Bankless - 127 - Is this the End? | Lyn Alden

Episode Date: July 11, 2022

✨ DEBRIEF ✨ | Ryan & David's Unfiltered Thoughts on the Episode https://shows.banklesshq.com/p/127-lyn-alden-debrief  Lyn Alden is the Founder of Lyn Alden investment strategy and is a leading expert in macro markets. She focuses on long-term debt cycles and how it’s impacting crypto, fiat, bonds, and equities markets. This is Lyn’s third appearance on Bankless. Each time she’s on, it usually means something is breaking in the macro markets. And something definitely is. Lyn thoroughly explains everything from whether we’re repeating history to what would turn this recession into a depression to whether or not we’re going to be okay. Don’t worry, Lyn shares her advice on how to be exactly that and more. Her superpower is to provide clarity during unclear times and this episode is no different. ------ 📣JUNO | Crypto Friendly Banking https://juno.finance/bankless  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: 🚀ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool  ⚖️ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  ❎ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🦁BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave  🌴MAKER DAO | DECENTRALIZED LENDING https://bankless.cc/MakerDAO  🔐LEDGER | SECURE STAKING https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 6:12 Is this the End? 11:08 Debt Cycle Arc 15:40 The Dollar Milkshake Theory 20:05 Historial Analogs 30:35 How Do We Get Stable? 38:30 Weak Market Links 48:24 Raising Rates 55:03 Deflation & Softer Landings 1:00:19 Fed Meme & Competency 1:07:52 Recession vs. Depression 1:13:06 Markets to Watch 1:18:15 Are We Going to be Okay? 1:22:58 Energy, Food, & Fertilizer Markets 1:29:21 The New Normal 1:36:02 Mental Health 1:38:37 Closing & Disclaimers ------ Resources: Lyn Alden https://www.lynalden.com/  The Death of the Dollar Dominance https://youtu.be/_Kqcrz3u8rQ  Inflation in 2021 https://youtu.be/dyDsQ-XCoNo  Fed Meme https://twitter.com/cobie/status/1542562195573297153  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to bankless where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Once again, guys, the bankless journey has veered into macro territory because we've got some big questions. These are tumultuous times in macro markets. And we brought on Lynn Alden, who is the perfect person to tell us more about this. And our basic question for Lynn, David, was, are we going to be okay?

And her answer was kind of. It depends. Not really. It's complicated. Maybe not. The big question is, how are we going to get out of this? And this is what we asked Lynn, a few things to look out for in this episode. Number one, what's the checkmate for central banks?

What do they come to an end of their capabilities? Number two, why crypto is the only honest market left? Lynn makes the case for that. Number three, is this capital R recession going to turn into a capital D depression? And number four, a theme of this episode is what decade are we in? Is this the 1940s, the 1970s? Oh my God, is it the 1930s? I hope not.

Number five, we end with some tips on how to prepare, just basic life advice, what you should do to store your value with your career, even in kind of your family world. David, this is just a great episode for us. I think put a lot of missing pieces together for me in all of the craziness that has been the last three months, maybe the entirety of this year of 2022 in macro markets. We've had wars, we have inflation, we have the Fed doing all sorts of craziness.

Now we have a recession. What's that going to turn into? We get into all of those subjects. Yeah, the fog of war for macro markets and even crypto markets right now is really, really thick. Everyone's confused. Multiple people from multiple different parts of the world have stated that this is some of the hardest times, the hardest market like sentiment to invest capital. No one knows how to invest or

where to invest. People are just, they feel frozen. They feel like they have paralysis. And that's because the macro markets are so confusing. There are so many different things at play. And so we go through a list of them just with Lin Alden. We talk about the choices that the Fed has made and the choices that the Fed has left to make and how there's not really very many tools in the tool belt for their federal reserve. So those choices are kind of fixed. And so when we fix that steering wheel, where does that trajectory take us? And then we go into the macro, the external forces, commodity prices, energy prices, food prices. Those things are kind of fixed, too. There's not really much influencer choice that we as humans have over these things. And so when we blend all these

trajectories together, where do we go? And so that's ultimately where we conclude with this podcast. And then we finish off with, like you said, Lynn's advice. And her advice was, grab your bear market because, you know, you need to not go alone into the bear market. So that's what I'll say now is, as you go listen to this, grab your bear market buddy. Because listen with a friend. You might need it. Send this to a friend. Yeah. Guys, in all the chaos that's going on, I think you'll get a rare breath of signal from this episode because Lynn is always clear of thought and will help you shape the next decade and your outlook on it. We're going to get right into the episode. with Lynn Alden, but before we do, we want to talk about these awesome tools for going bankless

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it's time to ditch those risky extensions, and it's time to switch to the Brave wallet. Download Brave at brave.com slash bankless and click the wallet icon to get started. Bankless station, super excited to introduce Lynn Alden. She's back again on bankless. Anytime Lynn comes on the podcast, you know there's something going on in macro. And today is no exception. Lynn is the founder of Lynn Alden Investment Strategy. He's a leaning expert in macro markets, focuses on long-term debt cycles and how that's impacting everyday markets. Of course, a ton to discuss on crypto, on Fiat, on bonds, on equities, on whether Jerome, Powell is going to steer us off a cliff or whether we're going to be okay. And so, Lynn, we want to

find out what is going on. My first question to you, first of all, welcome back to Bankless. It's great to have you. And then could you answer the question? Is this the end? Like, are we all going to make it? I think a lot of people are worried. I'm worried myself. What's going on here? Happy to be here. Thanks for having me. I think we can divide it into a couple of different timeframes. And so when they're kind of the big macro scale, I've been using the framework of Ray Dalio, the long-term debt cycle. And so, So in that conception, it's the end of something big, right? But of course, the end is a long process, and it can be a decade long process.

So I think that basically, you know, with the long-term debt cycle, every several decades, when you reach a massive amount of debt, when you go down to zero interest rates and you have kind of just massive amounts of debt in the system, usually go through some sort of currency devaluation and system change, right? So it's not the end of the era, basically. And I think that's something we're seeing in a number of markets. But, you know, to get less do me than that. if we focus more on the near term, we're in a, you know, cyclical downturn. And not all cyclical

downturns become recessions, but some subset of them do. And so we look back over the past, you know, let's say pre-COVID. We had like a 10-year-long, you know, economic expansion in the United States. We still had three cycles within that decade-long period of accelerating growth and then decelerating growth. And it just that the decelerating growth never became negative growth. It never became an outright recession, even though you had a couple near misses there. And so what we've been in over the past more than a year now is a decelerating growth environment. And then combined with the fact that this one is so inflationary, you know, kind of leading up to that, that this one is becoming more severe and is kind of starting to look like a recession, at least by many indicators.

So it does not look like a recession in terms of employment yet, but by most other, especially leading indicators, it does look more recessionary. And tying this into crypto, you know, to the extent that I'm here, historically when you look at, you know, Bitcoin and crypto bull markets, a lot of people tie it to the Bitcoin having, which I think is relevant to some extent, but also actually matches up very, very closely with these economic accelerating and decelerating environments. And so, for example, we can use the purchasing managers index. It's kind of a go-to macro indicator for economic acceleration or decelerate. It looks like a sine wave over time.

And they average roughly three-year cycles. And it just so happens that all the Bitcoin bull runs were during these rising PMI environments and all of the downward or choppy sideways periods were in declining PMI environments. And of course, that all of crypto kind of goes up and down together, maybe with a little bit of a lag. And a lot of what dictates the PMI environments is also liquidity conditions. And so central banks and kind of dollar liquidity around. the world, generally, you know, one of the big questions was, for example, why is Bitcoin not

serving as an inflation hedge? And of course, that would extend to any sort of finite token. Why are these things going down when you ironically have high inflation and fee currencies? And there's actually really good charts out there that show, you know, Bitcoin in particular. I use that one because that's what most of the macro people will look at because that's the biggest, most liquid one. And you'll see that, you know, in rising global M2, so rising global money supply year-of-year, Bitcoin does very well in that environment. And now we're actually in a period where money supply is growing more slowly than it was a year or two ago. And you have multiple central banks mainly of the Fed kind of pushing back and strengthening the dollar compared to many

other currencies. And so when you translate all that back into USD-denominated global M-2 growth, it actually kind of came to a standstill. So ironically, now that, you know, price inflation is happening with a lag from monetary inflation, and some central banks are actually fighting back. It makes more sense while we're seeing kind of downward price action and a number of assets, including Bitcoin and cryptocurrencies. Lynn, you focus on like these long-term debt cycles, and you're really, really good at placing us in history, or at least like talking about what parts of history rhyme with our current phase. So I kind of want to pick your brain as to like where we are in the arc of this long-term debt cycle. And just for added context, we brought you on,

I think our first episode with you was episode 48, January 18th of 20, And we titled it the death of the dollar dominance. And this was basically a prelude of things to come where the dollar was really just going to lose its place as like the king of, you know, global currencies. And like we've seen events, you know, especially lately, we kind of see the writing on the wall. And then we had you on in August for episode 76 titled inflation in 2021. This was when inflation really started to pick up, which was one of the things that we kind of predicted with that dollar dominance. We were going to see dollar inflation. And now here we're. Here we. we are in July of 2022. And there's that like gif, that famous internet gif of that truck and it's hurtling towards a wall and like you just know it's going to crash. But then it cuts and then it's going to crash and then it cuts again. It never actually crashes. But it feels like the question that Ryan started with like are we at the end, this feels like with just like extreme inflation, extremely high interest rates, this kind of feels like the last hurrah before we really start to see like the actual just reduction of the dollar dominance.

