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Welcome back everyone. 
I am Caspian Sea and I'm here as

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usual with my partner in crime 
Bennett Tomlin. 

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How are you today? 
I'm doing well. 

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Cass, how are you? 
I'm doing good today. 

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We are joined by a very special 
guest, Mike Green portfolio, 

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manager and chief strategist for
simplify Asset Management. 

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Mike how are you? 
I'm doing well Cass. 

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So so glad to be here and share 
Airing in the crime of crypto 

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its partners in crime. 
Exactly. 

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I have two partners today, 
Bennett, would you mind starting

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starting us out today. 
Sure, I'll start it off mic. 

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What risks do you think are 
under appreciated by most 

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cryptocurrency investors? 
Well I think the core risk is 

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one that's actually been exposed
by Canada today right? 

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Which is that governments 
actually serious governments 

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decide to get serious about 
crypto and And you know, this 

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has been one of the frustrating 
Dynamics is since I first became

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involved in the space or 
discussing the space. 

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I've tried to emphasize the 
people that as far as I can tell

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the primary mechanism or primary
feature of Bitcoin in 

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particular, and also, you know, 
a lot of the other Dynamics 

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around. 
It participation exchanges, Etc,

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says that whether it is 
intentional or not, people are 

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functionally raising their hands
and saying we want to engage in 

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what's perceived as seditious. 
T. 

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We want to, you know, do things 
that our government doesn't 

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necessarily want us to do if 
you're in Venezuela or Lebanon. 

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That's not that big of a deal, 
right? 

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I mean, the government's are not
capable of tracking you down. 

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In those Citrus, they certainly 
can come to your door with 

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jackbooted thugs and beat down 
your door and subject you to 

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torture that you may not 
experience in the developed 

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world but the realistic risks of
being tracked down as a money 

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launderer or as a unlicensed 
distributor and Money Transfer 

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service are Low in those 
regimes. 

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Which is why you see those 
regimes being the center of 

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money, laundering activity and 
Drug distribution and everything

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else right in the developed 
world, what you've largely seen 

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as governments, ignoring the 
problems and issues associated 

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with crypto to this point and 
that feels like it's changing 

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very rapidly and and just in all
seriousness, that feels like the

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biggest underappreciated risk 
and the second component that 

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I'd tie to that is the Narrative
that exists around that, which 

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is people in this space saying, 
well, that's completely 

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unreasonable, that the 
government would do that. 

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If the government does that, 
then there, you know, truly, you

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know, I love Aya thin. 
That is, you know, evil and they

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should be resisted, right? 
Like, I'm sorry that's just not 

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true. 
Most of the regulations that 

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were put in place across the 
financial system were put there 

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to protect participants. 
They weren't there, to try to, 

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you know, stamp, you down and 
pray. 

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Be you from investing in 
lucrative investment 

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opportunities, you know, things 
like accredited investors who 

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have to have a certain level of 
income, or wealth before they're

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able to invest in speculative, a
certain types of speculative 

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activities. 
So that's a private Equity Fund,

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or venture capital or various 
other things that's not being 

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done because people who have 
money hate you, right is being 

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done because there's just so 
much evidence of Fraud and scams

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that there, isn't that a line 
was drawn, you may disagree. 

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Free with that line, you can 
certainly Lobby to have that 

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changed and I applaud people who
are willing to do that, but it's

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not that people were that these 
restrictions were put in place 

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to keep people down. 
They were there because the 

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incidents of fraud in the with 
the lack of Regulation tends to 

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be so high, that it was just 
expedient to say, let's cut it 

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out, let's not do it right? 
I mean it's fantastic that you 

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can use Bitcoin for transferring
I had a discussion with somebody

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today like I use Bitcoin to 
transfer ten thousand dollars 

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you know in. 
Real estate transaction that 

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cost me less than 50 Cent's and 
it took no time whatsoever. 

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I transferred it from one of my 
accounts, to another account, 

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and it was, you know, much, 
much, much easier than doing a 

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bank wire transfer. 
And my reaction to them was 

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like, okay, well, wait a second 
one. 

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Why do you think that number was
10,000 to you transferred money 

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from one of your accounts to 
another account? 

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Like, you know, that's not that 
impressive. 

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If you try doing that with a 
hundred million dollars, under 

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the framework that you Describe 
you just broke any number of 

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laws, right? 
And the reason why a bank wire 

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transfer has all the problems of
know your customer. 

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And you know, did you really 
mean to transfer this hundred 

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million dollars and we're not 
entirely sure. 

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You should be allowed to 
transfer this hundred million 

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dollars. 
What are the uses and purposes 

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of it? 
All the things that make people 

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say, what the hell is it your 
business, right? 

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That's there because they don't 
want arms merchants and drug 

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dealers. 
Everybody else doing it, right? 

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It's just It's you know if your 
Citibank transferring a hundred 

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million dollars is not hard for 
a very simple reason, you do it 

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all the time. 
So we had this world where 

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unfortunately the language of 
lack of trust of Institutions 

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has created conditions under, 
which people are uniquely 

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exposed to an actual crack down 
and it feels like that's 

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starting to happen. 
Well, your your answer uniquely 

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segwayed us into one of my 
questions which was I was Only, 

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I saw you chatting about it 
earlier the, the Canadian 

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trucker Convoy situation and for
anyone who isn't paying 

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attention to it, I, the idea is 
that there's a lot of truckers 

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in Canada. 
Who, who can't they have to get 

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vaccinated basically is what the
government is telling them. 

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They have to get vaccinated for 
Corona for Coronavirus and they 

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don't want to. 
And so they put up essentially a

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protest, they've gone into 
Ottawa and they've they've 

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They've gone on to Bridges and 
stopped traffic between Canada, 

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and the US. 
And and they've made a lot of 

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noise about this. 
And there's a lot of people, it 

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seems like there's a lot of 
people who agree agree with them

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and think they shouldn't have to
do this. 

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Regardless. 
I'm not trying to touch on on 

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that part of this story. 
What, what I am trying to talk 

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about though is that they tried 
to have a go fund me, that got 

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shut down, and then they tried a
different funding mechanism that

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also got shut down. 
Now, they Sorted to utilizing 

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funding through Bitcoin. 
And now what was it? 

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20 wallets or so got blacklisted
by the Canadian government. 

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And so, I just want to hear your
thoughts on that, in general, I 

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guess what, what it, what it 
means, why it does drive home 

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the points that you were 
mentioning before, but also what

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that means for Bitcoin in 
general. 

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Well, so I think Bitcoin is 
actually an ancillary component 

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of that story, right? 
And so, I Like I want to 

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emphasize and I hopefully this 
has been clear on Twitter. 

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Like, I actually deeply support 
the Canadian truck drivers right

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to protest. 
I deeply support. 

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The message that they're 
actually protesting the the 

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introduction of mandated 
vaccines of dubious utility in 

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an environment in which we are 
increasingly post pandemic, 

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right? 
This statistic came out today, 

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it's something like 75% of the 
United States is already Omicron

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resistant and we Do the way 
these things work and it does 

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feel that this is excessive we 
don't have mandatory 

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vaccinations for the flu. 
We don't you know etcetera it 

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feels very arbitrary and that's 
one of the things that I think 

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is very clear in people's 
resistance to this behavior is 

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not actually that this is a 
principled stance that says, hey

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you need to have your 
immunization against polio, 

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right? 
What they're actually saying is,

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this does not seem rational to 
me that I'm being forced to do 

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this. 
One particular thing, I'm fully 

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supportive of that message and 
I'm fully supportive of Civil 

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Disobedience against the 
behavior of the Canadian 

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government but we got to be 
really clear about a couple of 

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things. 
One is, it is a commercial 

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driver's license, right? 
By definition, you actually have

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to follow the rules that the 
state has set down in order to 

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be a commercial driver and to 
have a commercial driver's 

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license that allows you to do 
the Whatsoever. 

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They can change those rules so 
that you're required to be able 

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to stand on your head for 30 
minutes at a time. 

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If they wanted to, it's a 
terrible policy choice. 

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I would not support it in the 
least, but they do actually have

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that, right? 
And by virtue of having gotten 

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licensed in the first place, 
you've already seated that 

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authority to them, right? 
So like, I really think that's a

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really critical component that 
people tend to forget on this. 

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The second component is if you 
decided as a commercial, 

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driver's license vehicle driver 
to park, your semi in the middle

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of a bridge and walk away from 
it and say, hey I'm here to 

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protest. 
You would probably almost 

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certainly regardless of 
vaccination or anything else. 

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Have your CDL suspended or 
withdrawn, you're not allowed to

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commit traffic violations as a 
commercial driver you know as a 

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commercial driver like so we're 
kind of in this silly place 

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where like They've already 
seated Authority by getting a 

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draw. 
A job that requires a certain 

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degree of license. 
Now, you can have a very 

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disciplined, as a civil 
disobedience. 

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That says, we refuse to take the
test, we refuse to participate 

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in these jobs. 
Those create shortages and 

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that's going to force reform and
I hope that's the direction that

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this is heading. 
But so far, a lot of that has 

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been lost in the process. 
The second component around 

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Bitcoin itself. 
What is come out far more 

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clearly is that when the 
government Sides. 

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Hey this is actually something 
serious and then you try to use 

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the theoretical anonymity of 
Bitcoin, the speed and ease of 

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use the chaos that emerged 
around. 

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It is not dissimilar to the 
chaos that emerged in El 

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Salvador, when they pronounce 
Bitcoin, the official currency 

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and the chivo system went down 
in the ATMs. Couldn't be 

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accessed. 
And people basically, you know, 

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fraudulently withdrew money, 
stealing IDs and everything 

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else. 
Right? 

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All of this is completely 
predictable for a system that is

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For more enamored of its 
theoretical potential than in, 

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developing any practical 
applications. 

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And I would just suggest that 
more than anything else is what 

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we've seen. 
Like, we saw printers busted out

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where they're trying to hand out
you know slips of paper that 

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have keys so that people can 
access the Bitcoin that was sent

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to the trucker's, right? 
Like guys, we're 12 years into 

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this. 
There is not a usable user 

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interface for anyone who has not
decided to do a deep dive into 

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the wallet and boy this Is super
like your grandmother cannot use

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this. 
That me feel like a feature set 

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to people who want to be part of
a mystical priesthood of Bitcoin

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and everything else. 
But it's not that's not the way 

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the world works and by the way, 
you're actually starting to see 

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like some of the people that you
and I find amusing and I put 

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that in quotes because like Nick
Carter Etc. 

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They're actually suddenly you're
seeing elements of am a oculto 

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where they're saying, you know, 
geez maybe instead of, you know 

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an excuse my language jerking 
off, You know, the president of 

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El Salvador, we probably should 
have been thinking about ways to

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improve the actual utility of 
this and we've under done it. 

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Well guess what you under did it
and you compete? 

