1 00:00:00,120 --> 00:00:02,200 Luke, welcome to the New York State Podcast. 2 00:00:02,360 --> 00:00:04,160 Great to have you here. It's great to be here. 3 00:00:04,160 --> 00:00:05,520 Thanks for having me on Blagi. Yeah. 4 00:00:05,520 --> 00:00:10,160 So you know, we have been carry on a fairly long running 5 00:00:10,160 --> 00:00:13,400 conversation, a sidebar on the world stage. 6 00:00:15,360 --> 00:00:18,640 You know one of the things just as a meta comment like the group 7 00:00:18,640 --> 00:00:24,760 chats are actually good because they are it's it's like 8 00:00:24,880 --> 00:00:26,240 everybody's busy. So you can have like an 9 00:00:26,240 --> 00:00:30,280 asynchronous conversation and then you can, you know, hang out 10 00:00:30,280 --> 00:00:31,680 in person. Like, you know, sometimes you'll 11 00:00:31,680 --> 00:00:33,520 see Kathleen Tyson or some other people from the group. 12 00:00:33,520 --> 00:00:35,080 And it's always great because you could pick up right where 13 00:00:35,080 --> 00:00:36,560 you left off. And everybody knows all the same 14 00:00:36,560 --> 00:00:37,880 references over the last several months. 15 00:00:39,280 --> 00:00:41,480 So anyway, so welcome, Great, great to great to have you here. 16 00:00:41,960 --> 00:00:43,760 It's great to talk to you. I know we've talked before 17 00:00:43,760 --> 00:00:45,800 offline, but it's it's, I've been looking forward to this. 18 00:00:46,000 --> 00:00:48,680 Awesome. So OK, so you are, you know, 19 00:00:48,720 --> 00:00:50,880 you've got force for the trees. LC, do you want to just give you 20 00:00:50,880 --> 00:00:52,720 a quick bio? You're pretty, you know, big 21 00:00:52,720 --> 00:00:55,000 account on Twitter, but just for those people are X. 22 00:00:55,040 --> 00:00:58,360 You know, I should say nowadays give give the give the Luke on 23 00:00:58,360 --> 00:01:00,240 Luke spiel if you wouldn't mind. Yeah, sure. 24 00:01:00,240 --> 00:01:01,440 I'll give you that the elevator pitch. 25 00:01:01,440 --> 00:01:05,040 So nearly 30 years in finance, started out in investment 26 00:01:05,040 --> 00:01:09,200 research, was a partner at two different firms that were 27 00:01:09,520 --> 00:01:12,240 pioneers in bottoms up fundamental channel check 28 00:01:12,240 --> 00:01:15,560 research. At both of those places I was 29 00:01:15,560 --> 00:01:19,240 one of the founding editors of a weekly piece that basically 30 00:01:19,240 --> 00:01:23,040 aggregated the bottoms up fundamental research we were 31 00:01:23,040 --> 00:01:27,000 doing into sort of a macro thematic piece that became one 32 00:01:27,000 --> 00:01:30,080 of the more widely read research pieces on Wall Street heard in 33 00:01:30,080 --> 00:01:31,600 the Midwest. And then straight from the 34 00:01:31,600 --> 00:01:34,760 source at the at the at the two different shops hung out my own 35 00:01:34,760 --> 00:01:37,880 shingles. FFTT in 2014, doing the same 36 00:01:37,880 --> 00:01:42,080 type of work with publicly available information and what 37 00:01:42,080 --> 00:01:45,680 we do is I, I have what I think is the best job in the world. 38 00:01:45,680 --> 00:01:49,400 I get to sit around, read, comprehend, think all day and 39 00:01:49,400 --> 00:01:52,280 aggregate large amounts of publicly available data into 40 00:01:53,000 --> 00:01:55,480 what I'm looking for are developing economic bottlenecks. 41 00:01:55,480 --> 00:02:02,240 Because for me, my 30 years in finance have taught me that how 42 00:02:02,400 --> 00:02:05,360 a developing economic bottleneck will affect various sectors in 43 00:02:05,360 --> 00:02:09,240 the economy is the biggest attribution for investment 44 00:02:09,240 --> 00:02:12,080 outperformance. Perfect example, in the housing 45 00:02:12,200 --> 00:02:16,120 downturn, it didn't matter if you owned the best home builder, 46 00:02:16,120 --> 00:02:20,800 it was only down 90% while all the others went down 95 to 100%, 47 00:02:20,800 --> 00:02:23,320 right. And maybe not home builder, but 48 00:02:23,400 --> 00:02:24,880 mortgage broker, you get it right. 49 00:02:25,360 --> 00:02:28,720 The most important thing was getting them the, the bottleneck 50 00:02:28,720 --> 00:02:32,000 correct in that time. And that's something we try to 51 00:02:32,000 --> 00:02:34,520 do. So that's the short version of 52 00:02:34,600 --> 00:02:38,160 of where I've come from, my background and and what we do 53 00:02:38,160 --> 00:02:41,520 today. So it's funny you say finance in 54 00:02:41,520 --> 00:02:45,600 the East Coast way as supposed to finance which is the West 55 00:02:45,600 --> 00:02:48,680 Coast issue way of saying it was funny so. 56 00:02:48,680 --> 00:02:49,960 It continues our our thing, right? 57 00:02:49,960 --> 00:02:52,320 It's like almost instead of flashing gang signs, we'll just 58 00:02:52,320 --> 00:02:54,040 it's. How you Yeah, yeah, yeah, 59 00:02:55,440 --> 00:02:56,360 exactly. It's funny. 60 00:02:56,600 --> 00:03:01,280 So but the it's interesting you say economic bottlenecks because 61 00:03:02,280 --> 00:03:05,560 So what, what you mean by that? Do you mean, do you mean macro 62 00:03:05,560 --> 00:03:09,200 trends or do you mean a bottleneck in like a chemistry 63 00:03:09,200 --> 00:03:15,040 sense where there's genuinely a scarcity of some compound or raw 64 00:03:15,040 --> 00:03:16,880 material or something in the economy? 65 00:03:17,200 --> 00:03:22,240 Explain me how you think about. That with at the risk of being 66 00:03:22,240 --> 00:03:24,920 flipped yes, it's a little bit of both right. 67 00:03:26,360 --> 00:03:30,920 I am when I when I read and read and read and read, I don't know 68 00:03:30,920 --> 00:03:33,880 what I'm looking for right. I'm, I, I've equated myself to 69 00:03:33,880 --> 00:03:36,520 be in like a, you know, a giant catfish at the bottom of the 70 00:03:36,520 --> 00:03:39,200 Ohio River just waiting for stuff to kind of come downstream 71 00:03:39,200 --> 00:03:43,880 to me. And sort of the secret sauce in 72 00:03:43,880 --> 00:03:48,400 it is when I see something that interests me, it's like a 73 00:03:48,400 --> 00:03:50,800 splinter in my brain and I kind of go, OK. 74 00:03:50,880 --> 00:03:53,680 And I don't most of the time, I don't know, it's sometimes like, 75 00:03:53,720 --> 00:03:57,120 oh, well, that's important. Other times it's like that feels 76 00:03:57,120 --> 00:03:59,000 like it could be important. And I don't know why. 77 00:03:59,000 --> 00:04:01,880 I don't know when. And then I put that in what I 78 00:04:01,880 --> 00:04:07,120 call my cutting room, which is I set it aside, I save it and, and 79 00:04:07,600 --> 00:04:11,960 as things, especially for the things I don't know exactly 80 00:04:11,960 --> 00:04:15,040 where they fit, but I just have a feeling, almost an intuition 81 00:04:15,040 --> 00:04:20,760 that they're important. Possibly for whatever reason, I, 82 00:04:20,760 --> 00:04:25,600 I retain a lot of what I read for long, long periods of time. 83 00:04:25,600 --> 00:04:29,400 And so it might be 24 hours later, it might be 24 days 84 00:04:29,400 --> 00:04:32,560 later, it might be 24 years later and it'll be like 85 00:04:32,920 --> 00:04:37,600 something else triggers. And I go, oh, that reminds me of 86 00:04:37,600 --> 00:04:39,520 this. And this is related to that. 87 00:04:39,520 --> 00:04:45,080 And you start sort of putting pieces together in a way that 88 00:04:45,080 --> 00:04:47,840 starts to build a mosaic of something that's happening. 89 00:04:47,960 --> 00:04:51,080 And I kind of see things in these, these trends of where I 90 00:04:51,080 --> 00:04:54,880 get really excited because not only am I reading for what is 91 00:04:54,880 --> 00:04:58,720 happening, what interests me, but for what I call the dog that 92 00:04:58,720 --> 00:05:01,240 doesn't bark, right? When you're when for what's not 93 00:05:01,240 --> 00:05:04,600 happening or for what people are not reacting to that they should 94 00:05:04,600 --> 00:05:06,760 be. And so when I get really excited 95 00:05:06,760 --> 00:05:10,320 and when I talk about a bottleneck, what I'm most 96 00:05:10,320 --> 00:05:14,680 excited about is when I've got and have read for investing 97 00:05:14,680 --> 00:05:17,880 consensus, which is over here, right? 98 00:05:17,880 --> 00:05:19,840 And everyone thinks this is going to happen. 99 00:05:20,680 --> 00:05:24,320 And I've got this big body of evidence way over here saying 100 00:05:24,640 --> 00:05:26,520 this is actually going to happen. 101 00:05:26,520 --> 00:05:29,400 Not that I mean another. Yeah. 102 00:05:29,920 --> 00:05:33,200 So and that's the it's the conflict of those two. 103 00:05:33,200 --> 00:05:36,920 And that's why I say, yes, it's both is it's, it's, it's more 104 00:05:36,920 --> 00:05:41,960 sort of sort of fundamental macro driven, but it is almost 105 00:05:41,960 --> 00:05:43,920 like a, you know, a chemical reaction of sorts. 106 00:05:43,920 --> 00:05:46,840 When you've got in, you know, when you've actually got the 107 00:05:46,840 --> 00:05:50,800 people, you know, when you, we have positioning in assets and 108 00:05:50,800 --> 00:05:54,680 flows, physical flows on the wrong side of things and they 109 00:05:54,680 --> 00:05:57,400 need to move somewhere else to adjust to what's happening. 110 00:05:57,760 --> 00:06:02,120 There's actually, you know, a kinetic movement of positioning 111 00:06:02,120 --> 00:06:04,360 of money. And that's what I mean by 112 00:06:04,360 --> 00:06:07,320 bottleneck. Yes, this is interesting. 113 00:06:07,320 --> 00:06:12,120 So you know, one of the things I want to do is I want to go 114 00:06:12,120 --> 00:06:15,600 through some of you know you and I have come from I mean I think 115 00:06:15,600 --> 00:06:18,440 we're somewhat similar in that I also just like digest giant 116 00:06:18,440 --> 00:06:20,840 quantities of information. I come at it from maybe a more 117 00:06:21,160 --> 00:06:25,200 tech in Asia standpoint, and you have a lot of experience on the 118 00:06:25,200 --> 00:06:28,520 ground in the Midwest and you've actually seen, you know, the 119 00:06:28,520 --> 00:06:31,440 other side of that, like the deindustrialization and so and 120 00:06:31,440 --> 00:06:32,960 so forth. And you see what, you know, 121 00:06:32,960 --> 00:06:35,680 what's happened with the the factories and and whatnot. 122 00:06:36,200 --> 00:06:40,720 But we've come to, I think, pretty similar conclusions on on 123 00:06:40,720 --> 00:06:44,680 a lot of things, right. And do you want to give the 124 00:06:44,760 --> 00:06:47,080 unified Luke theory of the world? 125 00:06:47,160 --> 00:06:51,160 I mean, you know, the money printer subsidizing things gold 126 00:06:51,160 --> 00:06:55,200 is going to get repriced. You know, financial repression 127 00:06:55,200 --> 00:06:57,600 is really already ongoing, but it's going to become more like 128 00:06:57,760 --> 00:06:59,160 harder to deny. I don't know. 129 00:06:59,360 --> 00:07:08,040 Give me give me the Luke macro. The the Luke macro is really, I 130 00:07:08,040 --> 00:07:16,160 think the fundamental case is that post 2008 it became 131 00:07:16,160 --> 00:07:20,120 apparent to what we will call the bricks or the Global South. 132 00:07:20,120 --> 00:07:26,080 I'll just say bricks for ease that the status quo monetary 133 00:07:26,080 --> 00:07:30,720 system could no longer work after the US basically got out 134 00:07:30,720 --> 00:07:35,440 of it by printing money for a simple reason, which is the 135 00:07:35,440 --> 00:07:39,160 Global South in 2008 was only 10 years past the Asian the Asian 136 00:07:39,160 --> 00:07:41,560 financial crisis, which was essentially they ran out of 137 00:07:41,560 --> 00:07:43,920 dollar reserves. And once they did, they had to 138 00:07:43,920 --> 00:07:47,480 devalue and go through a lot of pain and austerity and they 139 00:07:47,480 --> 00:07:49,280 never wanted to do that again. And what 2? 140 00:07:49,280 --> 00:07:52,600 1000 the way US got out of 2008 showed them. 141 00:07:53,880 --> 00:07:57,320 Was that ultimately as long as commodities are only priced in 142 00:07:57,320 --> 00:08:00,520 dollars and the Americans are always going to print rather 143 00:08:00,520 --> 00:08:06,960 than take pain then as. A. $100 trillion plus of US 144 00:08:06,960 --> 00:08:11,560 entitlement promises go cash flow negative and go from on off 145 00:08:11,560 --> 00:08:12,840 balance sheet to on balance sheet. 146 00:08:13,720 --> 00:08:15,680 The Americans are going to print the money for that and that is 147 00:08:15,680 --> 00:08:19,400 going to export dollar inflation that shows up in commodities 148 00:08:19,400 --> 00:08:24,880 that basically runs down global S FX reserves and puts them 149 00:08:24,880 --> 00:08:29,920 right back to the problem they had in the late 1990s and 150 00:08:29,920 --> 00:08:32,679 including China. And that was simply a political 151 00:08:33,280 --> 00:08:34,960 and economic red line. They weren't going to allow that 152 00:08:34,960 --> 00:08:38,480 to happen. And so the reaction to 2008, 153 00:08:38,480 --> 00:08:42,240 which was seen in Beijing, Moscow and other places around 154 00:08:42,240 --> 00:08:43,640 the global. South as as basically. 155 00:08:43,640 --> 00:08:47,320 A financial attack on Beijing, Moscow, etcetera. 156 00:08:47,320 --> 00:08:51,400 They began not necessarily doing because they wanted to hurt 157 00:08:51,400 --> 00:08:55,080 America or hate America per SE, but simply out of enlightened 158 00:08:55,080 --> 00:08:58,600 self-interest, which is if we don't do this, we are going to 159 00:08:58,600 --> 00:09:03,280 have another Southeast Asia financial crisis and right then 160 00:09:03,280 --> 00:09:07,960 we need to start de dollarizing our global commodity markets. 161 00:09:08,720 --> 00:09:13,280 And the real you know, that's what we've been seeing happen as 162 00:09:13,280 --> 00:09:19,160 a shift to gold and a pricing in in outside the dollar, primarily 163 00:09:19,160 --> 00:09:21,720 in yuan China setting up different offshore you want 164 00:09:21,720 --> 00:09:24,600 clearing banks and gold hubs around the world, etcetera. 165 00:09:24,600 --> 00:09:28,440 And the other side of that same coin that's part of this unified 166 00:09:28,440 --> 00:09:33,200 theory is the actions, the enlightened self-interest 167 00:09:33,200 --> 00:09:35,080 actions. Of the bricks. 