Gary Broad. It's been too long, sir. Welcome back to the show.
Thanks for having me back, Marty.
Well, we were just discussing before we hit record the last time you were on it.
I believe I remember it was in the midst of or right before the tariff tantrum.
And regardless of whether it was right before or right during, I think your call was pretty prescient.
is that this is going to take time to see the sort of ramifications of a shift in trade policy
toward tariffs to play out. And so we've had about eight or not eight, like six, seven months now
of the implementation of the tariffs. What is your, what are your thoughts on how this has
played out so far as it pertains to tariffs specifically. So, you know, back when, you know,
we had Independence Day roughly six months ago, seven months ago, something like that.
You know, what I said at the time was this is not going to be the disaster people think it is.
You had all these fiat economists screaming, oh, no, you know, we're going to have horrible
inflation. It's going to crash the economy. And none of that has happened. And, you know,
to their credit. Some of them said, hey, you have to give it time. It takes a while for these things
to work their way through the supply chains. But, you know, here we are and we're now a day away
from November and we're just not seeing the kind of goods inflation that indicates any kind of
disaster or, you know, any kind of massive slowdown. Regardless of that, I think, you know,
there's a huge error in the academic models. You know, Porter's theory of competitive advantage,
it makes sense in a classroom. And I'm a free market guy myself. But the issue with this stuff
is the United States has been outsourcing its manufacturing capacity to lower cost
partners. You know, I use that word very guardedly. And that's been going on for about 40 years.
And so what happens when we can no longer make our own pharmaceuticals, our own chips?
You know, there are all sorts of aspects of our economy that we no longer have control over.
And, you know, what happens when we get to the point where the only thing we export is dollars?
So it's not a sustainable situation.
And one of the things I really like about what President Trump is doing is he's bringing back manufacturing to the United States.
We have trillions and trillions of dollars of companies saying we're going to build manufacturing capacity in the United States in order to avoid these tariffs.
That, to me, is a pretty good way around this.
And touching on the point of it's going to take time to really see the full ramifications of this policy shift.
When do you think we'll be in the clear?
Do you think we're in the clear now in terms of understanding the effects of tariffs?
Is it going to be a 12 to 18 month window where it's like, OK, we're in this period where we're adjusting and we'll have clear information once we get a year, year and a half out?
Or is it safe to say now that this is moving in the right direction and we should be leaning in harder?
So I think we're leaning in the right direction.
It'll be interesting to me to see if the fiat economists who are screaming that this will be a disaster, but saying it's going to take a little time.
You know, we'll get CPI data and we'll get like PMI manufacturing data over the next couple of months.
And it'll be interesting to me to see if there is no gigantic spike in goods inflation, if they'll just admit we got it wrong.
And if you take a look at, you know, the history on this stuff, one of the ways that the academic theories have gotten it wrong is people do substitute for different goods.
But also when there are tariffs, you end up with an increase in domestic manufacturing.
And that's exactly where we're heading.
The thing that I'd be watching for right now is all the companies have said we're going
to build trillions of dollars of production capacity in the United States.
I want to see them follow through on it because that's that's the long term win is to put
Americans back to work, building things, making things.
And I get that I sound like a 1980s and 1990s Reagan commercial saying that, but there is something to it.
And outsourcing all of that to Asia or to Mexico, that's, again, not sustainable.
It's not something that I want to see happening long term.
We're in a situation right now where China has just basically exercised influence over U.S. trade policy by threatening to withhold certain things that we need.
do we really want to be at their behest?
I think that's not a good place for us to be.
Yeah, it's been a topic on the show for the last few weeks
is the posturing between the US and China,
particularly around rare earth metals.
Obviously, Scott Pesant, Trump,
meeting with Xi in his cabinet this week.
Are you optimistic that something good
can come out of these meetings?
Yes and no. I think short term, at first of all, they've said, you know, we're going to come to an agreement.
And the smart money was always on them coming to an agreement because it's in both sides' interest to do that.
The thing that I think this particular White House understands, and I wish more Americans understood, is China's viewing this as temporary.
Right. The thing that they were using as leverage is access to rare earths, which we need for things like technology, auto manufacturing.
You want EVs. We're going to need those. And a lot of our weapons systems require that advanced weapons systems.
You need these kinds of things. So China, by saying you can't have these things that, you know, they have an almost a near monopoly on.
You can take entire U.S. industries offline. And that's that's where we are. It's not an accident that China has such a monopoly on this. And, you know, one of the things that will happen is if other places start to produce rare earths, you know, China can drop their price.
They will lose money. They're willing to lose money in order to maintain market share or or basically monopoly market share.
This is not an accident. And so, you know, I think China views what's happening here.
We'll have an agreement, but they view it as temporary while they continue to build strength in areas where we're going to need them.
And if the United States doesn't understand that we need to build our own capacity again in rare earths and pharmaceuticals and semiconductors, you know, these kinds of of critical industries without that, we're going to be in trouble.
