Speaker 1: more about is how credit gets introduced into the market. Right,

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Speaker 1: How is money created? It's created in the dollar denomination

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Speaker 1: because of something that we call maturity transformation. This is

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Speaker 1: the idea that you have people's savings that are allocated

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Speaker 1: to very safe investments. Right. We think of them as

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Speaker 1: money market funds or fixed short term fixed income treasury funds.

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Speaker 1: Those types of instruments. Okay, those types of instruments have

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Speaker 1: a very short maturity, right, this is money that people

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Speaker 1: know they're going to get back tomorrow. Then you have

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Speaker 1: in the capital market a desire to borrow money for five, ten,

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Speaker 1: and thirty years at a time by corporations and by

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Speaker 1: governments because those governments they don't want to have to

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Speaker 1: roll their debt every day. They want to borrow money

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Speaker 1: for a long time and invest in a project. And

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Speaker 1: let's say a toll road that will take thirty years

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Speaker 1: to pay itself back. So they want to borrow money

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Speaker 1: for a long time. So how do you match the

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Speaker 1: short term money with the long term desire to borrow

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Speaker 1: and spend and invest and build. That process is called

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Speaker 1: maturity transformation. It's done largely through the repo market, where

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Speaker 1: short term money finances long term bonds at the investment

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Speaker 1: at the asset manager level of the bank level. And

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Speaker 1: that maturity transformation happens in dollars. And that maturity transformation

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Speaker 1: is how the world builds things and invest in long

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Speaker 1: term projects. That's the plumbing that we're talking about that's

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Speaker 1: done in dollars, because both sides have agreed that that's

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Speaker 1: the denomination that is coming with the savings and the

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Speaker 1: short term demand for safe assets. And because we have

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Speaker 1: that base, we have companies and countries willing to borrow

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Speaker 1: in dollars, doesn't matter if it's the United States. Every

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Speaker 1: country company that's a major player participates in the dollar

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Speaker 1: capital market so that they can participate in the maturity

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Speaker 1: transformation that the dollars saving split has to offer. So

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Speaker 1: that's what I'm describing about plumbing, and that's why it's

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Speaker 1: so deeply entrenched. There's nothing that unwinds that on a

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Speaker 1: short time horizon, and there's nothing there's no actual challenger

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Speaker 1: in that regard for the maturity transformation, and so that's

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Speaker 1: why I don't see a competitor coming for the dollar

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Speaker 1: anytime soon. So you're talking about the liquidity or not

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Speaker 1: just not just the payments markets, but the credit markets,

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Speaker 1: and so the majority of loans being done are denominated

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Speaker 1: in dollars, and you need the differences of maturities and

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Speaker 1: links and the liquidity available in those markets for sovereigns

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Speaker 1: and whatever to be able to borrow. And there's just

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Speaker 1: no replacement for that. That's correct. And if you think

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Speaker 1: about who is investing in these long term projects, not

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Speaker 1: the core here to understand the maturity part is that

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Speaker 1: not all players in the dollar market want to lock

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Speaker 1: their money up for thirty years. They finance that activity

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Speaker 1: through the repo market, and it's just a matter of

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Speaker 1: borrowing money and then investing that money at a rate

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Speaker 1: that's higher than the amount that the rate sorry than

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Speaker 1: the rate at which you're borrowing. So that's you know,

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Speaker 1: called a spread or a positive carry, where you borrow

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Speaker 1: and then you invest and you try to target a

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Speaker 1: difference that's positive so that you're making a net interest

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Speaker 1: on that activity that is done in dollars, because both

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Speaker 1: sides are there all across the maturity spectrum, from the

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Speaker 1: short to the long end. Now, isn't China, through their

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Speaker 1: belt in the Road initiative and now the two point

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Speaker 1: zero version of that doing lots of you on denominated

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Speaker 1: debts to all those nations they are, and those are

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Speaker 1: extensions of credit right and the extension of credit is

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Speaker 1: an effort for China to get countries to pay them

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Speaker 1: back in rembmb over the medium term. That does introduce

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Speaker 1: that current see into the capital markets, but there's no

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Speaker 1: Chinese currency repo market, and there's no Chinese currency convertibility

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Speaker 1: across borders either, so it is the extension of credit

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Speaker 1: slipper of the pie, but that doesn't make it into

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Speaker 1: a robust capital market that's equipped to handle something like

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Speaker 1: maturity transformation. Understanding the Chinese currency is difficult because there's

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Speaker 1: two of them, right, you have the WAND and the NIMBI,

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Speaker 1: and understand how they use those two is is interesting.

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Speaker 1: I want to get more into that, but before we do,

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Speaker 1: I want to kind of kind of build this case

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Speaker 1: up a little bit more first. And so you had said,

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Speaker 1: you know, upwarding the critical financial infrastructure would prove lengthy, costly,

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Speaker 1: disruptive and practical, and there's no clear reason for another

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Speaker 1: national currency to displaced the US dollar. Per the IMF's website,

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Speaker 1: they say, for the most of the last century, the

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Speaker 1: permanent role of the US dollar and global economy has

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Speaker 1: been supported by the size and strength of the US economy.

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Speaker 1: It's stability and openness to trade and capital flows, and

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Speaker 1: strong private property rights and the rule of law. So

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Speaker 1: that's the ims website. So you said there's been there's

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Speaker 1: no reason, there's no clear reason for another national currency,

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Speaker 1: and per the IMF, the US has had this role

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Speaker 1: because of those reasons stability and openness to trade, capital flows,

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Speaker 1: strong private property rights and rule of law. But what

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Speaker 1: happens when those are gone? So if we no longer

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Speaker 1: have openness to trade, no longer have strong property rights,

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Speaker 1: and no longer have rule of law, for example, unilatterally

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Speaker 1: moving against oligarchs without any due process, does that cause

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Speaker 1: now per the ims reasons? That starts to lose the reasons.

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Speaker 1: And then to your point, there's no clear reason for

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Speaker 1: another currency, does that start to then push the need

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Speaker 1: for needing to do that or wanting to do that.

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Speaker 1: It's a relative game mark, and so when we think

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Speaker 1: about the dollar as the outlet it, you have to

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Speaker 1: compare the property rights to other places. Now I know

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Speaker 1: we're struggling. Let's just say Americans are struggling to fight

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Speaker 1: for their rights on a state and a federal level.

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Speaker 1: That's actually a tale that's as old as the American

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Speaker 1: nation itself, where the people are struggling to protect the

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Speaker 1: republic aspect of our form of government. Right because in

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Speaker 1: the way that regulations can come down and the way

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Speaker 1: that regulatory bodies have evolved, we just have that constant battle.

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Speaker 1: So that is that exists. But then let's just bring

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Speaker 1: in the euro for a second, just look at the

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Speaker 1: euro Do we feel that our property rights will be

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Speaker 1: stronger in Europe relative to the United States. That's the

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Speaker 1: key conversation. And let's not even try to compare the

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Speaker 1: property rights in China and the United States. And really

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Speaker 1: quickly on the Chinese currency. The renminbi is the name

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Speaker 1: that they call the currency, and my understanding is that

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Speaker 1: yuan or one is a more generic way to describe currency,

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Speaker 1: and so they're interchangeable and they can be used interchangeably.

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Speaker 1: With China, it's there. The unit of account is renminbi

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Speaker 1: and uan is a word to describe the currency, so

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Speaker 1: you can use both of them at the same time

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Speaker 1: or interchangeably. M Yeah, So you know when I'm when

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Speaker 1: I'm looking at this, and again, you know, I think

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Speaker 1: neither of us, any experience investor trader, would never be

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Speaker 1: trying to time things right. We're just looking for directtionality here,

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Speaker 1: and so you know, looking at the directionality of this,

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Speaker 1: we can see a couple of trends. One, obviously, we

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Speaker 1: can see the dollars percentage of GDP and FX reserves

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Speaker 1: has been dwindling, but I mean it's still well over

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Speaker 1: fifty over sixty percent or approximately there. But what I'm

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Speaker 1: looking at is like money being used as a weapon.

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Speaker 1: In twenty eighteen, there was an article written an MSNBC

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Speaker 1: by Left and he said that the US was now

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Speaker 1: waging war on one tenth of the world. I was

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Speaker 1: looking it up earlier. The US is sanctioning over one

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Speaker 1: quarter of the world's populations. And so you know, when

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Speaker 1: you kick a country out of being able to use

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Speaker 1: a currency, then what are they going to do? Go die?

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Speaker 1: They just have to find something else. And so like

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Speaker 1: when you have a quarter of the world's people that

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Speaker 1: now can't be in the system, then those people, like

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Speaker 1: if I kick a quarter of the people out of

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Speaker 1: my party, they may go start their own party somewhere.

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Speaker 1: But what I've been seeing, and here's a couple of

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Speaker 1: data points I pulled, is I see Russia has now

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Speaker 1: made yuan the reserve. Seventeen percent of their fex is

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Speaker 1: now in yuan. The UAE is now issuing bonds in

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Speaker 1: their own currency, so outside of the dollar, Egypt is

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Speaker 1: issuing five hundred million in yuan bonds. So outside of

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Speaker 1: the dollar, Israel's diversifying their FX in Duan. And then

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Speaker 1: we have China and India buying oil in yuan. But

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Speaker 1: what it looks like to me though, is all of

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Speaker 1: those people are diversifying out of the dollar. But does

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Speaker 1: it really matter because it seems like what's really at

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Speaker 1: risk here is all FX reserves and not just dollar reserves.

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Speaker 1: So it looks like they're almost diversifying for deflation or

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Speaker 1: inflation in the currency, as opposed to what we saw

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Speaker 1: happen in Russia was their entire FX reserves were just seized.