Would you agree with this arc and just overall, where are we on this arc, this long arc of the global debt cycle? Yeah, so global debt cycles are kind of correlated to that global reserve status, but not necessarily the same thing. And so in the last kind of long-term debt cycle, we did see the transition from UK having global reserve currency to the United States. One point I've been making for a while is that, you know, now there's really no country large enough to have the only global reserve currency. That was kind of actually anomaly that persists in history. It's not something that necessarily has to repeat over and over again. And that I think we're heading towards a more decentralized type of system. And I think that was somewhat accelerated by, you know, the events we've seen in Ukraine, right?

So you have Russia initiated a war and then the West responds by cutting off their foreign exchange reserves. And then you kind of, you know, everyone kind of realizes around the world at the same time that, wait a second, you know, the money-like aspects of these reserves are maybe not as money-like as people thought, right? If they can be censored, if they can be confiscated, you know, whether or not you agree with the reason, that now gives an incentive to a number of countries to be like, wait a minute. I mean, we're holding liabilities of countries that we're not necessarily fans of. You know, what does that mean? What should we hold instead? And so I do think that we are, now we are starting to see, for example, gradual shifting away from the treasuries by Russia. It was obviously early to do it. China's been doing it since 2013. You know, Japan has been a big buyer of treasures, but now they kind of have to protect their own currency. So they're not really

buying treasures anymore either. And you've seen, for example, some of the economic forms, Putin is called for kind of, you know, alternative payment systems, you know, cooperation with some of the other peers like between Russia and China or Russia and India, for example. India's actually stepped in, even though India's more of a, you know, somewhat of an ally to the West than, you know, compared to China or Russia, they stepped into by massive amounts of Russian crude. And so I do think we're seeing a little bit more of a multipolar world emerge rather than a unipolar world, you know, just kind of a U.S. dominated global order.

I think it's shifting into kind of a more multipolar, you know, multiple centers of power. And right now we actually, the dollar index itself is very strong. But that's in large part because it's heavily connected, you know, it's heavily based on the euro and the yen. And Europe's obviously having a very specific energy crisis more so than even the rest of the world. And Japan's doing yield curve control with a very tight cap. And so basically it's one of those things where, you know, it's not that the dollar is weakening right now. it's actually quite strong, but the global demand for it, especially among foreign central banks, is drifting towards that more decentralized model.

And if anything, other past decade, we've seen a mild uptick and gold usage among central banks because, you know, I was just something like Bitcoin or these others, nowhere near big enough or stable enough for most of them to be interested. And so gold is kind of the, you know, the self-custodial inflation protected asset that they could turn to if they want to, you know, hold money for a long period of time and not have counter-party risk. So we have central banks that are definitely following the reducing the dollar dominance playbook. But we have the DXY, the Dixie, which is like the dollar strength index, having like I think 20-year highs or just really, really strong right now.

And so I want to ask you about the dollar milkshake theory, which I'm pretty sure you're familiar with, the idea that before there's a collapse in the dollar, there's a significant strength in the dollar because so many debts are dollar denominated, both inside the United States and outside the United States, that even if we are on the precipice of like a total reduction in dollar dominance in the world, first people have to buy dollars to pay back their debts. And then the big like crash and reset happens. Do you ascribe to the dollar milkshake theory? And do you see that as the evidence of what's going on in the macro markets as supporting that theory? So I think that the theory has a lot of merits. And I've actually met and

discussed and debated with the, you know, the person who proposed that theory, Brent Johnson. You know, on my acquaintances with them. And, you know, when people, macro people debate that theory, you know, the ones that understand it, it's not so much they disregard this theory. The question is, how does that theory end up? And so basically that for people that aren't enough to know, the point goes that, you know, United States is global reserve currency. That doesn't just mean that central banks hold it. It also means that it's the currency that most offshore debt is denominated in. So if an entity makes a loan to a developing country, either the government or a large corporation there, they often don't want to do it in their local currency. They'd rather do it

in a harder currency. I mean, that could be dollars, euros, yen, things like that. And a dollar, of course, is the disproportionate one there. And also, it's not even mostly U.S. entities that are necessarily making those loans. Entities in Europe or Japan or China will go out and make dollar-based loans to, you know, a country in Africa or a country in South America. And so as a result, the world outside of the United States has, according to the Bank for International Settlement, something like $13 trillion in U.S. denominated debt. Now, that's somewhat offset by the fact that the whole world outside of the U.S. has something like $50 trillion in U.S. denominated assets, right? So the U.S. has run these gigantic structural trade deficits.

It's actually about, you know, $14 trillion worth of trade deficits over the past, you know, call it 25 years or something like that. And they take those. dollars and then they buy U.S. assets. So they buy treasuries. Those start to become kind of worse investments. They shifted to buying U.S. stocks. They buy U.S. real estate and things like that. They kind of pile it into financial assets. And so basically when it comes down to the dollar milkshake theory, the point is that if there's any sort of disruption in dollar cash flows, the strength of the dollar goes up dramatically because all of that debt represents demand for dollars. And so they have to

basically, they have a short squeeze. They have to buy dollars if they want to cover their own debts or try to service them. Now, where that theory, I think, becomes so much self-defeating is that if the dollar spikes too much, like what we're seeing right now and what we saw back in action in March 2020 during the, you know, kind of the worst of the COVID crash, it starts to cause ironically U.S. recession, global recession, global liquidity problems, and then those foreign entities start selling U.S. denominated assets in order to get dollars. So you start to get problems in the U.S. Treasury market, illiquity problems, because. because the foreign sector stops buying or outright starts selling them in order to get dollars.

And so, you know, first it hits other countries, but then it ricochets back into us. And I think that right now we're kind of in that phase where it's ricketing back into us. And that's an environment where almost nothing other than dollars does well, including U.S. assets, U.S. stocks, you know, multiple things start selling off. And then, of course, Bitcoin and crypto is being so volatile and a smaller market, they generally, you know, there's some of the earliest things of the fall. They get crushed. but even things like, you know, equities, real estate, gold, just assets around the world sell off because basically this unit of account is strengthening so much and causing kind of for selling.

That's interesting. Yeah, it's interesting how interrelated all of these things are, Lynn. And, you know, you talked about sort of subscribing to Ray Dalio's long-term debt cycles, overarching thesis. And I've recently read his book, you know, principles for dealing with a changing world order, where he kind of looks historically at other empires and kind of the rise and fall of their monetary systems as well. And so you kind of wonder if this is sort of part of the fall of the U.S. as a monetary leader. And I think you're indicating that, well, before that happens completely,

there might be an erosion, right? And there might be some pluralism in terms of the monetary instruments used. But I'm curious if you could kind of ground us with any historical analogs here. So is this like something that happened in the 1700s? Should we go back to our history of other empires? Or even I've heard so many people talk about this as the 1940s. Maybe that's a good analog, you know? Or others have talked about the inflation of the 1970s. Some people, when you start using the recession word, people immediately think back to 2008, which was in most listeners, I guess every listener's lifetime who's probably listening to this. And it also feels like, hey, if things get really bad, if the recession, the R word turns out, into the D word, are we entering a 1930s type time range? So are there any historical analogs for this that come to mind for you? Or is this just the 2020 is it's a completely independent thing and brand new? So it's a good question. I mean, I think that that quote that is either correctly or false attributed to Mark Twain is really applicable. And I've used a number of times, which is history repeats. I mean, history doesn't repeat, but it does rhyme. And so analogs, I think, are actually really useful.

But of course, there's no perfect analog. And if you go back far enough, technology is totally different. And so basically the 2020s, you know, are their own thing, but we still learn from periods of history. I think that the base is to understand different analogs so that one can then see how they're different from that. If they don't study history at all, they're completely blindsided. They think it's all unprecedented, whereas actually there were rather similar environments. And so I think we can divide that into two parts. One is the, you know, you mentioned Dahlia's principles of focusing on that global reserve and rising and falling empires. And then that's different from maybe this current macro environment.

I mean, even though I think they're related. So in that book, one thing he does, he actually, he'll take an empire and he kind of goes back in history. So there's, you know, kind of the, call it the Chinese one, the United States one, the UK, you know, the Netherlands. He goes back in time, maybe 500 years or so when he tracks these handful of empires. And he grades them on multiple scales, right? So there's like their education, their military power, their economic size, their global reserves are of currency status, basically the acceptance of their currency by, you know, their various trading partners and other countries around the world. And there are some that are more leading and lagging than others. So education, for example, is a rather leading one where that starts

to rise before many of the others and then starts to fall before many of the others. Whereas the other ones, you know, because of network effects and momentum that takes a long time to turn around, those are more lagging. And so global reserve currency is actually one of the most lagging ones where all those other things come in a place first and then their currency gets widely accepted. and then even as some of those other ones start to clearly deteriorate, the global reserve currency is kind of the last one to roll over because there's still so much network effect and usage for it that it's the incumbent. It's very hard to displace until all the other pieces are there. And so Dali often point to China as kind of the rising power compared to the United States, which is in many ways compared to the United States with the rising power compared to the UK. I think that there is some accuracy to that. But I mean, I don't think that, you know, transits into, you know, 20 years from now, we're all using the Yuan, right? I think that's not what that means. I think that ultimately we're going to as, again, a more bipolar type of world, you know, maybe a tripolar world, whatever you want to call it, but not this kind of unipolar world.