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You, you spent your time 
shouting from the rooftops that 

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the government couldn't stop you
and your inevitable conquest of 

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the world. 
Congratulations, your 

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00:11:47,600 --> 00:11:49,600
universally hated in. 
No one knows what to do with 

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your product. 
Sounds like a wonderful platform

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00:11:52,200 --> 00:11:54,900
to build it from one of the 
Striking things for me, that I 

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noticed in response to 
initially, when the Canadian 

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government use, Their emergency 
powers to get the banks to start

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cutting off access from any of 
the trucker's is how many 

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Bitcoin Max, he's hailed it as 
like this major bullish event 

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for Bitcoin where it was going 
to increase in value is people 

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recognize the value of its 
censorship resistance, in 

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contrast to the banking system. 
And from what I've heard, many 

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of the trucker's don't have 
anything they can really spend 

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00:12:27,100 --> 00:12:31,900
the Bitcoin on and Without 
access to the banking system and

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the Fiat system. 
They're not able to convert the 

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Bitcoin into things they can 
actually spend. 

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00:12:37,200 --> 00:12:39,900
And so because like you're 
talking about there was not the 

229
00:12:39,900 --> 00:12:44,100
work done to develop the ability
to spend and use Bitcoin. 

230
00:12:44,500 --> 00:12:47,900
And I think this is partially 
due to like the narrative 

231
00:12:47,900 --> 00:12:53,000
around, Bitcoin is digital gold.
You've ended up with this asset 

232
00:12:53,000 --> 00:12:57,800
that is censorship resistant in 
the sense that you can send it 

233
00:12:57,800 --> 00:13:00,500
to whoever you want. 
But it fails in the sense that 

234
00:13:00,500 --> 00:13:03,500
the receiver often can't 
actually use it to accomplish 

235
00:13:03,500 --> 00:13:05,400
much. 
And so I think that's a really 

236
00:13:05,400 --> 00:13:06,900
excellent point you're drawn 
there. 

237
00:13:07,400 --> 00:13:10,800
Well, I think that's important 
and I also I do think your 

238
00:13:10,800 --> 00:13:13,400
analogy, your identification of 
digital gold. 

239
00:13:13,400 --> 00:13:17,600
Like you know just for the sake 
of argument, imagine that I had 

240
00:13:17,600 --> 00:13:22,300
filled up a briefcase with 
Canadian maple leaves and you 

241
00:13:22,300 --> 00:13:26,300
know walked out into the the 
protest and started handing them

242
00:13:26,300 --> 00:13:29,100
out, right? 
Like would people be happy to Of

243
00:13:29,100 --> 00:13:31,300
them. 
Yeah, hey that's fantastic. 

244
00:13:31,300 --> 00:13:33,800
This guy's handing out, you 
know, Canadian maple leaves an 

245
00:13:33,800 --> 00:13:35,300
ounce of gold is worth 2,000 
bucks. 

246
00:13:35,300 --> 00:13:39,200
Each, you know how lucky am I? 
Are they going to take the maple

247
00:13:39,200 --> 00:13:41,900
leaf to the local convenience 
store and get a, you know, 

248
00:13:41,900 --> 00:13:46,500
super-sized Slurpee and a slim 
jim to tide them over as they 

249
00:13:46,500 --> 00:13:48,800
wait for the opportunity to use 
the bathroom? 

250
00:13:48,800 --> 00:13:52,500
Like no, they can't do that. 
It's not useful. 

251
00:13:52,800 --> 00:13:55,100
So, you know, I don't think this
is actually a necessarily a 

252
00:13:55,100 --> 00:14:00,100
Bitcoin versus gold as much as 
it is a like, Eating is not a 

253
00:14:00,100 --> 00:14:03,200
currency. 
It cannot be used for all the 

254
00:14:03,200 --> 00:14:04,900
reasons that you said, but guess
what? 

255
00:14:04,900 --> 00:14:07,700
Hey, fantastic, those those 
truckers now, you know, 

256
00:14:07,700 --> 00:14:11,200
potentially have Bitcoin and 
without access to their banking 

257
00:14:11,200 --> 00:14:14,500
system. 
Their wealth will be preserved, 

258
00:14:16,800 --> 00:14:20,200
wonderful, great system. 
Well it's funny. 

259
00:14:20,200 --> 00:14:22,600
It's funny that you're even 
mentioning this because I feel 

260
00:14:22,600 --> 00:14:27,800
like the idea of having Bitcoin 
be a useful currency, they gave 

261
00:14:27,800 --> 00:14:29,400
up on that a long time. 
Ago. 

262
00:14:29,500 --> 00:14:32,800
Of course, that's been a reality
that any of them perceive or 

263
00:14:32,800 --> 00:14:37,200
want or desire like the Maxis. 
They do, they they pivoted to 

264
00:14:37,300 --> 00:14:42,300
digital gold or whatever, but 
store of value it, they stopped 

265
00:14:42,300 --> 00:14:45,700
thinking it should be a way to 
move money. 

266
00:14:45,800 --> 00:14:48,800
And as you're saying now, if you
get rid of that part of the 

267
00:14:48,800 --> 00:14:51,400
usefulness, just kind of gets 
destroyed along with it. 

268
00:14:51,800 --> 00:14:54,900
Yeah, I mean, I think that's, I 
think, that's right. 

269
00:14:54,900 --> 00:14:58,700
I would take issue with the idea
of the ability to move money. 

270
00:14:58,900 --> 00:15:01,200
Because I do think that's 
actually exactly what it's used 

271
00:15:01,200 --> 00:15:03,400
for, right? 
It is, it's a phenomenal tool. 

272
00:15:03,400 --> 00:15:07,300
If you happen to reside, outside
of a functional government, a 

273
00:15:07,300 --> 00:15:10,700
functioning government, and you 
want to ship 10 million dollars 

274
00:15:10,700 --> 00:15:14,700
worth of proceeds, you know, 
into a banking system where 

275
00:15:14,700 --> 00:15:17,100
you've paid off a local bank 
clerk, that allows your money to

276
00:15:17,100 --> 00:15:20,700
slip in a variety of ways, or 
you can use a wall, you know, 

277
00:15:20,700 --> 00:15:25,000
coin washer and an exchange to 
launder your Bitcoin into tether

278
00:15:25,000 --> 00:15:27,200
and then subsequently make a 
withdrawal. 

279
00:15:27,300 --> 00:15:30,200
All in the hopes that your that 
You're not going to get caught 

280
00:15:30,200 --> 00:15:34,500
in the process if you're outside
the United States or outside 

281
00:15:34,500 --> 00:15:37,400
Canada or outside, you know, a 
lot of functioning regimes. 

282
00:15:37,400 --> 00:15:41,400
Yeah, it can actually do that 
pretty well, I'm not sure why 

283
00:15:41,400 --> 00:15:45,100
that matters to you, as the vast
majority of US citizens, or 

284
00:15:45,100 --> 00:15:46,600
Canadian citizens for that 
matter. 

285
00:15:47,100 --> 00:15:49,000
That brings up another good 
point though. 

286
00:15:49,000 --> 00:15:52,300
Because you and I what we 
generally would talk about 

287
00:15:52,300 --> 00:15:56,300
before when we were talking 
regularly was a was China and 

288
00:15:56,300 --> 00:15:59,900
Bitcoin. 
And I think That has changed 

289
00:15:59,900 --> 00:16:02,400
drastically and it does have to 
do with something you're talking

290
00:16:02,400 --> 00:16:05,600
about right now which is 
functional governments can make 

291
00:16:05,600 --> 00:16:09,900
decisive, they can take decisive
action when they so please. 

292
00:16:09,900 --> 00:16:13,500
So, when we were talking, it 
seemed like China was happy to 

293
00:16:13,500 --> 00:16:16,600
have all this hash rate there 
that hash rate is now gone. 

294
00:16:16,600 --> 00:16:18,600
Right? 
So what is your take on all of 

295
00:16:18,608 --> 00:16:20,800
that? 
Well, as I'm going to actually 

296
00:16:20,800 --> 00:16:24,200
push back, I mean, this is, this
is one of the wonderful things 

297
00:16:24,200 --> 00:16:27,600
that has happened and continues 
to happen in places. 

298
00:16:27,900 --> 00:16:31,400
It's almost like a Joe great 
only in the land of Bitcoin 

299
00:16:31,400 --> 00:16:32,900
could this sort of stuff happen,
right? 

300
00:16:32,900 --> 00:16:37,000
So this the hash rate that 
you're referring to is 

301
00:16:37,000 --> 00:16:40,400
effectively the processing 
capability of the network. 

302
00:16:40,800 --> 00:16:44,900
You know, we just the other day 
we saw an unexplainable jump of 

303
00:16:44,900 --> 00:16:48,300
give or take 25% of the total 
network capacity suddenly showed

304
00:16:48,300 --> 00:16:50,900
up. 
How does that happen? 

305
00:16:51,600 --> 00:16:53,700
Is that happening? 
Because there's a massively 

306
00:16:53,700 --> 00:16:56,600
decentralized series of pools 
that come on. 

307
00:16:56,600 --> 00:17:00,500
Is it because China? 
Anna actually is running 

308
00:17:00,500 --> 00:17:02,700
processing capacity. 
We know that. 

309
00:17:02,700 --> 00:17:05,700
That's, you know, again, if I 
look at the Cambridge official 

310
00:17:05,700 --> 00:17:08,900
studies, they say there's zero 
hash rate in China, we know 

311
00:17:08,900 --> 00:17:12,000
that's not true, right? 
So, this transition that 

312
00:17:12,000 --> 00:17:15,800
supposedly occurred from China 
Banning, it has not actually 

313
00:17:15,800 --> 00:17:18,700
fully happened. 
Russia just came on and said, 

314
00:17:18,700 --> 00:17:21,700
hey, we're licensing. 
We're going to have an official 

315
00:17:21,700 --> 00:17:23,500
Bitcoin. 
Like, do we think this is 

316
00:17:23,500 --> 00:17:27,500
because Russia has suddenly 
decided to embrace freedom and, 

317
00:17:27,599 --> 00:17:30,200
and the importance. 
Of, you know, they're the 

318
00:17:30,200 --> 00:17:35,200
ability for individuals to 
access a global banking system. 

319
00:17:35,200 --> 00:17:37,300
Of course not. 
They're worried that they're 

320
00:17:37,300 --> 00:17:41,500
going to be cut off in one form 
or another if Ukraine situation 

321
00:17:41,500 --> 00:17:44,500
accelerates and gets worse and 
guess what? 