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Speaker 1: So are they are they are they trying? I mean,

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Speaker 1: does it look like they're they're not really protecting themselves

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Speaker 1: against the what the US could crack down on like

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Speaker 1: what happened with Russia. They're really kind of diversifying currency risk, Yes,

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Speaker 1: that is for sure. You know, the want will have

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Speaker 1: a higher carry than the dollar will, right for example,

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Speaker 1: And so we see that people that are dollar investors

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Speaker 1: will swap dollars for a foreign currency to buy bonds

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Speaker 1: in that currency and hope that the FX movement doesn't

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Speaker 1: go against them enough to account for that extra carry

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Speaker 1: that they got going for the higher return bond because

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Speaker 1: and it has a higher return because sorry a higher

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Speaker 1: expected return because it has a higher risk. And so

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Speaker 1: when it comes to countries diversifying their reserves and holding one.

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Speaker 1: We see that that can happen at the margin, and

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Speaker 1: it probably will, especially for Chinese trading partners. There's no

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Speaker 1: denying that that will definitely happen. But if you see

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Speaker 1: countries diversify away from dollar or the mix of their

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Speaker 1: reserves and start to buy debt from let's say the

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Speaker 1: UAE or other countries that are issuing their own currency bonds,

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Speaker 1: a lot of that trade is done through the FX

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Speaker 1: swap market itself, where the capital that exists to buy

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Speaker 1: that bond is actually in dollars to begin with, and

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Speaker 1: it's just swapped into the currency to buy that bond,

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Speaker 1: But when it returns back into its maturity, it's an

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Speaker 1: extension of dollar credit actually that allowed that bond to

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Speaker 1: be issued in a foreign currency, and it's some bank

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Speaker 1: that transforms the unit of dollars to that other fiat currency. So, yes,

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Speaker 1: the U one is gaining in terms of the way

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Speaker 1: people are or countries are holding their reserves, especially trading

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Speaker 1: partners with China, but it doesn't it's not enough to

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Speaker 1: make it's not enough to start the transformation of the

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Speaker 1: broader capital markets going in that direction. It's it's an

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Speaker 1: alternative investment, right, yeah, And so if we again, so

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Speaker 1: if we break this apart like medium exchange and the

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Speaker 1: store of value and kind of using this chucky cheese

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Speaker 1: example again, Um, I don't want chucky chucky che tokens

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Speaker 1: unless I'm going to play those video games. Um. You know,

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Speaker 1: Russia was selling their energy in rubles, but nobody has rubles.

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Speaker 1: And what is Russia now they get rubles? What are

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Speaker 1: they gonna do with them? Nobody accepts rubles. They're no good. Right,

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Speaker 1: money must be saleable, right, it must be accepted. But

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Speaker 1: to your point, if they're doing it in Chinese, you

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Speaker 1: want and China, China is the largest exporter in the world, Well,

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Speaker 1: that's a lot of Chucky cheese tokens that could be

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Speaker 1: spent at China, right that that that could be used,

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Speaker 1: but that would be the medium of exchange. Doesn't mean

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Speaker 1: that's where their reserves would go. I guess it. Would

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Speaker 1: you break it apart like that. So but then could

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Speaker 1: they put their reserves into gold like what they're trying

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Speaker 1: to do right now? And so we'll use the yuan

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Speaker 1: as a currency because hey, we have you know, trade

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Speaker 1: and balances there and then we'll store our wealth over

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Speaker 1: here in some in liquid currencies that we might use,

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Speaker 1: but also maybe gold or something like that. And that

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Speaker 1: is how it's playing out. And that's not the recipe

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Speaker 1: for a world reserve currency to develop. It's the recipe

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Speaker 1: for the internationalization of a currency. That's the process that China.

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Speaker 1: That China is going through right now. They're trying to

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Speaker 1: internationalize their currency. They're nowhere close to making it a

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Speaker 1: capital market or let's see a deep capital market and

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Speaker 1: the reserve and the method for global reserves to be held.

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Speaker 1: They're just not close. But they are internationalizing their currency,

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Speaker 1: and they're doing that with trade and you know things

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Speaker 1: like Belton Road. Yeah they did. I also did see

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Speaker 1: that they're making the yuan convertible to gold. Did you

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Speaker 1: see that? So then that looks like maybe it has

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Speaker 1: a little bit of a store of value play in

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Speaker 1: it where you could hold their currency and it's supposedly

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Speaker 1: kind of convertible to gold as good as gold almost.

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Speaker 1: I didn't actually see the news story about Chinese currency

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Speaker 1: being convertible into gold. But it's a it's not a peg, right,

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Speaker 1: there's no peg to gold or anything like that. Yeah,

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Speaker 1: it's not peg to gold. It's just convertible to gold

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Speaker 1: at whatever that floating rate is going to be. They

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Speaker 1: just announced the last two months they added over thirty

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Speaker 1: metric tons per month, which they didn't add that. So

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Speaker 1: then what they did is they announced they have it,

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Speaker 1: and then the question is why did they just announce that,

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Speaker 1: right if they've already had it. These are just speculation.

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Speaker 1: But if we keep going down this, you had said

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Speaker 1: that regardless of whether you'd like to deal in dollars,

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Speaker 1: if you're going to grow as a nation, you need

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Speaker 1: to be utilizing the currency that is embedded throughout all

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Speaker 1: of global finance. And then you said that as the

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Speaker 1: world continues to decentralize, which I view as what's happening,

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Speaker 1: you say that the dollar actually becomes more entrenched as

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Speaker 1: that happens because of the adversario dynamic where no nation

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Speaker 1: will accept another small, relatively a liquid currency because it

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Speaker 1: narrows the options available and so the money must be salable.

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Speaker 1: They don't want to be stuck with some little, small

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Speaker 1: nation's money. So it's interesting that you say that as

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Speaker 1: the world becomes more decentralized than the dollar gets stronger.

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Speaker 1: Explain that dynamic. Yes, so If the world gets more decentralized,

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Speaker 1: you're less likely to see the euro takeover all the

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Speaker 1: countries in Europe, like let's say the Nordic countries, which

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Speaker 1: still have their own currency, the Swedish corona, the Norwegian corona, right,

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Speaker 1: the British pound still and the Swiss franc. Okay, So

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Speaker 1: you have Nordic countries, you have UK, you have Switzerland,

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Speaker 1: you have several strong currencies still in Europe, right, you know,

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Speaker 1: and you can throw in more fringe ones like the

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Speaker 1: Polish lottie, right, which are still relatively deep capital markets

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Speaker 1: from an international prospective, and I say relatively compared to

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Speaker 1: let's say emerging markets. Right. The the Polish companies and

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Speaker 1: the British companies are as likely to use Euro as

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Speaker 1: they are likely to use dollars. But the smaller you

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Speaker 1: go in terms of nations, the less likely you are

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Speaker 1: to see them coalesce around a second or third place currency,

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Speaker 1: unless it's something that's directly regional and regional base like

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Speaker 1: how we will probably see Chinese yuan utilize more regionally

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Speaker 1: in Asia, right, but from the global perspective, they're The

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Speaker 1: lack of consensus of the second place player makes the

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Speaker 1: dollar last in its first place for a lot longer

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Speaker 1: than it otherwise would have if Europe or China was

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Speaker 1: really making that charge. And that's why I keep bringing

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Speaker 1: up the euro and the yuan, because that's what we

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Speaker 1: have in the second place than third place. It's not

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Speaker 1: even clear which one is second because different metrics will,

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Speaker 1: Like if we talk about maturity transformation, the euro market

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Speaker 1: is very advanced in that realm. The euro repo market

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Speaker 1: is a well developed market. China doesn't have any repo

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Speaker 1: market that's globally based. They don't have a global capital market, right,

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Speaker 1: Western banks don't traffic and U want denominated securities and

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Speaker 1: engage in maturity transformation. But is China the nation making

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Speaker 1: the biggest charge in internationalizing its currency. Yes, So you

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Speaker 1: see how the second place isn't even clear and it

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Speaker 1: won't become clear. That's my opinion here is that no

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Speaker 1: matter what China does, you still aren't eclipsing the Euro

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Speaker 1: and the dollar in that battle. And that's that's the

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Speaker 1: lay of the land as I see it. So you

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Speaker 1: have these challengers, but because it's not clear, the dollar

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Speaker 1: still reigns. So in Latin America, in Africa, Africa is

429
00:28:12,040 --> 00:28:16,040
Speaker 1: a good place to think about, because we have China

430
00:28:16,160 --> 00:28:22,960
Speaker 1: coming into various African nations, investing, lending, trying to increase

431
00:28:23,040 --> 00:28:26,160
Speaker 1: the amount of trade between Africa and China, and then

432
00:28:26,320 --> 00:28:31,760
Speaker 1: yelling goes and addresses that this is a continent that

433
00:28:31,800 --> 00:28:34,520
Speaker 1: we have to focus on as a nation in the West.

434
00:28:34,880 --> 00:28:38,520
Speaker 1: So Africa will go to Africa will actually be the

435
00:28:38,520 --> 00:28:42,000
Speaker 1: place where we can play this thesis out. And if

436
00:28:42,040 --> 00:28:47,480
Speaker 1: you see Africa going full China, then I'm beginning to

437
00:28:47,520 --> 00:28:50,040
Speaker 1: be wrong here. And you have to assess if you

438
00:28:50,080 --> 00:28:54,560
Speaker 1: see Africa resist going full China with the West coming

439
00:28:54,600 --> 00:28:57,760
Speaker 1: in and the United States specifically saying, hey, increase the

440
00:28:57,800 --> 00:29:00,920
Speaker 1: dollar trade, and you don't think it's in response to

441
00:29:01,040 --> 00:29:03,840
Speaker 1: the what China has done over the last decade. It is.

