Kind: captions
Language: en
the problems go all the way to the
Bedrock of the financial system in terms
of treasuries being the new toxic waste
it's going to be at least as bad as 2008
but probably worse than that
you spent a million dollars of your own
money
to raise the alarm to the fact that the
government is printing trillions of
dollars and what I want to know is how
are you so sure that the U.S economy is
in really uh bad shape what does Bitcoin
have to do with this and how on Earth
could you justify spending a million
dollars of your own money to make people
aware of this I do believe uh that we're
in the middle of something or the
beginning of something that is at least
as serious as a 2008 crisis
um the government is extremely good at
kicking the can and like that's his
primary skill in some ways so it's hard
to know exactly when things will be
formally acknowledged as such you know
I've got I've got a bunch of slides that
show that the economic situation is
powerless a
um B that uh you know the the degree of
collapse across a number of different
Industries a number of different
weaknesses will probably necessitate
some form of bailouts or printing even
if it doesn't look exactly like 2008
um a lot of what the financial system
does is it evolves to evade last times
pattern recognition
um and so it won't it may not look
exactly like it used to despite what
form it comes in
um whether it's like treasury BuyBacks
or the people's QV which are different
ways of like injecting money into the
system that don't look exactly like the
2008 bailouts I do believe an enormous
amount of money is going to be printed
just like Ray dalio just like a number
of other people do and uh in such a case
you want to have outside money whether
that is uh gold whether that is a
foreign fiat currency that you have
faith in that's sort of outside the
fed's control uh or whether that is
Bitcoin or a cryptocurrency uh Bitcoin
in particular is you know built to be
difficult to seize uh I think that's
that's part of the answer and it's not
the only it's only not the only thing
you want an allocation you want to think
about other things in life like where
you live your location again Dali also
thinks of that as an important thing you
know early to 2010s Janet Yellen
incredibly reported as having known
about the housing crisis having seen it
and not raised the alarm and now I'm
actually sort of finding like you know
people don't want to hear you raise the
alarm or whatever they're like oh my God
you're a Doomer why are you saying this
right the financial crisis was maybe
officially acknowledged in September
2008 but of course it had been going on
for years before then it was just
something where it became undeniable at
that point but I felt it was my
responsibility having put together what
I had seen to be like you know what it's
a lot worse and people are saying it's
not just uh like a single Bank crisis
it's not even just a banking crisis it's
a Central Banking crisis the problems go
all the way to the Bedrock of the
financial system in terms of treasuries
being the new toxic waste and it's going
to be at least as bad as 2008 but
probably worse than that one thing I
really want to I want the audience to
understand why I become so obsessed with
this and I've heard you say that the
farther we get from the last
deleveraging the more cautious people
become and what I think people have the
the subroutine that runs in the average
American's mind for sure is that uh this
hasn't ever happened not realizing what
they mean is hasn't happened in my
lifetime and they don't realize the hard
truth which is that every single Empire
and every Reserve currency all
throughout all of recorded history have
all collapsed they have all failed they
have all gone through this massive
deleveraging and deleveraging is a
really polite way of saying everybody
loses everything
and it is a it is a bloodbath it is
often as Ray dalio talks about it it is
often marked by Blood literal blood in
the streets this is when we go to war
everybody's freaking out and so because
it's been so long since
um we've had a big war on a global scale
because nobody alive uh in the Western
World anyway is aware of a massive
deleveraging
they don't understand that a they do
happen B that they have when they happen
they happen fast and see when they
happen it is catastrophic and so I'm
like I don't want to be Chicken Little I
am super optimistic
but man the more I started getting into
Financial content the more I was like
whoa there's something going on here
redalia says that every society every
Empire goes through six stages stage six
is absolute collapse and for people that
don't know Rey
he built the largest hedge fund in the
world so this is somebody that literally
puts their own money at stake much in
the way that you have to say hey I think
I know what's going on he's been right
so many times that he's built the
largest hedge fund ever and so what he's
saying is okay there's six stages stage
six is total collapse P.S the US is
stage 5.5 so like that's that's not
ideal so as people hear you talk the one
thing you're a very metered guy but the
one thing I want people to understand
about why I'm obsessed with this content
is
um Sky's probably not falling today at
least that's my take we'll get to the
the sort of how impossible it is to
predict the timing a little bit later
but to really understand how these
Cycles happen and they are Cycles where
we're at in the cycle so that you
understand what to do so if you don't
mind walk us through the the rapidity
with which this stuff happens because I
know that you have uh some slides that
walk through like it was three days from
when SP BB collapses to when they're
printing like that the the speed at
which this stuff happens I think is
really important for people to
understand one other thing you might
want to just kind of point out to your
audience is
um like you know I I am I'm younger than
Rey uh but I've I've done some okay
things in life so you called out uh what
was going to happen with kovid that it
was going to be serious everybody said
you're out of your mind and you were
like one of the first people to call it
