Kind: captions
Language: en
so Ray is just like Look Backwards last
500 years of History every time every
time you've gotten to this point where
you're gliding uh it it always ends with
either economic war or actual hot
Weaponry war and you need this level of
trauma so that people will finally go
fine everything that I owed I'm I'm just
going to let go of it whatever it is
what it is I just want peace and so you
get this complete upending of everything
we reset we go back to zero but we do it
in the most grueling brutal sacrificial
way possible mean and and I hear this a
lot from people like ah this all
rebalanced in 100 years sure but that is
cold comfort to Millennials who could
never buy a house right like
so yes but this is where the fourth
turning comes to me right I think we are
at economic
Warfare everybody needs an enemy so
we've decided that China Russia whoever
we want to be our enemy is our enemy
so we are economic Warfare for the share
of the
P but the world is not it's not actually
a fixed Pi there's an abundance and that
abundance is the other economic Warfare
which is technology but that's happening
at a massive scale and it's going into
space it's going everywhere so we've got
physical kind of
warfare economic Warfare over technology
which is what Taiwan is all about you
know they own the secret code which is
the ability to produce um computer chips
uh in ways that nobody else can
replicate so there's
that and
then we are at war with each
other as the population is split and
wants to blame each other for what has
happened when in fact it was actually
the Baby Boomers that actually caused
the problem in the first place the
people caused the problems of the People
In fairness it was the greatest
Generation that had all the sex that
gave birth to the Baby Boomers that
created the problem and this is where it
gets tricky because God bless the
greatest Generation for fighting the
wars etc etc okay before we keep going
down that road cuz I I want to keep this
all in the construct of your um
everything code this was very
enlightening okay so you just walked us
through uh that first part about why
we're going to keep having these
Financial crises and the only way out of
that uh is to print money basically uh
okay next section and the only way here
we go and the only way of solving this
uh is putting it on the central bank
balance sheet because there's not enough
GDP to pay the interest this what you're
just talking about so if you think about
GDP growth let's call it 2% and let's
assume that interest rates are 2% which
is roughly where they've been since 2008
so if the government is 100% GDP in debt
and GDP grows at 2% but interest
payments are also at 2% that's all of
GDP growth just to pay the interest on
the US government debt but the private
sector excluding the financial sector so
households and corporations
are another 120% of GDP in debt uh well
that will give you negative growth every
year of 2% and adjust com compounds so
what happens is those interest payments
go to the FED balance sheet and they
monetize it again this is what we were
just talking about so then the private
sector is not competing with the
government and that was provable across
all major economies it's like they all
decided that they're they're too far in
debt and the only way to solve this is
quantitative easing and then I started
thinking well if I know this to true and
I know that the central bank balance
sheets are 97% correlated with the asset
prices well all I need to do is use
forward-looking indicators to predict
the central bank balance sheets Andor
interest
payments dude talk to me about this 97%
correlated with assets that that seems
like having a crystal
ball so it doesn't actually reflects
today so you could basically as I
explained before
the thing that's actually driving the
S&P 500 is the Fed balance sheet it's
not companies getting more say driving
you mean driving the price correct so
it's an optical illusion it's a money
illusion so the price simply Rises to
meet the level of inflation caused by
printing money correct you're
readjusting the
price so that is what's going on
and so then when you understand that and
it's
97% you understand that nothing matters
apart from this liquidity which is what
I've been trying to tell people is sorry
all your economic models are wrong yes
you need to forecast the business cycle
to know where you are in the probability
of printing money cycle but that's all
that matters and it drives assets and
that's why people right now are getting
very angry because the stock market's
going up and they're like don't know
there's a recession yeah I know that the
answer to recession is more cowbell
printing of more money which is why
explain people this this is what I'm
talking about with as people become
aware of these issues as you zoom out
and you see the gigantic crater you
begin to realize oh we're in a recession
that means they're going to print money
so in a recession prices are going up
and people are like yeah I know where
this goes so that's crazy and that it it
it will be very interesting to see what
the knock on effects are of the um
Everybody becoming aware of these
patterns and I've heard you say that uh
it's almost always the path of most pain
is the the path that ends up actually
happening and so as we begin to predict
oh this is what's going to happen the
fact that we can predict will have some
very sort of painful uh consequences the
important point being here is
I know what drives
liquidity it's driven by the business
cycle and there are certain cycles that
are forward-looking the Chinese credit
cycle happens to lead by about 18 months
or two years for people that don't know
what the business cycle is can you give
a quick primer the business cycle is the
EB and flow and economic activity that
occurs and that's a boom and bust a
recession expansion is it caused by
interest rates
we don't really know what causes the
business cycle it's caused partly by
interest
rates it's caused by excess production
excess inventories to limited
inventories to there's many things that
can can drive a business cycle but it's
observable and has been observable for
Millennia and one of the things we do is
