Robert, welcome back to the show, sir.
Good to be back.
Good to have you back.
Like I was telling, I was binging your channel earlier this morning, playing some catch-up.
You put out a lot of content, so it's hard to keep up if you don't have enough time in the day.
But I think for this conversation, let's start in Japan.
Obviously, that's been a big topic of discussion this week.
Japanese yield curve screaming right now.
And I think a couple of the videos they put out last week really dive into it, sort of the nuance of their yield curve, where a lot of the debt exists in different durations and what is actually happening.
And I think this was incited, correct me if I'm wrong, from a tax policy.
They were going to eliminate a sales tax or something, and that sent the yield curve screaming because people were worried they're not going to be able to service their debt.
yeah food tax um sales tax on food i believe um and yeah that sent long end rates moving
pretty sharply higher i mean we had 35 basis point move uh in the long end rate there in a
single day so it is basically i mean on par with like the liz truss moment over in great britain
where their bond market just completely imploded.
It was kind of on par with that.
It was kind of on par, arguably, with what happened in the U.S. in April
with Liberation Day and all that chaos.
So it was pretty historic what we saw over there.
But, you know, for the nuance of I think what's important when it comes to Japan
that a lot of the people I follow don't seem to talk about is,
Number one, they run a very large current account surplus, four and a half percent of GDP.
And they've ran that for a long time.
That's part of how they've accumulated so many dollar denominated assets.
So they've run a very large current account.
When you look at where the debt is actually being issued, it's very similar to the U.S.
where they issue the majority of their debt in notes and bills.
So short duration, five year and under is definitely a majority.
I think five year and under represents 65-ish percent of the debt.
And the third year only represents two, three, four percent, like very low single digits when it comes to the amount of debt that is actually out there.
Also, when you look at like the average duration on their debt, it's quite long at I think nine, ten years.
So different than the US, not quite as long as Great Britain, where their average duration is close to 15 years.
So quite a buffer when it comes to kind of flexibility, I guess you could say, or resistance to the fiscal dominant short term rate volatility that, like, for example, we're starting to kind of get a picture of here in the US.
So large current account surplus, most of the debt is issued in the short end. And then they basically have a pretty decent buffer when it comes to the duration on their debt.
So, yeah, they're there. You know, when it comes to the ownership of all of their debt, which is definitely high, you know, I I hear a lot of people talk about 240 percent debt to GDP, you know, the sky high amount of outstanding debt, which is totally 100 percent accurate.
But when you look at who actually owns all that debt, the vast majority, well, majority is the Bank of Japan themselves.
So they hold about 50 percent of the debt, meaning that all the interest payments just get recycled back to the Ministry of Finance.
So after operational expense for the Bank of Japan, that interest expense just gets recycled back to the Ministry of Finance.
They have very low external debt to GDP, only about 12 percent of the total debt that is outstanding is owned by foreigners.
So low external debt, high, you know, large current account surplus, most of the debt being issued at the short end of the old curve.
Yeah, I don't think that it's necessarily an imminent sign of, you know, Japan completely imploding most of the interest from higher rates.
Again, they have that nine year average duration. So that's a buffer to kind of short term fluctuations, much less so than like what we see in the U.S. with so much issuance in the front end.
So they have more of a buffer, large current account surplus.
Most of the debt is issued in short term bills.
The Bank of Japan themselves own 50 percent of the total outstanding debt, and they have a low external debt.
Only about 12 percent of that debt is owned by external people outside of Japan.
So, yeah, those are all points that you don't necessarily hear a lot of the like macro Fintwit type people on X talking about.
But there are indications that maybe Japan is a little bit more resilient to withstanding.
Now, look, like pension funds, banks, insurers over there in Japan, they're sitting much like it was in the U.S.
where we had regional banks sitting on TLT, basically, long duration debt.
And that debt fell 50 percent in value.
Then there was a run on deposits and, you know, they didn't have enough liquidity to come up with it. So we had three of the four largest bank failures. Much like that happened here in the U.S., you know, a similar sort of situation could could could come out of Japan.
But yeah, kind of like broadly speaking in general, doesn't seem to be, you know, the end of the world sort of catastrophe. I would argue it's even probably worse. What's going on over there is probably worse for the US, if anything.
that's exactly what i was going to say way to because uh earlier this week with
more economic forum going on obviously a lot of uh political rhetoric around greenland specifically
markets uh markets took a bit of a dive and many people were um pointing at the greenland
tension saying oh look trump's getting us in trouble and then scott percent came out
and said it's not greenland it's the job japanese yield curves exploding um that's why markets are
so he explicitly sort of highlighted the japanese yield curve as uh an input to the the bad uh the
bad run that markets had earlier this week it was a six six standard deviation move like it was a six
sigma event so yeah it was it was definitely uh major for sure yeah and so why why does this
potentially have a more negative consequences for the us uh as opposed to japan itself
So for a number of reasons. So that current account surplus that they've ran for decades, 30 years, 40 years, that means that they've accumulated.
They've become they've been a creditor by by definition to the rest of the world.
The U.S. being, you know, the primary beneficiary of that credit.
Japan used to be before the Cayman Island repo nonsense basis trade stuff.
Before that, Japan was the largest holder of U.S. Treasury debt. And so what could eventually happen is, you know, part of the reason that so much capital from Japan flowed into U.S. Treasuries was due to the fact that Japan was in the last decade.
They had, you know, negative wage growth. They had negative GDP. Their economy was contracting. They had deflation. They were I mean, it was pretty bad and it didn't you know, it wasn't a short lived thing that we're talking, you know, 20 years of this sort of poor growth.
And, you know, in response to that, the Bank of Japan, you know, the QE yield curve control, negative interest rate policy, 10-year JGB was only yielding, you know, zero, basically.
I mean, there was no yield in Japan.
You know, different points at different times had different rates, but you could basically think of the 10-year JGB as yielding zero.
So in order to get yield, what what, you know, domestic institutions would do, you know, an insurer pension fund, something like that, is they would sell the yen by the dollar.
This is part of why the yen has weakened so much.
And then that once they had the dollars, they would buy U.S. Treasuries.
And the difference, the interest rate differential, the difference between yield on a 10 year JGB and a 10 year U.S. Treasury at at the peak was four percent.
meaning you got 4% more yield in U.S. Treasury, in a 10-year U.S. Treasury, than you did in a 10-year JGB.
Not only that, but the dollar was strengthening versus the yen.
So you're picking up extra carry there.
And so that trade, this is kind of like what the yen carry trade generally was,
borrowing yen at basically free, zero interest rates,
sell the yen to buy the dollar to buy U.S. Treasuries to pick up yield.
They would also go into U.S. stocks, MAG7, tech stocks were another beneficiary of this sort of yen carry trade.
And so what could happen is with higher rates in Japan, some of that money could look at the higher rates in Japan and go, well, I got 0% five years ago, 10 years ago, but now there's yield finally.