yeah and and I think I also gave a
pretty detailed projection of what would
happen and if you go and look at the you
know the qts on that
um it's one of those things that feels
like somebody was treated like uh I
nailed everything to such an extent that
it that it seems less remarkable today
because of you know it was um it's
almost like reading back history there's
like one thing I think I got wrong which
was like you know that full face masks
would be more common for longer but
otherwise I think I played it out
relatively well I'm an angel investor
and so what I do is I look at long-term
trends and I'm very early on them I'm
early on genomics and Robotics and Ai
and most of the time you want to
identify those things that have a lot of
positive upside right but Africa covered
was the first time I was looking at
someone's like I cannot
I cannot figure out a way that this
isn't bad you know what I mean like it
was kind of like that I just was looking
at chimney graphs too many charts and
like you know this is the first time
I've seen something you have to work
back to that time which is now several
years ago and I was like
this is the first time I've ever had a
Sinking Feeling where it's like down
into the right you know
um and that's mainly because I wasn't
really looking at such graphs I wasn't I
wasn't paying that much attention before
the financial crisis
um
I was in Academia at that time I was
just wasn't looking at markets or
whatever but I've got that kind of
feeling again let me let me actually
show the slides and and maybe jump go
there right perfect this concept of the
Fiat crisis right uh one way of thinking
about it is it's like okay how fast
could you know things unwind how fast do
they start printing trillions well it
was two days from the collapse of
Silicon Valley Bank to the printing of
300 billion dollars even if they didn't
call it printing it was two weeks for
500 billion dollars to move out of local
banks to money market funds and to uh
you know big Banks and so and so forth
for them to flee right
um it was two months to go from patient
zero the first patient being infected by
covet in the U.S to lockdown
um as January to March of 2020.
it was two quarters from uh Bernanke
declaring that it was a quote mild
recession in April 2008 the full-blown
financial crisis being acknowledged in
uh September 2008 okay finally it was
two years for the USSR to go from
superpower in 1989 to Total collapse and
non-existence in 1991 okay and so you
know the lesson of that is that too slow
is too late right that was you know two
days two weeks took months two quarters
two years too slow it's too late and
meaning if you don't react quickly
you're going to be too late you're going
to be the one left holding the bag to
get smashed by the freight train
well yeah and then what does react mean
and the thing about it is
um Paul Graham actually has a good
saying which is when something is
exponential it always feels like you're
reacting too early
and the reason is because you don't have
the normal social cues around you it's
like um uh it's like it's like flying by
instruments as opposed by opposed to
flying by looking out the window right
looking out the window you can see
nothing is wrong but instruments show
actually beep beep there's a big
mountain in front so you should pull up
right and you have to essentially trust
your instruments at that point because
nobody is saying anything everybody's
calm and um that's like absolute
Reckoning as opposed to relative
Reckoning
um and uh that's an unnatural way for
humans to behave especially when it
comes to doing something atypical
um you have to have the you know that's
what being an individual investor is
like that's what being an investor is
like I mean the whole point of course
you've heard Buy Low sell high right
um you know why it sounds oh yeah it's
much harder than it sounds right because
right if you're if you're buying low
you're going against a crowd if you're
selling high again you're going against
a crowd buying low you know you're
you're you're getting something when
everybody else thinks it's a bad idea
you're literally going opposite the
crowd both times so it's trivial when
you look at a graph oh I bought here and
I sold air when you actually if you
could have VR that would project the
emotions of the moment and then you're
hitting the buy button and at that time
and as you say the time to buy as much
blood in the streets or whatever right
or you you know you get greedy with
others or fearful fearful if you get VR
that captured the emotions at the moment
and being very contrary to the crowd
um it feels very different you know
anyway so
so too slow is too late and many things
are breaking okay so
um there's the recent debt ceiling
Showdown that was a near Miss but the uh
it boosted uncertainty in U.S debt it
felt like the conversation was different
this year did you feel like that as well
very much so and I reacted differently
and moved my money differently and yeah
it not only did it feel different when
you look at the chart of How High the
debt ceiling is now compared to what it
was last year like it is a straight
vertical line it's crazy yes that's
right and what's happened is basically
like
um in a sense you know you can think of
it as
um
the more people can deficit spend and
borrow without apparent Consequence the
more they do so it's as if you had a
seemingly infinite credit card and there
were no consequences for decades and uh
you were like accelerating into the wall
right because it just feels like nothing
is happening hey we're such a superpower
we're so Invincible even as the tide is
going out even as it'll get to like you
know Foreign Affairs now agrees it's a
multi-polar world
um China is like the number one car
manufacturer out of nowhere they're
becoming a plane manufacturer like all
of these graphs a huge amount of
essentially the US's
scope around the world is narrowing very
quickly
and its domestic scope there's massive
internal conflict
and yet its Ambitions go to the sky even
at State capacity is falling through the
floor
does that make sense right so
um one thing I want to Anchor people
