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You've had a dynamic where money has become freer than free.

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You talk about a Fed just gone nuts.

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All the central banks going nuts.

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So it's all acting like safe haven.

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I believe that in a world where central bankers are tripping over themselves to devalue their currency,

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Bitcoin wins.

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In the world of fiat currencies, Bitcoin is the victor.

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I mean, that's part of the bull case for Bitcoin.

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If you're not paying attention, you probably should be.

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Robert, thank you.

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Thank you for joining me, sir.

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Yeah, good to be here.

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We got introduced by a mutual friend, Roberto, formerly known as and still known as popularly as Peruvian Bull.

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He reached out and showed us the email said, had to talk to you.

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We've been going back and forth a little bit through email.

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this week and just really excited to touch on some of the topics that you're focused on and

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passionate about globalization, silent depression, Triffin's dilemma. And as we were discussing right

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before we hit record, let's start with globalization. Because obviously, I think this year, particularly,

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we're seeing political reactions to globalization in the form of tariffs and economic policy

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here in the United States making big shifts. And so let's start with globalization. How did it get

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to this point? And where do you see it going in the future?

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Yeah. So really started in the 80s, at least from what I can gather from

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balance of trade, current account data. Started in the 80s. And basically, what we did was we

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offshored over 5 million high-paying manufacturing jobs in critical industries to the rest of the

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world. And the reason that this was done was the labor in the developing emerging market economies

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is much lower. And so if you're a multinational corporation, you're able to increase your profit

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margin significantly by utilizing that cheaper labor despite being an American company and

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eventually selling your goods in America and benefiting from the American people.

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So yeah, it started in the 80s and it also kind of coincided with some of the silent

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depression stuff.

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There were clearly some immigration policy, even under Reagan, under both political parties,

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that kind of started to exacerbate some of the wealth dynamics that we started to see.

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But the other side to a trade deficit that many people don't talk about,

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they're talking about it more recently, which I appreciate, is this capital account.

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So if you are running a current account deficit, as the U.S. has,

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there is an opposite side to that, which is a capital account.

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And so we've been running a current account surplus,

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meaning we are importing the value of goods that we are importing is higher than the amount of

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goods, the value of goods that we're providing to the rest of the world. And the way that you

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balance that current account is by an inflow of capital. And so this, you know, kind of goes into

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the Dutch disease dynamics with the dollar where, you know, certain industries have done very,

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very well from this. You think FIRE, right, is the little acronym that gets thrown around finance,

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insurance, real estate. If you are a MIT grad in engineering, you're not going to build rockets

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for NASA. You're going to build an algorithm for Jane Street. Certain industries have done very

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well. With these billions and billions, hundreds of billions, cumulative, it has worked out to be

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trillions of dollars, tens of trillions of dollars actually, in capital inflows. This can be

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real estate. This can be equities, corporate equities, the U.S. stock market. This can also

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be treasury bonds, of course. And certain industries have done exceedingly well. And I

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would also point out those that are wealthy enough to afford to own financial assets have also done

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well as not only the corporate profit margin has been boosted due to that cheaper labor boosting

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the profit margin for the corporation, but also due to the structural dollar bid.

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And this is part of the reason the dollar has become kind of so grossly overvalued.

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And as the dollar continues to appreciate, our goods become less and less competitive

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in the rest of the world.

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So there's a lot of kind of concepts interlinked there.

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But I think it ties in well to some of the tariff dynamics that we're seeing now, you

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know, a rise of what I would call, I wouldn't call it protectionism so much as I would call it

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economic nationalism. You know, for the longest time, we, for some reason, our policymakers

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worried more about building the middle class of Indonesia and Malaysia and China and India,

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than they worried about building the middle class here. You know, and of course, traditionally,

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you know, manufacturing jobs, you know, were kind of the core, the cornerstone of the kind of

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post-World War II American dream. The family, especially in the Rust Belt, we've seen

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that area have been absolutely decimated. And this has led to not only the economic and financial

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consequences with this kind of huge amount, tens of trillions of dollars coming into

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capital markets, boosting the value of, say, stocks and keeping bond yields low,

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boosting the dollar, of course, and real estate. Not only that, but you also have this dynamic where

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you know, socially in America, we see the highest suicide rate going all the way back to the Great

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Depression. We see deaths of despair that are double the rate that they were during the Great

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Depression. So deaths of despair being defined as suicides plus drug overdose. We know that,

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you know, the prior industrial heart of America in the Rust Belt, it was especially hit during the

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opioid crisis. And, you know, I think a lot of these concepts are kind of interlinked and it

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goes into the issues with the dollar.

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You know, Dutch disease, I think,

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refers much more to the benefit

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for certain industries, right?

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The Netherlands discovered this great natural gas field

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that was going to revolutionize,

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you know, boost their economic output.

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Well, it ended up hollowing out,

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you know, all their other industries

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that had been core to their kind of economic success

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leading up to that.

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So, you know, we've seen this hyper-financialization

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of the economy.

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that's what's really driving the wealth inequality story

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is those who own financial assets and those who don't.

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The current account deficit, the trade deficit,

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is really great if you're one of the top 1%

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that own the vast majority of U.S. equities.

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The top 10% own 93% of household equity exposure.

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We know the bottom 50% have debt.

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that debt has skyrocketed in cost due to the interest rate hiking cycle. And meanwhile,

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the top 1% to 10%, they own financial assets. And financial assets have skyrocketed due in part to

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this current account deficit. I would say that the current account deficit on a quarterly basis

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is about $450 billion. And so if you take that down to per month, it's about $150 billion per

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month that mechanically must flow into the dollar and then financial assets within America. That's

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$150 billion a month is a significant amount of money. And, you know, per quarter that would build,

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I forget the exact number, I did the math, it was like eight or nine Ford class aircraft carriers,

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right? So it's a huge amount of money that we are, you know, needing to finance via other ways.

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And that gets into the Triffin dilemma with the need to run this current account deficit due to being the reserve currency issuer of the world.

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And so I think, you know, I'm not supportive of every single thing that Trump has done.

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But the one thing that I have been very outspoken in favor of is the tariffs and at least the attempt to start to address some of these issues.

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I mean, it ends up being a national security threat when our industrial capacity is so hollowed out that we rely on what a lot of people would consider to be an enemy for 65% of active pharmaceutical ingredients.

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Or we see on the defense side, we're losing a proxy war to a country with one-twelfth of our GDP.

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and then you look at the net international investment position which has accrued over

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many many years of this kind of prolonged current account deficit that nip refers to how much assets

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do we own of the rest of the world versus how much of our assets do they own and that's negative

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100 percent of GDP so it's it's a level I've looked for another kind of you know parallel to

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that. And I've never seen a parallel to that in history, which means all of our, whether it's U.S.

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Treasury debt, even corporate equities, to some degree, real estate as well. We saw in April what

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happens when foreigners start to dump U.S. dollar assets en masse. And it basically brought the

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president of the United States into capitulation on one of his core policy agenda proposals.

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So the power that that net international investment position being so insanely large in a negative direction, that power is immense.

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You know, foreigners literally own us to some degree.

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And, you know, we start to threaten tariffs.

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We put on tariffs and they don't like that.

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They can just start dumping treasuries and force Trump to capitulate.

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So there's a there's a number.

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I mean, we we didn't get here overnight.

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And a lot of these issues are interlinked.

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are linked, they're complex and they'll be difficult to fully unravel. But I do see positive

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steps in some of those areas. Yeah, this reminds me of a conversation I had with Lynn Alden

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a couple of months ago after, I believe, from May or June newsletter, which covered this

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sort of terrific, like the effects of Triffin's dilemma. You flood, you hollow out your

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manufacturing base, flood these emerging markets with dollars so that they can build the things

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that you're replacing. And then that flows back into financial assets. And I think what we sort of

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dug into is that works for a period of time, but eventually it falls under its own weight because

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you just have this imbalance socially, economically that exists domestically that is untenable.

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Yeah. Well, I would, I would argue that, uh, you know, looking at some of the societal KPIs,

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I'm a big, pretty outspoken on what I call GDP maximalism, right?

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This idea that GDP is the end-all be-all for measuring the success of an economy.

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I much prefer to look at real wages, for example, or the suicide rate, or drug overdose deaths

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and deaths of despair, kind of broadly speaking.

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I think antidepressant prescriptions, which have 13x'd in the past 50 years, some of those

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metrics are pointing to a very sick society. And I think we see that with the political polarization

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that, you know, to some degree, Trump is a symptom of, and I think it'll continue to get worse. I mean,

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we see kind of, you know, I said it before, Mom Donnie, but I warned people, I said,

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Trump is a, you know, your kind of populism, right? The kind of populism a lot of people might

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like, but be careful because, you know, the, the natural consequence of kind of all of these things

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is that we see the other side of, of, you know, left-wing populism. And sure enough,

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mom Donnie kind of came out of nowhere and, uh, you know, did really well there. So yeah,

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politically, I think, I think most of the issues we see in America are downstream from economics.

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Uh, and, and that is not just because I'm a, you know, a macroeconomic nerd, but because that's

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genuinely how the correlations that I found, you know, that's generally what the data supports,

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at least for me. And, you know, like at some point, like you said, it has to come to an end.

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Certain systems are not sustainable. And I would argue that a 7% pro cyclical deficit

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in combination with a 4.5% current account deficit, you know, is not sustainable in any

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in any reasonable world. And, you know, the unfortunate thing, you know, for us as Bitcoiners

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is, you know, Lynn is great, talks about broken money and fractional reserve and debt-based money

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and a lot of those concepts, which I think are great. I've been talking about this concept of

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kind of global broken money, which is that in trade, you know, going back hundreds of years,

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there have always been imbalances. There have always been countries that,

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you know, run a trade surplus versus another country. The release valve used to be when it

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was gold, gold backed money, the release valve used to be that the currency would move right to

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offset the currencies were valued on balance of payments. For example, the currency would move to

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offset that particular imbalance over time. You know, it's not an immediate overnight sort of

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thing, but over time, the currency would be this kind of equalizing equilibrium force.

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Well, that's completely broken down with the dollar's reserve status. The dollar,

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at least as of a couple months ago, is even more overvalued on a purchasing power parity basis

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than it was in 1985, leading into the Plaza Accord, when we saw this historic

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weakening of the dollar. So the dollar has kind of remained way too strong for way too long,

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and has just kind of exacerbated these issues. And if we had a neutral measuring stick against

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which to measure fairly on fundamental basis, the actual strength of currencies, we wouldn't see

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anywhere close to the degree of problems that we see. So that's one of the really unfortunate

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things. And sure enough, we have central banks, gold has been on the rise. My hope is that Bitcoin

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is joining that in terms of use as a reserve asset. The problem for America with something

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like a Bitcoin strategic reserve, however, is that because we run a twin deficit country,

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The only thing we can accumulate is debt.

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When you think of it in those terms I think most people would agree that not sustainable If we start issuing interest debt to buy Bitcoin for example then at some point China can just turn around and say look all those 65 of active pharmaceutical

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ingredients that you rely on us for to keep your people alive, well, we're only taking Bitcoin.

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And because we're a twin deficit nation, there's nothing we can do. So the Bitcoin ends up flowing

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out. A twin deficit nation by definition is kind of net unproductive. So really, we got to address

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kind of the deeper issue, in my opinion, which is why are we running this twin deficit? And what are

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some policies that can be done to address that actual underlying kind of root problem, if that

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makes sense? Yeah, it totally makes sense. And going back to what you said earlier about Trump's

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capitulation in April due to the dumping of treasuries, it seems since then. I mean,

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there are still some posturing, hard lines, policies, decisions being made in regards to

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tariffs, but it seems pretty clear a combination of Trump and Bessent specifically have sort of

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committed to this, we're going to grow out of the debt situation and really turn it on turbo.

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as Elon said a few months ago.

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And I guess that's the big question,

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like that capitulation, that recognition

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that the only way out is through is a bit unnerving.

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Yeah, I mean, I think it was November

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when Elon started talking,

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we're going to balance the budget.

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We're going to cut two trillion from the deficit.

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I did some math and granted,

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I don't have a PhD in economics.

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I'm no mathematician, right?

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But just this humble nerd's math

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found that balancing the budget would result in a GDP contraction worse than COVID and worse than

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2008. So, you know, I always kind of faded the doge thing because it just, number one,

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most of the spending, as you know, is entitlements and politically you can't really touch that.

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But then number two, like if you were to really cut that much government spending,

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it would result in a contraction of GDP so severe that it would throw us into a debt spiral.

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immediately. So I always kind of was skeptical of, I support it, right? Like on a personal level,

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I very much support cutting all that waste and fraud and abuse. But from a, you know, just pure

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objective accounting standpoint, one man's fraud is another man's income, right? That USAID worker

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who's getting fraudulent, wasteful money, right? They have a mortgage, they have a car loan, right?

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They have personal loans and credit cards, right?

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So they buy groceries, they buy insurance.

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So yeah, I was always skeptical.

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I was hopeful, right?

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Cautiously optimistic that they would cut something.

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But we look back and they cut like 1.6%,

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I think of the federal budget.

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So yeah, so I noticed that too,

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that pivot that you noted a couple months ago.

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I noticed that too, it was like all in one week,

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you had Besant, Elon, Chamath,

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all the key people coming out and basically publicly abandoning doge, right? Just like,

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yeah, we're not going to cut our way out of this. The step, the key, how we're going to win is to

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grow our way out. And I thought to myself, okay, so here's the negative real rate story, right?

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Like they're going to come in, they're going to propose, they're going to find some way,

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whether it's explicit QE, yield curve control, tinkering with regulatory levers like SLR and

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LCR, but they're going to find a way to get negative real rates. And, you know, that's kind

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of the direction I think things are headed in, generally speaking, for the next 12 months or so.

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It appears that they really want that negative real rate environment, especially in bills.

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And bills, you know, should be pointed out, that transition happened under the last administration

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with Yellen, and Besant was very critical.

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And I just did a video on the QRA, the most recent one.

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He is not changing the issuance schedule, right?