I'm going to bring some of that money back home.
Well, the order of operations would be the exact opposite of what they putting on a young carry trade sort of thing would be, which is sell the U.S. Treasury downward pressure on the bond, upward pressure on the yield and then sell the dollar to buy the yen.
So there is going to be an equilibrium point. Japan was kind of like a beach ball that was held underwater. The yen carry trade and low rates, QE, old curve control, NERP, all of that was a large marginal driver of liquidity.
And so now that that's kind of that beach ball has been let above water, you know, it's going to drag rates higher all over the world in the US.
I see is probably being, you know, the most affected in that sort of thing.
Yeah, it's rather interesting, especially considering Trump's move a couple of weeks ago to prevent institutional investors from buying.
single family real estate.
And then on top of that, announcing a $200 billion mortgage bond buying spree
in an attempt to bring down mortgage rates.
And rather quickly, this Japanese Six Sigma event happens
and sort of throws a wrench in that plan.
And so the reason to bring that up, it just seems like things are chaotic.
You mentioned beach ball underwater finally released.
We'll find equilibrium somewhere.
And that's the question I have in my mind is, does anybody who's, quote unquote, in control or behind behind the helm of economic policy, monetary policy, understand where that equilibrium is?
I don't think so. I personally think the yen, you know, weakening here, obviously, on with populist prime minister.
Look, it was one thing to have Abenomics where you have super dovish, you know, kind of easy money, easy fiscal policy, easy monetary policy.
That's one thing when you're in the last decades. It's a whole other thing when inflation is 3%, wage growth is 3% or so. When your economy finally gets some heat in it, it's a totally different thing to have super dovish monetary and fiscal policy.
So the long end of the old curve is indicating that, right, like that if you're going to continue this uber dovish monetary and fiscal policy with heat in the economy, finally, then we're going to demand a higher rate, especially out, you know, at the long at the long end.
So, yeah, I think that, you know, eventually maybe Bank of Japan hikes right now.
Very low odds that they hike here in a couple of days.
I think the odds I think that's mispriced.
I think there is a chance given what is going on with the yen kind of approaching that like 159 level on dollar yen.
And what just happened at the long end of the yield curve.
You know, this is Besant was pushing maybe a month ago, two months ago, was pushing the Bank of Japan.
to hike rates. And the reason he was doing that was for exactly what we're talking about, which is,
you know, he comes from a macro background with Soros and Druckenmiller and some of the greats.
And he recognizes that, you know, the long end of the yield curve, if it gets too out of control
over there, could cause major issues over here. And so he was pushing the Bank of Japan to hike
interest rates. I think this is like a month or two ago where he was making kind of unusual comments
for a treasury secretary to make about a foreign monetary decision, monetary policy decision. So
I think that there's a chance that they hike rates here at this next meeting.
Definitely this year, we're going to see Bank of Japan hikes. I think that'll help stabilize the
yen. And I think that also it'll help stabilize long end rates, which are moving higher in response
to kind of, you know, to lose monetary and fiscal policy.
Well, if they, you know, start hiking rates,
they'd be one of the only developed countries to be in a hiking cycle.
You know, maybe that gets a bit into the yen.
Hopefully, you would hope it would calm down the long end,
which is worried about inflation and worried about kind of fiscal concerns.
So I think that it would be a step in the right direction.
But yeah, like dollar yen, the purchasing power parity,
like fair fundamental value is 110 115 on dollar yen last i checked according to the imf so you
know there's um there's there's room for it to appreciate for sure just on a fundamental basis
um and yeah where that equilibrium point is no one really knows it certainly dragged rates higher
not just in the u.s but all over the world i mean great britain france germany um you know their
long-end rates look even worse than the US. We're kind of brushing up against that 490
level on the third year, but yeah, Great Britain's even worse. So as Japanese rates move higher,
eventually that's going to drag all rates higher and currencies, we could see significant volatility
in the FX market, I think this year. And yeah, eventually there's an equilibrium point where it
all calms down i haven't heard anyone that's able to uh give a level or you know say exactly where
that's going to be but there but there is always an equilibrium point there's always a release valve
um you know they kind of had the choice to like let the currency go or let the bond market go and
it appears they've kind of let the bond market go um but you know they've also talked about
currency intervention so uh yeah if we get if we get one of those or if we get a bank of japan hike
I think you could see the yen start to appreciate quite rapidly, and it's not expected by the market, at least the bankage band hike at this next meeting.
So just like we saw in summer 2024, all this kind of stuff can cause significant volatility for risk assets like we saw with the NASDAQ and S&P 500 last year or 2024.
for. And how do you think the U.S. is positioned relatively in terms of, particularly in terms of
the sort of tectonic economic policy changes we've made over the last year with tariffs,
reshoring, the deficit falling significantly as the, in your mind, the economic policy decisions
made over the last 12 months set the U.S. up to weather a yield storm, if you will, or are we
exposed right now? Yeah. So I think one of the most under-discussed data points that's come in
recently when it comes to that, when it comes to economic data, is the trade deficit. So the
trade deficit shrank to the lowest level going all the way back to 2009. And the third lowest
reading going back all the way to 2001, which was when China was admitted into the World Trade
organization, the China shock. So the other way of saying that, you know, we've gone from, I think
it was at its peak in April, $140 billion per month trade deficit. We've gone from $140 billion
of worth of dollar exports to the rest of the world, exporting of the dollar to now 39 billion,
I think it came in at. So yeah, the amount of dollars that the U S is now exporting to the rest
of the world is dramatically reduced compared to what it was. The current account last I checked
over the prior four quarters right now is running at about $1.3 trillion, but that's going to
shrink as the trade deficit starts to get reflected in the current account data. So yeah,
that is a pretty stunning reversal for what it implies when it comes to the dollar, when it comes
to Triffin's dilemma, which Triffin's dilemma, you know, at the end of the day, you got to
eventually you're going to have to pick between domestic needs and international obligation of
being the reserve currency issuer. That's Triffin's dilemma. And it appears that they've
picked domestic, you know, needs, reindustrialization and tariffs and, you know, MAGA.
They've chosen that over international obligation of being the reserve currency issuer. And I think
that all the trade tensions that we've seen that you mentioned with the EU and Greenland and all
this kind of thing, I think it's, you know, indicating that the U.S. is, you know, stepping
away from that sort of obligation that we had for decades to run ever larger trade deficits,
to get the dollars out to the rest of the world. That's the mechanism by which you get dollars to
other countries is by running a large trade deficit. I think that they've chosen, I think
I think that there been a clear like regime shift when it comes to you know what role the U would like to play I think that we so thoroughly hollowed out our industrial base
We've so thoroughly become reliant on our adversary, at worst our enemy, for critical components go into our, you know, our military, our defense systems, you know, our our weapon systems.