322
00:17:44,500 --> 00:17:48,200
They can use the Bitcoin Network
in lieu of the Swift system for 

323
00:17:48,200 --> 00:17:51,100
whatever purposes they would 
like to I just keep coming back 

324
00:17:51,100 --> 00:17:53,700
to the dynamic of. 
This is not a system that is 

325
00:17:53,700 --> 00:17:57,300
built for banking. 
The unbagged it is a system that

326
00:17:57,300 --> 00:18:01,100
has unique characteristics. 
Is that are super useful for 

327
00:18:01,100 --> 00:18:06,000
people who want to engage in bad
behavior and I can't emphasize 

328
00:18:06,000 --> 00:18:07,900
enough. 
I'm not suggesting that, every 

329
00:18:07,900 --> 00:18:11,600
individual, the roughly 100 
million people that are actively

330
00:18:11,600 --> 00:18:14,000
involved in crypto. 
I'm willing to bet that 99 

331
00:18:14,700 --> 00:18:17,800
million of them. 
Plus a sizable fraction of the 

332
00:18:17,800 --> 00:18:20,700
remaining million are actually 
good players and they feed their

333
00:18:20,700 --> 00:18:22,600
families properly. 
And they're looking for a 

334
00:18:22,608 --> 00:18:25,300
solution to various problems 
that they're dealing with in 

335
00:18:25,300 --> 00:18:27,900
their life whether that's access
to banking system. 

336
00:18:27,900 --> 00:18:30,100
So that's access To 
appropriately volatile 

337
00:18:30,100 --> 00:18:32,500
speculative activities to give 
them the opportunity to 

338
00:18:32,500 --> 00:18:34,900
participate in hope for a better
life. 

339
00:18:34,900 --> 00:18:38,600
Like those are all important 
features but that's not the vast

340
00:18:38,600 --> 00:18:40,500
majority of what's actually 
happening there. 

341
00:18:40,900 --> 00:18:42,700
That's not why the network was 
built. 

342
00:18:42,700 --> 00:18:48,600
It's built to serve that 0.2% 
that are actually engaged in the

343
00:18:48,600 --> 00:18:52,000
vast majority of bad behavior. 
I'm gonna go on a bit of a 

344
00:18:52,000 --> 00:18:54,700
different direction here because
I was reading some of your 

345
00:18:54,800 --> 00:18:58,600
writings from last year in 
preparation for this call. 

346
00:18:58,800 --> 00:19:02,200
And so I would love it. 
If you could describe what you 

347
00:19:02,200 --> 00:19:06,200
see, as some of the differences 
between inflation now and the 

348
00:19:06,300 --> 00:19:08,900
inflation that occurred during 
the 1970s. 

349
00:19:09,400 --> 00:19:11,600
Yeah. 
Okay, so this is one of these 

350
00:19:11,600 --> 00:19:14,300
really interesting Dynamics, 
right? 

351
00:19:14,300 --> 00:19:18,200
Because and people ask me it's 
like well what causes inflation?

352
00:19:18,200 --> 00:19:21,900
And the reason why inflation is 
hard is because there is no 

353
00:19:21,900 --> 00:19:25,700
single one cause of inflation 
and inflation, that occurs in 

354
00:19:25,708 --> 00:19:28,700
the aftermath of the loss of 
capacity in a war. 

355
00:19:28,900 --> 00:19:32,600
Like we had in the 1920s in 
Germany where they lost 

356
00:19:32,600 --> 00:19:36,100
significant productive capacity.
Had fixed obligations, they 

357
00:19:36,100 --> 00:19:40,000
needed to meet outside in terms 
of reparations and at the same 

358
00:19:40,000 --> 00:19:43,500
time somehow or another needed 
to put enough money into the 

359
00:19:43,500 --> 00:19:47,800
hands of people so that they 
could actually buy food and try 

360
00:19:47,800 --> 00:19:49,400
and engage in that sort of 
stuff. 

361
00:19:49,700 --> 00:19:53,300
We hear this over and over again
in environments that enter into 

362
00:19:53,300 --> 00:19:58,000
hyperinflationary Dynamics. 
The money printing is actually a

363
00:19:58,000 --> 00:19:59,900
solution. 
Shinto, nothing. 

364
00:19:59,900 --> 00:20:01,900
And, you know to something that 
just doesn't exist, right? 

365
00:20:01,900 --> 00:20:05,000
People don't have the money to 
buy bread, food, Etc. 

366
00:20:05,300 --> 00:20:07,200
And so it needs to be printed, 
right? 

367
00:20:07,200 --> 00:20:09,500
It is a bandage in the hope that
things get better. 

368
00:20:09,800 --> 00:20:13,600
What happened in the 1970s is 
something that is very unique, 

369
00:20:13,700 --> 00:20:17,200
the 1960s and 1970s is something
that was really, really unique 

370
00:20:17,200 --> 00:20:22,000
on a global basis, which is the 
aftermath of World War Two, 

371
00:20:22,000 --> 00:20:24,400
which had devastated 
populations. 

372
00:20:24,400 --> 00:20:27,100
And to a certain extent, World 
War 1 and the Spanish Flu had 

373
00:20:27,100 --> 00:20:30,900
created the conditions under 
which Global population had 

374
00:20:31,200 --> 00:20:33,900
slowed significantly. 
The reproductive Dynamics, 

375
00:20:33,900 --> 00:20:36,600
particularly in regions of the 
world that were caught up in the

376
00:20:36,600 --> 00:20:40,800
global conflict had fallen. 
And in the aftermath of this, we

377
00:20:40,800 --> 00:20:43,500
saw baby booms around the world,
right. 

378
00:20:43,500 --> 00:20:46,800
Those baby booms were very 
unique in their features because

379
00:20:46,800 --> 00:20:50,400
government spent money to lower 
the cost of people having 

380
00:20:50,400 --> 00:20:54,400
families and children subsidized
Transportation Systems to the 

381
00:20:54,400 --> 00:20:58,300
suburbs and the exurbs that made
available significantly more. 

382
00:20:58,900 --> 00:21:02,600
And for people to raise their 
families in a housing market 

383
00:21:02,600 --> 00:21:05,500
that was facilitated by 
Innovations in mortgage Finance.

384
00:21:05,500 --> 00:21:08,000
The introduction of things like 
Fannie, Mae and Freddie Mac the 

385
00:21:08,000 --> 00:21:10,700
facilitated borrowing by the 
average American who 

386
00:21:10,700 --> 00:21:13,100
historically would have had to 
save 50% down. 

387
00:21:13,100 --> 00:21:16,500
Suddenly could get by with 20% 
down with standardized fix 30 

388
00:21:16,500 --> 00:21:19,900
year mortgage, the Dynamics of 
the GI bill that facilitated, 

389
00:21:19,900 --> 00:21:21,300
many of these components of all,
right? 

390
00:21:21,300 --> 00:21:24,200
So lots of stuff happened to 
basically create a conditions 

391
00:21:24,200 --> 00:21:26,000
under, which people had a lot of
kids. 

392
00:21:26,400 --> 00:21:28,800
And at the same time, the 
Innovations in healthcare 

393
00:21:28,900 --> 00:21:32,700
Particularly sterilization that 
happened in the late 19th 

394
00:21:32,700 --> 00:21:35,200
century and the introduction of 
antibiotics, which people tend 

395
00:21:35,200 --> 00:21:38,600
to forget, kill, you know, you 
had a very high probability of 

396
00:21:38,600 --> 00:21:41,400
dying of some random disease 
when you hit your mid-30s 

397
00:21:41,400 --> 00:21:43,700
because you contracted 
tuberculosis or whatever, right?

398
00:21:43,700 --> 00:21:48,700
Antibiotics took all that away. 
And so we had a baby, boom. 

399
00:21:48,700 --> 00:21:54,400
It became the boomer generation 
on a global basis because we had

400
00:21:54,400 --> 00:21:57,000
more kids and those kids 
survived. 

401
00:21:57,000 --> 00:22:01,500
So, we ended up having this This
fantastic shift in population 

402
00:22:01,700 --> 00:22:04,200
that happened, not just in the 
United States but across the 

403
00:22:04,200 --> 00:22:07,200
developed world and then we 
further drove those Dynamics 

404
00:22:07,200 --> 00:22:10,400
through the Green Revolution. 
Then in a malthusian framework 

405
00:22:10,400 --> 00:22:14,700
lowered, the cost of feeding a 
family raised in comes around 

406
00:22:14,700 --> 00:22:17,100
the developing world and created
conditions under which 

407
00:22:17,100 --> 00:22:20,400
populations exploded, right? 
So, if you just think about that

408
00:22:20,400 --> 00:22:24,600
in your simplest economic 
textbook, that outward shift in 

409
00:22:24,600 --> 00:22:29,200
population that outward shift in
economically active, Rules 

410
00:22:29,200 --> 00:22:32,700
because civil rights introduce 
women into the labor force. 

411
00:22:32,700 --> 00:22:35,000
The pill suddenly created 
conditions under which they 

412
00:22:35,000 --> 00:22:37,000
could maintain their own 
households and engage in 

413
00:22:37,000 --> 00:22:38,800
activity that they previously 
hadn't. 

414
00:22:38,800 --> 00:22:42,400
If you're a 22 year old woman 
and you want to have sex and you

415
00:22:42,400 --> 00:22:44,500
don't want your parents to see 
it because you're still living 

416
00:22:44,500 --> 00:22:46,500
at home, you want your own 
apartment, right? 

417
00:22:46,500 --> 00:22:48,500
That had never happened before 
in history. 

418
00:22:48,500 --> 00:22:51,900
So we have this fantastic 
outward shift in the aggregate 

419
00:22:51,900 --> 00:22:56,000
demand curve that it just never 
happened before in history, 

420
00:22:56,400 --> 00:22:58,100
right? 
And it was that outward shift in

421
00:22:58,100 --> 00:23:00,900
the aggregate demand. 
Man, curve the power, the rising

422
00:23:00,900 --> 00:23:06,200
prices of the 1960s and 1970s. 
That's what that inflation was 

423
00:23:06,200 --> 00:23:08,600
all about. 
What we're seeing this time 

424
00:23:08,600 --> 00:23:12,500
around is radically different. 
We effectively put the global 

425
00:23:12,500 --> 00:23:15,100
economy to sleep, with the 
exception of China. 

426
00:23:15,400 --> 00:23:18,500
We tried to effectively 
facilitate all the material 

427
00:23:18,500 --> 00:23:22,300
goods and, you know, durable 
products that people could 

428
00:23:22,300 --> 00:23:25,200
possibly want and try to get 
them through the two narrow 

429
00:23:25,200 --> 00:23:28,100
entrance points points of the 
Port of Los Angeles and the 

430
00:23:28,100 --> 00:23:30,500
point or two. 
Long Beach, right? 

431
00:23:30,800 --> 00:23:34,500
And we effectively tried to 
sustain this for a period of 

432
00:23:34,500 --> 00:23:37,300
time and what we're experiencing
now is something that you guys 

433
00:23:37,300 --> 00:23:39,400
are still young enough that you 
don't fully appreciate. 

434
00:23:39,400 --> 00:23:42,700
But you know, as you get older 
you go to bed. 

435
00:23:42,800 --> 00:23:45,600
You fall asleep, you wake up in 
the morning and you're well 

436
00:23:45,600 --> 00:23:48,600
rested, but then you go to get 
out of bed and oh my God, Like 

437
00:23:48,600 --> 00:23:51,100
You Creek and it hurts, and 
you've got arthritis. 