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So I think he recognizes the reality of the situation

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of the bond market, especially at the long end.

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But we're talking about a shift even more into bills.

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And what's important for that for people to understand is,

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and you can find this on TradingView, right?

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Pull up a single percentage chart, right, and throw on like a short-term bond ETF, TLT, and then like a five-year bond ETF.

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And you can see that the shorter duration bonds move very little compared to TLT, which has these big, massive moves.

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And that's due to convexity with the duration.

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but because the shorter term duration, the treasury bills, because those are less volatile,

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they can be levered much more easily and created into new dollars,

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treasuries being the collateral for kind of the global financial system.

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So it's very pro-liquidity.

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It's very stimulatory.

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I think inflation is going to pick up.

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I've been saying that for a couple months.

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And I think that this, the treasury bill kind of focus and the ease at which they can be so readily levered into new U.S. dollars, I think it's very pro-liquidity.

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The thing I would say, though, is I just want to know who's going to buy this negative 2.5% real yield Treasury bill.

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Because Trump's talking about taking the federal funds rate from 4.3 down to 1.

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He's talking about just massive cuts in the short-term rates.

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That would result in bills and shorter duration follow the Fed funds.

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and that would result,

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we're talking probably inflation's around three,

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maybe even 3.5 or four.

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So you're talking like significantly negative real rates.

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I just kind of want to know who's going to buy those.

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Maybe it's stable coins, I don't know.

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But who wants to take a guaranteed loss

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where you're losing two to three to 4% per year

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in inflation adjusted terms?

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And we know, of course,

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inflation is actually higher than CPI,

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so it's even worse.

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um so that clearly is their plan right and that's clearly like i think the direction that they're

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heading but um yeah for me i just kind of want to see like who's actually going to end up buying

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those because i i surely wouldn't want to no you touch on like such great points here number one

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like besan completely shifting face about the short end of the yield curve like berating

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yelling like the Trump admin gets in, like they messed up the curve. And then silently,

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sort of implicitly, like recognizing, all right, maybe that was a good idea,

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continuing with it. But to your broader point, and this is something that did not get enough

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coverage last year, but funnily enough, Noriel Robini co-wrote a paper basically explaining

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why the over-indexing or how the over-indexing on the short end of the curve is actually

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stimulatory. It's like stealth QE, essentially, in a way in which you described, because you can

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take that short-term paper and basically get dollars out of it and spend those or push those

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dollars into other assets. And so it's like stealth QE without saying QE. It's not the mechanics of

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QE as we know it. But I think the overarching point is like the system has gotten to such a

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point that politically you need to find those mechanisms to stimulate the economy and that

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they're doing on the short end of the yield curve and um the the other thing i wanted to bring up it's

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i lost it but like building on that um that theme oh it's the stable coins right like it seems like

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the genius act and they're gonna try like i don't i i think they're i don't know how certain they are

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But I think they're basically exploring all the options possible to drive demand to these things.

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And by really pushing the stablecoin narrative, which particularly here in the United States doesn't make any sense to me.

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Like, as an American citizen, my bank account works well.

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Cash app works well.

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I don't need stablecoins, but they're really trying to make fetch a thing with stablecoins.

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And I think what's underlying that is this need to drive demand for these treasury bills.

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yeah they need balance sheet uh to financially repress um they they need they need suckers at

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the car table you know uh as luke groman says they need to you know get those suckers at the

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car table uh to to repress them uh and look maybe foreigners are willing to take a guaranteed 2.5

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3 3.5 percent loss to to um i'm not sure i i you know i also think that uh it could weaken

283
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the dollar, I don't see how significantly negative real rates combined with a shift

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towards basically payday financing the government and just fully admitting, yeah, we're in fiscal

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dominance and we're going to run the Turkey. Central Bank has no independence, right? We're

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doing all the stuff with that. And the 1951 Fed Treasury Accord, we're basically reversing it,

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Right. I don't see how like any of those things are bullish for the dollar.

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And again, what I've been, I kind of got very bearish on the dollar, the Dixie back in like January.

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And it was for a number of reasons.

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But, you know, we've seen clearly kind of a bit of a short squeeze, you know, positioning got stretched and and whatnot.

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But I still think that like, you know, if you just look at incentives and Bitcoiners are big on incentives and we can see kind of through.

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lot of things by just looking at what are the incentives. As much as they may say they want a

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strong dollar, they want a weak dollar. Going to the point of the current account deficit and trade

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and re-industrialization, we need a significantly weaker dollar to make any of this viable.

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A 15% tariff is not going to suddenly make American manufacturing cost effective for the

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rest of the world when the currencies are, you know, 35 or 40% mispriced. And so, you know, I was

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one of kind of the first people talking about like some sort of accord, right? Like that's kind of

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their only option is to weaken the dollar sort of like plaza accord. And the reason was I watched,

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I think it was in like May or June of last year, Besant did a speech at the Manhattan Institute.

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and as soon as I got done watching it,

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I watched it again

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and I thought it was very notable

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that he mentioned monetary reordering

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three times during that speech

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and he said something like,

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and I want to be a part of it or something.

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I think that that inevitably is going,

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if they're serious about reindustrialization,

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they're going to need some sort of accord

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and when it first kind of came up as a topic,

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it didn't have that Mar-a-Lago Accord name,

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you know, like whatever it ends up being,

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is it a Mar-a-Lago Accord or, you know, the Hilton Accord?

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We need to weaken the dollar

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if they're serious about re-industrialization

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and that, you know, has consequences to it, right?

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Like all those cheap imports,

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all that cheap Alibaba plastic junk

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that Americans have been, you know, piling up,

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that gets more expensive. But the good news is that over kind of medium to long term,

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high paying manufacturing jobs hopefully come back. Now, I fully concede some degree of automation

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and robotics will make that difficult, right? Reshoring 5 million is out of the question,

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most likely. But even Bloomberg, which I take as kind of a pretty globalist leaning organization,

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even they were forced to admit, this was a couple months ago on the morning show,

325
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forced to admit that Apple, an assembly technician, right? So not a plant engineer,

326
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nothing crazy, not a supervisor, just a technician, US-based, the salary was $112,000 per year.

327
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So in the medium to long term, there is a world where inflation is rising at say 5% or 6% because

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this will be very inflationary, especially if you mix it with negative real rates and all the bill

329
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dynamics. Both of those are inflationary, weaker dollar and that. So there is a world though where

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inflation is 5%, but real wage gains are 8 or 9. And that's what I would hope to see. Because

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going back to the silent depression stuff, the average hourly wage price in gold has declined by

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80% going back to 2000. So just since .com, just since the Y2K and all that, just since

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Since then, the real purchasing power of the average hourly wage has declined by 80% if you measure it in gold.

334
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And if you look at personal income divided by M2 money supply, that's fallen, I think, 30%.

335
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So again, in real purchasing power terms, the average American has been getting just decimated for decades.

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And a lot of the turning points in my chart happened to be that early 2000s.

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And I think it's not a coincidence that China was admitted into the World Trade Organization in December 2001.

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And that's when deaths of despair, like literally to the year, that is when deaths of despair just went vertical.

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And that is when, you know, these measures of real purchasing power wages started to decline and personal savings has been declining.

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so i would argue that you know there are short-term consequences to a weaker dollar whether

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that's via uh just kind of policy or via an explicit accord of course there's consequences

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short-term but you know my hope uh would be that medium to long term you would see uh kind of a

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de-financialization of the economy and a return towards a much more net productive economy that

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is not based around a bunch of people writing algorithms for high-frequency trading firms,

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making millions and millions and millions hedge fund managers, but reorient around actual

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useful productive capacity.

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Because whether it's the medicine that I mentioned, 65% of active pharmaceutical ingredients,

348
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you look at chips and electronics, some of these key industries, this is a national security

349
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emergency in my opinion.

350
00:30:31,084 --> 00:30:31,404
Yeah.

351
00:30:33,044 --> 00:30:55,624
Yeah. And to your point, like, I think I tweeted this out a couple months ago, but like, even if we do, if and when we reshore manufacturing, and even if 80% of it is automated by robots and AI, that's still preferable from the national security perspective that you're digging in here.

352
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It should be made here to be over overlooked and managed by American citizens to make sure that the quality is good and that not only the quality is good but you able to make it yourself So you not dependent on geopolitical adversaries

353
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And so that like that whole that whole sort of theme of like, oh, the jobs aren't going to come

354
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back. And even if they do, they're automated. It's like, I don't care if they're automated.

355
00:31:22,928 --> 00:31:30,248
Like we should be making it here is my perspective. Yeah. And, you know, I have firsthand experience

356
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with domestic manufacturing.

357
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My family has had a company for, I think, 75 years

358
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that has manufactured goods in America.

359
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And I think that there's a pretty large amount

360
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of kind of overestimation as well.

361
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I think a lot of people that are talking

362
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about re-industrialization need to go look,

363
00:31:53,848 --> 00:31:57,688
go down to your local industrially zoned part of town

364
00:31:57,688 --> 00:31:59,308
and just ask for a tour.

365
00:31:59,308 --> 00:32:04,628
I know if it's our company, we'd be happy to, they love showing people around and what they do.

366
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I think a lot of people are overestimating the degree to which automation will really play a role.

367
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We have a couple of robots that I think they got maybe five or ten years ago.

368
00:32:16,948 --> 00:32:22,848
There's some degree of automation, but I think people are overestimating the amount of automation.

369
00:32:22,848 --> 00:32:38,448
But to your point, even if, you know, 70 or 80% is automated, at least we are not reliant on countries that, you know, arguably at the, you know, turn of a hat, you know, flip of a coin might be our enemy, you know?

370
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And like, how are we, if we're so reliant on, say, China for kind of chips and electronic components for our own missiles and our own defense systems and our own ships and vehicles, like the minute that they, like the minute we get into a war over Taiwan, which I hope doesn't happen, but like they just shut it off as we saw them do with the rare earths.

371
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And like, yeah, I just, it's kind of my mind boggling that our leaders let it get this bad. You know, it just makes you wonder like what, I mean, you know, you can infer what the incentive was, but a lot of people got obscenely rich.

372
00:33:22,568 --> 00:33:35,748
And, you know, now wealth inequality is even worse today than the Gilded Age, which was so bad that we named an entire era of American history after how bad the wealth inequality was, was even worse today.

373
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So, yeah, you know, that was probably the incentive to do all this, but it just got to such ridiculous levels.

374
00:33:42,548 --> 00:33:45,528
It kind of makes you wonder, like, what were our leaders thinking?

375
00:33:45,548 --> 00:33:47,948
Because it was both parties, to be clear.

376
00:33:49,328 --> 00:33:52,148
So, yeah, that's on the economic side.

377
00:33:52,148 --> 00:34:01,028
then socially you have like the rise of neoliberal progressive ideals and if you're a student of

378
00:34:01,028 --> 00:34:06,088
like yuri bezmanov and that interview he did in the 80s like have we been just under a slow

379
00:34:06,088 --> 00:34:14,348
rolling color revolution in the united states over the last four decades yeah well i mean look at um

380
00:34:14,348 --> 00:34:19,768
i mean trade is trade is a great uh illustration of that i would say uh globalization and the degree

381
00:34:19,768 --> 00:34:22,488
to which it was embraced at the expense of the average American.

382
00:34:22,928 --> 00:34:24,868
I would also point to immigration, right?

383
00:34:24,868 --> 00:34:25,968
We're talking economics.

384
00:34:26,588 --> 00:34:30,228
One of the key reasons, in my opinion,

385
00:34:30,228 --> 00:34:33,188
that the real purchasing power of the average hourly wage

386
00:34:33,188 --> 00:34:35,908
for the average American has declined so precipitously

387
00:34:35,908 --> 00:34:39,828
is both parties have, you know,

388
00:34:39,928 --> 00:34:42,608
our birth rate has been declining for decades.

389
00:34:43,588 --> 00:34:46,548
And the way that both parties, up until Trump, of course,

390
00:34:47,008 --> 00:34:48,568
the way that both parties dealt with that

391
00:34:48,568 --> 00:34:52,148
was to import tens of millions of immigrants

392
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from other countries to come in.

393
00:34:54,308 --> 00:34:56,928
These are willing to work for lower wages.

394
00:34:57,328 --> 00:34:59,488
And the law of supply and demand

395
00:34:59,488 --> 00:35:01,048
is no different when it comes to labor,

396
00:35:01,468 --> 00:35:04,888
that if you dramatically increase the supply of labor

397
00:35:04,888 --> 00:35:06,668
while demand stays constant

398
00:35:06,668 --> 00:35:09,668
or maybe slightly grows 1%, 2% per year,

399
00:35:09,828 --> 00:35:10,548
whatever it is,

400
00:35:10,948 --> 00:35:13,648
if you increase the labor supply by 10%,

401
00:35:13,648 --> 00:35:17,708
wages must go down, just mathematically.

402
00:35:18,568 --> 00:35:29,688
And so that's another kind of avenue where you see, like Reagan was the one that granted, kind of started it, at least from what I can gather, with kind of mass amnesty back in the 80s.

403
00:35:29,688 --> 00:35:33,908
And look, like multinational corporations benefited massively from that.

404
00:35:34,788 --> 00:35:39,948
You know, again, it boosts their profit margins, whether it's cheap labor here in America or cheap labor elsewhere.

405
00:35:40,168 --> 00:35:42,048
So there have definitely been beneficiaries.

406
00:35:42,048 --> 00:36:06,668
The other thing I'd point out that I think is really interesting is if you take the net worth of the top 1% and look at it as a share of GDP, so denominated in GDP, and then you overlay the balance of trade and you invert it, so it's the capital account surplus, it's almost a perfect fit.

407
00:36:06,668 --> 00:36:16,148
So the net worth of the top 1% as a share of GDP has basically been identical to an inverted trade deficit.

408
00:36:16,328 --> 00:36:24,628
So as the trade deficit has gotten larger and larger, the net worth of the top 1% is increasing at a faster rate than GDP.

409
00:36:24,868 --> 00:36:31,728
When you do one of those relative charts, when the line goes up, it means that the numerator is increasing faster than the denominator.