Because what are we going to do when we don't have something to negotiate with?
yeah and that's china this year particularly with the rare earths the tariff saber out of
saber rattling between the u.s and china and then i'm sure you've noticed but the sort of shift
towards this alternative settlement network by putting a lot of gold registering a lot of gold
on warren at the shanghai exchange and beginning to broker deals with with other countries to settle
trade deals and yuan that can easily be reconverted into gold because they're putting
all this gold up. And so it seems like China is like moving their pieces on the chessboard to say,
hey, US, we have a strong economy, number one. Number two, we're not happy with the way you
guys are weaponizing the dollar system and are beginning to set up alternative rails to
sort of hedge that exposure. Yeah, that I mean, that brings me to something where
I've had, you know, multi-year arguments with people. You know, if we go back to,
you know, I think it was the first quarter of 2022 when the Biden administration basically stole
hundreds of billions of dollars of Russian dollar denominated assets. And I said, this is a bad
idea. And, you know, people got angry at me and they said, oh, no, you know, you're supporting
Russia that you like Putin. No, that's not it. I'm an American. I want what's best for the United
States. And what we've just done is we've communicated to the rest of the world that the
dollar is something you can rely on only as long as you stay in the good graces of Washington, D.C.,
a place that switches leadership every two to six years. Right. I mean, we we just made the dollar
unreliable by doing that. It didn't stop the Russian war machine. It didn't slow Putin down,
but it did hurt the United States. On top of all of that, you know, I've had this multi-year debate
with people where, you know, they're the BRICS coalition, right? Brazil, Russia, India, China,
South Africa. Now that that group has grown to a couple dozen countries that encapsulate more than
half the world's population, you know, they're saying we're going to come up with our own
BRICS currency. And, you know, so we need to take this seriously. And people have, you know,
they've argued with me on X, formerly Twitter, and said, you know, hey, they can't do it. Who
will trust them that, you know, they don't really have the capacity. They're not coherent. Okay,
fine. But we should be concerned about the fact that more than half the world's population is
looking for an exit for the dollar. And, you know, I've I had never owned gold before 2020.
But in 2020, I started buying it in size. I've never sold any and I just held that position.
because you have a situation where the dollar is being debased at an increasing rate.
You know, the purchasing power of the dollar is declining.
But also you have central banks all over the world that are saying we want to sell dollars and buy gold and we're just going to hold it.
And they're they're not price sensitive. Right.
The central banks buying gold don't care if they're buying it.
Three thousand dollars an ounce, you know, fifteen hundred dollars an ounce where I first bought it at four thousand dollars.
It doesn't matter. They're just going to stick it in a vault.
Yeah. Well, and that turns to sort of domestic monetary policy here in the United States.
And I think throughout the course of this year, it's been pretty clear that the Trump administration, particularly Scott Pecent, wants to sort of align the goals of the Federal Reserve with the goals of the Treasury and begin to sort of erode the.
perceived demarcation between the Fed and the Treasury, the Fed's independence. And there's
been a number of things that happened this year, but obviously we had a Fed meeting this week,
and I believe it was last month's meeting or maybe in Jackson Hole. Jerome Powell had to come
and make an about face and acknowledge that tariffs weren't as inflationary as people
thought they were. But in recent months, it's this idea or this theme that you have so for
rates blowing out, you have the standing repo facility being tapped and many people wondering
if a liquidity crisis is on the horizon in the back end of the system. And yesterday cut 25 bps
and it looks like inflation is not screaming like the Fed thought it would, at least as it
pertains to the CPI inflation. What do you make of the Fed's decision this week? What's been
happening in recent months and this sort of quarreling between the Treasury and the Fed?
Yeah. So I have a lot of thoughts on that. But first, I actually want to address something that
you said. One of the reasons I love talking to you already was the way you said the perceived
independence of the Fed. And again, like this is a disagreement I've been having with people.
You know, you have all these people saying, you know, the Trump administration is, you know,
They're changing our norms. They're, you know, they're violating the independence of the Fed.
OK, Marty, you know, as well as I do, the Fed has never been an independent institution for the first couple of decades.
The chairman of the Fed and the Treasury secretary were by law the same person.
FDR used the Fed to finance his whole, you know, New Deal.
Lyndon Johnson, you know, literally picked up Fed chairman Arthur Burns and slammed him into a wall.
literally strong-arming the guy into lower rates. President Nixon, he did the same thing. He didn't
slam anybody into a wall, but he pressed for lower rates, got it, and we had the inflation
of the 70s. This has been a constant feature. I'm on team and the Fed, but we have never had
a politically independent Fed. And every president, whether Democratic or Republican,
has always wanted a Federal Reserve that would give them easy money policies so they can juice
the economy. Every president wants to point to lots of economic growth, even if it's meaningless
nominal growth. Right. It's why Washington spends so much money right now. They can all say,
you know, look, while they're stealing, they can they can just say, you know, look,
we have GDP growth. Well, you know, is it really? Is it is it really product or are you just,
you know, wasting our money and counting it on your own scorecard? Right.
Every one dollar snap benefits contributes one dollar and 80 cents to GDP. I hope you knew that.
Yeah. Great. Yeah. I'm glad to know that. Yeah. The government multiplier. That is, you know,
So if you think about it, that is one of the most incredible examples of a PSYOP I've ever seen, where the government, which even when it's effective, is not efficient, is trying to convince us that every dollar they take from us, every dollar they take from the productive private economy and spend on their own prerogatives somehow leads to more benefit for us than we would have produced ourselves.