We can't even we can't even make enough artillery and missiles and, you know, interceptors to to protect our own homeland.
We rely on our enemy for about 85 percent of active pharmaceutical ingredients to keep our people alive.
So, yeah, I think that, you know, things got a little bit too stretched.
And I think that this administration, at least, is choosing the domestic needs over the international obligation of being the reserve currency issuer.
And I think that, you know, the gold market is waking up to that. You see the gold price just going, you know, parabolic. But you don't really hear it being like discussed when it comes to the real implications, what that really means, not just for gold, not just for Bitcoin, but kind of broadly speaking.
I mean, that is a once in a generation sort of reordering of the monetary order and global trading order.
So, yeah, I think that's really significant to have President Trump say, you know, trade deficit is going to zero or trade balance.
We're going to run balanced trade because what that means is we are not going to export you dollars anymore.
And what's interesting is the dollar hasn't really rallied on that news.
You would expect if dollar milkshake theory was correct, you would expect there to be the short squeeze in the dollar.
But we didn't see that. You would also expect a bid into the dollar with the Greenland EU tariff geopolitical tension.
You would expect a bid into U.S. treasuries and into the dollar. We saw the exact opposite.
We saw selling of the dollar, selling of treasuries and selling of U.S. equities.
So, yeah, that's that's a that's an important signpost. It didn't just pop up recently. This has been apparent going all the way back to like early 2020 or early last year.
You could see indications of that where, you know, risk off sort of environments. You not see the dollar get bid or U.S. treasuries per se.
You would see the Swiss franc, the euro and the yen were taking the place already before Liberation Day even came around and before CNBC woke up to this.
It was already happening. So I think that there's a recognition that, you know, if you look at the FX holding FX reserves when it comes to gold versus U.S. treasuries, gold has already overtaken U.S. treasuries.
So, you know, I think that there's some pretty important monumental shifts going on under the surface.
It's not an overnight thing. You know, we're not going to wake up tomorrow and the dollar is just not used by anyone in global trade.
And it's worthless toilet paper. It doesn't happen overnight. You know, these things take a long period of time to play out.
But, yeah, I think that the U.S. is vulnerable, given the fact that we've let ourselves fall on the other side of Triffin's dilemma for so long.
Right. Where we prioritized international needs, the needs of people outside of the U.S.
We prioritize that. You know, we both parties chose globalism over nationalism and caring about domestic needs first and foremost.
And the consequence of that is our net international investment position accumulated up to negative 95 percent of GDP, I think, at the peak.
Right now, I think it's about negative 90% of GDP, which is still historic in the history of the world, that we haven't seen that negative of a net international investment position, which on a gross basis, foreigners own about $65 trillion of US dollar denominated assets.
So we're incredibly vulnerable with that with that negative nip, 90 percent of GDP.
We're very vulnerable to that, you know, shifting back to the U.S. and prioritizing, you know, domestic needs over international.
You know, we're very vulnerable to upsetting the rest of the world who owns a huge amount of U.S. treasuries, U.S. equities, real estate.
We could see another version of early April where you basically had the reserve currency in the very early stage of a balance of payments crisis for that first five days.
If you saw a concerted dumping of dollar-denominated assets, it could put us in a very, very tough position, one that generally you only see in emerging markets.
So, yeah, I would say, you know, it's going to be difficult to balance to to try to extricate ourselves from Triffin's dilemma without so thoroughly, you know, angering the rest of the world that we get ourselves into that sort of situation.
Again, it's going to be really delicate to try to balance that looks like with Greenland.
Maybe we dodged a bullet.
Maybe there's a deal.
Maybe everything's good.
Who knows?
Too early to tell.
But, yeah, we're we're definitely vulnerable.
I mean, arguably, you know, you look at Japan going back to Japan, their interest expense as a share of GDP is only like one point four, one point five percent.
You look at U.S., it's like three point nine four percent.
So, yeah, the fiscal situation going on in the U.S., yeah, we might be, you know, trade deficit might be coming in.
But the fiscal it's improved for sure.
You know, it's come from seven percent of GDP to six.
So we have seen some improvement in the fiscal deficit, but interest expense right now is growing at about 15 to 16 percent year over year.
And so they got to get that down. Otherwise, the deficit, there's going to be continued pressure there.
Social Security, Medicare, Medicaid and defense still eats up a huge portion of the budget.
So you can't really cut discretionary items and easily address the fiscal deficit.
And the reason that's important is that we've relied on the rest of the world to buy our debt. And if you're balancing trade, right, and the trade deficit is shrinking to the degree that it is, but your fiscal deficit is shrinking, but much less quickly, then what that is essentially saying is that you're relying on other buyers of your debt, right?
Instead of foreigners who were buying your debt, recycling trade deficits into your debt.
Instead of that, now you're going to have to rely on your domestic institutions and individuals to absorb all that, you know, $1.7 trillion of new U.S. Treasury debt issued every year.
Yeah, a lot to respond to there.
But it's funny, as you mentioned, we got to balance this.
It's like the art of politic and threading the needle.
And I thought this week, it's funny because I think we both understand the sort of structural, the lack of structural integrity behind the system because of all the debt that's been built up over years.
But you look at what happened in Davos this week and letting it come out first, like globalism has failed.
We're expressing a lot of what you just described.
We're beholden to supply chains outside of our borders when it comes to health care, defense.
Like we need to fix that.
Bessent comes out, shits on Gavin Newsom and basically says, yes, we're America first.
Come work with us.
Go, baby, go.
Then Trump obviously gave his two hour speech, which really was just a flaming roast of globalism and its effects over the last five decades and signaling to that crowd.
In Davos, America is going a different way.
you can come with us or not. And as an American citizen, I think we've had this conversation a
couple of times now on this show about the silent depression and because of the hollowing out
of the manufacturing base and Triffin's dilemma's effect on United States citizens over five
decades. And I looked at what happened this week and I was like, yes, we need to get this message
out there, it is time to make this phase shift. But it's funny. It's like, depending on your
perspective, do you want to continue the globalist agenda and keep going down that path? Or do you
want to really pack it in and be America first and revitalize America's industrial base and
domestic economy? It's like you're watching two different movies, the reactions to all these
speeches at Davos this week were polar opposites, depending on what lens you were looking at this
through. And I think that's the big question. Like how many countries are actually going to be
inspired by the, um, the sort of posture that this administration is taking in the United States and
say, Hey, this is actually a good idea. And I think that the narrative part of it and the sort
of buy-in from a critical mass of foreign nations is going to be critical to land this plane.
Yeah. I mean, Japan already has, they, uh, Takeichi was not at all expected to win. Uh,
It was quite the shock.
And so Japan's definitely going the kind of populist nationalist route.
Keir Starmer, I think it was, out of the UK, made comments.
This is, I don't know, a year ago, maybe, about globalization failing the median grit.