when the business cycle is too hot and
inflation starts Rising central banks
tend to rise raise interest rates that
tends to bring down economic activity I
think even without a central bank
interest rates would rise naturally um
because I think the free market can set
interest rates without central bank and
then the economy slows down again and we
see this this endless cycle so what I
think my hypothesis is is that okay this
is very observable I think it's going to
last this relationship between assets
and the central bank balance sheet
because of the mechanism of debasement
of currency
and I can forecast out what the business
cycle looks like and I also know the
amount of interest payments that need to
be made because that they happened three
and a half years ago and I can see how
far the balance Sheet's going to expand
so the balance sheet right now is what
$6 and a half trillion dollars and it
looks like it will get over7 trillion or
so and it looks like it will get to 12
to4 trillion by the end of
2025 so that puts and there's a number
of other ways I've proven this out in
this whole thing and I'll send you the
whole piece uh myself I've not really
gone public with all all of the whole
thing of how it works but in the end
that
puts asset prices massively higher than
here hugely higher um so we're looking
at more than a doubling of the NASDAQ
from here we're looking at another
gigantic crypto run that's into 2025 so
we're seeing huge moves that just come
from the debasement
and I've gone through in the everything
code article that I wrote for Global
macro investor which is my kind of
Premium research service in that I've
gone through various ways of proving
this all out um so that's what I think I
can do but your observation I think is
really important okay when people I mean
I've sent this to quite a few people and
obviously the subscribers of global bank
investor are kind of L the world's most
famous hedge fund managers um asset
managers and I think it it really
shocked people and resonated with people
people they're like oh my God everything
makes sense now and so once you see it
it all makes
sense um now as it becomes more public
as a thesis and Mike Howell at crossb
Capital has been talking some elements
of this liquidity you can see liquidity
becoming part of the the conversation on
financial Twitter and stuff
now what I think we'll probably do is
create boom bus
Cycles again you can't have the bus
cycle going below the level of Central
Bank liquidity because optically they
make it rise this is what people don't
yet understand but of course the stock
market should go down 90% can't
happen literally can't happen because of
the debasement it's a money
illusion but what I think we'll do is
see hey off we go to the races that's
what happened in 2018 2018 sorry 19 uh
early 20 we actually diverged from the
central bank balance sheet uh massively
because people starting to figure out
this game which is the moment the FED
sto the tightening cycle markets take
off because they know that the
probability of more cowbell more more
Central Bank printing of money more
interest rate Cuts is coming and so
therefore we get boom bust Cycles so the
boom times are too big and then you get
a bust and we people know that from
crypto as well the long-term Trend
remains intact but we we keep getting
these huge booms collaps boom collaps
but the trend is still up I think that's
what we'll see we'll be more like the
crypto cycle which is pretty much what
we've just seen as well we had a big
collapse last year and now we're
straight back into the boom as we're
starting to forecast this all right so
uh let me see if I'm tracking all of
this sorry there is a lot in this no man
there there is but the the more I go
over this stuff the more times I
encounter it the more I'm I'm really
beginning to piece together what's
happening uh it it is though leading me
to a level of distress it does not make
me calm and it's leading me to a level
of distress while I agree with you when
you start looking beyond the next 20
years it it evens back out and and we
hopefully get the exponential Age and
and that works out but I I think there's
such a a period of tumult that
no yes okay let's get down to an
individual level let's not get to
societal level I can solve I can unfuck
your future which is the series that we
ran on real Vision by simply offering
you the right
asset you get caught in this trap if you
own crypto or technology you will
outperform this entire thing now if
you're not wealthy enough to buy you
know set of a brokerage account doing
that because it's complicated for you
you can do it with crypto for no money
and you will
participate not only in the in the trend
of debasement so you're not getting left
behind because if you're just getting an
income and you're not buying any assets
you're truly going getting behind so
your 401k may look like the S&P 500
that's not making you any richer just bu
technology or bu crypto and those are
the only two assets that outperform the
central bank balance sheet so there's
your solve at a personal level all right
so level before we can get into that I
think we have to track we have to track
why uh let's recap why you get this uh
the stock market rising and falling with
the printing of money so you've covered
that very well but just by quick recap
uh as you pump money into the system
then the cost of the assets are
necessarily going to rise because they
are a scarce asset and as there's more
money available those prices are going
to rise they're going to rise in
proportion and so you can just watch
them rise and lower together uh now the
reason why and I'll say Bitcoin maybe
instead of crypto just because there's a
lot of things going on in crypto that
get a little dodgy and so I'll Focus uh
while I don't think Bitcoin I'm not a
Bitcoin maximalist by any stretch of the
imagination but bitcoin's a clear way of
describing this correct so when you look
at Bitcoin the reason and you were the
first person to show me a chart that
basically shows the the price of Bitcoin
goes up as money is pumped into the
system and it it's interesting that it
tracks in the same way that the stock
market tracks but for the exact opposite
