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What happens when people start losing jobs to AI?

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It all depends on how quickly it happens.

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You never want a short kind of multi-decade human productivity.

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But on five-year, 10-year timeframes, there are, you know, they're not magic.

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There's no way around it.

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That's rough.

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Is there a chance this is the last debt cycle?

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Like, could this be the one that actually breaks the fiat system?

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I think it could.

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The fiat system as we know it only goes back to the 70s.

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Commerce is happening globally.

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it's those intermediaries that have all the power.

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Until the dawn of Bitcoin, there was no fast settlement.

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And now we have alternatives.

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Can this fiat system survive that?

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We are already in the period where debt matters.

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The debasement's already happening.

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That's kind of the straw that breaks the camel's back.

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If people can't get to work, if they can't get the lights on,

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that's when you get revolution.

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This is like DEF CON 5.

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This is, you know, this is a catastrophe.

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Lynn Alden in Bedford. How are you doing?

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I'm good. Thanks for having me.

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Did you enjoy Teat Code yesterday?

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I did, yeah. Always a great conference.

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You did an amazing talk, and then we did a fireside,

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all about the long-term debt cycle.

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I think we should kind of go over the talk you did and then get into it.

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Sure.

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So I think you started this by talking about when the long-term debt cycle matters.

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Do you want to pick it up from there?

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Sure, yeah. I basically started out by saying that one of the most common questions I get,

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people ask, when will the debt matter?

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is what they ask. As though people have, I think, in their head that there's like some

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day of reckoning where suddenly, you know, a treasury auction fails or some crazy thing happens.

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I think I had this in my head.

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Right. It's commonly what you think, because that's how many debts matter, right? Many,

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you know, if you have private debt, it often matters all at once. It doesn't matter until

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it does. Sovereign debt tends to work differently. It tends to be more of a process. So one of the

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arguments that I was making at the start of that talk was kind of saying that it has been

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mattering. Realistically, I would say that it's somewhat mattered since the global financial

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crisis. But really, I would say since about 2018, 2019, I think it's been really mattering,

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which is to say that we're shifting more and more toward that kind of fiscally dominant

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environment. So it kind of reduces credit cycles because the US deficits are so large,

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partially because of interest expense. And then in addition, I think the populism that we're seeing

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in the US and Europe especially, a lot of it does tie into basically these very top-heavy

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entitlement systems with slowing demographics. And that's basically a debt problem.

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And even things like war that we sometimes see with a number of steps can be potentially tied

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back to debt problems that basically financial imbalances build up and countries start making

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more extreme decisions in those contexts. So my view is that the debt has been mattering

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from a macro standpoint, even just from an investor standpoint. I mean, I use the phrase,

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nothing stops this train in large part because we're running these six to seven percent of GDP

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deficits. And a lot of it is so locked in because we already have so much debt, including so much

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interest expense on that debt. And so a lot of it is just kind of on autopilot at this point.

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So you say there's not like a moment that it matters. There's not going to be

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a failed treasury auction, which is the key moment. It's a process. But what happened,

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like when in 2008 or in 2018, 2019, when did it start mattering? Like what happened that meant

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this started to become a problem? Yeah, good question. I back up and say like there are

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moments where it matters more than others. Like I would say it's punctuated by many crises.

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in the UK, for example, the guilt crisis in 2022,

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like the Liz Truss moment.

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Yeah.

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That was like a moment where it mattered,

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but it wasn't like the apocalypse, right?

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It wasn't like the day it mattered all at once,

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but it was like a moment where the debt,

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the deficit were basically called out in a sense.

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And the US has kind of gone through similar moments.

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The reason I kind of point to 2018 or so

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is we started to see overall deficit spending

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was larger than total bank lending in the country.

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And even when you add total bank lending

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and total net new bond issuance,

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you're kind of taking a pretty big snapshot

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of private lending.

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And the U.S. deficit was as big or bigger

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than all of that combined.

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So when you say, well, where's net new money creation

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coming from?

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You know, in the 70s, in the 80s, in the 90s,

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in the 2000s, the answer would have been

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mostly from the private sector.

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even though the government was running deficits too.

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But once we got over 100% debt to GDP,

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so we have pretty substantial interest expense,

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and we're running these entitlement systems

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that are kind of no longer mathematically as sound

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as they were decades ago,

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that combination of the demographics

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and the accumulated debt made it so that

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even in a non-recession year,

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so it used to be that only in kind of recessions

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would deficit spending exceed like bank lending

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because bank lending would contract in a recession,

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deficits would blow out in a recession.

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So you'd have these kind of brief moments.

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But this was like the first time where in a non-recession,

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just as a baseline, deficits are bigger than private bank lending.

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Like all banks in the US combined do deficits bigger

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than all their net new loan creation.

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And so that starts kind of, it creates like a run at hot environment.

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So recessions start to feel different

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because you're almost pre-stimulating in a way

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before a recession would hit.

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You get more inflationary recessions.

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So at least, or at least less disinflationary recessions.

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Of course, COVID threw a whole wrench into everything.

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But even apart from that, just we, even just before COVID, we started entering that.

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And then even.

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Is that when we had like the repo crisis in 2019?

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Yeah, that's, that was a key moment.

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I think about a year before that, some of these signs were showing up.

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That's actually when I found Luke Groman's work.

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He made very good calls about what was going to happen.

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I looked into it at the time.

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And when the repo crisis happened, people were quite confused.

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Some people were like, the doomers were kind of naturally like, oh, there must be major banks failing and such and such.

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And then the establishment was like, no, no, it's a technical problem.

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It's no issue at all.

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And the view that I was taking at the time, the view that Luke was taking was, no, no, this is actually kind of tied to excessive debt issuance.

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Basically, all these T-bills and debts were coming out.

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There were a bunch of other financial plumbing issues.

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but at the end of the day basically the fed had to go from balance sheet reduction

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to balance sheet increases despite no recession uh just because they they needed more liquidity

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with their own liquidity rules to account for like how much treasury securities were coming

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to market when foreigners were not buying enough banks could only buy so much insurance like other

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kind of balance sheets could only buy so much you add a couple other kind of uh topical factors on

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that are kind of probably too wonky for this podcast.

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And you get this moment where the Fed has to step in

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and buy T-bills just because it's too many T-bills.

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So when we obviously got COVID early 2020,

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and then there was the insane COVID stimulus,

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was that inevitable anyway, even if we hadn't have had COVID?

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Do you think they'd have had to step in

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and do something like that?

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I do think so.

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And it's funny because even BlackRock had a paper out

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before COVID that was like,

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the next recession that happens,

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we're going to have to get more direct.

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We're going to have to do more like helicopter money type stuff to re-stimulate.

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And I'd even read an article in mid-2019 called, I think it was called,

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is this a bond bubble?

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Are we in a bond bubble or is this the new normal?

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And it was a whole thing kind of like how bonds work.

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I was looking at the fact that there was now 18 trillion in negative yielding bonds in the world,

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mostly in Europe and Japan, let alone very low positive interest rates in the US.

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and my i took the stance that this is a bubble this is like people like i was like people always

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ask me if the stock market might crash i was like i'm far more worried about bonds uh at this time

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and i even talked about i was like people have gotten so used to disinflation they don't realize

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that the next time we have a major recession central banks and governments can do crazy things

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like i didn't have obviously covid in my mind but i was like basically they can do much larger

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monetized like they can always create inflation yeah that they have no problem creating that if

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they want to um you know it's harder to stop inflation than it is to create inflation my

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rule was kind of like the last few years have proved that you've proven that and that but that

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in 2019 that was a non-consensus view uh so then when it started to play out in 2020 i already had

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a lot of this mapped out i mean just from reading ray dalio's research uh and then kind of go like

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going even like i would quantify it even kind of more than than he did in a lot of his um

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presentations, I would kind of go and double check the math myself and look at other avenues and try

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to disprove it. And really kind of made up my own research at that point. And so when all that hit,

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when all that COVID stuff hit, I was like, okay, this is bigger and sooner than I would have guessed.

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It didn't have to happen at that scale. But the numbers were already making it so that this was

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So when you, like, obviously this has got worse since 2018, 2019.

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What are you worried about now?

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Like what are the areas of the market that you're most concerned about?

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Oh, entirely the straight-up Hormuz.

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People ask me, for example, if I'm worried about private credit.

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I mean, there's always little pockets to be worried about.

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Like, for example, in the 2023 regional bank crisis,

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uh literally the day i think it was march 9th when it was kind of playing out uh i i just went

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on twitter i was like i know it's like non-consensus at the moment but most banks are going to be fine

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this is like a it was a specific bank issue a handful of banks that were like had very specific

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issues that they ran into yeah uh and most banks were fine um and very small amounts of tweaks were

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able to just kind of put that fire out what makes you think that because i did a show with your

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sparring partner, Jeff Snyder.

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I can't remember exactly when it was,

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but I think it was just before the war started.

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So to be fair, he didn't have that to sort of tie into this.

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But he was looking at private credit

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and thinking this might escalate into being a real issue.

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And he wasn't calling for financial crisis now,

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but he was like, this is something we need to pay attention to.

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Well, I would agree with that phrasing.

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And even in my own research, I was like,

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I don't consider it an issue yet,

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but I mean, it's notable enough that I'm watching it,

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especially because if people are always asking about it,

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I want to be able to give them answers

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that are backed by analysis,

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not just kind of like off the cuff.

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But we need to quantify the size of private credit.

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So it's total bank lending

230
00:13:11,720 --> 00:13:13,820
to non-deposit financial institutions.

231
00:13:14,220 --> 00:13:16,420
It's otherwise known as shadow banks,

232
00:13:16,700 --> 00:13:18,280
which sounds scary.

233
00:13:18,480 --> 00:13:20,920
In some ways, they're less scary than normal banks

234
00:13:20,920 --> 00:13:23,120
because normal banks do fractional reserve bank lending.

235
00:13:23,460 --> 00:13:24,900
They take your checking account,

236
00:13:25,140 --> 00:13:26,600
like your demand deposits,

237
00:13:26,820 --> 00:13:28,000
if you're running a business,

238
00:13:28,140 --> 00:13:29,480
like literally your payroll account,

239
00:13:29,780 --> 00:13:31,440
and they go and make a liquid loans with it.

240
00:13:31,960 --> 00:13:34,600
And they just hope that not too many people

241
00:13:34,600 --> 00:13:40,260
withdrawal at once. Now, because they are so risky, they're also highly regulated banks,

242
00:13:40,380 --> 00:13:46,280
especially after the global financial crisis. So shadow banks are entities that make loans,

243
00:13:46,780 --> 00:13:51,440
but they don't use depositor funds. And if anything, so it's mostly like high net worth

244
00:13:51,440 --> 00:13:59,080
investors, institutions that want to return, insurance companies, pensions, just large balance

245
00:13:59,080 --> 00:14:03,760
sheets, as well as just wealthy individuals will put money into this fund. And right up front,

246
00:14:03,760 --> 00:14:05,940
it'll say, we can't guarantee liquidity.

247
00:14:06,400 --> 00:14:07,960
This isn't a savings account.

248
00:14:08,120 --> 00:14:09,480
This is you're putting capital in,

249
00:14:09,540 --> 00:14:11,080
and we're making loans with this capital.

250
00:14:11,660 --> 00:14:14,980
And when you want to pull your money out,

251
00:14:15,060 --> 00:14:16,460
we'll try to accommodate that.

252
00:14:16,620 --> 00:14:18,600
But if too many people want it at the same time,

253
00:14:18,640 --> 00:14:19,240
you're going to have to wait.

254
00:14:19,280 --> 00:14:19,700
Tough luck.

255
00:14:19,800 --> 00:14:19,980
Yeah.

256
00:14:20,480 --> 00:14:22,660
And that makes sense for savings,

257
00:14:22,860 --> 00:14:26,680
not for a checking account or near-term savings.

258
00:14:27,200 --> 00:14:29,540
So when they gate withdrawals,

259
00:14:29,540 --> 00:14:31,240
it's not nearly as bad as a company

260
00:14:31,240 --> 00:14:34,160
whose payroll, what do you say?

261
00:14:34,200 --> 00:14:34,960
What do you mean it's not there?

262
00:14:34,980 --> 00:14:36,000
What do you mean I can't access that?

263
00:14:36,100 --> 00:14:37,060
Or what do you mean by checking account?

264
00:14:37,160 --> 00:14:39,440
So it's in some ways less scary.

265
00:14:39,940 --> 00:14:43,120
But the part that, of course, freaks people out

266
00:14:43,120 --> 00:14:44,660
is that it's one, it's more opaque.

267
00:14:45,520 --> 00:14:46,500
It's less regulated.

268
00:14:48,060 --> 00:14:51,960
And they do generally engage in riskier types of lending

269
00:14:51,960 --> 00:14:53,600
than a regulated bank.

270
00:14:54,260 --> 00:14:55,760
And the kind of the cheat code, I guess,

271
00:14:55,760 --> 00:14:57,660
I'll use the word cheat code because where we are,

272
00:14:58,040 --> 00:15:00,440
is banks want exposure to that area,

273
00:15:00,440 --> 00:15:02,740
but they want risk-reduced exposure.

274
00:15:03,440 --> 00:15:05,600
So instead of lending the types of entities,

275
00:15:05,760 --> 00:15:06,720
like these smaller businesses

276
00:15:06,720 --> 00:15:08,440
that might be recipients of private credit,

277
00:15:08,900 --> 00:15:10,620
banks will lend to the private credit fund.

278
00:15:11,100 --> 00:15:12,460
And then the private credit fund

279
00:15:12,460 --> 00:15:13,520
will go out and make loans.

280
00:15:14,240 --> 00:15:16,720
Now, the difference is the bank's not lending all the capital.

281
00:15:17,240 --> 00:15:19,940
So the private credit fund's mostly taking capital

282
00:15:19,940 --> 00:15:21,240
from investors, either, again,

283
00:15:21,300 --> 00:15:22,920
high net worth individuals or institutions.

284
00:15:23,180 --> 00:15:24,100
They're lending it out,

285
00:15:24,140 --> 00:15:25,680
but they're also borrowing from a bank

286
00:15:25,680 --> 00:15:28,320
for a smaller portion of their capital.

287
00:15:28,820 --> 00:15:30,900
And let's say they do make bad loans

288
00:15:30,900 --> 00:15:32,560
because some of these are risky.

289
00:15:32,680 --> 00:15:33,760
Some of them are consumer loans.

290
00:15:33,860 --> 00:15:34,960
Some of them are business loans.

291
00:15:35,080 --> 00:15:36,180
There's different specialties.

292
00:15:36,820 --> 00:15:38,920
And let's say they do start to go badly.

293
00:15:39,460 --> 00:15:41,860
The first people that get hurt are the investors,

294
00:15:42,240 --> 00:15:44,060
the ones that decided to put money in

295
00:15:44,060 --> 00:15:47,740
and they expected to make, say, 90% returns on these loans.

296
00:15:48,240 --> 00:15:49,800
But that risks on them, that's kind of fine.

297
00:15:49,940 --> 00:15:50,580
Yeah, and that's fine.

298
00:15:50,660 --> 00:15:51,720
I mean, it's not great.

299
00:15:52,100 --> 00:15:55,040
Around the margins, the negative wealth effect

300
00:15:55,040 --> 00:15:56,280
could hurt the economy.

301
00:15:56,280 --> 00:16:01,160
because if you had a billion dollars in this fund and it got cut to 700 million, maybe you'll

302
00:16:01,160 --> 00:16:06,460
buy a couple less cars that year. It could affect high net worth spending around the margins,

303
00:16:06,620 --> 00:16:13,080
but it's not a grave concern compared to a true financial crisis. It would have to get so bad

304
00:16:13,080 --> 00:16:20,320
that they lose so many loans that even their bank loans, they have trouble paying back.

