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Speaker 1: Imagine a case where the United States government actually wants

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Speaker 1: the gold price to explode higher. Why would they want that,

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Speaker 1: and what would that look like in the face of

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Speaker 1: the rest of the world as the world is breaking

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Speaker 1: apart and feemalely racing for another reserve asset. That's a

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Speaker 1: topic we're going to explore today. I'm sitting down with

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Speaker 1: Luke Grahman. He's the founder and president of Force for

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Speaker 1: the Trees FFTT an amazing newsletter. I was just telling

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Speaker 1: him it's like the only one I read every single week.

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Speaker 1: We'll link to that down below. We're gonna sit down,

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Speaker 1: We're going to talk through the situation that we're having

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Speaker 1: in the United States and really the rest of the

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Speaker 1: world with that, the potential outcomes, how that unfolds, and.

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Speaker 2: So much more. So let's just jump in, Luke, thanks

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Speaker 2: for joining me. Today.

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Speaker 1: We've done we've done a couple of interviews, the first

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Speaker 1: one live so so so stoked on that. So we

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Speaker 1: are going to do a panel later today talking about

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Speaker 1: out of control government. So we'll get into that later,

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Speaker 1: but let's just let's just tie right in. So there's

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Speaker 1: a situation where the fiscal problem in the United States

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Speaker 1: is out of control, and that's kind of the ahead

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Speaker 1: of our panel. So whant you just frame up this

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Speaker 1: out of control situation?

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Speaker 2: That we're in?

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Speaker 3: The out of control situation, there's a couple of factors

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Speaker 3: to it. The debt to GDP of the United States.

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Speaker 3: Deaths of the GDP at both as a percentage of

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Speaker 3: GDP are so high that the US needs to have

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Speaker 3: nominal GDP growth consistently run above the interest rates on

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Speaker 3: the debt. So little G phenomenal G growth for nominal

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Speaker 3: growth of GDP and little R four rates is the

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Speaker 3: parlance in the economics world. And we have to have

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Speaker 3: G stay far not just above R, but far enough

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Speaker 3: above R to keep the interest the debt sustainable to

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Speaker 3: keep from going into a debt spiral. The problem is

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Speaker 3: with the absolute levels of debt that we have thirty

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Speaker 3: five almost thirty six trillion dollars. Now, what that implies

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Speaker 3: is that you need to be blunt a sucker at

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Speaker 3: the card table with enough balance sheet to be able

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Speaker 3: to take real losses. Losses on a real basis. I'm

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Speaker 3: thirty six trillion dollars in debt and aggregate, and of

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Speaker 3: course there's no private sector entity big enough that is

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Speaker 3: able to do that, and the higher the debt goes,

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Speaker 3: the more G has to be above R, which means

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Speaker 3: the more the holders of our debt have to fall

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Speaker 3: behind on living standards. Our growth outpaces the interest rate

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Speaker 3: we're paying them in our debt, and that just there's

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Speaker 3: not an entity big enough with a private sector balance

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Speaker 3: sheet to do that, and so of course it falls

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Speaker 3: to the FED or FED proxies. And so that's the

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Speaker 3: fundamental problem. You can dig into why that's happening, the

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Speaker 3: structural nature of what's happening as it relates to entitlements, defense,

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Speaker 3: interest being the big biggest three expenditure items by far,

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Speaker 3: some other things in terms of just deflationary pressures of protectivity, AI,

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Speaker 3: et cetera. But that's the fundamental issue is G has

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Speaker 3: to be far enough above R, and there's nobody with

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Speaker 3: a balance sheet big enough to do that on thirty

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Speaker 3: six trillion dollars in debt.

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Speaker 2: Yeah. Now there's a couple of variables in there, though.

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Speaker 1: So one, we're trying to grow the G grow, grow

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Speaker 1: the GDP, and we could do that through inflation, we

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Speaker 1: could do through a productivity miracle, right, those are the

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Speaker 1: ways to do that.

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Speaker 2: But also you.

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Speaker 1: Talk about the true interest expense, so that's the you said,

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Speaker 1: the entitlements plus the interest. So the rates could just

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Speaker 1: go back down to one percent and that would greatly

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Speaker 1: help that situation, right.

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Speaker 3: Yeah, absolutely, And that's you know, the key ultimately in

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Speaker 3: this is that higher rates of inflation are in the cake.

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Speaker 3: So you know, when you look at we need to

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Speaker 3: keep g above r we need higher nominal GDP growth.

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Speaker 3: You can do that the inflation. We saw that and

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Speaker 3: that can work, but again that weakens you know, the

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Speaker 3: more we have high inflation, the less incentive there is

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Speaker 3: to hold the debt so far below that rate of inflation.

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Speaker 3: The more impetus that puts on the central bank to

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Speaker 3: buy it or their proxies to buy it, the more

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Speaker 3: inflation goes up, and that gets into that that issue.

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Speaker 1: So if they lower rates, then there's even less demand

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Speaker 1: for the treasuries than there is now, which means the

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Speaker 1: Fed then has to print and buy more of it conceivably.

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Speaker 3: Yeah. So if you you know you can cut you

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Speaker 3: can in theory cut in titlements, but you probably really can't.

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Speaker 3: But that's a separate disciplity. If you cut rates, uh,

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Speaker 3: in my view, there's gonna be two impacts to that.

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Speaker 3: There is going to be the accounting impact, which is,

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Speaker 3: given how much debt we have, if you cut rates,

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Speaker 3: you're actually probably going to lower the deficit outlook and

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Speaker 3: over the next six to twelve months, because you know,

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Speaker 3: thirty six trillion in debt. If you cut rates from

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Speaker 3: you know whatever, five and a quarter today, let's say

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Speaker 3: they cut it to three. That's two hundred and twenty

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Speaker 3: five basis points. Let's do it to three and a

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Speaker 3: quarter to make the math easy for me, five and

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Speaker 3: a quarter to three and a quarter. They cut rates

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Speaker 3: two inner basis point points in a compressed period of time,

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Speaker 3: you are going to reduce interest expense twelve months from

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Speaker 3: now by two hundred base points on thirty six tra

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Speaker 3: seven hundred and twenty billion dollars, which is meaningful on

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Speaker 3: a deficit of two hundred billion or excuse me, two trillion.

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Speaker 3: That is meaningful. That it would also probably slow growth

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Speaker 3: a little bit because you're going to be putting out

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Speaker 3: less interest to asset holders, to treasury holders domestically and globally. Paradoxically, however,

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Speaker 3: you're also going to be sending a message in terms

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Speaker 3: of the animal spirits multiples et cetera, to the markets

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Speaker 3: that you are cutting rates aggressively with nominal GDP still

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Speaker 3: growing at five to five and a half percent, with

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Speaker 3: unemployment at four percent, basically full employment, and with gd

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Speaker 3: or CPI running still a little over three percent, know,

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Speaker 3: above your com above your target. So I think it

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Speaker 3: gets into this very delicate situation where mechanically cutting rates

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Speaker 3: aggressively will slow growth, it will reduce the deficit, but

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Speaker 3: it's all and so in theory it it has a

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Speaker 3: d disinflationary impulse on one hand, but then I think

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Speaker 3: ultimately it will be inflationary because I think the markets

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Speaker 3: will read what that is for what it is, which

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Speaker 3: is the US is in a form of fiscal dominance.

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Speaker 3: The feed is cutting rates because it has a fiscal

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Speaker 3: crisis that is accelerating, and when central banks cut rates

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Speaker 3: to address fiscal crises, the price of stuff goes up,

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Speaker 3: not down.

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Speaker 1: We're in a world today where information is abundant. The

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Speaker 1: old problem used to be getting the right information. Today

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Speaker 1: we have just too much of it, so we have

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Speaker 1: to learn how to discern it. Do you think it's

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Speaker 1: probable to think that any government that's somewhat intelligent, which

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Speaker 1: I'm guessing is most of them look the US and

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Speaker 1: doesn't see that we have a fiscal problem. Like you're

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Speaker 1: saying that we're going to tell the world we have

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Speaker 1: a fiscal problem. Don't you think they already realized that?

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Speaker 3: Oh they know it, and so does the US. So

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Speaker 3: does the US.

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Speaker 2: So I mean we've seen warnings from the IMF. We've

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Speaker 2: seen I mean they're.

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Speaker 3: Yeah, they all know, and you can see it in

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Speaker 3: the you know. For me, I always I always want

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Speaker 3: to hear what they have to say, but I put

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Speaker 3: more credence, I put more weight on what they do.

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Speaker 3: And so global central banks stopped buying treasuries on that

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Speaker 3: ten years ago. They've been buying gold that whole time.

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Speaker 3: They've significantly accelerated it since twenty twenty two with the

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Speaker 3: sanctions on FX reserves of Russia. They have put on

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Speaker 3: some of it by nature of the structure of the system,

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Speaker 3: but I think some of it by design. They've brought

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Speaker 3: a lot of dollars and they've bought a lot of

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Speaker 3: US assets, which is that's an expression of that view,

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Speaker 3: which is when people say, well, oh, they're still borrowing dollars.

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Speaker 3: The Saudi's just borrowed whatever. Two billion dollars a few

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Speaker 3: weeks ago in dollars. People say, well, see the dollars

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Speaker 3: still dominant. The dollar is still dominant. But that's there's

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Speaker 3: another interpretation of expression, which is the soud he's just

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Speaker 3: short at two billion dollars against oil.

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Speaker 2: So I think when you use the speculative attack.

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Speaker 3: Yeah, I mean, and it's some of it's just a

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Speaker 3: structure of the system. But I think it's also just

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Speaker 3: smart hedging. Now, I don't even think it's a specular attack.

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Speaker 3: I just think it's it's it's going with the energy,

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Speaker 3: it's going with the flow. You know when when yes,

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Speaker 3: foreigners have borrowed thirteen trillion dollars in debt, but they

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Speaker 3: also have twenty two trillion dollars net in US assets

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Speaker 3: fifty seven trillion dollars gross. So you're in this sort

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Speaker 3: of Mexican standoff of mutually assured economic destruction where the

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Speaker 3: dollar gets too strong. If we weaponize the dollar against

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Speaker 3: those dollar borrowings, we actually end up hurting our markets,

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Speaker 3: hurting our revenues, hurting our economy more faster than we're

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Speaker 3: able to recap our adversaries with the dollar. And we've

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Speaker 3: seen that repeatedly since twenty twenty two. So I do

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Speaker 3: think there is I do think there's absolutely an understanding

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Speaker 3: globally and in particularly at the central bank level, the

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Speaker 3: message of stopping buying treasuries and buying gold couldn't be

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Speaker 3: more clear. They don't need to be right, they don't

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Speaker 3: need to get the timing right, but they know and

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Speaker 3: they know what the situation is. And critically, by virtue

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Speaker 3: of them doing that ten years ago, they accelerated the

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Speaker 3: whole thing meaningfully.

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Speaker 1: So it's almost like they're the only way out is inflation,

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Speaker 1: one way or another. Just where do you want to

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Speaker 1: see it? Do you think you know? You hear about

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Speaker 1: the FED talking about bringing inflation back then two percent.

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Speaker 1: Of course, the Bide administration prices are too high, et cetera,

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Speaker 1: et cetera. But at the same time, it almost seems

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Speaker 1: like inflation would be easier to digest than deflation, like

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Speaker 1: even maybe for the American people at some point. I mean,

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Speaker 1: obviously the poor people really get hit high with inflation,

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Speaker 1: but the more fluid people will see their asset prices

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Speaker 1: go higher, they can raise their wages. You know, your stock,

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Speaker 1: your four one key account doesn't crash. Do you think

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Speaker 1: inflation is the easier choice to make, not just for

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Speaker 1: the government to stay in power, but even maybe just

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Speaker 1: for the people.

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Speaker 3: I think it is easier choice. I mean, it's deflation

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Speaker 3: is always an option, but because the debt and deficit

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Speaker 3: levels are so extreme, what we're talking about is, in

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Speaker 3: practical terms, is a new great depression of slashing entitlements

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Speaker 3: and defense spending in the US by twenty five to

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Speaker 3: thirty percent overnight, permanently, which has severe political implications, probably

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Speaker 3: pretty quickly into an already politically unstable or increasingly politically

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Speaker 3: unstable situation. So ultimately, I do think inflation is the

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Speaker 3: only way out now, depending on how you structure that

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Speaker 3: you can make that good for the middle and working classes.

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Speaker 3: And there's an argument to be made that's the fundamental

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Speaker 3: or one of the fundamental cruxes of this election, which

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Speaker 3: is which group of people are going to suffer it?

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Speaker 3: Because if you have a wide open border, unrestrained immigration

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Speaker 3: and you inflate, what you're going to do is you're

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Speaker 3: going to have asset prices risegnificantly. You're going to have

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Speaker 3: the top one percent do really well, but and you're

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Speaker 3: going to have sort of everybody else, the bottom ninety

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Speaker 3: to ninety five percent seeing inflation rise faster than their

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Speaker 3: wages because you're going to be restraining wages with immigration.

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Speaker 3: That is the recipe for a revolution. That is, but

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Speaker 3: a revolution at some undetermined future date that could be

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Speaker 3: two years, five years, ten years, twenty ors thirty years,

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Speaker 3: you don't know. And politicians famously would always rather take

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Speaker 3: pain tomorrow at some undetermined time, or sixty year, eight years.

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Speaker 3: It could be sixty or eighty years. Absolutely, on the

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Speaker 3: flip side, you can look back and see when Trump

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Speaker 3: reduced And I'm not pining or I'm not stumping for

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Speaker 3: either candidate here, I'm simply looking at it as an

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Speaker 3: objective observer. When immigration levels fell under Trump's first administration,

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Speaker 3: the bottom fifty bottom seventy percent of wages grew faster

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Speaker 3: than the top one to ten percent of wage journers

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Speaker 3: for the first time in like thirty years. And so

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Speaker 3: it's fascinating to hear the narratives around the Trump Harris.

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Speaker 3: It never touches on this, and I think it never

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Speaker 3: touches on this for a good reason, because saying we

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Speaker 3: want more immigration so that the one percent can make more,

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Speaker 3: so that corporate profit margins can remain at all time

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Speaker 3: highs or hires. Which is what the inflate plus open

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Speaker 3: immigration does is it's not a winnable platform. You are

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Speaker 3: going to get killed in an election on that. So

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Speaker 3: you make it about other social things and you denigrate

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Speaker 3: and you call names, but you don't whatever you do,

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Speaker 3: you don't do that because if you inflate and you

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Speaker 3: significantly restrain border, now you get a different outcome, which

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Speaker 3: is actually really good outcome for everybody that has not

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Speaker 3: done as well as the top one percent of the

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Speaker 3: last forty years, which is to say, asset prices are

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Speaker 3: still probably gonna go up. Corporate profit dollars are going

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Speaker 3: to go up with the inflation, but corporate profit margins

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Speaker 3: are going to go down. Wages for the bottom fifty

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Speaker 3: seventy percent of Americans are going to go up because

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Speaker 3: inflation is going to go up and growth is going

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Speaker 3: to go up, but there isn't going to be the

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Speaker 3: cheap labor around to and so basically corporate America is

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Speaker 3: gonna have to pay up for the labor that is here.

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Speaker 3: Then you get into things like tariffs, et cetera. But

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Speaker 3: that ultimately starts to be a situation where the middle

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Speaker 3: and working classes actually recapture some of what they lost

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Speaker 3: over the last forty years. Asset prices still go up,

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Speaker 3: they don't go up as fast. Perhaps the bond market

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Speaker 3: gets killed on a real basis, because now we're talking

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Speaker 3: about sort of a wage spiral, if you will. For

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Speaker 3: some period of time, the Fed probably has to be

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Speaker 3: involved with some sort of yield cur control, which they

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Speaker 3: probably would on the other side. But on the other

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Speaker 3: side of that you end up, especially if it's married

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Speaker 3: with some sort of industrial policy, it's with a a

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Speaker 3: much more stable, less divided country, something that's really good

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Speaker 3: for America. And so it's you basically that inflation flips

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Speaker 3: on its head. The winners and losers of the last

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Speaker 3: you know, thirty forty years, which is Wall Street and

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Speaker 3: certain Washington interests one on a relative real basis over

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Speaker 3: the least thirty forty years, they would lose on a

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Speaker 3: relative real basis under that scenario. And that's what needs

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Speaker 3: to happen, like the for the US to win, the

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Speaker 3: real value of the US treasury market needs to lose badly.