438
00:23:51,100 --> 00:23:53,400
And if you're smart, you'll 
stretch and you'll do various 

439
00:23:53,400 --> 00:23:56,400
things to get your body moving. 
What we're going through right 

440
00:23:56,400 --> 00:23:59,900
now or the frictional aspects of
that getting out of Abed the 

441
00:23:59,900 --> 00:24:04,100
stretching Dynamics, the 
rebuilding of Global Supply 

442
00:24:04,100 --> 00:24:07,200
chains and that's showing up a 
shortages, all over the place. 

443
00:24:07,400 --> 00:24:11,100
What's frightening about what's 
happening right now is that the 

444
00:24:11,100 --> 00:24:14,900
response to those shortages, 
which are a byproduct of a 

445
00:24:14,900 --> 00:24:19,400
poorly planned entrance and exit
from that overnight nap, 

446
00:24:19,400 --> 00:24:22,300
effectively that going to bed 
for the global economy. 

447
00:24:22,800 --> 00:24:27,100
We're beginning to see 
policymakers decide that they 

448
00:24:27,100 --> 00:24:28,800
either have to accommodate it by
doing. 

449
00:24:28,900 --> 00:24:33,400
Big things like removing the 
gasoline tax which lowers the 

450
00:24:33,400 --> 00:24:37,600
effective price of gasoline 
allowing demand to be sustained.

451
00:24:37,800 --> 00:24:40,000
At the same time, the supply is 
still challenged, right? 

452
00:24:40,000 --> 00:24:42,700
This the free market solution to
that is price of gasoline, goes 

453
00:24:42,700 --> 00:24:45,400
really high people cut back on 
the consumption of gasoline. 

454
00:24:45,700 --> 00:24:47,100
And guess what it resolves 
itself. 

455
00:24:47,100 --> 00:24:49,600
But at a higher price at the 
same time it stimulates Supply, 

456
00:24:49,600 --> 00:24:52,500
right? 
Instead, we're trying to smooth 

457
00:24:52,500 --> 00:24:57,200
this path in a variety of policy
choices that creates a really 

458
00:24:57,200 --> 00:25:01,300
interesting wrinkle where we 
Just subsidized developed Market

459
00:25:01,300 --> 00:25:05,000
consumption of gasoline and so 
we can complain about it as 

460
00:25:05,000 --> 00:25:07,600
Californians or Ben. 
Are you there in Southern 

461
00:25:07,600 --> 00:25:10,500
California as well? 
No I'm not an Illinois here in 

462
00:25:10,500 --> 00:25:11,300
Illinois. 
Okay. 

463
00:25:12,200 --> 00:25:15,600
Not none of us live in rational 
States but the the simple 

464
00:25:15,600 --> 00:25:19,000
reality is that we're 
subsidizing developed Market 

465
00:25:19,000 --> 00:25:22,900
consumption were all 
ridiculously rich on a relative 

466
00:25:22,900 --> 00:25:25,000
Global basis. 
Not within the United States 

467
00:25:25,000 --> 00:25:28,200
necessarily sound, I'm focused 
on but relative to elsewhere 

468
00:25:28,200 --> 00:25:30,400
around the world. 
If you tell us that, hey, guess 

469
00:25:30,400 --> 00:25:32,700
what, it's no problem. 
We're going to subsidize your 

470
00:25:32,700 --> 00:25:35,600
gasoline capacity that makes 
less available to the rest of 

471
00:25:35,608 --> 00:25:37,800
the world. 
And so I would just focus people

472
00:25:37,800 --> 00:25:41,000
on as much as it sucks to live 
in California and deal with five

473
00:25:41,000 --> 00:25:47,100
dollar plus gallon for gasoline.
Imagine being in Malawi, right? 

474
00:25:47,100 --> 00:25:51,000
Or who's Becca stand, where they
tried removing subsidies because

475
00:25:51,000 --> 00:25:54,700
it's going to drain the treasury
of Uzbekistan who's Becca Stan. 

476
00:25:54,700 --> 00:25:57,800
Generates a significant portion 
of its foreign currency by 

477
00:25:57,800 --> 00:26:01,300
exporting. 
Fossil fuels and has been forced

478
00:26:01,300 --> 00:26:04,200
to actually Retreat from its 
ability to earn hard currency in

479
00:26:04,200 --> 00:26:06,300
a global economy. 
That is largely shut down and 

480
00:26:06,300 --> 00:26:09,700
again as we are trying to 
restart it, they're being forced

481
00:26:09,700 --> 00:26:14,200
to service their domestic 
environment in a you know 

482
00:26:14,200 --> 00:26:16,200
preferred manner. 
That's what the that's what 

483
00:26:16,200 --> 00:26:18,800
subsidies are. 
We see this in the Middle East 

484
00:26:18,800 --> 00:26:22,400
for example if you're in a place
like Malawi you're not getting 

485
00:26:22,400 --> 00:26:23,800
gas. 
You're a farmer. 

486
00:26:23,800 --> 00:26:28,200
You can't get your crops to 
Market your a resident of a 

487
00:26:28,208 --> 00:26:30,400
major city. 
In Malawi, that relies on those 

488
00:26:30,400 --> 00:26:33,100
crops being brought to Market so
that you can feed your family, 

489
00:26:33,500 --> 00:26:36,300
you're going to starve. 
That is what is underway? 

490
00:26:36,300 --> 00:26:39,800
We here in the developed world 
are shielded and protected from.

491
00:26:39,800 --> 00:26:43,100
This is one of the incredible 
ironies of the nonsense around 

492
00:26:43,100 --> 00:26:45,700
the crypto of, you know, banking
the unbanked and helping people 

493
00:26:45,700 --> 00:26:47,900
around the world. 
You look at what's happening in 

494
00:26:47,900 --> 00:26:50,600
places like Malawi, or you look 
at what's happening in 

495
00:26:50,600 --> 00:26:54,800
Madagascar or you look at what's
happening in many of these very 

496
00:26:54,800 --> 00:26:57,800
poor regions around the world. 
We are literally going to see a 

497
00:26:57,800 --> 00:27:01,500
replay of the 1870s not from the
standpoint of a sustained, 

498
00:27:01,500 --> 00:27:04,500
inflation of the developed 
world, but from the standpoint 

499
00:27:04,500 --> 00:27:07,100
of the famines they brought, you
know, Sally Struthers to our 

500
00:27:07,100 --> 00:27:09,900
common, you know, mind. 
We're we're like watching people

501
00:27:09,900 --> 00:27:14,900
die in Ethiopia that is underway
right now, obviously. 

502
00:27:15,600 --> 00:27:18,100
And I think we're probably all 
on the same page with this. 

503
00:27:18,300 --> 00:27:21,600
I don't, I don't suspect. 
The cryptocurrency is the answer

504
00:27:21,600 --> 00:27:25,100
for this, but it also doesn't 
sound like you're necessarily 

505
00:27:25,300 --> 00:27:30,000
pessimistic about this. 
You're not one to be And the end

506
00:27:30,000 --> 00:27:34,600
is near Isis, I suppose. 
But I do want to understand what

507
00:27:34,600 --> 00:27:38,100
you think will be ultra, how 
this will ultimately play out, I

508
00:27:38,100 --> 00:27:41,100
guess. 
Well, so, all right, so first, I

509
00:27:41,108 --> 00:27:44,500
don't know that I could get much
more alarmist and saying people 

510
00:27:44,500 --> 00:27:47,100
are going to die, right? 
So like I just want to be clear.

511
00:27:47,100 --> 00:27:50,200
The fact that I'm not saying 
Caspian saying Bennett Tomlin 

512
00:27:50,200 --> 00:27:52,600
are going to die. 
May feel like I'm D escalating 

513
00:27:52,600 --> 00:27:55,300
the situation, but like I really
want to emphasize that we are 

514
00:27:55,300 --> 00:27:59,900
watching a human catastrophe 
unfold Beyond And the nonsense 

515
00:27:59,900 --> 00:28:04,100
of the pandemic and inevitably, 
it is the least privileged 

516
00:28:04,100 --> 00:28:07,000
around the world that are going 
to suffer through this. 

517
00:28:07,300 --> 00:28:10,000
The least privileged in the 
United States are suffering more

518
00:28:10,000 --> 00:28:12,300
than those who are among the 
most privileged that we consider

519
00:28:12,300 --> 00:28:15,600
all of us to be relatively 
privileged in that Dynamic. 

520
00:28:15,600 --> 00:28:18,500
And so, you know, am I going to 
be frustrated when my kid comes 

521
00:28:18,500 --> 00:28:21,300
home and says, Hey Dad, I had, I
need a hundred bucks to fill up 

522
00:28:21,300 --> 00:28:24,100
the gas tank and the car. 
I'm not going to be happy about 

523
00:28:24,100 --> 00:28:26,600
it, but I'm also not going to 
panic. 

524
00:28:26,600 --> 00:28:28,200
Right? 
There are places around the 

525
00:28:28,200 --> 00:28:31,800
world where people You're 
panicking in terms of crypto, 

526
00:28:31,800 --> 00:28:33,500
like, I just want to emphasize 
very broadly. 

527
00:28:33,500 --> 00:28:37,900
I am super supportive of the 
broader implications of the 

528
00:28:37,900 --> 00:28:42,800
introduction of secure, digital 
transmission of value, the 

529
00:28:42,800 --> 00:28:47,300
Dynamics of transparency that 
could potentially be introduced 

530
00:28:47,900 --> 00:28:51,800
the ability to introduce smart 
contracts and a manner that 

531
00:28:52,100 --> 00:28:56,300
takes products, that sounds 
super mysterious things like a 

532
00:28:56,300 --> 00:28:59,800
structured, note or RMB. 
Yes, you know, Structured 

533
00:28:59,800 --> 00:29:03,000
Products, that take millions of 
mortgages and slice them and 

534
00:29:03,000 --> 00:29:06,000
dice them to create products 
that have unique stochastic 

535
00:29:06,000 --> 00:29:10,200
characteristics, that truly can 
be democratized through the 

536
00:29:10,200 --> 00:29:12,900
Dynamics of digitally native 
Securities. 

537
00:29:13,000 --> 00:29:15,100
And I like, I really want to 
emphasize. 

538
00:29:15,100 --> 00:29:18,100
I couldn't be more excited, I 
wish I was 20 years younger so 

539
00:29:18,100 --> 00:29:22,000
that I could spend a significant
fraction of my time not managing

540
00:29:22,000 --> 00:29:26,200
traditional aspects of business,
but exploring the potential to 

541
00:29:26,200 --> 00:29:28,700
do that in this new world of 
digital. 

542
00:29:28,900 --> 00:29:31,800
Julie native Securities right 
like that would be an amazing 

543
00:29:31,800 --> 00:29:36,700
opportunity, it's coming, it's 
super, super important, but with

544
00:29:36,700 --> 00:29:42,000
that said, that's going to 
happen in digitally native 

545
00:29:42,000 --> 00:29:44,700
Securities and I want to 
emphasize why I'm saying the 

546
00:29:44,700 --> 00:29:47,900
word security is because it's a 
regulated business. 