reason so the reason that the price of
Bitcoin is going going to to go up is
people are like yo I need to be
somewhere where I can't have my value
debased through the creation of
additional right so printing of money so
when you print money buying power goes
down because prices rise in commensurate
with the amount of money going into the
system so you feel like you're getting
rich but you're not it's an illusion God
I love that you use that word okay so
people then pour into Bitcoin because
they're like there will only ever be 22
million that that's just it and so since
I know that that's it that it is a
finite cap it will never go more then
you can't debase it through the printing
of additional Bitcoin okay so people
flood into that and you see it rise and
so that was the first time because I was
like people were speculating what is
bitcoin what does its price respond to
and once you pointed out it responds to
the M2 Global money supply I was like
okay that makes a lot of sense so um
walk people through then how to
play that game well why technology I
that we haven't addressed yet so why
technology um and how do you do Bitcoin
well is it a Buy and Hold You trading
what does that look
like so if with Bitcoin I treat
it as an
asset that is going to protect my
long-term wealth and that sounds crazy
when it goes up and down like it does
right and you just gone through that
full first cycle and you're like oh oh
but what you'll find is the low is
higher than the last time it it hit the
bottom and then the next low will be
higher and each high is higher oh it's
in an uptrend so I just don't need to
sweat about the ups and downs what I
should do is just accumulate every time
it's in a down
cycle why well because the down cycle
signifying that economic contraction is
happening and the world is slowing down
and money is being taken out of the
system quantitative tightening which is
the opposite process and assets fall and
interest rates are going up so your
disposable income's going down because
your wages aren't going up enough and
interest rates have gone up
more so it's at that point you know the
outcome is if economic activity is going
to slow down the next year in NE in a
year's time they're going to be printing
money or cutting rates because it's very
cyclical for the phenom of this rolling
of this Deb so therefore you should be
buying more at these points because then
you've got the next upside cycle to come
which is what I've always said is it's
the cyclical Trend within a secular
Trend okay this is guaranteed people do
not know the difference so secular trend
is something long-term Trend driven by a
large explainable
Factor cryp uh Bitcoin is an answer to
the financial system system and over
time the number of users and people who
become aware of its um of its superpower
the more people move
across that is a secular trend of e of
of adoption that's really
important the cyclical Trend the
cyclicality is the EB and flow within
it so that's the boom bust of the
economy not at a gigantic bust level
it's just a boom bu
now Bitcoin harving Cycles correspond
with all of this why is there some magic
in that reduction of Supply maybe but
Bitcoin came out exactly at the same
time that all interest rates went to
zero they're all part of the same
cycle so every time we get into this
economic cycle it affects Bitcoin in the
same way but over the long run the
adoption the secular cycle means it
outperforms everything
because there's no secular adoption of
of the S&P 500 there's no secular
adoption of General Electric or you know
that stuff's not really happening yes
there's an ongoing purchasing by
401ks but that's really it
so so that big Mega trend is the
observable Trend that people can
participate in and it is going to more
than
offset what is going on with the
debasement of currency and that's to
do with meta's
law and the exponential trend of the
adoption of a technological Network or a
technology itself great so that's why
Bitcoin charts over time just keep doing
this it's because it's exponential the
S&P 500 doesn't do that because it's not
exponential but the NASDAQ does most
Technologies do and the reason why the
NASDAQ keeps outperforming the S&P and
keeps out performing value stocks and
makes people so angry is because it's
all about the adoption of new technology
if you think about what's been driving
the NASDAQ recently it's the adoption of
AI obviously that's the fastest adoption
of any technology in history crypto was
the fastest beforehand but this is
eclipsed it it's gone from in six months
from basically zero users to 100 million
users in six months we've never like it
to put an interpretation of what you
just said forward and tell me if this is
accurate because I thought your
punchline was going to be the reason
that technology performs outperforms the
illusion of prices going up uh is
because it's an increase in productivity
per capita but what I hear you saying
with meta's law is it's actually
outperforming because of what I will
call you're going to hate this word but
hype that basically the people are
pouring into it they're so excited oh my
God that's not what that's not what
Met's law is I know what's law is but
I'm saying if if you really think about
why meta's law would drive value that
exceeds the
illusion that is the only thing I can
take away from that because if it isn't
increasing productivity per capita why
would it otherwise out strip it is we'll
come on to that in a sec but meta's law
is the number of nodes on a network I
number of users of crypto versus the
number of applications in the
interconnection so the more we build out
a web 3
world the more that that's the
multiplier as opposed to the people
initially it's the people who use it so
like Doge has no use case apart from
memes mimetics but it has a bunch of
users um Bitcoin has limited use but a
huge amount of users as well but the use
case is very you know is very clear
which is the you know the scarcity of
the asset and the purity of the asset
and the security of the network ethereum
has lots of newses defi nfts all of this
stuff and a whole load of users so the
the this is what's driving these things
why are we adopting the technology
that's the productivity