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Speaker 1: Yeah, I'm really interested to dig into the mechanism of

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Speaker 1: energy and oil and gold and bitcoin, but I want

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Speaker 1: to stay on this thread just for a minute. So

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Speaker 1: if you think about that, I mean, so we sort

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Speaker 1: of reindustrializing the base, but not allowing the big immigrants,

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Speaker 1: the big immigration numbers to come in, which then means

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Speaker 1: the Americans get more jobs.

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Speaker 2: I guess is kind of what you're saying, right.

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Speaker 1: But if you think about that, then I mean, that's

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Speaker 1: going to push the prices of the those assets, or

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Speaker 1: not the acids, but the goods and services way higher.

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Speaker 1: Right at ten dollars part in China is now one

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Speaker 1: hundred bucks in the United States. So while I guess

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Speaker 1: that's good, we have more people working than Also, theoretically

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Speaker 1: the cost of goods is going up faster than their

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Speaker 1: wages are, so technically they could still be crashing.

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Speaker 3: Yeah, I think it's you will still probably have necessities

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Speaker 3: going up faster, right, You'll have you know, food and

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Speaker 3: what have you. So it is a like there's there's

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Speaker 3: really no.

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Speaker 2: Goldilige pay.

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Speaker 3: There's no Goldilofe scenario you're you're about. It's about choosing

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Speaker 3: who's going to take sort of the brunt of the pain.

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Speaker 3: And so if you are the average American with a

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Speaker 3: fixed rate mortgage and that fixed rate mortgage is three percent,

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Speaker 3: four percent, and your wages start growing fifteen. That's a

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Speaker 3: debt jubilee on your house, on your car, et cetera,

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Speaker 3: on your student loans, on all of it, all of it.

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Speaker 3: The coupon on it doesn't adjust. Yeah, your wages grow

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Speaker 3: ten fifteen for the span of five or ten years. Yes,

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Speaker 3: your grocery bill's probably going to grow seventeen eighteen. Yes,

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Speaker 3: your heating bill and you're cooling, those things are probably

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Speaker 3: going to go up. Yeah.

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Speaker 2: So really just it would drive the cost of labor up.

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Speaker 1: And so you know, homes that are already made in

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Speaker 1: America probably wouldn't change a whole lot. Necessarily, things that

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Speaker 1: were made in America probably wouldn't change. It's the stuff

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Speaker 1: that's made overseas that now has to be made in

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Speaker 1: America that would probably agree.

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Speaker 3: We'd probably go up a ton, exactly.

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Speaker 1: And so then I wanted to then dig into because

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Speaker 1: you talk a lot about it hollowing out the industrial base.

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Speaker 1: So Triffin's dilemma, right, So we had to because of

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Speaker 1: the reserve currency of the world, we had to offshore

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Speaker 1: our manufacturings. We could offshore our dollars, and I think

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Speaker 1: about that and then you know, there's obviously the national

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Speaker 1: security imperative, like, shoot, we should probably build stuff in

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Speaker 1: the United States, we found out the hard way. But

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Speaker 1: just in terms of sort of reindestrillizing the base. Something

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Speaker 1: I think about then I want to get your opinion on,

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Speaker 1: is that the world changes and most likely are mostly

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Speaker 1: driven from technology, and technology removes low level tasks so

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Speaker 1: we can focus on higher value tasks. So industrial Revolution,

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Speaker 1: we had mechanized machines that could do the work of

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Speaker 1: all the guys in the field. All those guys are

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Speaker 1: out of work now. And then they went on to

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Speaker 1: do science in medicine. That was great, great trade off,

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Speaker 1: and we had that Industrial Revolution, which then people moved

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Speaker 1: in cities and factories and we had mass productions. So

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Speaker 1: Henry Ford created the mass production right, and so when

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Speaker 1: we had that in the United States, we had assembly

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Speaker 1: lines everywhere and it made everybody equal. Smart people and

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Speaker 1: dumb people worked even and they just put the piece

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Speaker 1: on the machine as it went down. And I believe

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Speaker 1: like in sort of the way I look at it

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Speaker 1: is that created this massive middle class because everybody became

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Speaker 1: equalized and.

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Speaker 2: They were doing good work.

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Speaker 1: It seems though to me now that those are low

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Speaker 1: value jobs. So we've offshored those to China or Asia

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Speaker 1: or wherever those are. But those are low value jobs,

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Speaker 1: so we could bring those back. But that's almost like

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Speaker 1: we could just also put everybody back into the fields

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Speaker 1: and pick cotton and corn too. So one from the

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Speaker 1: strategic side, or like I said, the national security side,

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Speaker 1: I understand the importance, But do you really think it's

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Speaker 1: that big of a deal to bring really low skilled,

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Speaker 1: low paying jobs back.

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Speaker 3: Well, I think there's the lit the low paying, low

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Speaker 3: skilled stuff. It it depends on where it is, right.

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Speaker 3: So you know, you've got the US Navy basically begging

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Speaker 3: people on tv ads to become a welder, right you

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Speaker 3: can become a welder and make really good money, make

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Speaker 3: a really good living right now. So those types of

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Speaker 3: you know, skilled trade jobs, I think there will always

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Speaker 3: be some sort of uh, some sort of good demand

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Speaker 3: for some of the challenge that you highlight in terms

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Speaker 3: of those shifts of labor. You know, this is around

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Speaker 3: the industrial revolution, you know. I find it's gonna be

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Speaker 3: a little dark here, this little part of the interview.

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Speaker 3: We tend to skip over like the as humans, and

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Speaker 3: I think it's probably just a coping mechanism the real

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Speaker 3: implications of that. So we did do the Industrial Revolution

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Speaker 3: late eighteen hundreds, take people out of the fields, put

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Speaker 3: them in the cities. What we tend and ultimately higher

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Speaker 3: value added stuff. What we tend to leave out are

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Speaker 3: the disruptions and the costs of those disruptions. So we

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Speaker 3: did run through a cycle like we're going through now

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Speaker 3: in the late eighteen hundreds Industrial Revolution, et cetera, et cetera,

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Speaker 3: like you described, and we ended up with what we've gotten.

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Speaker 3: But in the middle we had nineteen thirteen through nineteen

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Speaker 3: forty five, and there was some portion of those wars, disruption,

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Speaker 3: tumult throughout the northern hemisphere that was caused by It

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Speaker 3: was an economic issue.

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Speaker 4: It was.

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Speaker 3: It was, and you can even go back and make

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Speaker 3: arguments that the US Civil War actually had. It was

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Speaker 3: the South had sixty percent of the wealth in this

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Speaker 3: country eighteen fifty five and the North had the minority,

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Speaker 3: and the northern industrialists that were doing some of the

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Speaker 3: productivity stuff, et cetera, et cetera, there was an economic

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Speaker 3: clash that was, you know, slavery became the focal point,

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Speaker 3: but it was it was in no small part an

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Speaker 3: economic political power struggle between the new money northern industrialists

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Speaker 3: and the old money southern plantation owners agrarian society. But

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Speaker 3: nineteen thirteen, nineteen forty five, we have all these massive changes,

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Speaker 3: all this disruption, all and and it leads to power

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Speaker 3: struggles and from the real the math I looked at

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Speaker 3: it a few months ago. Seven percent of the war

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Speaker 3: seven percent of the world's population that was alive in

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Speaker 3: nineteen thirteen died over the next thirty years in wars.

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Speaker 3: And so these transition periods like as a huge as

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Speaker 3: economists as and as we go, well, yeah, we went

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Speaker 3: from you know, industrial revolution and the progress of human

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Speaker 3: you know, it's like just like this, well it's like

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Speaker 3: this this.

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Speaker 2: This nothing goes up and down a straight.

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Speaker 3: Line, no exactly. So that I think is the I

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Speaker 3: think that model that analog highlights some of the challenges

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Speaker 3: of what we're living through, which is how do we

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Speaker 3: want this to look and how do we try to

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Speaker 3: manage to avoid that because you know, practically speaking, fro

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Speaker 3: nineteen thirteen nineteen forty five, you know, by nineteen forty five,

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Speaker 3: some present of the people in the world alive in

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Speaker 3: thirteen had died and by the way, not that many

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Speaker 3: died in America in the grand scheme of things. You know,

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Speaker 3: we lost four hundred and fifty zerusand just in the war.

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Speaker 3: It just well just the wars, yeah, just related to

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Speaker 3: the wars. The russiansaws twenty seven million, right, so.

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Speaker 2: A lot of twenty five of those were they're killed

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Speaker 2: their own killed.

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Speaker 3: Their And these are these economy, right, these are these economics,

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Speaker 3: you know, these these changeovers of great power. Right in

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Speaker 3: nineteen thirteen, four great empires. By eighteen there were one, right,

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Speaker 3: there was only one left. So and I think a

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Speaker 3: lot of this is these political changes that are driven

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Speaker 3: by these economic changes that are driven by these you know,

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Speaker 3: productivity enhancers and the way that starts to redistribute wealth,

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Speaker 3: et cetera. There's there's long, long winded way of saying,

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Speaker 3: there's not a great answer to it. I do think

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Speaker 3: that I do think that a lot of those jobs

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Speaker 3: could come back, because then it feeds on itself. There

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Speaker 3: is a domestic service society. There are service jobs for

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Speaker 3: service jobs, for every you know, manufacturing job. I do

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Speaker 3: think look, the robots, et cetera, automation, it's not going

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Speaker 3: to go back to the nineteen forties, nineteen fifties four.

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Speaker 3: And you know, by the way, the other way the

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Speaker 3: US had a middle class was because seven percent of

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Speaker 3: the world's population and its entire factory base had been

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Speaker 3: destroyed from fourteen to forty five. I mean, you come

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Speaker 3: home and the Americans sort of have all the people,

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Speaker 3: all the factories, you know, the and so we couldn't

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Speaker 3: help but have a period of time where we had that.

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Speaker 3: And to your point, that was a unique moment in time.

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Speaker 3: Very quickly, the Germans got back in the feet, the

435
00:23:07,560 --> 00:23:10,159
Speaker 3: Japanese got back on their feet, and they're very productive, very industrious,

436
00:23:10,240 --> 00:23:13,159
Speaker 3: very skilled tradesmen, and they make great products. So they

437
00:23:13,240 --> 00:23:14,920
Speaker 3: started competing with us, and we get into the late

438
00:23:14,920 --> 00:23:17,600
Speaker 3: sixties seventies, right that all of that kind of fed

439
00:23:17,640 --> 00:23:22,959
Speaker 3: on itself. So I do think your point that it's it.

440
00:23:24,560 --> 00:23:27,840
Speaker 3: There's no sort of easy, you know, easy button to

441
00:23:27,920 --> 00:23:32,200
Speaker 3: fix this. I do think that sort of the days

442
00:23:32,200 --> 00:23:36,359
Speaker 3: of like, hey, the forties and fifties middle class that's

443
00:23:36,440 --> 00:23:40,640
Speaker 3: probably gone never to come back. But I do think

444
00:23:40,680 --> 00:23:44,280
Speaker 3: there's somewhere between that and sort of what we have today,

445
00:23:45,680 --> 00:23:50,199
Speaker 3: both from an economic political stability, middle working class and

446
00:23:50,240 --> 00:23:53,120
Speaker 3: then national security im perative where I think there's some

447
00:23:53,119 --> 00:23:54,840
Speaker 3: sort of happy medium we can move toward.

448
00:23:55,200 --> 00:23:58,080
Speaker 1: The national security is like, of course, like we should

449
00:23:58,080 --> 00:24:01,399
Speaker 1: be able to build our create medicine and toilet paper

450
00:24:01,480 --> 00:24:04,960
Speaker 1: and ammunition in the United States, that's a given. But also,

451
00:24:05,080 --> 00:24:09,080
Speaker 1: you know, it wasn't just competing with Germany and Japan,

452
00:24:09,160 --> 00:24:12,120
Speaker 1: et cetera. It was really a shift from industrial era

453
00:24:12,240 --> 00:24:15,760
Speaker 1: into an information age. And so today you work out

454
00:24:15,760 --> 00:24:18,600
Speaker 1: of your home office with your laptop and you're just

455
00:24:18,640 --> 00:24:20,760
Speaker 1: on your own. And I travel around the world with

456
00:24:20,760 --> 00:24:22,680
Speaker 1: my cameras and my laptop, and I'm just on my own.

457
00:24:23,040 --> 00:24:25,760
Speaker 1: And so in the information age, we don't need the

458
00:24:25,800 --> 00:24:27,359
Speaker 1: industrial or we don't need the workforce, we don't need

459
00:24:27,359 --> 00:24:29,639
Speaker 1: assembly line, and it really turns into a lot more

460
00:24:29,680 --> 00:24:33,240
Speaker 1: of a meritocracy. So back to the assembly line equalizing

461
00:24:33,280 --> 00:24:36,040
Speaker 1: everybody now and the information age is a meritocracy where

462
00:24:36,040 --> 00:24:38,399
Speaker 1: if you're smarter, work harder, you can really get ahead.

463
00:24:38,600 --> 00:24:40,760
Speaker 1: And unfortunately it seems like more people are falling further

464
00:24:40,800 --> 00:24:44,159
Speaker 1: and further behind. You talk a lot about, you know,

465
00:24:44,200 --> 00:24:45,920
Speaker 1: the drug epidemic that we have in the United States,

466
00:24:45,960 --> 00:24:49,000
Speaker 1: which could be somewhat attributed to you know, losing the

467
00:24:49,080 --> 00:24:52,119
Speaker 1: jobs and I think you kind of point pinpoint it

468
00:24:52,160 --> 00:24:54,320
Speaker 1: that way, right, and they're the desperation and they turn

469
00:24:54,359 --> 00:24:56,800
Speaker 1: to drugs, et cetera. But yeah, that meritocracy in that

470
00:24:56,880 --> 00:24:59,400
Speaker 1: information age, and it's just a sort of a function

471
00:24:59,480 --> 00:25:01,080
Speaker 1: of the world we're going into and I just don't

472
00:25:01,119 --> 00:25:04,560
Speaker 1: really see a way that we can resolve that. So

473
00:25:04,600 --> 00:25:06,879
Speaker 1: I guess that was question number one. Does reindustrialize the

474
00:25:06,880 --> 00:25:09,879
Speaker 1: base really make that big of a difference, I'm guessing

475
00:25:09,880 --> 00:25:12,560
Speaker 1: the question the answer was maybe not so much.

476
00:25:13,080 --> 00:25:15,760
Speaker 3: I think it does because part of it is the currency, right,

477
00:25:15,840 --> 00:25:18,880
Speaker 3: So part of the reason I'm in finance. I made

478
00:25:18,880 --> 00:25:22,119
Speaker 3: a conscious decision when I was in college, right, So

479
00:25:22,160 --> 00:25:24,240
Speaker 3: I went to the University of Cincinnati, one of the

480
00:25:24,240 --> 00:25:26,960
Speaker 3: top five architecture schools in the world or in the country,

481
00:25:27,119 --> 00:25:29,760
Speaker 3: and I got into the architecture program. I was gonna

482
00:25:29,760 --> 00:25:31,480
Speaker 3: be an architect, and a quarter and a half in

483
00:25:31,520 --> 00:25:34,359
Speaker 3: I hated architecture. So, okay, I'm going to go engineering.

484
00:25:34,960 --> 00:25:38,360
Speaker 3: I'm going to go into finance. And in the late

485
00:25:38,440 --> 00:25:43,639
Speaker 3: nineteen nineties, mid nineteen nineties number one engineering, all my

486
00:25:43,680 --> 00:25:45,640
Speaker 3: engineering buddies never got to go to the bar because

487
00:25:45,680 --> 00:25:48,800
Speaker 3: they were all working really, really hard and having the

488
00:25:48,880 --> 00:25:51,399
Speaker 3: study just to keep their heads above water. And all

489
00:25:51,440 --> 00:25:53,280
Speaker 3: my guys in finance were like out at the bars

490
00:25:53,320 --> 00:25:55,520
Speaker 3: four nights a week, and the tests weren't that hard.