305
00:16:20,320 --> 00:16:25,420
They're more kind of frontline creditor, not just the investors in the fund.

306
00:16:25,420 --> 00:16:35,860
And when you quantify the numbers, so banks in the U.S. currently have $1.9 trillion in loans outstanding to all non-deposit financial institutions.

307
00:16:37,080 --> 00:16:41,960
And that sounds like a lot, but that's out of $25 trillion in total bank assets.

308
00:16:42,180 --> 00:16:47,520
So something like 7% or 8% of their assets, which of course their assets are someone else's liability.

309
00:16:47,800 --> 00:16:52,640
But of their assets, 7% or 8% is in non-deposit financial institutions.

310
00:16:52,640 --> 00:16:56,480
of that some of that is private equity which actually has its own problems at the moment

311
00:16:56,480 --> 00:17:00,300
so only a subset of that 1.9 trillion is private credit

312
00:17:00,300 --> 00:17:04,200
and so you know it's a trillion in change

313
00:17:04,200 --> 00:17:08,840
and let's say half of that were to just go away

314
00:17:08,840 --> 00:17:11,840
it is really half of all private credit just defaults tomorrow

315
00:17:11,840 --> 00:17:16,540
well first the investors take hundreds of billions in losses some of the worst hit funds

316
00:17:16,540 --> 00:17:19,720
then might start defaulting on the bank loans

317
00:17:19,720 --> 00:17:25,760
but the the amount of that gets through to the banks the losses we're talking you know 100 100

318
00:17:25,760 --> 00:17:31,000
billion 200 billion drop in the ocean 300 billion i mean yeah but they have 25 trillion assets and

319
00:17:31,000 --> 00:17:35,740
they have i mean their bank capital like their the amount that their assets exceed their liabilities

320
00:17:35,740 --> 00:17:41,840
it's well over two trillion um so while there might be individual banks like probably banks

321
00:17:41,840 --> 00:17:46,920
you never heard the name of that suddenly we wake up and kind of like how silicon valley bank had a

322
00:17:46,920 --> 00:17:50,800
very particular issue and a couple others along that. You could absolutely have a bank failure,

323
00:17:51,440 --> 00:17:54,520
but it won't be, generally speaking, the ones that you know the names of.

324
00:17:54,680 --> 00:17:58,220
Yeah. I mean, I even had that with Blue Owl was the one that I think Jeff Snyder was talking about.

325
00:17:58,220 --> 00:18:00,560
I'd never heard of that before. These are things that...

326
00:18:00,560 --> 00:18:07,860
And it's a bellwether. It's a canary in the coal mine. There's aren't headlines that are dismissible.

327
00:18:08,540 --> 00:18:11,260
So, for example, when people ask, are you worried about private credit? I'd be like,

328
00:18:11,300 --> 00:18:13,940
well, if I was a private credit investor, I'd be worried about private credit.

329
00:18:13,940 --> 00:18:20,660
What people are really asking is, can this tank the whole economy, or can this contagion into the banking system?

330
00:18:21,000 --> 00:18:26,700
Those are the parts where my view is not that much, other than what if it's combined with other issues.

331
00:18:26,720 --> 00:18:31,200
Like I mentioned the straight-up Hormuz, if we have an energy crisis that then has all these negative effects,

332
00:18:31,280 --> 00:18:33,820
and then on top of that, we have some private credit also.

333
00:18:34,480 --> 00:18:40,740
Things can, of course, pile on to make a really bad outcome, but I don't view it as emanating from private credit per se.

334
00:18:40,740 --> 00:18:43,940
It's not truly big enough to be frightening in that sense.

335
00:18:44,100 --> 00:18:44,600
That makes sense.

336
00:18:44,660 --> 00:18:45,740
I think when we're on stage yesterday,

337
00:18:45,740 --> 00:18:48,620
we were talking about the things that do frighten you.

338
00:18:48,860 --> 00:18:50,360
And you said when it gets to the issues,

339
00:18:50,460 --> 00:18:52,860
it's like straight up humus is number one, two, and three.

340
00:18:53,020 --> 00:18:53,140
Yeah.

341
00:18:53,320 --> 00:18:55,400
So obviously the energy crisis being a part of that,

342
00:18:55,440 --> 00:18:56,900
but what are the things that you're looking at there

343
00:18:56,900 --> 00:18:57,580
that concern you?

344
00:18:58,020 --> 00:19:03,440
Well, one is, I mean, 15 to 20% of global energy production

345
00:19:03,440 --> 00:19:06,760
is just offline, or at least can't get to where it has to go

346
00:19:06,760 --> 00:19:07,800
and then starts going offline.

347
00:19:08,180 --> 00:19:09,120
Some of it's damaged.

348
00:19:09,920 --> 00:19:11,500
It's not clear when it's going to reopen.

349
00:19:11,820 --> 00:19:14,700
It could, you know, peace talks could break out a week from now.

350
00:19:14,760 --> 00:19:18,440
And then after some further weeks, we start getting things coming back online.

351
00:19:18,520 --> 00:19:21,760
So either way, it's going to take bare minimum weeks to get flows.

352
00:19:21,980 --> 00:19:24,000
But I mean, that could take months or longer.

353
00:19:25,520 --> 00:19:30,420
And there's no kind of viable alternatives to get that energy out.

354
00:19:31,460 --> 00:19:37,520
And really, energy shortages or food shortages are about the worst case scenario for any economy.

355
00:19:37,520 --> 00:19:44,180
and they often even go together because it's not just oil and gas going through the straight

356
00:19:44,180 --> 00:19:50,040
it's also fertilizer inputs i mean natural gas is a major fertilizer input there's also other

357
00:19:50,040 --> 00:19:59,220
urea sulfur helium there are things that either for fertilizers or for electronics manufacturing

358
00:19:59,220 --> 00:20:05,880
or for even just medical equipment there's tons of components so when you talk about oil food

359
00:20:05,880 --> 00:20:10,760
production medical equipment electronics it's like it's everything it's everything yeah and it's it's

360
00:20:10,760 --> 00:20:15,600
the it's the foundation it's like you know where the economy is based on upside on pyramid and that

361
00:20:15,600 --> 00:20:32,608
little tip is basically raw materials and that the part that disrupted because if you have a i mean let go back to private credit let say you have a 500 billion dollar hole just shows up in private credit I mean that three months of like US deficit spending Like that like literally you can snap your fingers

362
00:20:32,608 --> 00:20:34,547
and make that problem go away.

363
00:20:34,668 --> 00:20:36,828
Or just, it's like, it's, you know,

364
00:20:36,848 --> 00:20:37,727
we live in a fiat world.

365
00:20:37,908 --> 00:20:39,807
But when you have molecules that just can't get

366
00:20:39,807 --> 00:20:42,588
to where they have to go at that scale.

367
00:20:42,787 --> 00:20:43,668
The Fed can't print oil.

368
00:20:44,007 --> 00:20:44,588
Can't print oil.

369
00:20:44,908 --> 00:20:47,287
And it's not, you know, like, it's funny

370
00:20:47,287 --> 00:20:48,688
because the oil analysts I follow,

371
00:20:48,688 --> 00:20:52,527
I mean I purposely try to follow the non-sensationalist ones

372
00:20:52,527 --> 00:20:54,707
the ones you know there's just like any field

373
00:20:54,707 --> 00:20:57,388
there are perma bears there are perma bulls

374
00:20:57,388 --> 00:21:00,608
you know so the analysts I follow

375
00:21:00,608 --> 00:21:03,447
were not either of those if anything they probably lean more

376
00:21:03,447 --> 00:21:06,547
bearish because that seems to be in oil the sensationalist

377
00:21:06,547 --> 00:21:08,888
ones are more like tend to be perma bulls

378
00:21:08,888 --> 00:21:11,767
like all this is going to go wrong we're going to get a massive

379
00:21:11,767 --> 00:21:14,888
and they're always like no no it's going to be fine it's going to be fine

380
00:21:14,888 --> 00:21:18,568
well this time all those like my closest analysts

381
00:21:18,568 --> 00:21:19,908
they follow, they're always like, no, it's fine.

382
00:21:19,987 --> 00:21:21,247
They're like, okay, this one's not fine.

383
00:21:21,787 --> 00:21:24,648
This is like DEFCON 5.

384
00:21:25,487 --> 00:21:27,408
This is, you know, this is a catastrophe.

385
00:21:28,287 --> 00:21:30,367
And everything I track says the same thing.

386
00:21:30,668 --> 00:21:31,967
So how does it work?

387
00:21:32,007 --> 00:21:34,287
Because all the oil that's coming through the straightforward moose,

388
00:21:34,408 --> 00:21:37,188
generally, I think, is going to South Asia, Southeast Asia.

389
00:21:38,168 --> 00:21:40,027
Obviously, it affects the oil price globally.

390
00:21:40,207 --> 00:21:43,767
But it doesn't have a direct impact on production in the U.S.

391
00:21:43,767 --> 00:21:44,908
Or does it?

392
00:21:45,467 --> 00:21:47,547
It doesn't have a direct impact on production in the U.S.

393
00:21:47,547 --> 00:21:52,668
If anything, if prices are higher for longer, it could encourage a little bit of shale oil

394
00:21:52,668 --> 00:21:53,947
to come back online.

395
00:21:53,987 --> 00:21:57,507
So it could increase our production a little bit, but not 15 million barrels.

396
00:21:57,648 --> 00:22:01,447
I mean, it might be to get another million barrels, not 15.

397
00:22:02,908 --> 00:22:06,367
And the complicated thing is not all oil is the same.

398
00:22:06,848 --> 00:22:10,007
You know, there's lighter crude, there's heavier crude, and then refiners are set up

399
00:22:10,007 --> 00:22:11,627
to refine a certain type of crude.

400
00:22:12,267 --> 00:22:16,688
That's why even though like a country can produce as much oil as it consumes, it might

401
00:22:16,688 --> 00:22:20,987
still have to import and export because it might not be producing the right type for its own

402
00:22:20,987 --> 00:22:27,727
refineries, ironically. And that's like the US's case. You still have to trade. And so it is true

403
00:22:27,727 --> 00:22:33,727
that almost all what comes out of the straight goes east. But especially the wealthier ones there

404
00:22:33,727 --> 00:22:39,688
can then bid for other sources of oil and liquefied natural gas in the world. And that's why

405
00:22:39,688 --> 00:22:45,367
already, I mean, it was three weeks into the war, gasoline in the US was up 30% or more.

406
00:22:45,367 --> 00:22:47,367
because it is like a global market.

407
00:22:48,668 --> 00:22:51,648
Some energy markets are more fungible than others.

408
00:22:52,027 --> 00:22:54,207
One of the least fungible will be natural gas

409
00:22:54,207 --> 00:22:56,987
because transporting it is so cost and expensive.

410
00:22:58,007 --> 00:22:58,888
You either need a pipeline

411
00:22:58,888 --> 00:23:01,188
or you need liquefied natural gas,

412
00:23:01,267 --> 00:23:05,188
which is a very expensive facility to freeze it,

413
00:23:05,307 --> 00:23:07,767
ship it, and then get it back into its gaseous form.

414
00:23:08,388 --> 00:23:10,867
There's a limited amount of LNG capacity,

415
00:23:10,867 --> 00:23:13,408
which means that when there are gas shortages,

416
00:23:13,408 --> 00:23:19,287
um they tend to they last longer than like oil price differential so for example when when europe

417
00:23:19,287 --> 00:23:25,547
had a gas shortage um gas prices in europe were way higher than u.s gas prices and it lasted

418
00:23:25,547 --> 00:23:30,388
a very long time and it's i mean that that delta is kind of always there because there's only so

419
00:23:30,388 --> 00:23:36,588
much lng capacity that you can use to to arbitrage that whereas oil markets because it's easier to

420
00:23:36,588 --> 00:23:41,487
move oil around except for an extreme scenarios like like this or or similar ones uh you can

421
00:23:41,487 --> 00:23:48,267
arbitrage spreads easier okay so but the the point is that basically and using like say 22

422
00:23:48,267 --> 00:23:52,487
as an example when europe had a natural gas shortage they're wealthy enough to say okay

423
00:23:52,487 --> 00:23:57,307
we'll pay whatever we need to keep the lights on which means that like lng that was like headed

424
00:23:57,307 --> 00:24:02,688
toward pakistan would just get outbid and just go to europe and then pakistan can't you know i'm

425
00:24:02,688 --> 00:24:06,967
using them as an example they had other issues but that was one of the issues they had that year

426
00:24:06,967 --> 00:24:12,188
And so the poorer countries, often, they're the ones that actually end up with the true shortages.

427
00:24:12,967 --> 00:24:19,068
And I think we'll see a similar thing here, which is people will look at, like, Taiwan stockpiles or Japanese stockpiles.

428
00:24:19,148 --> 00:24:20,148
It's like, well, they're pretty wealthy.

429
00:24:20,947 --> 00:24:26,267
They've got a lot of options to bid pretty much whatever they need to to keep the lights on.

430
00:24:26,767 --> 00:24:35,447
It's the developing countries in the world that I think are going to be the hardest hit, including South Asia, including Africa, parts of South America, many parts.

431
00:24:35,447 --> 00:24:40,967
I mean, you were saying again on stage yesterday that that's already happening in Egypt where you spend a bit of time.

432
00:24:41,127 --> 00:24:43,688
They're having, are they going into sort of rolling blackouts?

433
00:24:43,967 --> 00:24:45,888
Yeah, it's starting to happen, not just in Egypt, but elsewhere.

434
00:24:46,588 --> 00:24:50,447
So in Egypt, historically, because they've had energy issues in the past.

435
00:24:51,888 --> 00:24:56,088
They, like, for example, they built some ghost cities before they built like a nuclear power plant.

436
00:24:56,627 --> 00:24:57,648
Done it the wrong way around.

437
00:24:57,908 --> 00:25:00,207
Yeah, if you're going to at least do the power plant first.

438
00:25:00,207 --> 00:25:05,348
um but anyway so they had electricity shortages uh and it but it shows up mostly in the summer

439
00:25:05,348 --> 00:25:09,787
months because you're in the desert people use air condition um so they'd have they have

440
00:25:09,787 --> 00:25:16,328
in summers they'd have rolling black brownouts um and what's happening this time is here in the

441
00:25:16,328 --> 00:25:21,688
spring um they're already planning to say okay like cafes are gonna have to start shutting down

442
00:25:21,688 --> 00:25:27,828
at 9 p.m uh other times you know just a bunch of these kind of limiters uh which is all these

443
00:25:27,828 --> 00:25:35,027
constraints on the economy because their natural gas import bill tripled on a monthly basis is

444
00:25:35,027 --> 00:25:41,388
tripled and it's it's a poor country upon a per capita basis so they just get outright shortages

445
00:25:41,388 --> 00:25:45,607
and we're already seeing i mean there are countries in southeast asia that are kind of

446
00:25:45,607 --> 00:25:51,867
reporting similar things that are saying you know we're doing gasoline rationing and it's those

447
00:25:51,867 --> 00:25:57,107
will just keep getting worse kind of starting mainly with the with the poorest countries so

448
00:25:57,107 --> 00:26:00,008
This might be a silly question after everything we've just spoken about,

449
00:26:00,127 --> 00:26:02,248
but when I had Luke Grohman on the show recently,

450
00:26:02,428 --> 00:26:04,328
he was talking about oil at $130.

451
00:26:04,328 --> 00:26:06,828
I think he used $130 as the benchmark.

452
00:26:06,987 --> 00:26:10,227
Oil above $130 is basically a catastrophe for the economy.

453
00:26:10,867 --> 00:26:11,867
When we were speaking last night,

454
00:26:11,908 --> 00:26:14,068
you said you think it can go far north of that.

455
00:26:14,888 --> 00:26:16,748
What is the constraint that puts on everything?