410
00:36:31,728 --> 00:36:35,488
So the net worth of the top 1% isn't just growing with GDP.

411
00:36:35,868 --> 00:36:40,408
It's growing faster than GDP as the trade deficit gets worse.

412
00:36:40,708 --> 00:36:46,708
So there are very clear beneficiaries to a lot of these policies and kind of the capital

413
00:36:46,708 --> 00:36:50,948
class, right, that Wall Street and those that own financial assets.

414
00:36:51,568 --> 00:36:53,528
It's the same thing with the housing market, too.

415
00:36:53,628 --> 00:36:55,428
Like, I'm a young person that liked to own a home.

416
00:36:55,428 --> 00:37:02,468
I worked really hard for 15, 16 years, had a particular career, climbed the ladder.

417
00:37:03,168 --> 00:37:04,748
And it's the same story with housing.

418
00:37:04,928 --> 00:37:11,748
If you look at the average sales price divided by the average income for a family, say, and

419
00:37:11,748 --> 00:37:18,908
again, overlay it with the trade deficit, it is a perfect fit outside of QE2 and 3, where

420
00:37:18,908 --> 00:37:21,608
the Fed bought trillions in mortgage-backed securities.

421
00:37:21,608 --> 00:37:25,048
but interestingly when they engage in quantitative tightening

422
00:37:25,048 --> 00:37:29,828
that it came right back down to where the trade deficit or the capital account surplus

423
00:37:29,828 --> 00:37:35,488
would indicate that it should be so you know i whether that's a correlation without a causation

424
00:37:35,488 --> 00:37:40,208
and that's just a spurious correlation i'm not sure but it's like the more the more of these

425
00:37:40,208 --> 00:37:46,028
metrics that i've been finding over the past year or two the more i'm convinced that it's all it's

426
00:37:46,028 --> 00:37:52,808
all kind of one trade one story uh at the end of the day yeah the whole correlation is not causation

427
00:37:52,808 --> 00:38:02,508
thing it's like it's it's a whole it's like a way to obscure what you know intuitively to be true

428
00:38:02,508 --> 00:38:06,288
but it's like so hard to like directly connect the dots that they're able to hand wave it's like

429
00:38:06,288 --> 00:38:13,088
correlation is not it's like come on this is certainly happened like if you have two brain

430
00:38:13,088 --> 00:38:16,968
cells to rub together and you can think about second and third order effects. It seems like

431
00:38:16,968 --> 00:38:21,868
there definitely is some causation here. Yeah. Well, you know, M2 money velocity,

432
00:38:22,548 --> 00:38:27,448
personal income as a share of M2. So real purchasing power of the personal income,

433
00:38:27,888 --> 00:38:36,108
S&P in gold terms, labor force participation rate, all of these peaked money velocity as well.

434
00:38:36,108 --> 00:38:41,928
All of these peaked, you know, around the same time. Average hourly wage and gold terms as well

435
00:38:41,928 --> 00:38:44,308
also peaked in the early 2000s.

436
00:38:44,368 --> 00:38:46,748
So it's like, okay, I understand, you know,

437
00:38:46,868 --> 00:38:50,128
contesting one of those or, you know, two of those,

438
00:38:50,208 --> 00:38:52,948
but like I've presented so much data

439
00:38:52,948 --> 00:38:55,088
over the past year or two charts, right?

440
00:38:55,188 --> 00:38:58,088
That it's like, I just, it baffles me

441
00:38:58,088 --> 00:39:01,408
that people still try to dispute some of these things,

442
00:39:01,488 --> 00:39:01,748
you know?

443
00:39:02,648 --> 00:39:02,808
Yeah.

444
00:39:03,768 --> 00:39:08,328
And let's get like, let's get into like silent depression

445
00:39:08,328 --> 00:39:11,508
and like something you said earlier,

446
00:39:11,508 --> 00:39:14,288
which is like, let's get away from financialization.

447
00:39:14,388 --> 00:39:19,628
Let's definancialize the economy, get back to a productive economy

448
00:39:19,628 --> 00:39:21,868
where people are actually working, building things

449
00:39:21,868 --> 00:39:27,508
and not just creating sort of synthetic financial exposure to things.

450
00:39:28,068 --> 00:39:30,008
Because it's all connected.

451
00:39:30,188 --> 00:39:33,788
Again, in my mind, correlation is causation with a lot of these things.

452
00:39:34,048 --> 00:39:38,728
Like, you're not going to tell me that these things don't have effects on each other.

453
00:39:38,728 --> 00:39:42,328
and it's like it's weird because we live at this time

454
00:39:42,328 --> 00:39:47,248
my go-to example whenever something like like we are literally you're on the other side of the

455
00:39:47,248 --> 00:39:52,668
country i'm looking at my laptop i've got my mic in my hand we're going to distribute this

456
00:39:52,668 --> 00:40:00,448
on many platforms and it'll be accessible to many like it's inarguable that the tools that we have

457
00:40:00,448 --> 00:40:06,048
the technology we have is is incredible today and that's what they use like hey like things are

458
00:40:06,048 --> 00:40:17,008
Great. Look at what we can do. But despite that, there is this silent depression, these divergences in the quality of life between the haves and the have nots.

459
00:40:17,008 --> 00:40:29,748
And there has to be a better way. I think we have all of this in spite or despite, excuse me, despite all of these things.

460
00:40:29,748 --> 00:40:36,348
They try to use the fact that we have all these technologies as evidence that everything is all well and good.

461
00:40:36,608 --> 00:40:40,748
But I'm a strong believer in it could be much better.

462
00:40:40,988 --> 00:40:43,208
We have all this despite all of that.

463
00:40:43,488 --> 00:40:43,588
Yeah.

464
00:40:43,988 --> 00:40:44,468
Yeah.

465
00:40:44,588 --> 00:40:45,568
I mean, look, it's great.

466
00:40:45,868 --> 00:40:47,788
I worked in healthcare.

467
00:40:48,068 --> 00:40:49,508
That was kind of my day job.

468
00:40:49,508 --> 00:40:59,548
I started working very shortly after Lehman collapsed and was doing my first interviews at like 18 around that time.

469
00:40:59,748 --> 00:41:05,488
So that was the start of my adult life. And I know a lot of millennials, especially Zoomers,

470
00:41:05,588 --> 00:41:13,208
are kind of in this boat where then we had, of course, the kind of prolonged great moderation,

471
00:41:13,448 --> 00:41:19,168
as they called it, but really kind of a lost decade of stagnant growth, very similar to Japan's

472
00:41:19,168 --> 00:41:27,928
lost decade. And then we had 2020, all the craziness of that. But really in my adult life,

473
00:41:27,928 --> 00:41:37,928
Like it felt like no matter how hard I worked, I kept climbing the ladder and getting the next better job, you know, from from the bottom to, you know, middle management.

474
00:41:37,928 --> 00:41:46,128
And then from there to to, you know, basically right below the owner as a director, making a good salary or what I had thought was a good salary.

475
00:41:46,128 --> 00:42:12,488
And just for real concrete numbers that people can wrap their head around, at least here in LA, in 2019, 2020, my salary of $90,000, $100,000 would have bought a starter home, a 70-year-old starter home, not in LA, but in one of the suburbs like the Valley, for example.

476
00:42:12,488 --> 00:42:17,028
I would have been able to do that. And I was looking at buying a home back then.

477
00:42:17,468 --> 00:42:22,288
And, you know, the income, I could make it work with interest rates being what they were.

478
00:42:22,508 --> 00:42:31,408
Well, today, that same house in that same neighborhood, not great neighborhood, not great schools, pretty high crime rate, 70, 80 years old, right?

479
00:42:31,448 --> 00:42:39,688
Probably needs some work. That same, I would need to triple my income to qualify for a mortgage on that same house.

480
00:42:39,688 --> 00:43:06,228
So, you know, like this, this, I understand why they changed the CPI calculation, but that's like a very real cost for a young person, right? Like if, if the income needed to qualify for a mortgage on the same house increases by 200% in five years, you're going to tell me that inflation is only 21, 22%. Like it just doesn't make sense.

481
00:43:06,228 --> 00:43:25,688
And yeah, I think the societal KPIs, antidepressant prescriptions, 13x since 1970, the suicide rate at levels rate, not nominal numbers of suicide, the rate per 100,000, that rate not being this high going all the way back to the Great Depression.

482
00:43:25,968 --> 00:43:27,648
That's the last time it was this high.

483
00:43:28,048 --> 00:43:31,488
Deaths of despair just going absolutely parabolic since 2000.

484
00:43:32,468 --> 00:43:35,408
We see it with political polarization as well.

485
00:43:35,408 --> 00:43:41,088
like all these societal KPIs, all these like horrible events that keep happening in public,

486
00:43:41,548 --> 00:43:47,788
right? That, um, you know, try and be careful, like not to use bad words, but you know, the,

487
00:43:47,788 --> 00:43:52,788
the, these things that just like every day we're seeing, you know, people acting out in,

488
00:43:52,888 --> 00:43:59,688
in just absurdly violent ways. And there is, there is this kind of like scream from especially

489
00:43:59,688 --> 00:44:05,208
the younger generations, uh, that just appears to be falling on deaf ears, uh, with, with the

490
00:44:05,208 --> 00:44:10,788
boomers. And if it was just deaf ears, that might be one thing, but instead it's generally met with

491
00:44:10,788 --> 00:44:18,868
righteous indignation, of course. But yeah, it's going to continue to drive all of those same

492
00:44:18,868 --> 00:44:25,448
problems until the actual issues are addressed. Wealth inequality will get worse, and therefore

493
00:44:25,448 --> 00:44:30,348
the kind of political polarization will get worse. We'll see racial divisions get worse.

494
00:44:30,348 --> 00:44:51,668
We'll see the political extremes getting more extreme. I mean, if, you know, I've talked to a number of like, you know, kind of average Zoomer men, and these guys are going to make Stephen Miller look like a moderate, right? Like, this is just a natural consequence of what happens when you default on the social contract.

495
00:44:51,668 --> 00:45:07,148
And I think that, you know, until we really address the underlying issues that are driving these these problems, all of the things that are bothering the average American person are going to just get worse and worse and worse.

496
00:45:07,628 --> 00:45:09,688
And I don't want that.

497
00:45:09,868 --> 00:45:13,768
Like, you know, I want a safe, prosperous country.

498
00:45:14,008 --> 00:45:17,308
I want, you know, my people to succeed and do well.

499
00:45:17,788 --> 00:45:19,908
I want a land of opportunity again.

500
00:45:19,908 --> 00:45:37,788
And look, to your point about technology, there are certainly certain advantages, I guess you could say, over the past couple of years as I've started doing all this markets and economics and YouTube and all this various stuff.

501
00:45:38,028 --> 00:45:44,108
It's a crash course for me in this whole new world that I didn't really know anything about.

502
00:45:45,028 --> 00:45:48,328
And look, I'll be the first one to say that it's great.

503
00:45:48,328 --> 00:45:58,388
You know, I can, I can do spend an hour or two, you know, putting together a video, hopefully educate people, put that up on this website that people have on their phone.

504
00:45:58,508 --> 00:45:58,948
Right.

505
00:45:59,028 --> 00:46:01,348
They like, there's some really cool stuff.

506
00:46:01,348 --> 00:46:04,228
Like I'm not trying to make it sound like it's all bad.

507
00:46:04,608 --> 00:46:13,208
But, you know, we, it kind of goes the other way too, which is like, you, you know, you look at the average zoomer, the average young man, and what are they doing?

508
00:46:13,208 --> 00:46:17,688
They're gambling, whether it's meme coins or sports betting.

509
00:46:17,688 --> 00:46:19,608
We've seen a dramatic increase in that.

510
00:46:19,608 --> 00:46:27,408
Like the financial nihilism, I would say offsets the benefits from like, look, the Internet's

511
00:46:27,408 --> 00:46:27,688
great.

512
00:46:27,688 --> 00:46:32,148
The kind of everything being connected, the world being connected, it's great.

513
00:46:32,148 --> 00:46:45,712
But like it also enables these very negative and destructive expressions of you know within technology whether that you know the meme coin casinos and kind of all that craziness

514
00:46:45,932 --> 00:46:52,292
I mean, I know a girl that just buys tech options every day, zero DTE tech, you know,

515
00:46:52,412 --> 00:46:55,012
meta, Nvidia, just buys calls every day.

516
00:46:55,012 --> 00:46:57,552
Doesn't know what a bid ask spread is.

517
00:46:57,612 --> 00:47:01,012
Doesn't know what IV or Delta or Gamma or Theta, just buys calls.

518
00:47:01,772 --> 00:47:03,232
Like just totally gambling, right?

519
00:47:03,232 --> 00:47:12,412
Like this is kind of the norm now with young people is that without that 10,000 X return, they feel like they're never going to get ahead.

520
00:47:12,412 --> 00:47:16,812
So just as much as the internet can be used in positive ways, right?

521
00:47:17,372 --> 00:47:17,852
Responsibly.

522
00:47:17,992 --> 00:47:27,512
It also has, I would argue, offsetting negative sides to it too, which is it enables some of this gambling and kind of the financial nihilism piece.

523
00:47:28,052 --> 00:47:28,612
If that makes sense.

524
00:47:29,232 --> 00:47:29,972
Completely agree.

525
00:47:29,972 --> 00:47:36,312
that's exactly what i was trying to get to as well as like this financial nihilism the enablement of

526
00:47:36,312 --> 00:47:41,772
it and this like this strive for yield the younger generation specifically that feels like they have

527
00:47:41,772 --> 00:47:49,272
to play catch up and take obscene risk is real and it's having extreme negative consequences like

528
00:47:49,272 --> 00:47:53,252
you're talking about death's despair you brought up sports gambling if you look at it's not only

529
00:47:53,252 --> 00:47:58,352
affecting zoomers like it's affecting millennials and gen xers too like there was a i think some

530
00:47:58,352 --> 00:48:03,732
vandals getting sued by the wife of a guy who blew their 14 million dollar trust

531
00:48:03,732 --> 00:48:10,612
because he was a high roller and just it's so easy to access that he blew

532
00:48:10,612 --> 00:48:19,872
eight figures of wealth within a very short period of time and that's i think the big

533
00:48:19,872 --> 00:48:25,572
question for me and a lot of what i've explored over the years on this show and just doing

534
00:48:25,572 --> 00:48:30,092
introspection personally is like, can this actually be solved via political means? Or

535
00:48:30,092 --> 00:48:35,512
do you need something outside the system to actually fix it? And that's why I focus on Bitcoin.