547
00:29:48,100 --> 00:29:51,200
It is a regulated business. 
And you reason you hear a crypto

548
00:29:51,200 --> 00:29:53,000
proponents running around 
saying, well they're not 

549
00:29:53,000 --> 00:29:55,000
Securities and they should be 
treated differently and we 

550
00:29:55,000 --> 00:29:58,600
should have, you know, different
rules for tokens and and I see 

551
00:29:58,800 --> 00:30:02,700
you should it's because they 
don't want the restrictions on 

552
00:30:02,700 --> 00:30:05,500
getting any scam across that 
they possibly want. 

553
00:30:05,500 --> 00:30:08,800
Some of them again, are doing it
for the best possible 

554
00:30:08,800 --> 00:30:11,900
intentions. 
I genuinely believe that our 

555
00:30:11,900 --> 00:30:14,600
project is going to change the 
world and we want to be able to 

556
00:30:14,600 --> 00:30:17,100
access funding. 
And isn't it frustrating that we

557
00:30:17,100 --> 00:30:19,600
have to follow the rules like 
everybody else had to follow? 

558
00:30:19,700 --> 00:30:21,800
Like that's like the commercial 
driver's license. 

559
00:30:21,800 --> 00:30:23,900
Dynamic. 
You want to raise money for a 

560
00:30:23,900 --> 00:30:28,200
business opportunity. 
There Are Rules around it, are 

561
00:30:28,200 --> 00:30:30,500
the rules. 
Perfect are the rules overly 

562
00:30:30,500 --> 00:30:33,300
intrusive, they're definitely 
not perfect and there possibly 

563
00:30:33,300 --> 00:30:35,900
too intrusive but deciding that 
you're going to engage in 

564
00:30:35,900 --> 00:30:39,900
criminality because you don't 
like the rules that changes the 

565
00:30:39,900 --> 00:30:43,300
parameter and introductory. 
Introduces, this risk that we 

566
00:30:43,308 --> 00:30:47,500
started at the very beginning of
governments spooling up. 

567
00:30:47,800 --> 00:30:51,400
Turning the battleships saying 
here's a threat and you're 

568
00:30:51,400 --> 00:30:53,400
hearing it, the FBI is targeting
it. 

569
00:30:53,400 --> 00:30:56,300
Now the Department of Defense is
targeting it now the state 

570
00:30:56,300 --> 00:30:59,600
department is targeting it. 
Now the These Regulators are 

571
00:30:59,600 --> 00:31:01,700
targeting it now. 
Guess what? 

572
00:31:01,700 --> 00:31:04,700
Guys, you stood up and you 
shouted from the top of your of 

573
00:31:04,700 --> 00:31:06,800
your lungs. 
You can't stop us. 

574
00:31:07,200 --> 00:31:09,400
Here they come. 
So sorry, let me just 

575
00:31:09,600 --> 00:31:12,500
re-emphasize this part though. 
Obviously, we have inflation 

576
00:31:12,500 --> 00:31:15,200
here, it has arrived. 
Everybody's experiencing it. 

577
00:31:15,200 --> 00:31:18,100
Like you said, there's places in
the world where that is life and

578
00:31:18,100 --> 00:31:19,700
death. 
It isn't life and death here. 

579
00:31:19,800 --> 00:31:22,700
How does that play out over the 
negatives on how we respond, 

580
00:31:22,700 --> 00:31:24,900
right? 
And and unfortunately what's 

581
00:31:24,900 --> 00:31:28,000
happening is that the Federal 
Reserve feels backed into a 

582
00:31:28,008 --> 00:31:31,100
corner because Adopted, the 
language of, we believe this is 

583
00:31:31,100 --> 00:31:33,500
transitory. 
We believe that this is people 

584
00:31:33,500 --> 00:31:36,600
waking up overnight dealing with
the arthritic conditions of 

585
00:31:36,600 --> 00:31:39,500
trying to restart this. 
Give me some stretching, it's 

586
00:31:39,500 --> 00:31:42,000
going to be slower to get itself
back up, etcetera. 

587
00:31:42,400 --> 00:31:45,100
And did we make our condition 
worse by? 

588
00:31:45,100 --> 00:31:49,100
Keeping financing rates. 
Very low enabling excess demand 

589
00:31:49,300 --> 00:31:53,000
punching through a crazy amount 
of stimulus into the system and 

590
00:31:53,000 --> 00:31:55,500
did much of that stimulus. 
We're going to pour see these 

591
00:31:55,500 --> 00:31:58,600
headlines emerge where there was
fraud and there were those who 

592
00:31:58,700 --> 00:32:01,400
Closest to the money that were 
able to get it first and all 

593
00:32:01,400 --> 00:32:05,200
sorts of bad behavior occurred 
as always does, right? 

594
00:32:05,200 --> 00:32:09,400
But what we're engaged in is is 
that we've gotten to the point 

595
00:32:09,400 --> 00:32:13,700
that it is unacceptable for the 
central bank's to sit there and 

596
00:32:13,700 --> 00:32:17,100
not do something. 
They can't say the near the 

597
00:32:17,100 --> 00:32:21,200
transitory narrative has been 
lost right where that transitory

598
00:32:21,200 --> 00:32:23,500
narrative. 
I think people again, I'm never 

599
00:32:23,500 --> 00:32:26,400
entirely sure if it was willful 
misunderstanding or if it's 

600
00:32:26,400 --> 00:32:30,100
intentional, the transitory 
narrative was To inflationary 

601
00:32:30,100 --> 00:32:32,700
rates, right? 
So the seven and a half percent 

602
00:32:32,700 --> 00:32:35,900
that we're seeing in my view 
very clearly should naturally 

603
00:32:35,900 --> 00:32:40,800
Retreat back towards below 2% 
the conditions of the 1970s that

604
00:32:40,800 --> 00:32:43,700
outward shift in the population 
that outward shift in aggregate 

605
00:32:43,700 --> 00:32:45,200
demand think just don't exist. 
Today. 

606
00:32:45,200 --> 00:32:48,200
People are over-indebted, the 
population is not growing 

607
00:32:48,200 --> 00:32:49,900
rapidly. 
The labor force is not growing 

608
00:32:49,900 --> 00:32:51,900
rapidly. 
The population is older, which 

609
00:32:51,900 --> 00:32:54,600
tends not to use credit to 
nearly the same degree. 

610
00:32:54,600 --> 00:32:57,300
Like all of these Dynamics are 
radically different than what 

611
00:32:57,300 --> 00:33:00,000
you had in the 1970s. 
So I just don't see the 

612
00:33:00,000 --> 00:33:03,700
sustained inflation. 
But the great irony is, is it 

613
00:33:03,700 --> 00:33:07,900
has been sustained a long enough
that the central bankers and 

614
00:33:07,900 --> 00:33:12,500
policymakers around the world 
are now undertaking, what might 

615
00:33:12,500 --> 00:33:16,500
actually be the single greatest 
austerity measures we've ever 

616
00:33:16,500 --> 00:33:18,700
seen. 
In our lifetimes, the 2011 

617
00:33:18,700 --> 00:33:22,700
Dynamics around, the Euro crisis
pale in comparison to what I 

618
00:33:22,700 --> 00:33:27,500
think we're beginning to see 
here and that to me, says that 

619
00:33:27,500 --> 00:33:31,600
not only are we Facing 
transitory inflation but we're 

620
00:33:31,600 --> 00:33:36,100
likely to see a rapid rapid 
inward shift in aggregate demand

621
00:33:36,100 --> 00:33:41,500
with the loss of credit that is 
going to very meaningfully 

622
00:33:41,500 --> 00:33:46,000
affect sectors of the economy 
that we tend to take for 

623
00:33:46,000 --> 00:33:47,900
granted. 
And I think it's very scary. 

624
00:33:47,900 --> 00:33:51,100
What we're engaged and and the 
great irony, of course and 

625
00:33:51,100 --> 00:33:53,200
others on Twitter, do a better 
job of doing this? 

626
00:33:53,200 --> 00:33:55,000
Like, Joey Paula Tano is all 
over this. 

627
00:33:55,300 --> 00:33:59,000
You know the only mechanism that
exist for the FED to To use 

628
00:33:59,000 --> 00:34:03,000
interest rate policy to Target 
aggregate demand is to crash the

629
00:34:03,000 --> 00:34:05,000
economy. 
That's all they can do. 

630
00:34:05,300 --> 00:34:07,600
They can't like raise interest 
rates and suddenly oil 

631
00:34:07,600 --> 00:34:10,100
production goes up. 
Like it does that doesn't work 

632
00:34:10,100 --> 00:34:12,000
that way. 
So we're asking them. 

633
00:34:12,000 --> 00:34:14,300
You know you can't raise 
interest rates and suddenly the 

634
00:34:14,300 --> 00:34:17,199
ports of Los Angeles clear? 
Because we got more productive 

635
00:34:17,199 --> 00:34:18,900
at it, right? 
Like that's just not the way. 

636
00:34:18,900 --> 00:34:22,600
The system works, the tools that
were using are like, it's like a

637
00:34:22,607 --> 00:34:26,800
machete to do surgery, right? 
Like, can you cut out the tumor?

638
00:34:26,900 --> 00:34:28,100
Yeah. 
But you're going to take their 

639
00:34:28,100 --> 00:34:31,300
liver. 
It, you know, we're we're making

640
00:34:31,300 --> 00:34:33,100
a terrible mistake, in my 
opinion. 

641
00:34:33,199 --> 00:34:37,400
And part of it is understandably
being driven by the fact that 

642
00:34:37,400 --> 00:34:39,600
trust, in institutions has 
collapsed. 

643
00:34:40,000 --> 00:34:44,100
So, in an ideal world where you 
had control over the Federal 

644
00:34:44,100 --> 00:34:48,699
Reserve policy, what would be 
the path without the mistake 

645
00:34:48,699 --> 00:34:50,000
that you think they could 
follow? 

646
00:34:50,500 --> 00:34:52,900
Well, fortunately, I am in 
control of Federal Reserve 

647
00:34:52,900 --> 00:34:56,000
policy as as all of the Bitcoin 
community grows. 

648
00:34:56,000 --> 00:34:59,100
I also run the regulators and a 
largely responsible Responsible 

649
00:34:59,100 --> 00:35:02,400
for enforcement action busy day.
Let's pretend that's not true, 

650
00:35:02,400 --> 00:35:05,100
and I'm limited to control of 
the FED, right? 

651
00:35:05,100 --> 00:35:07,600
The point that I would make is 
is that what we are? 