around and I want to know if you think
this is true that the the the collapse
the big collapse begins with debt
and if it I think that the story that
we're going to go through at least in
the beginning part of the interview is
really a story of debt
um do you agree with that it is it is
debt but it's also
um you know it's it's it's several
different shocks at the same time
um so uh you know
dalio actually talks about
um the and I'm deciding him because I
think he came to similar conclusions but
I actually have in some ways maybe a
more hopeful take or or some of
different takes in terms of similar
inputs different outputs so yeah there's
the economics where you have
um essentially sovereign debt crisis not
not just brewing underway with lots of
smaller countries already defaulting but
you know the big ones you have to come
potentially
but you also have massive internal
political conflict in the U.S and you
have massive external superpower
conflict between the US and the dragon
bear you know Russia plus China
um
and you also have
um you know a couple other factors which
are a huge consequent decline in the
US's soft power globally and
domestically so you know super
majorities of Americans don't trust DC
and abroad you have you know France
Brazil
um Israel even uh you know allies right
that are trading in Yuan or declaring
strategic autonomy or you know Brazil's
is housing Iranian warships
um and uh even Taiwan said it would
shoot down you know U.S uh uh planes if
they tried to bomb tsmc right and um and
that was like a little Tempest in a
teapot but it was clear that a lot of
countries are kind of going their own
way okay and then finally you've got the
technological shocks
um where uh you know the in a sense
um
you know for like the ABCs of economic
apocalypse for blue America in
particular are you know AI Bitcoin and
China in the sense that AI takes their
jobs and Bitcoin uh takes their power
over money and China takes attention to
their military power
um because lots of the jobs especially
like you know the Northeast are lawyer
bureaucrat doctor like licensed jobs in
some way where an AI might be able to do
them better faster cheaper
um and then finally you have um the
uncensoring of social media and that is
you know what alone is done with Twitter
uh but it's also
um you know YouTube is following suit
they've they have reduced their level of
censorship on certain things and then
you also have things like Noster and
forecast which are decentralized social
media so that's like a digital glass
nost to a company bitcoin's digital
perestroika okay meaning
um when the Soviet Union collapsed you
had truly free speech which was uh you
know like a glass dump honest and you
also had free markets which is
perestroika and we're having that in the
west so you have like a lot of different
shocks hitting at the same time it is
not simply the economic shock it's in
the context of everything else does that
make sense all right so we have all
these things colliding at the same times
what I'll call a rogue wave phenomena
yeah and let me kind of just show yeah
like Rogue Wave right so but um Let me
show what all these things are right so
mentioned death ceiling was like a near
miss that the boosted uncertainty in U.S
debt
um there's an ongoing banking crisis
most U.S banks are quote technically
near insolvency hundreds are already
fully insolvent okay that's you know a
guy who disagrees on many other things
it's got a root beanie
um you know is saying that
there's a banking price at the time of
you know uh in in um May June of 2023
we've seen through the largest through
the four largest bank failures in in the
last two months somebody uh this guy
Bianco Jim Bianco Bianca research coined
the term it's not a bank run it's a bank
walk right deposits are leaving Banks
regularly
um they're not uh they're they're not
moving um all at once digitally
overnight they're moving pretty fast
um and they're moving to places with
higher interest rates they're moving out
of regional Banks right hundreds of
billions of dollars
um and uh you know when you start
something off with three of the large
four bank failures in the last few
months is that is that the end of
something uh you know it's funny uh you
know somebody observed
um the reason the banking crisis is kind
of operating in slow motion is we don't
have
um
it's not like on a blockchain where you
can see real-time financials for
everything in Banks you have to sort of
wait for the quarterly reports
so it's a hurry up and wait kind of
thing so every quarterly report that
people look and they're like oh my God
the losses are so big and then you know
they act on it right
um this is kind of a slow motion thing
in some ways I'm not saying there aren't
things that happen in between quarterly
reports sometimes there are like
obviously a bank run but but often
quality reports kick off a whole new
burst of activity
moreover it's not just you know these
these huge banks that have just filled
um Stanford study reports there's 2.2
trillion dollars in unrealized losses
that many U.S banks face the same risk
of Broad and Silicon Valley Bank and
fundamentally
um what happened as it will get to is
the the fed and the treasury
um the FED basically devalued treasuries
so the Bedrock of the financial system
everybody who bought treasury because
long-term treasuries in 2021 got
completely destroyed in 2022 and some of
those institutions started to collapse
in 2023 and so the safest asset in the
world became the risky assess in the
world how did they undergrade in return
this is an important idea how how does
how did the government end up doing that
let me give a few analogies first and
then let me get more kind of technical
or specific
do you remember in 2008 when the banks
uh sold AAA mortgage-backed Securities
to each other but they really weren't
AAA
right and it was something where it was
a combination of some of those guys
relying to themselves some of them were
lying to themselves so they could lie to
others the ratings agency is rely like
everybody was kind of uh you know a
combination of it's like self-interested
delusion right
um where you know oh my God are you