456
00:26:16,867 --> 00:26:19,908
Why is that such a big issue, aside from just gas prices?

457
00:26:20,547 --> 00:26:23,068
Yeah, so if the trade is closed for a prolonged period of time,

458
00:26:23,068 --> 00:26:24,547
it can go well above $130.

459
00:26:24,547 --> 00:26:31,688
30. And I don't know, the magic number changes over time just because we keep growing the money

460
00:26:31,688 --> 00:26:39,688
supply. So $130 is not the same as $130 barrels 10 years ago. But generally speaking, when you do

461
00:26:39,688 --> 00:26:47,947
get to atypically high levels, the problem is that's a raw input. And when you have, let's say,

462
00:26:47,947 --> 00:26:52,767
private credit contagion, that's going to impact funds and things like that, people that have the

463
00:26:52,767 --> 00:26:59,348
spare capital. Gasoline impacts, I mean, there's consumers that are just, you know, they're very

464
00:26:59,348 --> 00:27:04,408
constrained in terms of their spending. In the US, I mean, people have been suffering from higher

465
00:27:04,408 --> 00:27:11,447
food prices, higher insurance prices. I mean, even though the bulk of the price inflation is behind

466
00:27:11,447 --> 00:27:16,107
us, but it's still trickling out in these other categories. And the last thing they need is

467
00:27:16,107 --> 00:27:20,987
gasoline, 30% more expensive, let alone if it doubles, you know, if it goes to record highs or

468
00:27:20,987 --> 00:27:26,148
something. It just, there are many income in many households in the bottom two thirds of the income

469
00:27:26,148 --> 00:27:32,088
stack that that is, that's a kind of a catastrophe if gasoline prices just double. Then you add

470
00:27:32,088 --> 00:27:38,867
businesses. So many businesses that are not like software companies, they, they operate on 10, 20%

471
00:27:38,867 --> 00:27:43,807
margins. And especially if they, you know, if they're moving things around a lot, I mean, energy

472
00:27:43,807 --> 00:27:50,088
is a huge component of that. So just business margins get eaten up by these energy inputs.

473
00:27:50,088 --> 00:27:55,787
and then like i mentioned natural gas is a huge input for fertilizer um and so you start to get

474
00:27:55,787 --> 00:28:01,188
a situation where farmers uh their input costs have gone up substantially which means they're

475
00:28:01,188 --> 00:28:06,188
going to have well one they they run into their own financial issues if if they're if they're if

476
00:28:06,188 --> 00:28:10,588
their crop prices don't go up quickly so their inputs are going up and not their x so they're

477
00:28:10,588 --> 00:28:15,908
getting squeezed over if that persists of course then the the crop prices go up which means food

478
00:28:15,908 --> 00:28:21,807
prices go up, which, you know, again, if you're in the top 10% of a wealthy country, you might not

479
00:28:21,807 --> 00:28:28,508
even know, like, you might not even notice. But if you're in, most people will notice, and especially

480
00:28:28,508 --> 00:28:33,467
if you're in a developing country, you'll absolutely notice. I mean, a large part of what

481
00:28:33,467 --> 00:28:38,508
caused the 2011, like Arab Spring, like the uprising in a number of countries, they were

482
00:28:38,508 --> 00:28:43,807
protesting against kind of dictatorial policies, but the catalyst was basically high food prices.

483
00:28:43,807 --> 00:28:47,207
That's kind of the straw that breaks the camel's back.

484
00:28:47,287 --> 00:28:51,648
If people can't get to work, if they can't get the lights on,

485
00:28:51,727 --> 00:28:53,648
if they can't get air conditioning on...

486
00:28:53,648 --> 00:28:54,487
That's when you get revolution.

487
00:28:54,547 --> 00:28:55,328
That's when you get revolution.

488
00:28:55,648 --> 00:28:56,627
Yeah, it's scary.

489
00:28:57,447 --> 00:29:00,068
You said earlier that the debt crisis was one of the things

490
00:29:00,068 --> 00:29:02,908
that played in or can play into potential wars like this.

491
00:29:03,248 --> 00:29:04,268
How does that work?

492
00:29:04,967 --> 00:29:05,888
It works in two ways.

493
00:29:05,987 --> 00:29:07,248
One is obviously war is expensive,

494
00:29:07,388 --> 00:29:09,648
so war leads to sovereign debt crises.

495
00:29:09,908 --> 00:29:11,727
I mean, this was true in World War I and World War II.

496
00:29:11,727 --> 00:29:18,768
uh but then also um very indebted sovereigns especially if you're like the kind of incumbent

497
00:29:18,768 --> 00:29:25,967
like hegemon the empire uh usually you don't kind of give up your your borders your influence your

498
00:29:25,967 --> 00:29:30,568
your scale usually you try to put that problem somewhere else you know if you're a smaller

499
00:29:30,568 --> 00:29:34,627
country uh maybe higher debt won't make you more belligerent because you don't really have the

500
00:29:34,627 --> 00:29:40,207
option uh too much but if you're if you're you know the us or previously britain or you know

501
00:29:40,207 --> 00:29:41,967
before that and any number of empires,

502
00:29:43,768 --> 00:29:46,408
they tend to lash out when they start to have problems.

503
00:29:47,227 --> 00:29:49,207
And so they get feisty.

504
00:29:49,768 --> 00:29:51,287
So it's classic fourth turning stuff

505
00:29:51,287 --> 00:29:52,627
where it just gets more and more volatile.

506
00:29:53,047 --> 00:29:54,068
Yeah, it gets more and more volatile

507
00:29:54,068 --> 00:29:56,428
until it just kind of finally settles.

508
00:29:57,008 --> 00:29:59,227
And of course, like it, you get more,

509
00:29:59,328 --> 00:30:01,307
on average, you get more polarized politics.

510
00:30:01,307 --> 00:30:03,127
You get more populist politics.

511
00:30:03,987 --> 00:30:05,828
And you just get, yeah, over time,

512
00:30:05,888 --> 00:30:07,248
you need just more extreme decision-making

513
00:30:07,248 --> 00:30:10,508
compared to times are good, business is normal.

514
00:30:11,088 --> 00:30:13,347
It's no, no, we need to make radical changes.

515
00:30:13,908 --> 00:30:16,188
And of course, whenever you have big imbalances

516
00:30:16,188 --> 00:30:17,068
growing in the economy,

517
00:30:17,748 --> 00:30:19,607
it's very easy to misdiagnose

518
00:30:19,607 --> 00:30:21,847
where the problems are coming from,

519
00:30:21,928 --> 00:30:22,847
who's causing it.

520
00:30:23,527 --> 00:30:25,947
Either just subconsciously,

521
00:30:26,188 --> 00:30:29,947
most people don't wake up and they're not macro experts

522
00:30:29,947 --> 00:30:31,828
and they don't know why a lot of this is happening.

523
00:30:31,828 --> 00:30:33,888
They have other jobs and other expertise.

524
00:30:33,888 --> 00:30:37,367
so they easily complain the wrong thing.

525
00:30:37,467 --> 00:30:41,447
And then politicians also can purposely target a group,

526
00:30:41,527 --> 00:30:43,828
an outsider or something, and say, this is happening to us.

527
00:30:43,828 --> 00:30:45,947
You'll see that a lot in developing countries

528
00:30:45,947 --> 00:30:47,008
when they have a currency crisis.

529
00:30:47,148 --> 00:30:48,727
They're like, no, it's the outside speculators

530
00:30:48,727 --> 00:30:49,928
that are breaking our currency.

531
00:30:50,027 --> 00:30:51,467
That's why we need to do capital controls.

532
00:30:51,467 --> 00:30:54,787
And it's always, it's some other entity's fault.

533
00:30:54,928 --> 00:30:57,168
I mean, that's happening in developed countries too, though.

534
00:30:57,487 --> 00:30:59,547
Like it's blaming immigrants for,

535
00:30:59,768 --> 00:31:02,027
which like, I'm not saying that we should have

536
00:31:02,027 --> 00:31:03,588
completely unfettered migration,

537
00:31:03,588 --> 00:31:07,227
but it's a very easy scapegoat when things aren't going great.

538
00:31:08,068 --> 00:31:12,027
Well, yeah, I mean, I think it plays into that kind of pattern, that mindset.

539
00:31:12,207 --> 00:31:16,967
And I think that another issue is that even some of the immigration policies we see,

540
00:31:17,127 --> 00:31:19,347
some of that ties back to the debt and demographics,

541
00:31:20,008 --> 00:31:21,947
because it depends on the country.

542
00:31:22,928 --> 00:31:26,068
Some of them chose to have looser immigration standards

543
00:31:26,068 --> 00:31:28,588
to try to fix their demographics problems.

544
00:31:28,648 --> 00:31:31,748
So they would have these bloated entitlement systems that are very expensive.

545
00:31:31,748 --> 00:31:37,008
and when they were designed in the you know the middle of the the 20th century it was kind of

546
00:31:37,008 --> 00:31:41,248
based on the idea that you know every generation is going to be bigger than the prior generation

547
00:31:41,248 --> 00:31:46,408
population is going to keep growing so you always have plenty of young workers paying in to support

548
00:31:46,408 --> 00:31:52,888
the the retired workers but when birth rates slow down and and people have fewer kids uh you start

549
00:31:52,888 --> 00:31:57,688
to get very top heavy demographics you'll bring people in you yeah you've got major issues i mean

550
00:31:57,688 --> 00:32:02,807
the u.s i mean it used to be you know when social security came into being it was like over 10 workers

551
00:32:02,807 --> 00:32:08,487
per retiree and then in for you know kind of stayed more at like six workers or five workers

552
00:32:08,487 --> 00:32:12,807
or it was like inching down and it gets to the point where it's like three workers for every

553
00:32:12,807 --> 00:32:19,367
retiree and it just becomes more and more imbalanced um and uh so then policymakers say well

554
00:32:19,367 --> 00:32:25,527
maybe we shouldn't a lot of immigrants um what could go wrong you know let's do all at once and

555
00:32:25,527 --> 00:32:27,707
And then, of course, that has its own ramifications,

556
00:32:27,888 --> 00:32:30,668
that has pushback, that leads to the populism.

557
00:32:31,347 --> 00:32:33,367
And so you're putting out one problem

558
00:32:33,367 --> 00:32:34,888
with potentially another problem.

559
00:32:35,987 --> 00:32:38,027
And so these problems don't,

560
00:32:38,347 --> 00:32:42,107
they tend to cluster for a reason, unfortunately.

561
00:32:42,648 --> 00:32:44,388
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562
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563
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564
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565
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566
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569
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571
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579
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580
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581
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601
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604
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605
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619
00:35:49,288 --> 00:35:51,448
So in terms of getting out of the debt,

620
00:35:52,288 --> 00:35:53,587
there's really three levers.

621
00:35:53,768 --> 00:35:55,668
There's the idea of defaulting on the debt,

622
00:35:56,168 --> 00:35:58,788
inflate the debt away, or grow your way out of debt.

623
00:35:59,347 --> 00:36:02,288
Do you think, which do you think is the most likely of those three?

624
00:36:03,567 --> 00:36:05,248
Combination of inflate and grow your way out.

625
00:36:05,387 --> 00:36:06,148
They're never going to default.

626
00:36:06,688 --> 00:36:07,567
I mean, almost never.

627
00:36:08,727 --> 00:36:12,468
Almost, well, any country that can print its own currency

628
00:36:12,468 --> 00:36:14,508
will rarely ever default.

629
00:36:15,047 --> 00:36:17,027
There are obviously developing countries

630
00:36:17,027 --> 00:36:21,027
that owe debt to nominate in dollars yeah and sometimes they i mean the polite word is

631
00:36:21,027 --> 00:36:25,828
restructuring that's kind of the polite word for defaulting you you know you it's not saying you're

632
00:36:25,828 --> 00:36:30,387
not going to get it back it's saying we're going to shift the terms around that you get it back

633
00:36:30,387 --> 00:36:37,828
um and so yeah that can default uh same thing with like the eurozone um you know you can have bail-ins

634
00:36:38,468 --> 00:36:43,587
where you know you thought you had money in the bank and now you have less money but maybe you

635
00:36:43,587 --> 00:36:50,148
own shares of this now crippled bank yeah like you know much diminished bank um so if if the if

636
00:36:50,148 --> 00:36:54,308
the entity in question can't just unilaterally create its own currency then default is an option

637
00:36:54,308 --> 00:36:58,948
just like household debt corporate debt uh the main difference is that if you're a sovereign that

638
00:36:58,948 --> 00:37:04,468
prints its own currency why would you ever do that you they rarely do they almost never uh and so

639
00:37:04,468 --> 00:37:09,268
instead they debase their way out of it whenever they you know if they ever have a trouble with a

640
00:37:09,268 --> 00:37:16,927
bond auction uh whenever they have a repo spike like 2019 or more recently um they expand the base

641
00:37:16,927 --> 00:37:23,288
money supply uh as needed uh and they so it defaults through purchasing power and inflation

642
00:37:23,288 --> 00:37:28,288
rather than through a nominal default so in the u.s for example in world war ii

643
00:37:28,288 --> 00:37:33,848
i mean it was the dollar was one of the least impaired currencies in the world but even our

644
00:37:33,848 --> 00:37:39,907
currency uh you know we had at one point we had 19 inflation but we're doing yield curve controls

645
00:37:39,907 --> 00:37:45,788
who are artificially holding treasury yields at 2.5 percent on the long end shorter on the i mean

646
00:37:45,788 --> 00:37:50,788
lower on the short end while inflation is 19 money supply is growing dramatically and so if you were

647
00:37:50,788 --> 00:37:56,468
holding currency or bonds crushed you're just crushed you can buy less less uh gold less house

648
00:37:56,468 --> 00:38:02,527
less food anything that's kind of scarce semi-scarce you're going to get less of it and over the past i

649
00:38:02,527 --> 00:38:04,527
I mean, I talked before about that article,

650
00:38:04,768 --> 00:38:05,527
Are We In A Bond Bubble.

651
00:38:05,788 --> 00:38:05,968
Yeah.

652
00:38:06,868 --> 00:38:09,808
We literally, starting in like from mid-2020

653
00:38:09,808 --> 00:38:11,768
until like the next five years,

654
00:38:11,768 --> 00:38:13,808
that was like the worst five-year stretch

655
00:38:13,808 --> 00:38:16,067
for like developed world bonds,

656
00:38:16,587 --> 00:38:17,547
like roughly in history,

657
00:38:18,107 --> 00:38:20,007
nominally let alone purchasing power.

658
00:38:21,107 --> 00:38:24,268
And that's because we are already in the period

659
00:38:24,268 --> 00:38:25,348
where debt matters.

660
00:38:26,427 --> 00:38:28,107
The debasement's already happening.

661
00:38:28,727 --> 00:38:31,348
The reason growing away out of it is a factor

662
00:38:31,348 --> 00:38:35,268
is because inflation feels less bad

663
00:38:35,268 --> 00:38:37,828
when it's partially offset by productivity growth.

664
00:38:38,507 --> 00:38:42,427
You know, if we double the money supply,

665
00:38:42,968 --> 00:38:44,288
but we somehow use that money

666
00:38:44,288 --> 00:38:46,027
to build a bunch of like power plants

667
00:38:46,027 --> 00:38:48,188
and manufacturing facilities and hospitals,

668
00:38:48,627 --> 00:38:50,448
and we keep prices down for a lot of things,

669
00:38:50,547 --> 00:38:51,788
kind of the MMTers dream,

670
00:38:52,468 --> 00:38:54,968
then it'll still be inflationary

671
00:38:54,968 --> 00:38:56,328
for things we can't print more of,

672
00:38:56,507 --> 00:38:58,727
you know, gold or Bitcoin or waterfront property

673
00:38:58,727 --> 00:38:59,927
or fine art, for example.