652
00:35:07,600 --> 00:35:12,700
Actually facing is a temporary 
phenomenon and as painful as it 

653
00:35:12,700 --> 00:35:17,700
is in many ways, the right thing
to do is not change, the broad 

654
00:35:17,700 --> 00:35:21,000
pricing of money across the 
system and certainly not to 

655
00:35:21,000 --> 00:35:24,100
engage in changing multiple 
variables at the same time, 

656
00:35:24,100 --> 00:35:25,000
right? 
If you want to shrink the 

657
00:35:25,000 --> 00:35:27,500
balance sheet, fine, give that a
shot. 

658
00:35:27,600 --> 00:35:30,200
Don't hike interest rates to the
Your time, I let us, let's try 

659
00:35:30,200 --> 00:35:32,600
to isolate some variables for a 
change, right? 

660
00:35:32,600 --> 00:35:35,600
Let's not assume that we know 
exactly what we're doing here. 

661
00:35:35,900 --> 00:35:38,900
I just got off a call with Grant
Williams and Bill. 

662
00:35:38,900 --> 00:35:43,000
Fleckenstein and Bill was very 
accurately bringing up this 

663
00:35:43,000 --> 00:35:46,300
issue of Central Bank. 
Hubris right now, I happen to 

664
00:35:46,300 --> 00:35:51,300
think that it's less hubris and 
more incompetence but the 

665
00:35:51,300 --> 00:35:54,400
broader point that I would just 
raise is like if you're trying 

666
00:35:54,400 --> 00:35:57,000
to change something you change 
one thing at a time, you don't 

667
00:35:57,000 --> 00:36:00,100
like turn all the dials on. 
You're on your stereo system 

668
00:36:00,100 --> 00:36:02,900
when you're trying to tune it 
into a particular radio system 

669
00:36:02,900 --> 00:36:04,900
or set a particular tone. 
That's so like, you don't change

670
00:36:04,900 --> 00:36:06,900
things. 
All of the same time you 

671
00:36:06,900 --> 00:36:09,700
isolate. 
We've shown no desire to do that

672
00:36:09,700 --> 00:36:12,700
and I feel the life of me. 
I can't figure out why the, the 

673
00:36:12,700 --> 00:36:17,200
second thing that I would 
suggest is that there are non 

674
00:36:17,200 --> 00:36:22,300
interest rate measures that you 
can engage in that are far more 

675
00:36:22,300 --> 00:36:27,400
effective. 
So, for example, if your concern

676
00:36:27,400 --> 00:36:32,300
is that there is a A shortage of
toilet paper or a shortage of 

677
00:36:32,300 --> 00:36:36,100
particular products, then you as
the government can do exactly 

678
00:36:36,100 --> 00:36:40,400
what you would do in times of 
War, which is to suspend things 

679
00:36:40,400 --> 00:36:43,100
like a patent and say, you know 
what, you're going to have to 

680
00:36:43,100 --> 00:36:45,200
license. 
Somebody new to do this because 

681
00:36:45,200 --> 00:36:47,200
you've not met the capacity 
needs. 

682
00:36:47,300 --> 00:36:51,900
You can encourage a longer-term 
solution, recognizing that there

683
00:36:51,900 --> 00:36:54,600
are short-term problems 
associated with it, you want to 

684
00:36:54,607 --> 00:36:58,500
keep cars on the road and reduce
pressure on used autos suspend. 

685
00:36:58,800 --> 00:37:01,300
Auto emission standards for two 
years, right? 

686
00:37:01,300 --> 00:37:03,500
So that you're not yanking cars 
off, because guess what? 

687
00:37:03,500 --> 00:37:06,000
They have slightly more 
particulate matter coming out of

688
00:37:06,008 --> 00:37:07,900
the tailpipe. 
But again, that's not the 

689
00:37:07,900 --> 00:37:10,000
Federal Reserve. 
So like what you're basically 

690
00:37:10,000 --> 00:37:13,400
saying is, you know, what can 
the waiter do to solve the 

691
00:37:13,400 --> 00:37:16,000
problems in the kitchen, 
nothing, right. 

692
00:37:16,000 --> 00:37:18,500
It can go back and yell a little
bit and he can tell you yelled 

693
00:37:18,500 --> 00:37:20,400
at the chef and you can take 
something, you know, you can 

694
00:37:20,400 --> 00:37:24,300
subsidize your meal but he can 
actually cook Right. 

695
00:37:24,300 --> 00:37:27,200
He can't really speed up the 
kitchen in any meaningful way 

696
00:37:27,700 --> 00:37:31,500
and that sort of humility to me 
is what's lacking, right? 

697
00:37:31,500 --> 00:37:34,300
It's this need to stand up and 
say, hey, we're going to do 

698
00:37:34,300 --> 00:37:37,000
something and again, it's an 
Institutional framework that is 

699
00:37:37,000 --> 00:37:39,800
completely understandable. 
Because if Jay Powell were to 

700
00:37:39,800 --> 00:37:41,900
stand up and say, you know what,
I'm really sorry. 

701
00:37:42,200 --> 00:37:47,700
I know this feels permanent, I 
know this feels disastrous but 

702
00:37:47,700 --> 00:37:49,700
we have to approach this from a 
degree of humility. 

703
00:37:49,700 --> 00:37:53,600
There's only so much we can do 
if they were to say that. 

704
00:37:53,800 --> 00:37:57,200
Most Americans be like, wow, he 
must have been taken over by 

705
00:37:57,200 --> 00:37:59,500
aliens, but that was remarkably 
prudent. 

706
00:37:59,800 --> 00:38:03,200
And about 15 minutes later he'd 
be fired and replaced. 

707
00:38:03,200 --> 00:38:06,000
By charlatans is like no I know 
the solution, right? 

708
00:38:06,000 --> 00:38:09,100
Because it's a politically 
unacceptable State, that's part 

709
00:38:09,100 --> 00:38:12,100
of the challenge that exists 
right now is nobody can stand up

710
00:38:12,100 --> 00:38:14,600
and say, there's not really that
much we can do about it. 

711
00:38:14,700 --> 00:38:17,000
I'm sorry. 
I know it's uncomfortable. 

712
00:38:17,400 --> 00:38:19,600
We did the best we could to 
smooth ourselves through this. 

713
00:38:19,600 --> 00:38:21,800
Did we make mistakes? 
Absolutely. 

714
00:38:22,100 --> 00:38:25,100
Like, I honestly believe that 
most Most Americans would really

715
00:38:25,100 --> 00:38:28,800
like to hear that. 
But I also know that trial 

716
00:38:28,800 --> 00:38:34,100
lawyers would love it because 
every like trial lawyer on the 

717
00:38:34,100 --> 00:38:37,400
planet would start a civil or 
criminal lawsuit against, you 

718
00:38:37,408 --> 00:38:40,600
know, if Cuomo came form is 
like, you know what, like, I 

719
00:38:41,000 --> 00:38:43,500
made the best judgment available
to me at the time, but in 

720
00:38:43,500 --> 00:38:46,300
hindsight, it clearly was a 
mistake to put old people into 

721
00:38:46,300 --> 00:38:48,300
nursing homes, with covid. 
Guess what? 

722
00:38:48,300 --> 00:38:52,200
He is getting sued forever, 
right? 

723
00:38:52,200 --> 00:38:55,900
It's like, it's never going. 
That's the society that we live 

724
00:38:55,900 --> 00:38:57,400
in. 
And so we're all very focused, 

725
00:38:57,400 --> 00:38:59,600
like the FED is screwing things 
up. 

726
00:38:59,700 --> 00:39:01,600
The politicians are screwing 
things up. 

727
00:39:02,000 --> 00:39:05,600
The really sad sober message. 
I have to send is we put him in 

728
00:39:05,600 --> 00:39:08,200
office, all right, we're 
screwing up. 

729
00:39:08,200 --> 00:39:11,700
We as a society need to do a 
much better job and that 

730
00:39:11,700 --> 00:39:14,400
involves every single one of us.
And I know it's hard. 

731
00:39:14,500 --> 00:39:17,500
And I know it's lazy and I know,
I'm sitting from a position of 

732
00:39:17,500 --> 00:39:21,100
privilege relative to 99.9% of 
the audience and offering a 

733
00:39:21,107 --> 00:39:22,900
lecture that nobody wants to 
hear. 

734
00:39:23,200 --> 00:39:26,000
They're like me. 
We have to do better. 

735
00:39:26,500 --> 00:39:29,700
This is a this is a little bit 
off topic and I hope I'm not 

736
00:39:29,700 --> 00:39:33,900
overstepping my bounds here but 
you and last bear standing had 

737
00:39:33,900 --> 00:39:38,300
some really great takes whenever
Grand was deep in the muck but 

738
00:39:38,300 --> 00:39:40,500
they're still deep in the muck 
yesterday. 

739
00:39:41,000 --> 00:39:45,100
I think it was trying to court 
freezes 157 million of 

740
00:39:45,100 --> 00:39:47,600
evergrande assets over 
misconstruction payments. 

741
00:39:47,700 --> 00:39:51,000
I know where this is, this is 
far removed from everything else

742
00:39:51,000 --> 00:39:53,300
we've talked about, but it does 
feel. 

743
00:39:53,800 --> 00:39:57,800
Terry when I was in China years 
and years ago, I showed a friend

744
00:39:58,200 --> 00:40:00,700
The Big Short. 
And they were like, oh my God, 

745
00:40:01,400 --> 00:40:04,000
it's like here. 
And I was like, yeah, and so 

746
00:40:04,000 --> 00:40:05,900
this feels like that moment but 
maybe it isn't. 

747
00:40:05,900 --> 00:40:08,400
I don't know. 
I'd love, I just love to hear 

748
00:40:08,400 --> 00:40:11,100
what you're thinking these days 
after some of the drama has 

749
00:40:11,100 --> 00:40:14,200
subsided for now. 
Well, I think that's, you know, 

750
00:40:14,200 --> 00:40:17,000
again, the great irony and 
again, I'm repeating some of the

751
00:40:17,000 --> 00:40:20,400
lines from my last discussion, 
but when you're constantly 

752
00:40:20,400 --> 00:40:24,300
fighting fires and putting out 
fires right, There's this 

753
00:40:24,300 --> 00:40:27,800
overwhelming desire to 
occasionally just say oh thank 

754
00:40:27,800 --> 00:40:29,400
God. 
I get an evening off. 

755
00:40:29,400 --> 00:40:31,200
Right? 
Like, you know, out my good 

756
00:40:31,200 --> 00:40:33,100
friend Alex curve. 
It's just recently wrote a book 

757
00:40:33,100 --> 00:40:36,300
called The trades of March that 
literally like walks through the

758
00:40:36,300 --> 00:40:39,700
internal chats, from his 
trading, activity from March or 

759
00:40:39,707 --> 00:40:42,000
2020 which he navigated quite 
successfully. 

760
00:40:42,000 --> 00:40:44,600
And and it's a phenomenal book 
called The trades of March. 

761
00:40:44,600 --> 00:40:49,800
I encourage anyone who's at all 
interested in in trading to read

762
00:40:49,800 --> 00:40:53,600
that book and the same time Alex
collapsed on his bathroom floor.