I mean, after World War II, which is maybe the closest analog, because that was the rise of the United States over the United Kingdom. You know, most of the world was devastated. United States was kind of like almost untouched, right? And so we were building our allies. We were helping rebuild some of our enemies. I mean, we, you know, we had kind of the last intact manufacturing base. And that was kind of becoming like a hyper power status, which is, which is pretty rare in history. And so I, you know, outside of something like that happening, I think that the error we're going into somewhat more decentralized, somewhat, you know, different poles. And just you have the relative diminishment of the United States. I mean, we have something like what, four or five percent of

the population. At our maximum height, we were like two thirds of global currency reserves. That's kind of inherently unstable system. It's kind of, it's hard to maintain that level of. dominance. And I think we're naturally drifting towards where is the population center? Where are these different sources of power? And so I do think that we're headed in that direction. And then tying it into historical analogs in other areas. Like, what is this inflation similar to? What is this economic environment similar to? I have been using the 40s as the closest comparison. And the reason I've been doing that is so when people think of inflation, they often think of the 70s, right? So that's the one they think of. But the environment was quite different and the

causes of inflation were quite different. The one similarity, I think, was the shortage of energy. But outside of that, you know, most of the money supply growth in the 70s was you had a demographics boom. You know, the baby boomers were entering their home buying years. You had a lot of bank lending happening. And so, you know, when commercial banks make loans, that increases the broad money supply. And then, of course, on top of that, you had some fiscal problems, but the deficits are actually much smaller. And a lot of that broad money supply was happening because of the banks. You also had pretty low debt as a percentage of GDP. And so, you know, Paul Volcker, for example, the head of the Fed at the time could raise rates to double digits to try to, you know, kind of purposely put the U.S. in a recession, stabilize the dollar for international creditors and go from there, right? So I think it's both the causes and solutions to inflation were quite different than what we're seeing today. And actually, I think a closer analog is the 40s, which was, you know, you didn't have a lot of bank lending. You didn't have a lot of democratic expansion. But you had, you know, after the 30s, actually, let's go back to the 30s. So you had this, you know, obviously,

1929 crash, and you had a decade-long depression, and you had rising populism both between countries and within countries, and that took different forms. I mean, obviously in Europe, you know, you had the rise of Nazism, and that obviously contributed a global conflict. You also had populism in the United States, multiple other countries because of that tough economic environment. And then eventually, when you ran into the 40s and he started to get that conflict happening and you worked out of a lot of leverage in the system, you had, you know, huge fiscal expenditures, right? Because a lot of it was to fight the war and to kind of rebuild things after that period of, you know, stagnation and populism. And so the inflation that we saw in the 40s was very

fiscally driven. It wasn't bank lending driven. It was very fiscally driven. So you had a sharp increase in the money supply. And you had very high public debt to GDP, which means that the central bank couldn't raise rates to double digits because you'd bankrupt the federal government. And so they just held rates low anyway, despite significant inflation. And you had this huge fiscal driven inflation. And I think that, you know, what we've seen over the past, you know, call it 15 years, has kind of been a replay of that where we had the Chesney crash in many ways that, you know, I have a whole bunch of charts out there that show it's very similar to 29 crash in terms of it being a private debt bubble that unfolded. And then, you know, throughout the whole 2010s,

we had what in many ways was a mild depression. I mean, emerging markets, basically they had, you know, almost no, you know, except for China and a couple others, most of them had no dollar denominated GDP growth over a very long stretch of time. I mean, if you look at the stock markets, they've gone sideways in dollar terms for 10, 15 years. You know, many of them have not had, you know, kind of substantially new highs in dollar terms. Even in the United States and elsewhere, you had unusually slow GDP growth.

You had rising populism and tensions in the United States and Europe and many other countries. And so, you know, going into this, we're very, very leveraged. And then we have, you know, the pandemic. And we have, you know, this very leveraged. system hit by an external catalyst. And so we have something that looks like wartime finance and dollars printed, you know, trillions and trillions of dollars printed ends up being a very inflationary as one would expect. And so I think that in many ways, the 2020s are resembling the 1940s, but then there

are some differences. So in the 40s, going back to Ray Dalai's conception, the United States was a rising power. We were running trade surpluses. Now we look more like the UK looked in the 40s. were structural trade deficits, were kind of the incumbent power. You know, we are more deindustrialized due to kind of shipping our supply chains overseas. And so there are a bunch of differences, I think. But I think that people should be familiar with the 40s if they want to have a, you know, kind of a decent macro framework here. So is there a vague way where this plays out like the 1940s except the U.S.

is the U.K. something to that effect? Well, I think in terms of the U.K. had a diminishing share of global GDP in that time. and I think that that could play out for the U.S. somewhat similarly. In all of my kind of 1940s comparisons, I have, you know, obviously the first thing people think of is like, wait a minute, world war. And I'm like, I'm not saying that's going to happen. I was like not making the kinetic comparison. Unfortunately, that's gotten more direct with, you know, obviously recent events where you have more kind of, you know, kinetic conflict happening. But I do think that this is a time where, you know, we go through transitions.

And right now it's Europe, I think, that's most at risk for a lot of things. But I do think that the United States, I mean, probably at the end of this decade, it's going to have less of a unipolar grip on global financial markets than it had, you know, going into this decade. I think that there's more catalysts for countries like Russia and China and then even countries like India to develop just alternative systems and alternative stores of value. Having a more decentralized money system definitely seems to fit into the theme that we've been seeing. There's less globalization going on.

Our supply chains are broken. people are moving manufacturing to be more domestic and also kind of more or less fits into the crypto side of things. It's like, yeah, we also like our money to be internet based and not based in any one particular geographic region. So it's really helpful just to like kind of take these like decade and almost century long time frames just to really place us into history. But also at the same time, Lynn, like the fog of war around markets seem so thick right now. like we are not looking five, 10 years long investing horizons. People are looking at like, what is the Fed going to do next week? So I want to zoom in here and start to get a little bit

granular as to like how we get out of this like that we're in a disequilibrium right now. Everyone understands that whatever the financial or economic state of the world is is not normal right now. And we would like it to go back to being normal. Whatever normal is, It's probably going to be a new normal, but that's fine, so long as it's stable. And so my question to you is, like, we have a few paths ahead of us. How do we get to, like, a stable path? What does that stable path look like? What is this new equilibrium?

So we have, like, the Fed's going to raise interest rates or lower them. So, like, what are the paths ahead that the Fed have? Like, what are the reasonable outcomes that the Fed's choices are going to make in the next, like, three, six, 12 months? So my expectation for, you know, several months now is that the Fed's going to raise rates until it breaks something. And I think we're kind of entering the phase where things are starting to break. Nothing's kind of broken so much that they have to pause now.

But I think that, you know, basically they were late to respond. And now I think that they're kind of making another mistake, which is responding super aggressively too late when they've already kind of missed their window. So, you know, we already have, you know, economic decelerating activity. And then they're tightening into that, which is actually historically very unusual. And, you know, they're basically because their credibility is on the line, you know, Jerome Powell's legacies on the line where they have a long-term 2% inflation target and they're looking at like 8.6% official inflation levels higher if you look at a number of important categories.

And so it's understandable that with employment is so low and industry it's so high that they're going to try to fight it, the problem is that the source of inflation is largely outside of their control. So a lot of the inflation happened not because of Fed actions but because of fiscal actions. And number two, they can't really do anything about the supply side, right? the lack of energy, the lack of certain commodities, things like that. I mean, if any things, if you tighten too much, you can ironically make it harder for many companies to bring on new supply. And so I think that they have a very limited tool set. But nonetheless, in order to preserve their own kind of legacy and any kind of purpose, they're trying to use the tools they have.

And I think they're going to basically use them until it gets messy enough because they can't create new supply, but one thing they can do is try to suppress demand. And that can potentially lower prices, but then ironically, that comes at the cost of a recession. And, you know, kind of checkmate for a central bank is when they have high inflation, but for one reason or another, they cannot raise interest rates. And so, for example, in 1940s, United States, you're fighting a total war. You have 130 percent, you know, federal debt to GDP. You have running massive deficits. And the Treasury Department just says, look, you know, we're not going to lose this war, so you're not going to raise interest rates. And you just can't do it. And so that was an example

where they just said, look, you know, inflation is running hot, but we're going to cap yields anyway. So at one point in the 40s, you had 19% year-of-year inflation, and they still didn't raise rates because they just couldn't. And it wouldn't even really matter because the source of inflation was a decision to, you know, print a lot of money, build a lot of stuff and fight the Nazis and things like that, right? So it's just a different type of inflation than what you see in, say, the 70s. And I think that right now, there's a number of central banks that are essentially checkmated where there's, you know, too much debt in some of their areas. Like, for example, Italy has 150% debt to GDP. Japan has 250% public debt to GDP. And so, you know, they can't

support 5, 6, 7, 7, 8, 10% interest rates. And so their central banks, the ECB and the bank in Japan are basically saying, look, we just can't raise rates right now. So, you know, we're just going to hold rates low despite the fact that this is happening. The Fed has a little bit more leeway. And so they're still in the phase where they're at least trying to, you know, raise rates from a very low level to try to combat it. But again, I think that runs into the whole dollar milkshay thing we discussed earlier, where if the Fed is kind of an outlier compared to a number of other developed countries and you see a dollar strengthened too much, then you ironically have foreign entities sell treasuries and start causing, you know, problems in U.S. capital

markets and the U.S. economy. And I think that ultimately forces the Fed to probably stop tightening by next year, even if inflation is still kind of running hot or is quick to bounce back as soon as they do. So I think kind of the new normal for this decade is probably going to be this kind of cyclical inflation where it can go away for periods of time, but then it's quick to return once the conditions are ripe for it. And I think that, you know, in many ways the past few decades have been unusually disinflationary in the sense that we basically had more money supply growth, but lower inflation they need to expect for that money supply of growth because we had a lot of levers we could pull to prevent wages from rising and to kind of push that inflation elsewhere.