168 00:09:35,280 --> 00:09:40,080 To basically avoid what is a guaranteed repeat of Southeast 169 00:09:40,080 --> 00:09:43,640 Asia crisis the late 90s the other side of that is it means 170 00:09:43,640 --> 00:09:47,240 the price insensitive buyer of treasuries global central banks, 171 00:09:47,240 --> 00:09:49,440 these tend to be all the creditor countries, the bricks 172 00:09:49,440 --> 00:09:52,480 and global S stop buying treasuries on net while US 173 00:09:52,480 --> 00:09:55,440 deficits didn't stop growing right and So what you end up 174 00:09:55,440 --> 00:09:59,240 with is a treasury supply situation that starts to look 175 00:09:59,240 --> 00:10:04,200 like the famous Lucy and I can't think of her name I Love Lucy 176 00:10:04,200 --> 00:10:05,920 episode, right where the chocolates just keep coming 177 00:10:05,920 --> 00:10:08,440 faster and faster right so the US deficits keep coming down the 178 00:10:08,440 --> 00:10:12,040 line faster and faster and you know you stuff the banks with 179 00:10:12,040 --> 00:10:14,800 them you stuff the US pensions with them you stuff US retail 180 00:10:14,800 --> 00:10:17,760 with them and the ultimate problem is these bricks creditor 181 00:10:17,760 --> 00:10:21,720 nations their central banks are no longer buying treasuries as 182 00:10:21,720 --> 00:10:23,480 the reserves they're buying gold or in the. 183 00:10:23,480 --> 00:10:26,240 Case of China, actually, I want to pause you there for a second. 184 00:10:26,240 --> 00:10:29,360 So some premises that maybe we both agree on, I'll go kind of 185 00:10:29,360 --> 00:10:31,240 one by one, get your thoughts first. 186 00:10:32,280 --> 00:10:33,800 The currency of bricks is gold bricks. 187 00:10:34,240 --> 00:10:36,200 Or it's going to be, if it isn't already. 188 00:10:36,200 --> 00:10:38,280 Like that's the one that's traded between them, right? 189 00:10:38,280 --> 00:10:39,840 100% Yep. OK. 190 00:10:39,960 --> 00:10:46,120 And then #2 is gold physical gold, like not, not GLD, not all 191 00:10:46,120 --> 00:10:49,800 the virtualizations of gold, but like physical gold bricks that 192 00:10:49,800 --> 00:10:53,320 you can put in an armored car is going to, that's just going to 193 00:10:53,320 --> 00:10:56,160 become more important because it's there when all kinds of 194 00:10:57,400 --> 00:10:59,640 abstractions go away. That's like physical that you 195 00:10:59,640 --> 00:11:04,240 can touch and feel and it's at record highs, but it's nowhere 196 00:11:04,240 --> 00:11:06,440 near where it's going to be. I think we both agree on that. 197 00:11:06,960 --> 00:11:08,480 Agree. OK. 198 00:11:09,040 --> 00:11:12,480 And you know, an interesting thing, I'm not sure it was you 199 00:11:12,480 --> 00:11:13,760 and I have both done this calculation. 200 00:11:13,760 --> 00:11:18,440 If you actually revalued all of the you know, they it's funny 201 00:11:18,440 --> 00:11:19,800 this is being talked about. I don't know if you have a 202 00:11:19,800 --> 00:11:21,280 theory on this. I don't I don't have a strong 203 00:11:21,280 --> 00:11:23,520 opinion. Is the Golden Fort Knox really 204 00:11:23,520 --> 00:11:25,080 there? I think at least some of it, 205 00:11:25,600 --> 00:11:27,280 maybe all of it, maybe more than all of it. 206 00:11:27,320 --> 00:11:28,760 I, I don't have a strong view on it. 207 00:11:28,840 --> 00:11:31,760 I think a bunch of guys who have haircuts like mine with big guns 208 00:11:31,760 --> 00:11:33,600 say it's there and, you know, and. 209 00:11:33,960 --> 00:11:37,280 You know this Ron Paul types who say it's not and so on. 210 00:11:37,480 --> 00:11:40,960 I I am rationally ignorant. I think it might be there, but 211 00:11:40,960 --> 00:11:45,680 I've also wouldn't be surprised if it was misaccounted for like 212 00:11:45,720 --> 00:11:49,000 you saw this jobs report. It's it's really genuinely 213 00:11:49,280 --> 00:11:54,200 Potemkin American where for years remember how mad they got 214 00:11:54,200 --> 00:11:57,640 at David Sacks and a few other people who pointed out that 215 00:11:57,920 --> 00:12:00,880 these jobs numbers seem really wishy washy and weird during the 216 00:12:00,880 --> 00:12:04,240 Biden administration. It was like 17 like months 217 00:12:04,240 --> 00:12:06,200 straight of like up into the right job numbers. 218 00:12:06,200 --> 00:12:09,120 Remember that like of job growth and then every absolutely. 219 00:12:09,520 --> 00:12:11,840 Yeah, yeah, I was going to say too, as you look back to summer 220 00:12:11,840 --> 00:12:14,800 2022, like I remember saying early in 22, I'm like, they 221 00:12:14,800 --> 00:12:18,200 can't tighten because the debt situation will put us into a 222 00:12:18,200 --> 00:12:22,120 recession really quick. And they tightened. 223 00:12:22,280 --> 00:12:24,720 I was wrong. I was, I, I immediately pivoted 224 00:12:24,720 --> 00:12:25,680 like, OK, well, they're tightening. 225 00:12:25,680 --> 00:12:26,800 Well, this would be really bad for risk. 226 00:12:26,800 --> 00:12:29,440 So that was correct. And then you saw all of these 227 00:12:29,440 --> 00:12:31,960 sort of data series that had always. 228 00:12:31,960 --> 00:12:35,480 Foreshadowed recession and employment loss, you know ISM 229 00:12:35,480 --> 00:12:38,080 and and and industrial production and. 230 00:12:38,600 --> 00:12:41,200 All of these things and it was chapter and verse through second 231 00:12:41,200 --> 00:12:43,760 quarter, third quarter dollars rising like you'd get into a 232 00:12:43,760 --> 00:12:45,440 recession. The only thing that didn't move 233 00:12:45,440 --> 00:12:47,360 was employment. And so people were saying, aha, 234 00:12:47,360 --> 00:12:49,440 see, there wasn't a receipt, tax receipts. 235 00:12:49,680 --> 00:12:52,800 How how do you have tax receipts fall as dramatically as they did 236 00:12:52,800 --> 00:12:56,040 in 2022-2023? And I call it a recession. 237 00:12:56,040 --> 00:12:58,120 You thought of that graph that. 'D be a great graph to show. 238 00:12:58,120 --> 00:13:00,560 Can you share that graph? This is this is going back to 239 00:13:00,560 --> 00:13:06,520 1947 and so right anytime you get receipts down year over year 240 00:13:06,520 --> 00:13:12,480 about 5% like the only time you didn't have a recession down 241 00:13:12,480 --> 00:13:17,200 more than 3% on receipts was sorry, 64 was 2, but that was 242 00:13:17,200 --> 00:13:20,560 down only down 2% right recession, recession. 243 00:13:20,560 --> 00:13:23,760 Wow, what a great charge. And, and look at this, we've got 244 00:13:23,760 --> 00:13:28,040 receipts in the, you know, down 8% and we're not in a recession. 245 00:13:28,120 --> 00:13:30,280 And the only reason we weren't in a recession, if you go back 246 00:13:30,280 --> 00:13:34,560 and read at the time, was all the economists were like, well, 247 00:13:34,560 --> 00:13:37,760 it's not technically a recession even though GDP fell. 248 00:13:37,760 --> 00:13:41,360 If you remember, they revised GDP decline in two Q and three Q 249 00:13:41,360 --> 00:13:44,880 22 away, but initially it was reported as a decline. 250 00:13:45,200 --> 00:13:50,640 So they why, why was it because the jobs numbers had gotten, you 251 00:13:50,640 --> 00:13:53,520 know, whether you call it faked, whether you call it massaged, 252 00:13:53,520 --> 00:13:57,160 whatever, what have you is that. I don't I don't know like I 253 00:13:57,160 --> 00:14:00,400 looked at that like you get receipts down 8 now a big chunk 254 00:14:00,400 --> 00:14:06,480 of that was withheld, right. So the as reported, the reason 255 00:14:06,480 --> 00:14:11,720 why, why receipts fell and employment didn't was because a 256 00:14:11,720 --> 00:14:18,160 about $500 billion of that decline, 450 billion was what 257 00:14:18,160 --> 00:14:23,040 they call non withheld, right. So non withheld is just stock 258 00:14:23,040 --> 00:14:26,840 based comp. And so as stocks fell in 2022, 259 00:14:28,320 --> 00:14:31,960 it's a huge, you know, stop the stock market is the key marginal 260 00:14:31,960 --> 00:14:37,640 driver to to consumer spending and therefore U.S. tax receipts. 261 00:14:37,640 --> 00:14:44,680 So it's, it's for me, I don't think the job revision is, you 262 00:14:44,680 --> 00:14:47,800 know, it, it's not necessarily that we didn't have a that we, 263 00:14:47,800 --> 00:14:49,680 that we had a recession there, a job recession. 264 00:14:50,160 --> 00:14:57,400 But I think it supports the view that it was much softer in 2022. 265 00:14:57,400 --> 00:15:01,200 Everything else was recessionary except jobs, including this, the 266 00:15:01,280 --> 00:15:04,040 the decline in receipts, which was like I said, heavily non 267 00:15:04,040 --> 00:15:06,080 withheld. It was stock based, comp driven. 268 00:15:06,400 --> 00:15:10,720 Very interesting. I mean, the, the, the thing 269 00:15:10,720 --> 00:15:18,200 that's really fascinating about this is there's almost a 270 00:15:18,200 --> 00:15:24,240 reflexivity to it of if you can sort of fake enough people into 271 00:15:24,240 --> 00:15:27,920 thinking it's not a recession, then they might act if it's not 272 00:15:27,920 --> 00:15:30,040 a recession and then they come out of recession. 273 00:15:30,040 --> 00:15:33,240 Or at least that was the, I think that was probably what the 274 00:15:33,280 --> 00:15:34,880 Biden and men people were thinking. 275 00:15:34,880 --> 00:15:36,600 They can just skate by it and so on. 276 00:15:37,200 --> 00:15:41,920 But I think what actually happens is they just are hiding 277 00:15:41,920 --> 00:15:45,240 the stick of dynamite under more and more pillows and then it 278 00:15:45,240 --> 00:15:49,200 blows up in a you know, I don't know if kicking the can, but 279 00:15:49,200 --> 00:15:52,320 then it can't be kicked. It the duration of can kicking 280 00:15:52,960 --> 00:15:59,200 or the distance you kick it, it reduces each time, you know, So 281 00:15:59,200 --> 00:16:04,280 OK, that was a great graph. So, OK, now your conclusion from 282 00:16:04,280 --> 00:16:06,560 that is what? That essentially, the economy is 283 00:16:06,560 --> 00:16:08,600 in much worse shape than it actually looks. 284 00:16:09,000 --> 00:16:13,600 My conclusion from that graph was at the time and continues to 285 00:16:13,600 --> 00:16:19,280 be that stocks are the US economy on the margin and you 286 00:16:19,280 --> 00:16:24,440 know if we if we go back to sharing that right and screen. 287 00:16:26,080 --> 00:16:28,240 So I've got a graph for you, also from 2023. 288 00:16:28,240 --> 00:16:29,920 Let me show you one which maybe you've seen. 289 00:16:30,160 --> 00:16:32,160 Oh, actually, actually go, go, go show your screen. 290 00:16:32,160 --> 00:16:36,120 Then I'll show you something. We go to the same chart here and 291 00:16:36,120 --> 00:16:40,240 it's this is now I've overlaid total equity market cap year 292 00:16:40,240 --> 00:16:43,240 over year over that same tax receipt number, right? 293 00:16:43,240 --> 00:16:51,400 And so I'm going to go 1966. Through. 1995, right? 294 00:16:53,160 --> 00:16:57,680 And there's, there is in the inflationary 70s, there is some 295 00:16:57,680 --> 00:17:00,480 rhyming, right? But then when we get into the 296 00:17:00,480 --> 00:17:09,599 financialized 80s, let's go 82 to 95, you know, stocks go up, 297 00:17:09,599 --> 00:17:13,240 stocks go down. But receipts are just, you know, 298 00:17:13,599 --> 00:17:16,280 there's, there's, yeah, they're, they, they continue to chug 299 00:17:16,280 --> 00:17:19,040 along no matter what it, you know, call it zero, you know, 5 300 00:17:19,040 --> 00:17:24,319 to 10% year over year. Now in 1995, President Bill 301 00:17:24,319 --> 00:17:29,080 Clinton signs tax legislation. And in that tax legislation he 302 00:17:29,080 --> 00:17:35,280 says we are going to, we're going to make non deductible to 303 00:17:35,280 --> 00:17:42,600 the corporation cash compensation over $1 million per 304 00:17:42,600 --> 00:17:45,520 year. We basically we're going to try 305 00:17:45,520 --> 00:17:47,280 to fight wealth inequality, right. 306 00:17:47,280 --> 00:17:52,760 We executive comp, CEO comps getting too far away from 307 00:17:52,760 --> 00:17:54,680 workers. So we're going to we're going to 308 00:17:54,680 --> 00:17:57,120 make non deductible to the corporation cash comp and the 309 00:17:57,120 --> 00:18:00,280 lobbyists were able to change that to say. 310 00:18:00,880 --> 00:18:04,880 To to exclude. Stock based comp And so guess 311 00:18:04,880 --> 00:18:08,000 how corporate America started getting paid post 1995? 312 00:18:08,120 --> 00:18:13,440 CEO, C-Suite, middle managed. They all went to equity and now 313 00:18:13,440 --> 00:18:16,280 this is the same chart 1995 to present. 314 00:18:16,440 --> 00:18:20,200 This is in blue U.S. Federal tax receipts year over 315 00:18:20,200 --> 00:18:26,360 year all in and red is U.S. stock market equity market cap 316 00:18:26,400 --> 00:18:30,040 year over year. You tell me where the stock 317 00:18:30,040 --> 00:18:32,960 market? The three big crashes correspond 318 00:18:32,960 --> 00:18:37,160 to the downturns in the.com crash, the 2008 financial 319 00:18:37,160 --> 00:18:41,120 crisis, and then the 2022-2023 correction. 320 00:18:41,760 --> 00:18:45,560 There's a decline in the corporate equities liability 321 00:18:45,560 --> 00:18:48,840 level and a corresponding decline in current receipts. 322 00:18:49,080 --> 00:18:52,640 And the first two of them correspond to a recession, but 323 00:18:52,640 --> 00:18:55,040 the third one doesn't. And the third one doesn't. 324 00:18:55,040 --> 00:18:57,880 And this is super, super powerful chart because this 325 00:18:57,880 --> 00:19:01,680 tells us you look at this chart and I, you know, we were hearing 326 00:19:01,680 --> 00:19:04,800 Scott Besson saying January and February and Elon Musk and 327 00:19:04,800 --> 00:19:06,240 Trump, we're going to take some pain. 328 00:19:06,240 --> 00:19:08,560 It's OK if the stock market falls, we're going to get the 329 00:19:08,560 --> 00:19:09,520 deficit down. And you. 330 00:19:09,520 --> 00:19:13,080 Look at this chart and you go. No, you're not. 331 00:19:14,920 --> 00:19:17,440 Anything that drives stocks down is going to blow out the 332 00:19:17,440 --> 00:19:21,120 deficit, which given our fiscal position is a huge problem. 