491
00:25:55,840 --> 00:25:58,520
Speaker 3: And oh, by the way, they were making way more

492
00:25:58,520 --> 00:26:00,520
Speaker 3: money when they graduated, and way more money five years

493
00:26:00,560 --> 00:26:03,119
Speaker 3: later than ten years later. And a lot of the

494
00:26:03,119 --> 00:26:05,639
Speaker 3: industrial companies engineering guys were going to we're getting off

495
00:26:05,680 --> 00:26:07,320
Speaker 3: short of Chine. So it was like for me, I

496
00:26:07,359 --> 00:26:09,040
Speaker 3: mean a conscious decision. It's like, well, I could go

497
00:26:09,080 --> 00:26:12,760
Speaker 3: either way, but what's best for me? Where you know,

498
00:26:14,119 --> 00:26:18,000
Speaker 3: this is the system why leaders have given me the

499
00:26:18,080 --> 00:26:20,000
Speaker 3: answer is clear, and I can't be the only person.

500
00:26:20,080 --> 00:26:21,840
Speaker 3: And we can see it, you know in terms of

501
00:26:21,880 --> 00:26:25,000
Speaker 3: the empirically in the share of jobs that went into

502
00:26:25,000 --> 00:26:27,879
Speaker 3: the fire industry, right, finance, insurance, real estate from the

503
00:26:27,920 --> 00:26:30,520
Speaker 3: mid nineties on after NAFTA and then China and the

504
00:26:30,560 --> 00:26:34,320
Speaker 3: wto so point being is, yes, there's this information age,

505
00:26:34,359 --> 00:26:36,719
Speaker 3: but some of the information age is a function of

506
00:26:36,760 --> 00:26:41,239
Speaker 3: the currency system shifts. I mean, yes, I think what

507
00:26:41,280 --> 00:26:45,520
Speaker 3: I do is very valuable. And you know if the

508
00:26:45,560 --> 00:26:47,359
Speaker 3: plane you and I fly around on to go to

509
00:26:47,359 --> 00:26:51,800
Speaker 3: these places wings fall off. You know, it's it's one

510
00:26:51,800 --> 00:26:55,760
Speaker 3: of these things where there is some level of minimum

511
00:26:55,800 --> 00:27:03,560
Speaker 3: competency and mestic engineering capabilities that are necessary for quality

512
00:27:03,600 --> 00:27:06,680
Speaker 3: of life. And then that gets into some qualitative issues

513
00:27:06,720 --> 00:27:09,560
Speaker 3: of of like, okay, well, what is you know, is

514
00:27:09,640 --> 00:27:13,640
Speaker 3: the guy who are the engineers who you know engineer

515
00:27:13,720 --> 00:27:19,880
Speaker 3: these airplanes really worth whatever they make? You know one

516
00:27:20,000 --> 00:27:25,040
Speaker 3: fifth what some derivatives trader on Wall Street makes. No,

517
00:27:25,080 --> 00:27:27,960
Speaker 3: they're probably not. It's just that he's a derivatives trader

518
00:27:28,000 --> 00:27:31,280
Speaker 3: in a financialized system. So there's some element. Yes, the

519
00:27:31,320 --> 00:27:33,920
Speaker 3: comty is absolutely switching. Yes, it is absolutely more information

520
00:27:34,000 --> 00:27:40,760
Speaker 3: based and some element of this inequality. Uh and the

521
00:27:40,960 --> 00:27:44,600
Speaker 3: this this that we've described is a function strictly of

522
00:27:44,640 --> 00:27:48,159
Speaker 3: the fact that we have you know, we have devalued

523
00:27:48,320 --> 00:27:51,440
Speaker 3: these jobs. These you know, I would how much money

524
00:27:51,480 --> 00:27:53,199
Speaker 3: would I pay to make sure my plane was never

525
00:27:53,240 --> 00:27:56,720
Speaker 3: going to crash? A lot? Right? And how much money

526
00:27:56,760 --> 00:27:58,760
Speaker 3: would I pay a derivatives trader to make sure my

527
00:27:58,800 --> 00:28:01,920
Speaker 3: mortgage stays locked in? M Like it's you know what

528
00:28:01,960 --> 00:28:04,560
Speaker 3: I mean, it's not that we've we've gotten a little

529
00:28:04,560 --> 00:28:07,240
Speaker 3: bit of So I do think there's a shift, and

530
00:28:07,280 --> 00:28:08,959
Speaker 3: I don't think there's any stopping that shift. But I

531
00:28:08,960 --> 00:28:13,200
Speaker 3: also think there is a there has been a perversion

532
00:28:13,480 --> 00:28:17,560
Speaker 3: of relative value of tasks in our economy by the

533
00:28:17,600 --> 00:28:20,600
Speaker 3: currency system we've been living in. That has to be

534
00:28:20,960 --> 00:28:23,400
Speaker 3: backtracked or else like, Look, we're not gonna be able

535
00:28:23,400 --> 00:28:25,080
Speaker 3: to fight wars. We will not be the hedgemon because

536
00:28:25,080 --> 00:28:27,080
Speaker 3: we will not have the weapons. We won't be able

537
00:28:27,119 --> 00:28:29,480
Speaker 3: to make planes, we won't you know, So that's there's

538
00:28:29,520 --> 00:28:30,919
Speaker 3: some happy medium there.

539
00:28:31,119 --> 00:28:34,919
Speaker 1: Yeah, so you're saying that, yes, that information age and

540
00:28:34,920 --> 00:28:37,399
Speaker 1: that shift has happened, but it's also because of a

541
00:28:37,480 --> 00:28:40,320
Speaker 1: perversion of the fiat monetary system that we have and

542
00:28:40,360 --> 00:28:43,440
Speaker 1: the financialization of all the assets that have now created

543
00:28:43,440 --> 00:28:47,000
Speaker 1: this overvaluation of trading derivatives that really provide no value

544
00:28:47,000 --> 00:28:50,080
Speaker 1: to the world. And so it's a function of the system,

545
00:28:50,440 --> 00:28:53,520
Speaker 1: which I tend to agree as a bitcointer. We think about, well,

546
00:28:53,560 --> 00:28:55,200
Speaker 1: if we had more of a salmoney system and we

547
00:28:55,280 --> 00:28:57,440
Speaker 1: and our money held its value, we didn't have to

548
00:28:57,440 --> 00:29:01,160
Speaker 1: become these investors, right, And so imagine if I could

549
00:29:01,200 --> 00:29:04,560
Speaker 1: just be the best inventor, brain surgeon, and cancer researcher

550
00:29:04,600 --> 00:29:06,400
Speaker 1: in the world. But now I'm only fifty percent of

551
00:29:06,400 --> 00:29:08,680
Speaker 1: that because now fifercent of my time was thinking about investing.

552
00:29:08,720 --> 00:29:10,960
Speaker 1: So I don't lose my wealth. And if I didn't,

553
00:29:10,960 --> 00:29:12,760
Speaker 1: if I didn't have to lose my wealth, then I

554
00:29:12,760 --> 00:29:14,520
Speaker 1: could just save and I could just focus on being

555
00:29:14,560 --> 00:29:15,280
Speaker 1: the best inventor.

556
00:29:15,480 --> 00:29:17,560
Speaker 2: And then all of Wall Street just kind of goes away.

557
00:29:17,600 --> 00:29:19,320
Speaker 3: I don't it right sizes itself, right. I mean, I

558
00:29:19,840 --> 00:29:24,400
Speaker 3: literally know of a case. Maybe this was probably ten

559
00:29:24,480 --> 00:29:26,280
Speaker 3: fifteen years ago. It's in my former life. It wasn't

560
00:29:26,320 --> 00:29:28,760
Speaker 3: what I was at FFTT. It was in a former seat.

561
00:29:29,960 --> 00:29:36,440
Speaker 3: There was a medical professional who had trained for sixteen

562
00:29:36,480 --> 00:29:39,520
Speaker 3: to eighteen years to operate on one of the most

563
00:29:39,600 --> 00:29:43,120
Speaker 3: sensitive parts of the human body. So the four years school,

564
00:29:43,160 --> 00:29:45,320
Speaker 3: four years of med school, they don't even they're not

565
00:29:45,320 --> 00:29:47,480
Speaker 3: even practicing un till they're like almost forty so, and

566
00:29:47,520 --> 00:29:49,800
Speaker 3: they're probably only a couple thousand of these people in

567
00:29:49,800 --> 00:29:52,760
Speaker 3: the world operating on this part of the body. And

568
00:29:52,800 --> 00:29:55,479
Speaker 3: they quit that job to become a healthcare analyst at

569
00:29:55,480 --> 00:29:59,040
Speaker 3: a hedge fund because they could make way more money

570
00:29:59,520 --> 00:30:01,840
Speaker 3: and they didn't have the legal risk of getting sued

571
00:30:01,840 --> 00:30:06,760
Speaker 3: from outpractice. And I remember hearing this story because the

572
00:30:07,160 --> 00:30:09,360
Speaker 3: person was a client of a colleague of mind setting

573
00:30:09,360 --> 00:30:12,840
Speaker 3: on the sales desk, and I just remember thinking, how

574
00:30:12,840 --> 00:30:15,959
Speaker 3: fucked up is this. Yeah, like this is such a

575
00:30:16,000 --> 00:30:20,440
Speaker 3: gross misallocation of resources. So it's not hypothetical, you know,

576
00:30:21,920 --> 00:30:24,600
Speaker 3: you know, especially when you see you know, and oh,

577
00:30:24,640 --> 00:30:26,920
Speaker 3: by the way, when you live in parts of the

578
00:30:26,960 --> 00:30:31,760
Speaker 3: country where housing, education, et cetera are bid up by that, right,

579
00:30:31,800 --> 00:30:33,720
Speaker 3: it's a lot more affordable to live in Cleveland, whether

580
00:30:33,760 --> 00:30:36,200
Speaker 3: aren't a lotto derivatives traders than it is in New York,

581
00:30:36,320 --> 00:30:40,080
Speaker 3: you know, where it's much more financialized. So that's it's

582
00:30:40,080 --> 00:30:42,800
Speaker 3: a winners and loser situation. But there's a tragedy of

583
00:30:42,800 --> 00:30:46,040
Speaker 3: the commons problem that was you know, fifteen years ago. Huh,

584
00:30:46,120 --> 00:30:50,000
Speaker 3: that's man, that's really saying something. Now when we've got

585
00:30:50,440 --> 00:30:55,840
Speaker 3: you know, hey, problems with very obvious problems with US manufacturing,

586
00:30:55,960 --> 00:31:00,760
Speaker 3: very obvious problems with the US ability to apply weapons,

587
00:31:00,800 --> 00:31:04,520
Speaker 3: make weapons in any kind of timely manner. It's you know,

588
00:31:05,400 --> 00:31:07,480
Speaker 3: the economists were saying, oh, well, just let the markets work,

589
00:31:07,520 --> 00:31:10,000
Speaker 3: just let the markets work fifteen years ago, and the

590
00:31:10,080 --> 00:31:13,360
Speaker 3: Chinese are saying, like, keep reading those stupid books, like

591
00:31:13,560 --> 00:31:16,240
Speaker 3: things are going great for US, and the military around

592
00:31:16,240 --> 00:31:19,640
Speaker 3: ten years ago finally said we're borrowing money from China

593
00:31:19,720 --> 00:31:22,440
Speaker 3: to build weapons to face down China using Chinese components.

594
00:31:22,960 --> 00:31:26,440
Speaker 3: This isn't a sustainable strategy like stop, and so I

595
00:31:26,480 --> 00:31:29,000
Speaker 3: think that's kind of been an evolution we've been through

596
00:31:29,040 --> 00:31:29,920
Speaker 3: over the last ten years.

597
00:31:30,760 --> 00:31:32,880
Speaker 1: Another thing I want to talk about is you often

598
00:31:32,960 --> 00:31:36,440
Speaker 1: reference almost all the time in your newsletters bar in

599
00:31:36,480 --> 00:31:39,440
Speaker 1: some sort of productivity miracle. This is where we're going,

600
00:31:39,560 --> 00:31:42,120
Speaker 1: bar In some sort of productivity miracle. A lot of

601
00:31:42,120 --> 00:31:44,720
Speaker 1: that is about unlocky and like cheap access to energy,

602
00:31:45,200 --> 00:31:48,120
Speaker 1: nuclear fission, some sort of thing like that, maybe, And

603
00:31:48,160 --> 00:31:49,960
Speaker 1: I had to tweet it at you and then I

604
00:31:50,040 --> 00:31:52,280
Speaker 1: saw you write a whole thing about it. But could

605
00:31:52,280 --> 00:31:56,719
Speaker 1: AI be one of those productivity miracles? And basically thinking

606
00:31:56,800 --> 00:32:00,720
Speaker 1: that it's not really AI, it's just LMS, right language models,

607
00:32:00,760 --> 00:32:04,640
Speaker 1: But it is improving efficiency for sure, Like just for myself,

608
00:32:04,680 --> 00:32:06,880
Speaker 1: the amount of data I'm able to turn through. I

609
00:32:06,880 --> 00:32:08,800
Speaker 1: feel like I'm in that movie Limitless. I can just

610
00:32:08,840 --> 00:32:13,520
Speaker 1: like get through data. You know, I've easily added the

611
00:32:13,720 --> 00:32:16,959
Speaker 1: work to my business of two three people. At least

612
00:32:17,200 --> 00:32:20,000
Speaker 1: I didn't fire anybody. But I'm doing more than I

613
00:32:20,080 --> 00:32:23,760
Speaker 1: was before, right, And so if these large corporations don't

614
00:32:23,800 --> 00:32:26,480
Speaker 1: necessarily to fire people, they could just do more work.

615
00:32:26,520 --> 00:32:27,640
Speaker 2: Than they were doing before.

616
00:32:28,640 --> 00:32:31,560
Speaker 1: If they were two to three percent more efficient, which

617
00:32:31,680 --> 00:32:34,040
Speaker 1: in a lot of business, especially information businesses, they could

618
00:32:34,040 --> 00:32:35,400
Speaker 1: be ten twenty percent more.

619
00:32:35,600 --> 00:32:36,640
Speaker 2: Let's say they're two or three.

620
00:32:36,480 --> 00:32:40,240
Speaker 1: Percent more efficient at a stock market ratio of twenty

621
00:32:40,280 --> 00:32:42,719
Speaker 1: times PE or something like that. I mean, is that

622
00:32:42,760 --> 00:32:43,960
Speaker 1: a productivity miracle?

623
00:32:44,920 --> 00:32:48,600
Speaker 3: It can be if it arrives I think at just

624
00:32:48,720 --> 00:32:52,200
Speaker 3: the right pace. If it arrives too slowly, then we

625
00:32:52,240 --> 00:32:54,800
Speaker 3: go back to point one, right, which is fiscal crisis.

626
00:32:54,800 --> 00:32:55,320
Speaker 3: Blah blah blah.

627
00:32:55,320 --> 00:32:56,719
Speaker 2: I think we're talking about what's too slowly?

628
00:32:57,200 --> 00:33:00,240
Speaker 3: I don't know, well know right, that's if the debt

629
00:33:00,960 --> 00:33:02,600
Speaker 3: and this is where it's it's tricky to know. It's

630
00:33:03,440 --> 00:33:08,040
Speaker 3: if the fiscal if if if deficits and debt continue rising,

631
00:33:08,280 --> 00:33:10,400
Speaker 3: it's not arriving fast enough. So that's that's probably a

632
00:33:10,400 --> 00:33:14,600
Speaker 3: pretty good way of judging that. You know, if GDP,

633
00:33:16,000 --> 00:33:18,360
Speaker 3: if debt and GDP, if G if growth, if G

634
00:33:18,760 --> 00:33:22,600
Speaker 3: is not you know, growing fast enough. Above are without

635
00:33:23,520 --> 00:33:28,320
Speaker 3: inflation is probably another good way to look at it.

636
00:33:28,800 --> 00:33:30,520
Speaker 3: But the flip side, and this is the side I

637
00:33:30,720 --> 00:33:37,360
Speaker 3: I I wrestle with a lot, but we we have

638
00:33:37,400 --> 00:33:39,160
Speaker 3: a we have a model for this, right we have

639
00:33:39,200 --> 00:33:41,440
Speaker 3: a model for a productivity miracle. It was called China

640
00:33:41,440 --> 00:33:46,320
Speaker 3: into the wt O And no, you may not fire people.