saying that these mortgages aren't
aren't real that would mean a housing
crash that would mean all these people
are going to lose their homes that's
anti-American right
um that was the tone in 0607 what are
you saying the housing market doesn't
always go up you're crazy right you're a
Doomer and uh you have to work back to
that period of time
but that is one of the reasons why this
is allowed to go on for so long the the
housing credit so I was able to get so
bad is because people thought well real
estate's the safe investment it's always
going to go up when is that ever going
to go down the government is backing it
et cetera et cetera right
and the AAA ratings
um on mortgages or or mortgage-backed
Securities is part of what allowed the
crisis to get so bad and one of the
issues was the rating agencies were not
able to down rate those things
um for a variety of reasons one is that
they're paid by the the you know uh the
the guys who they're they're rating okay
but so that's a private issue but the
second is later
um for example in 2011 when an s p
actually downgraded U.S debt from AAA
you know what happens to them no
no they got uh they got
um you know a case from the US
government and I believe like a senior
official there this guy you know Sharma
had to step down these government did
not like
um s p downgrading the debt and uh I'm
pretty sure that you know the government
would not have liked the ratings agency
is downgrading the mortgage-backed
Securities either in around 2008 because
it bipartisan Thing by both Bush and
Clinton was to get people into homes
okay nyt has this article like you know
the Bush Drive for home ownership fueled
a housing bubble and then there's
another one which was how the the
Clinton era roots of the financial
crisis okay in the Wall Street Journal
so if you have sometimes binocular
vision where you take the New York Times
attacking Republicans in the Wall Street
Journal that's attacking Democrats you
put it together and you're like oh that
was a bipartisan government caused
housing crash did you know that part
no
okay that's actually pretty important
right
um it's important what follows because
uh there's a bunch of movies that have
been made on the housing crisis and uh
there are some of them are good movies
there's The Big Short uh which talks
about you know The Outsiders and they're
seeing the problems there is uh
too big to fail which talks about like
the government's vantage point on it
um there's Margin Call which talks about
the bank's vantage point on it there's
inside job which is sort of like the
activist point on it which is calling
for more regulation but what there
really hasn't been at least to my
knowledge is one that shows the extent
to which government policy pushed Banks
to
um you know again in the words of both
the the times in the journal to
um because they wanted to get people
into houses because they wanted
affordable housing goals ending
redlining and so on and so forth both
the journal and the times are publishing
the truth on this around that time in
the early 2010s so the government was
nudging pushing Banks and if you didn't
um uh if you didn't go and uh you know
extend all these mortgages to people who
probably couldn't pay well often you got
acquired by a bank that did and that
would kind of
um you know override your decision
making anyway
so hold on I think it's important to
understand why why they're doing that so
are these ESG style goals where there's
like a moral imperative that's driving
it
that's exactly right you know for
example here's a quote December 21st
2008 again when the New York Times had
an incentive to attack Bush over this
um they said Bush Drive for home
ownership fuel housing bubble quote we
can put light where there's darkness and
hope where there's despondency and part
of it is working together as a nation to
encourage folks to own their own home
George only Bush October 15 2002 right
so that is the approach which says oh we
deregulated the market and you know push
people and so and forth
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
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yeah
there's some truth to the idea that
um they pushed lending standards to be
low but that's not exactly the same as
deregulation to actually use regulations
to push Banks to hit certain uh whether
you call them formal or informal quotas
they were doing that then the other side
of it is
um the Clinton era roots of the
financial crisis in uh you know Wall
Street Journal article in 2013
and um that says affordable housing
goals established in the 1990s led to a
massive increase in Risky subprime
mortgages right and uh you know there's
a strong case the answer is going to be
traced to September 12 1992 on that day
presidential candidate Bill Clinton
proposed using private Pension funds to
invest in government priorities such as
affordable housing sharing long-term
broad-based economic benefits right and
um so the point is if you add up these
two articles again you start getting
binocular vision have you heard that
saying like uh you know there's there's
a stupid party in the evil party and
sometimes they get together and do
something bipartisan and that's both
stupid and evil have you heard that nice
it's lovely it's good right okay so one
thing I don't want to get lost in all
this I really want people to understand
why this stuff is happening so this is
maybe you and I don't agree on this but
I I am formulating a hypothesis the more
that I get into this uh that the
following is what's happening and this
is this is actually me synthesizing you
and dalio and a few other people like
Rao Paul so you what ends up happening
my thesis goes and please strike this
down where you think I'm wrong is that
uh you become the reserve currency you
now have the ability to print money to
cover up problems uh that begins to
change the uh the way that people
perceive money even at the governmental
level so now all of a sudden people
start trading what works in a free
market sense of working that you spend a
dollar you get to in return it exchanges
that for I I think morally we ought to
do this thing we do it it's not working
meaning that we're losing money so you