And so you're starting to see a recognition that globalization really, look, it worked great for certain people.
The problem was those certain people were the top 1%, right?
It was a small share of the overall population.
The vast majority of the people didn't really benefit.
Look, you got to buy cheap Bluetooth speaker on Alibaba, right?
But your good-paying middle-class job that didn't need a high school diploma is gone, you know?
and your country and your your your state your city is completely hollowed out and called the
belt because everything is a bucket of rust uh you know your your deaths of despair triple the
rate that they were during the great depression you're you know addicted to fentanyl uh so yeah
i i think that uh i think that it's pretty clear that the the maga right uh which is not conservative
It's not old school Republican. It is not real. You could call it right wing, I guess, but it's definitely not like Republican. It's the opposite of the Republicans back in the 90s, early 2000s, who were the prime advocate of globalization because it was going to boost corporate profits and make them all rich and therefore boost corporate profits.
You boost stock market valuations and who owns all the equities, the top 10% own 92% of equities.
So, yeah, like it's kind of an inversion that we've seen.
I kind of suspect that we might see here in the U.S. a return from our left back to what they used to be during the 90s and 2000s.
Speaking out against globalization, we could even see kind of momentum start.
or continue to build in kind of much more of the nationalist populist sort of direction.
Because, I mean, it was, you know, the left back in the 90s that protested, you know,
the World Trade Organization in Seattle, Battle of Seattle, the IMF, I believe it was in Miami,
right? Like all those huge protests, they were all like global anti-globalization.
And they were all coming from the left wing at the time and the Democrats at the time.
I mean, there's like endless comments from Schumer, Pelosi.
I remember Dennis Kucinich was like, you know, one of them that I remember, you know, all the Bernie, Bernie Sanders.
They were all talking about globalization.
It's going to suppress blue collar wages.
It's going to widen wealth inequality.
It's going to hollow out our industrial base, all things that happen.
So, you know, like my question has always been like, why aren't they taking a victory lap?
You know, like you, it's such a layout, a layout to, to, to take a victory lap on that because they were right.
They were a hundred percent right in what ended up happening.
And I would encourage people to go look up, you know, some of those comments, which are, you know, public.
You would think that they might return to that.
And if we get a return to that, then I think it's a durable trend.
I think the damage so-called is already done. I think the trend is all, you know, I think the entropy has been built and the critical mass has been achieved. And I think the pendulum is going to swing. I've been saying, I think, you know, peak globalization, we've already reached it, you know, and I still I still stand by that.
So I think that whether it's, you know, the right wing continuing with this kind of anti-globalist push or whether the left starts to kind of, you know, reinvigorate what they used to believe.
I'm not sure if anything changed or they just, you know, you know, have to criticize the other party kind of thing.
But yeah, I could see it even gaining momentum here in the US if we see in 2028 the pendulum swing to the other side.
We might even see a more concerted effort to reverse some of the kind of ill effects of globalization.
And I think that that's a pretty critical signpost when it comes to the impact that that's going to have on kind of the monetary order, how trade is settled, neutral reserve assets, right?
How Bitcoin kind of fits into all of it.
So, yeah, I think the critical mass has already been achieved, but I think we can even gain momentum if you see a resurgence of kind of what the left used to believe not too long ago.
we'll get to bitcoin gold in the monetary order in a bit but i completely agree and i'm that would
actually be i would welcome that with open arms if we can get some obscene sort of uh bringing back
uh bringing both parties back from the polar uh ends of the spectrum towards the middle to really
rally around american dominance and domestic economic policy um but i mean bringing back to
the deficit and one thing i would worry about if even if the democrats were to get more moderate and
begin becoming more nationalist to to an extent is the the spending the federal programs uh
particularly medicaid medicare and i think that's a topic i want to cover with you is um obviously
we have this problem we have all the spending we have this interest expense on the debt going up
We have to manage that.
But as we've come to know over the last year and more specifically over the last two months,
the federal spending is wrought with fraud.
Potentially 50% or more of federal spending is being laid bare that a lot of it is overt fraud.
And so that's my question.
Is it possible?
And I talked about this with DarkSide earlier this week.
Is it possible to have an actual doge come in and cut spending without collapsing the system?
Like, is this fraud just sort of heroin that's being injected into the system because it needs it to sustain itself?
Yeah, I mean, I agree that spending $5 billion on a Elmo program, Sesame Street program for Iraqi children,
is kind of like not the best use of taxpayer dollars.
Totally agree with that. I like, you know, cutting waste, fraud and abuse.
But I always point out that, like, you know, just because just because one person might ascribe that descriptor, that adjective to it on an economic, you know, pure, purely removing politics and just purely looking at it from an economic standpoint, you know, one man's fraud is another man's income.
So someone on the other end of that fraud is getting over much money if it's half of the deficit or half of spending.
That's a lot of money. And those people have mortgages. They have car loans.
They have, you know, they go out to the movies, they buy groceries, all that kind of stuff.
So, yeah, you start cutting too much and you get, you know, a contraction of GDP.
If we were to balance a budget overnight, like with a magic wand and just wave that magic wand and we have a perfectly balanced fiscal budget, it would result in a GDP contraction worse than 2020, worse than 2008.
So, yeah, like it would be great to cut a lot of spending. The problem is we have become so kind of strung out on that drug that, yeah, it's difficult to do quickly without collapsing the system.
And, you know, once you start talking about a GDP contraction, well, the deficit goes up during a recession, during an economic contraction. So now, you know, we go from a 6% deficit to a 14 or 15% deficit. And, you know, what is how does a bond market reply to in the face of that sort of, you know, increase in supply in bond supply?
yields might go up. And this went from being kind of a kooky theory to now, like even Jeffrey
Gunlock and some pretty well-respected people are talking about the fact that yields might go up
in the next recession. And then you're talking about a debt doom loop. So yeah, I think it's
difficult to extricate ourselves from the two kind of dueling conundrums that we've gotten
ourselves into both on the kind of current account side with the trade deficit, but also on the
fiscal side, both of them are kind of difficult to fix overnight and difficult to fix without
tolerating some economic pain. So yeah, I could, you know, if there was a way to balance the budget,
it would be pretty ugly We would have to tolerate a significant amount of pain for you know in the short term But like I fall into the camp that OK so so what Right Like recession is part of the normal business cycle We basically like outlawed recessions
Well, you know, just like a fire is necessary for a forest to regrow, you know, in a healthy way, you need a rinse of leverage and malinvestment needs to be flushed out. And we need to have, you know, the moral hazard that has been imposed over the past, I don't know, 20 years is pretty incredible.
And I think it's led to some second and third order effects in our society that are pretty, pretty negative. So, yeah, I think it'd be good. You know, the problem is politically, how do you get elected on? Hey, I'm going to bring pain. You know, people kind of always bring this up. I make the point that the twin deficit, the only thing we can accumulate as a twin deficit nation is debt.