442
00:29:03,880 --> 00:29:07,920
Speaker 1: It's in direct response because they see the challenger right,

443
00:29:08,160 --> 00:29:10,840
Speaker 1: and governments have to play the long game twenty years,

444
00:29:10,880 --> 00:29:13,960
Speaker 1: fifty years, and they say, hey, we need to come

445
00:29:14,000 --> 00:29:19,160
Speaker 1: back to Africa because it's a battleground for the global

446
00:29:19,200 --> 00:29:23,640
Speaker 1: reserve currency and we can't lose that battle. So that'll

447
00:29:23,680 --> 00:29:26,360
Speaker 1: be a great place to watch, and at the Bitcoin layer,

448
00:29:26,480 --> 00:29:29,360
Speaker 1: we will be watching that closely. Yeah, I want to

449
00:29:29,360 --> 00:29:31,320
Speaker 1: get more into some of that, some of those questions

450
00:29:31,320 --> 00:29:33,480
Speaker 1: I have. But before before we dive into that, I

451
00:29:33,640 --> 00:29:38,000
Speaker 1: talked about Africa. So if we look at and maybe

452
00:29:38,160 --> 00:29:40,000
Speaker 1: maybe I'm wrong here, but some of this kind of

453
00:29:40,000 --> 00:29:42,960
Speaker 1: going back to where we started about the liquidity and

454
00:29:43,000 --> 00:29:45,640
Speaker 1: the banking system, the financial markets that we have that

455
00:29:45,680 --> 00:29:48,120
Speaker 1: the dollar has, And so if we look at like

456
00:29:48,160 --> 00:29:50,560
Speaker 1: the way the Internet spun up, it's fun up really

457
00:29:50,600 --> 00:29:52,840
Speaker 1: fast in the United States because we already had wired telephones,

458
00:29:54,320 --> 00:29:56,360
Speaker 1: and it didn't happen in an emerging markets yet because

459
00:29:56,360 --> 00:29:58,600
Speaker 1: they didn't have telephone lines. But then like Africa leap

460
00:29:58,680 --> 00:30:01,760
Speaker 1: frog and went straight to wirele for example, right, And

461
00:30:01,840 --> 00:30:04,400
Speaker 1: if we look at sort of the kind of the

462
00:30:04,440 --> 00:30:07,240
Speaker 1: same dynamic, we may be already seeing that playout where

463
00:30:07,480 --> 00:30:12,000
Speaker 1: Africa has already jumped onto digital currencies kind of leapfrogging

464
00:30:12,120 --> 00:30:16,080
Speaker 1: past some of this traditional financial payment network stuff. So

465
00:30:16,160 --> 00:30:19,239
Speaker 1: I'm curious if it is, you know, some of this

466
00:30:19,560 --> 00:30:22,840
Speaker 1: backbone of this US payment system, the dollar payment system,

467
00:30:23,240 --> 00:30:26,120
Speaker 1: is because of the correspondent banking systems and stuff that

468
00:30:26,160 --> 00:30:29,320
Speaker 1: they have. If going to something like a CBDC or

469
00:30:29,360 --> 00:30:31,640
Speaker 1: some sort of a digital payment might be a way

470
00:30:31,680 --> 00:30:34,960
Speaker 1: where we might see them leap frog past the existing

471
00:30:35,000 --> 00:30:38,040
Speaker 1: constraints we have and set up a new system much

472
00:30:38,400 --> 00:30:42,120
Speaker 1: quicker and easier, and that type of system would have

473
00:30:42,200 --> 00:30:45,320
Speaker 1: to get legs. So it's proof of concept right now.

474
00:30:45,880 --> 00:30:51,720
Speaker 1: And you know, we talk about bitcoin. Bitcoin is part

475
00:30:51,800 --> 00:30:55,320
Speaker 1: of what is the leap frog event that we're witnessing

476
00:30:55,400 --> 00:30:58,280
Speaker 1: right now with mobile phones and digital money. Because the

477
00:30:58,360 --> 00:31:01,920
Speaker 1: CBDC is not live if yet in Nigeria for example,

478
00:31:02,560 --> 00:31:08,080
Speaker 1: but it's coming, it's not it's not live, so I

479
00:31:08,200 --> 00:31:10,880
Speaker 1: thought that it was in more of a pilot stage

480
00:31:11,000 --> 00:31:13,720
Speaker 1: right now that it's not being used across the country.

481
00:31:14,000 --> 00:31:18,720
Speaker 1: So but you can correct me on that arc. Yeah,

482
00:31:18,760 --> 00:31:21,040
Speaker 1: I'm not sure. I don't know either. I do know

483
00:31:21,160 --> 00:31:23,959
Speaker 1: that I've reported a couple of times where they were

484
00:31:24,000 --> 00:31:26,960
Speaker 1: trying to use the carrot first to incentivize people to

485
00:31:27,080 --> 00:31:29,600
Speaker 1: use the Nira, and they were given them discounts on

486
00:31:29,680 --> 00:31:31,760
Speaker 1: cabs and petticabs and stuff, and not enough people were

487
00:31:31,800 --> 00:31:33,720
Speaker 1: moving to it. So now the stick came out and

488
00:31:33,760 --> 00:31:37,160
Speaker 1: I think they limited ATM withdraws to twenty five dollars

489
00:31:37,280 --> 00:31:40,840
Speaker 1: per day, right unless they get the Nira. Yes, and

490
00:31:40,960 --> 00:31:43,920
Speaker 1: so you're you're right, And so it's been live since

491
00:31:44,360 --> 00:31:49,280
Speaker 1: late twenty twenty one and it's the it's the restriction

492
00:31:49,320 --> 00:31:52,520
Speaker 1: that confused me that, yes, that they're restricting their withdrawals

493
00:31:52,600 --> 00:31:56,040
Speaker 1: of the money, and that's happening in the CBD form.

494
00:31:56,080 --> 00:31:58,080
Speaker 1: I was assuming that that was at the banking level.

495
00:31:58,600 --> 00:32:02,240
Speaker 1: So you see Nigeria being one of the places where

496
00:32:02,440 --> 00:32:07,400
Speaker 1: the adoption of bitcoin is at its most fears, and

497
00:32:07,480 --> 00:32:10,160
Speaker 1: so you know that battle is something that you're witnessing.

498
00:32:10,680 --> 00:32:17,120
Speaker 1: And yes, CBDCs do help get you know, the technology

499
00:32:17,240 --> 00:32:22,960
Speaker 1: going forward, but I don't see it materially affecting let's say,

500
00:32:23,280 --> 00:32:28,400
Speaker 1: the dollar being entrenched, because in the end, currencies that

501
00:32:28,640 --> 00:32:31,720
Speaker 1: do gain traction are the ones that are going to

502
00:32:31,760 --> 00:32:37,360
Speaker 1: be convertible to dollars, let's say in the beginning stages. Yeah,

503
00:32:37,440 --> 00:32:39,680
Speaker 1: I guess what I just keep coming back to is

504
00:32:40,400 --> 00:32:43,160
Speaker 1: necessity being the mother of invention or whatever, right, And

505
00:32:43,360 --> 00:32:45,400
Speaker 1: I like to say that we only move when the

506
00:32:45,440 --> 00:32:47,600
Speaker 1: pain is high enough. And so, you know, in the

507
00:32:47,600 --> 00:32:50,720
Speaker 1: Western world, the United States or Canada or something like that,

508
00:32:50,800 --> 00:32:52,720
Speaker 1: like why do we need something like bitcoin? We don't

509
00:32:52,720 --> 00:32:55,400
Speaker 1: have high enough pain. Versus if you're in Turkey or

510
00:32:55,640 --> 00:32:58,800
Speaker 1: Venezuela watching your currency blow up, or in you know, Afghanistan,

511
00:32:58,800 --> 00:33:01,280
Speaker 1: where nobody can send you money, you kind of get

512
00:33:01,320 --> 00:33:05,680
Speaker 1: it back to the Nigeria. When I was doing some

513
00:33:05,720 --> 00:33:07,840
Speaker 1: research on that carrot and stick, I was telling you

514
00:33:08,280 --> 00:33:10,120
Speaker 1: the people were saying, why would we use the n

515
00:33:10,160 --> 00:33:12,520
Speaker 1: I R. It's the exact same thing as the regular are.

516
00:33:12,600 --> 00:33:15,000
Speaker 1: It's just still going to keep losing value, like we're

517
00:33:15,000 --> 00:33:17,560
Speaker 1: not going to use that, why would we? Righte And

518
00:33:17,600 --> 00:33:20,600
Speaker 1: so the pain is high enough. But going back to

519
00:33:20,680 --> 00:33:23,920
Speaker 1: that pain, if we have a quarter of the world

520
00:33:24,000 --> 00:33:26,360
Speaker 1: under US sanctions not being allowed allowed to use this

521
00:33:26,440 --> 00:33:31,160
Speaker 1: payment network, and a lot of these are commodity rich countries.

522
00:33:31,320 --> 00:33:35,560
Speaker 1: You're talking about Africa for example, And so when these

523
00:33:35,560 --> 00:33:38,760
Speaker 1: countries they can't deal in the dollar network, they got

524
00:33:38,760 --> 00:33:42,360
Speaker 1: to deal in something else. And so maybe in the

525
00:33:42,400 --> 00:33:44,800
Speaker 1: beginning it starts off very small, but they have to

526
00:33:44,840 --> 00:33:47,920
Speaker 1: do something. What do you think they'll go to? I mean,

527
00:33:48,440 --> 00:33:50,880
Speaker 1: try the un and see if that gained steam. I

528
00:33:50,920 --> 00:33:55,680
Speaker 1: think black market dollars are black market dollars more more

529
00:33:55,920 --> 00:34:01,040
Speaker 1: the method that's used in those cases we see, like

530
00:34:01,080 --> 00:34:04,959
Speaker 1: in Iran, you see black market dollars being you know,

531
00:34:05,960 --> 00:34:08,320
Speaker 1: a store of value and something that people traffic in.