Right? Literally, the nonproductive part of the economy is taking from the productive
part of the economy and saying, we're producing $1.80 of benefit for every dollar we steal
from you or Guys like Krugman would make a living talking about the multiplier effect If you just think about it for a second of course that doesn make sense But it an incredible psyop that you know the newspapers reported
And like, how stupid do we have to be to accept that as the truth?
I think people are waking up to it, though.
I mean, that was the I mean, that was it seems like one of the wrote scripts that was handed to Democratic politicians last week at Tim Walts.
Keem Drefrees, I believe, tweeting it out like, hey, we need to turn Snap back on because it's
actually stimulative for the economy. And it's like, this doesn't really make sense.
You know, one of the things I think is really interesting, you know, look, Marty, I know one
of the things that you pay attention to is the Overton window, right? What are we really allowed
to talk about? And I have seen an incredible change in the last couple of weeks as we've come
up on like, you know, the snap cliff. And previously, if we go back, you know, five or 10 or 15 years,
it would have been unseemly to say, hey, I don't care about this program because we always said,
oh, no, you want people to be hungry. You want people to starve. And we couldn't have talked
about it. My thread on X, my feed is full of people saying, wait, how many people are getting
fed by the government? How many people are on benefits? Like there, there is this visceral
anger from people who are working saying, wait, how many people am I feeding who aren't in my
household? And it didn't, this, this situation has actually ended up opening the Overton window
wider where that's not what I would have expected to see. You know, people are openly saying,
we've got too many people who are on benefits. Yeah. 40 million, 15% of the country. And,
And to not come off as a sort of soulless, non-empathetic individual,
there are certainly people who may need some assistance.
But if you look into the details, it's like you're supposed to be looking for a job,
what you're allowed to spend the benefits on.
You can buy any crap you want.
It's becoming clear if you hop on TikTok and you find people talking about what people actually do with the benefits.
There's a lot of people just selling them and just using as a loophole to not have to work.
And I think that's whether it's the SNAP benefits or the broader immigration conversation that's happening in the country right now.
I think a lot of people are getting back to first principles.
Wait a second. There should be rules. There is a rule of law.
And if we don't enforce the rules, whether it pertains to what you have to do to get these SNAP benefits or the rule of law of what you have to do to be here legally as somebody who came from outside the country, people are saying, wait a second, we're not following any of these rules.
And that can't happen anymore.
You don't have a society.
Why does the government exist if they're not enforcing any of these rules?
That is the contract that we engage in as citizens with them is to enforce these pretty basic rules.
Yeah. And in fact, you know, one of the things people, you know, the conversation has to take place in this, you know, humane, you know, we want what's best for people.
We want to be kind. But I have more concern for my fellow Americans than I do for people who came here illegally.
And one of the ways our government is harming our fellow countrymen is by taking people who came here illegally, giving them free housing, giving them these these SNAP benefits, giving them food and basically covering their expenses.
And what that means is that these people can work for below market rates. Right. I mean, basically imagine, you know, you're you're a blue collar worker and your job gets taken by somebody who who's supported by the government.
Right. Who's like, yeah, I can work for lower rates. I can work for a lower wage because the government's covering my grocery bills and my rent. And that's I you know, why is it somehow wrong to express sympathy for our own people?
I don't think it is. And to your point, I think the Overton window is shifting. And that's what I wonder is, is there enough time between when these policies started getting implemented earlier this year and the midterms to really see immaterial effects that sort of gets regular Americans like you and I, maybe not like you and I, blue collar Americans.
specifically waking up and saying, oh, this actually did help me.
I can get a job now.
And when you think about immigration specifically,
as it pertains to rent and housing and all that,
like pushing up the cost of real estate
and exacerbating the housing affordability crisis,
like if they're successfully able to cut the benefits of illegal immigrants
and get them out of the housing, bring housing costs down,
bring jobs back to market, bring consumer good costs down,
then I think there's a good chance that people can say, oh, wow, this is actually working.
We should lean into this order. Yeah. So I you know, one thing I think was lost in the data that
we got earlier this year was you had a decrease in the number of jobs available, but you didn't
have a decrease in the number of Americans working and wages went up. And you think, wait, how how is
that possible? These things shouldn't have existed together. And the obvious answer was you had people
leaving. So you had fewer jobs available, but you had fewer people looking for those jobs,
enabling Americans to hold on to their jobs and get wage increases, right? They were no longer
competing with illegal labor. And so what you had, and Powell was, he was careful the way you said it,
But he talked about a labor market that was surprisingly imbalanced.
So this is a few months ago and some people may not remember.
But I think people were surprised that you had so many things shifting all at once, but
remaining in balance.
Now, you know, one thing you and I should talk about is he had some other interesting
comments in this week's press conference.
But, you know, this is as long as we're talking about policy, it makes sense to reference what
happened earlier.
I think it was in the summer.
Yeah.
What comments this week stuck out to you?
Well, you saw the market, you know, tank when Powell said that, you know, a December rate hike wasn't, you know, baked in.
And I think, you know, people, anybody with a brain would have said, well, there's no universe where Powell would have actually said, yeah, we're planning a rate cut for December as well.
He was never going to say that.
But I think it was the part where he said far from it. Right. It was like this hawkish hawkish message, like telling Wall Street, don't don't count on this.