And as large part due to globalization, right? So we'd kind of, you know, we'd push a lot of our manufacturing to cheaper places of the world so that, you know, we basically had that big offset. I mean, you combine that with Moore's law and technology and things like that. We had a rather, you know, disinflationary period of time. And I think that we've kind of run out a rope for that path. both for just geopolitical reasons and just kind of populism reasons and then just due to, you know, kind of the natural limits of how much you can do that, I think we're now kind of in a process

where we don't really have that ability to push inflation elsewhere. And so money supply of growth more readily results in inflation for us going forward in developed markets. And then in addition, commodity cycles kind of go through these kind of 10 to 20 year cycles where it takes years and years to bring on these big commodity resources. And so you have this period where, you know, prices are low, nobody wants to invest. Eventually, you kind of work through the existing supply. You start to get price increases.

You start to get inflation. And then a lot of new capital comes in and builds up all this new supply. Eventually, overbilled. It takes many years. And then that's, you know, the high prices end up being their own cure for high prices. They bring a lot of capital. Then you have oversupply at a period of lower prices. And I think the past, you know, call it 10 to 15 years.

We've been in this commodity disinflationary cycle, oversupporting. apply, and I think that that's mostly behind us now. So I think that, you know, going for the next, you know, call it five, ten, ten, fifteen years, I think we are in a just inherently more inflationary environment because we're not oversupplied with energy in most commodities. And we don't have those offshoring disinflationary levers that we had. So in some ways, it's not that this is highly inflationary, although it is. It's actually that the past decade was highly disinflationary. It's unusually disinflationary. We had unusually strong levers. to offset some of our monetary growth, and we don't have those levers anymore.

So I think there's going to be more correlation between money supply and inflation, but of course, with a lag. I want to get just a little bit more clarity on what you mean by the Fed is going to raise interest rates until something breaks. And when you said that, my mind immediately went to the crypto markets, which are, like, a lot of things broke in crypto in the last month. We have like three hours capital got liquidated that had contagion and Voyager, like Celsius is underwater, a bunch of just like,

smaller crypto banks are going under, like blockfi is distressed. So if we're looking at the crypto industry as like a litmus test, like, well, a lot of things just broken crypto. However, crypto is still very, very small. So if we're taking this to the larger financial market and you're saying that the Fed's going to raise rates until the larger financial market starts to break, like what's an example of something breaking in the financial market? Is there any like weak link that sticks out to use? Like, oh, that's going to go first. I would say treasury market or credit markets, for example. You know, of my macro friends, Luke Roman describes, you know, Bitcoin and Crypto as the last functioning

fire alarm, meaning it's one of the last free markets. And so it's kind of like the canary in the coal mine. It responds quicker to change in liquidity than other markets that are larger and more managed, right? So the fact that we've seen so much carnage among all this leverage and all these things wiping out, I think as a precursor to what we're seeing, you know, to a lesser extent in macro markets, because there's no, you know, the central bank's not going to rush in and do anything with crypto. All of that is just on its own. It's going to survive or die. and its own, basically the merits of the projects. I guess analogs are good here. So if you go back to 2018, right? So the last time the Fed was raising rates, they were raising them through 2017. You had a

strong economic environment. You had, you know, kind of the incoming fiscal stimulus because they did tax cuts that were not, you know, offset any sort of, you know, other spending cuts elsewhere. So they're basically putting more money into the economy. And you had a rising economic environment. But again, this generally goes through cycles. And so by the time you got into late 2018, you were kind of out of stimulus and you were kind of slowly rolling over in terms of economic activity. You were starting to get slower growth. And the Fed was hiking rates. And Jerome Powell described it as being on autopilot. He's like, we're just going to keep doing this. We're going to keep reducing our balance sheet. We're going to keep hiking rates. And eventually credit markets broke.

And by credit markets, I mean that, you know, corporate bonds, basically corporate, you know, corporations have need for refinancing their debt, you know, issuing debt to do operations, things like that. And especially in the weaker markets, the non-investment grade, the junk bond markets, that market completely froze for like six weeks. Nobody was able to issue debt because the yields were messed up. The market was liquid. Nobody wanted to, you know, no one in that environment was like, you know what I don't want to buy right now? Junk bonds, right? So the whole market froze. And so a lot of people saw on the surface that the S&P 500 went down 20%, which was, of course, a notable event. I mean, it was a pretty big correction. But that's not why the Fed jumped in.

they jumped in because they saw credit markets, which are much more tied to the economy and much more tied to corporate solvency and liquidity totally break. And so, you know, they had to basically pause and say, you know, we're going to be data dependent. We're not going to an autopilot. We're going to, you know, start adjusting. A couple months later, they were already kind of trimming their rates a little bit. And this was all pre-COVID. This was in 2019. And then you had the repo rate spike. That's another thing that broke. So interbank overnight lending markets broke. The Federal Reserve had to come in and reliquify those, so they had to end their balance sheet reduction ahead of schedule and start expanding their balance sheet. And then by March 2020, when you were full on in COVID,

you had a massive crash, you had the dollar spike, the milkshake theorist playing out, you had foreign sectors selling treasuries. So the Federal Reserve had to come in and buy treasuries to reliquify the market. So you have the treasury market break. So those are examples of things in financial markets breaking that are closely tied to the functioning of the the U.S. economy that the Fed is basically forced to jump into. And some of those things like the Treasury market or the repo market are something that is, you know, if they break, the Fed will literally have an emergency meeting and fix it in like hours or days, right? Those are like the core of the system. You know, credit markets, you know, those can break for weeks and then the Fed will be like,

okay, we have to figure out what's going on here. Whereas like something like crypto markets are still on the periphery that, you know, they can break and the Fed will just keep tightening until one of those closer markets starts to break. And as we're having this recording, Treasury market illiquidity is getting pretty problematic. So it's pretty volatile market. It's pretty illiquid. So we're starting to see signs of stress in the treasure market.

It's not completely broken like we saw in March 2020, but it is getting quite messy. And we're also seeing rising spreads in corporate bond markets. So we're starting to see more distress in those markets. And neither of those markets have gone to outright breakage, but they are getting weaker. and I think pointing to the fact that, you know, the market's starting to realize that by next year, maybe even before then, the Fed's probably going to find it hard to continue tightening

regards to what the inflation numbers are showing us. This is so fascinating. By the way, Lynn, and to bankless listeners, I can't believe this content is free. All right. This is the beauty of podcasts. All right. So, like, in previous decades, normal people would have no access to this level of analysis and this kind of information much harder to prepare.

And the kind of analysis that we're getting, Lynn, is just helping me. think with much more clarity about the rest of the 2020. So, you know, thank you for everything you do. And it's so cool that, like, with the internet age that we're living and all of this is free, anyone can listen to this. That's also, let's jump in. That's also why the analogs can be tricky, right? So you're looking back in the 40s. And they're essentially doing what's called financial oppression. They're holding industries below the inflation rates. You know, people didn't have ready access. People couldn't rattle off what's the inflation rate, what are interest rates. You know, they would check their, like, weekly newspaper if they were into the markets. But, you know,

basically the information traveled very slowly, and a lot of what was happening was only known in hindsight as we dissected what happened throughout the whole banking system, who was buying what, how is this being managed? Whereas now, in the age of information, you know, people are updating each other with like memes on the internet about what's happening in real time and spreading that out. We have a meme here that we want to talk to you about, but like, is this also why things seem to be happening so fast? It feels like we're living through like decades. Inside of years. In the course of years. And the whiplash that we've seen lately, as felt like we've lived through several big, you know, decades just in the past three or four years.

Do you think that ties into the thesis of like things will actually happen at an accelerated rate with the highs and the lows and everything from here on now? I think partially that's it. I think that there's two things. One is that when things start to break, you know, basically when they're at the end of a long-term debt cycle, you have kind of a phase change in the way the system works, you get more volatility and more whiplash. So that's, that's number one. I mean, we kind of saw similar things in the 20s, 30s and 40s. But number two, yeah, I do think that the spread of information means that markets can adjust a lot quicker. And so you get a lot of kind of wild action. I mean, that's part of why those crypto banks had so much problems.

You know, even the ones that weren't outright and solvent, they had bigger bank runs than most banks would ever experience because all that money can move faster. And, you know, so that's kind of the whole point of the space. And so you had bigger bank runs and more liquidity problems. And it all just kind of becomes contagious right away. So this is fantastic. And to your earlier point about the Fed is like one takeaway I had while listening to you, Lynn, is the Fed doesn't care about equities right now.

It definitely doesn't care about your crypto asset prices. Doesn't care at all. But when things start breaking in credit markets closer to treasuries, that's when they're going to start caring. But one thing that I can't quite square in many of the macro people we've heard from and talked to lately is this. So Dan Moorhead from Pantera Capital put it out. a memo recently. And you called the recent actions of the Fed, the rate raises like, you know,

0.5% increase or something like this. And what are we at now, Lynn? Is it like 1.5%? 1.5% and we just had a 75 basis point increase, which was the biggest in, you know, something like 25 years. So the biggest in 25 years, the biggest in a long time. You called that aggressive. But Dan Moorhead in his commentary was like, that's not aggressive. What we need to be doing is 5%, like, or higher. Like, like, That's how much catch-up we have to do because the Fed hadn't been doing anything since the signals were there of like a year ago, let's say, summer of 2021, we should have been doing more. The Fed should have been doing more.