641
00:33:46,880 --> 00:33:49,280
Speaker 3: But there's I don't know how many a million kids

642
00:33:49,320 --> 00:33:50,680
Speaker 3: graduating every year. I don't I don't even know. The

643
00:33:50,760 --> 00:33:52,640
Speaker 3: number is probably three million kids a year graduating from

644
00:33:52,640 --> 00:33:54,680
Speaker 3: college something like that. Say one percent of the population

645
00:33:55,320 --> 00:33:59,640
Speaker 3: graduating from college every year. And you're not going to

646
00:33:59,720 --> 00:34:02,120
Speaker 3: hire that, Yeah, and then you're not gonna hire the

647
00:34:02,160 --> 00:34:04,200
Speaker 3: next ones. You're not gonna hire the next ones. And

648
00:34:04,320 --> 00:34:08,080
Speaker 3: like I hear all the time, America has the best

649
00:34:08,080 --> 00:34:11,640
Speaker 3: demographics of the world. And that's true basically of the

650
00:34:11,640 --> 00:34:16,080
Speaker 3: developed world and some of our adversars. I don't think

651
00:34:16,080 --> 00:34:18,880
Speaker 3: there's been enough thinking done about what that means in

652
00:34:18,920 --> 00:34:23,680
Speaker 3: an AI automation you know, AI robotics world, because you know,

653
00:34:23,719 --> 00:34:27,560
Speaker 3: it's great demographics. Middle East they have unbelievable demographics, Lots

654
00:34:27,640 --> 00:34:32,160
Speaker 3: of young people, lots of unemployed young people. And it's

655
00:34:32,200 --> 00:34:35,480
Speaker 3: not very politically stable, right because old people without jobs

656
00:34:35,560 --> 00:34:38,560
Speaker 3: they don't protest and riot. Young people without jobs they

657
00:34:38,600 --> 00:34:44,799
Speaker 3: protest and riot. Bad things happen. So the if it

658
00:34:44,880 --> 00:34:48,200
Speaker 3: arrives too fast, if the AI arrives too fast, then

659
00:34:48,239 --> 00:34:50,520
Speaker 3: you do dart getting layoffs and what have you, because

660
00:34:50,520 --> 00:34:53,000
Speaker 3: sooner or later, I mean, look, the AI, the the information,

661
00:34:53,040 --> 00:34:55,279
Speaker 3: it's not gonna be linear. You're not gonna go like

662
00:34:55,320 --> 00:34:57,400
Speaker 3: this with the stuff. You're gonna go like this, right,

663
00:34:57,520 --> 00:34:58,920
Speaker 3: and so in a year or two you maybe you

664
00:34:58,920 --> 00:35:01,800
Speaker 3: will fire people, the hypothetical book person will fire people.

665
00:35:03,239 --> 00:35:08,000
Speaker 3: And so if it arrives too fast with debt at

666
00:35:08,040 --> 00:35:10,480
Speaker 3: one hundred and twenty five, twenty two percent of GDP

667
00:35:10,600 --> 00:35:16,200
Speaker 3: deficit seven percent, with full employment and corporate debtword is

668
00:35:16,239 --> 00:35:20,440
Speaker 3: and consumer debt word is, now you start having people

669
00:35:20,760 --> 00:35:22,520
Speaker 3: you know, we know how this goes. You know, in

670
00:35:22,560 --> 00:35:25,160
Speaker 3: some prime they lose their jobs, default in the house,

671
00:35:25,280 --> 00:35:29,000
Speaker 3: default in the car, credit cards. Okay, now we layer

672
00:35:29,000 --> 00:35:31,200
Speaker 3: that onto a banking system that's already has some issues

673
00:35:31,200 --> 00:35:34,239
Speaker 3: with commercial real estate. Now what do the banks do. Well,

674
00:35:34,320 --> 00:35:36,880
Speaker 3: the banks have one thing they can sell to raise capitals,

675
00:35:36,880 --> 00:35:39,200
Speaker 3: treasury bonds that they were forced into buying on some

676
00:35:39,480 --> 00:35:42,320
Speaker 3: level over the last ten years. They start selling treasury bonds.

677
00:35:42,560 --> 00:35:46,319
Speaker 3: And so there's this paradox where if AI it's and

678
00:35:46,360 --> 00:35:49,799
Speaker 3: productivity arrives, these these technology productivities arrive too fast, it's

679
00:35:49,840 --> 00:35:54,920
Speaker 3: actually highly inflationary. If not hyperinflationary, because if it creates

680
00:35:54,960 --> 00:35:58,319
Speaker 3: efficiencies too fast, you're going to reduce employment because that's

681
00:35:58,320 --> 00:36:02,120
Speaker 3: the definition of productivity. Doing more with us and doing

682
00:36:02,160 --> 00:36:04,480
Speaker 3: more with less people is going to result in increasing

683
00:36:04,560 --> 00:36:09,000
Speaker 3: defaults of consumer loans, which will quickly laid to banking

684
00:36:09,040 --> 00:36:12,920
Speaker 3: strains banking failures, and then we're right back to point one,

685
00:36:13,080 --> 00:36:17,680
Speaker 3: which is do the federal policy makers step in and

686
00:36:17,760 --> 00:36:21,879
Speaker 3: let banks fail and take let depositors with over two

687
00:36:21,920 --> 00:36:24,640
Speaker 3: hundre and fifty thousand and the bank take losses because

688
00:36:24,640 --> 00:36:26,279
Speaker 3: if we do that, then it will be deflated. Then

689
00:36:26,320 --> 00:36:28,239
Speaker 3: AI will be deflationary, and we will have a new

690
00:36:28,239 --> 00:36:30,759
Speaker 3: great depression. The reality, as you and I both know,

691
00:36:30,760 --> 00:36:32,920
Speaker 3: there's zero chance they're going to let depositors over two

692
00:36:32,960 --> 00:36:35,960
Speaker 3: hundre and fifty thousand do that, And so what they're

693
00:36:35,960 --> 00:36:41,000
Speaker 3: going to do is they're AI moving too fast. Productivity

694
00:36:41,040 --> 00:36:48,000
Speaker 3: moving too fast ensures that the pace the date that

695
00:36:48,120 --> 00:36:52,080
Speaker 3: the Fed will have to fully reserve the banking system,

696
00:36:52,520 --> 00:36:56,799
Speaker 3: which means print all the money to match the liabilities.

697
00:36:57,320 --> 00:37:00,640
Speaker 3: It pulls it forward. So that's why I say it's

698
00:37:00,680 --> 00:37:04,160
Speaker 3: like the productivity miracle. There's other things you can in

699
00:37:04,280 --> 00:37:10,440
Speaker 3: theory do, but from the AI standpoint A. You know,

700
00:37:10,520 --> 00:37:14,239
Speaker 3: Jeff Booth's book A Price of Tomorrow gets into this tremendously,

701
00:37:14,360 --> 00:37:17,239
Speaker 3: which is, you know this, this deflationary impact is it's

702
00:37:17,280 --> 00:37:20,279
Speaker 3: fundamentally incompatible with a debt back system. We have a

703
00:37:20,280 --> 00:37:22,480
Speaker 3: system that is a debt back system. It is highly levered,

704
00:37:22,520 --> 00:37:24,600
Speaker 3: and you are going to make the debt start to default.

705
00:37:24,640 --> 00:37:27,120
Speaker 3: And when the debt the backs, everything starts to default,

706
00:37:27,120 --> 00:37:31,960
Speaker 3: when your denominator shrinks defaults, that's a hyperinflationary scenario. So

707
00:37:34,760 --> 00:37:36,759
Speaker 3: that's just the economic side. Then you get to the

708
00:37:36,800 --> 00:37:40,040
Speaker 3: political side, which is, you know, yeah, China's demographic stink,

709
00:37:40,120 --> 00:37:43,719
Speaker 3: Japan's demographic stink, and the relative to ours. But do

710
00:37:43,800 --> 00:37:46,880
Speaker 3: they if AI can all of a sudden do the

711
00:37:46,880 --> 00:37:51,000
Speaker 3: work of ten people, twenty people, fifty people, aren't you

712
00:37:51,000 --> 00:37:54,240
Speaker 3: better off having fewer young people then more young people

713
00:37:54,320 --> 00:37:58,400
Speaker 3: unemployed young people, or do those young people create more

714
00:37:58,440 --> 00:38:02,839
Speaker 3: with it? That's that that's the sixty four thousand dollars question.

715
00:38:02,880 --> 00:38:05,840
Speaker 3: And the optimists will tell you though, they will do

716
00:38:05,880 --> 00:38:07,560
Speaker 3: more and you'll be lifted higher, and that could very

717
00:38:07,600 --> 00:38:09,760
Speaker 3: well be the case. The pessimist will say, no, they won't.

718
00:38:10,200 --> 00:38:12,920
Speaker 3: The realists scenario is probably what we went through from nine,

719
00:38:13,000 --> 00:38:16,879
Speaker 3: you know, inteen eighteen ninety through nineteen forty five, which is, wow,

720
00:38:17,000 --> 00:38:19,080
Speaker 3: look at all this productivity stuff. We have trains and

721
00:38:19,080 --> 00:38:20,719
Speaker 3: all we have jets, and now we have cars. We

722
00:38:20,760 --> 00:38:23,520
Speaker 3: don't need horses, and holy cow, we're gonna fight over

723
00:38:23,600 --> 00:38:25,279
Speaker 3: the new economics of this new thing. We're gonna kill

724
00:38:25,280 --> 00:38:27,399
Speaker 3: something per some of the people in the world. And

725
00:38:27,440 --> 00:38:29,040
Speaker 3: then in nineteen forty five we're gonna have a new

726
00:38:29,040 --> 00:38:31,840
Speaker 3: system like and that's what we're trying to avoid. So

727
00:38:31,880 --> 00:38:35,160
Speaker 3: that's you know, there's anything. It's not black and white,

728
00:38:35,200 --> 00:38:35,720
Speaker 3: so it's.

729
00:38:35,520 --> 00:38:38,399
Speaker 1: Both, and it's over what timeframe, and it's and it's

730
00:38:38,440 --> 00:38:40,360
Speaker 1: this right, so nothing goes up or down on a

731
00:38:40,360 --> 00:38:43,080
Speaker 1: straight line. So you know, I saw your report and

732
00:38:43,080 --> 00:38:45,120
Speaker 1: you kind of back to the WTO And so that

733
00:38:45,160 --> 00:38:48,239
Speaker 1: productivity gain also created a crash and.

734
00:38:48,200 --> 00:38:49,080
Speaker 2: Then we reabsorbed it.

735
00:38:49,080 --> 00:38:50,920
Speaker 1: And you would imagine back in the destrial revolution, you

736
00:38:50,960 --> 00:38:53,239
Speaker 1: replaced all those field workers with machines, and now they're

737
00:38:53,239 --> 00:38:56,080
Speaker 1: all out of work. So now there's this huge unemployment problem.

738
00:38:56,320 --> 00:38:58,680
Speaker 1: But eventually they find new jobs, so there's a dip

739
00:38:58,920 --> 00:38:59,839
Speaker 1: and then and then they get going.

740
00:39:00,000 --> 00:39:00,280
Speaker 3: Sure.

741
00:39:00,719 --> 00:39:03,520
Speaker 1: The problem that I'm afraid of today is that you know,

742
00:39:03,560 --> 00:39:05,960
Speaker 1: in Industrial Revolution, if you didn't work, you didn't need

743
00:39:06,239 --> 00:39:08,080
Speaker 1: So those are people are very motivated to go back

744
00:39:08,080 --> 00:39:09,840
Speaker 1: and get new jobs. But now with this sort of

745
00:39:10,280 --> 00:39:13,239
Speaker 1: welfare state that we're in today, we're incentivizing people not

746
00:39:13,320 --> 00:39:15,680
Speaker 1: to get back to work. And so I am on

747
00:39:15,760 --> 00:39:19,200
Speaker 1: the side that protuber miracles and robots and AI will

748
00:39:19,239 --> 00:39:23,800
Speaker 1: always be bullish and be good only because I'm bullish

749
00:39:23,840 --> 00:39:27,200
Speaker 1: on human ingenuity. And I don't believe there's any utopian

750
00:39:27,239 --> 00:39:27,800
Speaker 1: world where.

751
00:39:27,719 --> 00:39:29,040
Speaker 2: Humans don't have problems anymore.

752
00:39:29,840 --> 00:39:31,680
Speaker 1: And as long as there's a problem, then there's a

753
00:39:31,719 --> 00:39:34,239
Speaker 1: solution that's needed, and there's a job that's that's there

754
00:39:34,280 --> 00:39:36,800
Speaker 1: for that right, But only if we're able to continue

755
00:39:36,840 --> 00:39:40,640
Speaker 1: to stay and you know, innovative, as opposed to sitting

756
00:39:40,640 --> 00:39:44,239
Speaker 1: in our house watching Netflix and getting Ubi, and so

757
00:39:44,480 --> 00:39:45,319
Speaker 1: that's a risk.

758
00:39:45,760 --> 00:39:50,839
Speaker 2: Now it sounds like almost any path forward is inflationary.

759
00:39:51,600 --> 00:39:54,360
Speaker 1: Just about yeah, the rock, the proverbial rock in a

760
00:39:54,360 --> 00:39:57,400
Speaker 1: hard place. There's really no choice because the choice of

761
00:39:57,480 --> 00:39:59,560
Speaker 1: saying like pack it up, boys, it was a good run,

762
00:40:00,160 --> 00:40:02,080
Speaker 1: Just shut everything down and wipe the dead, like that's

763
00:40:02,120 --> 00:40:04,680
Speaker 1: not really realistic. So the only way is to keep

764
00:40:04,680 --> 00:40:06,839
Speaker 1: the printer full of inc and just like keep it going.

765
00:40:07,239 --> 00:40:11,000
Speaker 3: Yeah, you've got to. And that's you know, your point

766
00:40:11,000 --> 00:40:13,680
Speaker 3: about the the you know, the the welfare state or

767
00:40:13,719 --> 00:40:16,000
Speaker 3: the entitlement you know, sort of these social backstops. They

768
00:40:16,000 --> 00:40:20,400
Speaker 3: are a relatively new phenomenon. And that gets into that,

769
00:40:20,840 --> 00:40:24,320
Speaker 3: you know, that feedback loop of Okay, if we cut

770
00:40:24,360 --> 00:40:29,120
Speaker 3: that off, then what are the you can get deflation.

771
00:40:28,840 --> 00:40:31,160
Speaker 1: In that scenario, and the animals in the state park

772
00:40:31,200 --> 00:40:33,040
Speaker 1: that no longer get fed, what happens to them?

773
00:40:33,600 --> 00:40:38,160
Speaker 3: Yeah, I mean it it's it's it's it's it's right,

774
00:40:38,200 --> 00:40:43,799
Speaker 3: It's it's true. You know, there was a great article

775
00:40:43,840 --> 00:40:45,120
Speaker 3: a couple of weeks early I'm sure you read in

776
00:40:45,160 --> 00:40:46,920
Speaker 3: my report a couple months ago about you know, this

777
00:40:46,960 --> 00:40:50,960
Speaker 3: time were the horses right? So you know, yes, and

778
00:40:51,000 --> 00:40:52,920
Speaker 3: the number of horses in this country went from like

779
00:40:53,440 --> 00:40:56,480
Speaker 3: fifty million to nine million in like ten years, and

780
00:40:57,280 --> 00:41:00,279
Speaker 3: and yes, the path of product, but like what, you know,

781
00:41:00,440 --> 00:41:02,840
Speaker 3: who's the horse this time? Right? And that's the question,

782
00:41:02,840 --> 00:41:05,680
Speaker 3: and that there's a feedback loop depending on how that

783
00:41:05,719 --> 00:41:07,480
Speaker 3: goes through where you could get a moment of deflation.

784
00:41:07,520 --> 00:41:14,840
Speaker 3: But ultimately, given the political and power structure across the world,

785
00:41:16,320 --> 00:41:19,680
Speaker 3: unless or unless central banks and policy makers in the

786
00:41:19,800 --> 00:41:22,160
Speaker 3: US and in the West more broadly around the world

787
00:41:22,160 --> 00:41:25,000
Speaker 3: more broadly are willing to sit aside and let sovereign

788
00:41:25,040 --> 00:41:31,359
Speaker 3: debt nominally default. Then no, there's really not a way out. Oh,

789
00:41:31,640 --> 00:41:32,640
Speaker 3: that's not inflationary.

790
00:41:32,719 --> 00:41:35,800
Speaker 1: It can't default, right, because in a debt based monetary system,

791
00:41:35,880 --> 00:41:38,319
Speaker 1: all that debt is an asset for more debt.