674
00:38:59,927 --> 00:39:04,748
but the things you're actively making more of won't feel as inflationary um if you're also

675
00:39:04,748 --> 00:39:08,768
benefiting from technological trends like moore's law you know semiconductors are always getting

676
00:39:08,768 --> 00:39:14,407
cheaper tvs are getting cheaper computers getting cheaper peripherals uh you know offshoring

677
00:39:14,407 --> 00:39:20,668
automation so plastic toys went down like 95 in price from their peak and you know textiles haven't

678
00:39:20,668 --> 00:39:26,948
gone anywhere in a long time when all that's happening the the effects of inflation debasement

679
00:39:26,948 --> 00:39:33,207
of more subtle you know you start to see it show up in in wealth concentration things feel a little

680
00:39:33,207 --> 00:39:37,148
harder but you can't put your finger on it because you're you're kind of on a treadmill that's semi

681
00:39:37,148 --> 00:39:42,368
balanced um where it really gets painful is when you have inflation without productivity growth

682
00:39:42,368 --> 00:39:48,288
you know like um war is a classic case of that because you're literally building stuff to break

683
00:39:48,288 --> 00:39:52,988
other productive things and they're trying to break your productive things uh so for example

684
00:39:52,988 --> 00:39:59,067
a closure of the Strait of Hormuz and then damage to energy facilities is a negative productivity

685
00:39:59,067 --> 00:40:03,948
shock because it's like all that stuff that was working and that was abundant is now less damaged

686
00:40:03,948 --> 00:40:12,567
and more expensive to get anywhere. And so policymakers, their kind of optimal scenario is,

687
00:40:12,648 --> 00:40:19,567
okay, we're going to run it mildly hot, and then we're going to hope that Moore's Law and AI and

688
00:40:19,567 --> 00:40:25,448
all these other things can, you know, let's say you grow money supply at 8% a year and you've got

689
00:40:25,448 --> 00:40:31,627
4% better technology every year. And, you know, things would be 4% cheaper because of that.

690
00:40:31,707 --> 00:40:37,547
Instead, they're only 4% more expensive on average. They're like, well, 4%, the population

691
00:40:37,547 --> 00:40:41,727
will deal with that. That's kind of how they will think. So it's a combination of inflating and

692
00:40:41,727 --> 00:40:46,308
growing a way out. And for the growth side, do you think that that is all kind of pinned on AI

693
00:40:46,308 --> 00:40:56,635
Is that their real only option I mean that the biggest one by far I mean for example in the 1990s so over the long arc of time there always kind of a delta

694
00:40:56,635 --> 00:40:57,835
between money supply growth

695
00:40:57,835 --> 00:40:59,315
and average price inflation.

696
00:40:59,515 --> 00:41:02,255
And it's because of that productivity amount.

697
00:41:02,255 --> 00:41:04,575
And some periods are more productive than others.

698
00:41:04,995 --> 00:41:06,055
And it depends on the country.

699
00:41:06,295 --> 00:41:08,775
So for example, in the UK, in the late 1800s,

700
00:41:09,215 --> 00:41:11,535
money supply and inflation were highly correlated

701
00:41:11,535 --> 00:41:13,055
because it was already a developed country.

702
00:41:13,315 --> 00:41:15,675
Whereas in the US, we had this like big,

703
00:41:15,675 --> 00:41:17,955
untouched continent, more or less.

704
00:41:18,635 --> 00:41:19,595
Plenty of land

705
00:41:19,595 --> 00:41:22,395
and, you know,

706
00:41:22,455 --> 00:41:23,255
plenty of gold.

707
00:41:24,095 --> 00:41:25,835
And so they could actually grow money supply quite a bit

708
00:41:25,835 --> 00:41:27,715
and not have it show up in prices because there were just

709
00:41:27,715 --> 00:41:28,975
fewer supply constraints.

710
00:41:29,395 --> 00:41:31,855
So we had a bigger than normal kind of gap there.

711
00:41:32,295 --> 00:41:33,695
There are other periods of time like

712
00:41:33,695 --> 00:41:36,295
Japan after World War II.

713
00:41:36,295 --> 00:41:37,575
I mean, they were just

714
00:41:37,575 --> 00:41:40,195
the most insanely productive kind of

715
00:41:40,195 --> 00:41:42,075
civilization for like several decades

716
00:41:42,075 --> 00:41:44,195
after that. It was like a huge kind of productivity

717
00:41:44,195 --> 00:41:51,635
miracle uh australia uh with the rise of china um there was a long stretch where australia had a

718
00:41:51,635 --> 00:41:56,195
bigger than normal um money supply uh growth compared to inflation because you were getting

719
00:41:56,195 --> 00:42:01,315
all this investment from china and all this demand for of commodities from china yeah um and then

720
00:42:02,195 --> 00:42:07,075
in the whole developed world throughout the especially the 90s and the 2000s when you had

721
00:42:07,075 --> 00:42:13,315
the rise of offshoring, China, and just in general automation, so even domestic automation,

722
00:42:13,875 --> 00:42:20,115
they dramatically lowered the cost of manufacturing. And that was disinflationary.

723
00:42:20,115 --> 00:42:25,875
And where inflation showed up then was things that were not getting automated. So hospital services,

724
00:42:26,915 --> 00:42:33,395
education services, anything that required other workers in developed countries doing things for

725
00:42:33,395 --> 00:42:37,315
you in some way that's the part that wasn't getting offset rather productivity growth so you

726
00:42:37,315 --> 00:42:42,955
had kind of pockets of inflation and pockets of disinflation um going forward you know we've

727
00:42:42,955 --> 00:42:47,815
already kind of optimized a lot of what we're going to get out of globalization manufacturing

728
00:42:47,815 --> 00:42:53,095
automation that sort of stuff uh which means that kind of really the next realm to tackle is to try

729
00:42:53,095 --> 00:42:58,895
to make some of those white collar services less expensive more more you know less human labor

730
00:42:58,895 --> 00:43:04,735
intensive um and so i do think that ai is you know it's it's kind of the the next major thing

731
00:43:04,735 --> 00:43:10,975
where depending on how good that technology can get and how efficient it can be used um that can

732
00:43:10,975 --> 00:43:17,775
keep costs down and obviously you know just like how manufacturing automation and offshoring uh had

733
00:43:17,775 --> 00:43:22,015
you know there it there were losers and winners from that because in the us we had the rust belt

734
00:43:22,015 --> 00:43:27,455
for example yeah um the uk is also a part of time has been been hollowed out industrially definitely

735
00:43:27,455 --> 00:43:35,355
And so there's losers to it, but from a productivity growth standpoint, AI is kind of the main thing.

736
00:43:36,315 --> 00:43:46,155
There's no other clear area, at least to me, where we're going to get it rapidly better at making something other than kind of white collar services.

737
00:43:46,795 --> 00:43:50,115
See, this is where I have a couple of worries, and I'm hoping you can kind of ease my fears on this.

738
00:43:50,115 --> 00:43:53,475
Because the big question I have is at what cost?

739
00:43:53,575 --> 00:43:54,875
Because we are definitely,

740
00:43:55,435 --> 00:43:57,735
I think AI is going to increase productivity massively.

741
00:43:58,075 --> 00:44:00,375
I think it's going to replace a ton of white collar jobs.

742
00:44:00,735 --> 00:44:03,295
But what happens if that is the case?

743
00:44:03,295 --> 00:44:05,495
Because we saw, like you said, in the Rust Belt,

744
00:44:05,635 --> 00:44:09,035
when a load of manufacturing jobs went over to China, essentially,

745
00:44:09,475 --> 00:44:11,095
that there was a huge opioid epidemic.

746
00:44:11,575 --> 00:44:13,775
It was like the economy of despair, essentially.

747
00:44:14,515 --> 00:44:16,095
I think we could see something like that.

748
00:44:16,155 --> 00:44:18,115
But instead of it being the blue collar workers in the Rust Belt,

749
00:44:18,115 --> 00:44:20,255
is going to be the white collar workers on the coast.

750
00:44:20,775 --> 00:44:23,195
And then on top of that, that's question one.

751
00:44:23,455 --> 00:44:27,035
On top of that, what happens when people start losing jobs to AI?

752
00:44:27,235 --> 00:44:30,595
Because I don't think you need a huge proportion of the population

753
00:44:30,595 --> 00:44:34,395
to lose their jobs before you start seeing people defaulting on their debt,

754
00:44:34,735 --> 00:44:36,595
their mortgages, their car loans, all that stuff.

755
00:44:36,695 --> 00:44:39,235
And can this fiat system survive that?

756
00:44:39,915 --> 00:44:40,475
Yeah, good question.

757
00:44:40,775 --> 00:44:42,015
So starting with the first one,

758
00:44:42,975 --> 00:44:45,895
it all depends on how quickly it happens.

759
00:44:45,895 --> 00:44:51,775
I mean, this has been a pattern going back really since kind of the dawn of hydrocarbons.

760
00:44:52,075 --> 00:44:54,835
So before then, population growth was pretty slow.

761
00:44:54,975 --> 00:44:56,555
Technological growth was pretty slow.

762
00:44:56,895 --> 00:45:01,755
The reason hydrocarbons accelerate everything is because, for example, a barrel of oil is

763
00:45:01,755 --> 00:45:04,875
the energy equivalent of thousands of hours of human labor.

764
00:45:05,695 --> 00:45:10,235
And it's just an enormous productivity boost.

765
00:45:10,235 --> 00:45:15,535
Once we got coal and then especially oil and gas, huge effect.

766
00:45:15,895 --> 00:45:21,575
Um, and it started like, for example, we used to be depends on the, on the area, but you know,

767
00:45:21,615 --> 00:45:25,315
two thirds of the population would work in farming or kind of close to farming.

768
00:45:25,915 --> 00:45:31,215
Uh, and that's just subsistence farming, uh, or near subsistence farming was kind of just the

769
00:45:31,215 --> 00:45:35,535
baseline. Um, but when you have hydrocarbons and you have tractors and you have other kind of,

770
00:45:35,535 --> 00:45:40,675
uh, high tech equipment, uh, and this is of course high tech a century ago or a century and a half

771
00:45:40,675 --> 00:45:47,695
ago, it allows vast majority of farmers to stop farming and to go do other things. They can go be

772
00:45:47,695 --> 00:45:53,535
engineers and doctors and accountants and, you know, the rest of civilization. So it ends up being

773
00:45:53,535 --> 00:45:58,535
that 2% of the population can feed everyone instead of half the population having to do it.

774
00:45:58,875 --> 00:46:04,935
And of course, if that happens in 10 years, you've got a lot of out of employed farmers.

775
00:46:05,275 --> 00:46:09,815
But if that happens over a generation or two, it just means that, yeah, it's an adjustment. It

776
00:46:09,815 --> 00:46:14,855
means that someone who was a farmer's son and was going to be a farmer instead goes to medical

777
00:46:14,855 --> 00:46:18,855
school. And it's most people would consider it a good thing. It's kind of like, okay, the next

778
00:46:18,855 --> 00:46:26,455
person will be kind of more educated and more able to travel and, you know, generally do other

779
00:46:26,455 --> 00:46:32,095
things. And, but, you know, if it happens quickly, it can be disruptive. The same thing is generally

780
00:46:32,095 --> 00:46:37,355
true. I mean, you know, if it takes 20 people on a manufacturing line and you find ways to automate

781
00:46:37,355 --> 00:46:41,755
that and make it so you only have two people overseeing bots and fixing them sometimes and

782
00:46:41,755 --> 00:46:45,915
call you know fixing edge cases and occasionally calling in a tech expert when you really need

783
00:46:45,915 --> 00:46:52,075
something help that's a good thing it's obviously bad if it happens in a 10-year stretch uh for

784
00:46:52,075 --> 00:46:57,675
people that they can't retool their careers and change everything um so i think ai is no different

785
00:46:57,675 --> 00:47:07,515
which is um you know a lot of iterative tasks uh we i we on average we want to spend less time

786
00:47:07,515 --> 00:47:11,355
doing those yeah uh now obviously if you make your living from doing those things

787
00:47:12,075 --> 00:47:16,635
that's disruptive if it if you know if you'd wake up one day and compared to two years ago

788
00:47:16,635 --> 00:47:21,435
your services are just greatly devalued um that's that's there's no way around it that's rough

789
00:47:21,995 --> 00:47:26,635
um but if it you know happens over a longer stretch it's fine and then even if it happens

790
00:47:26,635 --> 00:47:31,755
over a shorter stretch there's an inevitability to it which is you can put kind of artificial

791
00:47:31,755 --> 00:47:36,855
constraints on it but it's just it's like a jobs program at that point it's like we have a cheaper

792
00:47:36,855 --> 00:47:42,455
way of doing things um but we have to kind of slow it down on purpose yeah but the genie's out

793
00:47:42,455 --> 00:47:47,715
of the bottle genie's out of the bottle yeah pandora's box is opened um and you know i think

794
00:47:47,715 --> 00:47:54,015
i still think there's we don't know for sure how quickly this is going like i i'm an ai bull but

795
00:47:54,015 --> 00:47:55,775
not like the super bullish kind.

796
00:47:55,955 --> 00:47:57,635
Like there are people that you'll see people

797
00:47:57,635 --> 00:47:58,535
kind of talk in their own book,

798
00:47:58,655 --> 00:47:59,575
like, oh, in 18 months,

799
00:47:59,635 --> 00:48:00,995
it's going to make all jobs useless

800
00:48:00,995 --> 00:48:04,615
or kind of these, and like, not really.

801
00:48:05,455 --> 00:48:07,955
It's, you know, there's obviously a lot of things

802
00:48:07,955 --> 00:48:09,435
that require conscious thought.

803
00:48:10,275 --> 00:48:12,415
And there are a lot of things that can be iterated on.

804
00:48:12,495 --> 00:48:13,955
And of course, the longer you look out,

805
00:48:14,935 --> 00:48:18,755
you never want a short kind of multi-decade

806
00:48:18,755 --> 00:48:19,655
human productivity,

807
00:48:20,455 --> 00:48:22,835
but on five-year, 10-year timeframes,

808
00:48:22,835 --> 00:48:24,695
they're not magic.

809
00:48:24,935 --> 00:48:27,055
I don't think this is an 18-month thing,

810
00:48:27,195 --> 00:48:29,015
but I could definitely see it happening in a decade.

811
00:48:29,755 --> 00:48:31,355
That could also be too quick.

812
00:48:31,875 --> 00:48:32,915
I think we saw in COVID

813
00:48:32,915 --> 00:48:34,095
when people were losing their jobs

814
00:48:34,095 --> 00:48:35,915
and they were retrained as a computer programmer

815
00:48:35,915 --> 00:48:39,195
and now computer programmers are completely getting disrupted.

816
00:48:40,155 --> 00:48:42,295
I find it hard to believe

817
00:48:42,295 --> 00:48:44,435
or hard to imagine the future

818
00:48:44,435 --> 00:48:46,735
where your 50-year-old accountant or lawyer

819
00:48:46,735 --> 00:48:48,955
has to retrain to become a plumber.

820
00:48:48,955 --> 00:48:50,715
That seems like a crazy timeline.

821
00:48:51,035 --> 00:48:51,995
Yeah, I don't think that happens.

822
00:48:51,995 --> 00:48:56,835
I think, so your second question was, how can this potentially impact like credit cycles

823
00:48:56,835 --> 00:48:57,855
and things like that?

824
00:48:58,215 --> 00:49:01,955
I mean, basically, so we've been under a two-speed economy for a while.

825
00:49:02,295 --> 00:49:06,355
That's one of the kind of the risk factors when you have fiscal dominance.

826
00:49:06,735 --> 00:49:10,955
So in the US, for example, if you're an older American, you're on the receiving side of

827
00:49:10,955 --> 00:49:12,175
social security and healthcare.