equation the financial system becomes
more productive and safer and secur by
using cryptocurrency rails we become
superpowers as humans by adopting AI
robotics we become more productive in
ability to do stuff by adopting EV
technology we you know all of this stuff
is actually driving
productivity now here's another so I
need to push back on that so I don't
think it's it the value created in web 3
speaking of somebody is as in web 3 as a
human can be I've put just a gazillion
of my own dollars into this uh it's
right now it is all people betting that
this is going to be the future versus it
actually being the future right now so
that's why I say that's how you make
money my friend the moment I'm not is
right is the moment the be the
investment
the there are use cases so let me just
let's just get out of the NF noise and
everything else I'm having dinner with a
friend of mine he used to run one of the
largest the trading operations is one of
the largest banks in
Australia it's a big Bank the equivalent
of Bank of
America and um he's like yeah you know
he's just retired he's like yeah I've
been heavily involved in crypto at the
bank doing stuff I'm like what are you
guys doing goes we've issued five stable
coins I'm like why why do you need the
stable coins why you know why not use
tether or usdc or whatever he's like
okay so this is what people don't
understand why cryp cryto is so
important for the financial system he
said we're in Australia we have a
gigantic pension system our pension
system buys a gigantic amount of us
equities the US is about to you go to
settlement So when you buy a share and
you have to pay for it from T plus2 or t
plus3 so that's trade date plus three
days to pay for the bill to
t+1 okay that seems
fine for exchange transactions are T
plus2 they can't settle the US stocks
that they buy so they either have to
leave massive amounts of money with a
broker that they've dealt with who could
go Bust or use uses the money
ineffectively or they create a stable
coin for instant
settlement so they can so and they've
built that this one is on top of
ethereum okay fine but that is a multi
hundred billion dollar use case case for
why crypto is very powerful for
increasing productivity within the
financial system alone and there's many
of these all over the place so why is
tether such a big useful stable coin
you've basically fractionalize the US
dollar allowed a person in the
Philippines who works in a rice field to
receive a payment from his cousin who's
living in New York City instantaneously
without any
cost in dollars which is the currency
they all want that's mindblowing that's
why the stable coin system alone is so
gigantic so I don't agree with there is
no productivity or killer app the killer
app of crypto so far has actually been
stable coins and that so I want to make
sure what what I'm saying is is very
nuanced but I I don't think I'm being
clear enough yet so what I'm saying is
that um meta's law if the reason that
Tech has out performed is because of
metaps law which remember I was
surprised to hear you say I didn't think
that's what you were going to say I
thought you were going to say
productivity but you said metaps law if
that's true and I'm just trying to
understand what the reality is and
you're saying this is how you make money
I hey I'm with you I'm just trying to
understand what this is in without
fancy uh Concepts just like the the down
home nitty-gritty so meta's law is as
far as I can tell that is the point at
which it is hyp it's people getting
excited now they may be hyped for good
reasons they may be hyped because
they're right about where productivity
is coming from but is well then let me
ask it this way for those just listening
he's shaking his head uh is there a
difference between meta's law and
productivity or to you are they one and
the same no they're two entirely
different concepts mea's law is the
value of a network and how to Value it
and the the value with those are two
very different statements is it the
value of the network or is it how you
value value it's future uh
utility every vote that goes into a
market I.E every time price moves is a
vote about current expectations and
future expectations so it's difficult to
pass out what that means but I've
provably shown that I can distill meta's
law pretty simply in cryptocurrency are
two things number of active
users okay that makes sense that's the
nodes MH and then the value of the
economic activity and all I did was the
dollar
value that gets exchanged every month or
week those two numbers multiplied out
gives this crazy ridiculously large
number but that when you put it on a
graph is exactly the same as price and
so it's remarkable because price is not
in that equation
so law take in the the math that you
were just saying the value of the
transactions on the network it's the
it's the it's
basically no meta's nobody knows how to
fully measure a meta's law value system
so you need to approximate it because
it's quite a complex mathematical
formula and you're dealing with
imperfect worlds where you can't put it
in but anyway that's nothing to do with
the
productivity people are flocking to the
technology because it in
increases whether it's your productivity
or solves other solutions for you you
know so I'm going to say that slightly
differently and this is where I'm
surpris it's very possible I'm missing
something you are so much more
thoughtful on this stuff than I am
currently but this still what I'm about
to say still seems true to me and that
is that uh meta's law is
the is the observable response to when
people believe believe something is
going to be going to be amazing so take
eth people believe that building on
ethereum is going to be the future I'm
one of them I believe it to the core of
my existence but it hasn't
yielded that yet no that's not right
every mobile phone network is priced of
Metal's law all networks are priced at
metars law but but why can't they be I
think I don't think it matters Tom I
think you're getting caught in a in a
thing that doesn't really
matter what matters for the bigger
equation the two things that matter with
with um this whole thing is does does
Bitcoin protect you from
this issue of debasement the