536
00:48:35,512 --> 00:48:42,052
I do tend to sort of bend that way and believing that you're not going to vote your way out of this,

537
00:48:42,132 --> 00:48:48,532
like you need to create systems outside of the terminally ill system that got us into this

538
00:48:48,532 --> 00:48:55,332
predicament in the first place. And to that point, do you view it that way at all?

539
00:48:55,572 --> 00:49:18,912
Yeah. And with all this YouTube channel and all this stuff, the hunger and the degree to which it's resonated for someone who spent, I don't know, 30,000 hours nerding out, digging into academic papers and Investopedia and TradingView and the Fed and all this stuff, right?

540
00:49:18,912 --> 00:49:28,452
Like digesting it for normal people, the amount, the degree to which it resonated, which is random, everyday, normal people, I was not expecting.

541
00:49:28,992 --> 00:49:37,752
So what I would say is that there's clearly, like I underestimated the appetite for that sort of content.

542
00:49:38,092 --> 00:49:42,012
Because I think everyone knows that things are deeply, deeply wrong.

543
00:49:42,012 --> 00:49:48,732
Uh, it's just that, you know, you shouldn't have to spend 30,000 hours, you know, nerding

544
00:49:48,732 --> 00:49:54,372
out, uh, to, in order to, to grasp some of these concepts and understand how your own

545
00:49:54,372 --> 00:49:55,432
financial system works.

546
00:49:55,712 --> 00:50:00,692
Uh, and I would say that like the Overton window, the, the, the discourse is shifting,

547
00:50:00,692 --> 00:50:06,172
you know, like a lot of people have been talking about the, uh, the interview Tucker did recently

548
00:50:06,172 --> 00:50:09,292
with Werner, the economist.

549
00:50:10,492 --> 00:50:13,412
And that was actually one of the first things

550
00:50:13,412 --> 00:50:16,932
that I did a Twitter post or article on

551
00:50:16,932 --> 00:50:19,652
was I had listened to one of his speeches

552
00:50:19,652 --> 00:50:24,032
at some university about Japan.

553
00:50:24,032 --> 00:50:28,972
And the fact that that sort of discussion

554
00:50:28,972 --> 00:50:31,172
is happening on such a large platform,

555
00:50:32,452 --> 00:50:35,172
and I've had invites recently

556
00:50:35,172 --> 00:50:38,772
for kind of not Bitcoin channels, right?

557
00:50:38,872 --> 00:50:43,292
Not, you know, economics or macro markets sort of channels,

558
00:50:43,292 --> 00:50:47,212
but like much more kind of political sort of channels.

559
00:50:47,512 --> 00:50:49,232
And like, there's clearly an appetite

560
00:50:49,232 --> 00:50:53,592
for discussion about economics and what's really going on

561
00:50:53,592 --> 00:50:58,092
because part of the problem and what I always try to do is,

562
00:50:58,192 --> 00:51:00,352
you know, if you just look at the average hourly wage,

563
00:51:00,592 --> 00:51:02,732
which is what you hear reported on the nightly news,

564
00:51:03,192 --> 00:51:04,432
the line is, it looks great.

565
00:51:04,432 --> 00:51:05,412
It's up and to the right.

566
00:51:05,492 --> 00:51:06,632
It's kind of even parabolic.

567
00:51:06,852 --> 00:51:08,052
You would think everything's great.

568
00:51:08,152 --> 00:51:10,712
Well, you got to go a couple layers deeper, right?

569
00:51:10,712 --> 00:51:15,072
Like all these numbers that they're reporting to the American people, it's like they're

570
00:51:15,072 --> 00:51:20,152
sitting there, you know, getting home after their third job, right?

571
00:51:20,992 --> 00:51:26,912
And, you know, using a firm to pay for groceries, hearing the nightly news talk about, oh,

572
00:51:26,972 --> 00:51:29,492
unemployment's only 4.1 and GDP grew at 3%.

573
00:51:30,032 --> 00:51:31,332
And they're like, huh?

574
00:51:31,332 --> 00:51:39,172
You know, like what I always say is what good is GDP if the average hourly wage or personal income is not keeping pace?

575
00:51:39,992 --> 00:51:43,572
So, yeah, like, you know, certain things have outperformed, of course.

576
00:51:44,392 --> 00:51:46,912
Government debt has outperformed GDP.

577
00:51:47,332 --> 00:51:51,392
That's why government debt to GDP has doubled right in the past like 40 years.

578
00:51:52,052 --> 00:51:59,232
The net worth of the top 1% has also doubled as a share of GDP over the past 20, 30 years.

579
00:51:59,232 --> 00:52:05,772
And then you look at financial assets, the S&P 500 just radically outperformed GDP.

580
00:52:06,592 --> 00:52:11,212
A stat that I think is really telling to the hyper-financialization and the K-shaped economy

581
00:52:11,212 --> 00:52:17,572
is if you take the S&P 500 divided by the average hourly wage, what you get is the number of hours

582
00:52:17,572 --> 00:52:23,952
needed of work at the average job to buy one share of the S&P 500. And it goes all the way back to

583
00:52:23,952 --> 00:52:29,732
the 60s. And the average, when my parents were coming of age and working, was like 15 to 20

584
00:52:29,732 --> 00:52:36,412
hours of work at the average job to buy one share. Now that number is 200, right? So what that

585
00:52:36,412 --> 00:52:42,712
indicates is that the S&P 500 has increased 10 times faster than the average hourly wage, right?

586
00:52:42,792 --> 00:52:47,472
So those that hold financial assets, those bureaucrats that have benefited from a massive

587
00:52:47,472 --> 00:52:54,252
expansion, a massive expansion in the size of the federal bureaucracy, that, you know, the top 1%,

588
00:52:54,252 --> 00:52:59,652
right, that own all these assets, they are doing better and better and better. And people see that,

589
00:52:59,692 --> 00:53:05,552
like they might not know the stats, right? They might not be able to kind of conceptualize it,

590
00:53:05,552 --> 00:53:11,672
but they feel it and they see it and they know it. And so I would say that like the benefit or

591
00:53:11,672 --> 00:53:14,332
or the side of me that's optimistic

592
00:53:14,332 --> 00:53:17,472
is that there is such a growing kind of recognition

593
00:53:17,472 --> 00:53:20,092
and willingness to talk about it,

594
00:53:20,152 --> 00:53:22,092
even on the right wing, right?

595
00:53:22,152 --> 00:53:24,972
Which, I mean, both parties were equally responsible,

596
00:53:25,532 --> 00:53:27,712
in my opinion, for a lot of the globalization,

597
00:53:28,312 --> 00:53:30,012
you know, a lot of the things we talked about.

598
00:53:30,432 --> 00:53:32,452
But, you know, historically, when I was younger,

599
00:53:32,872 --> 00:53:34,632
you know, started paying attention to politics,

600
00:53:34,632 --> 00:53:37,472
it was like, you couldn't talk about wealth inequality

601
00:53:37,472 --> 00:53:40,912
or corporate profits greatly outpacing GDP.

602
00:53:41,252 --> 00:53:43,352
That's another one that's outpaced GDP growth.

603
00:53:44,012 --> 00:53:46,332
Like you can't talk, you couldn't talk about those things.

604
00:53:46,452 --> 00:53:48,532
Well, now not only are you getting it

605
00:53:48,532 --> 00:53:51,552
from the kind of mom Donnie side of things,

606
00:53:51,552 --> 00:53:53,792
but you're having a willingness to talk about it

607
00:53:53,792 --> 00:53:54,772
even on the right wing.

608
00:53:55,252 --> 00:53:58,032
So like that to me, that's a positive sign

609
00:53:58,032 --> 00:54:00,552
because that's kind of the horseshoe theory in action.

610
00:54:01,072 --> 00:54:03,452
You know, we're seeing that on a political level,

611
00:54:03,452 --> 00:54:05,452
at least there's a willingness to talk about it.

612
00:54:05,552 --> 00:54:07,972
Now, to your point, whether or not the solution

613
00:54:07,972 --> 00:54:10,832
ends up being a political one, I'm not so sure.

614
00:54:10,912 --> 00:54:22,892
But I would point to, I think that I'm seeing more and more of a discussion around the struggles for young people, the structure of the economy, wealth inequality.

615
00:54:23,432 --> 00:54:26,192
I'm seeing more and more discussion about it.

616
00:54:26,632 --> 00:54:38,332
Just over the past couple months, it seems like it's just absolutely gone exponential, which for someone who is like the old man yelling at the cloud about it for two years, it's good.

617
00:54:38,332 --> 00:54:43,432
because I feel like, oh, you know, I didn't do that much, right, to actually hopefully, you know,

618
00:54:43,652 --> 00:54:48,212
advance it. But it's like, it makes me feel a little bit more validated that like, okay, at least,

619
00:54:48,512 --> 00:54:52,432
at least like everyone's kind of talking about this now because we're not going to be able to

620
00:54:52,432 --> 00:54:58,132
get to a solution unless everyone knows what the problem is. That's an incredible point. It's funny

621
00:54:58,132 --> 00:55:01,752
that you mentioned that because literally I recorded an episode this morning with Zuby

622
00:55:01,752 --> 00:55:08,052
about this exact topic. He wrote a Substack piece last week about like 12 pieces of advice

623
00:55:08,052 --> 00:55:10,232
for Generation Z.

624
00:55:10,712 --> 00:55:11,632
And we walked through that.

625
00:55:11,712 --> 00:55:15,012
But the whole point of his article

626
00:55:15,012 --> 00:55:16,452
and our discussion about the article

627
00:55:16,452 --> 00:55:19,032
is to sort of transfer knowledge to the Zoomers

628
00:55:19,032 --> 00:55:21,792
of like, hey, we're a generation ahead of you.

629
00:55:21,932 --> 00:55:23,392
Like, here's exactly what's happening.

630
00:55:23,452 --> 00:55:25,352
You guys need to understand this.

631
00:55:25,412 --> 00:55:26,572
And here's how you should operate

632
00:55:26,572 --> 00:55:28,252
with that understanding.

633
00:55:28,972 --> 00:55:30,932
And I completely agree.

634
00:55:31,092 --> 00:55:32,912
Like, the recognition of the problem

635
00:55:32,912 --> 00:55:36,332
is greater than it ever has been

636
00:55:36,332 --> 00:55:41,152
for somebody who was radicalized by the great financial crisis.

637
00:55:41,512 --> 00:55:46,472
And like I went, the timing for me personally was perfect because I was a senior in high school.

638
00:55:46,712 --> 00:55:53,672
It affected my dad and my father's career and sort of like engendered me with the spirit of know your enemies.

639
00:55:53,672 --> 00:56:01,532
So I went and studied econ and always, even when I worked at a fund and was doing like sort of TradFi world things,

640
00:56:01,572 --> 00:56:06,072
in the back of my mind was always like, the system's broken and you figure out how and ultimately found Bitcoin.

641
00:56:06,072 --> 00:56:11,472
I was like, all right, this is what I think is a key part to the solution of solving these problems.

642
00:56:11,772 --> 00:56:14,212
But back then, it was like an island.

643
00:56:14,292 --> 00:56:15,312
It was that crazy Bitcoiner.

644
00:56:16,052 --> 00:56:18,112
2013, 2014, people were like, shut up.

645
00:56:18,352 --> 00:56:24,412
Now, it's not Bitcoin specific, but I just think, to your point, the recognition of...

646
00:56:24,412 --> 00:56:27,632
Because it's gotten to the point where it's impossible to ignore.

647
00:56:27,632 --> 00:56:36,332
and it sucks it had to get to this point but you can only solve a problem if you recognize that it

648
00:56:36,332 --> 00:56:42,772
exists in the first place yeah yeah and like if i had to give one piece or maybe two pieces of

649
00:56:42,772 --> 00:56:46,932
advice for the for the younger folks like i think it's hard for them because we as millennials

650
00:56:46,932 --> 00:56:52,372
um like you know when i was climbing the corporate ladder and you know trying to trying to get ahead

651
00:56:52,372 --> 00:56:58,032
and stuff. I could look to the Gen X, right? The generation ahead of me, they have the, you know,

652
00:56:58,112 --> 00:57:04,372
nice car and a house and the kids and a good salary that they were comfortable on. You know,

653
00:57:04,372 --> 00:57:10,592
I think what is part of what, part of what the zoomers have that's so difficult is they look to

654
00:57:10,592 --> 00:57:17,692
us, they look to the millennials and we're like directors making a hundred K a year and right,

655
00:57:17,692 --> 00:57:22,692
like not having any of that. So, uh, they have it, I, I, they don't have that like optimism,

656
00:57:22,692 --> 00:57:27,532
right? Like at least we, at least I, and a lot of the millennials, I know we could look to the

657
00:57:27,532 --> 00:57:34,292
Gen Xers for kind of like optimism or hope. Uh, but the zoomers don't have that. Like all they

658
00:57:34,292 --> 00:57:40,532
know is bad. Um, and if I, if I were to give two pieces of advice, it would be, um, trades,

659
00:57:40,772 --> 00:57:46,112
right? Like, I think that, um, you know, the, the wall street journal did an article like the next

660
00:57:46,112 --> 00:57:51,512
millionaires wear a tool belt or something like that was the title. And I think that that'll

661
00:57:51,512 --> 00:57:56,912
continue to be a trend that some of the highest paying, most successful people, especially

662
00:57:56,912 --> 00:58:03,972
if we de-financialize with a weaker dollar, some of the best industries for a young person to make

663
00:58:03,972 --> 00:58:10,692
a living in will be trades. And even now, like even today, they're making like hundreds of

664
00:58:10,692 --> 00:58:18,332
thousands of dollars. I know a guy that drives a GT3 and he puts in pipes. I still don't really

665
00:58:18,332 --> 00:58:23,512
understand. It's probably more complex than that, but he basically digs holes and puts pipes in.