And so rates have to increase to like four or five percent maybe higher. And so I hear that sentiment from some macro people. And then I also hear like the other, it seems like, you know, unstoppable force meets immovable object sort of thing. Like at five percent, the U.S.'s interest rate payments have. got to be absolutely crazy. And to your point about breaking, like, what has broken in the world economy at 5% levels, God knows. God knows what crypto prices look like, what stock prices look like, and what credit markets look like. And how does the U.S. actually service its debt

and pay its debt? And this is something I can't quite square. Can you help bring some insight here? How is it possible that we need to raise rates to 5%? Why are some macro people saying that? Why are others saying, like, you can't possibly raise rates to 5% because if you do, the U.S. won't be able to service its debt? Yeah, it's a good question. I think that actually comes back to why studying periods of history is so useful. And so back in 2020, I started writing about the inflation that was likely to come from this increase in the money supply and also expecting that interest rates would be slow to rise

in response to that high inflation. Basically, we'd have a large and normal gap between inflation and interest rates. And that's actually what we've seen. I mean, the Fed is, you know, even though they just had, you know, their first 75 basis rate hike in a long time, they're still the furthest behind inflation they've ever been since 1951, since basically the end of the whole 1940s inflationary period. And so basically they're basically the further behind inflation that they have ever been since the last long-term debt cycle ended. Right. So, and I think that's why historical analogs are important because if anyone was using the 2000s mild inflation environment or the 1970s inflationary environment or the 1970s inflationary environment,

or the 1970s inflation environment, they have expected higher interest rates in response to that higher inflation. Whereas if I think you're looking at the amount of debt in the system and you're looking at kind of the low threshold of industry rates where things start to break, you would more readily expect that policymakers would have no choice, but to have, you know, basically have inability to close that gap. And I think that that's what we're seeing playing out. And it's normal for macro people to be wrestling with this viewpoint because it's not something that happened in their lifetimes. And so really, you have to go back to history books and you have to kind of look at bottlenecks in the system and start trying to judge what is the order of which things

break. Because as you point out, if you go up to 5% interest rates, that sounds responsible. That's like we should have positive real rates. I mean, if we have high inflation, we have to raise rates. That makes sense for a lot of people. But as you point out, that breaks basically everything. So, you know, not just stock market going down, but housing market breaks. Probably the foreign sector has to rapidly start selling treasuries. Treasure market goes completely illiquid, like it did in March 2020, and then what do you do there? Right? So it's like, it just, you know, the whole system kind of seizes up. And I think that's a function of the fact that, you know, for 40 years now, we've had lower and lower interest rates all the way down to zero

and in some cases negative in some countries. And that's resulted in higher and higher debt relative to GDP. And that debt is only serviceable with low rates. And I think that that is what defines a long-term debt cycle. That's why it's different than a normal de-leverging event because there's so much debt at the system that it, if ever de-levers normally, the whole system breaks. And so given the choice between massive, you know, bumpy, deflationary collapse or printing money, historically the result in printing money, which can take the form of holding industry is below inflation for quite a long period of time. And so in the 1940s, for example, inflation average 6%.

It spiked as high as 19%. And the Fed held rates at roughly 0%. And they basically just said, you know, we're not going to default. So this is interest rates. And we're seeing that right now in Japan where they're above their inflation target, but they're holding rates at zero and they're capping their 10-year bond at 0.25%. With yield curve control, they're basically pritting money into an inflationary spike because they're like, our public debt is 250% debt to GDP.

So we're not going to raise rates to positive real levels anytime soon. And we're seeing a similar thing in Europe. They're basically saying, look, Italy's got 150% debt to GDP. They're not going to have positive rate. They're basically bondholders are going to default one or two ways. If they raise rates, they're going to default nominally, right? So Italy's just going to be unable to service debt. Or everyone's going to take a haircut.

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the way it was always meant to be, fast, cheap, secure, and fiction-free. When you keep saying default in real terms, right? So what we're talking about is inflation is really the pressure release valve here. Right? That's how in the long-term debt cycle, we have pumped this balloon maximally full. And now it's going to pop, but the way we can, like, deflate it slowly is through inflation. That's kind of seeping out the sides.

Is that why we're seeing that with like the yen and the euro? why they're at like, you know, 20-year lows relative to the dollar is because we're starting to see kind of inflation deflate this debt pressure that's been building up? I think that's what we're seeing, but it won't be a pleasant process. And so basically in a normal de-leveraging cycle, the amount of debt in the system comes down. Whereas in a long-term debt cycle, basically end-gain type of scenario, there's so much debt in the system that it can't come down without collapsing everything. And so instead, you have the denominator go up, which is money supply, right? So you're you have debt compared to GDP, nominal GDP, and compared to money supply, go down, not because

there's tons of de-leveraging, but because there's inflation of the underlying unit that that debt is nominated in. And, you know, it's a very messy environment, and it's so rare in developed markets. I mean, this happens all the time in emerging markets. It hasn't happened in our lifetimes in developed countries. And that's why this is so challenging to navigate. And it usually involves financial oppression because if you're inflating away the currency, people want to get out of the currency.

So then they often try to block the exits and say, well, you know, you can't buy, like in the United States, when they went through this period, they made it illegal to own gold. Literally for if you own a benign yellow metal, you could get up to 10 years in prison, which is, you know, kind of insane by today's standards. And so basically it's one of those things that's kind of intellectually offensive that they say, okay, well, this is, you took out this debt, this is what you owe. But when push comes to shove, that's essentially what happens in history, where they kind of inflated away. And, you know, there's scenarios where it can happen slower than others. And there's

ways that can happen more spectacularly and more kind of terribly. And that partially comes down to what's happening in the real world, right? So, for example, the fact that Europe is now energy insecure kind of makes that more of an emergency for them. Whereas, you know, Japan and the United States is a little bit less of an outright emergency and might happen more gradually, for example, whereas some areas are more an emergency status. And then of course, that's even more so for some of these periphery countries, like Sri Lanka, for example, that's like being completely unable to get fuel because they have kind of fewer resources in general, so their whole reserve systems messed up. And so I do think that we are an environment where a lot of debts will be inflated away. And that can mean different

things depending on the order of events that happen. Right. So it could be a spectacular blowup, or it could be like the 1940s financial oppression scenario where it drags out over a decade and everybody kind of takes a haircut. Is there any softer landing if it happens to all developed countries at once? It seems like all the central banks are in a similar scenario. And if it happens to everyone, is that a softer landing than if it's only happening in a few small pockets? I think that still remains to be seen because the challenge there is that even though it's

happening to every country at once. It's not happening to every person in those countries equally. Right. So, for example, right now in the United States, consumer sentiment, you know, the University of Michigan does a consumer sentiment survey nationwide. And it's actually got their lowest ever reading. Yeah, it was last month in June. Since they started doing it. Yeah, like 70 years ago, right? It's just, it's never been lower. Basically the, it only got almost as low during the bottom of the subprime crisis. And very briefly at the end of the 70s, early 80s, when they had math. inflation and Volcker was trying to put the economy into recession to fight it, which is kind of similar to now. But basically, it's the worst ever reading. And that's a large part

because, you know, the average wage went up like 6%. Official inflation went up 8.6%. You know, food at home went up 12%. High protein foods went up 14%. Gasoline went up 50%. And so, basically, even though unemployment's low, people in general are miserable. And it doesn't affect everyone equally. So if someone has resources, someone has a lot of fixed rate debt, you know, if their income is unaffected, if they, you know, have all their needs met, they're in pretty good shape. Whereas if someone's kind of struggling, that's where you're going to get rising populism, rising social discontent. And that can make, you know, a soft landing is not soft for everyone. And then you can get kind of, you know, fluctuating changes in leadership of that country. And

you know, basically I think the United States and Europe in particular among developed countries are pretty vulnerable to just kind of shifts in political wins around back and forth to get whiplash and what the people want from their politicians because they're in kind of an impossible scenario. I want to set up a scenario that I think we are all about to run into speaking in the frame of mind of, you know, history doesn't repeat, but it does rhyme, but it's also very different. And one of the reasons why it's different is from technology. And we already talked about how like the speed of information, especially memes being passed around on the internet, is part of that technology. people just like understand things better and faster these days.

And I also want to bring up something that's stuck out to me lately is that, you know, the Federal Reserve is led by the elder generation, the boomers of the world. Meanwhile, there's just like this growing younger cohort on like crypto Twitter that is surprisingly like well versed in like money and economics and finance for what they would be in previous eras. And so there was a meme that was circling around on crypto Twitter, Lynn, that I want to get your take on. And Ryan is going to share it here in a sec.

The Bankless Weekly Rollup, we talked about this meme at the end of the show. So if you listen to the roll-up, you'll know it's coming. So this is a meme that progresses quarter by quarter. So we start in Q1, 2021, and every single quarter has Jerome Powell's face. And he's quoting, in Q1, quantitative easing won't cause inflation. And then in Q2, 2021, we go, some inflation, but it's transitory. Q3, okay, high inflation, but it's peaking. Q4, 2021.

Okay, inflation. But maybe not transitory, but job market very strong, wage growth very strong. And then Q1, 2022, okay, we need to hike aggressively to curb inflation, but no worries. Economy very strong. Soft landing, definitely possible. Q2, 2022, and this is like, you know, it's circled red because this is where we are currently. Negative growth in Q1, but no recession risk. Q3, 2022.