mutualization of losses amongst
everybody yes okay fine nothing else
matters there does it could it be formed
part of what I call the exponential age
of Technologies which could eventually
increase
productivity yes now they're not
mutually exclusive there's no you know B
is just a measurement of value of a
network but this productivity idea is
the big
one and the pro productivity idea is if
we can't change we can't keep increasing
the debt remember the magic formula was
population growth or productivity growth
plus debt growth we can't change the
population the debt growth's got too far
so we've got this one thing in the
middle is the only thing that can change
this entire
equation so what we can do is try and
grow that okay now let's step back and
say okay what's happening to the
world that's a really big change that
happened that the central banks are
looking like they're going to print
money to do and that's the Green
Revolution it's being driven by Europe
but it's been driven
elsewhere so yes climate change yes all
of the benefits of doing this but there
is a magic
outcome so
productivity let's say we use AI we can
do more stuff and you and I have talked
about this in the past right we can
expand now human knowledge in ways we
couldn't do before and Factory lines and
agricultural Machinery just basically
created more productivity per human okay
fine but the big equation in this is the
inflation adjusted price of oil which
let's call that
the the kind of best Benchmark for
energy input costs have been $40 in
inflation adjusted terms for 70 years 60
years so we've got a fixed thing here
which is can we put more output per
calorie or kilog je of energy that is
what productivity is all
about so technology keeps rising and
that's great keeps
going but all of these governments are
focused on the other part of this
equation which is can I lower the cost
of energy because if you drop the cost
of energy from 40 bucks per per barrel
of oil equivalent to
10 you 4X
productivity and there is your Sol ution
and that is why they're pouring
trillions of dollars into this and we're
seeing what's known as rights law sorry
all these terms which is the increase in
output of a new technology has a
commensurate measurable decrease in the
cost and we're seeing that with all of
the green energy so it's just getting
cheaper and cheaper and cheaper and
cheaper now we can't scale it enough yet
but we know that there's nuclear there's
going to be part of this equation
there's a bunch of things but over time
we will move away from that $40 fossil
fuel anchor and move to $10 so think of
the multiplier because technolog is
doing
this and the cost is doing that that is
that is what the productivity miracle
that is
coming you can reboot your life your
health even your career anything you
want all you need is discipline I can
teach you the tactics that I learned
while growing a billion- Dollar business
that will allow you to see your goals
through if you want better health
stronger relationships a more successful
career any of that is possible with the
mindset and business programs and impact
Theory University join the thousands of
students who have already accomplished
amazing things tap now for a free trial
and get started
today so help me understand why didn't
the internet which still to me feels
like a productivity productivity Miracle
why didn't that um
change all of this why why isn't it
already the lily pad that you believe
the exponential age is going to be so I
think because it replaced
jobs you don't think AI is gonna replace
jobs yes I
do but I think the the the productivity
trend is a function of demographics as
well and I don't fully understand why
the internet didn't do that but it also
hold out manufacturing jobs so there was
a a balance on aggregate what happened
within the economy so I'm thinking it's
on aggregate it wasn't enough to offset
these Mega trends that we talked about
that were driven by the demographics and
the debt and and the globalization so
I'm thinking it's that and so we have to
have an accelerant because technology
growth is not enough to offset
demographic issues
and that's what I'm thinking it probably
is you know we did create I mean Trend
rate of GDP has been falling so whatever
we've done with technology and the same
number of people roughly we don't seem
to have pushed up GDP
growth let me ask a really ugly
question hearing everything you're
saying
it seems like I know it's not but I I
I'm not yet sure why not why isn't the
baby boom generation dying off and
population
Contracting uh deflationary in a good
way it
is well then tell me more uh I thought
so population collapse my gut instinct
is that it's terrible um what's the
benefit benefit the benefit is more
stuff for you and I our per capita GDP
goes up and it's observable in Japan
it's observable in Switzerland so GDP
per capita goes up and that helps offset
some of these now the problem is is per
capita is a nice economic
term but right now it acres to Mega
giant
companies so it's a way of
redistributing that cap Capital amongst
the people which is important which is
why you know I believe in things like
web 3 Technologies because it allows
more people to participate in ways that
they couldn't participate in before
because if not Google captured it all
and apple capture it
all so I think there's a probability
that as the population
shrinks it it creates a Slowdown in
growth because of the magic formula but
if you can increase that productivity
element
then we will be richer per capita now
there's a government problem of how you
distribute
that you know you need to tax
corporations more than they're being
taxed these giant corporations that pay
no tax most people with the average
business pay tax up to here but Google
pays I don't know what their marginal
rate attach is 5% that's wrong and
Amazon because they're benefiting from
the holing out of the American worker in
the technology boom and the people
aren't which is what's making people
angry now they're not not doing it
because they're bad people it's just the
set of cards they've been dealt with
it's been incredibly attractive to be
you know a super large company
particularly one with a growing industry
like