792
00:41:39,640 --> 00:41:43,080
Speaker 3: It well, it can theoretically, but you raise a great point,

793
00:41:43,120 --> 00:41:46,120
Speaker 3: which is it is an asset. It's somebody else's asset.

794
00:41:46,200 --> 00:41:50,560
Speaker 3: So right, if the debt defaults, it's somebody else's assets,

795
00:41:50,560 --> 00:41:51,719
Speaker 3: so they stop spending.

796
00:41:51,400 --> 00:41:53,040
Speaker 2: Their poor and it's collateral.

797
00:41:53,520 --> 00:41:55,600
Speaker 3: But the collateral side is where it gets really interesting

798
00:41:55,640 --> 00:42:00,000
Speaker 3: because if that defaults, what you have is one hundred

799
00:42:00,239 --> 00:42:06,480
Speaker 3: thirty trillion dollars global bond market flee into anything else.

800
00:42:07,800 --> 00:42:13,440
Speaker 3: So ironically it would probably be hyperinflationary. You basically, you

801
00:42:13,480 --> 00:42:16,319
Speaker 3: know there is there that collateral go and you know

802
00:42:16,400 --> 00:42:19,279
Speaker 3: gold would probably replace it overnight, and that's pretty easy

803
00:42:19,320 --> 00:42:22,000
Speaker 3: to do. Really, like gold goes to and ouns twenty

804
00:42:22,000 --> 00:42:25,480
Speaker 3: thousand ounce whatever that number is, and you move on.

805
00:42:26,120 --> 00:42:28,080
Speaker 3: And that's actually a way more stable system because it's

806
00:42:28,120 --> 00:42:32,680
Speaker 3: not a debt based collateral. That's a separate discussion. So

807
00:42:32,760 --> 00:42:37,680
Speaker 3: there's yeah, it can't, it can theoretically default. The fact

808
00:42:37,680 --> 00:42:42,080
Speaker 3: that it's collateral is very powerful information for why they

809
00:42:42,120 --> 00:42:44,840
Speaker 3: will never let it default. They will always print the money.

810
00:42:44,920 --> 00:42:48,719
Speaker 1: Right, So let's go through the mechanism then of the

811
00:42:49,160 --> 00:42:52,160
Speaker 1: how the energy and gold is starting to sort of

812
00:42:52,239 --> 00:42:54,920
Speaker 1: reprice that. So you talk a lot about sort of

813
00:42:55,040 --> 00:42:58,239
Speaker 1: money being energy and so oil maybe the energy and

814
00:42:58,280 --> 00:43:03,360
Speaker 1: bitcoin as well mechanism, And then how potentially what China's

815
00:43:03,400 --> 00:43:07,720
Speaker 1: doing with their gold kind of the way they're recycling

816
00:43:07,719 --> 00:43:09,719
Speaker 1: gold allow people to convert, and how that may force

817
00:43:09,760 --> 00:43:11,080
Speaker 1: the US's hand.

818
00:43:11,680 --> 00:43:17,839
Speaker 3: Yeah. So ultimately, one of the other problems driving a

819
00:43:17,880 --> 00:43:21,279
Speaker 3: breakdown of this post seventy one dollars system as it's

820
00:43:21,280 --> 00:43:23,920
Speaker 3: been structured has been peak cheap oil, which is to say,

821
00:43:23,960 --> 00:43:25,680
Speaker 3: we're not running out of oil, but we're running out

822
00:43:25,680 --> 00:43:29,279
Speaker 3: of the cheap oil. Ninety percent of the world's global

823
00:43:29,320 --> 00:43:32,799
Speaker 3: oil production growth over the last ten years has come

824
00:43:32,800 --> 00:43:39,280
Speaker 3: from US shale that's per going in Rosenswig. That oil

825
00:43:39,680 --> 00:43:44,040
Speaker 3: needs to be sixty sixty five seventy. If it goes

826
00:43:44,040 --> 00:43:46,799
Speaker 3: below that production, that's going to roll off. Growth of

827
00:43:46,800 --> 00:43:48,520
Speaker 3: that production will stop for three to four years. We

828
00:43:48,560 --> 00:43:52,760
Speaker 3: know that because we saw that in twenty nineteen, peaked

829
00:43:52,760 --> 00:43:55,880
Speaker 3: in twenty nineteen, finally retook twenty nineteen levels in twenty

830
00:43:55,880 --> 00:44:01,040
Speaker 3: twenty three. The problem with in the system if you

831
00:44:01,080 --> 00:44:04,120
Speaker 3: are China. You know, Kyle bas laid it up beautifully

832
00:44:04,120 --> 00:44:06,279
Speaker 3: four or five years ago with hedge eye, where he said,

833
00:44:06,280 --> 00:44:09,359
Speaker 3: look that the Chinese have a growing economy, they need

834
00:44:09,440 --> 00:44:11,840
Speaker 3: import oil. They can only port buy oil and dollars

835
00:44:12,480 --> 00:44:15,120
Speaker 3: and oil prices are going up, and so they're gonna

836
00:44:15,160 --> 00:44:17,200
Speaker 3: run out of dollars and then they're gonna have a

837
00:44:17,239 --> 00:44:19,600
Speaker 3: currency crisis like they head in Southeast Asia ninety seven.

838
00:44:19,719 --> 00:44:21,680
Speaker 3: And the CCP's and a class so and so forth

839
00:44:21,680 --> 00:44:23,640
Speaker 3: you want you want to value, CCP's gonna be a pressure.

840
00:44:23,680 --> 00:44:25,840
Speaker 2: Okay, that's Kyle's favorite to that scenario.

841
00:44:26,040 --> 00:44:33,839
Speaker 3: That's he likes that scenario. Yes, what the CCP saw

842
00:44:33,840 --> 00:44:37,520
Speaker 3: that too. They are very pragmatic about this. And so

843
00:44:37,840 --> 00:44:40,520
Speaker 3: what their solution was two things. Number one, stop buying

844
00:44:40,520 --> 00:44:43,000
Speaker 3: treasuries and instead start using those dollars to buy up

845
00:44:43,400 --> 00:44:50,000
Speaker 3: oil fields, ports boats, you know, the whole infrastructure fundamlitary. Uh.

846
00:44:50,200 --> 00:44:53,319
Speaker 3: The other thing they did was that is much more sustainable,

847
00:44:53,320 --> 00:44:56,040
Speaker 3: and that is forcing the systemic change in part is

848
00:44:57,200 --> 00:45:00,440
Speaker 3: begin offer, you know, setting up the infrastry. Actually, you

849
00:45:00,520 --> 00:45:04,880
Speaker 3: buy oil and other commodities in Yuan, and people say, oh, well, oh,

850
00:45:05,560 --> 00:45:07,200
Speaker 3: someone who's gonna take the you on? Well, the oil

851
00:45:07,239 --> 00:45:08,960
Speaker 3: exports will take you on. What we'll they get with it?

852
00:45:09,320 --> 00:45:12,000
Speaker 3: They'll get Chinese made goods. We're all buying Chinese made goods. Everyone's,

853
00:45:12,120 --> 00:45:14,280
Speaker 3: you know, thanks to the way this system has evolved,

854
00:45:14,440 --> 00:45:16,359
Speaker 3: China is the factory of the world. Okay, what will

855
00:45:16,360 --> 00:45:17,840
Speaker 3: they settle in? The Chinese don't want to open up

856
00:45:17,840 --> 00:45:20,200
Speaker 3: their capital account with Chinese gunment bonds. You're right, they'll

857
00:45:20,280 --> 00:45:23,040
Speaker 3: use gold at a floating price. And well, what does

858
00:45:23,040 --> 00:45:24,480
Speaker 3: that do? Well? It does two things. Number one, it

859
00:45:24,480 --> 00:45:27,400
Speaker 3: gives credibility to take you on, because everybody loves gold.

860
00:45:27,480 --> 00:45:34,280
Speaker 3: Everybody trusts gold. And number two, in unlike the American system,

861
00:45:34,280 --> 00:45:36,040
Speaker 3: which we she started at the top of the hour

862
00:45:36,080 --> 00:45:38,680
Speaker 3: with where America needs g to be above our In

863
00:45:38,680 --> 00:45:40,920
Speaker 3: other words, if you hold our treasury bonds, we are

864
00:45:41,200 --> 00:45:45,600
Speaker 3: we must steal your purchasing power just to keep you know,

865
00:45:45,680 --> 00:45:47,600
Speaker 3: our bellies full, just to keep the wheels on the cart.

866
00:45:48,360 --> 00:45:51,640
Speaker 3: Chinese are saying look nets settle in gold, and the

867
00:45:51,680 --> 00:45:53,400
Speaker 3: price of gold will go up over time in you

868
00:45:53,520 --> 00:45:56,319
Speaker 3: on terms, which means you're purchasing power in you on terms.

869
00:45:56,360 --> 00:45:59,600
Speaker 3: The factory of the world will go up. It's a

870
00:45:59,680 --> 00:46:02,800
Speaker 3: virtue cycle. The more oil goes up, the more yuwon

871
00:46:02,920 --> 00:46:05,239
Speaker 3: goes out against oil, the more gold goes up against oil,

872
00:46:05,239 --> 00:46:06,920
Speaker 3: the more gold is used, gold goes up, and you

873
00:46:06,960 --> 00:46:11,080
Speaker 3: want terms. Creditors of China on the energy side can

874
00:46:11,120 --> 00:46:16,320
Speaker 3: buy more Chinese goods with yuon, more Chinese goods, stronger

875
00:46:16,400 --> 00:46:21,960
Speaker 3: Chinese economy, more oil usage, washermants repeat. So the interest is.

876
00:46:21,880 --> 00:46:23,560
Speaker 2: That what you mean by the floating price of gold?

877
00:46:23,680 --> 00:46:25,200
Speaker 3: Yeah, floating price of goal you can see.

878
00:46:25,000 --> 00:46:27,279
Speaker 2: As opposed to what would be a non floating.

879
00:46:26,960 --> 00:46:28,919
Speaker 3: Pricere just yeah peg. Yeah, they're not pegging the yuan

880
00:46:29,000 --> 00:46:32,319
Speaker 3: to gold. The Chinese that were understood. Americans made two

881
00:46:32,360 --> 00:46:34,800
Speaker 3: mistakes with the gold standard. They pegged the dollar to

882
00:46:34,840 --> 00:46:37,319
Speaker 3: gold mistake one and number two they use their own

883
00:46:37,320 --> 00:46:40,240
Speaker 3: gold to settle. The Chinese have fixed both in the structure.

884
00:46:40,280 --> 00:46:42,600
Speaker 3: That's number one is floating. People saying, oh, the euon's

885
00:46:42,600 --> 00:46:44,320
Speaker 3: gonna devalue, it's gonna crash the value, it's gonna go

886
00:46:44,320 --> 00:46:47,240
Speaker 3: down huge against tell yuan is down fifty percent against

887
00:46:47,280 --> 00:46:50,120
Speaker 3: gold in the last like eighteen months. Like people are

888
00:46:50,120 --> 00:46:52,879
Speaker 3: missing the movie, they're missing the whole show number two.

889
00:46:53,560 --> 00:46:55,880
Speaker 2: So the yuan is not losing to the dollar, but

890
00:46:55,880 --> 00:46:56,720
Speaker 2: it's losing the gold.

891
00:46:56,560 --> 00:46:58,920
Speaker 3: Getting crushed by gold, which is what they want because oh,

892
00:46:59,000 --> 00:47:01,280
Speaker 3: by the way, the credits are getting more personing power.

893
00:47:01,520 --> 00:47:04,520
Speaker 3: They've been telling their people to buy gold for twenty years.

894
00:47:04,640 --> 00:47:06,560
Speaker 1: How are they getting more purchasing power if if you

895
00:47:06,600 --> 00:47:10,160
Speaker 1: want is losing value because because they're not saving in

896
00:47:10,280 --> 00:47:12,239
Speaker 1: you on, they're saving in the saving gold. So the

897
00:47:12,280 --> 00:47:14,920
Speaker 1: gold is going up, which is purchasing more in the new.

898
00:47:14,760 --> 00:47:17,520
Speaker 3: On exactly, which then keeps the factories full in China.

899
00:47:17,560 --> 00:47:21,160
Speaker 3: So it's so so that's the first mistake they know

900
00:47:21,200 --> 00:47:23,040
Speaker 3: the Americans made and they fix it. And the second

901
00:47:23,040 --> 00:47:25,359
Speaker 3: one is the Americans use their own gold to settle, right,

902
00:47:25,400 --> 00:47:26,840
Speaker 3: So that's why we had to close the gold windows.

903
00:47:26,880 --> 00:47:27,759
Speaker 3: We were bleeding it all out.

904
00:47:27,920 --> 00:47:28,040
Speaker 4: Right.

905
00:47:28,360 --> 00:47:32,520
Speaker 3: China's like our gold can't leave except over here in

906
00:47:32,520 --> 00:47:34,120
Speaker 3: the Shanghi Free Trade Zone, right, it can come in

907
00:47:34,160 --> 00:47:37,480
Speaker 3: there and leave, but mainland China gold never leaves. So

908
00:47:37,520 --> 00:47:39,319
Speaker 3: you got to get the gold from somewhere else. This

909
00:47:39,400 --> 00:47:41,719
Speaker 3: is the real elegant genius part of it, which is,

910
00:47:42,080 --> 00:47:44,640
Speaker 3: so where's that gold coming from what we know London

911
00:47:45,800 --> 00:47:48,160
Speaker 3: to a lesser extent in New York, to Switzerland on

912
00:47:48,360 --> 00:47:51,839
Speaker 3: to their trading partners, so you know, for example.

913
00:47:51,640 --> 00:47:54,040
Speaker 1: So rather than what the US did is like, okay,

914
00:47:54,080 --> 00:47:56,200
Speaker 1: we traded, here's some surplus.

915
00:47:56,280 --> 00:47:58,279
Speaker 2: We'll give you the gold our fixed rate, our gold

916
00:47:58,320 --> 00:48:00,480
Speaker 2: at a fixed rate. And China is like, no, no, we're

917
00:48:00,480 --> 00:48:01,920
Speaker 2: not going to be our gold. Here's the yuan. You

918
00:48:01,960 --> 00:48:02,760
Speaker 2: go buy your own gold.

919
00:48:02,800 --> 00:48:04,800
Speaker 3: You go buy your own gold, not our gold. And

920
00:48:05,080 --> 00:48:07,279
Speaker 3: you better yet you buy the Americans and the Britz

921
00:48:07,280 --> 00:48:08,200
Speaker 3: gold and the Britz gold.

922
00:48:08,160 --> 00:48:09,479
Speaker 2: And can they buy gold in yuan?

923
00:48:10,280 --> 00:48:13,440
Speaker 3: Yeah? Yes, if you look. There was an IMF report

924
00:48:15,239 --> 00:48:18,200
Speaker 3: early twenty twenty three looking at the internationalization of the

925
00:48:18,360 --> 00:48:21,680
Speaker 3: M and B, and it showed a map of offshore

926
00:48:22,640 --> 00:48:31,360
Speaker 3: yuon clearing arrangements UK, Switzerland, you a Singapore and what

927
00:48:31,400 --> 00:48:33,120
Speaker 3: do all these things have in common? You know, along

928
00:48:33,160 --> 00:48:35,520
Speaker 3: with of course Hong Kong, but there were there were

929
00:48:35,520 --> 00:48:37,520
Speaker 3: some others as well. But those they're all gold hubs.

930
00:48:37,560 --> 00:48:40,160
Speaker 3: They're all the physical gold trading hubs. So you can

931
00:48:40,200 --> 00:48:43,319
Speaker 3: convert yon into whatever, get the gold and go home.

932
00:48:43,360 --> 00:48:45,480
Speaker 3: And so then you look and say, okay, well is

933
00:48:45,480 --> 00:48:47,960
Speaker 3: it showing up in flows. Yeah, we all know that

934
00:48:48,040 --> 00:48:50,959
Speaker 3: the flow of gold from west to east into China

935
00:48:51,040 --> 00:48:54,200
Speaker 3: has been accelerating meaningfully. But interestingly, since twenty twenty two,

936
00:48:54,920 --> 00:49:01,000
Speaker 3: Swiss exports of gold from into Gold coast countries into

937
00:49:02,239 --> 00:49:07,360
Speaker 3: golf arab Opec suppliers of China have gone from like

938
00:49:07,480 --> 00:49:09,719
Speaker 3: eighty tons a year to three hundred three hundred fifty

939
00:49:09,719 --> 00:49:12,879
Speaker 3: tons a year and it's still growing. So you can

940
00:49:12,920 --> 00:49:17,800
Speaker 3: see this trade happening, and it's still not well understood

941
00:49:17,800 --> 00:49:19,800
Speaker 3: in sort of traditional finance that the Achilles heel of

942
00:49:19,800 --> 00:49:24,080
Speaker 3: the dollar system is the unallocated gold market centered in London.