get the 2008 crisis but they're like
what crisis we're just gonna pay for
over it we're going to print money we're
going to it was bad but it wasn't fall
off a cliff bad
and so they print over that and they
they go oh look see that wasn't that bad
and we were doing something good and
we're trying to be moral actors because
to be honest like this was the big
Awakening that I went through I'm like
this sounds awesome I love that you're
ending redlining you're getting people
onto the housing ladder that previously
weren't like it all sounds amazing but
then Thomas Soul comes along and he
gives me this idea that then you start
watching play out which is the last 30
years have been marked by exchanging
what worked for what sounds good now
when you tie that to debt because again
my whole thesis
is that the collapse begins with debt
because if you don't have debt you can
get away with some of this but the
problem is you you end up getting into
the moment that we're in now which is
why you talk about all these problems
happening at the same time the reason I
think this becomes a that you're
potentially about to walk off a cliff is
because you have all this debt the
government has a full GDP in debt uh U.S
households have full GDP in debt
corporations have full GDP in debt and
so now all of a sudden the only way out
of that debt is to either lower your
interest rates which if you do that then
you're going to have inflation uh to
print money to cover some of your debts
which again inflation and so if you have
to print and you can't lower rates
anymore
now you're in trouble so they start
raising rates the problem is everybody's
got all this massive massive debt and
this is where editors put back up that
the debt ceiling picture where we see
this huge spike in the last year where
it is just mahusif the the amount of
extra debt that we have right now is not
a little it is it is unbelievable it's
like 400 more than normal it's just
absolutely astronomical so you have this
massive amount of debt you can no longer
lower interest rates in fact you have to
start raising interest rates the FED
gets everybody again this me quoting you
the FED gets everybody to buy into the
bonds treasuries like hey rates are
going to be low for the foreseeable
future all is good and then whatever six
months later they take them to the moon
the fastest rake height in in history or
certainly recent memory and so now
people like whoa whoa all these bonds
that I just bought they're now toxic I
can't get them off svb fails everybody's
blaming them as if they did something
crazy they put all their money in like
the supposed safe ass it and so now
you're in this game of like the only
solution left is to print because you
you can't lower interest rates uh
because if you you can't lower interest
rates because of inflation you can't
raise interest rates because you will
break the economy and more people aren't
going to be able to pay their debts
including the government itself and so
now you're in a conundrum where all of
your tools are gone except printing
money and so the question that I'll ask
you point blank is we've printed a lot
of money and nothing bad has happened so
why why now why why is it a problem now
in short like the system is starting to
Creak and you're starting to see uh what
I'd call consumer failures like in the
sense of in 2008 you know when you went
to your ATM or something that didn't
that that just continued to work
um the failures didn't were like
Enterprise failures in the sense that
there were guys who were sweating in
skyscrapers with piece of paper back and
forth that weren't where they what they
thought they were now you're having
Banks Blow Up on uh on Main Street
um you are having it it is becoming much
harder to cover things up okay so we
just talked about the fact that all
these Banks blew up the fact that there
was this near miss and the deaths in
we've got people talking about debt
again uh the fact that there's 2.2
trillion unrealized losses according to
the Stanford study and I'll come back to
what those are but we have
commercial real estate crisis due to
remote work due to all the crime in blue
cities and and so on
um commercial real estate prices could
crash 40 from their peak in a worse
disaster than the financial crisis
Morgan Stanley Morgan's okay that alone
is pretty bad all right
um two uh it was the worst year for
bonds evidently in recorded history
um so it's a bond crisis not just to
bank Christ and everybody buys bonds as
we'll come back to that SEC that's
actually at the core of a lot of this
um and uh you know monster scene is a
safe haven but now but they're actually
Central to to this this crisis it's not
like a
um it's a crisis that's caused by
governments just like 2008 but even more
directly
um Insurance remember AIG when they went
down in 2008 like the guys who were
supposed to backs up everybody you know
so today insurers also bought a lot of
bonds
um and you know double digit percentage
of their portfolio which are supposed to
be safe are held in now essentially
these unsafe assets are being devalued
in a big way isn't it like 70 of their
portfolio yeah exactly there's a graph
here life insurers have like 70 percent
and you can go to other kinds of
insurers and the thing is life insurance
you might say oh well that's different
than real estate Insurance there's
actually been a collapse in life
expectancy in the US like this overnight
huge collapse life insurers are paying
out way more than they expected and um
so lots of insurers are just getting
um they have to pay when they didn't
think they were gonna have to pay
okay this insurance crisis there's a
fiscal crisis 1.4 trillion in unfunded
pensions there's auto loans spiking
defaults in that trillion dollar plus
sector their student loans payments uh
May resume on 1.8 trillion in debt after
this multi-year holiday due to covid and
it's almost like the worst right if you
if you just kept it or you'd forgiven it
right both those you know would have
been better than suspending it for three
years and then resuming it because now
what's happened is
um people didn't sock away the cash for
a rainy day right they didn't