333 00:19:21,120 --> 00:19:26,640 It's why we have repeatedly seen and since 2018 these periods 334 00:19:26,640 --> 00:19:29,360 that are very confusing to most market participants still, which 335 00:19:29,360 --> 00:19:34,120 is stocks go down 1020% and the 10 year treasury yield comes 336 00:19:34,120 --> 00:19:37,080 down like it always has a little bit and then all of a sudden it 337 00:19:37,080 --> 00:19:38,840 starts. Taking off like a scalded cat. 338 00:19:39,480 --> 00:19:43,000 And this is one of the reasons that has happened, The reason 10 339 00:19:43,000 --> 00:19:46,760 year yields have gone up in equity downturns after a brief 340 00:19:46,760 --> 00:19:52,560 decline since 2018-2019. Certainly 2020 is exactly this 341 00:19:52,560 --> 00:19:55,240 is. The US economy is the stock 342 00:19:55,240 --> 00:19:56,600 market. The stock market is the US 343 00:19:56,600 --> 00:20:00,880 economy because so much of the marginal shift in marginal 344 00:20:00,880 --> 00:20:04,680 amount of consumer spending. Consumer spending in 2/3 of GDP 345 00:20:05,680 --> 00:20:09,080 is driven by stocks. You know, we have a charge 346 00:20:09,200 --> 00:20:11,040 shows, you know, we've looked at the IRS data. 347 00:20:11,680 --> 00:20:16,000 The annual net capital gains plus taxable IRA distributions 348 00:20:16,000 --> 00:20:21,640 alone are 200% of the annual growth in personal consumption 349 00:20:21,640 --> 00:20:25,960 expenditures, which is a 17 or $18 trillion line item in the US 350 00:20:25,960 --> 00:20:28,600 economy. Like literally the US economy 351 00:20:28,600 --> 00:20:31,960 mathematically cannot grow if stocks fall. 352 00:20:32,360 --> 00:20:35,720 And so it's enormously powerful because what it tells you is 353 00:20:36,560 --> 00:20:39,240 unless they are willing to stand aside and let the Treasury 354 00:20:39,240 --> 00:20:43,520 market blow up, to let rates rise in a recession, in a 355 00:20:43,520 --> 00:20:49,600 inequity downturn and let let the US go into a debt death 356 00:20:49,600 --> 00:20:53,880 spiral, they can't let equities fall for, you know, this chart 357 00:20:53,880 --> 00:20:56,960 tells you they'll never let them fall and stay down at 20% for 358 00:20:56,960 --> 00:20:59,080 more than a week or two, maybe 3 weeks. 359 00:20:59,880 --> 00:21:02,400 Very powerful. Well, it's interesting. 360 00:21:02,400 --> 00:21:04,800 There's, there's a very, there's a guy 361 00:21:05,720 --> 00:21:11,080 stephen.randywaldman@interfluidity.com and I, I'm not sure I can find 362 00:21:11,080 --> 00:21:14,640 the post, but essentially he makes a very similar point to 363 00:21:14,640 --> 00:21:17,240 you. It might be a year or two years 364 00:21:17,240 --> 00:21:19,920 ago and so and sober, maybe AI could find it if you look for 365 00:21:19,920 --> 00:21:21,800 it. But essentially his point was 366 00:21:22,920 --> 00:21:30,000 something like the economy is a stock market because so many 367 00:21:30,000 --> 00:21:36,480 upper middle class people have their money in index funds that, 368 00:21:36,560 --> 00:21:41,120 that it has become an expectation of the kinds of 369 00:21:41,120 --> 00:21:45,440 people that take government jobs, especially senior 370 00:21:45,440 --> 00:21:52,200 government jobs, that the market will be going up and that if 371 00:21:52,200 --> 00:21:55,720 it's going down too much, then it needs to be propped up. 372 00:21:56,840 --> 00:22:00,080 And as you're aware, you, you know, the Plunge Protection 373 00:22:00,080 --> 00:22:02,040 team, you've probably written about it quite a bit. 374 00:22:02,120 --> 00:22:04,280 Right. And not in those words, but 375 00:22:04,280 --> 00:22:05,720 certainly, yeah. Yeah. 376 00:22:05,720 --> 00:22:10,120 So that's actually, you know, that's actually Greenspan's name 377 00:22:10,120 --> 00:22:13,520 for it in the 90s. So if you if you that's it's a 378 00:22:13,520 --> 00:22:16,000 term. The Plunge Protection Team is 379 00:22:16,960 --> 00:22:22,240 the informal name of taking printed paper from the Fed, 380 00:22:22,240 --> 00:22:25,000 printed money from the Fed and directly or indirectly, 381 00:22:25,120 --> 00:22:27,480 sometimes they literally directly buy assets, like they 382 00:22:27,480 --> 00:22:29,160 directly bought mortgage-backed securities. 383 00:22:29,720 --> 00:22:32,120 But often other times they will indirectly do it through some 384 00:22:32,120 --> 00:22:35,480 shell game or they have some bank go and buy the assets so it 385 00:22:35,480 --> 00:22:37,760 doesn't look like the direct hand of the Fed or they'll spot 386 00:22:37,760 --> 00:22:38,960 a bunch of people to go and do it. 387 00:22:39,680 --> 00:22:43,240 And to them, these kinds of shell games are extremely 388 00:22:43,240 --> 00:22:45,960 meaningful. And if you phrase it even 389 00:22:45,960 --> 00:22:52,160 slightly wrong, like if you say, oh, you know, the Fed is issuing 390 00:22:52,160 --> 00:22:55,040 debt, No, no, no, it's a Treasury that's issuing debt and 391 00:22:55,040 --> 00:22:58,120 not the Fed directly. As if Fed and Treasury aren't 392 00:22:58,160 --> 00:23:00,480 really joined at the hip for many purposes, right? 393 00:23:01,360 --> 00:23:03,320 I'm saying, right, they're really 100. 394 00:23:03,480 --> 00:23:04,200 Percent. I am. 395 00:23:04,320 --> 00:23:07,120 Oh, yeah, I get absolutely browbeaten by some people on 396 00:23:07,120 --> 00:23:08,720 Twitter because like, oh, he's a clown. 397 00:23:08,720 --> 00:23:12,280 Because technically and like, I think you and I, one of the 398 00:23:12,280 --> 00:23:14,520 reason we get along so well is we're functionalists, right? 399 00:23:14,520 --> 00:23:17,520 It's like, like, I don't care. Like I want. 400 00:23:17,720 --> 00:23:19,280 If this happens, then this happens. 401 00:23:19,280 --> 00:23:21,240 I don't care how you shell it in between. 402 00:23:21,800 --> 00:23:23,720 That's right. So, so much of the system has 403 00:23:23,720 --> 00:23:29,600 evolved to be a shell game to defeat, for example, the whole 404 00:23:29,600 --> 00:23:32,920 concept that, oh, you can just hold treasuries until maturity 405 00:23:34,680 --> 00:23:37,720 and it doesn't matter that they've been devalued so much by 406 00:23:37,720 --> 00:23:40,320 these rate hikes. But the whole point was that 407 00:23:40,320 --> 00:23:42,840 they're supposed to be the most liquid acid in the world. 408 00:23:42,840 --> 00:23:44,760 And if you have to hold them maturity and you can't sell 409 00:23:44,760 --> 00:23:47,240 them, then they've obviously been devalued. 410 00:23:47,240 --> 00:23:51,040 So you've given up the liquidity and you get a one very valuable 411 00:23:51,040 --> 00:23:53,320 property of it. And you and you're saying that, 412 00:23:53,320 --> 00:23:55,600 oh, it's, it's just fine. It's the same thing as it is, 413 00:23:56,120 --> 00:23:58,680 and they have to monkey with it and they have to say, Oh no, 414 00:23:58,680 --> 00:24:01,200 actually we're going to value it on the books for what you bought 415 00:24:01,200 --> 00:24:02,560 it for, not what you can sell it for. 416 00:24:02,720 --> 00:24:04,120 OK, just as one example, you know. 417 00:24:04,160 --> 00:24:05,640 Anyway. Yeah, just for the banks, right? 418 00:24:05,840 --> 00:24:10,200 Yeah, that was BTFP in one Q 23. It was like, well, you banks, 419 00:24:10,280 --> 00:24:12,800 you know, I know you're these are at $0.70 on the dollar in 420 00:24:12,800 --> 00:24:15,920 the market, but we're going to, we'll buy them from you and swap 421 00:24:15,920 --> 00:24:19,600 them out at $100, you know, at par exactly so that you are not 422 00:24:19,600 --> 00:24:22,440 insolvent or and more importantly, you don't have to 423 00:24:22,440 --> 00:24:23,840 sell these into a falling market. 424 00:24:23,840 --> 00:24:25,720 That's right. So, so essentially all of these 425 00:24:25,720 --> 00:24:28,200 shell games, these people have persuaded themselves that 426 00:24:28,200 --> 00:24:31,560 they're real and that they just want to avoid the accounting 427 00:24:31,560 --> 00:24:34,080 markdown. And it gets more and more 428 00:24:34,080 --> 00:24:38,040 complicated because to even understand that they're actually 429 00:24:38,040 --> 00:24:44,520 insolvent requires you to just tear through several layers of 430 00:24:44,560 --> 00:24:49,960 self and other obfuscation, you know, but but you know, the 431 00:24:50,360 --> 00:24:52,920 here, the point being that if you take this intrafluity 432 00:24:52,920 --> 00:24:55,080 article and I'll find the exact title of it, but you can 433 00:24:55,080 --> 00:24:57,440 probably find it with AI. It's something along the lines 434 00:24:57,440 --> 00:25:04,840 of because so many upper middle class people have their 435 00:25:05,360 --> 00:25:09,040 portfolios in index funds, they expect the government to keep 436 00:25:09,040 --> 00:25:10,920 propping that up. They think of the stock market 437 00:25:10,920 --> 00:25:14,880 as economy, just as you said. And the way they control that 438 00:25:14,880 --> 00:25:18,760 directly or indirectly is when it goes down too much, the Fed 439 00:25:18,760 --> 00:25:23,440 prints and props assets back up. And what that means when the Fed 440 00:25:23,440 --> 00:25:27,480 prints, it's not something that people, it's not cost less. 441 00:25:27,840 --> 00:25:31,240 It is diluting down. If you have let's say there's a 442 00:25:31,240 --> 00:25:35,520 trillion dollars in assets or in in just if it was like Bitcoin, 443 00:25:35,520 --> 00:25:37,160 you can actually count how many dollars there are. 444 00:25:37,320 --> 00:25:39,240 I know there's M naughty and M1 and M2. 445 00:25:39,240 --> 00:25:42,640 Again, the obfuscation is there on purpose, in part so that 446 00:25:42,640 --> 00:25:44,120 people don't even know what the denominator is. 447 00:25:44,320 --> 00:25:46,640 And they stopped reporting M3 and O6 by. 448 00:25:46,640 --> 00:25:49,040 The way, yeah, exactly. So this is all this, all these 449 00:25:49,120 --> 00:25:51,520 shimmy games where they make. It I would commend slightly just 450 00:25:51,520 --> 00:25:54,720 to say it probably in the short run tactical sense is probably 451 00:25:54,720 --> 00:25:57,000 more Treasury and some of that like the Treasury markets room 452 00:25:57,000 --> 00:26:00,520 exchange stabilization fund, but the Fed absolutely is in my. 453 00:26:00,520 --> 00:26:02,720 Opinion. So there's multiple pockets they 454 00:26:02,720 --> 00:26:03,760 can do it out. Of right, of course. 455 00:26:03,760 --> 00:26:05,120 OK, fine. That's right. 456 00:26:05,400 --> 00:26:08,880 The, the Plunge Protection team is a cross agency team. 457 00:26:08,880 --> 00:26:09,920 And what do they do with this pocket? 458 00:26:10,360 --> 00:26:18,200 So, but the, the net of it, it is that the population and 459 00:26:18,200 --> 00:26:23,680 really the world is taxed via, let's say to simplify dollar 460 00:26:23,680 --> 00:26:26,160 inflation. Is global taxation the issue? 461 00:26:26,160 --> 00:26:28,600 These dollars, they dilute everybody down who is a dollar 462 00:26:28,600 --> 00:26:32,560 holder or a treasury holder or indirectly a holder of other 463 00:26:32,560 --> 00:26:35,440 instruments. And then they use that to prop 464 00:26:35,440 --> 00:26:38,400 up the US stock market. And one way I think about it, 465 00:26:38,400 --> 00:26:40,280 and maybe you'd like this analogy, I'm not sure, actually, 466 00:26:40,280 --> 00:26:42,120 we discussed this. Have you seen those deep sea 467 00:26:42,120 --> 00:26:46,400 vents, like which have like sulfur coming out the deep sea 468 00:26:46,400 --> 00:26:48,120 and there's like bacteria, right? 469 00:26:48,720 --> 00:26:51,280 So I think of that as like the Fed and it's like belching the 470 00:26:51,280 --> 00:26:54,920 printed paper out. And then there's various 471 00:26:54,920 --> 00:26:57,360 financiers that are clustered around it. 472 00:26:58,080 --> 00:27:02,680 And that's Wall Street, right? And the, the reason that that I 473 00:27:02,680 --> 00:27:05,360 think is a good analogy is I don't think that the Wall Street 474 00:27:05,360 --> 00:27:08,680 guys like, why would they be able to make money on net? 475 00:27:08,920 --> 00:27:12,920 Trading should be a 0 sum activity, right? 476 00:27:13,720 --> 00:27:16,360 Building is positive sum. So why are they able to make 477 00:27:16,360 --> 00:27:20,880 money on net answer Because the Fed is taxing the world via 478 00:27:20,880 --> 00:27:24,320 dollar inflation. And then that in a sense, stolen 479 00:27:24,320 --> 00:27:28,360 money is coming up through this sulfurous event and then they're 480 00:27:28,360 --> 00:27:33,960 feeding off of it over here. But that's not actually due to, 481 00:27:34,080 --> 00:27:36,280 I mean, I'm not saying that these guys are dumb and so on 482 00:27:36,280 --> 00:27:37,760 and so forth. They're not necessarily all bad 483 00:27:37,760 --> 00:27:39,160 guys. And so, so Jim Simon's the 484 00:27:39,160 --> 00:27:41,320 smarter, you know, whatever, I'm not attacking them for that 485 00:27:41,320 --> 00:27:43,880 sake. You know, they're playing the 486 00:27:43,880 --> 00:27:47,320 game that's on the field. However, that game just goes 487 00:27:47,320 --> 00:27:49,360 like when people talk about a financialized economy. 488 00:27:49,360 --> 00:27:52,200 If you have this mental model, dollar inflation, global 489 00:27:52,200 --> 00:27:56,560 taxation, the Fed is propping up asset prices, this plume of 490 00:27:56,560 --> 00:27:59,440 sulfur, this printed papers coming up, the bacteria are 491 00:27:59,440 --> 00:28:02,600 feeding on it. This explains a lot about why 492 00:28:02,600 --> 00:28:05,400 the world is the way it is, where everybody who's not in 493 00:28:05,400 --> 00:28:08,920 finance or in tech is seeing their real purchasing power 494 00:28:08,920 --> 00:28:14,440 erode, at least in the West, and they're getting diluted down 495 00:28:14,440 --> 00:28:17,560 every day by this printed money. And they don't understand 496 00:28:17,560 --> 00:28:19,440 exactly why because they're like, I'm making more money than 497 00:28:19,440 --> 00:28:21,160 I ever could, than I ever had before. 498 00:28:21,160 --> 00:28:25,320 But everything is so expensive. And it's like, you know that 499 00:28:25,320 --> 00:28:27,360 saying, like water, water everywhere, but not a drop to 500 00:28:27,360 --> 00:28:28,960 drink. The, the, you know, right. 501 00:28:29,800 --> 00:28:30,760 The poem. Yeah. 502 00:28:31,080 --> 00:28:34,240 So printer, printer everywhere but no money for anything. 503 00:28:34,320 --> 00:28:38,280 And that's exactly it. And it's where that that's that 504 00:28:38,280 --> 00:28:41,000 Cantalon effect, right? That that kind of described 505 00:28:41,280 --> 00:28:45,280 where that ultimately when when you said that they start to 506 00:28:45,280 --> 00:28:50,520 believe the shell game is, I think, very, very powerful 507 00:28:50,520 --> 00:28:54,080 observation because they've believed the shell game in this 508 00:28:54,080 --> 00:28:56,720 unipolar world that has existed since the fall of the Soviet 509 00:28:56,720 --> 00:28:58,600 Union. Like, so the Soviet Union and 510 00:28:58,600 --> 00:29:02,920 sort of this opposing block kept them honest for years and years. 511 00:29:02,920 --> 00:29:07,200 And so as soon as that the USSR collapsed, there was no one left 512 00:29:07,200 --> 00:29:12,080 to keep them honest on sort of the amount being belched out for 513 00:29:12,240 --> 00:29:15,080 almost 40. Well, sorry, 3035 years now, 514 00:29:15,080 --> 00:29:17,800 right? So, yeah, so I guess almost 40 515 00:29:17,800 --> 00:29:19,520 years. So the point being is that. 516 00:29:21,360 --> 00:29:27,080 What they forgot in this ensuing 35 years is you need to ensure 517 00:29:27,080 --> 00:29:30,080 to reinvest into your own infrastructure, physical 518 00:29:30,080 --> 00:29:32,400 infrastructure, your own physical manufacturing, defense, 519 00:29:32,400 --> 00:29:36,680 industrial base to be able to maintain that level of dominance 520 00:29:36,680 --> 00:29:41,560 because if. For some reason, you lose your 521 00:29:41,560 --> 00:29:44,400 ability to basically go pound people in the head, and nuclear 522 00:29:44,400 --> 00:29:46,720 weapons are ultimately that sort of trump card. 523 00:29:47,120 --> 00:29:50,040 Then all of a sudden you get what we have on that chart that 524 00:29:50,040 --> 00:29:51,120 you're showing right there, right? 