666
00:58:23,912 --> 00:58:28,892
He has a GT3. So it's already kind of at that point. So I would say trades,

667
00:58:29,612 --> 00:58:35,552
the traditional four-year education, I think is a scam. And I think it's dead and gone.

668
00:58:35,552 --> 00:58:53,552
And then I would also say, of course, save in scarce assets like Bitcoin that will preserve your purchasing power and hopefully continue to outpace the amount of kind of currency debasement that I think, you know, I think most of us are, whether it's Larry Lepard with the big print, I don't think it'll be that big.

669
00:58:53,952 --> 00:59:02,252
You know, I don't think it's one big print, but I do see kind of a higher inflation period of, you know, regime that we're going into.

670
00:59:03,532 --> 00:59:05,212
Scarcity is the antidote, right?

671
00:59:05,212 --> 00:59:11,112
So like, you know, or as Jack says, you know, don't don't work for money that another man can print.

672
00:59:11,232 --> 00:59:11,952
I think that's great.

673
00:59:12,652 --> 00:59:20,072
And so, yeah, you know, saving your your time and energy and your labor in an asset that cannot be inflated, cannot be printed.

674
00:59:20,452 --> 00:59:22,092
I think that that's another critical.

675
00:59:22,092 --> 00:59:27,252
I mean, if I had done I, I came across Bitcoin in like 2009, 2010.

676
00:59:27,252 --> 00:59:34,392
if I had even put just 5% of my average weekly earnings,

677
00:59:34,572 --> 00:59:37,112
I would be insanely rich.

678
00:59:39,512 --> 00:59:41,252
I didn't know what I had back then.

679
00:59:41,352 --> 00:59:44,132
I thought it was just an internet money thing.

680
00:59:45,012 --> 00:59:47,012
It would have a little run-up and I'd think,

681
00:59:47,012 --> 00:59:49,612
oh great, that was great, sell it.

682
00:59:50,072 --> 00:59:53,492
So I didn't really know what I owned until recently, unfortunately.

683
00:59:53,492 --> 01:00:00,672
But I think that the antidote to an overabundance of fiat currency units is scarcity.

684
01:00:01,092 --> 01:00:07,252
And Bitcoin, we know, has one of the lowest supply increases of any asset.

685
01:00:07,712 --> 01:00:14,972
So when it comes to the scarcity side, it is one of the more scarce assets that you can own, even now more than gold.

686
01:00:16,332 --> 01:00:21,612
Yeah. And bringing this back to how do these overarching problems get solved in the long term,

687
01:00:21,612 --> 01:00:26,812
I'm a big believer that Bitcoin can lead to the great definancialization.

688
01:00:27,012 --> 01:00:38,012
Parker Lewis's blog post and ultimately a chapter in his book, Gradually and Suddenly, about the great definancialization is something that I truly believe in something like 1031.

689
01:00:38,432 --> 01:00:39,632
We're investing behind.

690
01:00:40,112 --> 01:00:46,592
Obviously, you were just talking about the individual saving scarce assets like Bitcoin.

691
01:00:46,592 --> 01:00:55,532
Ideally, I think, inarguably, if you look at all the scarce assets, Bitcoin is still going in the very early stages of its monetization phase and has the highest upside.

692
01:00:55,532 --> 01:01:12,452
But then in terms of like actually beginning to definancialize the world and sort of manufacture a soft landing in the long term, I think Bitcoin needs to be injected as collateral in credit structures.

693
01:01:12,452 --> 01:01:20,192
You need to refinance the existing pools of credit that exist out there with better collateral.

694
01:01:20,932 --> 01:01:24,552
And to what you were saying at the beginning and throughout this conversation, really,

695
01:01:24,632 --> 01:01:29,312
it's like we've seen the financialization people are the people who understand what's

696
01:01:29,312 --> 01:01:31,232
going on and want to outpace inflation.

697
01:01:31,232 --> 01:01:35,412
They're pushing it into real estate, into stocks, into financial assets.

698
01:01:35,932 --> 01:01:37,772
And now an alternative exists.

699
01:01:37,772 --> 01:01:46,512
Like instead of basically putting money in a house and using that as your long term savings vehicle, you can put it in Bitcoin.

700
01:01:46,512 --> 01:02:01,852
And now we're getting to a maturation point of Bitcoin's sort of development where you can sort of replace instead of taking out a mortgage on a house and just using the house as collateral loan, you begin to dual collateralize it with Bitcoin.

701
01:02:01,852 --> 01:02:11,352
And at that point, you're not really wholly dependent on the equity value of the house. You have the Bitcoin collateral in it as well. And to me.

702
01:02:11,376 --> 01:02:14,976
I could be wrong. I'm very interested to get your thoughts on it. That's how you

703
01:02:14,976 --> 01:02:19,436
manufacture a soft landing from the private sector and you're not beholden to the whims

704
01:02:19,436 --> 01:02:24,436
of the political apparatus and the ping-ponging that goes on there.

705
01:02:25,056 --> 01:02:33,156
Yeah. And Luke was like way, Luke Roman was way out ahead of this concept, but they need something

706
01:02:33,156 --> 01:02:45,796
to inflate. Ideally, it's not a commodity that's needed as an input in critical industry or global

707
01:02:45,796 --> 01:02:53,576
trade. You need an asset that can absorb something. We know financial repression is coming.

708
01:02:54,036 --> 01:02:58,996
We know it's really the only way out of a 7% pro-cyclical deficit with interest expense eating

709
01:02:58,996 --> 01:03:05,876
up 20% of tax receipts and mandatory spending over 100% of tax receipts. It's getting to a point

710
01:03:05,876 --> 01:03:13,676
where we know the only way out is to inflate the debt away, run it hot, whatever term you want to

711
01:03:13,676 --> 01:03:20,196
use. And Bitcoin emerges as a perfect asset because it's small. To your point, it's still early days.

712
01:03:21,116 --> 01:03:27,136
$2 trillion is a lot of money on the one hand, but when you compare it to say gold or equities or

713
01:03:27,136 --> 01:03:34,916
certainly bonds, it's still relatively young, very young. So, you know, it offers kind of an escape

714
01:03:34,916 --> 01:03:42,256
valve for the coming financial repression. And Luke, you know, was kind of the first person to

715
01:03:42,256 --> 01:03:46,516
frame it that way. And I think it's a great way to look at it. I would say, you know, like with

716
01:03:46,516 --> 01:03:53,216
the young people and Bitcoin versus homes, the only kind of pushback that I usually kind of think

717
01:03:53,216 --> 01:03:59,896
of when I hear that argument in the Bitcoin circles is the real secret with housing is that

718
01:03:59,896 --> 01:04:09,616
you get insane leverage. So, you know, you go and put 10% down on a million dollar home. And,

719
01:04:09,616 --> 01:04:14,076
you know, when that million dollar home inevitably doubles over, say, five years, six years,

720
01:04:14,436 --> 01:04:21,876
you get the equity of the whole home, right? You can then tap the home equity line of credit for

721
01:04:21,876 --> 01:04:24,736
2 million to however much was.

722
01:04:25,036 --> 01:04:29,336
So your equity is the entire value,

723
01:04:29,416 --> 01:04:31,136
even though you only put up 10%.

724
01:04:31,136 --> 01:04:33,436
So the leverage is really where

725
01:04:33,436 --> 01:04:36,436
owning a home builds wealth.

726
01:04:36,656 --> 01:04:38,176
It doesn't actually build wealth

727
01:04:38,176 --> 01:04:40,496
because the home price is just going up

728
01:04:40,496 --> 01:04:41,796
as the currency is debased.

729
01:04:42,636 --> 01:04:45,216
But in dollar terms,

730
01:04:45,496 --> 01:04:47,576
that leverage is really the secret.

731
01:04:47,696 --> 01:04:50,016
Now we know Bitcoin has an insanely high CAGR.

732
01:04:50,016 --> 01:04:56,936
so it could be the sort of thing where bitcoin continues to appreciate a you know 45 50 percent

733
01:04:56,936 --> 01:05:04,016
kegger i think that that would be enough to offset the leverage side of of that's why i always say

734
01:05:04,016 --> 01:05:09,596
like home ownership and the wealth that you get you're what it really is is just levered exposure

735
01:05:09,596 --> 01:05:14,496
to currency debasement the house goes up you know it's optical illusion the home price goes up as

736
01:05:14,496 --> 01:05:20,556
of currency is debased, you have a large amount of leverage and can then tap the equity.

737
01:05:20,916 --> 01:05:29,336
So if there was a company that came out to offer Bitcoin mortgages, that would I think

738
01:05:29,336 --> 01:05:32,696
be probably the single best thing that could be done.

739
01:05:33,216 --> 01:05:38,376
Because then you're getting the benefit of leverage and the Bitcoin's appreciation.

740
01:05:38,696 --> 01:05:43,016
And that's where the young can really get ahead in a quick way.

741
01:05:43,016 --> 01:05:46,736
because that's really what the home situation,

742
01:05:46,876 --> 01:05:47,916
that's really what it is.

743
01:05:47,916 --> 01:05:50,496
It's just leveraged exposure to debasement.

744
01:05:51,476 --> 01:05:54,696
And because Bitcoin, I mean, you can get leverage with Bitcoin,

745
01:05:54,956 --> 01:05:56,696
but it's not as intuitive

746
01:05:56,696 --> 01:05:59,576
and it's certainly not as large of an amount of money.

747
01:06:00,056 --> 01:06:01,756
Like no one's going to give some Zoomer

748
01:06:01,756 --> 01:06:03,556
that's got $5,000 of Bitcoin,

749
01:06:03,636 --> 01:06:06,416
no one's going to give them crazy amounts of leverage.

750
01:06:06,416 --> 01:06:11,956
So in a 30-year structured product like that

751
01:06:11,956 --> 01:06:13,536
with a relatively low interest rate.

752
01:06:13,656 --> 01:06:15,376
So yeah, I think, you know,

753
01:06:15,596 --> 01:06:16,816
I've heard people saying

754
01:06:16,816 --> 01:06:18,636
we want to create that sort of product.

755
01:06:19,216 --> 01:06:21,696
You know, and like we were both saying,

756
01:06:21,756 --> 01:06:22,576
you know, it's early days.

757
01:06:22,576 --> 01:06:24,736
So maybe something like that comes along

758
01:06:24,736 --> 01:06:27,416
and is able to kind of really accelerate

759
01:06:27,416 --> 01:06:30,596
the degree to which the young people can get ahead.

760
01:06:31,256 --> 01:06:31,396
Yeah.

761
01:06:31,756 --> 01:06:34,596
And it's not catered towards young people at all,

762
01:06:34,596 --> 01:06:39,336
but we invested and sort of helped incubate

763
01:06:39,336 --> 01:06:40,576
this idea of battery finance

764
01:06:40,576 --> 01:06:43,016
where they're starting out focusing on commercial real estate,

765
01:06:43,376 --> 01:06:49,996
which is a market that desperately needs more creative financing options.

766
01:06:49,996 --> 01:06:53,996
And they basically go and find high-grade properties

767
01:06:53,996 --> 01:06:57,736
that are sort of at their pick of the litter, refinance,

768
01:06:58,176 --> 01:07:00,996
give them the cash they need to pay off their original mortgage,

769
01:07:01,716 --> 01:07:05,316
a little cash for improvements if they need it,

770
01:07:05,356 --> 01:07:08,616
and then a chunk of cash to put into Bitcoin that sits in the loan structure.

771
01:07:08,616 --> 01:07:31,156
And just having been close to the development of that product, like I'm wholly convinced that like this is the way you manufacture sort of like a transition from aping your your leverage and your your sort of savings and value into real estate and begin sucking into Bitcoin.

772
01:07:31,156 --> 01:07:32,736
And they'll start like dual collateralized.

773
01:07:32,876 --> 01:07:49,956
And then hopefully over the long, long run, like these, these assets that really aren't optimal to be stores of value, long term, long term stores of value because they have other use cases, consumable use cases that that more people should have access to.

774
01:07:50,596 --> 01:08:00,696
That's how you get them to reprice to what I would argue is like a real, a real price for these assets.

775
01:08:01,156 --> 01:08:04,996
Yeah, and the thing I would say about Bitcoin in particular,

776
01:08:05,436 --> 01:08:10,516
kind of going to what we were talking about with the direction the Fed and Treasury and all that is going,

777
01:08:11,036 --> 01:08:18,176
I would say that in a world where there's basically a political puppet as Fed chair

778
01:08:18,176 --> 01:08:22,076
and monetary policy is now a political decision,

779
01:08:22,736 --> 01:08:27,396
I would just say for those on the right that support Trump and all of that,

780
01:08:27,396 --> 01:08:34,416
Just imagine a Biden-controlled Fed where everything about monetary policy was a political decision.

781
01:08:34,776 --> 01:08:40,096
I don't personally think that that's going to be very good, no matter who is in charge of it.

782
01:08:40,096 --> 01:08:57,216
And I think that as we see that go the emerging market sort of route, probably higher inflation and a worsening of the K-shaped economy as asset prices really take another leg higher,

783
01:08:57,396 --> 01:09:01,796
All the dynamics that we've been talking about today, I think something like Bitcoin emerges

784
01:09:01,796 --> 01:09:07,796
is like, you know, what's so cool for someone who's so immersed all day in macro and markets

785
01:09:07,796 --> 01:09:12,916
here in US and Europe and Asia and all this stuff, following every word of every Fed speaker

786
01:09:12,916 --> 01:09:15,456
and watching every bond yield in the entire world.

787
01:09:15,976 --> 01:09:19,736
What's cool about Bitcoin that I keep coming back to that I always tell people is like,

788
01:09:20,136 --> 01:09:22,216
look, you know the monetary policy of Bitcoin.