um didn't use it to pay down the debt
they just expanded their spending and
now suddenly it made them probably
gamble that uh you know the the the
um student loans go away forever right
and uh because it got suspended now
they're coming back they're like oh no
and now they've got that on top of their
rent payment or something like that so
that's going to be it let's use this as
an example so why then don't we just
forgive that debt
oh you I mean well first that's a that's
a huge tug of war between two groups
you're when you you know if one man's uh
assets and every man's liability you are
marking down a trillion dollars in
someone else's books and they will fight
to the nail to stop that from happening
right
um and uh so it's a zero-sum game it's
like
if you have the debt you want it to be
marked down if you if you're the uh if
you're the lender
you don't because that's your Revenue
stream right that's how you know maybe
if you're in college that's how you pay
your administrators or whatever right uh
why doesn't the US government just pay
that debt
well it could and if it does do that
then it's just printed a giant amount of
money and uh then people say why don't
you print the you know my mortgage as
well not just my student loan debt why
don't you print my car alone away right
and once you've kind of broken the seal
on that that's like the people's QE the
people's quantitative easing where the
money is printed not just to bail out
bangs but to bail out everybody and you
know what like At first people will some
people will love that but that much
introduction of money into the system
starts actually devaluing the currency
itself so you talk about student loans
there's credit card debt almost a
trillion dollars credit card debt record
high okay
um there is uh and there's yet more
right globally there's Ukraine the
Ukrainian crisis that's like at least
100 billion in it's a it's like 100
billion in direct costs for just the
arms but that understands it it's it's
easily a trillion indirect Europe alone
paid like 800 billion in energy costs
it's like a multi-trillion dollar War
um you know people say Wars cause blood
and treasure they I mean just think
about it like you've seen obviously
these bombs blowing up things in Ukraine
or what have you think about how
expensive a building is right it's like
somebody's entire life to pay for like a
like a house you know 30-year mortgage
or whatever so now you have a bomb that
blows up like a thousand percent of
apartment building that's like a
thousand economic lives wrecked right
even if the people didn't get blown up
it's like a thousand healthy working you
know uh people's 10 years of their life
or whatever is consumed if at current
very high housing prices so when whole
cities are leveled and stuff like that
that's a lot of damage right
and that's just within the country
obviously outside the energy crisis is
tremendous and of course the
humanitarian crisis is tremendous
um you also have so it's you know it's
the Ukraine crisis you have the energy
crisis in in Europe and some people are
like oh well price are down Synergy
price is over and it's like well what
was the cost of that right you had
demand destruction you had businesses
that shut down because they couldn't
afford the energy costs and then they
stopped consuming energy and maybe you
know that's that's why Energy prices are
down because they're not consuming you
know the the level of demand destruction
that probably happened in Q4 of last
year you need to see stats on it
and a Q4 of 22.2
um then dedolarization uh this guy
Stephen Jen who's not like uh he's not
like a Zero Hedge guy
um he says dedolarization's happening at
a stunning pace and people did not
um account for exchange rates and so on
he's like by his calculations uh you
know the dollar was down like you know
in terms of its share of
um assets but held by other countries
like 19 last year and everything else is
up you know southeast Asia
um all those countries the 10 countries
are using uh their own currency for
trade Indonesia president said that
Central Asia the ACU
um they met they said they want to
de-dollarize
um you have uh you know South America
Latin America Brazil saying they're
using the one you're in France saying
they want to use Iran you have Iraq in
the Middle East trading oil for Yuan you
have Russia trading role for Yuan
um and uh you have Israel even holding
you on and uh you know that's a lot of
countries that's a lot of the world
right there you know and um so
de-dollarization if the dollar is no
longer have to be used in an obligate
way right if it's no longer
um you know
it's only the thing you have to use if
you have options then that means you've
got another rail to go on and one thing
I should make clear by the way is I
don't think um this is very different
from dalio actually on this he thinks
the dollar just gets replaced by China
that's a clean kind of U.S China
replacement I actually think that
dedolarization is decentralization so
the kind of clean statement is money is
a store value meaning of exchange unit
of account and sometimes in the
cryptocurrency you might also include
like a system of control and like a
financial system okay so the store value
um that you know from treasuries or
you're just selling the dollar itself
you may go to goal central banks for
buying record amounts of gold or you may
go to bitcoin
uh or you may go to foreign Fiat so
medium exchange you may use foreign Fiat
currencies that you want you may use the
repeat you may use local currency you
may use cryptocurrencies
um in roughly that order I think so you
know
um
in terms of unit of count that may
Remain the dollar for a while but that's
like the last thing to flip you know
basically you can just look up an
exchange rate you know and flip that
that's the easiest one
um system of control is the most
important in some ways it's not normally
listed this is due to Andreas
Antonopoulos he came up with this
concept but system of control is who has
root access over the currency you're
using you know this was not necessarily
quite an explicit Concept in the past
but today it's very explicit is the Fed