525 00:29:51,120 --> 00:29:54,520 Which is exactly Saddam tried this, it didn't workout well. 526 00:29:54,560 --> 00:29:57,120 Gaddafi tried a version of this, it didn't workout well. 527 00:29:57,120 --> 00:29:58,440 Why? Neither had nukes. 528 00:29:58,840 --> 00:30:02,760 Putin started doing in No 8 and China, and she followed shortly 529 00:30:02,760 --> 00:30:06,000 thereafter. And you know, like you said in 530 00:30:06,000 --> 00:30:08,800 your conversation with Peter McCormick, like key parts of the 531 00:30:08,880 --> 00:30:10,280 US military are now made in China. 532 00:30:10,920 --> 00:30:13,400 It's you. You can't go to war with China 533 00:30:13,400 --> 00:30:15,840 to stop them from doing this because they won't sell you the 534 00:30:15,840 --> 00:30:18,880 rare earth magnets that you need to make the weapons to point at 535 00:30:18,880 --> 00:30:20,920 them. And the lead time on 536 00:30:20,920 --> 00:30:25,520 redeveloping those capabilities is decades best, a decade best 537 00:30:25,520 --> 00:30:27,480 case. And and yeah. 538 00:30:27,480 --> 00:30:29,760 One thing you're saying that I wanted to point out on this 539 00:30:29,760 --> 00:30:33,600 chart is the entire concept of the entire world being run on 540 00:30:33,600 --> 00:30:38,880 dollars is really a kind of like a 80s to post 1990. 541 00:30:38,880 --> 00:30:43,120 It's like as the Soviet Union fell, that's why USD just 542 00:30:43,120 --> 00:30:47,240 massively expanded like this and gold shrank to such an extent 543 00:30:47,240 --> 00:30:51,080 over here. And here is like, you can argue 544 00:30:51,080 --> 00:30:54,880 like peak America is like right before the 2008 financial 545 00:30:54,880 --> 00:30:56,680 crisis. Then it was kind of skittering 546 00:30:56,680 --> 00:30:58,640 along like this and then it's become receding. 547 00:30:58,960 --> 00:31:00,840 And, you know, we don't know the rate at which it's going to do 548 00:31:00,840 --> 00:31:04,280 so, but it'll probably hit 50% in the next few years. 549 00:31:04,920 --> 00:31:07,480 And but this is the graph that you're basically referring to 550 00:31:07,480 --> 00:31:09,680 when you said it's been essentially a last 30 years 551 00:31:09,680 --> 00:31:11,520 phenomenon. Yep, yeah. 552 00:31:11,520 --> 00:31:14,600 And and this is goes back to my sort of initial overriding view, 553 00:31:14,600 --> 00:31:18,480 which is post 2008, the world started going back to gold 554 00:31:18,480 --> 00:31:22,760 because they simply had to. It wasn't an attack on America. 555 00:31:22,760 --> 00:31:25,240 And quite honestly, what they're doing with gold will be very 556 00:31:25,240 --> 00:31:29,040 good for the parts of America that have been hurt. 557 00:31:29,160 --> 00:31:33,200 But that that implies a lot of inflation, right? 558 00:31:33,200 --> 00:31:34,520 The winners. Yeah. 559 00:31:34,520 --> 00:31:36,680 So go ahead. This is the thing where, so we 560 00:31:36,680 --> 00:31:38,880 agree on a lot. I think the thing which I, I 561 00:31:38,880 --> 00:31:42,320 wanted to discuss with you, so you've mentioned, for example, I 562 00:31:42,320 --> 00:31:46,240 think it was 1982 or thereabouts, Israel had about of 563 00:31:46,240 --> 00:31:49,280 very serious inflation that essentially like wiped out their 564 00:31:49,280 --> 00:31:51,880 debts and they were able to reboot and, and get going, 565 00:31:51,920 --> 00:31:53,280 right? Was it it, was it 82? 566 00:31:53,280 --> 00:31:53,960 Did I get the date? Wrong. 567 00:31:54,080 --> 00:31:56,880 It was like 84, 485, something like. 568 00:31:56,880 --> 00:31:58,720 That OK in that ballpark, right, so. 569 00:31:59,080 --> 00:32:01,480 Yeah, it was like, yeah, early to mid 80s, Yeah, something 570 00:32:01,480 --> 00:32:02,120 like. That fine. 571 00:32:02,280 --> 00:32:04,720 So shekel just got really inflated and so on. 572 00:32:04,720 --> 00:32:09,800 And my view is that that'll be much, much, much worse in the US 573 00:32:09,800 --> 00:32:13,400 for the following reasons. A, the shekel wasn't the global 574 00:32:13,400 --> 00:32:18,040 reserve currency. B Israel at the time was not a 575 00:32:18,040 --> 00:32:22,360 central hub of the world economy and even today is only 150th or 576 00:32:22,360 --> 00:32:24,360 would have you the size of the USA, right? 577 00:32:25,880 --> 00:32:31,280 C Lots of other countries weren't holding like shekels as 578 00:32:31,280 --> 00:32:33,800 treasuries. And so like it was just very 579 00:32:33,800 --> 00:32:36,840 much a spoke rather than a hub, you know. 580 00:32:37,120 --> 00:32:39,680 So a spoke, you know, in the sense of like a hub and spoke 581 00:32:39,680 --> 00:32:41,280 topology like for a wheel, right. 582 00:32:41,480 --> 00:32:44,400 So a spoke can just go and kind of do it at once and it fails 583 00:32:44,400 --> 00:32:47,600 doesn't matter. But a hub to fail in that way, 584 00:32:48,160 --> 00:32:51,720 basically all kinds of spokes just blow up and so on and so 585 00:32:51,720 --> 00:32:55,360 forth. And moreover, and I wanted your 586 00:32:55,400 --> 00:32:58,200 SO first, tell me if you agree with that or not that it's much 587 00:32:58,280 --> 00:33:00,760 worse for that to happen. I, I agree with that and I 588 00:33:00,760 --> 00:33:04,920 would, I would say I think that gold chart exploit is sort of 589 00:33:04,920 --> 00:33:07,560 the, the preparation for that, right? 590 00:33:07,560 --> 00:33:10,160 So I think, I think your view of that is correct. 591 00:33:10,160 --> 00:33:14,000 And I think ultimately, right. If you are a dollar asset holder 592 00:33:14,440 --> 00:33:17,040 and you see the direction this is going, what do you start 593 00:33:17,040 --> 00:33:18,680 doing, right? It's like what you do as a human 594 00:33:18,680 --> 00:33:20,840 is like, hey, there's somebody over there with a bunch of 595 00:33:20,840 --> 00:33:22,960 nitroglycerin and they're playing with matches and you 596 00:33:22,960 --> 00:33:28,240 kind of slowly back away, right? And that it tells you two 597 00:33:28,240 --> 00:33:30,160 things. Number one, that gold chart 598 00:33:30,160 --> 00:33:34,600 turning back higher is the world slowly backing away, number one. 599 00:33:34,600 --> 00:33:39,160 And then I think #2 I think it's, I do think it supports the 600 00:33:39,160 --> 00:33:43,560 view that whenever it happens, because it is a hub, not a 601 00:33:43,560 --> 00:33:48,560 spoke, that gold going to 50%, sixty percent, 80%, you know, 602 00:33:48,600 --> 00:33:52,600 back to where it was when this whole thing started in late 60s. 603 00:33:53,640 --> 00:33:55,440 People think that's going to happen linearly. 604 00:33:55,480 --> 00:33:58,480 And I think the fact that it's a hub and not a spoke issue means 605 00:33:58,480 --> 00:33:59,880 it's going to happen non linearly. 606 00:33:59,880 --> 00:34:02,400 In other words, we're going to have a six month period and it's 607 00:34:02,400 --> 00:34:07,600 going to be gold 36138 hundred 4100 something 4500, I don't 608 00:34:07,600 --> 00:34:11,760 know, something happens 14,000 in six months, something like 609 00:34:11,760 --> 00:34:14,040 that. And then all of a sudden you can 610 00:34:14,040 --> 00:34:17,880 go, OK, well, all of those dollar holders balance sheets 611 00:34:18,880 --> 00:34:21,560 are indifferent, right? They don't care if they owe $10 612 00:34:21,560 --> 00:34:26,600 trillion or $8 trillion in in dollar FX reserves and 1 613 00:34:26,600 --> 00:34:32,480 trillion in gold, or $10 trillion in gold and 0 in. 614 00:34:32,480 --> 00:34:33,760 You know what's funny about this? 615 00:34:34,199 --> 00:34:39,360 What's really funny about this is one of the counter arguments 616 00:34:39,400 --> 00:34:41,400 I saw when I posted that chart that we just looked at. 617 00:34:42,199 --> 00:34:46,520 People are like, that's just due to the price of gold going up 618 00:34:46,800 --> 00:34:50,800 and the price of treasury is going down as if they were like, 619 00:34:50,840 --> 00:34:55,080 oh, you know, rookie mistake. And I'm like but the whole. 620 00:34:55,600 --> 00:34:57,880 Day. That's the whole shooting match, 621 00:34:57,960 --> 00:35:00,600 That's the whole thing. That's the whole thing. 622 00:35:00,760 --> 00:35:02,520 Why is the price going up so much? 623 00:35:02,720 --> 00:35:05,760 Well, oh, it's only because, you know, it's actually did you see 624 00:35:05,760 --> 00:35:08,480 that article the Fed tried to put out last year where they 625 00:35:08,480 --> 00:35:13,880 said a a small group of countries he's buying gold 626 00:35:13,880 --> 00:35:15,400 instead of treasuries. Did you see this thing? 627 00:35:16,360 --> 00:35:19,040 I think I did, but remind me and like the small group of 628 00:35:19,200 --> 00:35:21,960 countries is like 45% of global population or something. 629 00:35:21,960 --> 00:35:23,000 Right. Yeah, yeah, yeah, yeah, yeah, 630 00:35:23,040 --> 00:35:26,000 exactly. Other than that, how was the 631 00:35:26,000 --> 00:35:29,040 play Mrs. Lincoln? Exactly, exactly what I was 632 00:35:29,040 --> 00:35:29,560 thinking. Hold on. 633 00:35:29,560 --> 00:35:31,600 Let me show you this one. This is a this is a banger. 634 00:35:31,720 --> 00:35:34,200 All right, here we go. So the Fed, by the way, this is 635 00:35:34,560 --> 00:35:36,560 my tweet. There was like 1.1 million views 636 00:35:37,200 --> 00:35:41,240 of their like because you know how the QT of the post actually 637 00:35:41,600 --> 00:35:43,160 gets most of the views or what have you, right? 638 00:35:43,440 --> 00:35:46,120 So in Tate's post, authors note the narratives about declining 639 00:35:46,120 --> 00:35:47,920 dollar share and increasing rolls for gold holdings by 640 00:35:47,920 --> 00:35:50,760 central banks inappropriately generalized actions of a small 641 00:35:50,760 --> 00:35:56,880 group of of countries, right? And a small group China, India, 642 00:35:56,880 --> 00:35:58,400 Russia and Turkey. Exactly. 643 00:35:58,400 --> 00:36:01,880 So it was like very close. Your is 37.5% of the world 644 00:36:01,880 --> 00:36:03,040 population. Right. 645 00:36:03,120 --> 00:36:06,000 And the world's factory and the world's manufacturing powerhouse 646 00:36:06,280 --> 00:36:09,920 and the world's like IT outsourcing hub and the most 647 00:36:10,000 --> 00:36:13,040 important part port in the world and it's. 648 00:36:13,040 --> 00:36:14,440 Crazy. The world's biggest energy and 649 00:36:14,440 --> 00:36:15,840 commodity producer. It's like, yeah. 650 00:36:15,840 --> 00:36:17,840 And what they're what they're doing is they're taking all 651 00:36:17,840 --> 00:36:21,440 these small euro states. This, by the way, is a common 652 00:36:21,440 --> 00:36:28,960 thing that I observe is lots of see a lot of Americans think, 653 00:36:29,080 --> 00:36:33,040 OK, there's US and then maybe Europe and they just completely 654 00:36:33,040 --> 00:36:38,840 discount Asia and also like, you know, the Middle East and you 655 00:36:38,840 --> 00:36:41,440 know, Latin America. Like they, they just part of the 656 00:36:41,440 --> 00:36:44,000 reason for that, I think is as I mentioned on the McCormack 657 00:36:44,120 --> 00:36:48,600 episode, you I think have a more global view than most, right? 658 00:36:48,920 --> 00:36:52,840 But I think most people, many Americans have simply not seen 659 00:36:52,840 --> 00:36:57,760 enough media or being physically overseas enough to see like it's 660 00:36:57,760 --> 00:36:59,120 real, right? A lot of there's a lot of 661 00:36:59,120 --> 00:37:00,560 amazing stuff that's happening overseas. 662 00:37:01,240 --> 00:37:04,680 And so because of that, when they hear, oh, you know, for 663 00:37:04,680 --> 00:37:07,080 example, Trump got all of Europe to go and sit in front of the 664 00:37:07,080 --> 00:37:08,520 desk, they're like, well, we're dominating the world. 665 00:37:08,520 --> 00:37:10,960 Everything else is a, you know, third world country and so and 666 00:37:10,960 --> 00:37:12,120 so forth. Do you know what I'm saying? 667 00:37:12,120 --> 00:37:13,360 Right. There's some, some of that maybe 668 00:37:13,360 --> 00:37:14,120 maybe you go ahead. I. 669 00:37:14,360 --> 00:37:15,800 I saw, Oh yeah, I saw it with Russia. 670 00:37:15,800 --> 00:37:16,280 Right. Where at? 671 00:37:16,280 --> 00:37:21,080 Where in 2022 it would be right? Well, Russia's GDP is less than 672 00:37:21,080 --> 00:37:23,360 Italy's or Maine. Yeah, it's a gas station with 673 00:37:23,360 --> 00:37:27,760 nukes kind of thing, right? And it's like there's a 674 00:37:27,760 --> 00:37:31,280 fundamental first principle miscalculation around leverage. 675 00:37:31,320 --> 00:37:35,800 And by that I mean Russia is, you know, if you take Russia's 676 00:37:35,800 --> 00:37:39,920 oil production, they are roughly 1115% of global oil net exports. 677 00:37:40,120 --> 00:37:44,400 If you took 11 to 14% of global oil net exports off the market, 678 00:37:45,440 --> 00:37:48,720 oil would be, I don't know, 4, five, $600 a barrel. 679 00:37:48,720 --> 00:37:52,360 The next day, every bond market in the West would have crashed. 680 00:37:52,640 --> 00:37:53,760 What is the price sensitivity there? 681 00:37:53,760 --> 00:37:55,000 I actually don't know what it is. 682 00:37:55,440 --> 00:37:57,360 You know what? Someone ran it for me once it's 683 00:37:57,400 --> 00:38:00,680 it's very inelastic. Demand destruction also and so 684 00:38:00,680 --> 00:38:01,920 on. So it's complicated, but go 685 00:38:01,920 --> 00:38:03,240 ahead. It's complicated, but it's 686 00:38:03,360 --> 00:38:07,560 especially early on, it's extremely inelastic #1 but then 687 00:38:07,560 --> 00:38:10,760 #2 it's that second derivative of the bond market, right? 688 00:38:10,760 --> 00:38:12,520 Like everyone's like, oh, we survived the 70s. 689 00:38:12,520 --> 00:38:16,040 Well, we survived the 70s oil spike because we had already 690 00:38:16,040 --> 00:38:22,080 devalued the debt from 110% of GDP in 1946 to 30% by 1970. 