789
01:09:22,216 --> 01:09:29,076
you know the monetary policy of bitcoin today six days from now six weeks from now six years from now

790
01:09:29,076 --> 01:09:35,796
60 years from now you know the monetary policy of of bitcoin and uh these kind of you know bear

791
01:09:35,796 --> 01:09:42,456
assets that are are neutral right this ability for neutral reserve asset uh that a lot of people

792
01:09:42,456 --> 01:09:48,196
been talking about like i think that the appeal of that is going to grow just generally speaking

793
01:09:48,196 --> 01:09:52,016
I think corporations, I think in the real estate sector,

794
01:09:52,216 --> 01:09:56,336
I know Grant Cardone is doing a lot of cool stuff with Bitcoin

795
01:09:56,336 --> 01:09:57,676
and real estate.

796
01:09:58,376 --> 01:09:59,876
I think on the individual level,

797
01:10:00,356 --> 01:10:03,456
there's so much chaos and instability

798
01:10:03,456 --> 01:10:04,876
and all this kind of stuff.

799
01:10:05,476 --> 01:10:06,556
I think normal people,

800
01:10:06,816 --> 01:10:12,156
the emergence of an asset where it is so predictable,

801
01:10:12,476 --> 01:10:15,176
you know exactly what the monetary policy of it is.

802
01:10:15,176 --> 01:10:24,756
It's consensus derived. It's hard coded in lines of code that are confirmed and secured by the strength of the network, which keeps growing.

803
01:10:25,356 --> 01:10:35,696
All the properties of Bitcoin that Bitcoiners talk about, I think are going to start to really become appealing amongst kind of normal people, if that makes sense.

804
01:10:36,956 --> 01:10:42,216
Yeah, it's this anchoring mechanism. It gives you a high degree of certainty in an incredibly uncertain world.

805
01:10:42,216 --> 01:11:07,356
Right. And if you can, I think that's just like the like when you get back, when you get to like first principles, Austrian economics perspective of Bitcoin, like that is the sort of stabilizing nature of the asset is like conversely, like why everything is so instable is because you have an inability to know at any given point in time what's going to happen with your money because it's centrally controlled.

806
01:11:07,356 --> 01:11:21,756
Once you can have certainty and anchor into that certainty by using Bitcoin, you can then begin to coordinate economically with a higher degree of certainty and have to you can take less risk and you don't have to financialize everything to get a return.

807
01:11:21,756 --> 01:11:27,756
I think succinctly put first principles, Austrian perspective of Bitcoin. That's what it does. Right.

808
01:11:27,756 --> 01:11:31,496
Yeah, and it's also outperforming so many other assets.

809
01:11:31,856 --> 01:11:36,616
The first thing I do when I see someone advocating,

810
01:11:36,776 --> 01:11:38,396
oh, buy this stock or buy this,

811
01:11:38,616 --> 01:11:40,756
the first thing I do is just divide it by Bitcoin.

812
01:11:41,576 --> 01:11:44,056
It's almost always just down and to the right.

813
01:11:44,056 --> 01:11:44,756
You know what I mean?

814
01:11:44,856 --> 01:11:48,476
So it's outperforming the vast majority of assets.

815
01:11:48,736 --> 01:11:53,516
Yeah, over certain timeframes you can find some tech stock, whatever.

816
01:11:53,816 --> 01:11:57,076
But the vast majority of people don't have the skill to be stock pickers.

817
01:11:57,076 --> 01:12:00,376
So it's very simple, it's very straightforward.

818
01:12:00,376 --> 01:12:04,836
You just buy it and hold it and it goes up.

819
01:12:04,836 --> 01:12:07,776
And it goes up forever because the dollar has no bottom.

820
01:12:07,776 --> 01:12:11,396
There's no top in the Bitcoin price because there's no dollar on the bottom.

821
01:12:11,396 --> 01:12:23,852
There certainty with what it is how it works the monetary policy the new supply All of those things And I would also point out that since the TradFi adoption

822
01:12:24,812 --> 01:12:29,592
which at first I was kind of like knee-jerk reaction was negative

823
01:12:29,592 --> 01:12:34,412
because the whole reason I found it in 2009 or 10 or whenever it was,

824
01:12:34,412 --> 01:12:36,912
was some anarchist blog spot.

825
01:12:36,912 --> 01:12:45,952
And it was like the cypherpunk ethos and the kind of revolutionary sort of side of it.

826
01:12:46,272 --> 01:12:53,612
And so then to see it kind of be adopted by BlackRock and this, my first reaction was negative.

827
01:12:53,812 --> 01:13:01,392
But now that I've had some time to kind of really think about it, it's really decreased the amount of volatility that we've seen.

828
01:13:01,392 --> 01:13:09,792
It's almost like Bitcoin pre-ETF versus after ETF has been just a different thing.

829
01:13:10,512 --> 01:13:25,972
And I think that to your point with the stability, I think that the lack of that volatility as we build derivatives complexes on top and all these different products are offered and it becomes a bigger market,

830
01:13:25,972 --> 01:13:55,952
I think that we'll see less volatility and that'll, that'll, uh, encourage more inflows, right? So it becomes a, uh, it becomes a strange game where the only winning move is to play. Um, the, uh, no, that then I completely agree. Like the, I had similar aversions initially, but now when you see it, I do, it would be naive to think that there aren't going to be some actors.

831
01:13:55,972 --> 01:14:01,612
in the traditional financial system getting into Bitcoin in size that make mistakes, get over their

832
01:14:01,612 --> 01:14:07,072
heels, get over levered, ultimately blow up. But I think in aggregate, the most important thing of

833
01:14:07,072 --> 01:14:16,572
this wave of adoption is it's growing the number of different archetypes of demand for Bitcoin.

834
01:14:17,052 --> 01:14:21,352
And I think we're getting to a point where there's so many different demand drivers, whether

835
01:14:21,352 --> 01:14:28,932
it's an individual looking to outpace inflation and save their value in an asset that can't be

836
01:14:28,932 --> 01:14:35,092
debased, or a company that realizes, a private company, small, medium-sized business that's

837
01:14:35,092 --> 01:14:41,772
profitable, is run by a Bitcoiner, who understands that if you're unprofitable and I'm skimming some

838
01:14:41,772 --> 01:14:45,172
of those profits into Bitcoin, it's going to be good for the equity value of my business.

839
01:14:45,292 --> 01:14:49,672
You have individual states who are saying maybe we should have a state-level Bitcoin treasury.

840
01:14:49,672 --> 01:15:00,792
Obviously, countries doing that. And then you can see going to like Luke Roman's thesis of a Mar-a-Lago accord or something like that probably won't happen.

841
01:15:01,252 --> 01:15:18,872
This administration, but at some point down the line, I think at the geopolitical level, it's going to be impossible to ignore that this neutral reserve asset that nobody can control is optimal and preferable to this sort of system of barter that exists in FX markets.

842
01:15:18,872 --> 01:15:27,492
Yeah, and I would say we saw a very early glimpse of what the dollar trading on a balance of payments basis looks like.

843
01:15:29,192 --> 01:15:35,732
We basically saw the early stages of a balance of payments crisis right after Liberation Day.

844
01:15:38,072 --> 01:15:39,672
We're in a tricky spot.

845
01:15:40,052 --> 01:15:44,752
There's not a ton of room to really navigate politically.

846
01:15:44,752 --> 01:15:51,012
uh you know because this nip is negative 100 percent of gdp foreigners own tens of trillions

847
01:15:51,012 --> 01:15:57,172
uh you know of of our assets they have us kind of you know they can control us if they don't like a

848
01:15:57,172 --> 01:16:02,692
particular policy so ultimately like you have to get to the root of the problem which is kind of

849
01:16:02,692 --> 01:16:08,192
the structure of the system and i would say that you know nations if i was a current account surplus

850
01:16:08,192 --> 01:16:16,752
sublustination, either in the Middle East or Asia. Traditionally, it was you put those surpluses

851
01:16:16,752 --> 01:16:21,892
into U.S. treasuries. People say the dollar, but really it's interest-bearing dollars like

852
01:16:21,892 --> 01:16:28,092
treasuries. Traditionally, because we're in the secular bull market, that was a good move,

853
01:16:28,572 --> 01:16:38,152
but it's not a good move. That bull market, that secular downtrend in rates,

854
01:16:38,192 --> 01:16:45,092
we've broken that in 2022 and you know i'm i like uh peter turchin and neil howland those guys those

855
01:16:45,092 --> 01:16:50,152
demographic guys and they talk about these long interest rate cycles um and if you look at all

856
01:16:50,152 --> 01:16:56,072
the structural drivers of inflation and and kind of if you look at negative catalysts for sovereign

857
01:16:56,072 --> 01:17:02,832
bonds uh it's just you just go down the list there's like half a dozen uh right catalysts

858
01:17:02,832 --> 01:17:10,072
whether it's deglobalization, whether it's the fiscal side of the government's balance sheet,

859
01:17:10,452 --> 01:17:16,652
whether it's a move in a different direction in regard to immigration policy, that's also

860
01:17:16,652 --> 01:17:22,952
inflationary, just as increasing the labor supply keeps wages suppressed. The opposite is also true,

861
01:17:22,952 --> 01:17:31,112
so you'll get inflation driven by wage gains. You just go down the list and it's all bad for bonds.

862
01:17:31,112 --> 01:17:36,372
And so I think that that long interest rate cycle, I think there's truth to that.

863
01:17:36,492 --> 01:17:41,432
Now, they could always do yield curve control and just totally nuke it.

864
01:17:41,672 --> 01:17:46,332
But I think that the bias is towards higher rates, especially at the long end.

865
01:17:46,432 --> 01:17:55,952
I mean, since the Fed started to cut rates prior to the last election, they cut by 100 basis points and the 30 years up 90.

866
01:17:56,632 --> 01:17:59,992
It went in the opposite direction by 190 basis points.

867
01:17:59,992 --> 01:18:05,512
Of course, it wouldn't be one-to-one on the cuts, but it went in the wrong direction.

868
01:18:06,472 --> 01:18:09,292
And since the cutting cycle began, we've been in a bare steepener.

869
01:18:10,352 --> 01:18:16,092
Now, today, there's a big bid into bonds, especially the short end, because the NFP was weak.

870
01:18:16,372 --> 01:18:25,712
But yeah, bonds, especially long-term duration, I don't see how it's appealing to all these current account surplus nations,

871
01:18:25,712 --> 01:18:29,052
especially after we did what we did to Russia

872
01:18:29,052 --> 01:18:32,172
where we basically just turned off a bunch of QSIPs

873
01:18:32,172 --> 01:18:36,572
and defaulted on treasuries that they rightfully owned.

874
01:18:36,812 --> 01:18:38,412
What was it, $200 billion?

875
01:18:38,512 --> 01:18:40,592
Yeah, it was over $100 billion.

876
01:18:40,732 --> 01:18:41,512
It was a lot of money.

877
01:18:42,792 --> 01:18:45,792
It's like the appeal of something like Bitcoin.

878
01:18:46,072 --> 01:18:49,512
If I was an emirate country with a lot of oil

879
01:18:49,512 --> 01:18:50,832
running a current account surplus,

880
01:18:51,132 --> 01:18:52,752
it's perfect.

881
01:18:52,752 --> 01:18:54,752
It's a bearer asset that's not centralized.

882
01:18:54,752 --> 01:19:00,572
no one can control it. It's scarce. And it's easily divisible, easily transportable,

883
01:19:00,652 --> 01:19:05,532
like all the properties we know. And it'll hold its value. Because if you're a current account

884
01:19:05,532 --> 01:19:11,132
surplus nation, that is really the purpose. It's really your goal is to, you know, you're

885
01:19:11,132 --> 01:19:16,832
accumulating national savings via that current account surplus. You're trying to store the value

886
01:19:16,832 --> 01:19:22,592
of those savings. And, you know, Japan did it in U.S. treasuries. They also bought a lot of real

887
01:19:22,592 --> 01:19:31,732
estate, of course. And I think that there will be on the margins a shift towards Bitcoin. It's not

888
01:19:31,732 --> 01:19:38,332
going to be like 20% of current account surpluses overnight get put into Bitcoin. But around the

889
01:19:38,332 --> 01:19:44,512
margins over the next five, 10 years, I think it's inevitable that we will see that kind of

890
01:19:44,512 --> 01:19:50,272
start to grow. And really just around the margins, slowly but surely, very gradually,

891
01:19:50,272 --> 01:19:53,432
stable sort of increase. I don't think it'll be violent.

892
01:19:54,192 --> 01:19:56,652
But you never know if there's a black swan event

893
01:19:56,652 --> 01:19:59,832
that just collapses trust

894
01:19:59,832 --> 01:20:01,712
of the system.

895
01:20:03,732 --> 01:20:06,832
I think you could see a little bit more of a dramatic

896
01:20:06,832 --> 01:20:10,012
move into Bitcoin from not just

897
01:20:10,012 --> 01:20:12,612
nation states, but people, corporations,

898
01:20:12,612 --> 01:20:14,472
and everyone involved.

899
01:20:15,452 --> 01:20:18,452
Yeah. When you think about long-term bonds, particularly

900
01:20:18,452 --> 01:20:24,052
the 30 year and then like yeah people like chamath saying we should do a hundred year bond a 50 year

901
01:20:24,052 --> 01:20:28,392
bond it's like take a step back and like what are you doing you're literally lending money

902
01:20:28,392 --> 01:20:36,172
and your counterparty has proven that they spend that money terribly and uh they're only racking

903
01:20:36,172 --> 01:20:42,792
up more more debt they're tapping the credit line the revolver more and more every time in 30 years

904
01:20:42,792 --> 01:20:46,792
is a long time to take that risk.

905
01:20:46,932 --> 01:20:49,132
So like why, when you have alternatives like Bitcoin,

906
01:20:49,232 --> 01:20:50,712
would you ever take that risk?

907
01:20:50,732 --> 01:20:54,552
And then you pile in the sort of geopolitical situation,

908
01:20:54,692 --> 01:20:57,092
the fracturing, the bipolar, multipolar world

909
01:20:57,092 --> 01:20:59,432
that is manifesting before us.