You know, we it may not be coming. And, you know, people got really worried about a hawkish Fed.
My take on it was very different. And I know you read the piece I put out on it.
But my take on it was very different. You had the Fed cutting for the sixth time, you know, in this cycle with the CPI, which is understated, you know, at 3 percent, 50 percent above the 2 percent target, which itself is 2 percent too high.
You know, what the Fed is basically doing and, you know, they can talk about the employment market all they want.
But, you know, Americans would rather have 5 percent unemployment, which is, you know, 1 percent above that baseline and 0 percent inflation because inflation affects 99 percent of the country, whereas 1 percent of the country would be losing their jobs.
And that's, you know, that's something that I think a lot of people are missing.
But basically, what the Fed has done is they made it clear the 2% target is gone.
We now have a 3% or 4% target.
And when you figure that the CPI is understated, most obviously in the difference between Case
Shiller and OER, the owner's equivalent rent, which makes the housing prices that people
are seeing in CPI not reflect the reality, which is much more challenging, unless you're
selling a home.
You know, what we really have now is a five or six percent inflation target. Right. And and they just did that at the same time that they're saying, yeah, we're going to end quantitative tightening.
Everybody was focused on Powell saying far from it, meaning we haven't decided on a December rate cut and got upset about it.
But the reality is this was very dovish action by the Federal Reserve.
Right. You you had the CPI going up.
The CPI understated a Fed cut and the end of quantitative tightening.
How much more dovish is this Fed supposed to get?
Right.
I mean, to Jerome Powell's credit, I guess, and to your point,
what do people expect him to come out in November
and basically tell you exactly what he's going to do in December?
But you wrote it in your piece.
The stock market is focused solely on expectations now,
like forward-looking expectations.
Yeah, and by the way, that's something that I find really,
really strange. Right. So like, you know, last week the market was looking for a 3.1% CPI print.
We got a 3% print. And so like, let's talk about a 3% print means, right. You got a 2% target,
which is just a made up numbers. Literally, it was made up by a European. Yeah. Like a guy from
New Zealand is on a TV show. Somebody asked him a question. He's like, ah, you know, 1%. Like you
just made it up on the spot. But the Fed's mandate, as you know, is stable prices. That's a 0%
inflation target that we should have. OK, so they're going for the 2% target, which
is not right. It's just made up, but fine. But we've been above that since the beginning of,
it's been five years, right, since early 2021. It's been five years, right? And they cut,
But but you saw people the week before when we get this CPI print, it's below expectations.
And so instead of three point one percent, we got three percent.
It's below expectations.
Powell has to cut.
Why?
The absolute number is still too high.
Right.
I mean, it's people are using buy now, pay later for their groceries because inflation
is too high, because the cost of groceries is not up one or two percent like the Bureau
of labor statistics tells us it is, right?
People aren't financing burritos because, you know, like they're doing it because a
burrito and a Coke is $20 or $18, you know, whatever it is.
Like people are suffering from inflation and the Fed just reduced rates, right?
And Wall Street is saying they have to reduce because our expectations were 3.1%.
You know, I follow the logic, but I don't agree with that.
Yeah. And I'm, excuse me, coughing, number one, but number two, looking for, I forget, it was the head of one of the banks.
I thought it was Citibank, but I can't find the clip. But essentially, he was.
We're getting to the point where the bankers are admitting that because you have this sort of dislocation between the stock market hovering around all time highs and the real economy, if you will, if you will.
And it was the first time I've ever heard a bank executive explicitly say, I think people are flowing in equities to escape or outpace inflation.
Equities are explicitly being used as an inflation hedge or not.
People aren't going into index funds because I think the financials of the companies within that index are producing value and they're being productive companies making a profit.
And that may spit off dividends.
It's like, no, we need to escape this inflation.
So we're just going to push all of our money into the stock market.
Yeah.
So the stock market, gold, silver, Bitcoin, energy, right?
I mean, basically what this Federal Reserve has done is they are taking money from the
99% of people who are harmed by inflation and blowing up another asset bubble.
So, you know, like, what are you going to do?
I have a no black pill policy, which I put into writing this week.
Like, I don't like it, but I'm not going to complain about it or whine about it or be upset about it.
I'm just going to own the things that are going to benefit from more long term inflation.
Yeah. Well, and we're at this weird crossroads to.
where you have people escaping into equities to escape inflation,
but then you have this sort of AI theme in the background too,
and there is this idea that we need stimulus to be able to invest in the infrastructure
that can manifest what many believe to be the holy grail of productivity gains,
And not only that, but an arms race against China to be the dominant AI player in the world.
And so you have that sort of external force implicitly begging for more liquidity so that they can go build out this infrastructure.
And then not only that, but then you obviously have the effects of the productivity gains from artificial intelligence if they're real, which I think they are to an extent right now and could grow stronger moving forward.
And that effect on the jobs market and the economy overall, like how it seems like an interesting variable that's been added to the mix in the last two years.
Yeah, look, first of all, I do think AI is going to be real.
I do think there will be gains. I do think there's there's a value to it. We're not there yet. You know, like my my version of chat GPT actually tried to send me to a place that was closed when, you know, I had a time sensitive situation.
And I said, why are you doing acid verified information only?
Why are you sending me to a place that was closed three years ago?