532
00:34:08,480 --> 00:34:13,560
Speaker 1: So that I think that's more likely Bitcoin does fit

533
00:34:13,640 --> 00:34:17,560
Speaker 1: that role. Right we think about you know, I think

534
00:34:18,320 --> 00:34:20,960
Speaker 1: a lot of people still think that gold can fill

535
00:34:20,960 --> 00:34:24,640
Speaker 1: the role of global money. But if gold isn't being

536
00:34:24,760 --> 00:34:29,000
Speaker 1: already used in these countries that are restricting the use

537
00:34:29,040 --> 00:34:33,080
Speaker 1: of dollars or where the dollar is sanctioned, then you're

538
00:34:33,120 --> 00:34:37,200
Speaker 1: probably not going to And I will provide an asterisk there,

539
00:34:37,640 --> 00:34:43,040
Speaker 1: which is that oil for gold transactions are still happening

540
00:34:43,080 --> 00:34:48,600
Speaker 1: between nations today, like Iran and India have been transacting

541
00:34:48,600 --> 00:34:52,359
Speaker 1: oil for gold in the past decade. I don't know

542
00:34:52,400 --> 00:34:55,280
Speaker 1: the statistics on it, but that has been a trade

543
00:34:55,360 --> 00:35:01,080
Speaker 1: that has been on and so gold is still being

544
00:35:01,200 --> 00:35:05,640
Speaker 1: used as global money in a small use case. Gold

545
00:35:05,719 --> 00:35:08,319
Speaker 1: is not really being used as money in a hand

546
00:35:08,360 --> 00:35:12,000
Speaker 1: to hand it's more black market dollars in places that

547
00:35:12,040 --> 00:35:17,600
Speaker 1: are sanctioned. I don't see uan being used as money

548
00:35:17,640 --> 00:35:22,319
Speaker 1: in the hand to handway in nations where let's say

549
00:35:22,360 --> 00:35:26,240
Speaker 1: non Asian nations that are sanctioned by the United States,

550
00:35:27,200 --> 00:35:32,080
Speaker 1: and we do see bitcoin being used in those nations

551
00:35:32,680 --> 00:35:35,720
Speaker 1: on the ground, and that's very exciting for the prospect

552
00:35:35,800 --> 00:35:41,760
Speaker 1: of bitcoin adoption and the prospect of bitcoin to rise

553
00:35:42,040 --> 00:35:45,520
Speaker 1: in the face of gold being an old money that

554
00:35:45,600 --> 00:35:49,840
Speaker 1: works globally the yuan being a new challenger that's trying

555
00:35:50,040 --> 00:35:54,640
Speaker 1: to attempt internationalization. Wouldn't you say that bitcoin is also

556
00:35:54,719 --> 00:35:59,279
Speaker 1: attempting internationalization. I would say yes. And then you have

557
00:35:59,400 --> 00:36:03,120
Speaker 1: the Euro which is a continent that will be biased

558
00:36:03,280 --> 00:36:08,000
Speaker 1: to restrict bitcoin activity because of their more restrictive property

559
00:36:08,080 --> 00:36:11,280
Speaker 1: rights relative to the United States, where bitcoin will thrive.

560
00:36:12,040 --> 00:36:15,839
Speaker 1: So there's a lot of moving parts. I don't have

561
00:36:15,960 --> 00:36:19,560
Speaker 1: any of the answers or even the predictions. I just

562
00:36:19,680 --> 00:36:21,680
Speaker 1: calling it like I see it, which is that the

563
00:36:21,840 --> 00:36:26,520
Speaker 1: entrenchment of the dollar is too deep, especially in the

564
00:36:26,560 --> 00:36:31,640
Speaker 1: capital market and maturity transformation side that that unwind is

565
00:36:32,520 --> 00:36:37,759
Speaker 1: has not begun, even though other ramp up efforts are happening,

566
00:36:38,200 --> 00:36:43,359
Speaker 1: including the Bitcoin ramp up, of which you and I

567
00:36:43,480 --> 00:36:47,640
Speaker 1: both identify as one of the big glimmers of hope

568
00:36:48,400 --> 00:36:52,880
Speaker 1: in this whole conversation, as we discuss the death of

569
00:36:52,920 --> 00:36:57,000
Speaker 1: the dollar or the non death of the dollar and

570
00:36:57,120 --> 00:37:01,759
Speaker 1: the internationalization of the Chinese frency, Yeah, I think you know,

571
00:37:01,800 --> 00:37:04,000
Speaker 1: the death of the dollar is definitely sensational and it

572
00:37:04,040 --> 00:37:06,920
Speaker 1: grabs headlines. But as I kind of started at the beginning,

573
00:37:07,360 --> 00:37:09,160
Speaker 1: the dollar took over from the pound, but the pounds

574
00:37:09,200 --> 00:37:11,279
Speaker 1: still a third rank currency. It's still there, so it

575
00:37:11,800 --> 00:37:13,560
Speaker 1: hasn't really died. It just kind of like starts to

576
00:37:13,600 --> 00:37:16,600
Speaker 1: lose its like relevance a little bit. Um jumping to

577
00:37:16,640 --> 00:37:18,480
Speaker 1: bitcoin for a minute. I mean, you did say in

578
00:37:18,480 --> 00:37:22,120
Speaker 1: this article, um, that bitcoin did process over eight trillion

579
00:37:22,200 --> 00:37:25,480
Speaker 1: dollars in twenty twenty two. That's not nothing. I mean,

580
00:37:25,480 --> 00:37:27,680
Speaker 1: that's that's it's it's growing pretty big, and that's that's

581
00:37:27,680 --> 00:37:31,160
Speaker 1: a big chunk. Um. Yes, and it was a stack

582
00:37:31,280 --> 00:37:34,480
Speaker 1: up in the kind of rank of of of trade

583
00:37:34,640 --> 00:37:38,160
Speaker 1: or globally. I think it's hard to compare that number.

584
00:37:38,760 --> 00:37:41,879
Speaker 1: So let's say first of all that that number um

585
00:37:42,280 --> 00:37:46,120
Speaker 1: was debated. When I put it out that people said, hey,

586
00:37:46,160 --> 00:37:49,439
Speaker 1: there's certain So I took the number from jameson Lap

587
00:37:50,080 --> 00:37:54,279
Speaker 1: who put out a tweet with the statistic analyzing the

588
00:37:54,360 --> 00:37:58,560
Speaker 1: movement of utxos during twenty twenty two. UM. I think

589
00:37:58,560 --> 00:38:01,160
Speaker 1: it was eight point two trillion that was in the

590
00:38:01,239 --> 00:38:05,160
Speaker 1: calculation that he posted, and others came back and they said, no,

591
00:38:05,239 --> 00:38:08,880
Speaker 1: it's actually less, so let's call it several trillion. But

592
00:38:09,000 --> 00:38:13,480
Speaker 1: even then, as we see these trillions transacted on the

593
00:38:13,480 --> 00:38:17,839
Speaker 1: bitcoin blockchain, how much of it is due to the

594
00:38:18,320 --> 00:38:23,520
Speaker 1: just the simple activity of sending money or sending bitcoin

595
00:38:23,560 --> 00:38:26,319
Speaker 1: two and from exchanges as traders get in and out

596
00:38:26,320 --> 00:38:31,280
Speaker 1: of positions, arguably most of it, but that use case

597
00:38:31,719 --> 00:38:36,439
Speaker 1: doesn't it's not apples to apples comparable to let's say

598
00:38:36,640 --> 00:38:42,279
Speaker 1: GDP or fedwire, Right. I remember a few years ago

599
00:38:42,400 --> 00:38:45,960
Speaker 1: the amount of fed wire on an annual basis was

600
00:38:46,040 --> 00:38:51,120
Speaker 1: somewhere around three quarters of a quadrillion dollars, which is

601
00:38:51,920 --> 00:38:56,200
Speaker 1: about I think it was seven hundred and sixty trillion.

602
00:38:57,400 --> 00:39:00,200
Speaker 1: This is from a few years ago, which would be

603
00:39:00,280 --> 00:39:04,920
Speaker 1: one hundred times the amount that was calculated for bitcoin.

604
00:39:05,239 --> 00:39:10,799
Speaker 1: So honestly, it's not it's not a lot mark, but

605
00:39:10,960 --> 00:39:14,160
Speaker 1: it's such a big it's such a big absolute number

606
00:39:14,600 --> 00:39:17,720
Speaker 1: that it goes to show you that we have entered

607
00:39:17,719 --> 00:39:22,120
Speaker 1: the trillions. When we're talking about how much is transaction now,

608
00:39:22,160 --> 00:39:27,000
Speaker 1: I know that between one and five trillion is transacted

609
00:39:27,360 --> 00:39:31,439
Speaker 1: in the FX market every single day, every single week day.

610
00:39:33,120 --> 00:39:37,000
Speaker 1: So bitcoin at eight trillion for the year is also

611
00:39:37,760 --> 00:39:43,759
Speaker 1: kind of small. Those are some relative numbers for you.