Well, that's not sustainable, especially when you rely on creditors overseas to finance that.
That's not sustainable.
The only thing you can accumulate is debt is just blatantly unsustainable.
But the problem becomes, you know, like when you tell someone the U.S. over consumes as a as a, you know, by nature of running a twin deficit, when you tell them, well, the U.S. over consumes, we by definition in the aggregate over consume.
They look at you like, well, you're you're saying, you know, communist, you're saying something no different than Mao Zedong, you know, and it's it's just it's just economic reality.
You know, it's just math like we have to address the fact that the U.S. over consumes the way that we are allowed to over consume is through debt, the accumulation of debt, whether, you know, in the aggregate.
That is the only way the U.S. is able to run a sustained twin deficit of the size that we've been able to.
Now, the reserve currency status kind of, you know, helped bolster that ability.
But as that fades, so will our ability to over consume.
Yeah, and a lot of that overconsumption is unearned, overconsumption with the fraud as well.
Yeah, it is this conundrum we find ourselves in trying to grapple with this.
And obviously, Bessent was in there, like, go baby, go, grow, baby, grow.
I think that's his mindset is like, we just need to get productivity up to a point.
And I don't know if this is his expressed opinion, but let's get people, let's reindustrialize,
let's get the domestic economy back up and running.
Let's get a lot of growth in the real economy, not the fraudulent sort of fiscal dominated side of the economy.
And then maybe at some point in the future when things are stable and we're on a good growth trajectory, we begin to peel off the fraud, waste and abuse by by cutting the budget in certain areas.
Yeah. And we we have really high productivity.
I mean, Q2 came in really, really hot at three point three.
The expectation for Q2 productivity was 2.3, 2.4. So Q2 came in quite hot. No one really talked about it. Then Q3 came in even hotter. I mean, we're looking at like 4.9% productivity. Now, the problem is who benefits from that.
we know that real wages diverge from real product from productivity, you know, back in the early 1970s with Nixon shock.
So, you know, high productivity is great from if you're the government and you're talking about, you know, fiscal health and sustainability, productivity gains are great for them.
But the question becomes, you know, who actually benefits from all these productivity gains?
And I think that that could set up, you know, quite a significant societal and political issue over the next decade as AI and robot, you know, not just AI, but eventually robotics.
As all these kind of productivity enhancements come, we know from history, we know from the data that those productivity benefits don't flow to the media in America.
And they flow the top 1%.
They flow to corporates and equity holders of those corporates who are all the top 1%, top 10%.
So yeah, like you could get into a situation and a lot of people are kind of talking about this,
the meme of like, you have four years to accumulate as much capital before you're in the permanent underclass sort of kind of meme.
Well, there's a real chance that there's some truth to that.
And does it lead to UBI?
What does it look like?
I'm not really sure, but I do think that it'll be one of the major turning points when it comes to political and societal kind of turning points will be this productivity boom.
But then the people getting even more upset as productivity is going up, you're going to have people getting more and more and more unhappy.
And eventually that'll have to come to a head and resolve somehow.
I'm not sure how it will, but that that's, I think, a theme. These productivity gains are great for the government and they're great for kind of debt sustainability and fiscal solvency and all that kind of thing.
but they could be setting up an even more dangerous situation when it comes to thinking
of it politically and societally, because we already know the median Americans already crushed.
And, you know, the middle class, if you're under 30 is gone. There is no middle class if you're
under 30. So and don't own a home already. So I think that that's probably a theme. Maybe
productivity continues to come in hot. Maybe they extricate themselves from the debt situation
through those productivity gains, which are legitimately coming in quite hot.
But then you might be setting up arguably an even worse situation, which is that people
are going to get to a breaking point.
And, you know, I don't want to see that.
Near to a while.
And I've been saying this last few weeks on shows that I've been doing and some talking
head videos, but I think the productivity gains need to be paired with the heart currency.
Like if you're going to have insane productivity gains that accrue predominantly to the top 10, top 1%, whatever it may be, I mean, you have to throw the lower classes a bone by at least using hard money that they can work a menial job, make a modest wage, but have the fruits of their labor saved in a currency that could increase some purchasing power over time.
Yeah, I mean, you know, home prices in gold terms are basically at an all time low. So the whole housing affordability story, I think, is a major one. And once you once you look, once you realize that the issue is not that homes are overvalued, if anything, homes are are cheap in real terms.
the issue is the purchasing power of the dollar and the fact that the denominator that we've used
our whole lives is failing. As I've been saying for a couple of years now, the denominator is
failing. Yeah, for decades, we didn't have to worry about the denominator like you would in
Argentina, right? You go to Argentina, Lebanon, Turkey, they worry about the denominator. They
spend half their day trying to set up a carry trade and figure out how to address the fact
that their denominator is melting at a rapid rate.
But we haven't needed to do that here in the US.
And I think that the past five years,
people are waking up to that reality.
And this is kind of the gold and silver story.
Eventually, you would hope that some of that flows
into Bitcoin eventually,
but we've underperformed gold by a lot.
Like for example, like summer 2021,
this is kind of the way I think of it,
the framework I use that Luke Romans also mentioned in the summer 2021, you have Bitcoin at like 35k
and in ounces of gold, it was 18 ounces of gold per Bitcoin. Well, now we're at 90k in dollar
terms and we're at 18 ounces of gold per Bitcoin. So like, I really want to see that start to pick
up. You know, the fact that we've held even with gold is not about, you know, it's, it's not an
indictment, right? You're not, if we were holding even in dollar terms, that would be an indictment
of Bitcoin, uh, holding even with, with gold over those four years, five years, not necessarily
that horrible of a thing. Uh, but yeah, I, I, my bet is that the young people, especially
who are much more kind of digitally native here in the U S uh, you know, the, the young people I
know, they all know what Bitcoin is. They, you know, they know about gold, but the vast majority
of them don't hold any gold. You know, they're not going out to buy gold bullion. So I think that,
you know, I think I'm still very bullish Bitcoin. But, you know, I think that if we're going to,
if we as Bitcoiners kind of our whole premise is the denominators breaking the denominator being
the dollar, you know, and there's issues there with denominating your life in fiat. Well, then
we need to stop talking about the Bitcoin price in dollar terms. We need to start talking about
it in gold terms. And I think that that's going to be important. But whether or not we go to a
hard money standard, I think it's pretty unlikely. But I do think that increasingly over the next
decade, you will see average Americans kind of wake up to these issues that we've been talking,
you know, some Bitcoin has been talking about for 15 years or whatever.
I do think that there's kind of a growing appetite.
The problem is, you know, most, you know,
the median Americans got less than $1,000 in savings, right?
Like the people I know are working three jobs, living paycheck to paycheck.
They don't have $1,000 a month to put into Bitcoin.