And it responded.
I was just trying to maintain the momentum of the situation of the conversation Like wait I not asking like I not looking to chat I looking for information right That said I not buying the argument that we need lower rates that we have to
you know, debase our currency in order to end up with AI leadership. And the reason for that
is I'm going to give you two reasons. One is the idea here is that if we lower the Fed funds rate,
we'll have like a lower five year, lower 10 year. But that's not what happened.
The Fed cut. And what happened that same day, the 10 year yield was up eight basis points. The next
day was up five or six basis points. So you had increases. And the reason is the market is correctly
baking in a higher long-term inflation. So we're getting higher bond rates. People have this weird
idea that the Federal Reserve controls interest rates. They don't. The Federal Reserve controls
the overnight rate. The bond market controls the rest of the yield curve, right? So Federal Reserve
overnight, the bond market, everything from one day to 30 years. So the Fed doesn't have that much
control. But the other thing, yeah, that you, you got it right there. That was, that was on a rate
cut. So, you know, I don't know about that. The other thing is AI spending is not being done by
the general economy. You have half a dozen companies that are doing that. And those that
have those half dozen companies have fortress like balance sheets. They're doing this with like the,
the cash on the balance sheet, right? Google, Facebook, Meta, whatever, Alphabet,
you know, Apple, NVIDIA. These aren't companies that are going into the market to borrow and
needing lower rates. If anything, higher rates bring them more income. Those companies have
billions and billions of dollars on their balance sheets, right? So the idea that if like lower
rates just means their interest income is lower. So I'm not I'm just not buying that answer. It
sounds good, you know, at a cocktail party. But if you sort of look at anybody's balance sheet,
it doesn't really hold up to scrutiny. That's a very good point. And so with all this in mind,
how do you think people should be positioning themselves? Never do. Do you think the ramifications
of the Trump admin's policies, basically being able to get a track record and really
get some teeth in terms of being deployed and having long-term ramifications come to fruition,
coupled with the AI narrative, whether you believe it's stimulative or not.
If we're going to go after that, it could be really good for the economy.
But tied to that AI narrative is energy, which we've been talking about.
for years. And if that is just a, an externality, a positive externality of the AI boom, and that's
all we get, that's, I'd be happy with that is increased energy capacity, uh, expansion in the
United States. And with that talking about over 10 window shifts, it seems like the over 10 window
as it pertains to nuclear power specifically has completely been blown open and it looks like we're
going to go after it. Yeah, that's that's definitely where we're heading. I've been
doing a lot of calls in that area. And that's the way I'm playing the whole AI thing. You know,
and look, congratulations to the people who've owned NVIDIA for the last few years. They've done
incredibly well. But we're, you know, we're also at the point in the show where they're creating
their own revenue, right? They're sending money to their customers that has to be used to buy their
products. Right. And this is the kind of thing that, you know, you saw with Cisco 25 years ago.
So, you know, that's that's something that we're seeing right now. And, you know, I think that's
that's a potential issue. You know, there's certainly huge demand for their products,
but they're financing their own customers. And that's a that's a gigantic potential problem.
The way I've been playing it is on the energy side, because some of these individual contracts actually require that some of them require like, you know, eight gigawatts of power or 10 gigawatts of power.
And if that's the case, that's multiple Hoover dams worth of power, worth of energy.
Where is that going to come from? Because we don't have it.
And so the way I've been playing this is is on the energy side.
I own huge amounts of uranium. And that's, you know, because I'm a believer in nuclear. I own,
you know, an SMR company, small modular reactors. Like, I think that's the direction all of this
has to go. And, you know, it takes 10 to 20 years to build a Gen 3 big nuclear reactor like, you
know, Homer Simpson works at on The Simpsons. But, you know, these SMRs can be built in factories
and rolled out and, you know, located very close to populations. There's no meltdown. You know,
there's no kind of like Chernobyl or Three Mile Island possibility with these. You know,
a core can be replaced when that has to be refueled. But there's no there's no dangers,
no radiation issues. So I think that's where all of this has to come from.
Yeah. And it's been interesting. I'm not sure if you've been following the announcements coming out
the Department of Energy, particularly as it pertains to FERC and demand response.
But somebody has been paying attention to the U.S. electricity grid and capacity expansion
since 2018 when I got into Bitcoin mining.
It seems like with Chris Wright at the Department of Energy, who really understands this stuff,
They're beginning to understand the problems and find unique solutions to expand capacity.
So FIR came out and wants to fast track large load interconnection and basically use Bitcoin miners or AI data centers to basically be like a buyer first resort for energy and wait for interconnect to be built out.
And I think that's another thing that's a good positive is people actually understanding the true problem as it pertains to energy.
We've had massive capacity expansion in the U.S., particularly in ERCOP and other parts of the country as well.
But we've been lacking on transmission and interconnects.
And I think the administration and the market more broadly is beginning to realize like, OK, we are beginning to get our legs under us and remember how to build out an energy system and prioritize.
And to your point about small modular reactors, I've literally been beating this drum for five years now, which is like plop down the reactor, mine Bitcoin with it, build out transmission, connect it to the grid and then rinse and repeat.
It seems like that is the express intent of this administration and organizations like FERC right now.
Yeah, I completely agree with you.