can literally hit a button and freeze
accounts just like they did to the
Canadian truckers just like they did to
Russian assets you know the Kansas Bank
uh you know banking system to debt
and so system of control you know the
Chinese Yuan the Indian rupee Bitcoin
and ethereum those are outside the
ability of the US Financial system to
set down to shut down with one click
okay
um
then there is the financial system and I
think that's uh the Yuan and the repeat
for the domestic economies that's maybe
uh you know in the Middle East AED
device currency is still pegged to the
dollar maybe it gets unpegged uh you
know there's a Singapore dollar and then
of course there's ethereum and the
Global Financial system that's built on
on crypto
um so you have essentially both What I
Call Land and Cloud competitors to the
dollar land being you know the sort of
bricks and especially China you know
currency and then Cloud being
cryptocurrencies right and so once you
start enumering all those then you add
on top of that there's a huge
development since 2008 which is
um there's lots and lots of fintech and
crypto people around the world
okay and if you go to other countries
um often their payment systems are more
advanced than a Divas for example
um like WeChat in China or UPI in India
or you know even like you know grab pay
in Southeast Asia or you know Pags to
grow in Brazil and so like you know it's
not that hard nowadays stand up a
fintech or crypto company right and
um by contrast you have ACH and so on
within the US where it's like slow wire
times and what have you you know what
I'm talking about right like how uh
payment technology is relatively lagging
in the US yeah as soon as you get into
crypto You Realize Real Fast uh how slow
the Legacy system is so the point is
that
um the only thing the U.S financial
system is going for it is its Legacy
traction it's not technologically
Superior
it is not something which you choose
from scratch because the US is no longer
a major exporter of physical Goods
relative to China China's the world's
number one trade partner it's
um it's not something that either your
engineer in the U.S would pick or you're
conservative in the US would pick or
um you're you're much of the world would
pick right so it's an incumbent that has
incumbent advantages but if if it had to
be adopted from scratch today it's not
clear that it'd be adopted in that way
does that make sense right so that's
important that the rest of the world it
it's much easier to launch currencies
than to scale factories I've done both
okay it's not trivial to launch currency
but it's digital basically China is the
number one trade partner for most of
most of the world right yeah I think
that's shocking to the average listener
they they have no idea that's true see
here's the graph right like essentially
here's the US in the year 2000 here is
China's you know trade and raise you
know this is why it's amazing right and
so the thing is that's that's only
accelerated over the last three years
right in a sense of course that's really
terrifying this is where I I feel like
um people aren't seeing how all these
things are adding up in fact I wrote
down what I think your thesis is because
I'm again I I don't quite know if we
compact fully agree so it's like you've
got okay there's all the problems that
we just went through all the debt all
that stuff plus the lack of financial
Innovation on behalf of the US is is
leading to this moment where we are now
weak to contenders and the most obvious
Contender is China
um how close am I getting to
the stack of problems or the stack of
issues that you think are creating what
I referred to earlier as the rogue wave
that seems prone to be uh the mark of
the end of the US Empire I think the
lack of financial donation is certainly
a factor uh but it's it's really I mean
the physical world is made abroad right
like if you have to choose if you as I
showed that graph countries don't want
to choose but they have to choose
um try to make sure your chairs and your
screws right people think the
competition with China is like a
high-tech military competition in large
part it's a low-tech economic
competition China will screw you on the
screws right they will literally just
withhold the nuts bolt screws and so on
you can't make things right terrifyingly
during covid the medication and PPE
masks and so on yep that that's right in
fact actually there was there were
there's Aid air lifted it wasn't wasn't
made public or it was made public but
wasn't emphasized Aid came from China to
the U.S so August 6 2020 Rolling Stone
the unraveling of America and
essentially uh here's here's this thing
he said he's like um
basically
for more than two For the First Time The
International Community felt compelled
to send uh disaster relief to Washington
for more than two centuries reported the
Irish Times the United States has
stirred a very wide range of feelings in
the rest of the world love and hatred
fear and hope and being in contempt upon
anger but as there's one emotion is
never being directed towards the us
until now which is pity
it's American doctors and nurses eagerly
awaited emergency airlifts of basic
supplies from China the hinge of History
opened to the Asian Century okay that's
right
now the thing about it is I actually
somewhat discrew the quote in the sense
of this is actually I'd say not for more
than a two centuries it's really about
like U.S World dominance actually
relatively recent you know it is not
it's not like an eternal fact it um
there's this book by Stephen wertheim uh
which is good which is um
it's like called tomorrow the world uh
the birth of U.S Global Supremacy okay
do you call that do you mark that after
World War II
well it's actually in the lead up run up
to World War II and the thing is I mean
this is sort of obvious but you don't
become number one by accident
right it's like it's like it's kind of
like um deciding to do a startup right
you don't become Google by accident it's
really hard to become Google you have to
set out to become Google it's a it's a
very difficult process and even those
who set out to it don't don't come in
the reason I say that is