612
00:39:45,719 --> 00:39:48,560
Speaker 1: But then if we look at you know, if we

613
00:39:48,600 --> 00:39:52,120
Speaker 1: look at just the absolute number of eight trillion, it

614
00:39:52,239 --> 00:39:55,240
Speaker 1: can go to show you that, hey, this is probably

615
00:39:56,600 --> 00:40:00,920
Speaker 1: the amount that gets transacted in all of FX in

616
00:40:01,320 --> 00:40:04,640
Speaker 1: a week maybe, and that happened on bitcoin in a year,

617
00:40:04,880 --> 00:40:09,960
Speaker 1: So it's impressive, but it should come with you know,

618
00:40:10,080 --> 00:40:15,520
Speaker 1: some relative markers. Yeah. Now, another piece you had said

619
00:40:15,640 --> 00:40:18,439
Speaker 1: was liquidity. Back to this kind of eight trillion dollar number,

620
00:40:18,480 --> 00:40:21,280
Speaker 1: you'd said, liquidity is what makes the reserve currency viable,

621
00:40:22,440 --> 00:40:24,560
Speaker 1: and so you have to have a big enough market

622
00:40:24,640 --> 00:40:26,960
Speaker 1: where you can have enough flow go in and out

623
00:40:27,000 --> 00:40:29,560
Speaker 1: and so on. An eight trillion dollars a year, which

624
00:40:29,719 --> 00:40:32,320
Speaker 1: sounds big, but in the scheme of things, is very small,

625
00:40:32,360 --> 00:40:35,000
Speaker 1: and it's not a big enough, not a liquid enough

626
00:40:35,080 --> 00:40:37,560
Speaker 1: market to move big amounts of money in and out

627
00:40:38,239 --> 00:40:42,080
Speaker 1: without swinging it wildly. Is that right? Yeah, And you

628
00:40:42,239 --> 00:40:44,600
Speaker 1: also have to think about the fact that bitcoin isn't

629
00:40:44,600 --> 00:40:49,439
Speaker 1: a cash flung security, and cash flong securities are at

630
00:40:49,560 --> 00:40:54,640
Speaker 1: the basis of a lot of banking planning or just

631
00:40:54,760 --> 00:40:59,480
Speaker 1: asset liability management, which takes place in the trillions, and

632
00:40:59,560 --> 00:41:03,120
Speaker 1: so you can't see you know, we think about pension

633
00:41:03,120 --> 00:41:05,360
Speaker 1: funds as one of the biggest buyers of fixed income,

634
00:41:05,680 --> 00:41:08,120
Speaker 1: and when are they going to come out of fixed

635
00:41:08,160 --> 00:41:11,600
Speaker 1: income into bitcoin? And that's going to unleash some flood

636
00:41:11,600 --> 00:41:15,600
Speaker 1: of capital. But bitcoin doesn't have cash flow, and so

637
00:41:15,760 --> 00:41:19,920
Speaker 1: it doesn't fit the eye of the asset liability manager,

638
00:41:21,280 --> 00:41:25,480
Speaker 1: and it doesn't fit the eye of liability driven investing

639
00:41:25,520 --> 00:41:31,120
Speaker 1: strategies because it doesn't have that nature, doesn't have that

640
00:41:31,239 --> 00:41:36,919
Speaker 1: characteristic and you can't plan an actuarial basis. You can't

641
00:41:36,920 --> 00:41:39,640
Speaker 1: plan on an actuarial basis for something that doesn't have

642
00:41:39,719 --> 00:41:43,760
Speaker 1: those cash flows or that expected life. Even right bitcoin

643
00:41:44,200 --> 00:41:49,200
Speaker 1: has an infinity expected life, and so that doesn't fit

644
00:41:49,520 --> 00:41:53,800
Speaker 1: the models of asset managers. So that's kind of also

645
00:41:53,920 --> 00:41:59,040
Speaker 1: the when we're talking about liquidity, we have to consider

646
00:41:59,040 --> 00:42:06,280
Speaker 1: also the characteristic sothiastic classes. Let's go into maybe maybe

647
00:42:06,360 --> 00:42:08,600
Speaker 1: let's let's let's flip it and say what would it

648
00:42:08,640 --> 00:42:11,440
Speaker 1: looked like if it was starting to transition this way.

649
00:42:11,480 --> 00:42:15,319
Speaker 1: So you said that I'm talking about the dollar being

650
00:42:15,320 --> 00:42:18,880
Speaker 1: the king and having the global liquidity and Bretton Woods

651
00:42:18,880 --> 00:42:22,040
Speaker 1: and seventy ninety years developing this this complex network, and

652
00:42:22,040 --> 00:42:25,560
Speaker 1: you said, quote, this simply can't be displaced by just

653
00:42:25,760 --> 00:42:30,359
Speaker 1: unplugging the USD cartridge and replacing it with the CNY one.

654
00:42:30,800 --> 00:42:33,200
Speaker 1: So you can't just take this existing plumbing. And I

655
00:42:33,239 --> 00:42:35,080
Speaker 1: think it's what you're saying and pull us d out

656
00:42:35,480 --> 00:42:40,120
Speaker 1: and then stick stick China in. It doesn't work that way. Um.

657
00:42:40,920 --> 00:42:42,799
Speaker 1: But as we kind of talked about with this leap

658
00:42:42,840 --> 00:42:46,719
Speaker 1: frog Africa example, UM, could you potentially keep this one

659
00:42:46,800 --> 00:42:48,880
Speaker 1: that just continues to get used less and less and

660
00:42:48,960 --> 00:42:52,080
Speaker 1: less and then have this alternative network over here that

661
00:42:52,200 --> 00:42:56,360
Speaker 1: starts to gain steam. Is that possible and what signs

662
00:42:56,400 --> 00:43:00,960
Speaker 1: would be looking at to see if that was actually happening. Yes,

663
00:43:01,160 --> 00:43:04,799
Speaker 1: And when we think about the Nira, so I just

664
00:43:04,920 --> 00:43:08,400
Speaker 1: looked it up while we were talking here. The latest

665
00:43:09,160 --> 00:43:12,720
Speaker 1: number is three million people up from one million people

666
00:43:14,880 --> 00:43:17,360
Speaker 1: in Nigeria. So you're you're you're up to three million

667
00:43:17,360 --> 00:43:22,160
Speaker 1: people that are using the nira now. But does the

668
00:43:22,239 --> 00:43:27,800
Speaker 1: adoption of the nira take away from the dollar at

669
00:43:27,840 --> 00:43:31,239
Speaker 1: on the net when we're talking about dollar versus U

670
00:43:31,239 --> 00:43:36,120
Speaker 1: on adoption. I'm not sure that I see that link,

671
00:43:37,120 --> 00:43:41,560
Speaker 1: and it would be it would be a different conversation

672
00:43:41,760 --> 00:43:46,719
Speaker 1: if we were seeing people in Nigeria adopting the digital

673
00:43:47,120 --> 00:43:53,200
Speaker 1: renmn B right, and which might happen Mark, So that

674
00:43:53,320 --> 00:43:59,080
Speaker 1: might be part of the internationalization effort of China as

675
00:43:59,120 --> 00:44:01,319
Speaker 1: it goes to its trading partners and it says, hey,

676
00:44:02,239 --> 00:44:06,719
Speaker 1: why don't you start transacting in digital currency with us

677
00:44:07,760 --> 00:44:11,960
Speaker 1: and you can hold it in your wallet and we

678
00:44:12,080 --> 00:44:15,560
Speaker 1: might even let you earn a yield on it, and

679
00:44:16,040 --> 00:44:18,879
Speaker 1: that would be that would be a game theory move

680
00:44:19,080 --> 00:44:25,280
Speaker 1: for China to try to strengthen its position. We could

681
00:44:25,280 --> 00:44:29,360
Speaker 1: see that type of aggression and so that's also something

682
00:44:29,400 --> 00:44:33,080
Speaker 1: that I'll be watching for. You know, this is again

683
00:44:33,120 --> 00:44:37,279
Speaker 1: it's a relative game. And if I can't if I

684
00:44:37,360 --> 00:44:41,680
Speaker 1: can't see the pieces that are there yet, it's hard

685
00:44:41,680 --> 00:44:46,200
Speaker 1: to speculate on the you know, Chinese you want coming

686
00:44:46,200 --> 00:44:51,200
Speaker 1: in and being able to support financial plumbing around the world, right,

687
00:44:51,680 --> 00:44:54,160
Speaker 1: those pieces are just not there. If they're there in

688
00:44:54,200 --> 00:44:57,200
Speaker 1: the next five years, we can we have to change

689
00:44:57,239 --> 00:45:01,919
Speaker 1: the conversation when you say those pieces financial plumbing. It's

690
00:45:01,960 --> 00:45:04,520
Speaker 1: not just the ability of the correspondent banks to send

691
00:45:04,520 --> 00:45:08,160
Speaker 1: money between themselves. That maybe the easier part. You're more

692
00:45:08,160 --> 00:45:12,000
Speaker 1: talking about the financial markets around at the debt markets,

693
00:45:12,280 --> 00:45:16,399
Speaker 1: the bond markets, etc. Yeah, like when we like when

694
00:45:16,560 --> 00:45:22,600
Speaker 1: when big international asset managers start keeping a significant portion

695
00:45:22,680 --> 00:45:28,200
Speaker 1: of their assets in Chinese denominated asset markets like Chinese

696
00:45:28,200 --> 00:45:31,640
Speaker 1: bond markets for example, why why do they have to

697
00:45:32,280 --> 00:45:35,560
Speaker 1: so what if what if these big allocators said, you

698
00:45:35,560 --> 00:45:37,880
Speaker 1: know what, we don't trust the FX market, none of

699
00:45:37,880 --> 00:45:40,480
Speaker 1: these countries are trustworthy, and so we're going to keep

700
00:45:40,480 --> 00:45:43,960
Speaker 1: our money and commodities you might. I'm sure you're well

701
00:45:44,000 --> 00:45:46,880
Speaker 1: aware of Zoltan Posar's work where he talks about um

702
00:45:46,960 --> 00:45:50,600
Speaker 1: these countries storing their wealth m in commodities, now, like

703
00:45:50,640 --> 00:45:53,000
Speaker 1: that's kind of the trend, and he talks there was

704
00:45:53,040 --> 00:45:57,120
Speaker 1: an article that came out this week. GM just purchased

705
00:45:57,800 --> 00:45:59,640
Speaker 1: what five hundred and half a billion dollars worth of