So that's kind of another issue that we have is, you know,
Maybe people would like to save in hard money, gold, Bitcoin, whatever.
But if you're working three jobs and living paycheck to paycheck,
how are you going to contribute anything meaningful?
I think that's another issue.
I'm very bullish, Bitcoin.
I've been buying here in the 80s when everyone else is giga bearish.
So here's a Bitcoin and gold chart.
here's the hopium for people looking at a looking at a rebound here from uh from the lows and this
chart actually doesn't look bad uh if you ask me yeah i um you know the the part of me that is way
more allocated to bitcoin rather than gold i do have gold i kind of wish it was more but uh you
know that part of me is like looking at the bitcoin gold performance over the past couple years and
I'm like, you know, it's not great.
But if I remove my kind of, you know, very, very long, very high conviction bed of Bitcoin, my personal position, if I remove that from the equation and look at it just as a trader, I look at that as a reversal for for a contrarian trade.
Right.
You could put a pair trade, you know, short, short, gold, long Bitcoin for a reversal there because, yeah, it has been stretched.
I mean, if you look over the past 12 months, it's just plummeted relative to gold.
That's painful for Bitcoin holders like me and a lot of folks.
But just remember that that is not usually how markets operate, right?
Things don't go up or down forever.
And contrarian trading is a thing for a reason.
So reversals happen.
They happen when you least expect them most often.
And, you know, who knows what kind of catalyst we can get?
I mean, I think that growth is looking pretty good, like in the aggregate for for the U.S. economy for 2026.
I think you have a fiscal impulse coming from the one big, beautiful bill and probably future, you know, additional fiscal impulse from populist measures, you know, stimmy checks or something due to the midterms.
I think that I think that global growth is, you know, picking up.
And I think that, you know, on the fiscal side, we're not we're not seeing a dramatic fiscal contraction by any means.
You have productivity, you know, quite decent.
Tech has been underperforming going back to late October and Bitcoin trades off, you know, the Nasdaq, unfortunately.
But, yeah, all those trends, I think, you know, especially in a run at hot environment where they're trying to get negative real rates.
I think that I've been buying here in the 80s and kind of low 90s.
I've been buying here.
I think that over the next year, I think that we could now whether or not we outperform gold, that might be a different equation.
But gold's had a significant run already.
Gold generally front runs, monetary easing.
We have the Fed printing $50 billion, $60 billion a month.
that's going to probably go up over the year. And negative real rates on the horizon,
you have Trump and Lutnik talking about the Fed funds being hundreds of basis points too high.
So we're going to get negative real rates. That's going to be incredibly bullish for
assets in general, but probably assets, scarce kind of debasement trade sort of assets like
gold and Bitcoin. So yeah, I'm bullish. It's legitimately a bit of pain that I know a lot of
people in Bitcoin land are looking at gold, looking at silver, and feeling quite a bit of
FOMO or pain from that. But yeah, I'm bullish Bitcoin. Is there a chance that we get some sort
of black swan out of nowhere? Because by definition, you can't foresee one happening.
a hundred percent. There's always that risk. There's always the risk of a economic contraction,
some sort of financial crisis causes, you know, kind of a VAR shock sort of phenomenon. But
generally, like I'm, I'm, I'm pretty bullish for the next, definitely for the next five to 10 years,
I think it all comes down to time horizon, right? A lot of people have a short time horizon,
a high time preference. And I think that, you know, the more that you can zoom out and look
at the longer trends, look at the mega trend. I think that the better you'll do.
Completely agree. And speaking of mega trends and taking a sort of step back from the individual's
balance sheet, getting into hard assets to preserve purchasing power in terms of the
monetary order and the reshuffling, which we've discussed, obviously, percent coming in before
Trump was even elected, was talking about it. I think the national security strategy that was
released and all the speeches that were given this week, Davos, particularly point to the fact
that like, hey, we're shifting things pretty tectonically in terms of geopolitical and by
extension, the monetary order. How do you think that looks on the other side of whatever's happening
right now? I think it's very bullish for gold and eventually very bullish for Bitcoin. I think that,
You know, unfortunately, the market, you know, looks at Bitcoin generally, you know, overall in the aggregate looks at Bitcoin as a, you know, 3x NASDAQ, you know, tech tech stock beta.
But, you know, I think that over the next five years, 10 years, you talk about like gold becoming the major neutral reserve asset.
But I think that like as a net settlement layer, gold can work.
But there's, you know, downside to it.
You have to worry about storage.
You have to worry about transport.
You know, gold is not perfect.
Gold has been centuries old money, you know, and it fulfills a particular purpose.
Well, I like gold.
I own it.
I'm bullish gold.
I would add on any dips.
But yeah, I think that Bitcoin, the properties that you need, Bitcoin fulfills those properties better than gold. It's more verifiable. It's more transportable. It's more divisible. I would argue it's more secure.
So, yeah, I think that, of course, without the whole quantum discussion, it's a whole other thing. But generally, it's very secure. It uses what? Like 1% of the global electricity, the network, right?
So, yeah, I think that I think that Bitcoin has a place and I think that the market will wake up to the fact that it's not a 3x NASDAQ.
You know, it's a it's a scarce asset that that anyone can own.
That's uncensorable. That's decentralized.
You know, so long as you're talking real Bitcoin.
And I think that, yeah, I think that, you know, it might take a year, might take two, might take three.
But I think that in a shifting kind of global monetary regime where you go from the U.S. Treasury being the primary reserve asset to gold, I think that Bitcoin eventually will start to take a place.
If I had to bet, I would venture to bet that some major nation states have already started mining, if I had to bet.
So I think it's already happening.
I don't think you have to bet.
I mean, Russia has talked about it.
Venezuela historically has been doing it.
Bhutan, not a major nation state, but they're doing it.
Ethiopia is in the game.
Argentina is talking about it.
I think it's there.
Yeah.
And I think that adoption will, again, it might take some time, though, because when you talk about the shift from U.S. Treasury to gold, you're talking a once in a generation, 70-year sort of trend reversing.
It's not going to happen overnight.
And for Bitcoin, smaller asset class, newer asset class for Bitcoin to start to benefit from that will take time on top of that, if that makes sense.
So I think that as long as people are patient, I don't see any reason, you know, so long as, you know, certain issues can can be addressed and the market is able to feel reassured with particular risks.
You know, the one that everyone's talking about being quantum, but, you know, other any other risk, right?
the security budget and all that kind of stuff As long as like the general market starts to become assured that that those risks are yeah this is my thought So like yeah you gold
gold will not last forever as,
as this primary reserve asset due to exactly that.
Well, and that's like, I'm just,
I wanted to pull this up because we're talking about obviously quantum is the
big FUD of FUD de jour, if you will, about Bitcoin.
And I thought Gruble's tweet here was, I mean, just to put things in the context.
And I think this is objectively true.