Okay, recession coming, but you're not going to lose your home. Q4, 2022. Okay, you may lose your home, but you're not going to starve to death. Q1, 2023, you may die, but at least you'll go to heaven. And so, like, part of this is this, like, technology that is passing around, like, these memes that are very well... By the way, I love his face, like, how it transitions, like, at the end. These memes that are very well understood by, like, younger generations. And it's commentary. It's, like, social commentary as to the performance and the knowledge of the Federal Reserve. So, Lynn, when you take a look at this meme,

First, is it as dire as the mean makes it out to be? And second, is the Fed, like, how would you rate the actions of the Fed? Is the Fed like a competent institution right now? So, I mean, dire, I think, depends on where you are, right? So if you're in Sri Lanka, it's pretty dire. Even if you're in Europe, it's pretty dire. Maybe less dire, depending on where you are in the United States or where you are in Japan or where you are in certain countries, maybe less dire.

So, you know, you'll die if it's not on my macro forecast. thankfully, but I think that, but I get the meme. Basically, one of the things I've been analyzing is the question of what does the Fed understand that they're not saying versus what do they not understand? That's actually kind of an interesting question, right? Because, you know, prior to this whole COVID fiasco and the money printing and the financial pressure and the inflation, you know, Black Rock with a former Fed official released a report saying in the next downturn, because debt's so high and because the interest rates are so low,

we're going to have to print a lot of money and probably do helicopter money, so probably fiscal stimulus combined with that, but that could be somewhat inflationary, so they're going to have to hold interest rates low for a period of time despite that, so you're going to have to have kind of coordination, and then the big challenge becomes

how to not have inflation get too high and out of control. So like the whole roadmap was there. I mean, they saw busy everything, and there were a number of analysts like me and others that were, you know, we had been reading things like that, and we've been doing our own kind of similar research and saying that's basically the problem. And so when it starts to play out in real time, you know, central banks never come out and say,

look, the sovereign debt's too high. So we just have to hold rates low and financial repress everything. I mean, they never to say that. They never say we have to inflate the debt away. So they have to use euphonisms. They have to kind of phrase it in different ways. And so the question then becomes, what do they know that they just have to phrase differently or kind of push the can down the road and kind of mislead people versus, you know, what do they actually just, that they honestly think that they can solve it or that they, you know,

that they think they're doing the right thing. And so, you know, for a while, the Fed and other central banks were saying as transitory when a lot of us knew that it wasn't, or at least not nearly as transitory as they think it will be. And so I do think that the Fed and other central banks are facing a competence, you know, chronic crisis here where their tools have always been kind of lagging indicators, right? So they're not very good at forecasting. And if you look at the Fed's track record of forecasting. Basically what they do, they never predict a recession because that, you know, they're kind of inherently political organization, right? So predicting a recession is kind of an inherently political statement in some ways, even if it's not, it just comes off that way.

So they never predict a recession. And what they do, basically, no matter if things are high or low, they kind of point back to everything that's going to go back to 2%. That's all they do. They basically draw a line for wherever it is now to 2% inflation and like, you know, 2% GDP growth and like 2.5% industry rates and they just are always kind of going back and trying to point towards that medium and they don't really have a good track record. And I think that that's all kind of being marked to market or being kind of realized now because now they're facing this kind of more end game type of scenario, the super high debt level combined with inflation, which is just not something that their tools are well equipped to handle and something that they contributed over

decades to getting us here that they don't really have the tools to get us out of. And so I do think that in countries around the world, especially these developed markets that have these super high debt levels. So Europe, Japan, the United States, like, I wouldn't want their job because it's an impossible job and you either have to like lie or, you know, like you either have to be stupid or kind of look stupid. And it's just, it's inherently challenging environment to be in, right? So I think that they face a credibility crisis and it's not, it's partially because they contributed to it, but it's also partially because their predecessors contributed to it. And that's just an inherently rough place to be in. I think that the model

itself is old, right? I think that, you know, if you ask most people, are price controls a good thing? Like, should the government set prices of things? Most people would say no. Whereas, like, you know, in the United States, we've had price controls on money since 1913, right? We control the price of money. It basically a group of elders gets in a room every six weeks and determines what the price of money will be. And it doesn't matter where you are in the country. I mean, this is a country of 330 million people, 50 states, very different markets, and they kind of set the nationwide price. And then also because with the global reserve currency, this has international ramifications. And it's literally because a group of people in a room are determining that price. And so I just think the model itself is kind of antiquated and that as software each the world and as we kind of go through a somewhat inflationary crisis, I think the shortcomings of that that model are kind of being laid bare. That is why, of course, in crypto, we were looking to immutable algorithms to control our monetary policy as a way out. And maybe as the institutional trust in the central banks around the world erode in this decade, as we expect they will, maybe that becomes

an increasing reason to turn to crypto. Of course, that is the bull case. But I want to ask you, another thing that this meme was conveying, I think, towards the end with the, well, maybe you'll die, but least you'll go to heaven part, which is like kind of this grim humor, but also a concern that I've heard David articulate. I've thought about it in the back of my head as well, which is one decade we haven't talked about, Lynn, is the decade of the 1930s. And the R for recession can turn into a D for depression.

And we have the populism, we have, you know, kind of like the commodity prices, the global instability, the political instability. Like, this could turn grim very quickly. You haven't mentioned the 1930s as a possibility. But what do you think about that? Is there some remote chance? Of course, there's always a chance. But do you think it's likely maybe? Or do you think it's a probability worth considering that this R could turn to a D depression and we get a decade or maybe less than a decade of some sort of

really big calamitous dip in the economy that is worldwide in nature and does affect the U.S. does affect the developing world as well as the developed world? I think that's possible. it would take a different form. And so the 1930s were pretty disinflationary decade. And that's because you had the popping of a private debt bubble. And so you had busy underutilization of existing capacity. So you had commodity over supply. You had low economic output. And then the economy had a tough time kind of bouncing back and responding to that. Whereas I think that to the extent that we've run into a calamity of this decade, and I think we're seeing kind of early signs of one due to energy crisis, I think it'd be more of an inflationary type of depression. Right. I think that basically,

you know, if I look at the bottlenecks of what could make this decade really, really bad, it's, you know, partially what's happening with the money system, but it's more so what's happening with the real movement of essential goods, right? So it's really about can people get the energy they need? And energy is kind of the master resource that affects everything else. So if you look back in history, you know, even though individual countries can kind of reduce their energy use, the world almost never reduces its energy use because, like, you know, there's so much developing countries around the world. There's still people that need a lot more energy. And even the countries and developed markets that have been able to kind of flatten their energy use, it's in large part

because they shipped some of the most energy intensive production to those developing countries. So they kind of got off their balance sheet and out of mind, even though they're still actually benefiting from that higher energy consumption. And the only times where global energy usage went down year of year, One was a kind of a three-year period in the early 1980s, which was basically when Volker basically put the kind of the U.S. into a severe recession. We had a Latin American debt crisis. You had a big dollar spike and you had this kind of just really rough global macro environment for a few years. So that was number one. That was basically that was actually the last time that consumer sentiment was anywhere near this low was that period.

Right. So that was a terrible period for almost everyone. The other one was the global financial crisis. you had one year of, you know, less energy uses than the year prior. And then the third instance was 2020, the whole COVID crash. And basically, you know, economic lockdowns and shut-ins and reduced air travel and things like that. And so generally reductions in energy consumption are associated with the worst economic

environments in modern history, right, in the whole kind of post-World War II era. I don't have data for energy consumption during the 30s, but it would not have been pretty, possibly worse. And so I think that that's one of the key things to look at is if we do have serious trouble getting the energy we need, that's where you can get really bad, you know, humanitarian outcomes. And it doesn't affect everyone equally. It depends on where you are physically, what resources you have available to you. So that's the thing. Like if there's an economic thing that keeps me up at night, it's about energy security, energy distribution, and then all these kind of other things come later.

So the money system, all that is really bad. But at the end of the day, it comes down to can we get energy, can we heat our homes in the winter? Can we, you know, get food on the table, right? Because even, you know, a lot of fertilizers are made from natural gas, right? And so if natural gas, you know, like in Europe, it just looks like a Wimar chart. Making fertilizer in Europe is going to look like a Wimar chart, right? So basically, it really comes down to whether or not. not we have abundant energy. I want to hear what you think about the fertilizer and food topic,

but before we get that, I just really want to double down on this whole energy conversation. Oil, a barrel of oil saw its first decline in price in the last like two weeks in a while. And I think if we take a trailing average of like five and ten years, oil and gas is still really highly priced currently, but at least it's coming down in the last two weeks. So that's like one very cautious note of optimism to be had there. If that continues to trend down, Downwards, I think that's a big relief as an energy prices, gas prices, food prices start to come down. But question for you is, is oil really at the center of this? Or like, what is, if we're saying the energy is at like the center of whether or not we go into a depression or a recession or just a pullback, what charts are we looking at?

What are the energy prices? How do we measure this whole thing? So oil, natural gas would be the two biggest coal and nuclear and other things like that are also big ones. And so, you know, basically, if you look at oil is more fungible than natural gas. So oil is pretty easy to transport around the world. And so you can get kind of dislocations in price, but it's generally pretty similar prices around the world. And so Brent crude and West Texas intermediate crude, you know, there could be brief anomalies

where they differ, but for the most part, they're rather similar prices. And, you know, right now we saw a dip in oil uses, but we have to keep in mind that the U.S. strategic petroleum reserve, so the oil that the government controls, they're actively selling oil into the market to try to suppress prices that they can't do forever for obvious reasons. They only have so much. We also, China's been under lockdowns for, you know, a large part of the spring, and even now, and basically they have unusually low jet fuel usage and car usage because they have, you know, kind of essentially suppress their economic activity. So the two biggest countries in the world are either increasing supply or suppressing demand for oil.