706
00:45:59,680 --> 00:46:02,360
Speaker 1: lithia mine in the United States, and they're talking about

707
00:46:02,360 --> 00:46:04,960
Speaker 1: how you know, they'd rather store their wealth in that

708
00:46:05,080 --> 00:46:09,279
Speaker 1: commodity than in US treasuries, right, And so what if

709
00:46:09,280 --> 00:46:12,120
Speaker 1: that trend continues, were these big capital allocators like GM

710
00:46:12,400 --> 00:46:14,279
Speaker 1: or sovereign and say, well, well, we're not going to

711
00:46:14,360 --> 00:46:16,400
Speaker 1: put in any currency, We're not gonna hold you US treasuries,

712
00:46:16,400 --> 00:46:18,600
Speaker 1: We're gonna buy the commodity of the lithium, mind the

713
00:46:18,640 --> 00:46:25,399
Speaker 1: gold directly. What about that sort of a trend. That

714
00:46:25,560 --> 00:46:27,480
Speaker 1: sort of a trend I think has been there for

715
00:46:27,520 --> 00:46:31,319
Speaker 1: a while. And we think about companies that allocate to

716
00:46:31,560 --> 00:46:35,120
Speaker 1: either their savings or to projects and if they see

717
00:46:35,160 --> 00:46:38,760
Speaker 1: the project having a better return profile than they invest

718
00:46:39,160 --> 00:46:41,600
Speaker 1: But you know, those projects that they're investing in, they're

719
00:46:41,600 --> 00:46:44,000
Speaker 1: purchasing in them in dollars and one day they'll sell

720
00:46:44,000 --> 00:46:48,480
Speaker 1: them indollars too, So it's it's just another asset that

721
00:46:48,520 --> 00:46:53,160
Speaker 1: they buy on the dollar. Rail and commodities also don't

722
00:46:53,200 --> 00:46:57,879
Speaker 1: have cash flow characteristics that can support the liability driven

723
00:46:57,960 --> 00:47:01,799
Speaker 1: investment world. So it's a it's a use, it's a

724
00:47:02,520 --> 00:47:08,560
Speaker 1: it's a potential allocation for certain participants in the market. Right.

725
00:47:08,560 --> 00:47:13,000
Speaker 1: We call that market segmentation, and in certain segments of

726
00:47:13,000 --> 00:47:16,600
Speaker 1: the market, we'll see commodities be more demanded. But part

727
00:47:16,640 --> 00:47:19,200
Speaker 1: of the reason that we wrote this article was to

728
00:47:19,280 --> 00:47:23,240
Speaker 1: address some of the narratives out there from Zoltan, posts

729
00:47:23,239 --> 00:47:26,759
Speaker 1: Are and others that were headed more to uh, you know,

730
00:47:26,880 --> 00:47:29,480
Speaker 1: maybe a dollar breakup or more of a commodity based

731
00:47:30,239 --> 00:47:35,840
Speaker 1: financial system. We don't necessarily see that unfolding in that way,

732
00:47:36,280 --> 00:47:38,959
Speaker 1: even though we can point like you can point to

733
00:47:39,040 --> 00:47:43,640
Speaker 1: the lithium allocation or other countries making certain moves like

734
00:47:43,840 --> 00:47:47,000
Speaker 1: Russian China, you know, in gold based moves. We see

735
00:47:47,040 --> 00:47:50,080
Speaker 1: those moves happening. We're not blind to them, but they

736
00:47:50,080 --> 00:47:54,160
Speaker 1: don't really change our thesis. Yeah, and it's it's great nuance,

737
00:47:54,160 --> 00:47:55,799
Speaker 1: and I appreciate it. Was a great article, and I've

738
00:47:55,840 --> 00:47:58,480
Speaker 1: shared it and I appreciate it um And and one

739
00:47:58,480 --> 00:48:01,080
Speaker 1: reason why I like it is because, uh, there's certainly,

740
00:48:01,120 --> 00:48:03,319
Speaker 1: no doubt a sensational headlines talking about the death of

741
00:48:03,360 --> 00:48:06,000
Speaker 1: the dollar, and people need to understand this is a

742
00:48:06,120 --> 00:48:09,200
Speaker 1: very nuanced topic. And even if this is the case,

743
00:48:09,360 --> 00:48:12,839
Speaker 1: per Azultan posar it again, it's not imminent, and it's

744
00:48:12,880 --> 00:48:17,000
Speaker 1: not it's not an event. It's that's a transition. But

745
00:48:17,000 --> 00:48:18,799
Speaker 1: but going back to that just a second, So what

746
00:48:18,880 --> 00:48:22,239
Speaker 1: would it take for you to kind of change your mind?

747
00:48:22,239 --> 00:48:23,960
Speaker 1: Like what are the things that would have to happen,

748
00:48:24,000 --> 00:48:27,760
Speaker 1: So like China would have to open up capital controls

749
00:48:27,840 --> 00:48:30,840
Speaker 1: or open up their capital markets and establish like a

750
00:48:30,920 --> 00:48:34,600
Speaker 1: trusted hum you know, bond market, Like what would have

751
00:48:34,680 --> 00:48:37,919
Speaker 1: to happen in order to see that where you'd but wow, okay,

752
00:48:37,920 --> 00:48:42,080
Speaker 1: this is starting to gain traction. Yeah, fully internationalized currency

753
00:48:42,200 --> 00:48:49,520
Speaker 1: that can be held offshore and convertible to currencies around

754
00:48:49,520 --> 00:48:52,240
Speaker 1: the world. So that would be the number one step

755
00:48:52,960 --> 00:48:58,200
Speaker 1: the Chinese currency to become fully convertible, and you know,

756
00:48:59,400 --> 00:49:02,919
Speaker 1: a potential allocation for most of the investment world, which

757
00:49:03,000 --> 00:49:06,120
Speaker 1: is just not yet because of the way that they

758
00:49:06,200 --> 00:49:09,080
Speaker 1: have a closed capital account. So that would be number one,

759
00:49:09,160 --> 00:49:12,320
Speaker 1: and then number two would be a globalized Chinese bond market,

760
00:49:13,160 --> 00:49:17,400
Speaker 1: which they're trying, but it's in its infancy. And then

761
00:49:17,440 --> 00:49:25,160
Speaker 1: a globalized Chinese repo market for its bonds, especially its

762
00:49:25,160 --> 00:49:30,840
Speaker 1: sovereign bonds, and it's sovereign bonds being auctioned on a

763
00:49:30,880 --> 00:49:38,959
Speaker 1: regular basis and reaching let's say the five to ten

764
00:49:39,080 --> 00:49:44,399
Speaker 1: trillion dollars worth of supply, and that market to be

765
00:49:46,719 --> 00:49:50,040
Speaker 1: followed in a way where you know how we're all

766
00:49:50,080 --> 00:49:52,479
Speaker 1: watching the Fed. Why because when they move the price

767
00:49:52,520 --> 00:49:55,600
Speaker 1: of money, all the price of the bonds moved too.

768
00:49:56,400 --> 00:50:01,560
Speaker 1: And so when we'll be watching Chinese monetary policy, because

769
00:50:01,680 --> 00:50:04,560
Speaker 1: it just affects that many assets and that many assets

770
00:50:04,560 --> 00:50:07,560
Speaker 1: are stored. So those would be some of the pieces

771
00:50:07,600 --> 00:50:10,560
Speaker 1: that I would look for, okay, And so they're working

772
00:50:10,600 --> 00:50:12,959
Speaker 1: on the currency piece of it right now, but doesn't

773
00:50:12,960 --> 00:50:15,200
Speaker 1: seem like they're doing anything on those other two pieces.

774
00:50:15,360 --> 00:50:18,400
Speaker 1: So as of right now, there's really not any positive

775
00:50:18,480 --> 00:50:21,399
Speaker 1: or any big progress being made in that direction by

776
00:50:21,400 --> 00:50:23,680
Speaker 1: any of these challenges by Russia, by the bricks or

777
00:50:23,719 --> 00:50:28,120
Speaker 1: by China. That's right, that's part of the entrenchment there.

778
00:50:28,520 --> 00:50:33,680
Speaker 1: It doesn't We can look at the headlines about trade

779
00:50:33,800 --> 00:50:41,880
Speaker 1: happening in Uue. That doesn't shift the plumbing aspect of

780
00:50:42,040 --> 00:50:48,960
Speaker 1: how the world financial system works. Okay, well, good, let's

781
00:50:49,040 --> 00:50:51,319
Speaker 1: let's let's let's jump topics for a minute. I got

782
00:50:51,320 --> 00:50:53,640
Speaker 1: a few minutes left with you here. Something that you

783
00:50:53,680 --> 00:50:56,520
Speaker 1: and I have talked about extensively. You've written a ton

784
00:50:56,600 --> 00:50:59,239
Speaker 1: about on the bitcoin layer, which is about the FED

785
00:50:59,680 --> 00:51:02,719
Speaker 1: and what they're doing with rates. I don't know. Six

786
00:51:02,800 --> 00:51:04,840
Speaker 1: eight months ago you shared a chart with me showing

787
00:51:05,440 --> 00:51:08,040
Speaker 1: I think it was the two year yield and the

788
00:51:08,080 --> 00:51:10,640
Speaker 1: FED funds rate and when it inverted and maybe they'd

789
00:51:10,640 --> 00:51:13,040
Speaker 1: stop raising at that point, which I think we're there now.