828
00:49:12,975 --> 00:49:17,615
Obviously, there are richer older Americans, there are poorer older Americans, but on average,

829
00:49:18,075 --> 00:49:21,115
older Americans are richer and they're the recipient of bigger deficits.

830
00:49:21,115 --> 00:49:24,995
In addition, if someone works in defense,

831
00:49:25,115 --> 00:49:26,315
and that's where a lot of our money is going,

832
00:49:26,935 --> 00:49:30,035
people on the receiving side of the deficits are generally doing well.

833
00:49:30,135 --> 00:49:34,115
Those that own assets that are getting inflated by all the deficit spending

834
00:49:34,115 --> 00:49:37,955
are generally doing well, whereas those who are not on the receiving side

835
00:49:37,955 --> 00:49:39,455
are generally the ones that are more struggling.

836
00:49:40,775 --> 00:49:44,415
And I think that AI is going to actually probably add fuel to that fire,

837
00:49:44,795 --> 00:49:47,515
which if someone is an earlier adopter of AI

838
00:49:47,515 --> 00:49:49,995
and is using AI to be more competitive

839
00:49:49,995 --> 00:49:52,735
than their peers or their competitors,

840
00:49:53,475 --> 00:49:54,975
then they'll probably view it as a good thing.

841
00:49:55,435 --> 00:49:58,015
If someone just wanted their status quo

842
00:49:58,015 --> 00:50:00,215
and they start getting disrupted by AI,

843
00:50:00,835 --> 00:50:03,535
I think it's going to be a rough time.

844
00:50:03,535 --> 00:50:05,595
And I think, I mean, kind of like how we see in the US

845
00:50:05,595 --> 00:50:08,995
and other places, you'll see wealthy people

846
00:50:08,995 --> 00:50:10,875
and a few blocks away, you'll see like tent cities.

847
00:50:11,875 --> 00:50:13,195
Like I do think that there's,

848
00:50:13,615 --> 00:50:15,675
that risk is going to keep happening,

849
00:50:15,675 --> 00:50:17,935
which is that there are some people that it just,

850
00:50:18,435 --> 00:50:20,575
everything kind of aligns.

851
00:50:20,875 --> 00:50:22,975
And there are other people that just can't find an avenue

852
00:50:22,975 --> 00:50:25,655
to get a handle of things

853
00:50:25,655 --> 00:50:31,395
because they might have done an educational path

854
00:50:31,395 --> 00:50:32,815
and taken all the student debt.

855
00:50:33,075 --> 00:50:36,675
And then their income is now sharply reduced

856
00:50:36,675 --> 00:50:38,495
because of AI.

857
00:50:39,235 --> 00:50:42,075
See, this is like, again, getting back to the debt cycle.

858
00:50:42,415 --> 00:50:45,115
This is where I see it as an inevitability

859
00:50:45,115 --> 00:50:46,475
that we have UBI at some point.

860
00:50:46,655 --> 00:50:48,195
Because the social unrest,

861
00:50:48,275 --> 00:50:50,595
if we did have the rich suburbs next to tent cities,

862
00:50:50,635 --> 00:50:51,575
will be insane.

863
00:50:51,755 --> 00:50:53,795
And like you say, this is when revolutions happen.

864
00:50:54,115 --> 00:50:56,735
And so surely to kind of stem any of that,

865
00:50:57,015 --> 00:50:58,415
they're going to do something like UBI.

866
00:50:59,095 --> 00:51:00,435
I think there's a good chance.

867
00:51:00,575 --> 00:51:02,735
I mean, yeah, you could have like a robot tax,

868
00:51:02,855 --> 00:51:03,435
you know, basically.

869
00:51:03,755 --> 00:51:04,955
Like, so yeah, yeah.

870
00:51:05,595 --> 00:51:07,315
I think on a long enough timeline,

871
00:51:07,315 --> 00:51:09,415
that could become more commonplace.

872
00:51:11,895 --> 00:51:14,995
And I mean, there are, like Japan is an economy

873
00:51:14,995 --> 00:51:21,615
that's very interesting because they have the worst demographics issues roughly in the world.

874
00:51:21,735 --> 00:51:25,315
I mean, other ones are now kind of catching up, but they've had the long-term bad demographics.

875
00:51:25,795 --> 00:51:26,615
Really aging population.

876
00:51:26,895 --> 00:51:32,235
Aging population. Now, I mentioned before how some of these things tend to cascade into other issues.

877
00:51:32,535 --> 00:51:37,215
They've actually managed to mostly avoid the cascading problem. So they were highly productive

878
00:51:37,215 --> 00:51:42,215
for a long time. So they had huge trade surplus, which then turned into current account surplus

879
00:51:42,215 --> 00:51:43,895
because they take all their capital

880
00:51:43,895 --> 00:51:47,655
and then they buy bonds and equity and commodity deposits

881
00:51:47,655 --> 00:51:49,315
and all these assets around the world.

882
00:51:49,395 --> 00:51:51,015
So they're getting interest in dividend income

883
00:51:51,015 --> 00:51:51,875
from the rest of the world.

884
00:51:52,475 --> 00:51:54,695
So they've kind of set up a financial fortress,

885
00:51:54,695 --> 00:51:57,195
even though they have a high sovereign debt

886
00:51:57,195 --> 00:52:00,095
in their own currency, they also have tons of assets.

887
00:52:00,355 --> 00:52:02,015
So this is why they could have such high debt

888
00:52:02,015 --> 00:52:03,175
without really seeing inflation.

889
00:52:03,315 --> 00:52:04,335
Yeah, that's why they're an outlier.

890
00:52:05,255 --> 00:52:05,895
And then in addition,

891
00:52:08,295 --> 00:52:11,295
I mean, the early adopters of automation,

892
00:52:11,295 --> 00:52:16,415
I mean, they were kind of known for automation and robotics and things like that.

893
00:52:16,875 --> 00:52:20,335
And then they also have a very kind of harmonious society.

894
00:52:20,915 --> 00:52:27,315
And they didn't fall into the pattern of saying, well, let's fix our demographics issues by dramatically increasing our immigration.

895
00:52:28,615 --> 00:52:31,595
And so they said, we're going to just tank this issue.

896
00:52:32,175 --> 00:52:40,395
They also did things like, I mean, even though they're older than the average American or the average Brit, they spend way less money per capita on health care.

897
00:52:40,395 --> 00:52:41,915
and yet live longer.

898
00:52:42,635 --> 00:52:44,375
So there's social aspects there.

899
00:52:44,455 --> 00:52:46,175
There's also how they structure their healthcare system.

900
00:52:46,495 --> 00:52:48,735
They've had very little military spending for a long time.

901
00:52:49,675 --> 00:52:54,075
So they're running, on average, pretty substantial deficits.

902
00:52:54,175 --> 00:52:55,295
Not as big as people think.

903
00:52:55,855 --> 00:52:57,655
But they've been running fairly large deficits.

904
00:52:57,895 --> 00:52:59,215
But actually, go back to the people.

905
00:52:59,215 --> 00:53:01,155
Their deficits are just going into healthcare,

906
00:53:01,395 --> 00:53:03,315
going into kind of well-being.

907
00:53:04,535 --> 00:53:06,995
And it's not, I mean, obviously, Japan has a,

908
00:53:07,535 --> 00:53:09,155
it's known for workaholicism.

909
00:53:09,155 --> 00:53:12,015
not very productive corporate sector

910
00:53:12,015 --> 00:53:14,515
in terms of how many hours worked versus output.

911
00:53:15,975 --> 00:53:19,075
When you look at quality of life or happiness ratings,

912
00:53:19,515 --> 00:53:21,515
they're not to be near the top,

913
00:53:21,615 --> 00:53:22,915
like say some of the Nordic countries are.

914
00:53:22,915 --> 00:53:24,055
Those two seem very aligned.

915
00:53:24,355 --> 00:53:29,015
Yeah, but they've avoided a lot of the crises

916
00:53:29,015 --> 00:53:31,475
that you'd otherwise expect when you're 15 years.

917
00:53:31,635 --> 00:53:33,015
I mean, they're further into fiscal dominance

918
00:53:33,015 --> 00:53:33,935
than any other country.

919
00:53:34,815 --> 00:53:36,655
And that just kind of shows that, yeah,

920
00:53:36,655 --> 00:53:38,095
it's a combination of debasement

921
00:53:38,095 --> 00:53:40,295
and then trying to keep the wheels on the car

922
00:53:40,295 --> 00:53:41,455
in terms of productivity growth.

923
00:53:41,575 --> 00:53:44,155
I mean, they've managed their energy policy pretty well.

924
00:53:45,015 --> 00:53:47,155
They haven't made any crazy decisions around energy.

925
00:53:48,555 --> 00:53:52,235
So, I mean, yeah, things can be softened

926
00:53:52,235 --> 00:53:54,915
when there's a social contract in place

927
00:53:54,915 --> 00:53:57,455
and people kind of feel part of a nation

928
00:53:57,455 --> 00:53:58,315
that they're not just being,

929
00:53:58,635 --> 00:54:01,375
it's not like one side is just kind of screwing over another side.

930
00:54:02,135 --> 00:54:04,055
But yeah, I guess if things get more automated,

931
00:54:04,555 --> 00:54:07,395
certainly from the left side of politics,

932
00:54:07,395 --> 00:54:09,295
you're going to get more and more calls for UBI.

933
00:54:09,835 --> 00:54:11,855
And it'll probably be more and more enticing

934
00:54:11,855 --> 00:54:14,135
to a larger share of the population

935
00:54:14,135 --> 00:54:15,855
should some of these AI technologies

936
00:54:15,855 --> 00:54:17,775
keep taking off as the polls expect.

937
00:54:17,955 --> 00:54:20,535
Yeah. And then what does that do to the debt crisis?

938
00:54:21,055 --> 00:54:23,195
Because we've had debt cycles in the past.

939
00:54:23,855 --> 00:54:25,275
You've talked a lot about the 40s

940
00:54:25,275 --> 00:54:27,135
and comparing now to the 40s.

941
00:54:27,995 --> 00:54:30,115
Is there a chance this is the last debt cycle?

942
00:54:30,535 --> 00:54:31,415
Like, could this be the one

943
00:54:31,415 --> 00:54:33,455
that actually breaks the fiat system?

944
00:54:34,615 --> 00:54:35,615
I think it could.

945
00:54:35,735 --> 00:54:36,835
I mean, well, the funny thing is

946
00:54:36,835 --> 00:54:42,435
the fiat system as we know it only goes back to the 70s i think if we go back a little further

947
00:54:42,435 --> 00:54:49,215
we can say it kind of goes back to the dawn of the telecommunications age um because and i talked

948
00:54:49,215 --> 00:54:56,035
about slot and broken money yeah which is for most of human history like information couldn't really

949
00:54:56,035 --> 00:55:02,235
go faster than humans could get somewhere so by by foot by horses by ships the fastest you could do

950
00:55:02,235 --> 00:55:04,835
like birds or fires in the night or something,

951
00:55:04,895 --> 00:55:05,795
but that's not high bandwidth.

952
00:55:06,115 --> 00:55:08,255
So you were kind of constrained.

953
00:55:08,815 --> 00:55:10,295
Once we had the telegraph,

954
00:55:10,795 --> 00:55:12,615
so it was invented in, say, the 1830s.

955
00:55:12,655 --> 00:55:15,735
It wasn't widely deployed across ocean

956
00:55:15,735 --> 00:55:17,175
until the 1860s.

957
00:55:18,015 --> 00:55:19,995
You started to be able to share

958
00:55:19,995 --> 00:55:22,115
fairly high bandwidth information around the world.

959
00:55:22,115 --> 00:55:24,755
By the time, it wasn't until the early 1900s

960
00:55:24,755 --> 00:55:25,875
you were going across the Pacific.

961
00:55:27,195 --> 00:55:29,755
And at that point, you could do transactions

962
00:55:29,755 --> 00:55:31,655
at the speed of light,

963
00:55:31,655 --> 00:55:36,375
but not settlements. Settlements, how do you do irreversible value transfer? Well, you ship gold

964
00:55:36,375 --> 00:55:41,795
and you audit and ensure the gold and it's a whole expensive, lengthy process.

965
00:55:42,495 --> 00:55:48,495
And that delta, that mismatch between fast transactions and slow settlements was like a

966
00:55:48,495 --> 00:55:52,295
godsend to the banks and the central banks. It said, oh, you need a middleman.

967
00:55:52,655 --> 00:55:53,515
It centralizes all the money.

968
00:55:53,615 --> 00:55:58,975
It centralizes all the money. It's a massive tailwind for the money centralizers.

969
00:55:58,975 --> 00:56:02,555
before it's not that banks didn't exist before then it's not even that central banks didn't exist

970
00:56:02,555 --> 00:56:07,955
before then in some cases it's that their services are more optional because you're you can still

971
00:56:07,955 --> 00:56:13,115
just really hand a coin to someone or but when you literally are doing when when when commerce

972
00:56:13,115 --> 00:56:19,895
is happening globally and most money's slow it's those intermediaries that have all the power

973
00:56:19,895 --> 00:56:27,055
and so from from really the dawn of the telegraph until the dawn of bitcoin there were there was no

974
00:56:27,055 --> 00:56:32,975
there was no fast settlement and then so bitcoin gets bitcoin gets uh developed and then even then

975
00:56:32,975 --> 00:56:38,175
of course there's no it's worth nothing it has no network effect it's a novelty so even you know

976
00:56:38,175 --> 00:56:43,675
for the first say decade of its life it wasn't moving the needle at all even today it's it's now

977
00:56:43,675 --> 00:56:48,295
it's increasingly part of the conversation but it's still a small asset in the grand scheme of

978
00:56:48,295 --> 00:56:53,715
things um but basically i would say that we we've reached the height of fiat currency in the sense

979
00:56:53,715 --> 00:56:55,955
that we've been in this period of time

980
00:56:55,955 --> 00:56:57,615
where there was no alternative

981
00:56:57,615 --> 00:56:59,795
between fast transactions and slow settlements.

982
00:57:00,175 --> 00:57:01,515
And now we have alternatives.

983
00:57:02,275 --> 00:57:04,755
And then while fiat currencies enjoyed

984
00:57:04,755 --> 00:57:06,935
that kind of monopoly on what works,

985
00:57:07,455 --> 00:57:09,475
they broke all their ledgers.

986
00:57:09,695 --> 00:57:11,415
They bloated their entitlement systems.

987
00:57:11,855 --> 00:57:13,835
They built kind of social insurance

988
00:57:13,835 --> 00:57:15,535
with the idea that every generation

989
00:57:15,535 --> 00:57:17,675
is going to be as bigger, bigger than the prior one.

990
00:57:18,115 --> 00:57:20,455
And all those things are kind of coming home to roost.

991
00:57:20,455 --> 00:57:26,895
um so i do think that one i think this cycle will last a lot longer than people think i mean that's

992
00:57:26,895 --> 00:57:32,375
part of why i use nothing stops his train there's two sides of it one is no matter all these attempts

993
00:57:32,375 --> 00:57:35,935
they're going to try to reduce the deficit spending they're almost all going to fail

994
00:57:35,935 --> 00:57:40,815
so people were really excited about doge i was like nope here's why didn't even move the needle

995
00:57:40,815 --> 00:57:46,975
um so it's on one side it's bearish but it's also saying it's also the wheels are going to be on the

996
00:57:46,975 --> 00:57:52,255
cart longer than you think, just because I think this is going to be a very stretched out cycle.

997
00:57:53,115 --> 00:57:57,175
So how long do people think it's going to last? And how long do you think it's going to last?

998
00:57:58,135 --> 00:58:01,215
I mean, there were people that thought the global financial crisis was going to break it all.