763
00:40:54,100 --> 00:40:57,700
Passed out in his wife had to 
call the doctor's right because 

764
00:40:58,100 --> 00:41:00,600
while he's navigating this 
extraordinarily, well he's like 

765
00:41:00,600 --> 00:41:03,500
just physically exhausted. 
The stress of not getting enough

766
00:41:03,500 --> 00:41:06,100
sleep, everything else, the 
personal Dynamics, right? 

767
00:41:06,100 --> 00:41:08,900
Like everyone wants to imagine 
hedge fund managers or the 

768
00:41:08,900 --> 00:41:12,000
Masters of the Universe. 
Alex has two kids and a wife, 

769
00:41:12,300 --> 00:41:13,800
and he's dealing with a global 
pandemic. 

770
00:41:13,800 --> 00:41:15,800
And his kids are no longer in 
school. 

771
00:41:15,800 --> 00:41:18,400
And like, are they going to get 
deathly ill and they all going 

772
00:41:18,400 --> 00:41:20,700
to die of covid, all the stuff 
that everyone else is dealing 

773
00:41:20,700 --> 00:41:23,300
with and at the same time, he's 
trying to trade on a 24-hour 

774
00:41:23,300 --> 00:41:24,200
schedule. 
Jewel, right? 

775
00:41:24,200 --> 00:41:27,100
So like, and again, the world's 
smallest violin is now playing 

776
00:41:27,100 --> 00:41:28,300
for a hedge fund manager. 
Right? 

777
00:41:28,300 --> 00:41:33,800
I emphasize this but that's the 
same stuff that Jerome Powell is

778
00:41:33,800 --> 00:41:37,100
dealing with when he's trying to
navigate that if you think he 

779
00:41:37,100 --> 00:41:41,300
went to bed at 9:00 after, you 
know, casually drinking his 

780
00:41:41,300 --> 00:41:44,900
chamomile tea and then woke up 
at 7:00 in the morning. 

781
00:41:44,900 --> 00:41:47,600
And, you know, satin had orange 
juice and toast with his wife. 

782
00:41:47,600 --> 00:41:50,000
Like that was not what was 
happening to Jerome. 

783
00:41:50,000 --> 00:41:53,400
Powell in that time period, he 
was frantically trying to solve.

784
00:41:53,900 --> 00:41:58,200
So that people were able to pay 
their bills deal with that those

785
00:41:58,200 --> 00:42:01,200
Dynamics, right? 
And the minute things start to 

786
00:42:01,200 --> 00:42:04,300
calm down, people start 
screaming at them, like, oh, you

787
00:42:04,300 --> 00:42:06,200
totally screwed this up and you 
did, he should have done this 

788
00:42:06,200 --> 00:42:08,700
better and etcetera, etcetera. 
And like, there's this 

789
00:42:08,700 --> 00:42:12,600
overwhelming, desire. 
Anyone who's been a parent or, 

790
00:42:12,600 --> 00:42:14,400
you know, has had to deal with 
this. 

791
00:42:14,500 --> 00:42:16,800
There is a point at which you're
just like man could I just have 

792
00:42:16,800 --> 00:42:20,500
one night where I don't have to 
deal with some of this stuff 

793
00:42:20,600 --> 00:42:23,600
that temptation is somewhat 
overwhelming? 

794
00:42:23,700 --> 00:42:26,100
Being from a regulatory 
standpoint because when things 

795
00:42:26,100 --> 00:42:29,900
start going well, okay, now I 
get to take that vacation. 

796
00:42:29,900 --> 00:42:33,900
Now, I get to, you know, do the 
things that I feel that I am 

797
00:42:33,900 --> 00:42:37,300
entitled to as a relatively 
affluent successful member of 

798
00:42:37,300 --> 00:42:41,100
our society that people seem to 
think is completely unreasonable

799
00:42:41,100 --> 00:42:42,900
for me to do. 
I mean let's let's be clear. 

800
00:42:42,900 --> 00:42:46,500
Jerome Powell is a cent, a 
millionaire And We complain when

801
00:42:46,500 --> 00:42:48,800
he goes on vacation. 
Just think about that for a 

802
00:42:48,808 --> 00:42:51,500
second, right? 
Like if we had a hundred million

803
00:42:51,500 --> 00:42:55,400
dollars, my guess is we'd like 
to go Vacations to, right? 

804
00:42:56,400 --> 00:42:58,300
Admittedly is a public servant 
etcetera. 

805
00:42:58,300 --> 00:43:00,300
I'm not an apologist for the 
fed. 

806
00:43:00,300 --> 00:43:03,000
I'm not an apologist for Jerome 
Powell, but like we have 

807
00:43:03,000 --> 00:43:07,600
ridiculously high standards. 
Unreasonable standards that we 

808
00:43:07,600 --> 00:43:10,800
apply. 
I would argue unfairly, they are

809
00:43:10,800 --> 00:43:13,000
doing their best. 
They're being asked to do too, 

810
00:43:13,000 --> 00:43:15,700
large of a job, that is why. 
When you asked me, what would I 

811
00:43:15,700 --> 00:43:18,200
do? 
Is the fed, the answer is, say 

812
00:43:18,200 --> 00:43:21,600
to you honestly, there are 
things I can fix and there's 

813
00:43:21,600 --> 00:43:24,200
things I can't and the vast. 
Majority of things you're going 

814
00:43:24,207 --> 00:43:27,600
to ask me to do, all I can do is
screw it up worse, right? 

815
00:43:27,600 --> 00:43:30,500
Like, I can put a bandage on it,
but unless we actually get in 

816
00:43:30,500 --> 00:43:34,100
there with Bacitracin and cetera
and clean it up, and you're 

817
00:43:34,100 --> 00:43:37,900
going to develop gangrene. 
So let's actually make the hard 

818
00:43:37,900 --> 00:43:39,700
choices. 
Let's deal with etcetera, 

819
00:43:39,700 --> 00:43:42,900
because that's politically 
unacceptable, we backed 

820
00:43:42,900 --> 00:43:45,700
ourselves into this corner, and 
it's also part of the reason why

821
00:43:45,700 --> 00:43:48,900
you see the appeal of the crypto
Dynamics, right? 

822
00:43:48,908 --> 00:43:52,600
Because every crypto fraud on 
the planet is out there saying, 

823
00:43:52,600 --> 00:43:55,000
here is the solution. 
And right from my mom's 

824
00:43:55,000 --> 00:43:58,000
basement. 
I've figured out the secrets of,

825
00:43:58,000 --> 00:44:01,000
you know, Global finance and 
it's also totally clear. 

826
00:44:01,400 --> 00:44:05,300
That's just, it's just not true.
What effect do you think the 

827
00:44:05,500 --> 00:44:10,600
increase in passive investing 
and indexing has had on the 

828
00:44:10,600 --> 00:44:14,800
market at large? 
So, is it going to be surprised 

829
00:44:14,800 --> 00:44:16,800
but none at all really? 
No, I'm joking. 

830
00:44:18,600 --> 00:44:22,800
So for your listeners are 
probably less exposed to my 

831
00:44:23,600 --> 00:44:27,100
Under traditional Finance 
theories, those few who are turn

832
00:44:27,100 --> 00:44:30,500
it tuning in, to listen, to me 
specifically, may be familiar 

833
00:44:30,500 --> 00:44:33,900
with it, but just, just very 
quickly what I'm really well 

834
00:44:33,900 --> 00:44:37,400
known for is the work that I've 
done on the impact of passive 

835
00:44:37,400 --> 00:44:40,500
and systematic investing in 
traditional financial markets. 

836
00:44:40,500 --> 00:44:43,100
So things like Vanguard 
BlackRock, Etc, where you're 

837
00:44:43,100 --> 00:44:45,700
buying an index fund. 
The most important thing for 

838
00:44:45,700 --> 00:44:48,900
people to understand is that a 
market doesn't represent 

839
00:44:48,900 --> 00:44:51,200
information. 
It represents transactions. 

840
00:44:51,500 --> 00:44:55,300
So what you're seeing when you 
look at it, Screen for the price

841
00:44:55,300 --> 00:45:01,700
of Apple, is inevitably whatever
the last transaction was and 

842
00:45:01,700 --> 00:45:04,500
potentially what the bid and the
ask our that are effectively 

843
00:45:04,500 --> 00:45:08,600
people waiting to come together 
and transact right across those 

844
00:45:08,600 --> 00:45:10,800
two. 
When you introduce passive 

845
00:45:10,800 --> 00:45:15,000
players, they're not actually 
passive because the definition 

846
00:45:15,000 --> 00:45:19,600
of passive requires you to never
transact and Vanguard and 

847
00:45:19,600 --> 00:45:23,500
BlackRock transact every single 
day when you give them money. 

848
00:45:23,600 --> 00:45:26,400
For your 401k, they're forced to
transact. 

849
00:45:26,400 --> 00:45:30,800
What you've actually signed up 
for is an active manager who has

850
00:45:30,800 --> 00:45:35,600
the world's simplest algorithms.
Did you give me cash if so, then

851
00:45:35,600 --> 00:45:41,100
by, did you ask for cash, if so 
then sell, and what valuation, 

852
00:45:41,600 --> 00:45:44,700
doesn't matter how much cash 
should I hold? 

853
00:45:44,800 --> 00:45:47,200
None? 
Because that's not a choice that

854
00:45:47,200 --> 00:45:52,100
you have available to you. 
So that change in ruleset as it 

855
00:45:52,100 --> 00:45:56,600
has become more and more. 
And on my estimates about 44% of

856
00:45:56,600 --> 00:46:01,400
the US Equity markets are now 
passive about 27% of the u.s. 

857
00:46:01,400 --> 00:46:05,500
debt, markets are now passive in
their construction terms of 

858
00:46:05,700 --> 00:46:08,800
these super simple algorithms. 
Did you give me cash if so? 

859
00:46:08,800 --> 00:46:12,900
Then why did you ask for cash if
so then sell being the dominant 

860
00:46:13,300 --> 00:46:19,000
marginal player in the markets, 
if you simulate that change, if 

861
00:46:19,000 --> 00:46:23,500
you introduce that player who 
holds no cash and buys or sells 

862
00:46:23,600 --> 00:46:26,800
Cells simply on an instruction 
that's coming through with no 

863
00:46:26,800 --> 00:46:29,500
thought process to it. 
Other than that, underlying 

864
00:46:29,500 --> 00:46:33,100
Dynamic, you can get a sense for
how it affects markets. 

865
00:46:33,300 --> 00:46:37,600
My analysis is that the growth 
of passive has significantly 

866
00:46:37,600 --> 00:46:42,100
inflated valuations and it has 
created conditions of 

867
00:46:42,100 --> 00:46:45,700
illiquidity that cause the 
extraordinary price movements 

868
00:46:45,700 --> 00:46:48,400
that we're seeing in markets, 
ranging from things, like meme 

869
00:46:48,400 --> 00:46:53,500
socks, like AMC or GameStop to 
the somewhat ridiculous. 