790
00:51:14,880 --> 00:51:17,080
Speaker 1: You know, they they leaked that they had probably only

791
00:51:17,160 --> 00:51:20,719
Speaker 1: raised twenty five basis points, which they did, and on

792
00:51:20,760 --> 00:51:23,799
Speaker 1: top of that, the BLS came out and changed the

793
00:51:23,840 --> 00:51:28,160
Speaker 1: CPI calculation, which doing nothing else instantly could bring down

794
00:51:28,239 --> 00:51:31,760
Speaker 1: CPI by a couple of points based off of those

795
00:51:32,280 --> 00:51:35,480
Speaker 1: changes in the system. Where do you see the outlook

796
00:51:35,520 --> 00:51:37,319
Speaker 1: for you know, rates from here on out. Do you

797
00:51:37,360 --> 00:51:40,080
Speaker 1: think they'll pause from here to see more rate hikes

798
00:51:40,120 --> 00:51:42,440
Speaker 1: or what do you see happening from here? Yeah, I

799
00:51:42,560 --> 00:51:48,440
Speaker 1: think that the disinflation is in and that will be

800
00:51:48,480 --> 00:51:51,520
Speaker 1: the trend of twenty twenty three. So the trend of

801
00:51:51,560 --> 00:51:57,120
Speaker 1: twenty twenty two was really hot inflation and an active

802
00:51:57,160 --> 00:52:02,359
Speaker 1: monetary policy response. The trend twenty three will be the

803
00:52:02,520 --> 00:52:10,480
Speaker 1: disinflation trend continuing and the FED allowing itself to step back.

804
00:52:10,680 --> 00:52:15,160
Speaker 1: It means not doing much. And so right now the

805
00:52:15,200 --> 00:52:18,879
Speaker 1: market has one more hike priced in for twenty five

806
00:52:18,880 --> 00:52:22,800
Speaker 1: basis points next month. We still have a lot of

807
00:52:22,880 --> 00:52:26,400
Speaker 1: data between now and then, but really what we're looking

808
00:52:26,440 --> 00:52:33,640
Speaker 1: for is this trend that the fear last year, the

809
00:52:33,719 --> 00:52:39,080
Speaker 1: fear of runaway inflation. That fear has ended. Now we're

810
00:52:39,239 --> 00:52:43,040
Speaker 1: in a stage in which we are basically trying to

811
00:52:43,040 --> 00:52:47,920
Speaker 1: assess how quickly do we come back down to longer

812
00:52:48,080 --> 00:52:51,080
Speaker 1: term two percent inflation and that kind of stuff. So,

813
00:52:51,200 --> 00:52:54,239
Speaker 1: I know, we talk about changes in the CPI, but

814
00:52:54,680 --> 00:52:59,040
Speaker 1: really look past the CPI and look to the prices

815
00:52:59,040 --> 00:53:05,400
Speaker 1: of commodities, prices of food, the prices that we're seeing

816
00:53:05,719 --> 00:53:10,600
Speaker 1: really across the survey components of PMI surveys, so like

817
00:53:10,719 --> 00:53:14,840
Speaker 1: price is paid in ISM, price is paid in others

818
00:53:14,920 --> 00:53:18,880
Speaker 1: pmis around the world. That's it. We have enough inflation

819
00:53:19,000 --> 00:53:23,359
Speaker 1: data from there to assess what inflation is doing. All

820
00:53:23,400 --> 00:53:26,399
Speaker 1: of those metrics right now are telling us that the

821
00:53:26,440 --> 00:53:31,160
Speaker 1: worst of last year's inflation is behind us. The Fed

822
00:53:31,239 --> 00:53:34,680
Speaker 1: sees that, and they don't see the need to keep

823
00:53:34,760 --> 00:53:39,920
Speaker 1: hiking now. They also don't see the need to cut

824
00:53:39,960 --> 00:53:45,719
Speaker 1: And I also I also believe that's my base case.

825
00:53:45,800 --> 00:53:48,680
Speaker 1: That's what I felt for a while, that whenever they

826
00:53:48,719 --> 00:53:51,799
Speaker 1: get to where they are, they'll be biased to keep

827
00:53:51,800 --> 00:53:54,800
Speaker 1: it there for a lot longer than people think. And

828
00:53:55,800 --> 00:53:58,080
Speaker 1: even if the economy gets weak, and that's really the

829
00:53:58,440 --> 00:54:02,600
Speaker 1: last factor here, is that is the economy heading into

830
00:54:02,640 --> 00:54:08,840
Speaker 1: a very bad recession, a shallow recession, or maybe avoiding

831
00:54:08,840 --> 00:54:11,759
Speaker 1: a recession altogether. I think it's I think it's still

832
00:54:11,800 --> 00:54:15,359
Speaker 1: a little early to call it on that, even though

833
00:54:15,480 --> 00:54:19,919
Speaker 1: right now what we're seeing is the economy in contraction

834
00:54:20,200 --> 00:54:26,080
Speaker 1: based off of the PMI surveys. But again, im services

835
00:54:26,120 --> 00:54:28,719
Speaker 1: just came in at fifty five, which is well in

836
00:54:28,760 --> 00:54:34,319
Speaker 1: the expansion territory. So right now it's it is still

837
00:54:34,360 --> 00:54:38,279
Speaker 1: a little too early to call any recession as well. Yeah, now,

838
00:54:38,600 --> 00:54:41,160
Speaker 1: of course twenty twenty told the show the whole world

839
00:54:41,239 --> 00:54:44,160
Speaker 1: that the economy does not equal the markets. We saw

840
00:54:44,200 --> 00:54:46,880
Speaker 1: the entire economy shutdown, businesses shut down, and yet the

841
00:54:46,880 --> 00:54:48,680
Speaker 1: markets screamed a new all time highs and so we

842
00:54:48,719 --> 00:54:53,120
Speaker 1: see those two are very disconnected. So you know, we'll

843
00:54:53,160 --> 00:54:55,040
Speaker 1: see what happens with the economy. The data doesn't look

844
00:54:55,080 --> 00:54:57,880
Speaker 1: super good. A lot of people say that, or history

845
00:54:57,960 --> 00:55:00,000
Speaker 1: kind of tells us that a lot of these changes

846
00:55:00,160 --> 00:55:03,000
Speaker 1: that has been making maybe don't show themselves in the

847
00:55:03,000 --> 00:55:06,080
Speaker 1: market and the economy until six nine months out or longer.

848
00:55:06,600 --> 00:55:09,040
Speaker 1: So maybe if some of these moves have been so

849
00:55:09,160 --> 00:55:11,359
Speaker 1: fast that we haven't really had time to digest them,

850
00:55:11,640 --> 00:55:13,719
Speaker 1: and so maybe we'll start to see some of the

851
00:55:13,760 --> 00:55:15,879
Speaker 1: results of those here over the next several months. Well,

852
00:55:15,880 --> 00:55:18,480
Speaker 1: that's what we're thinking about with when it comes to housing,

853
00:55:19,120 --> 00:55:22,640
Speaker 1: housing market has turned over and prices are now going

854
00:55:22,719 --> 00:55:26,280
Speaker 1: negative month over month. I think we're in I wish

855
00:55:26,280 --> 00:55:28,800
Speaker 1: I had the exact number, but I think it's around

856
00:55:28,880 --> 00:55:33,880
Speaker 1: four or five six months now of consecutive housing price

857
00:55:34,000 --> 00:55:37,200
Speaker 1: declines month over month basis. That's based off of the

858
00:55:38,239 --> 00:55:41,440
Speaker 1: Case Shiller Home Price Index. It's the main metric that

859
00:55:41,520 --> 00:55:46,560
Speaker 1: I watch on the housing market, and so those declines

860
00:55:47,040 --> 00:55:50,520
Speaker 1: have come from the increase in rates that we're happening

861
00:55:50,560 --> 00:55:54,399
Speaker 1: six months before. So they're still raising rates now, So

862
00:55:54,560 --> 00:55:56,799
Speaker 1: what is that going to have? What effect is that

863
00:55:56,800 --> 00:55:59,080
Speaker 1: going to have on housing in three months from now,

864
00:55:59,120 --> 00:56:01,600
Speaker 1: in six months from now, housing is twenty five percent

865
00:56:01,600 --> 00:56:03,920
Speaker 1: of the US economy? What does that due to the

866
00:56:03,960 --> 00:56:08,560
Speaker 1: greater US economy? So, yes, monetary policy operates with a lag,

867
00:56:08,760 --> 00:56:13,640
Speaker 1: and we don't see what happens fully from rate hikes

868
00:56:13,800 --> 00:56:21,160
Speaker 1: until several months after the fact, and it might have

869
00:56:21,160 --> 00:56:24,600
Speaker 1: been six months ago whenever we had talked, and you

870
00:56:24,680 --> 00:56:28,279
Speaker 1: had kind of had the contrarian viewpoint where there's no

871
00:56:28,360 --> 00:56:32,160
Speaker 1: shortage of headlines out there talking about this big crash

872
00:56:32,160 --> 00:56:34,200
Speaker 1: that's coming in the markets. You got the Harry Dents

873
00:56:34,440 --> 00:56:37,000
Speaker 1: and the David Hunters saying there's another sixty eight percent

874
00:56:37,080 --> 00:56:39,480
Speaker 1: draw down coming, and you were kind of one of

875
00:56:39,480 --> 00:56:41,640
Speaker 1: the first contrarians to say, I don't know if that's

876
00:56:41,680 --> 00:56:43,480
Speaker 1: going to happen. I think maybe the Fed could pull

877
00:56:43,520 --> 00:56:46,719
Speaker 1: off this kind of proverbial soft landing the markets. Would

878
00:56:46,719 --> 00:56:49,760
Speaker 1: that still be your base case for twenty twenty three, Well,

879
00:56:49,880 --> 00:56:53,240
Speaker 1: let's let's ignore the soft landing and just talk about

880
00:56:53,280 --> 00:56:56,759
Speaker 1: the asset price. Yeah, the SMP five hundred trades at

881
00:56:56,760 --> 00:57:01,239
Speaker 1: four thousand, it's significantly above. Believe it's well over ten

882
00:57:01,239 --> 00:57:05,640
Speaker 1: percent off of the lows, and it is still well

883
00:57:05,880 --> 00:57:09,200
Speaker 1: over ten percent off of the highs. So you're in

884
00:57:09,520 --> 00:57:14,359
Speaker 1: a consolidation range. And there's no there's no we don't

885
00:57:14,360 --> 00:57:20,040
Speaker 1: see any well. When the when the stock market unwound

886
00:57:20,080 --> 00:57:23,680
Speaker 1: in twenty twenty two, it bounced and has consolidated, so

887
00:57:24,600 --> 00:57:28,520
Speaker 1: there has been no crash yet. And I really just

888
00:57:28,720 --> 00:57:32,600
Speaker 1: always go back to the price and looking at the consolidation.