691 00:38:22,520 --> 00:38:26,800 So like blowing up, you know, having oil quadruple overnight 692 00:38:26,800 --> 00:38:29,840 basically, or in six months didn't blow up the bond mark 693 00:38:29,840 --> 00:38:32,960 because they could raise rates to basically, you know, we still 694 00:38:32,960 --> 00:38:35,120 have the inflation, but it prevented that you couldn't have 695 00:38:35,120 --> 00:38:37,440 a debt death spiral in the Treasury market, in the 696 00:38:37,440 --> 00:38:40,880 fundamental asset of the world at 7%, eight percent, 10 697 00:38:40,880 --> 00:38:44,400 percent, 15% fed funds rate. We haven't devalued the debt. 698 00:38:44,400 --> 00:38:48,040 So like if you tried to take Russian oil off the market, 699 00:38:48,280 --> 00:38:52,000 completely off the market, you would spike oil up several $100 700 00:38:52,000 --> 00:38:55,920 a barrel and you would literally blow up the treasury market 701 00:38:55,920 --> 00:38:59,360 within hours, if not minutes, which is the fundamental 702 00:38:59,360 --> 00:39:02,720 collateral underpinning the entire banking system, the 703 00:39:02,720 --> 00:39:06,120 entire Western financial system, the entire Western financialized 704 00:39:06,120 --> 00:39:09,600 economy. And so it's that second and and 705 00:39:09,600 --> 00:39:11,880 3rd derivative when you're starting from the wrong first 706 00:39:11,880 --> 00:39:13,760 principle where you say, well, Russia's not that important. 707 00:39:14,200 --> 00:39:18,720 Russia, Russia's like critically important because people, you 708 00:39:18,720 --> 00:39:20,800 know, these are the arguments you get from people like, well, 709 00:39:20,800 --> 00:39:22,400 where's electricity come from, from a wall? 710 00:39:22,400 --> 00:39:24,240 And where's food come? Well, it comes from a grocery 711 00:39:24,240 --> 00:39:25,880 store. You know, how big is Russia's 712 00:39:25,880 --> 00:39:27,480 GDP? Oh, it's smaller than Maine. 713 00:39:27,720 --> 00:39:30,680 Like it's the same like level of of understanding. 714 00:39:30,840 --> 00:39:33,520 But, but if you, if you look at it, have you seen the PPP chart, 715 00:39:34,040 --> 00:39:37,560 the World Bank PPP chart? They had to grudgingly admit 716 00:39:37,560 --> 00:39:41,560 last year that if you look at them purchasing power parity 717 00:39:41,560 --> 00:39:46,160 terms, China #1, USA #2, India #3, Russia #4. 718 00:39:47,400 --> 00:39:50,080 It's it's astounding. Like literally the, the four 719 00:39:50,080 --> 00:39:52,160 bricks are the bit for the brick, right? 720 00:39:52,640 --> 00:39:57,680 Yeah, the. 3 The Ric of bricks are #1 #3 and #4 and now the 721 00:39:57,680 --> 00:39:59,320 administration has managed to put them all. 722 00:40:00,040 --> 00:40:03,080 At least partially adverse to the US for whatever, you know, 723 00:40:03,240 --> 00:40:07,320 you know what it is. I think Democrats just were just 724 00:40:07,400 --> 00:40:10,000 like, in my view, irrational about Russia. 725 00:40:10,000 --> 00:40:12,400 And I think there could have been a way to avoid a war. 726 00:40:13,000 --> 00:40:15,640 And now unfortunately, a lot of Republicans are, in my view, 727 00:40:15,640 --> 00:40:20,280 irrational in India and the domestic sentiment is pushing a 728 00:40:20,280 --> 00:40:23,760 it's definitely provoked by the like, India was fine. 729 00:40:23,760 --> 00:40:25,520 India was actually one of the few countries in the world that 730 00:40:25,520 --> 00:40:28,720 was still very pro American, you know, and now they just managed 731 00:40:28,720 --> 00:40:30,960 to push them against the US, unfortunately, which is very 732 00:40:30,960 --> 00:40:33,080 unfortunate because I, you know, I know I have a lot of friends 733 00:40:33,080 --> 00:40:35,080 over there. You should get the noble piece 734 00:40:35,080 --> 00:40:36,320 to the under pushing and go together. 735 00:40:37,280 --> 00:40:38,600 Yeah, exactly. That's right. 736 00:40:38,720 --> 00:40:41,920 So. But, and the problem is here, 737 00:40:41,920 --> 00:40:46,760 the problem is that the current admin in many ways treats its 738 00:40:46,760 --> 00:40:51,040 enemies better than its friends. So, yeah, it, it, it's sort of 739 00:40:51,080 --> 00:40:53,480 and you know, it's fascinating. I read, I've seen that pursing 740 00:40:53,480 --> 00:40:55,360 power parity chart. I would, I would add on two 741 00:40:55,360 --> 00:40:58,320 things. First, there was a new Asia 742 00:40:58,320 --> 00:41:00,280 Times article this week highlighting, I think it's 743 00:41:00,280 --> 00:41:01,760 called the skull chart or something. 744 00:41:01,760 --> 00:41:03,800 And and what the Trump, you know why Trump keeps the. 745 00:41:03,920 --> 00:41:05,080 Unfazy one. Yeah. 746 00:41:05,080 --> 00:41:07,240 Yeah, exactly. And it was incredible to me. 747 00:41:07,240 --> 00:41:11,400 He lays out that I don't know if it's the IM FS calculation of of 748 00:41:11,400 --> 00:41:15,600 PPPGDP but but they look at it per capita and even as much as 749 00:41:15,600 --> 00:41:19,160 they begrudgingly admitted it, apparently the PPP per capita 750 00:41:19,440 --> 00:41:23,160 GDP of China is still basically on par with Mexico. 751 00:41:23,200 --> 00:41:26,680 And he's like are you crazy? Go to the top 100 cities in 752 00:41:26,680 --> 00:41:29,280 China and look at it relative to Mexico City and tell me. 753 00:41:29,280 --> 00:41:32,800 It's obviously the numbers like whatever it is that I, I don't 754 00:41:32,800 --> 00:41:36,200 know exactly how the numbers are being manipulated because China, 755 00:41:36,200 --> 00:41:39,040 as I said, has an interest in sandbagging and America has 756 00:41:39,040 --> 00:41:42,360 interests also in in. Sandbagging finest numbers for 757 00:41:42,360 --> 00:41:43,160 him, right? Like, yeah. 758 00:41:43,440 --> 00:41:45,720 Exactly. So America's just something 759 00:41:45,760 --> 00:41:48,640 China's sandbagging. And the combination is China 760 00:41:48,640 --> 00:41:50,840 wants to appear weak and America wants to appear strong. 761 00:41:51,440 --> 00:41:57,520 And so exactly how China is coming in at like this very low 762 00:41:57,520 --> 00:42:00,840 GDP per capita number. If you've been to China, it's 763 00:42:00,920 --> 00:42:02,880 obviously a very wealthy society. 764 00:42:03,200 --> 00:42:05,880 Like it's obviously ahead in many ways. 765 00:42:05,880 --> 00:42:07,160 Go ahead. Yeah, I was going to say, you 766 00:42:07,160 --> 00:42:11,160 know, the other thing I'd highlight within that is, and 767 00:42:11,160 --> 00:42:14,320 this speaks to the fundamental, A fundamental problem with the 768 00:42:14,320 --> 00:42:18,320 strategy Visa V Russia and China and now, now India. 769 00:42:18,800 --> 00:42:22,120 But Russia and China particularly, which is if you go 770 00:42:22,120 --> 00:42:25,760 to your average Western, particularly neoliberal 771 00:42:25,760 --> 00:42:29,040 economist and talk about PPPGDP, they'll tell you it's bullshit, 772 00:42:29,240 --> 00:42:30,680 right? It's a bullshit number, blah 773 00:42:30,680 --> 00:42:32,600 blah blah. Yeah, they always say that. 774 00:42:32,600 --> 00:42:34,960 Yeah, exactly. They always say always, but 775 00:42:34,960 --> 00:42:39,520 there's a there is you. When it stops being bullshit is 776 00:42:39,520 --> 00:42:42,000 when the bullets start flying because in the end, whether 777 00:42:42,000 --> 00:42:48,320 you've got $100 really nifty missile or you can make 100 just 778 00:42:48,320 --> 00:42:54,240 slightly less nifty missiles for that same $100, the guy with the 779 00:42:54,240 --> 00:42:59,120 bigger PPP GDP wins going away exactly just in Russia. 780 00:42:59,120 --> 00:43:02,360 And so like, you know, in this negotiation, if you're Russia 781 00:43:02,360 --> 00:43:06,120 and China, we literally can't go to work. 782 00:43:06,120 --> 00:43:09,680 Like, you know, if, if war is the, if politics by other means 783 00:43:09,680 --> 00:43:13,880 or the continuation of, of politics by other means, PPGDP 784 00:43:13,880 --> 00:43:19,200 metrics means this has to stop at either short of conventional 785 00:43:19,200 --> 00:43:21,800 war or nuclear war. And Russia and China have to 786 00:43:21,800 --> 00:43:23,440 know this. You know, and it's saying like 787 00:43:24,560 --> 00:43:28,120 PPP is Pew Pew Pew, you know, like the pistol. 788 00:43:28,320 --> 00:43:29,640 Right. Yeah, yeah, yeah, yeah. 789 00:43:29,920 --> 00:43:32,880 Right. So it's a good mnemonic or 790 00:43:32,880 --> 00:43:34,920 something. You know, two other addendums 791 00:43:34,920 --> 00:43:38,240 where you just said, which are all the people who are 792 00:43:38,240 --> 00:43:42,120 complaining about Chinese overproduction, they're like, Oh 793 00:43:42,120 --> 00:43:44,840 my God, China's dumping it's stuff and so on. 794 00:43:45,200 --> 00:43:48,400 What they what they really mean is China has such insane 795 00:43:48,440 --> 00:43:53,160 manufacturing scale that they can crank out very sophisticated 796 00:43:53,160 --> 00:43:54,560 kinds of things like electric cars. 797 00:43:54,560 --> 00:43:57,760 They're not easy to make right, especially not easy to make 798 00:43:57,760 --> 00:44:00,680 cheaply and not easy to make cheaply and at a profit while 799 00:44:00,680 --> 00:44:03,080 doing so. You know, positive margin, low 800 00:44:03,080 --> 00:44:05,280 cost is very, very, very hard to do. 801 00:44:06,120 --> 00:44:10,440 They can make all of this stuff at such enormous scale and this 802 00:44:10,440 --> 00:44:12,840 is so-called overproduction supposedly bad that they're 803 00:44:12,840 --> 00:44:15,520 doing it. But imagine, I mean, in like 804 00:44:16,400 --> 00:44:19,760 when the US is fighting World War 2, everybody complained 805 00:44:19,760 --> 00:44:22,400 about American overproduction because America had all the 806 00:44:22,400 --> 00:44:24,320 factories just crank out everything and solid everything 807 00:44:24,320 --> 00:44:28,280 with just artillery rounds and just, you know, just had this 808 00:44:28,360 --> 00:44:30,840 absolutely enormous, you know, could have like an ice cream 809 00:44:30,840 --> 00:44:32,760 ship and so on and so forth. As people talked about that 810 00:44:32,760 --> 00:44:34,600 time. That's what overproduction 811 00:44:34,600 --> 00:44:37,160 means. It means that imagine 812 00:44:37,160 --> 00:44:39,720 complaining about overproduction of war exactly as you're saying, 813 00:44:39,720 --> 00:44:41,960 right. Or similarly with the tariff 814 00:44:41,960 --> 00:44:46,640 thing, it's related to the the point on the drones, which is if 815 00:44:46,640 --> 00:44:49,440 you're just protecting the American home market, that is an 816 00:44:49,440 --> 00:44:52,440 admission that the American product is not price competitive 817 00:44:52,840 --> 00:44:54,960 abroad in some neutral market, right. 818 00:44:54,960 --> 00:45:01,360 If if it's a Morocco or Mexico or, or you know, I don't know 819 00:45:01,360 --> 00:45:04,320 the Middle East and you've got an American product on the shelf 820 00:45:04,320 --> 00:45:05,640 and the Chinese product on the shelf. 821 00:45:06,200 --> 00:45:10,000 If the American product is not price competitive there, then 822 00:45:10,000 --> 00:45:12,040 that means it's like not price competitive in the physical 823 00:45:12,040 --> 00:45:14,040 world. Like you can't crank out enough 824 00:45:14,040 --> 00:45:15,960 at a low enough price and high enough quality. 825 00:45:16,760 --> 00:45:19,840 And so the home tariff, you know, anyway, go ahead. 826 00:45:20,160 --> 00:45:24,280 So Josh Wolf testifies to Congress in summer 2023. 827 00:45:24,440 --> 00:45:28,160 And I think it's a super illustration of what you just 828 00:45:28,160 --> 00:45:32,200 described of if we need the protection, we can't compete on 829 00:45:32,200 --> 00:45:36,800 a scale standpoint. And right, so he highlighted 830 00:45:36,800 --> 00:45:42,480 that the cost of AUS nuclear power plant, which takes far 831 00:45:42,480 --> 00:45:47,000 longer to build, is still six to seven times more expensive than 832 00:45:47,000 --> 00:45:50,880 a Chinese one per per GW. And to me. 833 00:45:50,880 --> 00:45:53,600 Yeah, that was, that was the whole, like it was a huge 834 00:45:53,600 --> 00:45:58,000 admission, which is a GW in the US is a GW in China. 835 00:45:58,000 --> 00:46:00,880 There's no special physics in the US or China, right? 836 00:46:00,880 --> 00:46:03,840 A GW is a GW. Exactly the cost structure in 837 00:46:03,840 --> 00:46:06,360 the USA. It tells you that the yuan is 838 00:46:06,360 --> 00:46:10,680 90% like the dollar is 90% overvalued versus the yuan 839 00:46:10,800 --> 00:46:13,600 because if the Chinese in the yuan market can build a GW for 840 00:46:13,600 --> 00:46:17,320 1/6 that the Americans can, it tells you that the the dollar is 841 00:46:17,320 --> 00:46:20,200 85% overvalued, 83% overvalued against the yuan. 842 00:46:20,200 --> 00:46:21,440 That's right. That's right. 843 00:46:21,480 --> 00:46:24,560 And you know, there's another piece of this that it took me a 844 00:46:24,560 --> 00:46:27,240 long time to articulate properly. 845 00:46:29,320 --> 00:46:32,040 Let me give two or three pieces. And again, just premises and you 846 00:46:32,040 --> 00:46:34,000 shoot at them. You tell me if I'm wrong and you 847 00:46:34,000 --> 00:46:39,480 disagree or something. So China's stock market is being 848 00:46:39,480 --> 00:46:42,240 flat for a long time. Flatish, right? 849 00:46:42,720 --> 00:46:45,040 Recently, Chinese tech stocks have started to run. 850 00:46:45,040 --> 00:46:50,040 But overall, I would say China saves in factories, not 851 00:46:50,040 --> 00:46:52,320 equities. Like for example, if you had a 852 00:46:52,320 --> 00:46:56,680 stock that was increasing, you could sell that stock and take 853 00:46:56,680 --> 00:46:59,400 the cash and then go and invest in physical plant and so on and 854 00:46:59,400 --> 00:47:01,200 so forth. In theory, you know, Amazon did 855 00:47:01,200 --> 00:47:03,960 this for a long time, even though their stock has run quite 856 00:47:03,960 --> 00:47:06,120 a bit, they would take their free cash flow and keep 857 00:47:06,120 --> 00:47:08,520 reinvesting it. So they have very low profit 858 00:47:08,520 --> 00:47:10,520 margins, but they had enormous scale. 859 00:47:10,520 --> 00:47:12,560 So that's why the Street would keep investing in their scale, 860 00:47:12,560 --> 00:47:13,600 right? So. 861 00:47:14,520 --> 00:47:16,960 And I would add to that, that the other side of that same coin 862 00:47:16,960 --> 00:47:20,120 and I'll let you continue is the world, because the Americans 863 00:47:20,120 --> 00:47:23,080 don't make anything the world wants on net save in American 864 00:47:23,080 --> 00:47:26,120 stocks as the dollars are currency and they can't save in 865 00:47:26,120 --> 00:47:29,360 Chinese factories with American dollars or Chinese yuan since 866 00:47:29,360 --> 00:47:32,760 obviously of capital control. So what we end up with is often 867 00:47:32,760 --> 00:47:34,760 saying is we'll look at our stock market to their stock 868 00:47:34,760 --> 00:47:37,960 market we're dominating. And that's not exactly the 869 00:47:37,960 --> 00:47:40,200 message in my view. It's an apples to oranges 870 00:47:40,200 --> 00:47:42,120 message. There's another piece of it that 871 00:47:42,400 --> 00:47:45,880 again, it took me a while to figure out which is, and if you 872 00:47:45,880 --> 00:47:48,360 talk about how the US is printing money, somebody who's 873 00:47:48,360 --> 00:47:50,920 smart would say, well, China's also printing money. 