technology so I think net net you can
orchestrate
it that per capita GDP
Rises but you have to think about that
issue does it ACR to the people or
not what happens is if the population is
declining but productivity doesn't go up
well then we just go Trend rate of
economic growth just keeps
falling and so the reason that that I'm
so I always assumed that the reason that
population falling was a problem is
there are fewer people that want to buy
your goods and that's why it it Hollows
out the sort of uh GDP core economic
engine but as I think about it it would
also um it's interesting it's going to
create a weird sort of uh feedback
Collision but it would increase wages so
if there are fewer people for companies
to hire uh that's great for the
employees wages but if there are fewer
companies because there's no one to sell
anything to Now problem bad assumption
and this is I can see the the IMF got
into this whole mess as well and
everyone now says inflation's going up
as population dies out bad assumption
because technology is in the business of
replacing
costs and they will just find ways to
employ less people I mean again you and
I have talked about this is like 10
years ago video editors and sound people
Etc were really
expensive but now we can do it on AI so
people have to do two or three jobs they
hustle it's it's changed the structure
of stuff and Technology will just keep
looking for the cost and replacing it
it's it's it's Relentless it's the
biggest observable trend is once you
digitize things the cost goes to zero in
everything it touches inflation is a
generalized rise in prices the price of
eggs goes up the price of gas in your
car goes up you know the cost of
employing people goes up
Etc the basement of currency is this
really weird little
trick things have fixed Supply or
relatively F fixed
Supply go up immensely optically because
the price of the currency
Fallen things of variable Supply like
wages corporate earnings don't and they
don't go as much so what you find is
after quantitative easing what happens
stock market goes up gold goes up
cryptocurrencies go up housing goes up
binart goes up all of that stuff assets
so assets are a way of storing wealth
that's what an asset really is so in
relative terms they've held their price
and the currency's Fallen makes them
look like they've gone up in price it's
not and this is what everybody gets
confused with this is why price earnings
ratios have gone up so much because the
earnings doesn't move as much as the
price of the asset because it's a small
fraction of it so pees keep going up the
more we debase currency if you want to
see another example you look at chart of
the Venezuelan stock market in
Venezuelan bolevard and it goes straight
up if you put it in US Dollars it's
actually down
99%
so so it doesn't create a generalized
rise in prices this is what everybody
confused because they think it they
thought it was an increase in the money
supply in a way that you and I could get
it we can go buy more stuff it doesn't
work that way all right so would
inflation happen though if you didn't
have de basement I am not a monetarist I
don't believe inflation is always and
everywhere a monetary
phenomena interesting I think it is a
supply demand phenomena Above All Things
some people claim it's a supply and
demand for money phenomena I don't
believe that because of the 1970s
inflation is as provable as it possibly
can be was driven by
demographics the Baby Boomers all hit 30
at the same time bought their first
house their first car their first blah
BL blah blah blah blah and that what was
CA that's what
caused the inflation of the 70s we've
never had inflation like that before or
since because guess what we've never had
such a big cohort of 25 to 30 year olds
all at the same
time buy things that have a limited
Supply correct or buy anything because
they used to live with their parents and
before you know it they're buying
duplicate stuff because you live with
your parents there's one car or two cars
whatever it is right you leave there's
now another
car and you meet a girlfriend or a
partner there's another car so you've
now doubled the cont oh and you bought a
house so that's a second house that
didn't exist before that's why
demographics are deflationary and
inflationary depending where you are in
the demographic cycle okay this whole
idea of demographics as Destiny is
really interesting here's a question
that I've never thought of before would
we run into a problem if you could so
one I let's put a finger on uh debase
the basement is the government creates
money out of nowhere and so they
literally just make it up so if we were
back in the days of printing you would
just turn the printer on that's why they
call it printing money though now it's
just a database entry but if we were
back in the printer days you would print
more would we run into a problem if we
couldn't create more money because more
people are being born the population is
going up if money like I I think about
this sometimes with Bitcoin the very
that's what a depression is a depression
is when there's not enough money for the
demands like literal money so what
happens is the opposite of the
debasement assets get devalued and
currency which is the thing that's in
scarce
Supply but the money is the thing that
everybody desperately
needs when that is Extreme that's a
depression what we're seeing now is the
opposite so we've got
inflation
but they've reduced liquidity to try and
cool the
demand and okay people want preferring
to try and get hold of money as opposed
to assets and the price of assets has
gone down so they've actually done the B
the opposite quantitative tightening is
the opposite of quantitative easing so
theoretically if quantitative easing
causes assets to go up then quantitative
um tightening should make asset prices
go down because you're making currency
scarcer simple okay so one I I've asked
this question before but I forget the
answer how do they quantitatively
tighten how do they get money out of
Supply because they're not going around
burning paper dollars so how are they
doing it they're just buying it so
they're buying bonds from Banks or other
participants wouldn't that put money