a lot of people just sort of think oh
you know the U.S kind of just fell into
this role and you know it it didn't it
didn't you know I never wanted to be you
know totally World dominant with
embassies in every country in in
military-based area or in a financial
system everyone regulations after work
no there were people in Washington DC
who had a quote plan for world
domination just like the Soviets did and
uh you know the difference is that I
think that from 1945 to 91
um the American version was better than
the Soviet version and why is that it's
because uh you know if you look at West
Germany versus East Germany West Germany
is better off South Korea versus North
Korea South Korea is better off you look
at
um you know the uh Taiwan and uh and
Hong Kong which are you know capitalists
and the PRC that was Communist for for
most of the Cold War
um and and the the Western aligned
countries were better off and so just
looked at it in terms of that neutral
ground the American American system with
its flaws from 1945 to 1981 was better
than the Soviet system
if it was Court world domination was
relatively benevolent world domination
what I think happened after 1991 is
um without the Soviet Czech uh you know
as bad as the Soviets were and it's good
that you know that is on the ashy of
history and Eastern Europe is free and
you know India's gone on capitalists and
all of that is generally good even
though it was tough for a lot of the
former Soviets
um what happened is the you know over
time
um at first US just helped Eastern
Europe get back on its feet and it was
occupied in making sure that the Soviet
Union didn't totally blow up do you know
for example that um or the post-soviet
since do you know that the uh they shell
the the Russian White House in 1993 do
you know about that no
yeah the like you heard a lot about TNN
in 89 but you didn't hear about 1993 and
Yeltsin ordering like the Russian White
House to be shelled with tanks even
though that's more of a
like
um you know
Russia was at least within the Western
Camp ish at that time ostensibly it's
like a it's a new democracy and so on
and so forth you've never heard about
that most people have not heard about
that but basically the the post-sovied
era was a huge mess and the U.S to its
credit like essentially supervised that
mass and it's revealed later that you
know the U.S was backing Yeltsin it
wasn't like a complete organic thing
that Yeltsin you know became Prima
Center Paris
um of course you know the CIA all these
guys have an interest in loose nukes not
making their way around so the US was
all over that situation it's almost like
um you're seeing a waiter they catch a
bunch of balls that have fallen you know
down from the air like it's like a bunch
of plates go in there to go look at this
and catch them you know so
in the early 90s I think the US overall
was doing a decent job not a great job
in some ways than foreign policy Eastern
Europe is way better off than it was
Estonia is way better off than it was
I'm not somebody who's just like oh the
US is always evil and so forth not at
all in fact I think the US has actually
done a lot of amazing things
what started happening in my view
towards the end of the 90s and then
especially in the 2000s is you started
to get that Messianic crusading neocon
slash Samantha power slash
responsibility to protect kind of thing
arguably starting with you know Kosovo
and then going into you know like Iraq
and all the Middle Eastern forever Wars
and then onto the present day where you
know we've got why is this
why is this bad good question
um the reason it's bad is that
Wars are never clean you know they're
always sold to the public on this clean
line of like here's the bad guy here's a
good guy and
um they're very very rarely clean
um like even even World War II you're
talking about like the firebombing of
Dresden you're talking about the nuking
of Hiroshima doing lots of civilians and
Innocents killed right and many other
Wars are much more great than that a b
is
um
like in general War should be a last
resort absolute absolute Last Resort and
usually you want to solve things with
economics or some kind of political
solution or something like that and uh
the reason it was bad in the late 90s is
um
it's it's just unchecked power you know
actually that's what am I think about if
power corrupts absolute power corrupts
absolutely have you heard that before
right of course so
um right so basically uh you know
especially like Iraq has something I
think we can have consensus on a country
is totally blown up on totally false
premises eight trillion dollars was
wasted on these Middle Eastern Wars huge
part of the debt by the way okay
um Iraq Afghanistan and so on
um Isis formed in the aftermath of that
all these countries in the Middle East
were destabilized
and for what
like there's no accountability a lot of
the same people are still in power a lot
of those neocons are still you know
advised they're saying now war with
Ukraine it's totally memoryless it's
like a sociopathic serial killer at this
point right and at best you'll get well
we meant well and then move on why do we
bring that up you know and why are you
dwelling on the past okay
well
um I mean we're going back to 1619 but
we can't go back to 2003 right like um
you know people will selectively
excavate aspects of History uh and and
use them as a weapon in you know like uh
the the current events but they they
won't do the things that you know in
your times was responsible for printing
this false intelligence and uh but they
want to go back 400 years to not to
their own their own faults right so like
if you notice like from 1945 to 1991
again like you can't defend everything
that yours foreign policy did during
that period
um people say oh they're right-wing
death squads and so on probably there
were but you know what they were
left-wing doubt squads the Communists
killed 100 million people and they
didn't play nice you know like the
Winona decrypts have shown that uh you
know that is v-e-n-o-n-a have you heard
that before no not once okay Winona
venona showed that
um basically the Soviet Union had
riddled the United States with Soviet
spies uh in fact you