874 00:47:50,920 --> 00:47:54,640 They're printing quite a lot. So why is it bad if they're 875 00:47:54,640 --> 00:47:59,200 becoming so strong with it? And my answer to that now, my 876 00:47:59,200 --> 00:48:03,080 tentative answer, which I which I reserve the right to revise, 877 00:48:03,080 --> 00:48:06,200 but what I think is actually the case is if you think of 878 00:48:06,920 --> 00:48:09,960 inflation as taxation without legislation, you know, Milton 879 00:48:09,960 --> 00:48:13,840 Friedman's line, right, where basically by money printing you 880 00:48:13,840 --> 00:48:16,800 are effectively seizing a bunch of the assets of the population. 881 00:48:17,680 --> 00:48:21,400 In theory, you could actually spend that well. 882 00:48:22,680 --> 00:48:26,200 And what the Chinese government did is it spent it on roads and 883 00:48:26,200 --> 00:48:30,960 bridges and automated ports and gleaming this and gleaming that. 884 00:48:30,960 --> 00:48:35,400 And so all of this public infrastructure that increased 885 00:48:35,400 --> 00:48:37,280 the Chinese people's productive capacity. 886 00:48:37,880 --> 00:48:40,400 Yeah, and standard of. Living, but yes, but and what 887 00:48:40,400 --> 00:48:46,680 they also did is they also kept prices down or the the RMB 888 00:48:46,680 --> 00:48:50,720 exchange rate down so that you exports could work, right. 889 00:48:51,000 --> 00:48:56,240 So they, the, the part that I think I hadn't fully 890 00:48:56,640 --> 00:49:01,560 conceptualized is inflation is taxation, but taxation could be 891 00:49:02,120 --> 00:49:06,080 used in a positive some way because in the US it's, it's 892 00:49:06,080 --> 00:49:09,080 just not like the 100 billion is taxed in California. 893 00:49:09,080 --> 00:49:12,200 It's all just stolen and it's just all radical, radical waste 894 00:49:12,200 --> 00:49:13,640 beyond anybody can imagine, right? 895 00:49:14,000 --> 00:49:16,640 But in global War on Terror, right, we spent $8 trillion, and 896 00:49:16,720 --> 00:49:17,920 what do we have to show for that? 897 00:49:17,960 --> 00:49:19,440 Like, nothing. That's right. 898 00:49:20,480 --> 00:49:25,520 Even even this whole build up to fight China is, you know, I, I 899 00:49:25,520 --> 00:49:28,360 could tell from the beginning honestly, you know, that that 900 00:49:28,360 --> 00:49:31,000 that chart of the supply chain like the US military is made in 901 00:49:31,000 --> 00:49:32,400 China. Yep, it. 902 00:49:32,680 --> 00:49:33,960 Is the one that we both. Right. 903 00:49:33,960 --> 00:49:35,240 Yeah, Go, yeah, go. Yeah, yeah. 904 00:49:35,240 --> 00:49:36,640 Govani, I think is the source of it. 905 00:49:36,840 --> 00:49:38,120 Govani Exactly. Good memory. 906 00:49:38,120 --> 00:49:38,840 Exactly. That's right. 907 00:49:39,000 --> 00:49:41,640 So there is a $400 million Pentagon study that basically 908 00:49:41,640 --> 00:49:44,680 showed that these famous American weapons, the Tomahawk 909 00:49:44,680 --> 00:49:49,160 and the J Dam, their supplier supplier is in Shenzhen or 910 00:49:49,160 --> 00:49:51,640 Shanghai or something like that for hundreds of different kinds 911 00:49:51,640 --> 00:49:54,720 of companies, right? So and of course China has a 912 00:49:54,720 --> 00:49:57,400 full database of every part that's going out there. 913 00:49:57,400 --> 00:50:00,320 And so, you know, there's a button they can press that says 914 00:50:00,360 --> 00:50:04,680 shut off the American economy, right, which is why Trump had to 915 00:50:04,680 --> 00:50:08,440 blink on this trade war. And he's been up lots of other 916 00:50:08,440 --> 00:50:10,920 countries, but he keeps extending the 90 day thing with 917 00:50:10,920 --> 00:50:13,240 with China or what have you, because he can't cut it off, 918 00:50:13,240 --> 00:50:16,680 right? And now you're seeing headset 919 00:50:16,720 --> 00:50:19,920 basically saying in this very, I don't think it's the the defense 920 00:50:19,920 --> 00:50:21,400 strategy being publicly confirmed yet. 921 00:50:22,000 --> 00:50:25,720 But that thing you tweeted and the thing I tweeted, right, you 922 00:50:25,720 --> 00:50:28,000 posted, if I'm not mistaken, that headset that told China 923 00:50:28,000 --> 00:50:31,520 there's no conflict with them. Yeah, they're turning away and 924 00:50:31,880 --> 00:50:34,440 to refocus on basically rebuilding here. 925 00:50:34,600 --> 00:50:38,440 I think it's, well, I think it is the biggest development since 926 00:50:38,440 --> 00:50:39,960 the fall of the Berlin Wall from a. 927 00:50:40,000 --> 00:50:42,640 Absolutely. It is that big. 928 00:50:42,680 --> 00:50:46,040 And the stuff about the Department of War and so on and 929 00:50:46,040 --> 00:50:51,840 so forth, it's almost like a shouting retreat, right? 930 00:50:51,840 --> 00:50:56,080 Like in the sense of mega and look, I'm sympathetic to some. 931 00:50:56,160 --> 00:50:58,960 I mean, you know, I understand why where they are and where 932 00:50:58,960 --> 00:51:00,880 they're coming from. So I'm sympathetic in some ways. 933 00:51:01,520 --> 00:51:03,920 But they're conflicted because on the one hand, they want 934 00:51:03,920 --> 00:51:08,120 America to be great, which is this giant empire that has, you 935 00:51:08,120 --> 00:51:10,040 know, all this strength and this number one and so on. 936 00:51:10,040 --> 00:51:12,560 On the other hand, they wanted to be just a country again, not 937 00:51:12,560 --> 00:51:15,840 an economic zone, which means like withdrawal from the whole 938 00:51:15,840 --> 00:51:17,760 world and everybody else. You go and do your thing, stop 939 00:51:17,760 --> 00:51:19,040 exploiting us and so on and so forth. 940 00:51:19,640 --> 00:51:22,080 They don't understand the tension between these two world 941 00:51:22,080 --> 00:51:28,560 views, which is to say that pull back is actually in some real 942 00:51:28,560 --> 00:51:34,680 sense a weakening of the empire. And then the question is, will 943 00:51:34,680 --> 00:51:36,280 Sanders living persist and and may. 944 00:51:36,320 --> 00:51:37,920 Now here's a point that maybe you'd agree with. 945 00:51:37,920 --> 00:51:40,920 Maybe. But I think it's very difficult 946 00:51:40,920 --> 00:51:48,120 for them to do this pull back because the US can't tolerate A 947 00:51:48,120 --> 00:51:51,440 decline to like #2 since its business model is money printing 948 00:51:51,440 --> 00:51:56,160 that requires you to be global #1 you can if you stop, if you 949 00:51:56,160 --> 00:51:58,440 pull back from Asia and now you're just doing the Western 950 00:51:58,440 --> 00:52:00,400 Hemisphere, and you may pull back from Europe and just let 951 00:52:00,400 --> 00:52:04,760 Russia have that, OK, Now everybody reassesses where they 952 00:52:04,760 --> 00:52:06,480 want. It's no longer a global reserve 953 00:52:06,480 --> 00:52:09,160 currency. It's only has some historical 954 00:52:09,160 --> 00:52:10,920 kind of traction to it. All kinds of people move into 955 00:52:10,920 --> 00:52:12,640 gold. There's a repricing thing you're 956 00:52:12,640 --> 00:52:15,040 talking about. the US loses control. 957 00:52:15,040 --> 00:52:16,880 The dollar is no longer the reserve currency. 958 00:52:17,400 --> 00:52:22,840 And that means prices explode in the US upward because the 959 00:52:22,840 --> 00:52:27,200 dollar's purchasing power drops and they could explode upward as 960 00:52:27,200 --> 00:52:29,520 a very rough estimate. This is extremely rough. 961 00:52:29,520 --> 00:52:32,600 There's 300 million Americans. How many people worldwide are 962 00:52:32,600 --> 00:52:35,280 currently using the dollar? Maybe 1 to 2 billion, Maybe 8 963 00:52:35,280 --> 00:52:38,120 billion at the Max, right? Some billion, let's say 3 964 00:52:38,120 --> 00:52:40,840 billion, OK. And if that shrinks back to just 965 00:52:40,920 --> 00:52:43,800 U.S. citizens or even just U.S. citizens plus some Canadians and 966 00:52:43,800 --> 00:52:46,400 so and so forth, that could be like a 90% decline in the tax 967 00:52:46,400 --> 00:52:48,560 base. You could, if even if it went 968 00:52:48,560 --> 00:52:52,200 from 700 million to 330 million, it'd be a 50% decline in the tax 969 00:52:52,200 --> 00:52:54,160 base. It'd be a 50% devaluation of the 970 00:52:54,160 --> 00:52:56,480 dollar, right? That's like a radical. 971 00:52:56,520 --> 00:52:58,760 Then on top of that, all these countries will stop sending 972 00:52:58,760 --> 00:53:02,160 parts and so on so forth. So you can see a stacking of 973 00:53:02,160 --> 00:53:06,520 tariffs plus rise of Bitcoin, rise of gold, plus other 974 00:53:06,520 --> 00:53:09,200 countries pulling out effectively of the dollar 975 00:53:09,200 --> 00:53:13,520 taxation union. And so I think it's very hard to 976 00:53:13,520 --> 00:53:18,120 see a good outcome for that, though I also don't see any 977 00:53:18,120 --> 00:53:19,720 other possible outcome. Let me let me know your 978 00:53:19,720 --> 00:53:23,280 thoughts. I agree with your framing of it 979 00:53:23,840 --> 00:53:29,320 and I think I agree with your conclusion around we're at this 980 00:53:29,320 --> 00:53:32,000 point where we don't really have a choice. 981 00:53:32,120 --> 00:53:35,680 If we continue this business model, we we literally cannot 982 00:53:35,680 --> 00:53:38,040 produce the weapons we need to enforce this business model. 983 00:53:38,280 --> 00:53:40,520 So this business model is de facto dead. 984 00:53:40,640 --> 00:53:42,440 It just hasn't been fully marked to market yet. 985 00:53:42,800 --> 00:53:44,920 I think your math. Around the marking to market of 986 00:53:44,920 --> 00:53:49,320 it is, is directionally accurate and we can debate, you know, 987 00:53:49,320 --> 00:53:54,000 various, various whatever it is. You know, as you were saying 988 00:53:54,000 --> 00:53:58,600 that I'm reminded of a of a of a great meme. 989 00:53:58,600 --> 00:54:01,600 I've posted it Once Upon a time. But if you go back in the US 990 00:54:01,600 --> 00:54:07,200 economic data, you can go to 1963 right before we took silver 991 00:54:07,200 --> 00:54:11,720 out of quarters and Dimes and you can go look at what like 992 00:54:11,720 --> 00:54:17,360 the, the minimum wage is for, you know, what minimum wages. 993 00:54:17,360 --> 00:54:21,720 And I want to say it was like $1.25 or something like that. 994 00:54:21,720 --> 00:54:27,080 Or you know, in 1963, that's 5 silver quarters. 995 00:54:27,640 --> 00:54:31,680 Well, if you look at the silver melt value of a 1963 quarter 996 00:54:31,680 --> 00:54:37,840 today, I want to say it's like 5 bucks or something, 4 bucks, 6 997 00:54:37,840 --> 00:54:40,480 bucks, right. So when you say, OK, well then 998 00:54:41,240 --> 00:54:45,720 in real money terms, if we had stayed on a gold standard, 999 00:54:45,800 --> 00:54:49,040 right? Just let let me go with the gold 1000 00:54:49,040 --> 00:54:53,240 silver, right. But a real money standard then 1001 00:54:53,280 --> 00:54:56,960 minimum wage in the United States should be 5 quarters, 6 1002 00:54:56,960 --> 00:54:59,880 bucks, 30 bucks, 25 bucks, whatever it is. 1003 00:54:59,880 --> 00:55:02,560 What is it really? It's like less than half that. 1004 00:55:04,000 --> 00:55:05,920 And. That's the whole grift. 1005 00:55:06,040 --> 00:55:10,120 That's the whole grift. Post 71 in a meme and it 1006 00:55:10,120 --> 00:55:12,120 describes exactly what you're saying, which is. 1007 00:55:12,120 --> 00:55:13,600 You should post that. That's a good one, yeah. 1008 00:55:13,760 --> 00:55:15,760 Yeah, right. So it's and I've posted before I 1009 00:55:15,760 --> 00:55:16,960 can repost. It and it's. 1010 00:55:16,960 --> 00:55:22,040 It's it. Is exactly what's about to 1011 00:55:22,040 --> 00:55:25,400 happen. And I think ultimately what we 1012 00:55:25,400 --> 00:55:28,720 are watching from the Trump administration and key economic 1013 00:55:28,720 --> 00:55:33,480 officials, what we are watching with the the brow beating and 1014 00:55:33,480 --> 00:55:37,960 discreditation of the Fed. I don't think in this is my view 1015 00:55:37,960 --> 00:55:38,800 of it. I could be wrong. 1016 00:55:40,080 --> 00:55:44,160 I think Wall Street is entirely too focused on sort of the the 1017 00:55:44,160 --> 00:55:48,680 short term tactical reasons for why Trump wants to do this. 1018 00:55:48,680 --> 00:55:52,840 Oh, it's, you know, he has bad polls or this isn't going well 1019 00:55:52,840 --> 00:55:54,960 or China's beating them. I don't think that's what it is. 1020 00:55:54,960 --> 00:55:57,440 I mean, I'm sure it's probably a part of it, But I think the real 1021 00:55:57,440 --> 00:56:02,080 reason they're beating the heck out of the Fed is they need to 1022 00:56:02,080 --> 00:56:05,560 change this system. They need the Fed to help them 1023 00:56:05,560 --> 00:56:10,240 basically start this boulder, this dollar boulder rolling down 1024 00:56:10,240 --> 00:56:14,640 the hill in terms of, you know, if continuing on sort of US as 1025 00:56:14,640 --> 00:56:17,560 empire where China makes the weapons for the empire to 1026 00:56:17,560 --> 00:56:20,360 threaten China with is a dead business model. 1027 00:56:20,800 --> 00:56:24,440 And it is then we have to move to something else or else if 1028 00:56:24,440 --> 00:56:26,880 things get really bad. And so like the least worst 1029 00:56:26,920 --> 00:56:29,080 option is you devalue the dollar. 1030 00:56:29,080 --> 00:56:32,240 You have the Fed help. The issue with this though, is 1031 00:56:34,120 --> 00:56:36,680 there's so many graphs I can post and I'm sure you've seen a 1032 00:56:36,680 --> 00:56:39,840 bunch of them on the level of polarization in the US. 1033 00:56:39,840 --> 00:56:42,880 And it's not just it is of course blue versus red, but it's 1034 00:56:42,880 --> 00:56:46,640 also women versus men. It's young versus old because of 1035 00:56:46,640 --> 00:56:48,840 the Social Security issue, Medicare, Medicaid. 1036 00:56:49,280 --> 00:56:53,640 It is unfortunately for for some like white, non white, it is, 1037 00:56:54,640 --> 00:56:56,880 you know, American citizen versus foreigner. 1038 00:56:57,160 --> 00:57:00,880 It is also in a sense, American versus other countries, you 1039 00:57:00,880 --> 00:57:02,120 know, and so and so forth, right. 1040 00:57:02,600 --> 00:57:06,680 And and on and on and on. The thing is just riven by, you 1041 00:57:06,680 --> 00:57:11,200 know, I'm starting to see people even fighting over religion in a 1042 00:57:11,200 --> 00:57:14,320 way that I actually hadn't seen before in my life, like actual, 1043 00:57:14,800 --> 00:57:17,840 real fights between Catholics and Protestants, for example. 1044 00:57:17,840 --> 00:57:21,560 On my feet. I was like, this is like pre 90. 