943
00:49:24,800 --> 00:49:27,680
Speaker 3: You just keep we'll take more, we'll take more, we'll

944
00:49:27,719 --> 00:49:29,840
Speaker 3: take more, we'll take more, and you either at some

945
00:49:29,880 --> 00:49:31,400
Speaker 3: point have to let the price of gold rise or

946
00:49:31,440 --> 00:49:33,319
Speaker 3: you have to declare force masure. And we saw what

947
00:49:33,320 --> 00:49:35,720
Speaker 3: happens when you declare force masure in the nickel market

948
00:49:35,840 --> 00:49:37,480
Speaker 3: in London a couple of years ago. The price goes

949
00:49:37,520 --> 00:49:41,239
Speaker 3: up like three x over nine. And that's important because ultimately,

950
00:49:41,440 --> 00:49:44,920
Speaker 3: when gold goes up, inflation expectations in the dollar go up,

951
00:49:45,120 --> 00:49:48,640
Speaker 3: ex inflation rates in the dollar go up, and so

952
00:49:48,760 --> 00:49:54,359
Speaker 3: that's this is the arbitrage that the Chinese are doing.

953
00:49:54,360 --> 00:49:58,000
Speaker 3: The other thing it does is that it sets up

954
00:49:59,520 --> 00:50:03,880
Speaker 3: ultimately historically, when gold, when oil was only priced in dollars,

955
00:50:03,920 --> 00:50:07,440
Speaker 3: when all commodities were only priced in dollars, gold going

956
00:50:07,520 --> 00:50:10,040
Speaker 3: up fifty percent in yuan like it has in the

957
00:50:10,120 --> 00:50:14,040
Speaker 3: last eighteen months would mean the yuan's collapsing, because there's

958
00:50:14,080 --> 00:50:17,640
Speaker 3: no other way. When oil is priced in u wan,

959
00:50:17,719 --> 00:50:19,040
Speaker 3: and it doesn't have to be a lot, it doesn't

960
00:50:19,080 --> 00:50:20,440
Speaker 3: have to be the majority, it just has to be

961
00:50:20,960 --> 00:50:23,279
Speaker 3: a decent amount, five to ten percent, and it's it's

962
00:50:23,320 --> 00:50:27,320
Speaker 3: doing that. When oil is priced in yuan and gold

963
00:50:27,360 --> 00:50:31,200
Speaker 3: goes up in yuan, that's no longer the yuan is collapsing.

964
00:50:31,320 --> 00:50:35,920
Speaker 3: That is, gold buys more oil in China than it

965
00:50:35,960 --> 00:50:40,120
Speaker 3: does in dollars, and so now capital always flows where

966
00:50:40,120 --> 00:50:42,160
Speaker 3: it's treated best. Gold is just capital, so it's going

967
00:50:42,200 --> 00:50:44,520
Speaker 3: to flow. Gold's gonna flow there, and that sets up

968
00:50:44,560 --> 00:50:47,200
Speaker 3: this arbitrage, which has been done throughout history. You know,

969
00:50:47,239 --> 00:50:49,200
Speaker 3: I wrote about it this week, and the Spanish Empire

970
00:50:49,719 --> 00:50:52,799
Speaker 3: was being these arbitrages were being done five hundred years ago.

971
00:50:53,239 --> 00:50:56,319
Speaker 3: But if gold if the if the Anglo Americans using

972
00:50:56,320 --> 00:50:59,520
Speaker 3: mostly paper gold, say that gold to oil ratio is

973
00:50:59,520 --> 00:51:03,960
Speaker 3: twenty barels per ounce of gold, and China and Russia

974
00:51:03,960 --> 00:51:07,000
Speaker 3: are transacting and physical at thirty barrels per ounce. Just

975
00:51:07,040 --> 00:51:10,640
Speaker 3: to pick two numbers, it sets up a very easy arbitrage.

976
00:51:10,640 --> 00:51:13,799
Speaker 3: Go to London, sell oil futures, buy an ounce of

977
00:51:13,800 --> 00:51:16,200
Speaker 3: gold by twenty you know, so iice twenty barrels of

978
00:51:16,239 --> 00:51:19,880
Speaker 3: oil futures, Buy an ounce of gold, take physical delivery

979
00:51:19,920 --> 00:51:24,759
Speaker 3: from London, send it to China where it never comes back,

980
00:51:25,960 --> 00:51:31,040
Speaker 3: and sell it for thirty barrels. The Yuan oil contract

981
00:51:31,040 --> 00:51:32,760
Speaker 3: has this little provision where you can take your profits

982
00:51:32,800 --> 00:51:35,440
Speaker 3: and any currency you want. It's not well understood that

983
00:51:35,440 --> 00:51:38,680
Speaker 3: the Chinese capital account is open through gold and through

984
00:51:38,719 --> 00:51:42,359
Speaker 3: oil on a limited basis. Take the money out, pay

985
00:51:42,360 --> 00:51:44,960
Speaker 3: back your twenty barrel short because you get thirty barrels

986
00:51:44,960 --> 00:51:46,920
Speaker 3: for your you know, get your thirty barrels for your

987
00:51:46,920 --> 00:51:49,160
Speaker 3: one ounce in China, pay back your twenty barrel short.

988
00:51:49,560 --> 00:51:52,799
Speaker 3: You get ten free barrels of oil. Do it again, Yeah,

989
00:51:53,080 --> 00:51:57,880
Speaker 3: do it again, And the oil market is twelve to

990
00:51:57,880 --> 00:51:59,799
Speaker 3: fifteen times the size the global gold market. An you'll

991
00:51:59,800 --> 00:52:02,880
Speaker 3: fell go gold production, like they will drain the gold.

992
00:52:03,440 --> 00:52:08,440
Speaker 3: It's so we're watching them use this as a virtuous

993
00:52:08,480 --> 00:52:11,520
Speaker 3: system towards something that is better for not just them,

994
00:52:11,520 --> 00:52:14,399
Speaker 3: but I think for the world. But it's also being

995
00:52:14,440 --> 00:52:19,520
Speaker 3: weaponized in a way that like, look, if you do

996
00:52:19,600 --> 00:52:22,239
Speaker 3: something we don't like, if you don't if you go

997
00:52:22,280 --> 00:52:24,479
Speaker 3: too far with Taiwan, if you give Taiwan the wrong

998
00:52:24,520 --> 00:52:28,319
Speaker 3: weapons system, we'll get aggressive. We'll say we'll do you know,

999
00:52:28,320 --> 00:52:29,920
Speaker 3: we'll do forty barrels with the rush of the Russians

1000
00:52:29,920 --> 00:52:30,600
Speaker 3: are happy to do it.

1001
00:52:31,360 --> 00:52:33,640
Speaker 2: What would aggressive be then? What would they do?

1002
00:52:34,080 --> 00:52:35,560
Speaker 3: I think you could drain you could train London a

1003
00:52:35,600 --> 00:52:38,360
Speaker 3: lot faster they force do you know, drain London a

1004
00:52:38,360 --> 00:52:40,600
Speaker 3: lot faster? And either the price of gold goes up

1005
00:52:40,680 --> 00:52:44,280
Speaker 3: a lot in dollar terms, which then creates inflation expectations.

1006
00:52:44,640 --> 00:52:47,120
Speaker 3: If inflation expectations go up in the US, because if

1007
00:52:47,160 --> 00:52:49,000
Speaker 3: you look over time, it's not a perfect correlation, but

1008
00:52:49,040 --> 00:52:52,000
Speaker 3: it's a very positive correlation. As gold goes up, US

1009
00:52:52,000 --> 00:52:55,800
Speaker 3: inflation expectations go up. If inflation expectations go up, rates

1010
00:52:55,840 --> 00:52:58,080
Speaker 3: go up. If rates go up, the debt blows up.

1011
00:52:58,960 --> 00:53:01,319
Speaker 1: Why would they only hold their back pocket in case

1012
00:53:01,360 --> 00:53:03,680
Speaker 1: of some provocation versus like why not just do that?

1013
00:53:03,719 --> 00:53:03,959
Speaker 2: Now?

1014
00:53:04,600 --> 00:53:07,960
Speaker 3: I think number one, it's it's there is a mutually

1015
00:53:08,000 --> 00:53:13,440
Speaker 3: assured destruction aspect to it. Their economy isn't doing great either.

1016
00:53:13,560 --> 00:53:17,160
Speaker 3: There you know, we could you know, compensate by raising

1017
00:53:17,200 --> 00:53:19,759
Speaker 3: rates to ten percent or fifteen percent and blowing up

1018
00:53:19,760 --> 00:53:22,920
Speaker 3: our economy, blowing up their economy. We could put trade

1019
00:53:22,960 --> 00:53:25,319
Speaker 3: tariffs on on their products. You know, none of these

1020
00:53:25,320 --> 00:53:27,319
Speaker 3: things would be good for us or upon market either,

1021
00:53:27,360 --> 00:53:28,520
Speaker 3: but there's things we could do.

1022
00:53:28,840 --> 00:53:30,160
Speaker 2: They need us to buy their goods.

1023
00:53:30,239 --> 00:53:32,080
Speaker 3: Still, they still need us to buy a lot of goods.

1024
00:53:32,600 --> 00:53:36,239
Speaker 3: But there it's yes, yeah, so there's and again going

1025
00:53:36,280 --> 00:53:38,480
Speaker 3: back to the point we made before, I don't think

1026
00:53:38,480 --> 00:53:42,640
Speaker 3: anybody in the world wants the nineteen thirteen to nineteen

1027
00:53:42,760 --> 00:53:46,160
Speaker 3: forty five period. I think there is still some level

1028
00:53:46,160 --> 00:53:48,440
Speaker 3: of sanity at the highest levels in these in these

1029
00:53:48,480 --> 00:53:53,480
Speaker 3: countries that understand like, look like there is this transition.

1030
00:53:53,640 --> 00:53:56,560
Speaker 3: We do have competing self interest that we need to

1031
00:53:56,640 --> 00:54:01,160
Speaker 3: go and there is this economic transitioning to transition taking place,

1032
00:54:02,239 --> 00:54:07,680
Speaker 3: and we let's avoid let's avoid this. And so it's

1033
00:54:07,800 --> 00:54:11,080
Speaker 3: very possible, Like I think when Yellen went to China November.

1034
00:54:11,080 --> 00:54:12,239
Speaker 3: I think she went there and said, listen, you need

1035
00:54:12,280 --> 00:54:15,000
Speaker 3: strengthen you want I think the Chinese are like, piss off.

1036
00:54:15,040 --> 00:54:16,759
Speaker 3: If you want the either you want up and the

1037
00:54:16,800 --> 00:54:19,520
Speaker 3: dollar down. Bid gold, And there were there were rumblings,

1038
00:54:19,520 --> 00:54:22,040
Speaker 3: incredible rumblings at the US Treasury was buying a little gold.

1039
00:54:22,080 --> 00:54:24,600
Speaker 3: And we certainly have seen gold rise meaningfully since then,

1040
00:54:24,680 --> 00:54:28,080
Speaker 3: so that I think gold is kind of the pivot

1041
00:54:28,160 --> 00:54:29,960
Speaker 3: for doing that for the you know, for some of

1042
00:54:30,000 --> 00:54:31,719
Speaker 3: this for the time being. So I don't think it's

1043
00:54:31,760 --> 00:54:35,359
Speaker 3: in their interest to do that. I think you would rather.

1044
00:54:37,080 --> 00:54:39,680
Speaker 3: Big changes aren't good for anybody. Big fast changes aren't

1045
00:54:39,719 --> 00:54:40,320
Speaker 3: good for anybody.

1046
00:54:40,400 --> 00:54:46,200
Speaker 1: Yeah, it sounds like this is happening. People can see

1047
00:54:46,239 --> 00:54:48,279
Speaker 1: it again. Governments are smart enough to see what's going on.

1048
00:54:49,120 --> 00:54:50,799
Speaker 1: The writing is on the wall, so to speak. Jerome

1049
00:54:50,880 --> 00:54:52,920
Speaker 1: Powell was it a year ago, said that he could

1050
00:54:52,960 --> 00:54:56,239
Speaker 1: see maybe there's more than one reserve currency. I don't

1051
00:54:56,239 --> 00:54:58,439
Speaker 1: know exactly what that means, but do you think there's

1052
00:54:58,480 --> 00:55:01,839
Speaker 1: a case where the US sees what's going on and

1053
00:55:01,960 --> 00:55:05,120
Speaker 1: rather than being a victim of this situation, decides to

1054
00:55:05,239 --> 00:55:08,040
Speaker 1: sort of preempt it or move in advance of that

1055
00:55:08,320 --> 00:55:10,520
Speaker 1: and tries to revalue hold on their own or something

1056
00:55:10,560 --> 00:55:10,839
Speaker 1: like that.

1057
00:55:11,000 --> 00:55:16,120
Speaker 3: Yeah, I do. I think, you know, there are ways

1058
00:55:16,160 --> 00:55:19,440
Speaker 3: out of this fiscal situation. It's effectively a dollar devaluation

1059
00:55:20,200 --> 00:55:22,080
Speaker 3: that's in the cake at this point. It's a question

1060
00:55:22,160 --> 00:55:26,000
Speaker 3: of you know, I think it was actually putin whoad

1061
00:55:26,000 --> 00:55:27,239
Speaker 3: is like, if there's going to be a fight, the

1062
00:55:27,239 --> 00:55:28,840
Speaker 3: best thing to do is pick the time and spot

1063
00:55:28,840 --> 00:55:31,319
Speaker 3: for the fight right where it's most advantageous to you.

1064
00:55:32,040 --> 00:55:35,480
Speaker 3: If there's going to be a devaluation, why not use

1065
00:55:35,520 --> 00:55:37,799
Speaker 3: it to your pick the time, pick the spot, use

1066
00:55:37,840 --> 00:55:40,319
Speaker 3: it to your advantage. Because the devaluation is happening. That

1067
00:55:40,520 --> 00:55:42,359
Speaker 3: has to happen, given the death and everything we've talked

1068
00:55:42,360 --> 00:55:47,320
Speaker 3: about before. So, I mean, there is a financial accounting

1069
00:55:47,320 --> 00:55:50,960
Speaker 3: manual for Federal Reserve banks. It's public document. Latest update

1070
00:55:51,040 --> 00:55:53,440
Speaker 3: was April twenty twenty four. You can google it. Section

1071
00:55:53,440 --> 00:55:56,080
Speaker 3: two dot ten says the President can instruct the Secretary

1072
00:55:56,080 --> 00:55:58,680
Speaker 3: of the Treasury to tell the Fed to revalue the

1073
00:55:58,680 --> 00:56:02,400
Speaker 3: gold official gold, and the accounting treatment of that is

1074
00:56:03,000 --> 00:56:05,920
Speaker 3: it makes a deposit into the Treasury General Account or TGA,

1075
00:56:06,400 --> 00:56:09,200
Speaker 3: which is just the Treasury's checking account. They can do

1076
00:56:09,239 --> 00:56:12,880
Speaker 3: whatever they want with so yeah. I mean, President could say, listen,

1077
00:56:13,480 --> 00:56:16,759
Speaker 3: revalue it to twenty thousand dollars an ounce. Every four

1078
00:56:16,800 --> 00:56:18,839
Speaker 3: thousand dollars per ounce, given two hundred and sixty one

1079
00:56:18,840 --> 00:56:21,960
Speaker 3: million ounces of official gold, roughly every four thousand bucks

1080
00:56:21,960 --> 00:56:24,680
Speaker 3: is a trillion bucks. Twenty thousand announces twenty trillion into

1081
00:56:24,719 --> 00:56:29,600
Speaker 3: the tg excuse me, five trillion into the TGAU buy

1082
00:56:29,600 --> 00:56:32,880
Speaker 3: back the long end of the curve. Devalue the dollar fund,

1083
00:56:32,920 --> 00:56:36,480
Speaker 3: industrial policy, re sure. There's a lot of leeway things

1084
00:56:36,520 --> 00:56:38,680
Speaker 3: you could do with that that basically take a US

1085
00:56:38,719 --> 00:56:41,920
Speaker 3: debt crisis off the table, position the US economy for growth,

1086
00:56:43,080 --> 00:56:45,880
Speaker 3: sort of anesthetize the bond market. As I've said to clients,

1087
00:56:46,360 --> 00:56:46,840
Speaker 3: how does.