And one of the things that's really interesting, at least as it relates to Bitcoin mining and AI data centers, is we actually don't need to build transmission.
Right. What I think what we're going to see is one of two things.
Either individual companies like Google will will literally buy their own SMR and build a data center next to it and they don't need to hook it up to the grid.
Just go from there. The other thing that we're seeing, like in Pennsylvania right now, is some of these big tech companies are buying power from the independent power producers and they're hooking in, you know, basically behind the meter.
um and so some of that is going to stop because it's getting expensive for americans who just
want to rent an air conditioner and you know they're saying wait a minute i'm i'm competing
with facebook or you know google for my power and they can outbid me and i don't like this and it's
going to lead to problems but you know what can be done is because a lot of these places are already
zoned for energy, and in some cases nuclear, you put an SMR on or near the site and just hook in,
you know, behind the meter, and you can go from there. The thing that I really like about what
the Trump administration is doing here is they've correctly realized that the NRC, the Nuclear
Regulatory Commission, basically, as soon as they took over in the mid-1970s, the United States
stopped approving and building nuclear reactors. Over the last 50 years, we have closed more
nuclear reactors than we've built. And I think in the last, what have we permitted and built to
in the last 40 years? So the NRC, whether intentionally or not, serves to prevent any
kind of actual building. They require companies to submit millions of pages of paperwork and
regulatory filings. And so what the Trump administration has done is they've started
an accelerated program. They've got 10 companies enrolled in it where they can get accelerated
review by the Department of Energy. And that, I think, is phenomenal. And, you know, by the way,
there is an SMR company that's part of it, Terrestrial Energy, that just had their, they,
you know, went through a de-SPACing. The ticker was HOND. Now it's IMSR for Integral Molten Salt
Reactor. But, you know, you've got these companies that are saying, wait a minute,
let's do the accelerated DOE review and not get stuck for another 40 years not building power
plants. How profound is that in your mind? Like how if we get a few of these SMR companies going
through the accelerated reviews successfully, they begin plopping these down.
How transformational do you think that could be for the energy sector in the U.S.?
I think it's enormous.
I mean, look, before the NRC, we built more nuclear plants than anybody in the world.
And if you were somebody who wanted to stop the use of nuclear power in 1976,
you couldn't have done better than to have a regulatory agency that somehow manages to never
approve anything right that just somehow manages to never make it work now the people there you
know are are they dishonest are they you know not playing but i don't know you know maybe they're
just all worried that if they approve something without getting two million pages of documents
and it goes wrong you know you don't want to be the person to approve the next three mile island
So maybe maybe they're not dishonest. Maybe they're just, you know, ridiculously cautious because from their point of view, you you can turn everything down and say, I'm just being careful.
The thing that I really love about the DOE review is if you can get this accelerated process done, that what can happen is that that process will then produce data that can be given to the NRC.
And they can then be in a position where they're approving something that's up and running and working.
And that may get things moving again.
I also spoke with an expert in this area yesterday who said something really interesting.
He said, look, the people at the NRC, you know, they're in their mid 60s.
They've been there forever.
You know, all they know is how to reject things.
You know, the younger generation of engineers coming up actually are in favor of nuclear power and want to see these things done.
And so there may be kind of a changing of the guard along with more and better data that could allow some of this stuff to proceed.
The unfortunate part of this is it's not going to happen in the next three years.
And so I'm hoping, you know, whatever administration follows the Trump administration is in favor.
Like, I want them to be pro-energy as well.
from nuclear energy because Gen 4 is safe, and it's something that we should be taking advantage of.
Especially when you consider this chart. I think you just got to get this chart in front of anybody
in the US government, particularly the NRC, and say, we need to fix this problem. We need to bring
down these prices. Energy is the base layer of our economy, and we should be exploring any option
It allows us to expand capacity generation and drive down these prices because, I mean, at scale, that's the one thing that people will knock on a nuclear specifically.
It's like, oh, it's not economical. It's too much of an upfront cost.
But we haven't had the ability to really experiment with a wider implementation of this technology, which arguably over time should drive down costs.
marty i completely agree with you and would simply add that you know for the people who
don't know it there is a near 100 correlation between the energy a society uses and a good
material quality of life and if people want to say hey you know but you've got your health your
spiritual you know practice your um you know your connection other people yeah those those things
will all determine whether you live a good life or not. But if we're looking at material quality
of life, the R squared between that and energy usage is one. Yeah. And that's why, I mean, a lot,
there's a lot of dooming out there right now, but I'm extremely optimistic. I'm not sure if you've
been following the sort of industrial startup community. It's forming in El Segundo. There's
a lot of companies in Austin. There was just a metal fabrication startup that launched in Michigan.
The young people specifically, the Zoomers, are fascinated by this trend of reindustrialization
and really going out and starting companies. And I think that's interesting just watching the
sort of psychological and sociological side of things where I think people particularly millennials Gen X boomers have been conditioned to think it can never be re Like
this is just the way it is, but it's been extremely refreshing to observe younger generations,
particularly in the startup community, really lean into starting art industrial companies over
B2B SaaS products in recent years. I completely agree with that. And in fact, like one of the
things about the Zoomers is they have figured out that you're better off right now being a 22 year
old without a college education and with four years of experience as an electrician than you
are being somebody who spent the last four years on a college campus if you want to get a job and
get paid. Yeah. And it'll be really, and it'll be really interesting to see if this is allowed
to flourish. I really, I'm optimistic that it will be, but you have this political class,
particularly in DC, that seems to be filled with a bunch of Luddites, particularly on the left. I
mean, everybody says don't get political, but I think it's objectively clear that the left has
gone completely insane. We're seeing it with the shutdown, their inability to bargain over this
spending bill. And I think they're falling on tactics that were tried and true in the past.