910
01:20:59,432 --> 01:21:01,552
And it just doesn't make any sense at all.

911
01:21:02,372 --> 01:21:04,192
Yeah, and look, like buying,

912
01:21:04,732 --> 01:21:06,772
listening to the power centers,

913
01:21:06,772 --> 01:21:08,112
like the Fed and Treasury,

914
01:21:08,652 --> 01:21:11,352
you know, it blew up regional banks, right?

915
01:21:11,452 --> 01:21:12,652
Like they listened,

916
01:21:12,792 --> 01:21:17,732
They bought all those really, really long-duration treasury bonds.

917
01:21:18,632 --> 01:21:26,112
And as soon as rates started moving higher, due to convexity, those 20-, 30-year bonds just collapsed in value.

918
01:21:27,152 --> 01:21:36,092
And ended up taking down some of the, I think it's three of the largest four bank failures in U.S. history occurred during that time period.

919
01:21:36,092 --> 01:21:40,292
So yeah, I could not be more bearish on long-term bonds.

920
01:21:40,292 --> 01:21:44,092
There's no world that I could ever see where I would.

921
01:21:44,332 --> 01:21:48,692
Now, as Jim Bianco says, there's no bad bonds.

922
01:21:48,892 --> 01:21:50,692
There's only bad bond prices.

923
01:21:52,392 --> 01:22:01,792
If the thing was yielding like 50%, like some emerging market bond, then I don't know, maybe I would buy a 30-year treasury.

924
01:22:01,792 --> 01:22:04,552
But then you get into the interest side too, right?

925
01:22:04,612 --> 01:22:08,372
Which is like, if you take all of our marketable debt,

926
01:22:08,712 --> 01:22:11,332
the average interest rate on all of our marketable debt

927
01:22:11,332 --> 01:22:12,512
is 3.3.

928
01:22:13,592 --> 01:22:17,532
As of yesterday, there's nowhere on the curve

929
01:22:17,532 --> 01:22:18,872
where you can issue a 3.3,

930
01:22:19,132 --> 01:22:32,768
which means interest expense will only continue to go higher If they are not able to kind of gain control of the Fed and really force rates down through mega dovish forward guidance yeah like interest

931
01:22:32,768 --> 01:22:37,988
expense is only going to go up. And so, yeah, you get into a situation where you're stuck.

932
01:22:38,288 --> 01:22:43,348
I think that they're very close to admitting, look, it's fiscal dominance. Can't blame us.

933
01:22:43,568 --> 01:22:47,868
It wasn't our fault. We just inherited the situation. Here's what we got to do. We got to

934
01:22:47,868 --> 01:22:52,968
run negative real rates. I think what I was saying last year that I think would be smart

935
01:22:52,968 --> 01:23:01,788
is to strategically, we know they need negative real rates, use those negative real rates

936
01:23:01,788 --> 01:23:09,068
strategically to help domestic industry, right? Use it as a, create some sort of structure like

937
01:23:09,068 --> 01:23:17,348
Japan had. They might still have that, I'm not sure, but some sort of way to try to approach

938
01:23:17,348 --> 01:23:21,748
fiscal and monetary policy and meld it with industrial policy,

939
01:23:21,848 --> 01:23:22,908
domestic industrial policy.

940
01:23:23,028 --> 01:23:28,348
I think, look, maybe people might think that that sounds very anti-American,

941
01:23:28,348 --> 01:23:32,988
but if we've got to run negative real rates and financially repress the bondholders,

942
01:23:33,268 --> 01:23:41,168
shouldn't we at least be using it as a benefit by cheap financing for things that we need,

943
01:23:41,248 --> 01:23:43,908
like critical infrastructure and defense and all that?

944
01:23:45,288 --> 01:23:45,488
Yeah.

945
01:23:47,348 --> 01:23:55,288
yeah i'm thinking here the i could certainly like if i guess the point i would make there is like

946
01:23:55,288 --> 01:24:01,668
yeah if you have to do it like and you're trying to optimize for optimal outcomes for american

947
01:24:01,668 --> 01:24:05,048
citizens that makes sense but what i would worry about like particularly when it comes to yield

948
01:24:05,048 --> 01:24:10,688
curve control and building on a point we made earlier is that more like you're seeing it with

949
01:24:10,688 --> 01:24:17,488
your channel, like more people are hungry for this. They're recognizing it. And the,

950
01:24:18,208 --> 01:24:23,948
it sort of seems like it's a foregone conclusion in many circles that like, yes, implicitly,

951
01:24:24,328 --> 01:24:28,508
it's very implicit right now. It's not quite explicit, but it's beginning to become more and

952
01:24:28,508 --> 01:24:35,468
more explicit by the day that they want to sort of officially eliminate the independence of the

953
01:24:35,468 --> 01:24:44,408
Fed, tie it in with the Treasury and go towards the Japanification of sort of the Treasury market.

954
01:24:45,228 --> 01:24:51,448
And I totally believe that's their intent and their goal and what they're going to try to do.

955
01:24:51,448 --> 01:25:00,448
But I always wonder, like, we have, we can just look at what it's done to Japan since the 90s.

956
01:25:00,528 --> 01:25:04,548
And it's arguably not good going back to, like, Silent Depression, like in Japan.

957
01:25:04,548 --> 01:25:07,628
it shows up there in the fertility rate.

958
01:25:07,848 --> 01:25:09,428
They're going to have population collapse.

959
01:25:09,728 --> 01:25:14,248
And I just wonder socially if enough people become privy to,

960
01:25:14,388 --> 01:25:16,728
we're doing what Japan just did.

961
01:25:17,128 --> 01:25:19,288
Let's look at Japan and see how they're doing societally.

962
01:25:20,868 --> 01:25:21,848
Is that optimal?

963
01:25:21,988 --> 01:25:24,348
And people say, I don't know if we should be doing that.

964
01:25:24,488 --> 01:25:28,128
Does that throw a wrench in the yield curve control plan?

965
01:25:28,328 --> 01:25:28,768
I don't know.

966
01:25:29,388 --> 01:25:33,568
Yeah, I mean, I looked at one of the videos I did

967
01:25:33,568 --> 01:25:40,048
looked at like the world war two, right. The last time we've seen this sort of thing and inflation

968
01:25:40,048 --> 01:25:46,328
was like 18% during, uh, one of those years of, of yield curve control. Uh, and granted it was,

969
01:25:46,328 --> 01:25:50,968
you know, wartime and there's, you know, we were industrial economy. It's not a one-to-one thing,

970
01:25:50,968 --> 01:25:56,668
but like, yeah, there's, there's certainly consequences to it. Um, for sure. And, uh,

971
01:25:57,368 --> 01:26:03,088
yeah, like I, I just don't see how we don't have, you know, higher inflation for the next

972
01:26:03,088 --> 01:26:12,908
decade or maybe even more. It depends really on how negative they can get the rates and how far

973
01:26:12,908 --> 01:26:19,528
below nominal growth they can get those interest rates or the average cost of the debt. That, I

974
01:26:19,528 --> 01:26:27,208
think, will determine how long they will have to run the particular regime. But yeah, what I always

975
01:26:27,208 --> 01:26:32,848
say is you can't defy financial gravity forever. America tried to defy financial gravity for

976
01:26:32,848 --> 01:26:40,468
decades and was successful. And, you know, at some point, like the bill comes due. And there is no

977
01:26:40,468 --> 01:26:45,928
easy way out. There's no painless way out. There's no way out that is just perfectly, you know,

978
01:26:45,988 --> 01:26:53,968
risk-free and without consequence and pain due to, you know, like accumulated policy decisions by

979
01:26:53,968 --> 01:26:59,608
the prior administration, prior generations. So yeah, it's going to be volatile, I think.

980
01:26:59,608 --> 01:27:09,908
it's going to be unstable. It's going to be uncomfortable, probably. Yeah. Generally,

981
01:27:10,168 --> 01:27:17,988
you don't want to see monetary policy become a political tool. Turkey did that, Erdogan did that,

982
01:27:18,128 --> 01:27:27,528
and they had 45%, 50% annual inflation. The price of gold in lira is the craziest looking chart.

983
01:27:27,528 --> 01:27:31,708
when he started to really make it a political organization.

984
01:27:32,708 --> 01:27:34,588
Now, of course, we're not Turkey,

985
01:27:34,768 --> 01:27:38,208
but it's not going to be without consequence for the U.S.

986
01:27:39,308 --> 01:27:43,488
And I just, yeah, I feel that sentiment building

987
01:27:43,488 --> 01:27:45,588
that people know something's not right.

988
01:27:45,588 --> 01:27:48,948
I think people also know that something's coming.

989
01:27:49,428 --> 01:27:53,768
There seems to be this really pervasive sense that I get

990
01:27:53,768 --> 01:27:56,768
from reading comments and stuff of people,

991
01:27:56,768 --> 01:28:03,548
like feeling like there's something right around the corner, like some shoes got a drop. Uh, and

992
01:28:03,548 --> 01:28:08,748
you know, maybe it's all, I hope it's not war. Uh, you know, maybe it's all this kind of stuff,

993
01:28:08,808 --> 01:28:13,168
you know, negative real rates, yield curve control. Uh, you know, they probably won't call

994
01:28:13,168 --> 01:28:17,888
it yield curve control. Like I think if they end up going down that route, they're going to make an

995
01:28:17,888 --> 01:28:25,188
effort to make it sound as different as possible from Japan. Um, you know, different names,

996
01:28:25,188 --> 01:28:31,988
different acronyms, different terms. But like, yeah, with one of the silent depression kind of

997
01:28:31,988 --> 01:28:39,248
pieces that I did looked at total bank loans and leases, right? And this is what drove private bank

998
01:28:39,248 --> 01:28:44,648
credit creation was what drove, you know, the post-World War II kind of booming American economy.

999
01:28:45,268 --> 01:28:51,828
And if you look at like total private bank loans and leases divided by M0, the monetary base,

1000
01:28:51,828 --> 01:28:57,788
which is that government money, private bank credit just fell off a cliff in 2008 and hasn't

1001
01:28:57,788 --> 01:29:03,748
recovered. This is something that Warner was talking about with Tucker in that interview,

1002
01:29:04,348 --> 01:29:15,388
is that where the funding is going can be just as important. If the banks are going to create

1003
01:29:15,388 --> 01:29:21,408
private credit creation, but it's going to securities purchases, that's not going to

1004
01:29:21,408 --> 01:29:27,848
benefit most Americans. And in fact, if you look at GDP divided by M2, we had GDP growth outpacing

1005
01:29:27,848 --> 01:29:34,848
the money supply. Again, up until the late 90s, when that turned over, and we've been getting

1006
01:29:34,848 --> 01:29:42,028
negative returns for each new dollar of debt that we print, we're getting less and less actual GDP.

1007
01:29:42,508 --> 01:29:48,908
And it's the same story if you look at it, the GDP divided by the debt. And GDP outpaced debt

1008
01:29:48,908 --> 01:29:55,528
growth up until I think it was 82. And then in 82, 83, in the early 80s, it rolled over and we have

1009
01:29:55,528 --> 01:30:00,228
been getting less and less return on each new dollar of debt. So they, they got to do something.

1010
01:30:00,228 --> 01:30:07,288
And if they, if there is smart policy that can get, uh, that side of the economy, the bank and

1011
01:30:07,288 --> 01:30:14,108
the lending side, uh, to somehow direct into more productive, like you start getting into

1012
01:30:14,108 --> 01:30:19,508
uncomfortable conversations though, because like, you know, what, if you take that one or two steps

1013
01:30:19,508 --> 01:30:26,188
further, that's like, you know, socialism or, uh, some pretty ugly industry. Yeah. Like it,

1014
01:30:26,308 --> 01:30:32,208
you get into some uncomfortable conversations, but like, uh, and, and to be clear, like, I don't

1015
01:30:32,208 --> 01:30:38,848
support, you know, a lot of that craziness, but like, I think that there is a way that we can,

1016
01:30:38,848 --> 01:30:44,088
um, I mean, Japan had that, right. That was one of the things that they had like the trade

1017
01:30:44,088 --> 01:30:50,508
industrial ministry or whatever it was. And it coordinated with, and look, like Japan did great

1018
01:30:50,508 --> 01:30:56,548
after World War II, you know, up until kind of the bubble started. They were doing amazing. I mean,

1019
01:30:56,588 --> 01:31:00,628
they thought there were people here in America that were worried that Japan was going to overtake

1020
01:31:00,628 --> 01:31:05,988
America, like this tiny island country was going to overtake America. So like, you know,

1021
01:31:06,168 --> 01:31:12,448
I think that, you know, free markets are generally good, generally the side you want to err on.

1022
01:31:12,448 --> 01:31:26,408
But I think that like to ignore any and all evidence that to the contrary, I think, you know, like Japan made it pretty clear that like the average Japanese person from call it, you know, 1960 through to 1985 did really well.

1023
01:31:26,408 --> 01:31:28,828
And the economy as a whole did really well.

1024
01:31:29,788 --> 01:31:37,808
And, you know, I think, you know, even Howard Lutnick is calling for some of this kind of much more like not typical conservative stuff.

1025
01:31:37,808 --> 01:31:44,188
He did that interview with Pomp where he was talking about basically nationalizing the defense companies.

1026
01:31:44,708 --> 01:31:48,628
So this is not the Republican Party of my parents or my grandparents.

1027
01:31:49,908 --> 01:31:57,888
And so I think there will be some degree of coordination to try to direct much more productive lending.

1028
01:31:58,248 --> 01:31:59,508
Because I think that's a big story.

1029
01:31:59,508 --> 01:32:10,908
I mean, if you look at that private bank credit creation, if you look at it as a logarithmic trend, it fell off in 2008 and it's just been anemic going sideways.

1030
01:32:11,188 --> 01:32:12,788
And I think that's a big problem.

1031
01:32:13,048 --> 01:32:17,088
And Werner was very on point with his discussions about it.