999
00:58:01,415 --> 00:58:05,175
There were people that thought COVID was going to break it all. Then there were people that every

1000
00:58:05,175 --> 00:58:12,415
crisis, when the regional bank crisis happened, like, this is it. And it's always like next year

1001
00:58:12,415 --> 00:58:20,075
next you know five years um i mean i i there's only so far you can look out because like literally

1002
00:58:20,075 --> 00:58:25,075
you can have political structures be entirely different in say the 2040s yeah you know so i i

1003
00:58:25,075 --> 00:58:31,655
look out something like a decade um in the u.s for example that's when our social security uh trust

1004
00:58:31,655 --> 00:58:36,655
fund uh technically the surplus runs out we've got something like a three trillion surplus in there

1005
00:58:36,655 --> 00:58:41,575
just from prior uh overpayments that's now in draining mode because we're very top heavy

1006
00:58:42,395 --> 00:58:44,495
And then either Congress has to kind of say,

1007
00:58:44,635 --> 00:58:47,915
well, all retirees are now going to get 80 cents on the dollar

1008
00:58:47,915 --> 00:58:49,435
or 75 cents on the dollar,

1009
00:58:49,435 --> 00:58:51,395
or we're going to print the difference.

1010
00:58:52,155 --> 00:58:53,155
I know which one that won't be.

1011
00:58:53,355 --> 00:58:53,975
Probably, yeah.

1012
00:58:54,055 --> 00:58:56,155
That actually requires a decision at that point

1013
00:58:56,155 --> 00:58:57,455
because it's kind of a separate pool of money.

1014
00:58:57,615 --> 00:58:59,315
So it'd be interesting to monitor.

1015
00:59:01,415 --> 00:59:03,515
And I mean, the political discourse around that time

1016
00:59:03,515 --> 00:59:04,555
is going to be like lit.

1017
00:59:05,835 --> 00:59:09,115
And so, but I think I look mostly into the 2030s

1018
00:59:09,115 --> 00:59:11,555
and say nothing really...

1019
00:59:11,575 --> 00:59:16,335
seems like it's going to slow this down anytime in that investable timeframe.

1020
00:59:16,915 --> 00:59:19,595
You look out further than that and you get science fiction.

1021
00:59:19,595 --> 00:59:22,495
Science fiction. We will get onto that.

1022
00:59:23,015 --> 00:59:24,815
So if this is going to take longer,

1023
00:59:25,235 --> 00:59:28,435
what should people be doing now to protect themselves through this?

1024
00:59:28,975 --> 00:59:31,535
Well, one, I mean, for people that have the luxury,

1025
00:59:31,535 --> 00:59:35,395
it's making sure you're living in a spot that you're comfortable with,

1026
00:59:35,955 --> 00:59:39,295
either in terms of the political structures, the social structures.

1027
00:59:39,295 --> 00:59:45,295
um you know all the things that you somewhat can control on average wealthier people have

1028
00:59:45,295 --> 00:59:50,935
more optionality there than than people that are lower on the income stack um trying to make sure

1029
00:59:50,935 --> 00:59:56,375
either your job is ai resistant or that you're using ai uh that you're not just kind of ignoring

1030
00:59:56,375 --> 01:00:02,355
the trend that you're you're you're trying to to use the tools to be as as competitive as you can be

1031
01:00:02,355 --> 01:00:02,675
Yeah.

1032
01:00:04,835 --> 01:00:07,995
For long, I mean, owning where possible scarce assets

1033
01:00:07,995 --> 01:00:10,295
and trying to avoid bubbles,

1034
01:00:10,695 --> 01:00:14,475
because even scarce assets can have five,

1035
01:00:14,615 --> 01:00:15,915
10 years of price declines

1036
01:00:15,915 --> 01:00:18,555
if they were bid up into a manic bubble.

1037
01:00:18,935 --> 01:00:20,435
Is this gold that you're really talking about here?

1038
01:00:21,295 --> 01:00:24,095
I think gold was overbought.

1039
01:00:25,375 --> 01:00:26,995
I hesitate to call it a bubble

1040
01:00:26,995 --> 01:00:29,275
because if we do have a long-term popping

1041
01:00:29,275 --> 01:00:30,975
of like the whole sovereign debt crisis,

1042
01:00:30,975 --> 01:00:37,195
gold has to get pretty insane numbers to like truly have like a 10-year loss like a lost decade

1043
01:00:37,195 --> 01:00:42,755
but i mean gold had a lost decade really after 2011 it got bit up to to high levels

1044
01:00:42,755 --> 01:00:47,895
and i think it's obviously taking your breather now for a period of time but i think i mean there

1045
01:00:47,895 --> 01:00:53,635
for example i use costco stock as an example uh it's like people look at it's like the most

1046
01:00:53,635 --> 01:00:57,895
bulletproof company in the world it's one of the few companies where like employees generally like

1047
01:00:57,895 --> 01:01:01,975
customers like it and investors like it usually you only get one or two out of the three somehow

1048
01:01:01,975 --> 01:01:07,895
they you know it's the trifecta it's the trifecta a lot of probably rests on the hot dog um uh but

1049
01:01:07,895 --> 01:01:24,063
costco trades like 50 times earnings crazy uh for a you know 40 plus year old blue chip retailer they trade it they trade it Yeah that like tech stock valuations Yeah tech stock valuations So nothing stops that from one day

1050
01:01:24,063 --> 01:01:25,963
going down to 25 times earnings,

1051
01:01:26,043 --> 01:01:27,063
which is still actually rich.

1052
01:01:27,183 --> 01:01:28,483
That's still premium multiple.

1053
01:01:29,802 --> 01:01:31,263
And it doesn't have to happen all at once.

1054
01:01:31,323 --> 01:01:33,343
A really good example is in the late 90s,

1055
01:01:33,343 --> 01:01:34,503
we think of it as the tech bubble.

1056
01:01:34,863 --> 01:01:36,963
But for example, Walmart was trading 50 times earnings.

1057
01:01:37,723 --> 01:01:39,203
Coca-Cola was trading 50 times earnings.

1058
01:01:39,623 --> 01:01:41,802
They had very good growth in the 90s.

1059
01:01:41,802 --> 01:01:47,582
and over like the next 10 15 years their stock prices basically just went sideways

1060
01:01:47,582 --> 01:01:54,243
um you know sideways can be up up 20 down 30 up you know it's not literally sideways but it was

1061
01:01:54,243 --> 01:01:59,883
a chop solidation chop solidation for like 10 15 years while their earnings would double or triple

1062
01:01:59,883 --> 01:02:06,143
until literally through time they'd be trading at 20 something times earnings and that could

1063
01:02:06,143 --> 01:02:11,883
absolutely happened to stocks today that look like costco um or like a couple years ago i mean

1064
01:02:11,883 --> 01:02:17,063
recently we've had sales in the mag 7 you know these high quality companies that some some in

1065
01:02:17,063 --> 01:02:23,143
some cases people were paying really high multiples for um their fundamentals are still doing fine in

1066
01:02:23,143 --> 01:02:29,523
many cases but but you know especially with capex and ai um they've been running into frictions so

1067
01:02:29,523 --> 01:02:34,883
the point of all that is whether it's whether it's gold whether it's high quality real estate whether

1068
01:02:34,883 --> 01:02:39,683
high quality equities those are generally things you want to own obviously bitcoin as well and just

1069
01:02:39,683 --> 01:02:44,723
you just want to be careful of your enthusiasm when you're buying it you know you want to you

1070
01:02:44,723 --> 01:02:50,082
don't when when it's just all over social media when it's at a strictly high valuations that's

1071
01:02:50,082 --> 01:02:53,843
when you generally want to have a pause and say okay even though there's money printing can this

1072
01:02:53,843 --> 01:03:00,483
thing still have five or ten years of being dead money um but other you know basically buying scarce

1073
01:03:00,483 --> 01:03:06,143
assets at reasonable prices, trying to manage your location if possible, trying to make sure

1074
01:03:06,143 --> 01:03:11,243
on the right side of trends where possible. So there's obviously, I'm sure a lot of people

1075
01:03:11,243 --> 01:03:15,802
listening are psychos like me that are just basically 100% Bitcoin. But for an average

1076
01:03:15,802 --> 01:03:21,383
portfolio, how heavily would you weight Bitcoin in it? So for a lot of people, they have like zero,

1077
01:03:21,523 --> 01:03:29,423
1%. So I mean, I say, well, I think zero is the wrong number. That's kind of my kind of baseline

1078
01:03:29,423 --> 01:03:32,783
is like there's a lot of numbers that can make sense zero is not really one of them i think

1079
01:03:32,783 --> 01:03:38,343
uh so it starts by getting off zero um i i think five percent is reasonable i mean it's funny if

1080
01:03:38,343 --> 01:03:44,283
you look at portfolios um gold has been underweighted in portfolios for a long time despite

1081
01:03:44,283 --> 01:03:48,723
a lot of evidence showing how useful it is for portfolios especially replacing some of the bond

1082
01:03:48,723 --> 01:03:54,043
component uh so my view is always have more gold than like the baseline which is almost nothing

1083
01:03:54,043 --> 01:03:59,303
in a typical kind of managed portfolio and with bitcoin i mean i was early to put say

1084
01:03:59,303 --> 01:04:06,323
five or ten percent in um now in my personal like holdings it's i i hold cold storage bitcoin

1085
01:04:06,323 --> 01:04:13,043
uh you know i i do venture in in bitcoin um so for me it's obviously much higher than that five

1086
01:04:13,043 --> 01:04:16,763
to ten percent especially if you go through a couple cycles and you don't really sell you just

1087
01:04:16,763 --> 01:04:21,663
it just becomes higher it becomes higher um but the way i kind of look at it is like i think

1088
01:04:21,663 --> 01:04:26,903
five percent can make a lot of sense and then as someone you know if they if they do a podcast

1089
01:04:26,903 --> 01:04:31,903
circuit and you know listen to like your show and other shows and they read the books and they you

1090
01:04:31,903 --> 01:04:36,763
know they spend a you know 500 hours in the space i mean they then they know maybe they want they

1091
01:04:36,763 --> 01:04:41,503
might want to dial that number up but they're the ones that know when to do that not not me telling

1092
01:04:41,503 --> 01:04:45,503
them that they want to do that yeah that's fair and last question on this before we move on some

1093
01:04:45,503 --> 01:04:49,423
other stuff and we've spoken in the past and you said your base case was that we were going to have

1094
01:04:49,423 --> 01:04:52,723
money printing but it was going to be sort of gradual money printing that was sort of aligned

1095
01:04:52,723 --> 01:04:53,543
with GDP growth.

1096
01:04:54,423 --> 01:04:56,102
Does this war in Iran change that?

1097
01:04:57,043 --> 01:04:58,383
The short answer is potentially.

1098
01:04:58,783 --> 01:05:01,783
So I started pointing out the gradual print scenario.

1099
01:05:02,503 --> 01:05:03,623
I mean, in my research service,

1100
01:05:03,823 --> 01:05:05,203
over the past couple of years,

1101
01:05:05,203 --> 01:05:08,123
I've been kind of aiming that roughly in this 2025 period,

1102
01:05:08,203 --> 01:05:09,223
we would have had it.

1103
01:05:09,863 --> 01:05:12,323
And that was actually the Fed's own projections roughly too.

1104
01:05:12,663 --> 01:05:14,203
It was one of the few times I agreed with the Fed.

1105
01:05:15,183 --> 01:05:17,082
Because a lot of it was just kind of pretty,

1106
01:05:17,082 --> 01:05:19,723
like unavoidable math.

1107
01:05:19,723 --> 01:05:26,102
um and so when we got to late 2025 uh we started to get that gradual print scenario it started

1108
01:05:26,102 --> 01:05:31,903
kicking in december uh so actually a few months into the gradual print now in spring of 2026

1109
01:05:31,903 --> 01:05:38,363
um so iran war aside that's the baseline is that they're growing the in the u.s they're growing the

1110
01:05:38,363 --> 01:05:45,143
base money supply um roughly in line so that it's a pretty standard percent of gdp um and they're

1111
01:05:45,143 --> 01:05:49,163
not trying to stimulate they're trying to do that to keep fractures or bank lending just the the

1112
01:05:49,163 --> 01:05:55,823
wheels just kick the can down the road indefinitely um the war in iran it doesn't immediately threaten

1113
01:05:55,823 --> 01:06:01,343
that but if it stays closed for months and you start to get if gasoline in the u.s doubles

1114
01:06:01,343 --> 01:06:07,343
and other countries just i mean like you know like egypt starts to shut off at 9 p.m every night and

1115
01:06:07,343 --> 01:06:13,623
you know the philippines gas rationing and europe you know is freaking out if it's just across the

1116
01:06:13,623 --> 01:06:20,582
board, if there's economic turmoil, you could start seeing, on average, rising U.S. deficits.

1117
01:06:21,503 --> 01:06:26,723
And then the central bank, you know, it can run into liquidity issues. And they have to kind of

1118
01:06:26,723 --> 01:06:33,743
up their expected rate of money supply growth to kind of keep the treasury market functioning,

1119
01:06:33,863 --> 01:06:38,963
to keep the interbank lending market functioning. And then it comes down to, will a highly polarized

1120
01:06:38,963 --> 01:06:46,082
congress agree on a stimulus especially for a war we began right that's tricky it's like oh hey your

1121
01:06:46,082 --> 01:06:53,863
gasoline prices are high uh because we initiated a war um but we here's a gasoline stimmy you know

1122
01:06:53,863 --> 01:07:00,243
yes uh that's good looking at that through congress um and so there are certain like kind

1123
01:07:00,243 --> 01:07:04,683
of binary decisions at that point that i'm not going to try to predict what even because not even

1124
01:07:04,683 --> 01:07:06,243
being tabled in Congress yet, really.

1125
01:07:06,723 --> 01:07:08,023
But the first step is to just,

1126
01:07:08,903 --> 01:07:10,243
if asset prices struggle,

1127
01:07:10,703 --> 01:07:11,783
if consumers struggle,

1128
01:07:12,423 --> 01:07:13,623
if the economy struggles,

1129
01:07:13,823 --> 01:07:15,582
all of that impacts tax receipts

1130
01:07:15,582 --> 01:07:17,943
and that starts to widen the deficits,

1131
01:07:18,063 --> 01:07:19,602
do you start to inch out

1132
01:07:19,602 --> 01:07:21,243
of a potential gradual print scenario?

1133
01:07:21,643 --> 01:07:22,723
But I don't think we're there yet.

1134
01:07:23,283 --> 01:07:24,183
Very interesting.

1135
01:07:24,543 --> 01:07:25,763
Can we do something a bit different?

1136
01:07:26,082 --> 01:07:26,323
Sure.

1137
01:07:26,602 --> 01:07:28,783
Because we've done, I don't know,

1138
01:07:28,823 --> 01:07:29,483
on what Bitcoin did,

1139
01:07:29,483 --> 01:07:31,082
you must have been on 25 times

1140
01:07:31,082 --> 01:07:32,043
or something crazy like that.

1141
01:07:32,263 --> 01:07:34,503
And I don't think we've ever really talked about you.

1142
01:07:34,683 --> 01:07:36,343
It's always about macro.

1143
01:07:36,343 --> 01:07:37,783
And when we were at dinner last night,

1144
01:07:38,383 --> 01:07:40,063
you've got a pretty crazy story.

1145
01:07:40,203 --> 01:07:42,883
Everyone knows you as one of the best macro analysts in the world,

1146
01:07:43,023 --> 01:07:44,723
but you came from very little.

1147
01:07:45,523 --> 01:07:46,823
Can you talk about your childhood?

1148
01:07:48,303 --> 01:07:49,303
I mean, it's a lot.