They were successfully able to point at government shutdowns and blame it on Trump
during its first term. But this term, you just look at the polls, people are basically figuring
out like, oh, you're holding the U.S. economy hostage because you want to get your your jibs
passed and included in the spending bill. Yeah, it's there's no question that's been going on.
You know, I also think Democratic messaging has been bad here. Like I've seen them, they get on
these shows and people ask them, you know, direct questions about it. And instead of answering the
question, you can tell they go to the talking points of the Trump administration, this, this,
and this. And, you know, we're they're responsible for it. But anybody who's followed it has realized
that there have been more than a dozen votes and Republicans are voting to reopen the government
and Democrats are voting to keep it closed. And that's fine. As far as I'm concerned, go ahead and
keep it closed. I actually like the government closed for one key reason. It's because it is a
phenomenal message to Americans that we don't need them to manage our lives. Right. So I'm I'm
pro shutdown. Like if the Democrats listen, you know, you you made the great point. Like, let's
not get partisan. Let's not get political. I am strongly in favor of the Democrats keeping the
the government closed. Right. Great job. Team Blue. Keep it up. Right. I'm I'm I'm on your side
on this one. Right. And the reason is like, think about it. The government is in every aspect of our
lives. We've now had a month without the government open and there have got to be 300 million Americans
saying, what do we need them for? Yeah. And what what is it they do? How do they help us? I'm
sending tax money for what? Right. And great, because we've just had a one month experiment
in them not running our lives and somehow we're managing. Let's give it six months or a few years
and see how it goes and check in and figure out if we need to reopen things. I tweeted that out
four days ago on the 27th. I was like, the government's been closed down for 27 days and I
have not noticed any material degradation in the quality of my life. Let's keep this going.
Yeah. How did I miss that? That's the funny thing too, is the Democrats,
was made manifest their demise because I was watching something that Peter St.
Ange put out earlier this week.
And apparently mechanically, if this goes on for long enough, like you literally have
to start firing the furloughed workers completely so you could see at least one third of the
federal government workforce get fired if this goes on, I believe, past January.
And the thing I want to emphasize is those aren't temporary layoffs.
That's not temporary. Those are those are permanent workforce reductions.
And the amazing thing about this is, you know, a year ago I was saying, I really hope Doge is successful, but I'm skeptical.
I don't think anybody can shut down government spending. I just don't think it's possible.
And, you know, and, you know, Peter Thiel is right. Never bet against Elon Musk.
And I was really hopeful, but it didn't surprise me when, you know, that didn't really cut a whole lot of spending.
But this could be the thing that does it right. Like this. This could be the the doge moment when we get a real reduction in government spending.
And by the way, that's something that's really necessary. You know, you and I were understandably and reasonably critical of Federal Reserve Chairman Powell in this conversation. And I've been critical of him for the last however many years. But let's you know, let's also be honest here. There's nothing he can do. Right. Inflation is being created by overspending out of Congress. And that is a bipartisan problem. Right.
Whether Washington has been controlled by Team Blue or Team Red or some combination of, you know, White House and Congress, no matter what the combination is, we only have increased spending.
And that's the thing that's really causing inflation.
It's something that I've talked about as counterintuitive inflation.
Lynn Alden talks about it as fiscal dominance.
But there's nothing Powell can do to stop that.
There's nothing he can do to stop inflation.
And so, you know, we should we should throw him a bone on that.
But this is really the fault of Congress.
So if they're out of session, at least they can spend more.
Yeah, it's cautiously optimistic because I think, I mean, unless you're marching in a no kings protest, I think most your average American is looking at this and saying what you said earlier.
Do we really need this? What are we paying for?
So, Marty, you and I agree that it's the Democrats keeping the government closed.
closed, should I post on X? Marty Ben has just endorsed Democratic policies.
Yes. As long as not New York Democratic policies, if it's federal Democratic. Well, I mean,
and it's interesting, like we've got wins there, but then you have this sort of emerging
sort of socialist populace, particularly in New York City with Mamdani
coming to, it seems inevitable that it will be come to power in a couple of weeks here.
And it's this weird manifestation of this overt democratic socialism in the financial hub of the
world. And it is scary, to be honest, that there are a number of lemmings out there who will take
this guy's sort of campaign speeches hook, line and sinker and think that they can actually
impose socialism on the United States's largest city and have good outcomes. But
I think that's something we need to keep an eye on moving forward. And that's what I've been
thinking of. Like, how do you really cut through that narrative? Like this has never worked
throughout history, wherever tried to be implemented. We should not be doing that
anywhere in the United States, particularly the financial hub of the world.