870
00:46:53,700 --> 00:46:56,600
Behavior where Facebook can make
an earnings announcement into an

871
00:46:56,600 --> 00:47:00,500
ostensibly efficient market and 
see 200 billion dollars of 

872
00:47:00,500 --> 00:47:03,600
market cap wiped away in a 
matter of seconds, right? 

873
00:47:03,600 --> 00:47:07,600
Nothing like that has ever 
happened before and I very 

874
00:47:07,600 --> 00:47:11,600
strongly believe and the 
evidence is increasingly in my 

875
00:47:11,600 --> 00:47:13,500
favor. 
Whether those are academics who 

876
00:47:13,500 --> 00:47:16,500
are now coming out and 
supporting my work or whether 

877
00:47:16,500 --> 00:47:19,600
that is the empirical data that 
we're ultimately seeing the fact

878
00:47:19,600 --> 00:47:22,000
that we're within a few 
percentage points, nowhere close

879
00:47:22,000 --> 00:47:25,400
to a really deep bear. 
Market and we're seeing degrees 

880
00:47:25,400 --> 00:47:28,200
of liquidity, vanish and the 
market that we've never seen 

881
00:47:28,200 --> 00:47:30,500
before. 
We're actually, by the way, at 

882
00:47:30,500 --> 00:47:32,900
levels of liquidity in the US 
Equity markets that are 

883
00:47:32,900 --> 00:47:36,800
approaching the depths of March 
twenty twenty even as we're way 

884
00:47:36,800 --> 00:47:39,300
above those levels, right? 
Like people cannot transact 

885
00:47:39,300 --> 00:47:42,900
efficiently right now as part of
why you're seeing the extent of 

886
00:47:42,900 --> 00:47:45,800
the moves that you're seeing. 
So, I think the impact is quite 

887
00:47:45,800 --> 00:47:48,900
significant, and I think the 
evidence is very, very clear 

888
00:47:48,900 --> 00:47:52,700
that we have created a system 
that I like into driving a car 

889
00:47:52,700 --> 00:47:55,000
uphill with no Brakes right. 
Feels great. 

890
00:47:55,000 --> 00:47:57,900
As long as prices are going 
higher as they go down. 

891
00:47:58,400 --> 00:48:03,700
If the instructions are sent to 
the passive players cell, they 

892
00:48:03,700 --> 00:48:06,400
will not stop and say are you 
sure you want to do that? 

893
00:48:06,400 --> 00:48:09,900
Because prices seem pretty 
attractive now and that behavior

894
00:48:09,900 --> 00:48:13,600
in an illiquid Market is 
potentially quite catastrophic 

895
00:48:13,900 --> 00:48:18,500
God that. 
Yeah, there's Maybe this is just

896
00:48:18,500 --> 00:48:20,800
everyday in finance, but it sure
feels like there's a lot of 

897
00:48:20,800 --> 00:48:23,400
scary shit going going on right 
now. 

898
00:48:23,900 --> 00:48:27,600
There is an element of that is 
the description of every day and

899
00:48:27,600 --> 00:48:29,800
I want to emphasize this. 
And I've said this elsewhere and

900
00:48:29,800 --> 00:48:32,600
I'll repeat it till I'm, you 
know, to my dying breath, maybe 

901
00:48:32,600 --> 00:48:34,100
it'll be my deathbed quote, 
right? 

902
00:48:34,100 --> 00:48:37,400
The bearish case, always, sounds
more intelligent and part of the

903
00:48:37,408 --> 00:48:39,800
reason why is because we are 
wired for that. 

904
00:48:39,800 --> 00:48:41,600
If I come to you, and I say, hey
Cass, guess what? 

905
00:48:41,600 --> 00:48:43,400
There's berries in the bush over
there. 

906
00:48:43,900 --> 00:48:47,000
You you'd say, oh, that's 
important, I'm To make a mental 

907
00:48:47,000 --> 00:48:48,900
note of that. 
I've got a map of the territory.

908
00:48:48,900 --> 00:48:52,000
It has berries in that bush but 
I'm not hungry right now, but 

909
00:48:52,000 --> 00:48:53,300
I'm going to keep that in 
reserve. 

910
00:48:53,300 --> 00:48:56,200
Thank you for sharing that 
information with me like, but if

911
00:48:56,200 --> 00:48:59,300
I say to you, hey Cass, there's 
a saber-toothed tiger in that 

912
00:48:59,300 --> 00:49:02,200
bush. 
You will immediately react right

913
00:49:02,200 --> 00:49:07,000
now if we're in New York City 
and it's you know, 2022 or Los 

914
00:49:07,000 --> 00:49:10,100
Angeles and it's 2022. 
You'll almost immediately figure

915
00:49:10,100 --> 00:49:14,400
out that I'm joking with you. 
But if you were and I were on a,

916
00:49:14,800 --> 00:49:16,200
you know, Safari trip on the 
ice. 

917
00:49:16,400 --> 00:49:18,400
In Savannah, and we're walking 
along the way. 

918
00:49:18,400 --> 00:49:21,000
Holy shit cast. 
There is a lion in that bush. 

919
00:49:21,300 --> 00:49:24,300
You would freeze 
instantaneously, you would take 

920
00:49:24,300 --> 00:49:27,200
that as the most important 
possible message and I'll go a 

921
00:49:27,207 --> 00:49:29,800
step further and say, like I 
sound like a somewhat credible 

922
00:49:29,800 --> 00:49:31,500
guy. 
Your audience doesn't realize 

923
00:49:31,500 --> 00:49:33,800
that nothing I say should be 
taken, seriously. 

924
00:49:33,900 --> 00:49:36,600
But the point that I would make 
is, if I were to tell you that 

925
00:49:36,600 --> 00:49:40,700
there is actually a meteor storm
coming tomorrow with an 

926
00:49:40,700 --> 00:49:44,700
extraordinarily heightened risk 
of meteorites, striking the 

927
00:49:44,700 --> 00:49:48,100
Earth in the vicinity of Los, 
Angela's You by and large will 

928
00:49:48,100 --> 00:49:50,100
dismiss it. 
You may do a Google search to 

929
00:49:50,100 --> 00:49:53,500
see if I'm full of crap. 
If it turns out that I've 

930
00:49:53,500 --> 00:49:56,900
managed to see the Google page 
at the Google search pages with 

931
00:49:56,900 --> 00:50:00,300
meteor storm incoming, highly, 
you know, elevated risk of 

932
00:50:00,300 --> 00:50:03,200
meteorites striking, passengers 
or pedestrians? 

933
00:50:03,800 --> 00:50:05,900
I guarantee you, when you walk 
out of your house and explore, 

934
00:50:05,900 --> 00:50:09,000
your luck off on the sky 
guarantee it because that's how 

935
00:50:09,000 --> 00:50:11,300
we're wired as human beings. 
And so I just always want to 

936
00:50:11,300 --> 00:50:14,200
caution people that like the 
bearish case, always sounds more

937
00:50:14,200 --> 00:50:17,500
intelligent part of what is 
About what I'm saying also 

938
00:50:17,500 --> 00:50:20,600
though is because of the 
Dynamics of passive investing. 

939
00:50:20,600 --> 00:50:24,300
It's the same phenomenon that we
see with houghtaling in crypto, 

940
00:50:24,800 --> 00:50:26,100
right? 
What you're talking about 

941
00:50:26,100 --> 00:50:28,900
actually is creating increased 
in elasticity. 

942
00:50:29,200 --> 00:50:33,500
If I tell you to hotle, hold on 
for dear life, don't respond to 

943
00:50:33,500 --> 00:50:37,000
price signals and sell. 
All I've done is raise the, in 

944
00:50:37,000 --> 00:50:38,900
elasticity and that's 
functionally. 

945
00:50:38,900 --> 00:50:42,400
What's happening in financial 
markets, the introduction of 

946
00:50:42,400 --> 00:50:46,900
passive players raises the 
elasticity, elasticity T of the 

947
00:50:46,900 --> 00:50:48,900
marketplace. 
Mike, is there anything else 

948
00:50:48,900 --> 00:50:53,100
that you that you think is 
important to let the listeners 

949
00:50:53,100 --> 00:50:56,100
now or? 
No, I think anyone who's made it

950
00:50:56,100 --> 00:50:59,100
through this far. 
As is either listening for, you 

951
00:50:59,107 --> 00:51:03,200
know, shits and giggles queer, 
you know, in desperate need of 

952
00:51:03,200 --> 00:51:06,900
help. 
I will, I will let it go at that

953
00:51:06,900 --> 00:51:12,200
point but honestly, it's I do 
want to offer a shout-out in the

954
00:51:12,200 --> 00:51:14,900
opposite direction, right? 
I'm a tourist in this space 

955
00:51:15,600 --> 00:51:17,600
can't devote. 
The time and energy that you 

956
00:51:17,600 --> 00:51:22,100
guys have to trying to 
formulate, a clear and concise, 

957
00:51:22,100 --> 00:51:25,900
and informed view about the 
players and the various forms of

958
00:51:25,900 --> 00:51:29,600
Fraud and the behaviors that are
going on and what you guys have 

959
00:51:29,600 --> 00:51:31,000
done. 
I think it's actually an 

960
00:51:31,000 --> 00:51:34,400
incredible service for which you
are highly unlikely to be to be 

961
00:51:34,400 --> 00:51:37,900
compensated. 
But is nonetheless a public 

962
00:51:37,900 --> 00:51:41,600
service that I think is 
underappreciated? 

963
00:51:41,700 --> 00:51:44,400
And I do want to emphasize that 
and I'm thrilled that you guys 

964
00:51:44,400 --> 00:51:48,100
invited me on to talk ah It 
means the world hearing that 

965
00:51:48,100 --> 00:51:52,100
from you Mike. 
So thank you very much and and 

966
00:51:52,100 --> 00:51:54,600
look forward to having you on 
again, sometime soon whenever 

967
00:51:54,600 --> 00:51:59,000
whenever always happy to hang 
out with you guys, hopefully you

968
00:51:59,000 --> 00:52:05,100
enjoyed that episode but as a 
final point Have you ever just 

969
00:52:05,100 --> 00:52:07,000
thought about what does it all 
mean? 

970
00:52:08,000 --> 00:52:09,700
I know, I know that's a little 
meta. 

971
00:52:09,700 --> 00:52:13,900
I know, it might feel like it's 
a rhetorical question, but I 

972
00:52:13,900 --> 00:52:16,600
just want to say that. 
I think it all amounts to 

973
00:52:16,600 --> 00:52:20,600
ratings, ratings and reviews of 
podcasts. 

974
00:52:21,100 --> 00:52:23,600
So if you could leave a rating, 
leave a review positive one. 

975
00:52:23,600 --> 00:52:27,100
Hopefully, I think that kind of 
solves everything. 

976
00:52:27,300 --> 00:52:30,500
So, thank you for listening and 
we'll talk again soon.