And so I think that I would, you know, any sort of dips, I think that, you know, you have periods of time or gets ahead of itself. People bid up the price. And then you have kind of, you know, pullback. You have demand destruction. You have recessionary type of environment. I would be slow to celebrate those pullbacks because I think that the underlying supply constraints are still there.

And so I think that those can bounce back quickly or if they keep going down, it's a sign of basically depression. It's basically a sign of recession happening. Natural gas is a less fungible energy source because it's much harder to transport. If you want to transport it internationally, you need LNG, right? So you either need to, you know, transport over land with pipelines, usually. Those take years and years to build. They're very expensive. Or if you want to transport it by sea, you need LNG, which means you need these multi-billion dollar facilities to cool it. You know, there's this whole technical process to, you know, basically liquefy it, transport it, and then unliquify it. And there's kind of a firm amount of LNG capacity that we have because these are multi-billion

dollar facilities that we don't just switch on overnight and we don't just have a lot of flexibility there. And Lynn, so for people who are not familiar, what's LNG? Liquidified natural gas. Okay. Right. It's natural gas that we put into liquid form and cool it. So basically the result of what I'm saying is that because natural gas is more cost

to transport relative to the value of the product, we have much different prices around the world for natural gas. compared to oil that is pretty unified. And so right now, for example, European natural gas prices are absolutely through the roof. They're multiple times higher than you see in the United States or Canada because they have an energy crisis. They get a lot of their natural gas from Russia. So that's obviously a geopolitical problem right now. But actually, that was already happening before the war. They were just were having limitations there. And their ability to get natural gas from overseas is much more limited than their ability to get oil from overseas because the capacity to

transport natural gas is much more limited and takes a lot more money and time to get that capacity online in order for, say, Canada to ship over natural gas to Europe or the United States to ship over natural gas to Europe. And so I think the two markets to watch, one is just global oil prices, but then two, natural gas prices, especially in specific regions. And then also, I mean, as a fallback, you know, Asia uses coal quite heavily because they don't have a lot of oil and gas deposits. So they use a lot of coal. despite the fact that it's dirtier in most ways. And we're actually starting to see in Europe that some of those markets are falling back on coal

basically due to emergency conditions. That basically they have not built new nuclear facilities. They're at their limits in terms of natural gas. That whole market's breaking. And they can only get so much oil. And so they have a fallback on coal. And so I think that basically looking at these big markets are some of the underlying things for kind of near term, intermediate term energies.

So here's what I'm concerned about. The first half of this podcast, we were talking about how the Federal Reserve's hand is more or less forced with its tools. Its steering wheel has one of those things in it that's locked. So it can't really steer it. It's out of options. The global markets for oil, we're already broken with supply chains. So that kind of is a fixed thing as we can't really fix that. It's not fixable. We're already maxed out. As far as I can tell from the limited information that I've gathered, maybe you can help clarify. We're already maxed out with how much gasoline we can pump out of the ground or how much energy that we can produce. So that option is fixed as well. We don't really have much choice there. It sounds like

we have a little bit of ammo left in our reserves that we're selling into the market to help supply to reduce the price. But I mean, that runs out. So as soon as we're done shooting that ammo, then we're kind of stuck there. It seems to me we don't have very many choices and our future is already set. And for better or for worse, maybe that future is actually, you know, a clear sky. Somehow we make it out of this okay. You know, maybe it's not. Maybe it's a capital D depression. But either way, we don't have any choices. And if you're telling me that we don't have any choices, that makes me scared. And I don't really have a question. I kind of just want to hug. Like, do we have any good? Where are the clear skies here? Are there any? Or are we kind of effed?

So I think as we go deeper into this deck, I mean, there are ways to bring. more energy online, just not overnight, right? So, you know, partly is if you're an oil company or an investor in a potential oil company, you know, there are quick oil sources you can bring online like shale where maybe you're willing to ramp that up a little bit. But on the other hand, there are like oil projects you could do offshore that take seven years to pay back. And you don't know what the market's going to look like. You don't know what governments are going to do. You don't know what technology is going to look like. And so you're hesitant to do those. And right now, if you look at oil pricing markets,

they kind of like the Fed, they still kind of think this is transitory. They're like, oh, we're going to go back to normal and like oil price is not going to be that high. So if you're planning on putting $3 billion into like offshore development, you're like, well, maybe I shouldn't. And I think that basically the more kind of pain this goes on, the more incentive eventually you start to get of both governments and corporations,

like, no, no, we have to go get that oil. This is like an emergency and this is not going away. Right. So I think there are still leverage. to pull in terms of bringing a new supply online and then building LNG so that, for example, you know, relatively cheap American LNG could then kind of arbitrage some of the super expensive natural gas in Europe and kind of arbitrage and spread out those prices a little bit. So there's kind of natural things that over time should begin addressing this.

And I think their concerns come if one is you have kind of say governments make wrong decisions and either try to suppress new production or control production and then mismanage it, right? I think that those are risks. They're basically, you can kind of like snatch defeat from the jaws of victory where you're kind of maybe starting to come to a solution, then you manage to mess that up. And also, it's one of those things where if you're on the periphery, if you're in a poorer nation or if you're in a poorer segment of society, it's like you're kind of last in line in order to get this resolution.

So I think for a lot of people, it is a really tough time to be in. but I think over time that this can be fixed. And, you know, the Fed's purpose right now, like I said before, they can't do supply, but they can try to suppress demand. So they're kind of trying to take discretionary demand off the market. They're basically saying, look, if you're going to go on a frivolous vacation, maybe you shouldn't, right? So maybe, you know, curtail your optional usage so that the more essential usage gets used, right? So that's the lever that they're pulling.

And I think that over the longer run, the only way we truly get out of this towards, you know, constructive disinflationary growth again is to get more energy supply and distribution online. And then that can also, I mean, you know, China's building nuclear plants. You know, there's all sorts of technologies. If you look long enough in the future, deep geothermal, certain types of renewable resources. You know, I think that there are long range ways to address this. And it's just there's intermediate things and there's longer range things. And it just, that's why I think that's going to be a challenging decade because these are not things we can snap our fingers and just get.

you know, long-duration oil projects and gas projects and LNG terminals online tomorrow. Would it be unprecedented in the same way that the United States government, like, put a permanent bid on vaccines before they were developed and just footed the bill for that? Would it be unprecedented for them to do something similar with energy markets? Where they, hey, we need investment into our infrastructure. We promised to buy oil, like this many barrels of oil at this price for the next four years, to give some sort of like security onto this investment by the private sector. Would that be unprecedented? That would be kind of like the 40s, right? So in the 40s, they said, look, here's this

war. We're going to be a permanent bid for like building industrial facilities, making war machines, and you know, you're going to get paid, right? So that's kind of what we did. And also they did the same thing. They said, okay, we need aluminum. We're going to build aluminum. Like that's just, we're going to throw public money into building aluminum, right? So basically you had a very inflationary decade, but they actually had a lot of real world goods and services that came from that. And so that actually helped make it that inflation not permanent, right? So you brought on, you know, new resources because of that. So if you had some sort of policy where they said, look, we are going to, you know,

incentivize new production as quickly as possible and longer term as possible, I do think that would be one of the more productive uses of public capital. I mean, if you're going to, if your choices are either throw, you know, billions of dollars towards corporations for frivolous purposes or throw billions of dollars towards energy development, I would take that latter one every day of the week, right? So that's not the worst use of incentives or public capital. And basically, you know, if the U.S. said, look, if prices go below X, we will expand our strategic petroleum reserve to pay you X.

So you have no kind of downside risk over the next five years from producing oil. You know, I think that that would, I mean, that probably you'd have periods of problem in the future. You might have oversupply at some point, right? you probably, that's kind of the history of public arrangements where they solve one problem they create another. But I do think that is one of the solutions here. But I think this is overall it's just going to be a very challenging decade. I think different countries are going to handle it differently. I think some of them might try to do things like that. Other times, I think the private sector can wake up and, you know, if you kind of get out of their way, that they can go and do that.

And it's, of course, it's a very challenging balance because during this period of commodity over supply, that's when a lot of people develop some of these environmental goals that they then are stuck because now you have an actual crisis and you're kind of, you're balancing between the environmental goals you were kind of planning for and then being hit in the face by the real world. And I think a lot of people are kind of adjusting and kind of navigating that in the way that they see it. Really quick question before we kind of just summarize everything. Energy oil, these like energy markets are at this epicenter of everything, but then like downstream of that immediately becomes food. Can you just kind of paint the picture of what is the state of

fertilizer markets and just food markets and if there's any just like contagion risk there? So I mean, the subset of fertilizers are made using natural gas, right? So energy is a key input, not just in driving to work, but also in, you know, making food. And then even once the food is made in terms of transporting it and packaging it and getting it to where it needs to be, all that is a very energy intensive process. And so generally when you have price spikes in energy that translates into price spikes in food, which of course is one of the most bad types of inflation because it's an essential good and it hurts impoverished people the most. They spend the largest percentage of their income on necessities like food and fuel.