Well, you know, we've seen the same party and the same policies in every major city in the United
States and living conditions in those cities continually gets worse. But the people there
keep voting for the same policies. So, you know, the truth is anybody who knows any history knows
that socialism or communism or redistribution, it doesn't work. And, and, you know, everybody says,
oh, you know, we just did, it wasn't real communism. Yes, it was. It's, it doesn't work.
It's not going to work. Um, unfortunately, you know, every generation needs to learn
that lesson through hard experience. It's available in books, but that requires,
you know, reading something longer than a TikTok video. Um, and you know, people don't want to do
that, okay, you know, fine, then they're going to learn. And the thing that is really amazing to me,
as somebody who lived in New York City, who lived in Manhattan and worked in finance for 25 years,
you know, all these people who say, you know, the rich aren't paying their fair share.
Hey, well, you know, one, nobody ever defines fair share. The beauty of fair shares,
everybody's in favor of fair, but it's never specific. But more importantly, the tech space
of New York is a very, very small number of people. The top one or two percent of taxpayers there
are highly mobile. They run finance firms. They can pick up and leave. And by the way,
they don't have to move to Florida. They can. They don't have to. They can move to Connecticut.
They can go to Greenwich. They can go to Westchester. They can go to Long Island or New
Jersey. They don't have to pick up and have all of their employees move. They literally just need
to go one county over in any direction. And and New York has just lost its entire tax base. So,
you know, none of this is going to work. You know, I own a home in Connecticut. We're expecting
a flood of refugees and much higher property prices. And it looks like there's a good chance
that New Jersey could get a Republican governor in a couple of weeks. How incredible that is.
Right. Right. Virginia, New Jersey. Like people are they're getting tired of of seeing these policies.
They're willing to try something different. The thing that worries me, Marty, is, you know, so we've been very critical of the left in this conversation and reasonably rightfully so.
Right. I endorse everything I said, everything I said, I stand behind it.
But one of the things that does worry me is Republicans run for office saying we're the
party of fiscal sanity.
We're going to get things under control.
You know, we're, you know, not going to be the party of tax and spend.
And we're going to do things that make more sense.
Right.
We're the adults in the room.
But they don't actually do it.
They're lying.
Republican Team Red, when they're in charge of Washington, they don't cut spending.
They talk about it, but they don't actually do it.
And so, you know, we correctly criticize Democrats as being horrible communists, but we should also criticize Republicans as being liars because they spend like Democrats.
It's a bipartisan problem.
Yeah, it really is.
And hopefully the government shutdown doesn't give either of them the ability to lie.
I think I think it's incredible that if we could get you elected to the Senate, you'd be voting with the Democrats right now.
This is fascinating.
Yeah.
I'm very optimistic right now.
And I guess to wrap this up.
You have a deal.
For the listeners of the show for deep knowledge investing.
If you.
I'll let you explain it.
Yeah.
So if you go to deep knowledge investing dot com, there's a subscribe now button in the top right if you're interested.
So, you know, what we're doing there, I talk about macro stuff like this all the time.
But, you know, I also have my own portfolio up there.
And, you know, whenever I have a new idea, I write it up for subscribers and explain how I'm investing and why.
And because the important thing is, you know, you and I, we've just complained about a lot of stuff.
But I'm investing in a way to take advantage of all these things that you and I don't like.
And so for people who want to take advantage of that, just click, you know, the subscribe now button and we have a coupon code for you, for your people.
It's TFTC21.
And that gets you guys 21% off of a paid subscription, whether you do monthly or yearly.
Well.
I appreciate you offering that to our audience.
I mean, I think you're one of this audience's favorite recurring guests over the last couple of years.
The YouTube comments are always clamoring for me to bring you back on more consistently.
So I'm sorry it took us six months to catch up, but I'm glad we did.
And not only that, it's on Bitcoin White Paper Day.
It's the 17th anniversary of Satoshi Nakamoto releasing the Bitcoin White Paper.
so marty i'm gonna tell you bitcoin is my largest position because i bought a medium-sized position
and then didn't sell it just became it just became huge and and you know the one change
the one change i made so i bought in 2021 20 no 2020 when i was 15 000 runs up to 64 000 comes
back down to 15,000. I didn't get upset. I didn't lose sleep. I didn't worry. I just bought more.
I think we're sitting pretty now, hovering at 110.
Yeah. So, you know, I saw somebody, you know, saying, do you think it hits 100,000 first or
150 first or, you know, is the next 10,000 or 20,000 up or down? And I don't know the answer
to that. But somebody asked me the other day, do I think it'll hit a million? And I said, yeah,
absolutely. And a friend of mine said, you know, I want to buy Bitcoin, but I think I missed it.
And I see you didn't miss it. He said, how do you know? And I said, well, do you think Congress
is going to stop overspending? No. You think they're going to stop debasing the dollar? No.
Then you're not too late. We're all going to be billionaires one day in dollar terms.
Well, yes, it's that old Saturday Night Live Jimmy Carter thing. You know, like,
wouldn't you like to have a $6,000 suit? You know, wouldn't you like to have a $100 cigar?
are, right? Like, not really. No. Gary, this has been a pleasure. Thank you for joining me on this
Friday morning, and I hope you have a great night in Tel Aviv. Yeah, Marty, thank you so much. Really
appreciate you having me. Always great talking with you. I enjoy these conversations. Looking
forward to the next one. I am as well. Peace and love, freaks.