And there's more progress instantiating gold molecules out of thin air than there is for quantum computers being able to attack Bitcoin.
Well, the higher that gold goes, the more of an incentive there is to find out how to do that.
Yeah.
How to print gold.
Yeah.
And I completely agree.
adding to some of your points there,
I've written about this and talked about it
in the last couple of weeks too.
The fact that people are butthurt about gold and silver
having banning euros and Bitcoin being relatively flat to down,
it's just mind-boggling because we had an 8x
between November 2022 and October of last year.
And between 2009 and up until 2024,
Bitcoin was having all those gains.
gold and silver bugs were sitting on the sidelines and we were um making fun of them so like the fact
that they have one banner year performance which is well deserved the thesis i think is pretty sound
and they're being rewarded for that it's like you can't get butt hurt like you said it's a long-term
game and it's objective like there's a familiarity with gold as a reserve asset going back millennia
and there's a structure a structural aspect to it too where bitcoin's only had a 1.85
trillion market cap like if you wanted to rotate um funds and rotate flows out of assets that you
deem risky particularly government bonds and into a hard asset like structurally like gold and silver
just easier to do that without a ton of slippage yeah yeah and this is where the upside would come
with bitcoin and part of why you know i'm young i have you know a lot to catch up um in terms of
where I want to be in terms of kind of like wealth or net worth or, you know, whatever.
So, you know, I'm willing to take more risk, but that's where the upside comes from is
the fact that it is a much newer, younger, smaller asset class.
And, you know, just in the past three years, Bitcoin's up 320%.
And if you go back just to when the ETFs were approved, we're up, you know, 280, 290%
basically.
uh so yeah like i i i think that perspective is important um because uh yeah like it's easy to get
stuck in the drawdown but uh and and and and focus on that um but 100 120 percent since etf
um yeah it's easy to get you know upset we were at all-time highs you know just uh what a quarter
ago basically um and it's easy to feel the pain of a 30 drawdown i think that if we had this 30
drawdown but gold and silver we're going we're going nowhere i think the sentiment on like twitter
would be much different i think that it's mainly the fact that you pair the two of them where you
have a 30 drawdown from an all-time high that we literally like just hit um you pair that with the
fact that gold and silver are going parabolic. I think that two of them combined is what make,
is making sentiment so bad. But, um, but yeah, I like when sentiment's really bad that that's
the best time to buy something. Uh, generally you're going to get a pretty, pretty, you know,
gnarly reversal. So completely agree. And to your point about younger generations getting
Bitcoin and simply being able to access it easier. I actually, uh, I've been giving a
Bitcoin 101 presentation at a local high school. I mean, I moved back to Philadelphia recently,
so it's local to me now, but I was doing it remotely for the last two years. And I gave
the presentation yesterday and the amount of good questions I got after and the amount of
sort of enthusiasm in the room was palpable. A number of kids, one kid raised his hand
and asked, can I get a, I have a job with a direct deposit. Am I able to direct deposit that
into bitcoin like if so what apps should i use i was like yeah you can do that with strike
cash app fold whatever and so like i thought to your point that's actually one of the other
questions i got from um one of the kids was uh why uh why don't you think bitcoin adoption's been
uh been as strong as as many would like it to be and i said because you guys don't have enough
money yet because i think yeah once once you're in the job market you're making money if you get
a job hopefully you do you're a smart gentleman here uh i was an all-boys school um you'll you'll
get bitcoin it's gonna be much easier for you to spin up a bitcoin wallet and receive and send
bitcoin as opposed to a bank account and i think you're more tech savvy and this is something that's
native to the internet which is native to your to your life you've never lived without the internet
and i think just naturally your generation will will um will connect with a native digital currency
yeah and and the sentiment will shift on a dime like if we you know just just envision a rally
back to like i don't know 105 uh on bitcoin like the sentiment will come back you know people will
be super bullish oh now we're going to 300k like you know these things um you know are are uh
they shift on a dime and and it doesn't take much to get people bullish again um my my worry is like
when it comes to the younger generations and, you know, people my age, it's like,
you know, if we're falling further and further behind, how much of a decision
dynamic is being made where, you know, people are thinking to themselves, well,
you know, Bitcoin could double right from here. Maybe it goes to 160. Maybe it does a 3x.
but you know I need a 20x because the further the longer that it goes longer time goes on
the more ground I have to make up especially in kind of the environment I see coming over the next
couple years with negative real rates and fiscal dominance so yeah there's like kind of a concern
I have a bit where you know I worry that there might be even more gambling even more risk-taking
and that Bitcoin is going to not be able to be seen the way that it was in the early days where
there was huge upside and, you know, early adopters were rewarded handsomely, that sort of thing.
Right. So like I see the rise of gambling and Calci and, you know, I figured because I talk
about this stuff all the time, I needed to set up a Calci account and like do it, have some experience.
And so I did. And I was like, you can bet in an afternoon and 12x your money. Like, you know what I mean? It's wild. And so you have that where you can 12x your money in an afternoon. You know, you got Zoomers that are so far behind, for example, to buy a home.
how much are they going to that's my concern uh as as the young fall further and further behind
uh you know how much is the risk appetite going to grow beyond what bitcoin seems to provide
that that's i think another concern uh that to to be wary of you know uh i i don't do that um i mean
i trade but it's like one percent of my total net worth and any profits i basically just put back
into Bitcoin. But yeah, that risk-taking, I think, is going to be increasing as kind of financial
nihilism grows. The other thing I would say, too, when it comes to a potential catalyst that is
positive for Bitcoin is not to be political, but what we're seeing in the US starting to develop
is kind of scary in terms of a potential for some really ugly sort of political dynamic.
and violence here in the U.S. domestically.
That's characteristic of a fourth turning.
Well, some kind of violence, right?
Either international or domestic.
But yeah, I'm kind of like coming around to this view
that the risk of a domestic conflict here in the U.S.
is growing significantly faster by the day
than I thought it would.
How do, you know, when you're talking about a world
where people are maybe not able to cross state lines,
Maybe, you know, there's people that look at what might start to happen and start to flee the country and all those sorts of things.
You look at like, well, what is the single best way to store wealth in that sort of environment?
My opinion is Bitcoin by a long shot.
Like you can't, if you have any, you know, any, any decent amount of, of wealth can't even do it in gold, you know?
So because you would be fleeing through, you know, maybe check, but I mean, I'm not trying to be doomer, but like, you know, it could get pretty ugly here in the U S.