1149
01:07:50,403 --> 01:07:52,443
Yeah, I think there's a couple of podcasts where it's come up,

1150
01:07:52,483 --> 01:07:54,923
but he has not used something I kind of talk about a ton.

1151
01:07:56,423 --> 01:07:59,123
I mean, I was homeless for a few years as a kid

1152
01:07:59,123 --> 01:08:02,082
and then grew up in a trailer park is kind of the short of it.

1153
01:08:02,283 --> 01:08:03,623
How old were you when you were homeless?

1154
01:08:04,403 --> 01:08:05,883
Roughly four to seven.

1155
01:08:06,443 --> 01:08:06,943
That's crazy.

1156
01:08:06,963 --> 01:08:07,443
Give or take.

1157
01:08:07,843 --> 01:08:09,683
And so you were on this,

1158
01:08:09,823 --> 01:08:11,063
were you living literally on the street

1159
01:08:11,063 --> 01:08:11,643
when you were homeless?

1160
01:08:12,582 --> 01:08:13,823
So it started out,

1161
01:08:13,963 --> 01:08:16,523
first we were living with my aunt.

1162
01:08:17,023 --> 01:08:19,523
Then we left and we were living in a homeless shelter

1163
01:08:19,523 --> 01:08:21,143
and a couple of different homeless shelters.

1164
01:08:21,683 --> 01:08:24,442
Then we lived in a motel, like a cheap motel.

1165
01:08:24,923 --> 01:08:27,643
And then at the last stretch, we were living in a car.

1166
01:08:28,523 --> 01:08:30,583
And like we would, for example, to bathe,

1167
01:08:30,683 --> 01:08:32,683
we would sneak into a public restroom

1168
01:08:32,683 --> 01:08:34,803
and crack a dawn before anyone's there

1169
01:08:34,803 --> 01:08:36,783
and clean ourselves off.

1170
01:08:37,423 --> 01:08:39,803
So not quite like street street,

1171
01:08:40,583 --> 01:08:42,723
like not like, but if you're in a car

1172
01:08:42,723 --> 01:08:44,482
and it wasn't like a camper,

1173
01:08:44,602 --> 01:08:46,042
it was like a sedan.

1174
01:08:46,623 --> 01:08:48,423
Like, so yeah, living in a sedan.

1175
01:08:48,783 --> 01:08:50,523
Whenever you like look back at your childhood,

1176
01:08:50,723 --> 01:08:52,903
like I had a great childhood, very privileged,

1177
01:08:53,223 --> 01:08:55,703
but I think you always look back on it

1178
01:08:55,703 --> 01:08:57,442
and you remember this good times.

1179
01:08:57,843 --> 01:08:59,623
Are there any parts you look back on that fondly?

1180
01:08:59,623 --> 01:09:08,683
um well some like when we were in the homeless shelters especially because we were we were in

1181
01:09:08,683 --> 01:09:13,203
two different states the the first phase of it wasn't that bad it wasn't a very crowded shelter

1182
01:09:13,203 --> 01:09:20,163
there were other kids there um and so it didn't feel that normal from a kid's perspective you can

1183
01:09:20,163 --> 01:09:25,163
like kids don't need a ton if they feel safe and did you feel safe i did feel safe that's the thing

1184
01:09:25,163 --> 01:09:27,002
I felt safe at that time.

1185
01:09:28,183 --> 01:09:29,223
Wasn't like actively,

1186
01:09:29,542 --> 01:09:31,883
never got to the point where I didn't have enough to eat.

1187
01:09:32,403 --> 01:09:34,423
So it wasn't like third world poverty.

1188
01:09:34,623 --> 01:09:36,703
It was like developed world homelessness

1189
01:09:36,703 --> 01:09:39,903
and not the most extreme kind.

1190
01:09:41,542 --> 01:09:45,263
But that, it didn't, yeah, it was totally,

1191
01:09:45,383 --> 01:09:46,023
certainly workable.

1192
01:09:46,323 --> 01:09:49,462
I think the bigger issue was conflict between my parents.

1193
01:09:49,502 --> 01:09:52,083
That's the part that a kid gets kind of tuned in to,

1194
01:09:52,223 --> 01:09:53,783
not necessarily the physical stuff.

1195
01:09:53,783 --> 01:09:57,263
once we kind of got into the motel

1196
01:09:57,263 --> 01:09:59,563
and then the, especially the car

1197
01:09:59,563 --> 01:10:01,402
that's when it becomes a lot less

1198
01:10:01,402 --> 01:10:03,763
even for a kid, a lot less fun

1199
01:10:03,763 --> 01:10:05,743
and is this why you got into MMA?

1200
01:10:06,102 --> 01:10:07,803
was it like an idea of defending yourself

1201
01:10:07,803 --> 01:10:09,283
while you were living in these places?

1202
01:10:10,323 --> 01:10:11,482
that might have been part of it

1203
01:10:11,482 --> 01:10:14,323
I think it's actually contributed to why I got into investing

1204
01:10:14,323 --> 01:10:17,643
because from my, when I went to go

1205
01:10:17,643 --> 01:10:20,083
so all that homelessness I was living with my mother

1206
01:10:20,083 --> 01:10:23,683
it got so bad that I went to go live with my elderly father

1207
01:10:23,683 --> 01:10:30,902
um and in his trailer um and from that point on i was like a super saver like if i got christmas

1208
01:10:30,902 --> 01:10:36,743
money or i got easter money or i um got allowance i would save it i even got into precious metal

1209
01:10:36,743 --> 01:10:42,442
collecting like literally as a kid no yeah little little uh silver coins and eventually like little

1210
01:10:42,442 --> 01:10:48,002
like um one tenth ounce or up to like a half ounce gold coin this is back when gold was only like

1211
01:10:48,002 --> 01:10:48,902
$300 an ounce.

1212
01:10:50,243 --> 01:10:52,643
So I was a little bit of a coin collector.

1213
01:10:53,243 --> 01:10:55,223
I could have told you about inflation back then.

1214
01:10:55,523 --> 01:10:55,803
No way.

1215
01:10:55,863 --> 01:10:57,183
Yeah, I was just for whatever reason.

1216
01:10:57,703 --> 01:11:00,523
Did you keep any of those coins as like a momentum from then?

1217
01:11:00,843 --> 01:11:02,523
I held them until 2011.

1218
01:11:02,783 --> 01:11:04,982
It was the only time I ever sold physical precious metal

1219
01:11:04,982 --> 01:11:05,763
because it was like a bubble.

1220
01:11:06,763 --> 01:11:09,023
So I actually sold my precious metal collection then.

1221
01:11:09,563 --> 01:11:11,523
I eventually rebuilt it much larger.

1222
01:11:11,523 --> 01:11:15,523
But yeah, for years I had coins.

1223
01:11:16,183 --> 01:11:17,423
And then I got into, when I was a teenager,

1224
01:11:17,423 --> 01:11:18,523
I got into equity investing.

1225
01:11:18,623 --> 01:11:19,583
And I think a lot of that was

1226
01:11:19,583 --> 01:11:21,203
because I went through this period of instability.

1227
01:11:22,183 --> 01:11:24,303
So I think the pendulum for me,

1228
01:11:24,803 --> 01:11:26,303
you know, like how people in the Great Depression,

1229
01:11:26,523 --> 01:11:27,502
to use a more extreme example,

1230
01:11:27,942 --> 01:11:29,123
like you'll have like a grant,

1231
01:11:29,243 --> 01:11:30,442
like especially in the US,

1232
01:11:30,502 --> 01:11:31,363
we'll have like a grandparent

1233
01:11:31,363 --> 01:11:32,703
that like saves the rubber bands

1234
01:11:32,703 --> 01:11:33,883
where like never,

1235
01:11:34,002 --> 01:11:35,123
this never throws anything out.

1236
01:11:35,203 --> 01:11:36,083
It's super economical

1237
01:11:36,083 --> 01:11:37,902
because they lived through the Great Depression

1238
01:11:37,902 --> 01:11:39,243
or they were a kid through the Great Depression.

1239
01:11:39,243 --> 01:11:40,863
So it's kind of got imprinted on them.

1240
01:11:41,042 --> 01:11:41,703
Waste not, want not.

1241
01:11:41,902 --> 01:11:42,223
Exactly.

1242
01:11:42,223 --> 01:11:44,723
So I never developed that tendency,

1243
01:11:45,203 --> 01:11:47,323
but I did develop like a high savings tendency

1244
01:11:47,323 --> 01:11:53,123
from literally childhood, I think in part because I was used to chaos and wanted less chaos.

1245
01:11:53,523 --> 01:11:56,643
And so how do you go from there to, you know, going through college,

1246
01:11:56,723 --> 01:11:58,982
college is expensive in America. Like what happened there?

1247
01:12:00,123 --> 01:12:06,442
So my dad helped with the first year of college. After that, it was all student debt and part-time

1248
01:12:06,442 --> 01:12:10,723
jobs. So I had to work my way through college, which is, I mean, it's especially if you're doing

1249
01:12:10,723 --> 01:12:17,482
an engineering program i mean they're not they're not easy so it's um uh like i was envious of the

1250
01:12:17,482 --> 01:12:22,803
kids they could just you know they just it was all covered for them they had no debt yeah uh for me

1251
01:12:22,803 --> 01:12:27,343
it always kind of felt like i was on a timeline i always had to you know try to find time for it

1252
01:12:27,343 --> 01:12:33,883
but yeah i was working my way through college graduated got a job had uh 50 000 in debt which

1253
01:12:33,883 --> 01:12:39,323
i mean today is probably the equivalent of like 90 000 in debt yeah um like it was equivalent to

1254
01:12:39,323 --> 01:12:43,803
like basically a full year's gross pay. But of course, when you factor in your own expenses and

1255
01:12:43,803 --> 01:12:49,863
everything, that takes many, many years to pay off. So then I just, over time, gradually paid

1256
01:12:49,863 --> 01:12:54,123
off the student loans while continuing to invest and just kind of snowballed. So if as someone who

1257
01:12:54,123 --> 01:12:58,602
was investing from really young, why did you not go into that as a field? Why did you choose to go

1258
01:12:58,602 --> 01:13:05,563
into engineering? I was torn. I, when I came down to university, I was like either finance or

1259
01:13:05,563 --> 01:13:10,042
engineering um i had always in school i'd always been interested in kind of the math and science

1260
01:13:10,042 --> 01:13:18,823
classes um and for whatever reason it was kind of arbitrary to pick engineering um but then i over

1261
01:13:18,823 --> 01:13:25,423
time i found out that my heart was in finance um like for example there were like other kids and

1262
01:13:25,423 --> 01:13:30,442
other other students in university they'd already been like building circuits and stuff in like high

1263
01:13:30,442 --> 01:13:35,523
school and i was like oh you're like a real engineer like like i'm just showing up like

1264
01:13:35,523 --> 01:13:42,442
so i never was like a hardcore like super engineer um when i eventually graduated

1265
01:13:42,442 --> 01:13:48,303
uh i eventually um you know like for me it was the com it was engineering like we were building

1266
01:13:48,303 --> 01:13:52,883
aircraft simulators but from the beginning i kind of realized i want to do a hybrid approach i want

1267
01:13:52,883 --> 01:13:56,323
to be an engineer but i would eventually want to get like say maybe a master's in business

1268
01:13:56,323 --> 01:13:58,303
and then be like a manager of engineers

1269
01:13:58,303 --> 01:14:01,263
or managing the finances of like an engineering facility.

1270
01:14:01,383 --> 01:14:03,502
Kind of the hybrid technical decision

1271
01:14:03,502 --> 01:14:05,902
and kind of more business, that hybrid.

1272
01:14:06,442 --> 01:14:09,243
So I said, okay, I'm a decent engineer,

1273
01:14:09,402 --> 01:14:10,942
but I'm not the type of engineer

1274
01:14:10,942 --> 01:14:12,402
that's clearly born to be an engineer.

1275
01:14:12,843 --> 01:14:14,102
They're just absolute psychos.

1276
01:14:14,663 --> 01:14:16,743
And I'm like, I'm good, but I'm not like a psycho.

1277
01:14:17,663 --> 01:14:19,803
But I was the kid that was like watching.

1278
01:14:19,803 --> 01:14:23,363
When I was like eight, I could tell you what the Nikkei was

1279
01:14:23,363 --> 01:14:25,743
and what the price level was of the Nikkei.

1280
01:14:25,743 --> 01:14:29,002
because i would watch the financial section of news i was like that i was like that i was like

1281
01:14:29,002 --> 01:14:33,743
that kind of psycho so i was like okay clearly i have to get more into finance so in my engineering

1282
01:14:33,743 --> 01:14:40,502
job i gradually transitioned it toward um managing uh engineers and running the finances of the

1283
01:14:40,502 --> 01:14:46,442
engineering facility making kind of big technical financial decisions um while i was writing about

1284
01:14:46,442 --> 01:14:52,203
investing in the early kind of blogging days of the internet um and i had like a little blog about

1285
01:14:52,203 --> 01:14:56,923
stocks and I eventually sold it to a larger publisher. And then at some point I started

1286
01:14:56,923 --> 01:15:01,643
LyndAlden.com and it just grew so big. I had to leave my engineering work.

1287
01:15:02,002 --> 01:15:06,602
Why do you think there's such a crossover between Bitcoin and engineers? Like Michael

1288
01:15:06,602 --> 01:15:09,623
Sayles is an engineer. You are. Checkmate. I'm sure there's a ton of others that I can't

1289
01:15:09,623 --> 01:15:11,482
think of, but there seems to be a real crossover there.

1290
01:15:12,482 --> 01:15:18,623
I mean, I think because Bitcoin is a hybrid of finance and tech. I mean, in order to assess

1291
01:15:18,623 --> 01:15:24,283
it you have to have at least a decent understanding of its tech i know if you're because i mean if

1292
01:15:24,283 --> 01:15:29,563
you're comparing one is can this thing even work two okay now there's thousands of altcoins and

1293
01:15:29,563 --> 01:15:32,962
they're all claiming to be the next bitcoin or better than bitcoin or they fix you know bitcoin

1294
01:15:32,962 --> 01:15:38,502
is too slow we have to yeah so you have to build a set okay what are the trade-offs then uh how do

1295
01:15:38,502 --> 01:15:43,423
network effects and protocols historically develop uh what what you know what are what are these other

1296
01:15:43,423 --> 01:15:49,083
coin sacrificing to be quote unquote faster, more programmable and all this, um, that requires some

1297
01:15:49,083 --> 01:15:56,383
degree of, of technical knowledge. Um, so it's inherently multidiscipline field. So engineers

1298
01:15:56,383 --> 01:16:02,482
that also like finance is kind of the perfect background to find Bitcoin and sort of appreciate

1299
01:16:02,482 --> 01:16:08,002
it. And I think I'm right in saying you first started writing about Bitcoin in like 2017. Is

1300
01:16:08,002 --> 01:16:12,783
that right? That was the first article. Yeah. But you, you weren't really all in Bitcoin in a sense

1301
01:16:12,783 --> 01:16:14,363
until maybe 2020, 2021.

1302
01:16:14,623 --> 01:16:15,042
Is that right?

1303
01:16:15,442 --> 01:16:17,663
It was the 2019, 2020 period.

1304
01:16:17,803 --> 01:16:19,743
Yeah, so I wrote about in 2017.

1305
01:16:20,002 --> 01:16:20,602
And by that point,

1306
01:16:20,602 --> 01:16:22,203
I was convinced on the fundamentals.

1307
01:16:23,423 --> 01:16:25,803
I still, I had two main hangups at the time.

1308
01:16:25,902 --> 01:16:28,663
One was I wasn't sure

1309
01:16:28,663 --> 01:16:30,223
that the network effects would be strong enough

1310
01:16:30,223 --> 01:16:31,843
so that, okay, there's Bitcoin.