1088
00:56:46,719 --> 00:56:48,799
Speaker 1: That solve the debt crisis? Because five trillion is a

1089
00:56:48,840 --> 00:56:50,920
Speaker 1: drop in the bucket to the thirty five trillion of debt,

1090
00:56:51,280 --> 00:56:53,240
Speaker 1: and then you've shot your shot.

1091
00:56:53,320 --> 00:56:54,719
Speaker 2: Now you're out of the gold.

1092
00:56:54,840 --> 00:56:56,960
Speaker 3: Well, you don't. The gold doesn't leave. It's just an

1093
00:56:57,000 --> 00:56:59,200
Speaker 3: accounting treatment. The gold never moves in the vault. It's

1094
00:56:59,239 --> 00:57:02,759
Speaker 3: just money create pure It's just straight money creation with

1095
00:57:02,840 --> 00:57:06,560
Speaker 3: no offsetting debt. So let's say you let's say you

1096
00:57:06,600 --> 00:57:12,000
Speaker 3: know there's thirty five trillion in debt treasury markets twenty

1097
00:57:12,040 --> 00:57:15,840
Speaker 3: seven trillion, you know the nets and various xing out. Okay,

1098
00:57:15,880 --> 00:57:20,880
Speaker 3: so you can buy back five trillion overnight, all at

1099
00:57:20,880 --> 00:57:25,920
Speaker 3: the long end, basically all the way down. Maybe it

1100
00:57:25,920 --> 00:57:27,360
Speaker 3: needs to be more than twenty thousand, maybe needs to

1101
00:57:27,400 --> 00:57:30,680
Speaker 3: go to five trillion. By doing that, you're going to

1102
00:57:30,680 --> 00:57:35,960
Speaker 3: be replacing bond holders with cash. They're gonna go out

1103
00:57:36,000 --> 00:57:38,040
Speaker 3: and they're gonna buy something else. With that cash, freshly

1104
00:57:38,080 --> 00:57:42,040
Speaker 3: printed five trillion dollars being injected into the economy, you'll

1105
00:57:42,040 --> 00:57:45,640
Speaker 3: be growing the monetary base by five trillion dollars. Yeah, overnight,

1106
00:57:45,800 --> 00:57:50,240
Speaker 3: GDP skyrockets, inflation skyrockets. Fed's going to probably have to

1107
00:57:51,040 --> 00:57:52,640
Speaker 3: maybe do a little bit of QI and then but

1108
00:57:52,680 --> 00:57:54,360
Speaker 3: maybe not, because if you buy back the long end,

1109
00:57:54,400 --> 00:57:56,400
Speaker 3: there's no market at the the long end is no

1110
00:57:56,440 --> 00:58:01,560
Speaker 3: longer a market. It's basically yield curve control. And then

1111
00:58:02,360 --> 00:58:06,840
Speaker 3: once you know by virtue of reducing the debt, removing

1112
00:58:06,840 --> 00:58:10,160
Speaker 3: the long end blowout as a risk, then you can

1113
00:58:10,200 --> 00:58:13,320
Speaker 3: do some things on the fiscal side. Whatever. GDP's already

1114
00:58:13,320 --> 00:58:19,040
Speaker 3: be skyrocketing anyway, inflation to be skyrocketing, and you end

1115
00:58:19,120 --> 00:58:21,480
Speaker 3: up with debt the GDP maybe back to sixty seventy percent.

1116
00:58:21,640 --> 00:58:24,320
Speaker 3: Now the FED is in a position where they can

1117
00:58:24,520 --> 00:58:27,640
Speaker 3: raise rates to fight inflation. They might need to do.

1118
00:58:27,640 --> 00:58:29,360
Speaker 2: Some creatiation would be so high.

1119
00:58:29,760 --> 00:58:32,040
Speaker 1: I mean, if you raise gold to twenty thousand, the

1120
00:58:32,040 --> 00:58:34,760
Speaker 1: whole world benefits from that. Yeah, Russia is going to benefit,

1121
00:58:34,880 --> 00:58:37,200
Speaker 1: China's going to benefit. And so now you have all

1122
00:58:37,240 --> 00:58:39,720
Speaker 1: of this money globally that's going to be slashing around

1123
00:58:40,360 --> 00:58:42,640
Speaker 1: and based off of sort of the way it's been going,

1124
00:58:42,840 --> 00:58:44,880
Speaker 1: maybe a lot of that capital comes to the United States.

1125
00:58:44,960 --> 00:58:47,480
Speaker 1: It could, so then we have massive inflation.

1126
00:58:47,640 --> 00:58:47,840
Speaker 2: Right.

1127
00:58:48,480 --> 00:58:50,400
Speaker 1: You mentioned the Spanish Empire, right, So they went and

1128
00:58:50,400 --> 00:58:52,680
Speaker 1: discovered the gold in Peru or the silver, brought that back,

1129
00:58:52,720 --> 00:58:55,760
Speaker 1: created massive inflation, right, So that's in.

1130
00:58:55,760 --> 00:58:58,200
Speaker 3: The cake though, right, Like it was talking with Dylan

1131
00:58:58,240 --> 00:59:01,600
Speaker 3: McCleary yesterday, it was you know, we had a twenty

1132
00:59:01,600 --> 00:59:05,520
Speaker 3: five to thirty percent aggregate inflation over two years, and

1133
00:59:05,560 --> 00:59:08,040
Speaker 3: that the GDP didn't move, right, That the GDP was

1134
00:59:08,040 --> 00:59:10,000
Speaker 3: one hundred twenty one it's one hundred twenty two percent now,

1135
00:59:10,080 --> 00:59:14,480
Speaker 3: which tells you something really important. The Inflation Shock playbook

1136
00:59:14,520 --> 00:59:16,760
Speaker 3: that they were trying to run Inflation Shock Financial Quession

1137
00:59:16,760 --> 00:59:19,840
Speaker 3: Playbook twenty five to thirty wasn't enough. It needed to

1138
00:59:19,840 --> 00:59:22,600
Speaker 3: be fifty sixty or sixty eighty percent inflation for two

1139
00:59:22,680 --> 00:59:26,600
Speaker 3: years and now because they were not brave enough, not

1140
00:59:26,680 --> 00:59:29,880
Speaker 3: courageous enough to do it right the first time. Now

1141
00:59:29,880 --> 00:59:32,720
Speaker 3: it has to be like the sixty eighty those types

1142
00:59:32,720 --> 00:59:36,200
Speaker 3: of inflation numbers in a compressed period of time. That's

1143
00:59:36,200 --> 00:59:37,919
Speaker 3: what we're gonna That's what we're dealing with here because

1144
00:59:37,960 --> 00:59:40,480
Speaker 3: the debt and deficit levels are so high, and that's unpleasant,

1145
00:59:40,520 --> 00:59:43,000
Speaker 3: et cetera, et cetera. But you know, Israel had two

1146
00:59:43,040 --> 00:59:44,960
Speaker 3: hundred percent inflation for a couple of years in the eighties.

1147
00:59:45,000 --> 00:59:46,520
Speaker 3: Like no zombies, no.

1148
00:59:47,040 --> 00:59:49,959
Speaker 2: Collapse, No, it just and yeah, and I mean.

1149
00:59:49,920 --> 00:59:52,200
Speaker 3: It's a smaller economy, it's a but it just goes

1150
00:59:52,200 --> 00:59:55,520
Speaker 3: to show like it can be done. You know, it's

1151
00:59:55,680 --> 00:59:57,960
Speaker 3: it will be tricky, but that's we're gonna have high inflation.

1152
00:59:58,240 --> 01:00:01,600
Speaker 1: You reference a lot of American with Argentine vibes, is

1153
01:00:01,600 --> 01:00:03,480
Speaker 1: how you say. Right, So if you look at Argentina,

1154
01:00:03,520 --> 01:00:07,160
Speaker 1: who's had triple digit inflation for a long time. I

1155
01:00:07,160 --> 01:00:09,240
Speaker 1: haven't been there, but according to many people I know

1156
01:00:09,240 --> 01:00:11,800
Speaker 1: who have our friend George Gammon was down there recently, he's.

1157
01:00:11,680 --> 01:00:14,040
Speaker 2: Like, you wouldn't know it. You wouldn't know it when

1158
01:00:14,040 --> 01:00:14,640
Speaker 2: you're down there.

1159
01:00:14,720 --> 01:00:17,320
Speaker 3: The only people I talk to that equate like really

1160
01:00:17,360 --> 01:00:20,320
Speaker 3: a period of high really high inflation with like collapse

1161
01:00:20,360 --> 01:00:22,320
Speaker 3: of everything in zombies and all this stuff are Americans,

1162
01:00:22,360 --> 01:00:25,000
Speaker 3: and particularly Americans you know in the financial centers like

1163
01:00:25,080 --> 01:00:26,800
Speaker 3: oh my god. Well yeah, of course, like oh my god,

1164
01:00:26,800 --> 01:00:28,920
Speaker 3: because the real bet of their bonds goes poof. But

1165
01:00:29,480 --> 01:00:33,720
Speaker 3: they don't understand they are what is standing between American

1166
01:00:33,800 --> 01:00:38,160
Speaker 3: national security and where we are today, like long term bonds.

1167
01:00:38,880 --> 01:00:41,040
Speaker 3: So like basically by holding long term bonds, you're not

1168
01:00:41,080 --> 01:00:43,840
Speaker 3: betting on disinflation or deflation. You are betting on the

1169
01:00:43,880 --> 01:00:48,080
Speaker 3: American government not being willing to run over you to

1170
01:00:48,160 --> 01:00:51,240
Speaker 3: get to a national security position that is acceptable to them.

1171
01:00:51,640 --> 01:00:53,640
Speaker 3: And in my opinion, you know, people always say, don't

1172
01:00:53,640 --> 01:00:55,960
Speaker 3: bet against the Americans. If you're holding long term treasuries,

1173
01:00:55,960 --> 01:00:58,120
Speaker 3: you are betting against the Americans. They are going to

1174
01:00:58,280 --> 01:01:02,560
Speaker 3: run over you. They've run over like Native Americans. They

1175
01:01:02,560 --> 01:01:05,200
Speaker 3: had treaties, they had promises. How'd that work out? Right?

1176
01:01:05,280 --> 01:01:08,560
Speaker 3: Like it was not an American government's interest long term

1177
01:01:08,600 --> 01:01:11,320
Speaker 3: bond holders, especially long term treasury holders, are in the

1178
01:01:11,360 --> 01:01:14,120
Speaker 3: way of the US government securing its national security interest.

1179
01:01:14,160 --> 01:01:17,240
Speaker 3: They are telling you this every day, both parties, doesn't

1180
01:01:17,280 --> 01:01:23,200
Speaker 3: matter who wins, and yet people are you know, it's

1181
01:01:23,200 --> 01:01:25,040
Speaker 3: fascinating to me. It reminds me of like housing in

1182
01:01:25,240 --> 01:01:29,720
Speaker 3: four oh five, Like the signs are all there. It

1183
01:01:29,800 --> 01:01:31,080
Speaker 3: was like the most obvious thing in the world. It's

1184
01:01:31,120 --> 01:01:31,840
Speaker 3: just a question of when.

1185
01:01:31,920 --> 01:01:36,640
Speaker 1: And you know, so, now let's run through the mechanics

1186
01:01:36,640 --> 01:01:38,640
Speaker 1: of how bitcoin could come into play on that. Sure,

1187
01:01:38,680 --> 01:01:42,720
Speaker 1: So the US has a lot of gold, yep, the

1188
01:01:42,800 --> 01:01:44,240
Speaker 1: US doesn't really have any bitcoin.

1189
01:01:44,280 --> 01:01:48,800
Speaker 2: Maybe it does, that's an issue. Could they buy bitcoin?

1190
01:01:49,040 --> 01:01:51,400
Speaker 1: How would bitcoin work to kind of take this place

1191
01:01:51,400 --> 01:01:52,960
Speaker 1: of gold or work in conjunction with that.

1192
01:01:53,560 --> 01:01:56,840
Speaker 3: Yeah, I think it absolutely could. Gold does excuse me,

1193
01:01:56,840 --> 01:01:58,439
Speaker 3: Bitcoin does a lot of the things that gold does

1194
01:01:58,480 --> 01:02:03,600
Speaker 3: better than gold. We've seen, I've posted everyone knows the

1195
01:02:03,680 --> 01:02:07,320
Speaker 3: charts of of bitcoin over gold over time. Right, a

1196
01:02:07,320 --> 01:02:10,600
Speaker 3: lot of volatility, but it's up right gold bitcoin's purchasing

1197
01:02:10,640 --> 01:02:13,480
Speaker 3: Bitcoin is winning against gold overtime unquestionably.

1198
01:02:14,600 --> 01:02:17,360
Speaker 1: Over the last thirteen years, bitcoin is up one hundred

1199
01:02:17,360 --> 01:02:18,560
Speaker 1: and fifty percent and gold is.

1200
01:02:18,600 --> 01:02:22,240
Speaker 3: Up four Yeah and yeah, with ninety percent draw downs, right,

1201
01:02:22,280 --> 01:02:25,760
Speaker 3: so it's it's but absolutely it's it's over time with

1202
01:02:25,840 --> 01:02:28,480
Speaker 3: high volatility. It's absolutely outperforming, which makes sense. It is

1203
01:02:28,520 --> 01:02:32,320
Speaker 3: a harder currency, there's there's less supply growth to facto.

1204
01:02:35,120 --> 01:02:36,360
Speaker 3: There's a lot of ways you could do it. You

1205
01:02:36,400 --> 01:02:39,320
Speaker 3: could do it via what you know Kennedy talked about

1206
01:02:39,440 --> 01:02:41,960
Speaker 3: yesterday here at the conference, where the government comes in

1207
01:02:41,960 --> 01:02:44,800
Speaker 3: and just starts buying it to reserve. You could you know,

1208
01:02:44,840 --> 01:02:46,720
Speaker 3: I think we've got I don't know what the.

1209
01:02:46,760 --> 01:02:49,240
Speaker 4: Number is, but it's a decent two hundred and five

1210
01:02:49,680 --> 01:02:52,280
Speaker 4: and ten thousand, okay, something like that, from from seizing

1211
01:02:52,280 --> 01:02:56,160
Speaker 4: it from whatever the Silk Road supply, Yeah, from the

1212
01:02:56,160 --> 01:02:56,959
Speaker 4: Silk Road or whatever.

1213
01:02:58,040 --> 01:02:59,760
Speaker 3: You know, we could force the Germans to sell more

1214
01:02:59,760 --> 01:03:01,480
Speaker 3: of there are convinced that the Simma are theirs and

1215
01:03:01,480 --> 01:03:05,840
Speaker 3: buy theirs. I think they're gonna regret that. But that's

1216
01:03:05,880 --> 01:03:09,360
Speaker 3: neither here nor there. You could issue you know, one

1217
01:03:09,360 --> 01:03:10,840
Speaker 3: thing you could do if you came to said Luke,

1218
01:03:10,840 --> 01:03:12,840
Speaker 3: you're Under Secretary of the Treasury, I want you to

1219
01:03:12,880 --> 01:03:16,760
Speaker 3: come up with a proposal for restructuring the US debt.

1220
01:03:17,200 --> 01:03:23,400
Speaker 3: We're in a restructing situation using bitcoin. Great, let's let's

1221
01:03:23,480 --> 01:03:27,640
Speaker 3: issue five or ten trillion dollars of thirty your paper

1222
01:03:28,480 --> 01:03:31,959
Speaker 3: and yielding two and a half percent with a five

1223
01:03:32,000 --> 01:03:38,640
Speaker 3: percent bitcoin kicker, the floats people would take that down enormously.