into the system because at that point
they're buying something so sure they
sorry they're selling off their Bond
inventory so they're doing the opposite
right so they give people something but
they take the money and then they hold
it correct so that I wrote that down as
you were talking about a depression a
depression really isn't that the money
goes away a depression is that the money
is now locked in people's wallets bank
accounts whatever they still have it
they're just not moving it is that
correct and you can't get it For Love or
Money you just you want the money and so
the depression is is what all the assets
fall in price you know it's that it's
the it's the it's it's all supply and
demand in certain ways yeah it's all
psychology I mean this is the the
utterly fascinating thing that I'm sure
we'll keep looping back to okay so money
isn't moving during a depression and so
I was talking to Robert Breedlove about
this and I still have a naging feeling
as much as I don't right now with my
limit
understanding I don't like that money's
being inflated right now with my limited
understanding I absolutely love Bitcoin
because I see how it's going to hold my
wealth over time but there is a part of
me that keeps asking the question am I
actually mad at them using this cycle
because if this game really is
psychology and we get all of the
Innovation and everything that we get
because
of
innovation and to get people people to
innovate and I'm remembering now how
Robert uh swatted this down but I'll be
curious to hear your thoughts so I keep
my default position is that people
innovate because money is moving so you
make something and people don't think
that their money will be worth more over
time if they hold it so it is not a good
asset in that sense they think it'll be
flat that's how I think most people
think of it I think inflation is sort of
invisible no most people don't account
for it until you get into a higher
inflationary environment and so they
think of their money as being flat in
truth their money is actually declining
in buying power because of inflation but
they think of it as flat or at least I
always have so I think of my money as
flat people think of their money is flat
so ah if I want a Kit Kat bar today I'm
just going to give you money for it and
I'm gonna eat the Kit Kat but if I think
this is like the the joke that people
make about the guy that bought a pizza
for you know 20 Bitcoin or whatever it's
like bro that's $67 million you know or
whatever at the hype and so what a fool
you were
that is when your money is depreciating
instead of inflating or deflating excuse
me instead of inflating so you've got
this trick that happens psychologically
when the banks put money into the system
you feel like your money is going to be
worth the same tomorrow that it is today
and so you don't have a problem spending
it does that seem crazy to you no
so it's all about this marginal
propensity to consume or to save or
whatever and that's your expected future
value of money the reason there's not a
lot of velocity of money in Bitcoin
there's a lot of
hodlers is that the general view is well
I'm going to be better off if I just
hold
it right which is why nobody's going to
use Bitcoin as a transaction layer apart
from lightning because it's just the
blockchain rails but why would
you because nobody wants to be the
Bitcoin pizza guy
so you don't so it's actually kind of
deflationary in that
respect
and all of this is a game it's a game
of who are the other competitors in this
game who
the the rules as you would call them
right okay we got the central banks they
want to do one thing to us we've got the
asset prices and they can do another
thing based on whatever's going on there
you know if you're investing Commodities
or equities or
whatever and I need to navigate that to
get to where I want to get
to and I have this base assumption that
my cash is going to be
flat so I put 10 grand in a bank I'm
assuming my 10 grand is worth 10 grand
we know it's not but in a oneye Time
Horizon we don't really care if it's
worth 2% less because we we don't notice
that so then we're looking at the other
levers and saying okay what is going to
deliver what Tom wants which is I want
my money to offset
debasement not inflation because
crypto's done a terrible job of that as
as everything including gold I mean
virtually nothing offset this inflation
we've just had so that kind of took us
all by surprise but the debasement well
I just in divide all of these assets by
the FED balance sheet that's really
interesting the& kind of goes nowhere it
kind of it's right at the bottom now
since
2008 so as they started using the FED
balance sheet debasing the currency the
stock market has just accounted for that
the FED balance sheet has been doing
that the stock market's done that but
actually they' netted each other out you
haven't got any
richer um gold fails you've actually got
poorer versus the FED balance sheet so
the big gold narrative failed I don't
know because probably because of crypto
so I people just had a less marginal
propensity to use it in a digital age
gold is not actually that
useful the NASDAQ did actually pretty
well we still went back up to 2008
levels 2007 levels but it's been going
up why technology technolog is a secular
Trend the S&P 500 does not have a
secular Trend behind it so and then when
you put crypto crypto is the only thing
that's really outperformed because what
you've got there is you've got
technology and this kind of whole
network adoption
model and it works really well for
debasement of assets because it's scarce
technology companies aren't scarce
really you can just keep building them
but you can't do it here so it works
phenomenally well so you're taking the
bet that future Tom wants to not screwed
up and therefore future Tom wants to
choose the asset that he thinks best
represents the set of risks that he sees
being played at the table in the game
and that risk to you is debasement of
currency which I think is probably the
larger risk um and therefore Bitcoin or
crypto is the best bet to take but it
depends what future you is depending who
who's watching this and what they need
because some people want to protect some
people want to