1311
01:16:32,163 --> 01:16:33,763
That was also when Bitcoin Cash was,

1312
01:16:34,102 --> 01:16:36,083
and I hadn't done like a thousand hours on that.

1313
01:16:36,942 --> 01:16:38,542
Ethereum was really big.

1314
01:16:38,803 --> 01:16:41,002
And I was like, I don't know five years from now

1315
01:16:41,002 --> 01:16:42,102
what the market share,

1316
01:16:42,102 --> 01:16:46,602
how fractured the market share is going to be with all the different coins um so that was number

1317
01:16:46,602 --> 01:16:51,763
one and number two i was like okay in in late 2017 i'm like these are this is a bubble you know

1318
01:16:51,763 --> 01:16:55,583
might not be the end of the world bubble but this is i mean this is a very euphoric pricing so i was

1319
01:16:55,583 --> 01:17:01,803
like not gonna i was like interesting tech not gonna touch it but what i did was that in in so

1320
01:17:01,803 --> 01:17:07,683
before that i had watched prior cycles i saw like the i knew someone who mined it in 2010 and i was

1321
01:17:07,683 --> 01:17:11,962
like oh that's neat it's super cool but i just i don't know i didn't i was like i i was always like

1322
01:17:11,962 --> 01:17:15,102
i should look more into that i was never like dismissive i was like oh that's neat i should

1323
01:17:15,102 --> 01:17:19,683
look more into that i just don't and then cycle comes and goes and then it was like the 2013

1324
01:17:19,683 --> 01:17:23,383
kind of cycle and i was like oh it's like the like the cool like libertarian money that's you know

1325
01:17:23,383 --> 01:17:30,442
i hope they do well and it's kind of yeah i didn't follow up on it but in 2017 when we had that kind

1326
01:17:30,442 --> 01:17:35,123
of third it was like my third kind of awareness i was like i'm not going to just forget about it

1327
01:17:35,123 --> 01:17:40,663
this time so then i was correct and it did have a big correction it did do a long stretch of

1328
01:17:40,663 --> 01:17:47,102
underperforming most other assets but i watched the blocks as were play out um i i kind of

1329
01:17:47,102 --> 01:17:53,843
kept thinking about how to analyze how to value it um and so by 2019 i started to get pretty

1330
01:17:53,843 --> 01:17:59,123
convinced and i was kind of like but what's a good entry and then covid happened and i was like well

1331
01:17:59,123 --> 01:18:03,102
that's my entry so i mean that's a pretty good entry that's still my proudest buy i think it was

1332
01:18:03,102 --> 01:18:04,883
March 9th, 2020.

1333
01:18:05,042 --> 01:18:05,442
That's good.

1334
01:18:05,583 --> 01:18:07,402
I got it in April.

1335
01:18:07,663 --> 01:18:10,002
So it hit the bottom and it's coming back up.

1336
01:18:10,462 --> 01:18:12,383
And because I had a long stretch of history

1337
01:18:12,383 --> 01:18:14,143
of kind of investing in precious metals,

1338
01:18:14,723 --> 01:18:16,283
I mean, silver had a big drop.

1339
01:18:16,423 --> 01:18:18,523
Gold had a big drop, a smaller drop than silver,

1340
01:18:18,583 --> 01:18:20,002
but silver was like a really brutal

1341
01:18:20,002 --> 01:18:22,063
and a Bitcoin was behaving just like them.

1342
01:18:22,463 --> 01:18:24,623
So when they kind of the V shape happened,

1343
01:18:24,683 --> 01:18:26,883
I was like, I see, like I could sell it

1344
01:18:26,883 --> 01:18:27,663
where this was going to go.

1345
01:18:27,783 --> 01:18:30,502
So I got in pretty heavily in April and afterward.

1346
01:18:30,502 --> 01:18:36,402
When you see your friends from the engineering days, are they weirded out that you're this like micro superstar now?

1347
01:18:37,402 --> 01:18:42,502
I don't think so. I mean, I, you know, I think you always see people, you know, the same way.

1348
01:18:43,442 --> 01:18:53,362
And also we're in kind of a bubble. Like, you know, it's funny to them that they can see me on YouTube everywhere and like crazy number of followers on social media and stuff.

1349
01:18:54,123 --> 01:18:59,663
But we're, you know, people outside of our niche, you know, we're like little micro celebrities, you know.

1350
01:18:59,663 --> 01:19:01,982
I think you're kind of outside the niche, though.

1351
01:19:02,163 --> 01:19:03,703
You're in multiple niches, at least.

1352
01:19:04,063 --> 01:19:04,823
Multiple, but yeah.

1353
01:19:04,923 --> 01:19:06,703
I mean, I think they find it interesting.

1354
01:19:07,583 --> 01:19:10,263
But yeah, it's just nice catching up with them.

1355
01:19:10,683 --> 01:19:12,823
And when did sci-fi come into this?

1356
01:19:13,963 --> 01:19:14,643
Oh, yeah.

1357
01:19:14,862 --> 01:19:16,482
We've got to plug the new book.

1358
01:19:16,602 --> 01:19:17,723
Plug the new book, sci-fi.

1359
01:19:17,963 --> 01:19:18,843
The Stolgard incident.

1360
01:19:19,042 --> 01:19:20,203
I wrote a sci-fi book.

1361
01:19:20,463 --> 01:19:22,042
I told you I've started reading this,

1362
01:19:22,123 --> 01:19:23,463
but I need to read it when I'm not going to bed

1363
01:19:23,463 --> 01:19:24,523
so I can actually concentrate.

1364
01:19:25,002 --> 01:19:27,623
Yeah, it's not one of those light beach reads.

1365
01:19:27,623 --> 01:19:27,883
No.

1366
01:19:27,883 --> 01:19:33,123
It's pretty dark and pretty, but I, so I, I mean, I've long been interested in the kind

1367
01:19:33,123 --> 01:19:33,482
of fiction.

1368
01:19:35,042 --> 01:19:39,743
And I, I mean, the story idea for that, it's been in my head for well over a decade, but

1369
01:19:39,743 --> 01:19:41,783
I was like, when am I possibly going to find time?

1370
01:19:42,123 --> 01:19:47,063
Cause I was like, working in engineering while also on the side, writing about investing.

1371
01:19:47,063 --> 01:19:48,482
And then eventually that took off.

1372
01:19:48,482 --> 01:19:52,542
Then I was like, then I was adding, I got into venture investing with Ego Death Capital.

1373
01:19:52,542 --> 01:19:55,283
I sit on boards of companies

1374
01:19:55,283 --> 01:19:58,263
I'm like when am I possibly going to find time to write

1375
01:19:58,263 --> 01:20:01,683
but in 2024 I wanted to just kind of

1376
01:20:01,683 --> 01:20:04,183
improve work life balance a little bit

1377
01:20:04,183 --> 01:20:07,163
and then also just because of

1378
01:20:07,163 --> 01:20:11,843
just kind of logistics I had a little bit more time in the evenings for a period of time

1379
01:20:11,843 --> 01:20:14,323
as I finally was like you know what I'm actually going to write the

1380
01:20:14,323 --> 01:20:17,283
thing that's been distracting in my head for quite a while

1381
01:20:17,283 --> 01:20:19,143
Did you use AI at all to write it?

1382
01:20:19,143 --> 01:20:22,002
Nope. All your hard work, that's the way.

1383
01:20:22,002 --> 01:20:28,402
just me i used ai as like a research assistant so i would like for example vr virtual realities in

1384
01:20:28,402 --> 01:20:36,723
there or uh gene editing or um uh like how good will batteries look in 50 years right uh like i

1385
01:20:36,723 --> 01:20:41,203
have an engineering background but i mean these these multiple it's a multi-discipline thing so

1386
01:20:41,203 --> 01:20:46,243
i would say like okay what is like here's my conception of vr in the 2070s like what do you

1387
01:20:46,243 --> 01:20:51,243
do you think of this and the ai would you know give me its analysis or or like how energy dense

1388
01:20:51,243 --> 01:20:58,763
could batteries be in the 2070s and what type of batteries are they likely to be um or here's this

1389
01:20:58,763 --> 01:21:03,402
laser design does this make sense so it was like a useful it's kind of a second search engine or

1390
01:21:03,402 --> 01:21:09,663
research assistant um sometimes i'd also i would give it a chapter and be like like what do you

1391
01:21:09,663 --> 01:21:13,563
think of these characters like do it do an analysis of this chapter or something like that

1392
01:21:13,563 --> 01:21:15,102
It's kind of almost like a beta reader.

1393
01:21:16,402 --> 01:21:19,102
Or I would say, do you see any, you know, proofread this?

1394
01:21:19,163 --> 01:21:20,643
Do you see any like obvious errors?

1395
01:21:21,442 --> 01:21:24,623
I still gave it to human editors, but it's like, you know.

1396
01:21:24,743 --> 01:21:25,583
It's like the first cut.

1397
01:21:25,763 --> 01:21:30,482
Yeah, the less time editors have to find periods and, you know, misspellings,

1398
01:21:30,563 --> 01:21:32,383
the more time they can focus on substance.

1399
01:21:33,002 --> 01:21:33,463
It's funny.

1400
01:21:33,623 --> 01:21:35,102
I was excited to read this book anyway,

1401
01:21:35,203 --> 01:21:36,683
but we were at dinner the other night with Eric Herzman,

1402
01:21:36,803 --> 01:21:39,982
and I was going down my Matthew Pines conspiracy crazy shit.

1403
01:21:39,982 --> 01:21:42,763
And every time I mentioned something, you were like, read the book.

1404
01:21:43,183 --> 01:21:43,223
Yeah.

1405
01:21:43,262 --> 01:21:44,922
So I'm very excited now.

1406
01:21:45,602 --> 01:21:49,322
I say on behalf of everyone, it's really annoying that you can just do everything.

1407
01:21:49,802 --> 01:21:50,802
I can't do everything.

1408
01:21:50,882 --> 01:21:53,882
Like, how do you just pump out what I'm sure is an incredible sci-fi book?

1409
01:21:54,222 --> 01:21:55,342
How long did it take you?

1410
01:21:55,802 --> 01:22:00,982
So actually, the funny thing with both this and Broken Money is the actual writing process

1411
01:22:00,982 --> 01:22:01,802
was very quick.

1412
01:22:01,922 --> 01:22:06,982
Because with Broken Money, I had been thinking about doing a book for a while, but books

1413
01:22:06,982 --> 01:22:08,982
are super tedious.

1414
01:22:10,102 --> 01:22:11,962
Nobody should really write books for money.

1415
01:22:11,962 --> 01:22:16,222
if you work in finance like books are not where money is not a good investment not a good investment

1416
01:22:16,222 --> 01:22:19,862
um so my my strategy was don't write a book unless you feel like you have to

1417
01:22:19,862 --> 01:22:24,942
uh and we've broken money like the pillars the core concepts is built in my head so much

1418
01:22:24,942 --> 01:22:30,902
the book was there and it became more distracting not to write it okay like i had to just get it out

1419
01:22:30,902 --> 01:22:36,142
so by the time i actually go to write it it took six months to write it and another six months of

1420
01:22:36,142 --> 01:22:41,982
polishing it and literally within a year broken money's out and it's it's rather polished 500

1421
01:22:41,982 --> 01:22:46,382
page finance book but it's based on years of research but the actual process was actually

1422
01:22:46,382 --> 01:22:51,502
surprisingly quick and i was i was so passionate about it that it was like just hours and hours of

1423
01:22:51,502 --> 01:22:55,922
like late night just grinding and it just kind of came together very quickly like a fire hose

1424
01:22:55,922 --> 01:23:01,422
and this was kind of the same way which was the first draft was little over two months

1425
01:23:01,422 --> 01:23:04,442
to write a 400 plus page book.

1426
01:23:04,962 --> 01:23:06,482
I added a couple more chapters

1427
01:23:06,482 --> 01:23:09,182
in like the month or two after that.

1428
01:23:09,802 --> 01:23:12,622
But then actually that took a longer refining process

1429
01:23:12,622 --> 01:23:13,602
than even broken money

1430
01:23:13,602 --> 01:23:16,902
because fiction is not my expertise.

1431
01:23:17,962 --> 01:23:20,542
So that went through like broken money

1432
01:23:20,542 --> 01:23:22,642
and went through fewer rounds of editing

1433
01:23:22,642 --> 01:23:24,082
and fewer beta readers

1434
01:23:24,082 --> 01:23:25,742
because I was more sure of it from the beginning.

1435
01:23:26,222 --> 01:23:29,242
This was like writing exactly in my area of knowledge.

1436
01:23:29,242 --> 01:23:45,772
So other than a handful of people seeing it I just knew it would go out and just kind of people would experience it the way i experienced it whereas this one because it fiction i was like i have to get more eyes on this i have to go through more iterations i have to have editors that can

1437
01:23:45,772 --> 01:23:51,632
make sure that my prose is like in line with with genre conventions and things like that so

1438
01:23:51,632 --> 01:23:58,932
it was a shorter writing period but then a very like a year plus long revision period which one

1439
01:23:58,932 --> 01:24:05,512
more enjoyable to write? Actually equal. They both, both of them, the, the, what they had in

1440
01:24:05,512 --> 01:24:10,632
common was that they both consumed me when I was writing them. They like, I wanted to like get other

1441
01:24:10,632 --> 01:24:17,472
work done so that I could like work on my book that night, um, for both cases. So if anyone is

1442
01:24:17,472 --> 01:24:22,152
interested, what's like, what's the premise? How do, how do we hook people in? Uh, the premise is

1443
01:24:22,152 --> 01:24:28,272
near future. Um, and it's not a dystopian world, but it's kind of like our world further along into

1444
01:24:28,272 --> 01:24:30,272
like surveillance and AI.

1445
01:24:30,732 --> 01:24:31,732
It's like a Black Mirror episode.

1446
01:24:32,012 --> 01:24:32,472
Yeah, kind of.

1447
01:24:32,532 --> 01:24:33,412
It's a Black Mirror episode.

1448
01:24:34,072 --> 01:24:35,292
But it's action oriented

1449
01:24:35,292 --> 01:24:36,352
because basically what happens

1450
01:24:36,352 --> 01:24:39,532
is a terrorist with strange abilities

1451
01:24:39,532 --> 01:24:42,892
starts kind of doing a series of violent attacks.

1452
01:24:43,652 --> 01:24:47,272
And this investigator tries to figure out

1453
01:24:47,272 --> 01:24:49,552
why she's doing it and to find and stop her.

1454
01:24:49,732 --> 01:24:51,312
And there's a rabbit hole that they go down.

1455
01:24:51,572 --> 01:24:52,012
I love it.

1456
01:24:52,092 --> 01:24:52,892
I've started the book.

1457
01:24:52,972 --> 01:24:54,052
I've got a long flight coming up.

1458
01:24:54,112 --> 01:24:56,232
So hopefully I can get through a big chunk of it.

1459
01:24:56,232 --> 01:24:59,072
But go and check out the Stolgard incident.

1460
01:25:00,072 --> 01:25:00,592
Buy it.

1461
01:25:01,232 --> 01:25:01,832
Thank you, Lynn.

1462
01:25:02,132 --> 01:25:02,712
You're awesome.

1463
01:25:02,912 --> 01:25:03,512
This has been fun.

1464
01:25:04,312 --> 01:25:06,132
Anywhere else you want to send anyone apart from the book?

1465
01:25:06,572 --> 01:25:07,872
People can go to lynnaldon.com.

1466
01:25:08,112 --> 01:25:09,192
But yeah, I think they know where to find you.

1467
01:25:09,212 --> 01:25:09,932
They need to buy the book.

1468
01:25:10,012 --> 01:25:10,692
They know where to find you.

1469
01:25:10,772 --> 01:25:11,232
Thank you, Lynn.

1470
01:25:26,232 --> 01:25:56,212
Thank you.