1032
01:32:17,288 --> 01:32:38,684
Well you seeing the product of that be the manifestation of all these private credit funds that are spinning up to service this market because the banks either won or can for some reason Yeah And last question because this is a big meme and part of like that we going to grow out of this like do you have any hope or optimism

1033
01:32:38,684 --> 01:32:46,924
about like the productivity miracle provided by ai like is that is this a silver bullet like

1034
01:32:46,924 --> 01:32:55,564
black swan that we're getting handed it's possible um i am not the biggest like just on a personal

1035
01:32:55,564 --> 01:33:02,584
level. I try not to let like my personal beliefs or feelings influence like my analytical, right.

1036
01:33:03,244 --> 01:33:09,504
But just on a personal level, like I'm much more into like, give me a cabin in the woods of

1037
01:33:09,504 --> 01:33:16,144
Montana, right. And like, I'm not one of those like tech accelerationist sort of people that is

1038
01:33:16,144 --> 01:33:21,084
like begging for the singularity and all this craziness. It's generally not kind of who I am

1039
01:33:21,084 --> 01:33:29,204
as a person. So that being said, my bias being clear, I don't think that it's very likely. I

1040
01:33:29,204 --> 01:33:37,664
think it's certainly maybe 10, 20, 25% likelihood that you see productivity. But as Lou Groman

1041
01:33:37,664 --> 01:33:44,964
points out, and what he says, I have found as well through looking at it independently,

1042
01:33:44,964 --> 01:33:52,704
it would have to come at the right pace, not too quick, not too slow, and just the right amount.

1043
01:33:53,024 --> 01:33:57,684
Because otherwise, if it comes too quickly, you're talking about, I don't know, 20, 30,

1044
01:33:57,804 --> 01:34:04,344
40% unemployment if you throw robotics in there. You could see such massive disruptions. And then

1045
01:34:04,344 --> 01:34:11,684
how do you fund the UBI that ends up becoming necessary for that in that world? Some people say,

1046
01:34:11,684 --> 01:34:17,864
look for every job that's lost, one will be created. I don't fall into that camp. I think

1047
01:34:17,864 --> 01:34:22,904
more jobs will be lost than created with this, especially once you throw in robotics into the

1048
01:34:22,904 --> 01:34:29,624
mix. So yeah, I think that we know how inefficient the government is and the cost of administering

1049
01:34:29,624 --> 01:34:35,124
some of these social programs. I did a post maybe last month that looked at Medicare outlays,

1050
01:34:35,124 --> 01:34:42,444
social security outlays and VA outlays relative to tax receipts. And I think it was Medicare has

1051
01:34:42,444 --> 01:34:50,404
grown 7.4 times faster than GDP or tax receipts going back to 1965. Social security, I think,

1052
01:34:50,464 --> 01:34:59,344
was 3.4% 3.4 x faster, 3.4 times faster than GDP or tax receipts. And VA, I think, was in the

1053
01:34:59,344 --> 01:35:02,904
in the low threes as well. So government programs kind of by definition aren't efficient.

1054
01:35:02,904 --> 01:35:11,204
So if you have high unemployment, it'll take money to then administer the programs that do all the UBI.

1055
01:35:11,404 --> 01:35:13,704
So you end up talking about even more money.

1056
01:35:14,124 --> 01:35:15,344
Compoundly inefficiencies.

1057
01:35:15,764 --> 01:35:23,084
Yeah, and you ask the question, or I ask the question for tech stock kind of people, how are you going to fund that?

1058
01:35:23,084 --> 01:35:30,504
The only way that I see that being funded is by just massive taxes on Google and Meta.

1059
01:35:30,504 --> 01:35:36,124
Whoever has those tools, just massive taxes on them.

1060
01:35:36,364 --> 01:35:39,324
And then it's like, well, why own the NASDAQ?

1061
01:35:40,324 --> 01:35:40,844
Yeah.

1062
01:35:41,124 --> 01:35:47,444
And then also to that point, and I'll put my bias out there.

1063
01:35:47,544 --> 01:35:52,924
I'm probably more optimistic because we've been leveraging AI here and it's made us more productive.

1064
01:35:53,304 --> 01:35:55,484
And I haven't fired anybody for it.

1065
01:35:55,544 --> 01:35:56,784
I've just equipped people with it.

1066
01:35:57,384 --> 01:35:58,664
Extend your capability.

1067
01:35:58,664 --> 01:36:06,964
But to your point, I think it's very unclear how many, if any, of these companies are profitable yet.

1068
01:36:07,164 --> 01:36:08,124
I think that's the big question.

1069
01:36:08,244 --> 01:36:10,704
How much cash are they burning behind the scenes?

1070
01:36:10,884 --> 01:36:21,684
How much of this is just an attempt to try to create enough energy and attention and adoption to try to get to profitability?

1071
01:36:21,684 --> 01:36:27,644
but like certain companies at least i think it's pretty clear they're burning incredible amount of

1072
01:36:27,644 --> 01:36:32,684
cash and not getting huge amount any return in terms of profits and it's like have we reached

1073
01:36:32,684 --> 01:36:39,024
a point where these companies can actually do it profitably yet like i think no and like will

1074
01:36:39,024 --> 01:36:43,964
will it ever manifest like that's i think that's a big question yeah i mean i would say like i

1075
01:36:43,964 --> 01:36:50,984
at first was like very opposed to adopting ai just myself um but then i was like no i'll try

1076
01:36:50,984 --> 01:36:57,424
it out. And so I kind of started tinkering with it. And I got to say, I've come around personally

1077
01:36:57,424 --> 01:37:01,824
to AI. I was one of those people that kind of hated it in the beginning and was very skeptical.

1078
01:37:02,184 --> 01:37:11,544
But it's helped immensely. I can throw into it some complicated, I can say, country XYZ has a

1079
01:37:11,544 --> 01:37:17,484
current account deficit. They're running a fiscal, right? Give it all these conditions,

1080
01:37:17,484 --> 01:37:26,704
all these inputs or variables, and then ask it to interpret how a particular policy on this side can...

1081
01:37:26,704 --> 01:37:34,484
The degree to which it can think beyond my capacity so quickly has enabled me to...

1082
01:37:34,484 --> 01:37:36,344
It's helped me a lot.

1083
01:37:36,764 --> 01:37:41,444
And of course, it helps with little things like help me write an introduction to my video,

1084
01:37:41,724 --> 01:37:44,324
stupid stuff like that, that saves you time.

1085
01:37:44,324 --> 01:37:51,204
And so then that's more time that I can spend reading academic papers at the Fed or whatever.

1086
01:37:51,924 --> 01:37:56,424
And so I do think, I'm not trying to say that it's like a horrible thing.

1087
01:37:56,564 --> 01:38:05,644
I think that the productivity, I think that if people are skeptical of it, I would encourage them to try to just adopt it.

1088
01:38:06,044 --> 01:38:10,024
It's not perfect yet, of course, but I was one of those skeptics.

1089
01:38:10,024 --> 01:38:20,524
And I got to say, it's been a massive boost for just a single guy that's trying to do all this YouTube and Twitter and all this stuff.

1090
01:38:20,644 --> 01:38:22,984
It has massively benefited.

1091
01:38:24,984 --> 01:38:25,144
Yeah.

1092
01:38:26,664 --> 01:38:27,664
Fun times.

1093
01:38:27,964 --> 01:38:28,404
Exciting times.

1094
01:38:28,444 --> 01:38:29,044
Are you optimistic?

1095
01:38:29,244 --> 01:38:29,724
Pessimistic?

1096
01:38:30,244 --> 01:38:31,264
I'm optimistic.

1097
01:38:31,264 --> 01:38:39,864
I think I see a spirit that's kind of reemerging, especially amongst younger people.

1098
01:38:40,024 --> 01:38:48,084
it beneath the anger beneath the resentment and hopelessness and despair. Like there is this kind

1099
01:38:48,084 --> 01:38:54,864
of bubbling up of, you know, this is the first turning that Neil Howe talks about. And I think,

1100
01:38:54,924 --> 01:38:59,284
you know, we're, we're certainly in a fourth turning and it's certainly, you know, I think

1101
01:38:59,284 --> 01:39:06,464
the next couple of years are going to be very volatile, very unstable, uncomfortable maybe,

1102
01:39:06,464 --> 01:39:24,724
But the benefit is that coming out of this, we are going to have such a golden age of American exceptionalism that I think might even surpass the last golden age of America after World War II.

1103
01:39:24,724 --> 01:39:30,284
uh and so that part gives me hope you know and i would say for the people that like are worried

1104
01:39:30,284 --> 01:39:34,484
about where we're at today and where you know the volatility and the chaos and this and that

1105
01:39:34,484 --> 01:39:41,104
i would just say like just try to to weather through the storm because it i do have hope

1106
01:39:41,104 --> 01:39:46,464
that it gets better um and you know that's what history that thousands of years of history right

1107
01:39:46,464 --> 01:39:51,584
like peter turchin goes back like hundreds and hundreds and hundreds of years and finds the same

1108
01:39:51,584 --> 01:39:56,864
cycle. So yeah, like the inevitably kind of coming out of this fourth turning will be,

1109
01:39:57,524 --> 01:40:03,824
you know, a golden age, unlike any other, because now we're going to have tech, right? And, and look,

1110
01:40:03,884 --> 01:40:09,884
one of the things to say about America is like, we by far have the best tech companies and the best

1111
01:40:09,884 --> 01:40:16,244
kind of innovation. So that's a positive. And yeah, I think definitely medium to long-term

1112
01:40:16,244 --> 01:40:21,064
optimistic, short-term it could be, you know, but you just got to like weather the storm, right? Like

1113
01:40:21,064 --> 01:40:22,024
Don't do anything stupid.

1114
01:40:22,164 --> 01:40:23,044
Don't use leverage.

1115
01:40:24,384 --> 01:40:26,984
You know, just kind of keep it simple and just hold on.

1116
01:40:27,524 --> 01:40:31,064
And I think, you know, 10 years from now, things will be a lot better.

1117
01:40:31,684 --> 01:40:31,924
Hopefully.

1118
01:40:33,224 --> 01:40:33,484
I agree.

1119
01:40:33,924 --> 01:40:41,984
And that sort of energy that you're describing, it feels like for a period of time, particularly post 2000, there's been a lot of complacency.

1120
01:40:42,884 --> 01:40:45,624
Like we were given, like us as millennials, we were given the roadmap.

1121
01:40:45,864 --> 01:40:48,004
Like you go to school, you get a four-year degree, you get a job.

1122
01:40:48,064 --> 01:40:48,484
It's done.

1123
01:40:48,964 --> 01:40:49,804
A lot of us went.

1124
01:40:50,404 --> 01:40:51,024
I didn't do it.

1125
01:40:51,064 --> 01:40:58,164
But like a lot of people, I went to college, but like I didn't like stick to a career because I had basically sniffed out pretty early.

1126
01:40:58,264 --> 01:41:00,144
Like, this doesn't seem like the right thing to do.

1127
01:41:00,484 --> 01:41:07,084
But many of our generation did and recognizing like the roadmap didn't lead me to where I thought I was going.

1128
01:41:07,084 --> 01:41:12,844
Yeah. And I think particularly with Zoomers and millennials that are privy to what's going on like yourself,

1129
01:41:12,844 --> 01:41:20,704
there's a degree of agency that's re-emerging where it's like i'm not just gonna take the the

1130
01:41:20,704 --> 01:41:26,304
roadmap and basically use that for my life like i'm gonna try to figure out and actually understand

1131
01:41:26,304 --> 01:41:31,764
things and make my own way which is incredibly encouraging yeah it's the the weak men's weak

1132
01:41:31,764 --> 01:41:36,144
men create hard times and hard times create you know strong men strong men create good times it's

1133
01:41:36,144 --> 01:41:42,724
kind of i mean it it sounds stupid but it's kind of the pattern that i i see as well yeah robert

1134
01:41:42,724 --> 01:41:47,504
this was incredible. Where can people find out, uh, where can they find your work on YouTube?

1135
01:41:47,844 --> 01:41:54,664
Yeah. On YouTube, it's, uh, infranomics, I N F R A nomics, like economics. And then, uh,

1136
01:41:54,664 --> 01:42:02,344
on Twitter it's at infra I N F R A a underscore. And I have the blue check. There's, I guess I'm

1137
01:42:02,344 --> 01:42:07,564
at a size where I get the imposter. So just make sure it has the blue check, um, and the underscore

1138
01:42:07,564 --> 01:42:08,624
at the end there.

1139
01:42:09,184 --> 01:42:10,624
And yeah, that's basically

1140
01:42:10,624 --> 01:42:11,804
most of where I am.

1141
01:42:11,864 --> 01:42:12,944
I do spaces and stuff.

1142
01:42:13,124 --> 01:42:14,504
So I try to respond

1143
01:42:14,504 --> 01:42:15,764
to all the comments on YouTube.

1144
01:42:16,024 --> 01:42:18,404
So I try to engage with people

1145
01:42:18,404 --> 01:42:19,164
as much as possible.

1146
01:42:19,264 --> 01:42:20,124
If you ever want to talk,

1147
01:42:20,244 --> 01:42:22,044
come to one of the spaces we're in

1148
01:42:22,044 --> 01:42:23,324
and just hang out,

1149
01:42:23,984 --> 01:42:24,964
ask your questions, talk.

1150
01:42:25,604 --> 01:42:25,844
Hell yeah.

1151
01:42:26,004 --> 01:42:27,684
We'll link to all that

1152
01:42:27,684 --> 01:42:28,424
in the show notes.

1153
01:42:28,524 --> 01:42:30,204
We should definitely do this again.

1154
01:42:30,264 --> 01:42:30,904
This was fascinating.

1155
01:42:31,424 --> 01:42:32,584
Yeah, it was a great time.

1156
01:42:33,384 --> 01:42:33,744
Awesome.

1157
01:42:34,344 --> 01:42:34,624
All right.

1158
01:42:34,804 --> 01:42:35,624
That's all we got today, freaks.

1159
01:42:35,624 --> 01:42:36,104
Peace and love.

1160
01:42:36,524 --> 01:42:36,664
Okay.

1161
01:42:37,564 --> 01:42:38,324
Thank you.