And, and what, what is the single best way to transport your wealth that, you know, memorize 12 words and no one knows, you know,
they're not searching you and finding gold bars and you're not, you know,
so I think that's another thing that I've been thinking about more and more
recently seeing what's going on just kind of in the societal pulse,
I guess. And I know that the internet's not, you know, real life and stuff,
but you're seeing all these sort of escalating tensions out of Minnesota with
insurrection act and you know,
kind of some of the scenes coming out of there are a little sketchy and
kind of concerning. So yeah, like it's, uh, it, yeah, you know, in a world where you might not
feel super safe to walk around your neighborhood because your political views, that's a different
America than we've grown up in. Um, you know, I live in LA and, uh, you know, envisioning a world
where, you know, you have to watch what you, what clothing items you wear, uh, you know, for fear of
a mob of, you know, people attacking you for perceived political opinions. I mean,
we're seeing all that kind of stuff that like it's characteristic of a foreturning. It was kind
of predicted it would happen. But like, it's kind of scary when you really take a couple steps back
and look at how that picture is looking like it's developing. And yeah, in my opinion, that could be,
you know, in a positive way, at least a bullish indicator for Bitcoin. Because, yeah, you know,
I'm kind of putting myself in that position, you know, thinking that through over the next 10 years,
right, preparing for a possible situation where these sorts of things start to happen. And
the asset I keep coming back to is Bitcoin. That's what I want to own in a world of kind of,
you know, especially when you talk about even if it doesn't get violent, even if it's just kind of hyper political, you know, pendulum swinging back and forth to extreme to extreme.
Well, they can't seize Bitcoin on the blockchain, right?
Like if you envision, you know, a socialist taking power and going full blown socialist, they can't they can seize your stocks.
They can seize your house.
I don't think they would, but they could definitely seize stock.
They could definitely seize bonds.
and if you own gold in the wrong way, not self-custody buried in your backyard, they could
seize that too. What can't they seize? The only thing they can't seize is 12 words out of your
head. So I think thinking about that sort of thing, it's ugly and it's not what we want for
our country. But when it comes to potential bullish catalysts for Bitcoin, it's one that
I'm kind of increasingly coming around to, if that makes sense. Yeah. I mean, I was reading something
this morning about a hospital in New York City that refused to operate on plainclothes NYPD
officers because they thought they were ICE agents. And I mean, you're getting to that point where
you're absconding the hypocriticals because of your political views, which is not a good
social environment to be living in. Yeah, it's pretty ugly out there.
Like, again, you know, Internet's not real life. And we we see some of the most extreme stuff right on the Internet. And hopefully we can avoid, you know, domestic violence, you know, violence within within the domestic politics.
But but I don't know, I see seeing the way things are developing and seeing how like deranged people are when it comes to politics nowadays.
Like, you know, it's just it's concerning, you know, like I'm starting to think like I want to buy a house, want to start a family.
You know, I'm thinking about like, OK, well, I need to figure out like where to to live right where you live could determine whether or not you live or die.
like over the next decade. And that's a scary thought. There's huge consequence to, you know,
you have to look at the fiscal health of the city you're going to live in. You have to look at the
fiscal health of the state, because as much as we talk about the fiscal health of the feds,
like California here, you know, they're about to go into like a fiscal crisis within the next
couple of years, if nothing improves. They're trying to tax their way out of it like the UK,
but we know that doesn't work. You know, tax revenue as a share of GDP plummeted
over the past couple quarters in the UK.
You had a historic amount of wealth flee.
So you can't tax your way out, right?
So you're trying to think, okay, well, cities are,
they have these huge pension funds that are underfunded.
The state, a lot of blue states mainly,
have these enormous state budget deficits.
So you have to worry about that,
and then you have to worry about the geographics
of, you know, God forbid there's ever a potential conflict within our country. Like, where do you
want to be all that sort of thing? Like my parents never had to think about any of that, you know?
But I think that if, if we're being honest with ourselves, like these are conversations that I
think, you know, a lot of people are going to have to have over the next decade. Cause I don't see
political polarization and all that kind of vitriol and just derangement. I don't, I don't
see it getting better, you know? And, and then you come to the next logical question, which is
how do these people co like, how do you coexist with people like that, you know, and like all
these nasty, uh, sort of, um, uh, you know, implications from that. And yeah, like, it's
just all ugly, you know? And, and I think about when it comes to assets, when it comes to like
financial markets, it's not good for equities to, to, to go into a world of increasing populism,
increasing political polarization and potential, you know, full-blown socialism.
And look, even with MAGA, we're nationalizing, you know, the federal government's nationalizing
companies, right? Even MAGA is not free market capitalism. And that's, you know,
you're suspending buybacks, right? You're capping salaries at the defense company.
Yeah. Capping credit card rates, all this stuff, right? So it's like,
do i want to own equities when they're talking about like a windfall tax on the mag 7 to fund
electricity you know power generation so like i don't know equities just for a number of reasons
don't look good uh bonds certainly don't look good on that windfall taxes like we fought this
battle in bitcoin mining um in the united states two years ago when they they i forget it was the
epa or whatever sent out the survey to basically identify self-serving energy source to try to
to try to tax them more.
And it's like, oh, interesting.
And we're doing this now.
Yeah, like what do you want to own in a world
that looks like that?
Where you have, look, I'll point out
that the last time we really had like a massive impulse
when it comes to like fiscal spending and populism,
back from 1965 to 1982,
the S&P 500 collapsed 92% in gold terms.
So yeah, in dollar terms, you went nowhere.
In dollar terms, you got back all the dollars you were owed, but in gold terms, you lost 92% of the real value that you had in equity exposure.
So I think that those sorts of things, and again, what we see the government, and this is the free market party, right?
This is the conservatives or whatever you want to call it, right, that's doing it.
What is it going to look like when it's present at AOC?
It's going to be even worse.
and like ask, ask yourself, well, do you really want to own equities in that sort of landscape
where it's all centralized? And you know, yeah, there, there's a number of issues I see with
equities where I don't want to store my wealth in them. There are of course, bonds, like, you know,
bonds could not be worse when it comes to the way I see things over the next 10 years. And really
kind of the only thing I keep coming back to is like gold, silver, and Bitcoin. I bought, I was
buying a lot of gold and silver in 22, 23, 24. And I plan to hold that. I would like to add some
a little bit, you know, I'm still heavily in, uh, primarily vast majorities in Bitcoin,
but, uh, but those are the only two assets that really, when I take like 10 steps back and look at
the political setup, the societal setup, the fiscal setup, the international kind of global
trade setup, I, it's pretty clear that like the only thing I'm like super bullish on is gold.
some degree silver and, and, and definitely Bitcoin,
definitely Bitcoin at $89,000 per dollars per Bitcoin.
I'm definitely bullish here.
Me as well. And I want to be respectful of your time.
Cause I know you got to run here, but I really appreciate you taking the time
this morning to catch up. It was as always incredibly intellectually
stimulating and a high signal. So thank you for the work that you're doing,
sir. Yeah. Thank you. I appreciate that.
We'll have to do it again soon.
We should keep on this cadence once a quarter catching up.
Yeah, absolutely.
It's always a good time.
All right.
Peace and love freaks.