1045 00:57:21,560 --> 00:57:24,280 This is something I just never seen in your in my lifetime, 1046 00:57:24,280 --> 00:57:26,720 like passionate kinds of arguments on this kind of thing, 1047 00:57:26,760 --> 00:57:29,120 right? And it didn't look like they 1048 00:57:29,120 --> 00:57:32,280 were joking around either, which is which is new to me, you know, 1049 00:57:33,880 --> 00:57:38,880 And so the from my standpoint, the only thing that is keeping 1050 00:57:38,880 --> 00:57:42,480 this fragile, like just take Democrat, Republican Democrats. 1051 00:57:42,600 --> 00:57:45,160 There's a study shows only 4% of Democrats are married to 1052 00:57:45,160 --> 00:57:46,880 Republican. Obviously, Democrats don't vote 1053 00:57:46,880 --> 00:57:49,480 for Republicans. Now with blue sky, they don't 1054 00:57:49,480 --> 00:57:53,680 even socialize with Republicans. The one thing they still do and 1055 00:57:53,840 --> 00:57:57,440 only barely is they still trade with Republicans because the 1056 00:57:57,440 --> 00:57:59,520 dollars. So so it's like, you know, to 1057 00:57:59,520 --> 00:58:02,520 reverse the mag of saying it actually is an economic zone, 1058 00:58:02,520 --> 00:58:07,440 not a country, because it's a bi national thing where blue 1059 00:58:07,440 --> 00:58:09,840 American and red American are as different as North Korean and 1060 00:58:09,840 --> 00:58:11,800 South Korean. Like they don't agree on whether 1061 00:58:11,800 --> 00:58:15,560 men or women exist, right? Like fundamental, you know, 1062 00:58:15,640 --> 00:58:19,560 that's just like one huge obvious, you know, visceral 1063 00:58:19,560 --> 00:58:22,800 example, right? But such huge gaps are like 1064 00:58:22,800 --> 00:58:24,760 North Korea and South Korea, but they have a fundamentally 1065 00:58:24,760 --> 00:58:27,920 different conception of how the economy works, the world works, 1066 00:58:27,920 --> 00:58:30,120 what should be legal, what should be illegal, totally, 1067 00:58:30,120 --> 00:58:32,040 totally, totally different. And they're getting more 1068 00:58:32,040 --> 00:58:34,880 different. And, you know, some people say 1069 00:58:34,880 --> 00:58:37,720 wokeness is being beaten because it's being beaten on X, which is 1070 00:58:37,720 --> 00:58:40,640 true. That's like saying, you know, 1071 00:58:40,640 --> 00:58:42,120 like communists have been beaten. 1072 00:58:42,120 --> 00:58:45,080 Yes, after the Soviet Union fell, not everyone had to be 1073 00:58:45,080 --> 00:58:46,600 communist. But North Korea and Cuba 1074 00:58:46,600 --> 00:58:48,760 continued being communist, actually, right? 1075 00:58:49,920 --> 00:58:52,000 And that's a good example. That's a good way of thinking 1076 00:58:52,000 --> 00:58:54,440 about like, blue America. A lot big chunk of us continue 1077 00:58:54,440 --> 00:58:55,680 to being communist. What's my point? 1078 00:58:55,680 --> 00:58:59,680 My point is, I don't think you can just retire the dollar and 1079 00:58:59,680 --> 00:59:03,200 then ship a new script like what happens? 1080 00:59:03,760 --> 00:59:06,400 Let's say that happens, OK, what happens the next day? 1081 00:59:07,360 --> 00:59:10,320 First, blue America and Red America would not be able to 1082 00:59:10,320 --> 00:59:13,600 agree on a currency union after that number. 1083 00:59:13,600 --> 00:59:16,400 One see, I don't think I, I reject the premise a little bit 1084 00:59:16,560 --> 00:59:18,400 in in that I don't think anything's going to happen to 1085 00:59:18,400 --> 00:59:19,920 the dollar. So like you go to Latin America, 1086 00:59:19,920 --> 00:59:21,120 right? They've, you know, they've added 1087 00:59:21,120 --> 00:59:23,400 zeros forever and they still use the same currency. 1088 00:59:23,400 --> 00:59:26,000 It's just, you know, how many zeros does it have today? 1089 00:59:26,400 --> 00:59:28,280 So I, I think the dollar will remain. 1090 00:59:28,280 --> 00:59:31,560 Now, what do I think is a distinct possibility is let's 1091 00:59:31,560 --> 00:59:33,720 continue with the, with the USSR example, right? 1092 00:59:33,720 --> 00:59:38,720 I've got, I've got friends from Ukraine who emigrated from 1093 00:59:38,720 --> 00:59:43,440 Ukraine after the USSR fell. And they, they, they told me 1094 00:59:43,440 --> 00:59:47,160 this great story. They said, look, my family was 1095 00:59:47,160 --> 00:59:48,240 the richest family in the village. 1096 00:59:48,240 --> 00:59:50,520 My father was a doctor. We had enough in our bank to buy 1097 00:59:50,520 --> 00:59:53,120 5 cars. And so we were rich. 1098 00:59:53,800 --> 00:59:57,320 And they closed the banks on a Friday and then two weeks later 1099 00:59:57,320 --> 00:59:59,880 they opened them back up. And the money that on that 1100 00:59:59,880 --> 01:00:02,880 Friday when it closed, bought 5 cars, bought a month's of 1101 01:00:02,880 --> 01:00:08,160 grocery, same currency, same register, like it just the real 1102 01:00:08,160 --> 01:00:12,960 purchasing power was taken away like that, you know? 1103 01:00:13,000 --> 01:00:16,720 And when I say, well, what? You know what? 1104 01:00:16,760 --> 01:00:19,080 You know, my hit her, her husband was like, yo, yeah, I 1105 01:00:19,080 --> 01:00:21,760 was saving to buy a motorcycle, close the banks, reopen the 1106 01:00:21,760 --> 01:00:22,920 banks. I buy a carton of cigarettes 1107 01:00:22,920 --> 01:00:24,720 with the money I had saved up to buy a motorcycle. 1108 01:00:27,080 --> 01:00:29,280 How do people holding gold and silver do right, and they're 1109 01:00:29,280 --> 01:00:32,600 like, oh, everyone who held gold and silver is fine and like your 1110 01:00:32,600 --> 01:00:33,840 purchasing power is maintained right. 1111 01:00:34,320 --> 01:00:36,800 Presumably, you know, Bitcoin, I think would would do be more 1112 01:00:36,800 --> 01:00:41,760 than fine, but I think that's a much more likely Rep some 1113 01:00:41,760 --> 01:00:47,320 version of that right of bank holiday, close it down, reopen 1114 01:00:47,320 --> 01:00:51,440 up and you know, you've got and however they deal with it on the 1115 01:00:51,440 --> 01:00:52,920 other side of it, you could do a wealth tax. 1116 01:00:52,920 --> 01:00:55,400 You can do capital controls. The whole world's going to be 1117 01:00:55,400 --> 01:00:57,160 different on the other side of it, But I think it's still going 1118 01:00:57,200 --> 01:00:58,720 to be dollars. I think it's still going to be 1119 01:00:58,720 --> 01:01:00,240 dollars. And then I can see your 1120 01:01:00,240 --> 01:01:02,680 political your political that thing. 1121 01:01:02,680 --> 01:01:04,520 Things get tricky from a political standpoint, right? 1122 01:01:04,520 --> 01:01:07,880 Do we fight or do we do after 911 where it's like, Oh my God, 1123 01:01:08,000 --> 01:01:10,280 we're all going to starve if we don't friggin you know? 1124 01:01:10,880 --> 01:01:12,760 You know. You know, I, I, but I, I think 1125 01:01:12,760 --> 01:01:16,200 COVID showed that like, you know, the disaster doesn't make 1126 01:01:16,200 --> 01:01:19,520 Americans come together anymore. It just pulls them apart and 1127 01:01:19,520 --> 01:01:22,560 they just fight more. Right, it it's fair, it's fair. 1128 01:01:22,640 --> 01:01:26,320 It would you would have to be you would have to have a great 1129 01:01:26,320 --> 01:01:29,400 leader because I think you're to your point, the time, you know, 1130 01:01:29,400 --> 01:01:34,120 the time of when 911 happened. Think about America, totally 1131 01:01:34,120 --> 01:01:35,600 different area. I tell my boys, all right, my 1132 01:01:35,600 --> 01:01:38,720 boys are are are in their early 20s, late, late teens. 1133 01:01:39,320 --> 01:01:42,800 And I tell them, like you cannot fathom how amazing America. 1134 01:01:42,800 --> 01:01:47,560 Was how unified it was. 85 to like 2000, like 2001, 2002 even. 1135 01:01:47,560 --> 01:01:50,920 It was it was friggin amazing. And yeah, we're not there now. 1136 01:01:50,920 --> 01:01:53,880 We are absolutely not there. We can't agree on facts. 1137 01:01:53,880 --> 01:01:57,560 We can't agree on pseudo facts. We can't agree on science. 1138 01:01:57,560 --> 01:01:59,120 We can't we like we can't agree on anything. 1139 01:01:59,120 --> 01:02:00,760 And it to your point, it makes it very dangerous. 1140 01:02:00,760 --> 01:02:02,400 I fully concede it makes it. It would make it. 1141 01:02:02,400 --> 01:02:04,520 Very dangerous. Let me make a second point, 1142 01:02:04,520 --> 01:02:07,440 which is orthogonal to the first, but adds to it, which is 1143 01:02:08,160 --> 01:02:11,880 if you were picking a tech stack from scratch today, OK, forget 1144 01:02:11,880 --> 01:02:15,600 about the political, just technological because of how the 1145 01:02:15,600 --> 01:02:16,960 dollar was started when it was started. 1146 01:02:16,960 --> 01:02:19,440 And when I say the dollar, it's like, ACH, it's swift, it's a 1147 01:02:19,440 --> 01:02:22,200 suite of technology, it's it's fed wire and so on and so forth. 1148 01:02:22,680 --> 01:02:26,880 That tech stack was when it was started, cutting edge, leading 1149 01:02:26,880 --> 01:02:29,080 edge. But because it was all set up 1150 01:02:29,080 --> 01:02:32,640 pre Internet, other countries now that have kind of got all 1151 01:02:32,640 --> 01:02:36,080 this stuff only going post Internet, like, you know, China 1152 01:02:36,080 --> 01:02:38,760 has very sophisticated with WeChat and Alipay. 1153 01:02:38,760 --> 01:02:44,280 And so it's over India's UPI, you know, POG Seguro in, in 1154 01:02:44,280 --> 01:02:47,000 South America. And you know, there's this very, 1155 01:02:47,200 --> 01:02:50,640 there's very sophisticated intranet native payment systems, 1156 01:02:50,640 --> 01:02:53,360 obviously cryptocurrency, but also all of the fintech 1157 01:02:53,360 --> 01:02:58,600 companies, right? Like 18 years ago, in 2817 years 1158 01:02:58,600 --> 01:03:02,080 ago, there there weren't that many people around the world who 1159 01:03:02,080 --> 01:03:04,800 knew how to stand up a new currency to run payment rails, 1160 01:03:04,800 --> 01:03:07,840 to do fintech crypto, that that was actually a relatively rare 1161 01:03:07,840 --> 01:03:09,400 skill set. There were like, you know, a few 1162 01:03:09,400 --> 01:03:11,320 100,000 people with a Bloomberg Terminal. 1163 01:03:11,760 --> 01:03:15,200 Now that is a very widespread skill set. 1164 01:03:15,600 --> 01:03:17,360 I can do that. I mean, you know, you know, I 1165 01:03:17,360 --> 01:03:18,800 launched USDC at Coinbase, right? 1166 01:03:18,800 --> 01:03:21,000 That's number seven, you know, asset, right? 1167 01:03:22,920 --> 01:03:24,600 That by the way, that's a counter argument. 1168 01:03:24,600 --> 01:03:26,400 Some people will give, they'll say, well, dollars will continue 1169 01:03:26,400 --> 01:03:28,040 to get adopted because stable coins are going to grow. 1170 01:03:28,040 --> 01:03:29,160 And I actually do agree with that. 1171 01:03:29,640 --> 01:03:31,360 So the timing on all this is TBD. 1172 01:03:31,360 --> 01:03:35,320 It could be that everything dies against the dollar and then the 1173 01:03:35,320 --> 01:03:38,200 dollar, you know, collapse against Bitcoin and gold, just 1174 01:03:38,200 --> 01:03:42,320 like all local newspapers died against MIT and Wall Street 1175 01:03:42,320 --> 01:03:44,320 Journal in Washington Post. And then they died against, you 1176 01:03:44,320 --> 01:03:46,400 know, social media and. X that might be a right model. 1177 01:03:46,400 --> 01:03:47,760 I think that might be a right model, right? 1178 01:03:47,920 --> 01:03:50,520 Yeah, yeah. So, so that's that's possible, 1179 01:03:51,320 --> 01:03:54,520 which will be a lot of instability in its own right, 1180 01:03:54,520 --> 01:03:58,480 right. But the so anyway, so the 1181 01:03:58,480 --> 01:04:02,960 technological point, I think if you have the dollar no longer 1182 01:04:02,960 --> 01:04:06,640 being stable, it's so easy for people to set up an Internet 1183 01:04:06,640 --> 01:04:10,080 based thing, whether it's a cryptocurrency or fintech or a 1184 01:04:10,080 --> 01:04:12,400 cryptocurrency backed fintech, like a lot of stripes, new 1185 01:04:12,400 --> 01:04:15,200 products, new products are kind of in that line of thing, right? 1186 01:04:17,360 --> 01:04:20,800 Then no one would adopt the dollar again after it was 1187 01:04:20,800 --> 01:04:23,040 delegitimized or partially de dollar. 1188 01:04:23,040 --> 01:04:25,640 It's like you wouldn't choose it from you'd only use the dollar 1189 01:04:25,640 --> 01:04:28,240 as an incumbent technology. You wouldn't pick it from 1190 01:04:28,240 --> 01:04:30,360 scratch if if everybody's picking again. 1191 01:04:30,360 --> 01:04:32,400 Let me pause there. Yeah, it's a fascinating point 1192 01:04:32,400 --> 01:04:39,000 because there was a, you can call up on China scope the a 1193 01:04:39,000 --> 01:04:42,640 speech given by General Kiao Liang of the People's Liberation 1194 01:04:42,640 --> 01:04:45,080 Army. And this is this is the same guy 1195 01:04:45,080 --> 01:04:48,280 who when he was a Colonel, wrote Unrestricted Warfare in 1999, 1196 01:04:48,280 --> 01:04:50,600 which was a book that I believe still never been published in 1197 01:04:50,600 --> 01:04:53,080 English, kind of laying out, hey, we got to go against the 1198 01:04:53,080 --> 01:04:57,000 Americans all these different ways and in unconventional ways. 1199 01:04:57,760 --> 01:05:02,480 So by 2015, he's now a general and he gives a speech to senior 1200 01:05:02,480 --> 01:05:06,160 CCP party members. One of the thing in the name of 1201 01:05:06,160 --> 01:05:09,040 the speech is the US uses its dollar to dominate the world, 1202 01:05:09,080 --> 01:05:14,240 and it gives a Chinese version of events of US going off the 1203 01:05:14,240 --> 01:05:16,960 gold standard and weaponizing the dollars through various 1204 01:05:16,960 --> 01:05:19,600 cycles over the ensuing 50 years 40. 1205 01:05:19,600 --> 01:05:20,960 Five years? What article is this? 1206 01:05:21,520 --> 01:05:25,040 It's called US uses its dollar to dominate the world. 1207 01:05:25,320 --> 01:05:28,160 It's on China scope. It was published in April 2015. 1208 01:05:30,520 --> 01:05:33,680 Interesting. And so one thing as it relates 1209 01:05:33,680 --> 01:05:37,800 to what what you you said there that I think is very powerful 1210 01:05:37,800 --> 01:05:42,080 is, is towards the end of the speech, he says the Americans 1211 01:05:42,080 --> 01:05:45,680 made a mistake by thinking that China's their enemy. 1212 01:05:45,680 --> 01:05:47,440 The American we're not their enemy. 1213 01:05:47,480 --> 01:05:51,000 The enemy of America and the American dollar are the 1214 01:05:51,000 --> 01:05:56,080 technological platforms that the Americans are leading the world 1215 01:05:56,080 --> 01:05:59,560 in pushing out, he said. What is the dollar? 