889
00:57:32,720 --> 00:57:35,840
Speaker 1: Right now, I see a stock market that is in

890
00:57:35,920 --> 00:57:40,520
Speaker 1: decent shape technically speaking, and that's really the outlook I

891
00:57:40,560 --> 00:57:43,440
Speaker 1: have for for the stock market. There I see rates

892
00:57:43,480 --> 00:57:45,840
Speaker 1: trying to put in a top and stocks trying to

893
00:57:45,840 --> 00:57:50,360
Speaker 1: put in a bottom. That action has been trying to

894
00:57:50,440 --> 00:57:54,240
Speaker 1: unfold itself, honestly since June, but then we had a

895
00:57:54,360 --> 00:57:58,000
Speaker 1: course another test of the lows in stocks in the

896
00:57:58,160 --> 00:58:03,480
Speaker 1: in the fall winter time horizon. But that's kind of

897
00:58:03,520 --> 00:58:05,840
Speaker 1: the way that I still see it, and I do

898
00:58:05,960 --> 00:58:12,360
Speaker 1: believe that the stock market will respond well to the

899
00:58:12,400 --> 00:58:17,560
Speaker 1: FED saying we like the disinflation and we're going to

900
00:58:17,640 --> 00:58:20,720
Speaker 1: continue to watch that and sit in our position to

901
00:58:20,840 --> 00:58:25,840
Speaker 1: a pause. That's right. Yeah, So historically pauses have been

902
00:58:25,880 --> 00:58:29,560
Speaker 1: bullish for stocks, pivots not so much. Pauses have done good,

903
00:58:29,600 --> 00:58:32,840
Speaker 1: and so you're thinking that maybe there's a pause, potentially

904
00:58:32,880 --> 00:58:35,480
Speaker 1: another twenty five basis point hike and then just kind

905
00:58:35,480 --> 00:58:37,320
Speaker 1: of like the sit and wait, which would be a pause,

906
00:58:38,440 --> 00:58:42,160
Speaker 1: and that would probably be at least somewhat neutral, if

907
00:58:42,160 --> 00:58:44,200
Speaker 1: not maybe potentially a little bit bullish for the markets

908
00:58:44,200 --> 00:58:46,880
Speaker 1: and mark I'll say one last thing on the ten

909
00:58:46,920 --> 00:58:49,800
Speaker 1: year yield, ten year yield training between three and a

910
00:58:49,840 --> 00:58:53,440
Speaker 1: half and four percent, that's actually kind of fair value

911
00:58:53,480 --> 00:58:57,520
Speaker 1: for where what I'm looking at. So I'm usually the

912
00:58:57,640 --> 00:59:00,920
Speaker 1: treasury bull here thinking that rates are going lower, But

913
00:59:01,040 --> 00:59:04,040
Speaker 1: I don't see a lot of move impetus in the

914
00:59:04,080 --> 00:59:06,240
Speaker 1: market to get tents down to two and a half

915
00:59:06,280 --> 00:59:11,080
Speaker 1: percent right now, with the way that growth is kind

916
00:59:11,120 --> 00:59:13,919
Speaker 1: of hanging in there, even though it's contracting a little bit,

917
00:59:14,240 --> 00:59:16,600
Speaker 1: it's not falling off a cliff, and we don't see

918
00:59:16,920 --> 00:59:19,200
Speaker 1: we don't see some of the biggest red flags, and

919
00:59:19,520 --> 00:59:22,840
Speaker 1: a ten year yield crashing would be one of those

920
00:59:22,880 --> 00:59:25,680
Speaker 1: big red flags. So I watch yields to tell me

921
00:59:26,040 --> 00:59:28,720
Speaker 1: right now yield still above three and a half percent. Say,

922
00:59:29,280 --> 00:59:34,760
Speaker 1: economy is decent enough, and I try to read the

923
00:59:34,840 --> 00:59:38,680
Speaker 1: prices to tell me what's going on. Do you think

924
00:59:38,720 --> 00:59:41,840
Speaker 1: that some of the feds, like really fast swift action

925
00:59:42,200 --> 00:59:44,880
Speaker 1: might have been to buy themselves some room to maybe

926
00:59:44,920 --> 00:59:47,960
Speaker 1: come back down a little bit when needed. It's part

927
00:59:48,000 --> 00:59:52,200
Speaker 1: of their it's part of their academia actually, where they say,

928
00:59:52,440 --> 00:59:54,960
Speaker 1: we raise rates so that we can cut them. And

929
00:59:55,120 --> 00:59:59,720
Speaker 1: it sounds hilarious, but if you read their speeches from

930
01:00:00,360 --> 01:00:03,120
Speaker 1: fifteen twenty sixteen, when they were raising rates back then,

931
01:00:04,000 --> 01:00:06,600
Speaker 1: that's what they said. We're raising rates so that we

932
01:00:06,640 --> 01:00:09,480
Speaker 1: can cut them if the economy slows down. So it's

933
01:00:09,600 --> 01:00:13,120
Speaker 1: part it's definitely part of it um but it's a

934
01:00:13,120 --> 01:00:17,800
Speaker 1: little simplistic to categorize that as one of the main drivers,

935
01:00:17,840 --> 01:00:21,000
Speaker 1: but it's definitely there. They need room to cut if

936
01:00:21,040 --> 01:00:23,480
Speaker 1: things go badly, and so the more they hike, the

937
01:00:23,520 --> 01:00:27,120
Speaker 1: more they can accommodate when things slow down, and when

938
01:00:27,200 --> 01:00:31,320
Speaker 1: when better to overhike than when inflation headline is at

939
01:00:31,400 --> 01:00:33,400
Speaker 1: nine percent. So that's what we saw from them in

940
01:00:33,400 --> 01:00:38,480
Speaker 1: twenty twenty. So for all of our let's say potential

941
01:00:38,520 --> 01:00:41,200
Speaker 1: home buyers that got in at these seven percent rates,

942
01:00:41,280 --> 01:00:42,919
Speaker 1: do you think there might be a chance at lower

943
01:00:43,000 --> 01:00:45,600
Speaker 1: rates coming in the in the future somewhere, Yeah, that

944
01:00:45,760 --> 01:00:49,760
Speaker 1: people will get to refin lower Um. I'm I'm not

945
01:00:49,800 --> 01:00:53,560
Speaker 1: too worried about that. Yeah, okay, well man, that's that's

946
01:00:53,600 --> 01:00:56,160
Speaker 1: good information. We're gonna go to wrap it up with that, Nick. Um.

947
01:00:57,280 --> 01:00:59,120
Speaker 1: I get a lot of information out of the newsletter

948
01:00:59,120 --> 01:01:00,680
Speaker 1: of the Bitcoin Layer. I read it all the time.

949
01:01:00,720 --> 01:01:03,040
Speaker 1: I'm a paid up subscriber. I talk about it a

950
01:01:03,080 --> 01:01:04,600
Speaker 1: lot on my channel. And if you guys want to

951
01:01:04,600 --> 01:01:06,600
Speaker 1: get that information the Bitcoin Layer check it out. Will

952
01:01:06,600 --> 01:01:09,360
Speaker 1: link to it down below, as well as Nick's other

953
01:01:09,440 --> 01:01:14,000
Speaker 1: stuff on Twitter, time Value of BTC, and check out

954
01:01:14,000 --> 01:01:16,560
Speaker 1: the book Layered Money. Anything else you want to call

955
01:01:16,560 --> 01:01:18,320
Speaker 1: out Nick or that people should be paying attention to.

956
01:01:18,760 --> 01:01:21,480
Speaker 1: No follow along at the Bitcoin Layer dot com. We're

957
01:01:21,520 --> 01:01:24,040
Speaker 1: putting out newsletters and videos, so we hope you guys

958
01:01:24,080 --> 01:01:26,360
Speaker 1: will follow along. Mark appreciate you having me on. Thanks

959
01:01:26,400 --> 01:01:29,680
Speaker 1: a lot, dude. Yeah, all right, Nick, we'll wrap it

960
01:01:29,760 --> 01:01:31,800
Speaker 1: up with that. Thanks so much. All right, that's a rap.

961
01:01:31,840 --> 01:01:34,560
Speaker 1: Hopefully you enjoyed this conversation and how with Nick. He's

962
01:01:34,600 --> 01:01:36,600
Speaker 1: a great guest, someone that I use his research of

963
01:01:36,680 --> 01:01:38,320
Speaker 1: a lot. You should check it out. There's a link

964
01:01:38,400 --> 01:01:41,160
Speaker 1: down below. As always, let me know what you think.

965
01:01:41,200 --> 01:01:42,480
Speaker 1: Give me a thumbs up if you liked it. If

966
01:01:42,520 --> 01:01:44,200
Speaker 1: you don't, you can give me a thumbs down. That's okay,

967
01:01:44,200 --> 01:01:46,360
Speaker 1: but at least let me know why and hit that

968
01:01:46,400 --> 01:01:48,440
Speaker 1: subscribe button. Why you're at it, and that's what I

969
01:01:48,440 --> 01:01:50,080
Speaker 1: got to your success. I'm out.