And then it's compounded by the fact – I mean, so Russia is the biggest fertilizer exporter, first of all. We think of Russia as an oil exporter, but they're actually the second biggest oil exporter, they're the biggest natural gas exporter. They're the biggest fertilizer exporter. They're a big exporter of nickel, which is an important metal for, batteries and things like that. So a lot of the renewables that people want to do, they have sources there. So they're, you know, given the fact of the largest land mass, it's not shocking that they're

basically the most important commodity market. And so that obviously has some geopolitical implications. But either way, you know, basically, so Russia's a big fertilizer exporter. They're also a big wheat exporter. Ukraine's a big wheat exporter. And so I know that Ukraine's like harvest has obviously been disrupted from this. You have kind of, you've had kind of wheat problems. And if I actually had a wheat chart, there is a sign of good there. So you had this huge spike during the run up to the war, but it's actually given back a lot of those war-related gains because I think that that might be cooling off to some extent. But over the very long run, I think the key thing to focus on is fertilizer.

Because if natural gas prices stay high, that means fertilizer prices are likely to stay high, which transits into higher food prices. And like I said, transporting it. Now, again, you do have a supply response over time. And so, for example, one of the world's largest fertilizer producers, nutrient, is expanding their production. They were kind of on the fence for that for a number of years, where they always had the option to maybe expand it. And, you know, now they're kind of accelerating some of their expansion efforts because they, you know, the market has given them the signal, yes, we need all this new

production. And so I think that over time, you can get responses to that. But it just, you know, commodity cycles tend to be rather persistent. They tend to last, you know, five to 10 years in the upside in five to ten or more years in the downside because a lot of these projects do take years to bring online. And so I think that that is the big challenge right now is that you have so much debt in the system, increased money supply so much. Now we have real world constraints on energy and fertilizer and things like that. And so I think we're going to have a period of, you know, high inflation, interest rates below inflation. And to the extent that it's either bad or terrible, it really comes down to the real world, right? So can we get the energy? Can we

get the fertilizer? Can we get that? Who's going to get it? I think that's the situation we find ourselves in. So, Lynn, you've dropped so much fantastic information for us. And I feel like I have much more peace on the possibilities and the different outcomes of the 2020s, you know, particularly on the macro side than I did coming into this. I guess as we conclude, you know, two big questions. One is, could you just give us a summary of what this new normal looks like yet again? I know you were alluding to it earlier. And then secondly, want to leave the listener with some action items. What do we do?

So I think the message has been clear from this episode for travelers into the 2020s, of which we are all on that journey, you know, steady in time and space. We are entering the 2020s. There is going to be a new normal. We cannot expect a world of the 1990s or the early 2000s. or the 2010s, the 2020s are going to be different. There's going to be a new normal. There's going to be an adjustment. We should get prepared for that. And so first, what does this new normal look like? Can you summarize that? I know you mentioned cyclical inflation. That's going to be an ever-constant thing.

You also mentioned commodities going up because we are undersupplied on commodities. Are those the chief characteristics of the new normal? Are there others? How do you summarize that? I think that's a good way to put it. I think that, you know, we can describe the recent normal, which is basically the 90s, the 2000s, and the 2010s, which was we had China open up to the world. We had the Soviet Union collapse and, you know, those states opened up to the world. So we had this big pool of labor that was able to connect to develop markets. And so we had decades of geographic arbitrage where we could offshore things. It's very disinflationary force. And it resulted in this period of abundance where, you know, you can always go to the market and there's, you know, everything you could

ever want, any color, and pretty cheap. And that's kind of the environment we've been in. And I think that we've kind of exhausted quite a bit of that, where now we've tapped into that labor. You know, China is now a rising, you know, geopolitical power. Obviously, there's tension in Russia now. So basically, I think we've gone from this unipolar world that was opening up and that was becoming more efficient interconnected. I think now we're going into a multipolar world, a more contentious world and that we have to reshore some things and that basically we no longer have the capacity to push inflation and push, you know, kind of lower capital elsewhere. At the same time, we've, you know, we went through a long period where we underinvested in commodities

that this tends to happen in history. I mean, the 1970s, another contributor to why we had so much inflation is U.S. oil production peaked in 1970 structurally after like a century of going up and rolled over, you know, all the way until the 2000s when we, you know, started doing shale, right? So we became more reliant on those external sources, the Middle East, and that's along with money supply growth. That's part of why we had such an inflationary decades. It's always the combination of commodities and then whatever's happening with the money situation. And so I think going forward, because of how high debts are, because of how kind of tight

our energy situation is, and because of how we've lost some of the disinflationary levers, I think we're going to have a more constrained world for a while. I think that and that could take the form of inflation. And there are other periods where you can get disinflation, but then scarcity and recession and basically the shortages, right? And I think that those can manifest in different ways and different severities depending on where you are. And I, you know, navigating this is obviously challenging. I mean, that's something we're all trying to figure out. I think that there's practical things people can do. Like, you know, corporations are very lean manufacturing oriented. They want to have low inventories. They want to do just in time delivery. And I think it's kind of up to

households to have, you know, stockpiles if they can, basically to not rely on that everything is going to be there for you all the time right when you need it with no interruptions, right? So I think that people have to become a little bit more self-sufficient, a little bit more ready for periods of disruptions and challenges. And then number two, you know, I think people approach their portfolios differently. I mean, I take a rather diversified approach. I have cash. I have equities, you know, folks got kind of like energy equities, cash flow producing

pipelines, things like that. I mean, I have a diverse set of equities. I have some gold. Obviously, I have Bitcoin. People know that. And I kind of just, I diversify a number of different assets that I analyzed to be important for the next decade. I mean, of course, people have different expertise and they'll find different things that they want to invest in or different things that they want to exclude. But I do think it's important to be somewhat diversified because you can have big shocks. I mean, as we saw, crypto just completely went down dramatically. If someone was 100% in crypto, their net worth is down, you know, 70, 80% or more.

whereas if, you know, if they were like 100% cash over the past couple years, they just got, you know, their net worth went nowhere, went down in real terms while everything else went up for a long period of time. And so I generally have a mix of multiple assets. But I think a lot of it's also just, you know, cultivating yourself, trying to build relevant skill sets, trying to basically make your life as resilient as possible. Because I think there is kind of challenges ahead of us. And the one area that still could be disinflationary is actually ironically white collar labor. So we spent the past couple decades, you know, kind of offshoring blue-collar labor. And now with remote work, it becomes super easy to hire any competent person around the world. And I think that actually kind of can result in disinflation for a lot of white-collar jobs. So I think that basically people have to just, I think, cultivate diverse skill sets, be as valuable as possible and be diversified and basically have resiliency in your own life. This is all fantastic insight, and I think this key of self-reliance is going to be important in the 2020s.

You have to get out there and learn how to do things because the old methods will not work. And even questions of where do you store your value? And to your point in, you know, people used to store their value in, you know, savings account in the bank. Maybe now in the 2020s, you want to store the minimum necessary that you need for some time horizon to pay bills and such. And then with the other value that you want to store, look at this diversity. set of assets, including, of course, crypto and other things. One last question on that, because you touched kind of career and you've touched storing value. But one piece that I think might be shaking people a little bit is their mental health, actually. And I know that your focus is really,

you know, like macro, but there is a psychological element to investing into macro as well. Do you have any words for people in this volatility on kind of mental health and how we should prepare in that way? Well, I guess people don't want their macro advisor to give them health advice, but I mean, I think exercising and eating healthy is really important. I actually, it's funny, one of my earliest articles, I wrote like a 9,000 word article on kind of fitness and healthy living because, you know, I've always kind of been into fitness and I used to do assistant instructor for martial arts and it's kind of a big theme for me. I think people should not underestimate the importance of exercise, staying in shape, you know, trying to eat like whole foods,

you know, as much as they can. You mean get back to fundamentals? Get back to fundamentals. Yeah. And then, yeah, I mean, developing strong relationships with those around you, either online or offline, because we're social animals and, you know, we need to both interact with our tribe or our group and other groups. And so I think that mental health is an important thing. And I think especially in this environment where people hate each other so much, there's rising populism due to extreme wealth concentration due to changes in the money and breakdown of money systems and things like that. I think it's important for people at least try to be, have gratitude for what they have and and being. as constructive as possible to those around them. And I think it's also it's an environment where, you know, we talked before about how information travels super fast. That also means bad information travels fast. Basically, we have a flood of information, both accurate information and false information. And people have to be really discerning and like look for sources and like kind of not always just

kind of focus on whatever they, would have reinforced what they already think, but then, you know, seek out information that they disagree with so that they can then learn from it. and then, you know, basically then come to a more informed conclusion. And that's from multiple different subjects. And so I think that that's, and that's part of self-reliance is basically having your own information filter so that you were not getting in a bubble and that you were getting out there, basically trying to understand the world how it works. And I think that it's just, it's a really, really challenging environment because it,

you know, kind of breaks a lot of bubbles, I think, that people have been in for, for decades in various countries. Such a good way to end it, bankless listeners. Hope you were taking notes. We started with macro thoughts, macro advice. We end with life advice, which is always fantastic in what you can expect on a bankless podcast. Lynn, thank you so much for enlightening us on what's going on in the world and the 2020s. This has been super valuable.

We appreciate it. Happy to be here. Thanks for having me. Action items, guys. Of course, we will include a link to Lynn's fantastic newsletter and website at Linalden.com. Make sure you subscribe to that. sign up via email. Also, we have a number of previous podcasts with Lynn. David was mentioning them earlier in the episode. We'll include a link to all of those episodes in the show notes.

Also, stay tuned for more macro stuff on bank lists. More coming up with Luke Grumman and Travis Kling and others. Risk and disclaimers, as always, we have to end with this. None of this has been financial advice. Maybe some life advice sprinkled in. But crypto is risky. All this stuff is risky. You could definitely lose what you put in, but we are headed west. This is the frontier, it's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.