1224
01:03:38,800 --> 01:03:41,760
Speaker 3: You would be revaluing bitcoin enormously, right, because you're gonna

1225
01:03:41,760 --> 01:03:43,560
Speaker 3: be issuing you've got to have that. You're gonna have

1226
01:03:43,600 --> 01:03:46,000
Speaker 3: to buy the bitcoin to support that debt basically, or

1227
01:03:46,000 --> 01:03:48,360
Speaker 3: to backs out at least some of it. Bitcoin's market

1228
01:03:48,400 --> 01:03:54,520
Speaker 3: caps whatever one point three is we meet. Yeah, that's

1229
01:03:54,520 --> 01:03:57,160
Speaker 3: one way you could do it. You know, what Kennedy

1230
01:03:57,200 --> 01:03:59,400
Speaker 3: proposed yesterday is another way you could do it. You know,

1231
01:03:59,520 --> 01:04:02,920
Speaker 3: in my opinion as a markets guy, that's one of

1232
01:04:03,000 --> 01:04:06,400
Speaker 3: the least effective ways to do it, not jacking his poll.

1233
01:04:06,480 --> 01:04:08,200
Speaker 3: I like his proposal, but in terms of.

1234
01:04:08,200 --> 01:04:10,160
Speaker 2: Which is buying five hundred and fifty a day.

1235
01:04:10,080 --> 01:04:12,520
Speaker 3: Right and announcing it right? Like, if you announce it,

1236
01:04:12,600 --> 01:04:14,480
Speaker 3: the markets are going to discount that back. If you

1237
01:04:14,600 --> 01:04:16,280
Speaker 3: say I'm going to be in, youre buying five hundred

1238
01:04:16,280 --> 01:04:18,320
Speaker 3: and fifty a day. No matter what the price of

1239
01:04:18,320 --> 01:04:20,960
Speaker 3: bitcoin's going to do this, it's going to rocket ship,

1240
01:04:21,360 --> 01:04:23,280
Speaker 3: It'll pull back from some really high number, and then

1241
01:04:23,280 --> 01:04:25,240
Speaker 3: it will kind of flatten out and go select you know,

1242
01:04:25,440 --> 01:04:27,720
Speaker 3: steadily higher over time from there. That's like what the

1243
01:04:27,800 --> 01:04:29,680
Speaker 3: chart would do. And so if you say we're gonna

1244
01:04:29,680 --> 01:04:31,280
Speaker 3: buy bitcoin for the next seven years, the markets are

1245
01:04:31,280 --> 01:04:33,240
Speaker 3: going to go They're going to discount some big portion

1246
01:04:33,280 --> 01:04:35,920
Speaker 3: of that seven years of buying in the next three months. Yeah,

1247
01:04:36,320 --> 01:04:38,720
Speaker 3: And that's why I say I think it's a less

1248
01:04:38,720 --> 01:04:42,400
Speaker 3: effective way to do it. It's not jacking his proposal.

1249
01:04:42,480 --> 01:04:45,960
Speaker 3: It is from a market's perspective, you're going to get

1250
01:04:46,000 --> 01:04:47,440
Speaker 3: a lot less bitcoin than if you were to do

1251
01:04:47,440 --> 01:04:50,600
Speaker 3: it secretly. The challenge, of course, is they didn't have

1252
01:04:50,640 --> 01:04:52,280
Speaker 3: the foresight to be doing it secretly over the last

1253
01:04:52,320 --> 01:04:55,000
Speaker 3: ten years for a number of different maybe and maybe

1254
01:04:55,040 --> 01:04:57,080
Speaker 3: they have who knows, Maybe that's you know, oh, we're

1255
01:04:57,080 --> 01:04:58,440
Speaker 3: going to do it. No, by the way, we already

1256
01:04:58,440 --> 01:05:01,880
Speaker 3: have this yeah. Uh, then you could work it into

1257
01:05:01,920 --> 01:05:05,560
Speaker 3: trade settlement, right because ultimately part of the issue is

1258
01:05:05,560 --> 01:05:07,440
Speaker 3: we've been settling trade with treasuries. This is part of

1259
01:05:07,440 --> 01:05:10,080
Speaker 3: the reason why CDs, you know, why derivatives traders make

1260
01:05:10,240 --> 01:05:13,959
Speaker 3: five times what a Boeing engineer makes is because we've

1261
01:05:13,960 --> 01:05:16,760
Speaker 3: been in the debt export business. We need to get

1262
01:05:16,760 --> 01:05:20,800
Speaker 3: out of the debt export business and exchange value for value.

1263
01:05:21,240 --> 01:05:23,960
Speaker 3: So when we run if you're going to use bitcoin

1264
01:05:24,080 --> 01:05:28,160
Speaker 3: in this manner to weaken the dollar whatever, once something

1265
01:05:28,200 --> 01:05:30,120
Speaker 3: you do say, listen, we're going to settle. We're going

1266
01:05:30,200 --> 01:05:35,680
Speaker 3: to settle trade in bitcoin, not treasuries anymore. And as

1267
01:05:35,720 --> 01:05:38,760
Speaker 3: you do that, following the Americans lead, everyone's going to

1268
01:05:38,840 --> 01:05:41,000
Speaker 3: understand bitcoin. They're going to want to be because our

1269
01:05:41,160 --> 01:05:43,720
Speaker 3: one of our big advantages is the rule of law,

1270
01:05:44,080 --> 01:05:47,920
Speaker 3: the sort of the social cultural side to be. Yeah, right,

1271
01:05:47,960 --> 01:05:50,480
Speaker 3: I mean it's we're we're chipping away at that as

1272
01:05:50,480 --> 01:05:55,400
Speaker 3: fast as we can. That's that's a separate discussion. Anyway,

1273
01:05:56,160 --> 01:05:58,960
Speaker 3: So you use you use, the bitcoin basically becomes the

1274
01:05:59,000 --> 01:06:02,360
Speaker 3: reference point and instead of gold in trade with the Americans,

1275
01:06:02,400 --> 01:06:06,040
Speaker 3: Now that means our what are we running at one

1276
01:06:06,040 --> 01:06:09,240
Speaker 3: point one trillion dollar trade deficit? That's a lot of

1277
01:06:09,280 --> 01:06:11,520
Speaker 3: bitcoin buying ain't going to take place sixty eight thousand,

1278
01:06:12,440 --> 01:06:15,280
Speaker 3: It's going to be a lot higher. And again that

1279
01:06:15,320 --> 01:06:17,760
Speaker 3: then gets into okay, well, then who buys the extra

1280
01:06:18,360 --> 01:06:21,160
Speaker 3: four or five hundred billion in treasury paper that foreigners

1281
01:06:21,200 --> 01:06:24,600
Speaker 3: buying this? You know this year, the fed, the proxies,

1282
01:06:25,200 --> 01:06:27,320
Speaker 3: you know, the bitcoin we hold week it bids up.

1283
01:06:27,360 --> 01:06:30,080
Speaker 3: You could buy it. There's there's a lot of flexibility,

1284
01:06:30,120 --> 01:06:36,040
Speaker 3: but it basically is an aggressive, proactive step that restructures

1285
01:06:36,040 --> 01:06:38,160
Speaker 3: the system in one fell swoop, which leads to some

1286
01:06:38,200 --> 01:06:40,920
Speaker 3: interesting points of like there's a lot of people that

1287
01:06:41,000 --> 01:06:43,280
Speaker 3: think the dollar system is going to you know, well,

1288
01:06:43,320 --> 01:06:46,800
Speaker 3: it's nothing's going to change until we get a conference

1289
01:06:47,520 --> 01:06:51,520
Speaker 3: and we meet with everybody. Not necessarily, President could do

1290
01:06:51,520 --> 01:06:53,920
Speaker 3: this over a weekend and you you would come in

1291
01:06:53,960 --> 01:06:57,120
Speaker 3: and dollars limit down s and p's limit up bonds

1292
01:06:57,120 --> 01:07:01,000
Speaker 3: are not trading for five days because they've been frozen.

1293
01:07:01,080 --> 01:07:03,400
Speaker 3: You know, the market's just closed while they sort of

1294
01:07:03,440 --> 01:07:05,320
Speaker 3: settle that out. Thank you for your donation to the

1295
01:07:05,320 --> 01:07:09,480
Speaker 3: restructure of the American debt bondholders. And quite honestly, a

1296
01:07:09,480 --> 01:07:11,120
Speaker 3: lot of times in history, this is more how these

1297
01:07:11,160 --> 01:07:15,760
Speaker 3: things work out. But and maybe it is just gradual,

1298
01:07:15,800 --> 01:07:17,880
Speaker 3: but I think it's more likely to be not gradual.

1299
01:07:20,120 --> 01:07:24,840
Speaker 1: If Trump or RFK win, that's a somewhat probable scenario.

1300
01:07:25,240 --> 01:07:27,680
Speaker 1: Maybe not the five pin fifty day, but something like that. Potentially,

1301
01:07:27,760 --> 01:07:29,800
Speaker 1: if Kamala wins, it's probably the opposite. So we'll see

1302
01:07:29,800 --> 01:07:31,960
Speaker 1: how that shakes out. We got to wrap this up,

1303
01:07:32,040 --> 01:07:34,640
Speaker 1: I know, we got to get going here, Maybe give

1304
01:07:34,680 --> 01:07:39,960
Speaker 1: me the short version. The world is maybe more uncertain now.

1305
01:07:39,960 --> 01:07:41,800
Speaker 1: It seems like uncertain than it has been in my

1306
01:07:41,880 --> 01:07:45,040
Speaker 1: lifetime for sure, So who knows what could happen. The

1307
01:07:45,080 --> 01:07:49,040
Speaker 1: difference of Trump RFK versus Kamala is a massive, drastic outcome.

1308
01:07:49,080 --> 01:07:52,040
Speaker 1: But given the sort of fiscal situation, the debt situation

1309
01:07:52,040 --> 01:07:54,200
Speaker 1: we're in some over a long period of time, it

1310
01:07:54,200 --> 01:07:55,880
Speaker 1: almost seems a little bit more certain of what's going

1311
01:07:55,960 --> 01:07:59,040
Speaker 1: to happen. So one thing that I always find confusing

1312
01:07:59,120 --> 01:08:01,000
Speaker 1: when you hear different things like this, is like over

1313
01:08:01,040 --> 01:08:04,560
Speaker 1: what timeframe? So where do you think things end up

1314
01:08:04,600 --> 01:08:06,480
Speaker 1: by the end of the decade. Let's say, like in

1315
01:08:06,680 --> 01:08:09,360
Speaker 1: five six years from now, and maybe in you know,

1316
01:08:09,400 --> 01:08:10,680
Speaker 1: ten to fifteen years from now.

1317
01:08:12,680 --> 01:08:15,400
Speaker 3: I think by the end of the decade, the two

1318
01:08:15,440 --> 01:08:18,880
Speaker 3: competing forces of the exponential growth of the debt and

1319
01:08:18,920 --> 01:08:22,599
Speaker 3: the exponential deflationary impacts of the technology AI et cetera

1320
01:08:23,880 --> 01:08:28,920
Speaker 3: bring forward what we'll call a United States Liz Trust moment,

1321
01:08:30,439 --> 01:08:36,639
Speaker 3: and that forces some sort of yield curve control slash

1322
01:08:37,040 --> 01:08:43,880
Speaker 3: other extreme extreme fix that we just discussed. Whether it's bitcoin,

1323
01:08:43,920 --> 01:08:50,160
Speaker 3: whether it's gold, something like that. It's very inflationary bond

1324
01:08:50,160 --> 01:08:52,400
Speaker 3: holders get killed on a real basis, they're going to

1325
01:08:52,439 --> 01:08:53,920
Speaker 3: get paid every dime. They're old at the you know

1326
01:08:54,240 --> 01:08:56,000
Speaker 3: Western soeurns that get paid every day, every dime. They're

1327
01:08:56,000 --> 01:08:58,800
Speaker 3: OWD and FIA currency terms are going to lose a

1328
01:08:58,800 --> 01:09:01,200
Speaker 3: lot on a real basis relative to gold, bitcoin especially,

1329
01:09:01,280 --> 01:09:07,400
Speaker 3: but stocks commodities as well. I think once that happens

1330
01:09:07,960 --> 01:09:10,519
Speaker 3: to fact though, that forces either gold or bitcoin back

1331
01:09:10,560 --> 01:09:13,160
Speaker 3: to being the reserve asset of the world, the dollar

1332
01:09:13,280 --> 01:09:16,160
Speaker 3: system will have been restructured, and by the end of

1333
01:09:16,200 --> 01:09:18,800
Speaker 3: the decade, I think the math tells you that that's

1334
01:09:18,920 --> 01:09:20,600
Speaker 3: what's going to happen. And what I mean by that

1335
01:09:20,760 --> 01:09:23,439
Speaker 3: is the dollar system post seventy one is US dollars

1336
01:09:23,479 --> 01:09:26,360
Speaker 3: reserve currency. Treasury is a reserve asset, primary reserve asset.

1337
01:09:27,280 --> 01:09:30,240
Speaker 3: Already we are seeing treasuries is a primary reserve asset.

1338
01:09:30,240 --> 01:09:33,360
Speaker 3: We're ten years into that. That is ending. That is ending,

1339
01:09:33,400 --> 01:09:35,720
Speaker 3: and at central banks haven't bought one on net and

1340
01:09:35,760 --> 01:09:38,680
Speaker 3: ten years they have been buying gold, and so then

1341
01:09:38,760 --> 01:09:41,240
Speaker 3: gold or bitcoin become the reference point and we have

1342
01:09:41,240 --> 01:09:45,680
Speaker 3: a currency system, a global trade system that trades on

1343
01:09:45,760 --> 01:09:49,080
Speaker 3: balance of payments fundamentals, not on relative rates or on

1344
01:09:49,400 --> 01:09:52,160
Speaker 3: sort of this dollar centric system. You're a dollar system

1345
01:09:52,280 --> 01:09:54,720
Speaker 3: sort of artificial demand. And what that means then is

1346
01:09:54,840 --> 01:09:56,840
Speaker 3: the dollars not the cleanest dirty shirt. It's a dirtyest

1347
01:09:56,880 --> 01:09:59,000
Speaker 3: dirty shirt because we have the biggest trade deficit, followed

1348
01:09:59,040 --> 01:10:01,960
Speaker 3: by the Brits. And then you know, basically as you

1349
01:10:01,960 --> 01:10:05,679
Speaker 3: look at the SDR, currencies goes up, yen goes up,

1350
01:10:07,040 --> 01:10:10,400
Speaker 3: Euro goes up, a little pound goes down, dollar goes

1351
01:10:10,439 --> 01:10:12,680
Speaker 3: down a ton against gold and bitcoin, and they re

1352
01:10:12,880 --> 01:10:17,080
Speaker 3: rate around those pivots. And that's a much better system

1353
01:10:17,120 --> 01:10:20,560
Speaker 3: for the entire world. You get much more balanced economies

1354
01:10:20,560 --> 01:10:24,519
Speaker 3: everybody with the bondholders with the bondholders and like that's

1355
01:10:24,520 --> 01:10:29,800
Speaker 3: like they had forty years. Yeah, like it's like move on,

1356
01:10:30,120 --> 01:10:31,080
Speaker 3: like things change.

1357
01:10:31,920 --> 01:10:34,200
Speaker 1: Okay, we'll stop with that. So by the end of

1358
01:10:34,200 --> 01:10:36,439
Speaker 1: the decade, that's some big moves. It'll be interesting to see.

1359
01:10:37,520 --> 01:10:39,920
Speaker 1: I of course believe that bitcoin will be much higher.

1360
01:10:40,640 --> 01:10:43,000
Speaker 1: I'm in camp with you. Acid prices higher across the

1361
01:10:43,000 --> 01:10:44,240
Speaker 1: board because the dollar is going down.

1362
01:10:45,200 --> 01:10:47,240
Speaker 2: All right, we'll wrap it up with that. We cover everything, I.

1363
01:10:47,280 --> 01:10:50,880
Speaker 1: Think, so okay, so forced for the trees FFT, we'll

1364
01:10:50,880 --> 01:10:53,240
Speaker 1: link to that down below. Check that out follow them

1365
01:10:53,240 --> 01:10:55,639
Speaker 1: on Twitter for a lot of good updates as well,

1366
01:10:56,320 --> 01:10:57,040
Speaker 1: and we'll wrap.

1367
01:10:56,840 --> 01:10:57,160
Speaker 2: It up with that.

1368
01:10:57,200 --> 01:10:59,080
Speaker 3: Thanks Luke, thanks for me and Mark. It's great being here.