grow some people want to yeah there
there's different motivations but
generally it's protect what you've got
so you can maintain your level of your
who you are because nobody wants to
ratchet
down the reality or their expectations
of themselves there's psychology again
so velocity of money this is a very
interesting concept and I hope everybody
takes me as you would take somebody who
is learning something every time I get a
new piece of this puzzle it does feel
like the emotional ups and downs are
easier to deal with I won't say that I
feel that I'm better at predicting and I
do want to talk at some point before we
go about looking forward 18 months and
what that looks like but first I want to
contend with this idea of velocity of
money so the rate at which money moves
seems to be the thing that the FED is
trying to influence because they
understand the psychology so Roaring 20s
if I had to guess hi velocity of money
uh 1930s I know because you said earlier
that a depression is when the money
stops moving so depression low velocity
of
money I think it was Jerome Powell that
said recently I want to keep cranking up
rates because it will slow the economy
yes and if I go too far and I break a
bone that's okay because I have tools
that I know how to use to fix a broken
bone I don't have tools basing your
currency exactly so but goes back to the
velocity of money and so okay I'm I'm
put putting this all in context of a guy
who has a a a meaningful not a scary but
a meaningful part of my net worth in
Bitcoin because I believe in The
Narrative of it will hold value over
space and time there's an interesting
note there to be made about did Bitcoin
just inflate gold which is an utterly
fascinating thought and that 50 years
from now will there still be gold and
big coin anyway so I I believe in
Bitcoin I believe in its ability to hold
that but I also have this feeling
especially now sitting in the soup of uh
all this madness has happened in crypto
with fraud yes it happens everywhere
cool but my punchline is that regulation
I'm always tempted by the libertarian
notion of just like don't tread on me
let me do my thing then I'm like uh
humans like they'll find the edges there
are psychopaths among
even if SPF didn't mean to be a a just
absolutely ruinous psychopath like
that's what ended up happening and I can
only imagine the the human Agony expense
of nine whatever billion dollars that
ends up getting lost like whoa that just
absolutely devastating okay so sitting
in that soup I find myself going I'm
actually okay with a certain amount of
government I pay a lot of taxes I do
have a break point where I start to get
really annoyed and feel like it's being
overstepped and misused let me try to
put all the context on the table here
but I don't feel like just ah no
regulation is the right answer we need
some regulation to all of this to keep
people from going crazy but God is it my
ignorance that's telling me that the
central banks may not be the worst thing
ever oh I know how people that know more
than me are going to have a seizure but
I can't help but think given that this
is a game of psychology given how easy
it is to sort of nudge humans in a
direction that they could clamp down on
their money be too paranoid to spend it
and that it isn't necessarily a bad
thing that we do have this tool to nudge
it now conspiracies the beast from
Jackal Island like I understand all of
it and so it's like it's all sort of
bad
but on
balance I come down on I don't know the
system
seems reasonably functional
how crazy does that sound from your far
more knowledgeable perspective so
there's a few things first velocity of
money is as you say but it's a
demographic phenomena so velocity of
money has been super low since 2000 so
not influenced by the FED no interesting
whoa okay shocking you're you're
smacking my worldview around they have
not been able to interesting
because
psychology who is hoarding Money Baby
Boomers the same people who cause the
inflation are causing the deflation or
disinflationary Trend because they're
hoarding money because they're now 75
years old and all you want to do is make
sure you don't die destitute at 85 or 90
right imagine if you're homeless at 85
right so so you are driven by one of the
strongest psych psychological factors
you have is I cannot get any worse than
I am
today right so you're hard stop so you
won't spend so the baby booms have
stopped velocity of money and I've
proven this with charts over time that
that's what's causing it that's why
we've got this disinflationary trend in
the world even though we we're in a
temporary inflationary Trend and it's
been that that the FED have debased
currency try and offset the Baby Boomers
have and I did this whole long two and a
half hour thing that people should watch
on the real Vision YouTube channel with
Robert breed love about why we got here
it's a very long two and a half hour
video and I can't tell you how important
it is but the Baby Boomers with the
debasement of currency over time found
that their income didn't go up but the
assets did because there was two many of
them competing for these assets this is
before the basement and so they borrowed
money to fund the gap when we started
the big debt boom it was all driven by
this demographic so yeah go and check
out that video it's I think it's pinned
to the our YouTube channel that that
that's a big issue here it's a bigger
issue with this demographic game because
that's one of the rules of the game that
you can't change so what happens over
the next 15 years as Boomers start dying
they will get firstly
more propensity to not spend so when my
dad
retired dad used to quite like spending
money you know he he was reasonbly you
know he was a middle class reasonably
did reasonably well not phenomenally
well and what happened the moment he
retired he's like [ __ ] this is a fixed
sum of money I don't know how long I'm
going to live for and my wife's probably
going to outlive
me so his spending pattern probably in
two years fell 65% W you know he was the
guy Buy Champagne he'd go out for dinner
with friends buy a bottle of champagne
whatever blah blah blah you know by the
time he hit
76 he'd be on
the 5 special at the
supermarket because