1216 01:05:59,560 --> 01:06:03,760 The dollar is a currency. When we start to settle trade 1217 01:06:04,280 --> 01:06:09,080 without the dollar payment rails, will the dollar currency 1218 01:06:09,080 --> 01:06:11,880 hegemony still exist? This is the question the 1219 01:06:11,880 --> 01:06:13,680 Americans should be thinking about now. 1220 01:06:13,680 --> 01:06:19,640 He said this 10 years ago and then he cited the 2014 payment 1221 01:06:19,640 --> 01:06:24,240 statistics all done without dollar rails on Alipay in at the 1222 01:06:24,240 --> 01:06:29,520 end of 14 on, you know, Taobao and you know, whatever other 1223 01:06:30,240 --> 01:06:33,120 Chinese consumer websites. And they were already doing 1224 01:06:33,400 --> 01:06:37,960 staggering levels of consumer volumes outside the dollar in 1225 01:06:37,960 --> 01:06:41,280 non dollar rails. And he's warning America like, 1226 01:06:41,440 --> 01:06:44,240 hey, you guys are rushing headlong to push these 1227 01:06:44,240 --> 01:06:47,920 technologies that are literally undermining the branch. 1228 01:06:47,920 --> 01:06:49,680 You're cutting off the branch that you're sitting on as it 1229 01:06:49,680 --> 01:06:52,320 relates to the dollar. And so when I hear you say what 1230 01:06:52,320 --> 01:06:55,760 you laid out, it's exactly what he warned about 10 years ago. 1231 01:06:55,760 --> 01:06:57,440 And I think we're watching it in real time. 1232 01:06:57,440 --> 01:07:02,200 And I think not only is it gaining critical mass by virtue 1233 01:07:02,200 --> 01:07:05,560 of China's mass and global usage of things like Alipay and 1234 01:07:05,560 --> 01:07:09,880 WeChat, but also with U.S. policy where, you know, after 1235 01:07:09,880 --> 01:07:15,440 you weaponize the dollar enough times, You know, to me, I think 1236 01:07:15,440 --> 01:07:18,640 when the history books of the last 152025 years are written, 1237 01:07:19,360 --> 01:07:22,480 you know, I think, I think the, the kicking Iran out of Swift in 1238 01:07:22,480 --> 01:07:25,120 2012 will go down as one of the great strategic mistakes in 1239 01:07:25,120 --> 01:07:28,520 history. It was like, you know, it was 1240 01:07:28,520 --> 01:07:31,160 like being Alabama playing a team that you're already up 70 1241 01:07:31,160 --> 01:07:33,320 to nothing and running a trick play that you need to use 1242 01:07:33,320 --> 01:07:36,720 against LSU, you know, in a close game and, and getting it 1243 01:07:36,720 --> 01:07:38,400 on film. So the whole world, Russia, 1244 01:07:38,400 --> 01:07:43,240 China, everybody watched that and went, Oh my God, they can 1245 01:07:43,240 --> 01:07:47,640 hyperinflate us overnight. Within a year, the Chinese were 1246 01:07:47,640 --> 01:07:50,280 saying we're done buying treasuries and then began. 1247 01:07:50,520 --> 01:07:52,920 And that was peak treasuries, and it started falling their 1248 01:07:52,920 --> 01:07:53,800 whole. Treasuries. 1249 01:07:54,080 --> 01:07:57,480 Though I am surprised they haven't liquidated more than 1250 01:07:57,480 --> 01:08:00,520 they have because they still hold whatever, 100 billion of 1251 01:08:00,520 --> 01:08:02,920 them. But maybe, you know, I don't 1252 01:08:02,920 --> 01:08:04,480 know, but maybe it doesn't matter. 1253 01:08:04,480 --> 01:08:06,600 It's only 100 billion. I think they, I think they have 1254 01:08:06,600 --> 01:08:08,160 on net. The thing we never see, right 1255 01:08:08,160 --> 01:08:10,640 think about that's simply an asset side of a balance sheet, 1256 01:08:10,680 --> 01:08:11,960 right? We don't know if those are 1257 01:08:11,960 --> 01:08:14,680 pledged as collateral against the Pinterest. 1258 01:08:14,680 --> 01:08:17,600 Day so that's that's right you're right they could have 1259 01:08:17,600 --> 01:08:20,760 virtually sold it already and. That's how I would do it if I 1260 01:08:20,800 --> 01:08:22,200 was them. Because look, if you sell them 1261 01:08:22,200 --> 01:08:24,000 out, right, you're going to get a knock on the door from the 1262 01:08:24,000 --> 01:08:26,359 American Embassy and it's just an assay, right? 1263 01:08:27,040 --> 01:08:29,319 Hey, but if we use them in collateral, they love you. 1264 01:08:29,319 --> 01:08:31,319 Hey, great. I'll take Piraeus, I'll take 1265 01:08:31,319 --> 01:08:32,720 that oil field, I'll take that copper mine. 1266 01:08:32,720 --> 01:08:36,359 I'll take all that goal and the and the again, it's kind of like 1267 01:08:36,359 --> 01:08:39,520 when it's good for same way of of of, you know, the Chinese 1268 01:08:39,520 --> 01:08:40,560 want to understate their strength. 1269 01:08:40,560 --> 01:08:43,200 The Americans want to overstate it like the American banks are 1270 01:08:43,200 --> 01:08:45,880 happy to take this dollar collateral and the Chinese got 1271 01:08:45,880 --> 01:08:48,279 to be on. Clever point, very clever point. 1272 01:08:48,479 --> 01:08:51,640 So that because The thing is the reason I always thought that 1273 01:08:51,640 --> 01:08:53,520 this is the table that you and I are referring to, it's the 1274 01:08:53,520 --> 01:08:57,080 treasury table of like countries and their treasury holdings. 1275 01:08:57,080 --> 01:09:01,359 And one of the weird things about that is it has like Cayman 1276 01:09:01,359 --> 01:09:04,359 Islands and Belgium and these really small countries 1277 01:09:04,359 --> 01:09:05,960 supposedly have a lot of treasuries. 1278 01:09:06,359 --> 01:09:08,359 And what's actually going on there is it's, there's some 1279 01:09:08,359 --> 01:09:11,120 funny business with like banks in those countries that hold 1280 01:09:11,120 --> 01:09:12,560 treasuries on behalf of somebody else. 1281 01:09:12,560 --> 01:09:15,640 And obviously treasuries are especially the 10 year it's a, 1282 01:09:15,800 --> 01:09:19,600 it's collateral that is pledged and re pledged over and over 1283 01:09:19,600 --> 01:09:21,680 again and all kinds of fancy things around the world. 1284 01:09:22,600 --> 01:09:26,200 And so of course, you're right that China can get liquidity on 1285 01:09:26,200 --> 01:09:28,279 its treasuries without actually selling them. 1286 01:09:29,040 --> 01:09:31,279 They just pledged them and and you can send. 1287 01:09:31,399 --> 01:09:33,840 A chart of that, Yeah, is is. I would argue that I have a 1288 01:09:33,840 --> 01:09:34,840 chart. Let me see if it goes. 1289 01:09:35,479 --> 01:09:36,880 And that's all just private paper. 1290 01:09:36,880 --> 01:09:39,439 They don't have to disclose any of that, right? 1291 01:09:40,080 --> 01:09:41,680 No. And you can see it with GDP to 1292 01:09:41,760 --> 01:09:44,319 FX reserves, right? So like US, you know. 1293 01:09:45,040 --> 01:09:47,160 That's it. That's that's yeah, that's very 1294 01:09:47,160 --> 01:09:48,600 clever. It's I mean, maybe obvious, 1295 01:09:48,600 --> 01:09:49,720 maybe somebody else discussed about it. 1296 01:09:49,720 --> 01:09:51,439 It's the first time I've heard that particular argument. 1297 01:09:51,439 --> 01:09:54,200 Very good point. You know, I want to kind of give 1298 01:09:54,240 --> 01:09:59,640 one more tech lens on this to what you said, which is the 1299 01:09:59,640 --> 01:10:04,040 dollar as a database is a natural view of like crypto and 1300 01:10:04,040 --> 01:10:05,800 blockchain people, because that's what a blockchain is. 1301 01:10:05,800 --> 01:10:08,080 A blockchain is a, a new kind of database, right? 1302 01:10:08,600 --> 01:10:16,200 And in a sense, I think of, you know, the Fed and then the, you 1303 01:10:16,200 --> 01:10:19,960 know, Royal Bank of Canada and, or that was Royal Bank of it, 1304 01:10:20,120 --> 01:10:23,800 basically the Fed, the Bank of Canada, Bank of England, I 1305 01:10:23,800 --> 01:10:25,960 forget all the official names are the Bundesbank of Germany 1306 01:10:25,960 --> 01:10:28,480 and so on. All of those central banks and 1307 01:10:28,480 --> 01:10:31,320 then all the banks underneath them and all of those people 1308 01:10:31,320 --> 01:10:33,120 under those. So it's like 4 layers of Fed, 1309 01:10:33,520 --> 01:10:36,240 all of the US colonies basically, right, including Bank 1310 01:10:36,240 --> 01:10:40,560 of Japan, then all the banks that are licensed by those 1311 01:10:40,560 --> 01:10:44,480 central banks and then all of the citizens under them, right? 1312 01:10:44,600 --> 01:10:46,160 That sort of four layer structure. 1313 01:10:46,760 --> 01:10:50,160 That is what I think of as the Feds video game, right? 1314 01:10:50,160 --> 01:10:51,560 Because they control all the points. 1315 01:10:51,760 --> 01:10:55,320 They can freeze, they can seize, they can rewind a transaction, 1316 01:10:55,600 --> 01:10:59,160 they have root access over everything in this database, 1317 01:10:59,240 --> 01:11:01,760 right? So and they they use this 1318 01:11:01,760 --> 01:11:04,280 against Russia and actually this book called Treasuries War. 1319 01:11:05,360 --> 01:11:06,600 Juan Zarate. Great book. 1320 01:11:06,600 --> 01:11:08,880 Juan Zarate, right? It was actually a smart guy, I 1321 01:11:08,880 --> 01:11:10,480 think. I think he actually worked at 1322 01:11:10,480 --> 01:11:13,080 Coinbase at one point. So he basically pointed out 1323 01:11:13,080 --> 01:11:15,840 that, you know, because the US had control and so much of the 1324 01:11:15,840 --> 01:11:18,000 world's value flowed through this database that the US had 1325 01:11:18,120 --> 01:11:20,840 control over, they could freeze and seize and use it for anti 1326 01:11:20,840 --> 01:11:22,440 terrorists. And that fine, OK. 1327 01:11:23,880 --> 01:11:29,280 What's happened is you have two contenders, let's call them 1328 01:11:29,280 --> 01:11:34,400 crypto in China, that a larger one is kind of inside the empire 1329 01:11:34,400 --> 01:11:36,200 and one is outside the empire, right? 1330 01:11:36,760 --> 01:11:40,920 That our databases that the Fed does not have root access over. 1331 01:11:41,320 --> 01:11:45,320 So it cannot freeze and seize things on the Bitcoin blockchain 1332 01:11:45,320 --> 01:11:47,240 and other blockchains, not too easily at least. 1333 01:11:47,720 --> 01:11:54,560 And it cannot freeze and seize things in the digital yuan or on 1334 01:11:55,040 --> 01:12:00,600 the Russian ruble or the Indian INR or, you know, AED or Sud or 1335 01:12:00,600 --> 01:12:03,040 other currencies that some of these are soft peg to the 1336 01:12:03,040 --> 01:12:04,440 dollar. Some of these are hard peg like 1337 01:12:04,440 --> 01:12:06,680 HKD and AED are peg to the dollar. 1338 01:12:06,680 --> 01:12:09,000 But they could remove the peg if they needed to and they could go 1339 01:12:09,000 --> 01:12:10,800 to gold because they run their own Ledger, right? 1340 01:12:11,280 --> 01:12:16,200 So the the database aspect of this, you can the the big thing 1341 01:12:16,200 --> 01:12:19,160 about is these two economies, that which I called the Internet 1342 01:12:19,160 --> 01:12:23,640 economy, the crypto economy and the Chinese economy or the BRICS 1343 01:12:23,640 --> 01:12:26,160 economy, right? Those are growing and then 1344 01:12:26,160 --> 01:12:30,280 squeezing in the feds video game over here. 1345 01:12:30,280 --> 01:12:31,200 Let me know your thoughts on that. 1346 01:12:31,200 --> 01:12:32,600 So just another lens on the whole thing. 1347 01:12:32,960 --> 01:12:34,880 Yeah. No, I think that's, I think that 1348 01:12:34,880 --> 01:12:40,480 makes sense and I think it's, it's, it's enforced by 1349 01:12:40,480 --> 01:12:42,440 particular in the BRICS side and lever. 1350 01:12:42,480 --> 01:12:45,800 You know, the leverage is the physical world, right, It is. 1351 01:12:45,880 --> 01:12:48,760 You know, we are, we're leveraging manufacturing 1352 01:12:48,760 --> 01:12:54,680 dominance, we are leveraging energy, we are leveraging the 1353 01:12:54,680 --> 01:12:57,960 realpolitik of we have nukes and the United States has never 1354 01:12:57,960 --> 01:12:59,320 attacked a nuclear power country. 1355 01:13:00,680 --> 01:13:02,200 And then and then the population side, right. 1356 01:13:02,200 --> 01:13:06,760 You have a, a high, you know, enormous, highly educated, 1357 01:13:06,760 --> 01:13:13,360 highly motivated and, and, and rapidly moving up in terms of 1358 01:13:15,280 --> 01:13:17,760 living standards per capita, right consumption there. 1359 01:13:17,760 --> 01:13:21,560 There's a they, they have the physical world backfill. 1360 01:13:21,560 --> 01:13:24,120 So as they squeeze right, what do we hear so much of? 1361 01:13:24,440 --> 01:13:26,760 Well, they can't live without our consumers. 1362 01:13:26,760 --> 01:13:33,520 Well, you know, 15 years ago, 20 years ago, 100% ten years ago. 1363 01:13:33,960 --> 01:13:37,240 Yeah, yeah. Now, you know, it's gotten to 1364 01:13:37,240 --> 01:13:40,480 the point where we can see it in sort of where the pain has been 1365 01:13:40,480 --> 01:13:43,120 with post liberation day. Treasury market blew up in seven 1366 01:13:43,120 --> 01:13:46,560 days, seven trading days and and Trump was getting warned by 1367 01:13:46,680 --> 01:13:50,440 major US retail CE OS like there are going to be empty shelves 1368 01:13:50,640 --> 01:13:53,360 for Christmas if you don't stop this back in April. 1369 01:13:53,360 --> 01:13:57,760 I hear he was warned and so they are backfilling the entire. 1370 01:13:57,800 --> 01:14:00,920 Thing is so crazy, like you saw the manufacturing jobs print of 1371 01:14:01,200 --> 01:14:03,120 you know how many. Anyway, go ahead, you were 1372 01:14:03,120 --> 01:14:05,120 saying sorry. Yeah, no, I think it's this 1373 01:14:05,120 --> 01:14:09,000 physical world is is bad. They're leveraging that against 1374 01:14:09,000 --> 01:14:12,360 that sort of those those other two video games, if you will, 1375 01:14:12,360 --> 01:14:13,800 squeezing the Feds video game. I think that's. 1376 01:14:13,800 --> 01:14:15,160 I think it's. It's a model I hadn't heard 1377 01:14:15,160 --> 01:14:16,200 before, but that makes sense to me. 1378 01:14:16,320 --> 01:14:19,400 Cool, awesome. All right, Sir, Well, I think we 1379 01:14:19,400 --> 01:14:22,240 covered a lot. Anything that you want to say 1380 01:14:22,240 --> 01:14:25,600 you have, you know people should go and check out your sub stack 1381 01:14:25,920 --> 01:14:28,400 or. No, Yeah, Yeah, they're 1382 01:14:28,400 --> 01:14:30,160 interested. Yeah, interested in learning 1383 01:14:30,160 --> 01:14:33,640 more about our research, fftt-llc.com, different 1384 01:14:33,640 --> 01:14:35,320 institutional and mass market products. 1385 01:14:35,320 --> 01:14:39,040 And as as you know, I've got a fairly active feed on exit at 1386 01:14:39,040 --> 01:14:41,480 Luke Groman. But so, yeah, I appreciate it. 1387 01:14:41,600 --> 01:14:42,480 Cool. This is great. 1388 01:14:42,760 --> 01:14:43,720 Awesome. Thank you, Sir. 1389 01:14:43,720 --> 01:14:45,400 Likewise talk. Soon, really enjoyed it, thank 1390 01:14:45,400 --> 01:14:45,880 you very much.