Bankless - Inflation, The Fed, & Macro Markets | Jim Bianco

Episode Date: January 19, 2022

The Fed has made a big pivot in 2022, but what does that mean for markets? How aggressive does the Fed need to be to fight inflation? With the shift from Quantitative Easing to Quantitative Tightening, how are risk-on assets treated differently from risk-off assets? What's going on with the bond market? Jim Bianco is a seasoned investor, market commentator, and President of Bianco Research. With a sharp view of the past, present, and future, we ask him all these questions in order to know... is the world collapsing? ------ 📣 ALTO IRA | THE CRYPTO RETIREMENT ACCOUNT https://bankless.cc/AltoIRA  ------ 🚀 SUBSCRIBE TO NEWSLETTER:  https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: 👀 POLYGON | LAYER 2 DEFI https://bankless.cc/Polygon  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask  💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger  🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix  🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants  ------ Topics Covered: 0:00 Intro 6::00 Jim Bianco's Back! 9:17 The Bond Market Got Killed 14:50 Inflation is a Problem 18:53 The Fed's Perspective 27:02 Signaling and Fedspeak 30:04 Transitory vs Reality 34:50 Rock and a Hard Place 43:08 What Should You Pay Attention To? 48:00 Crypto & Expecations 53:20 Deflation? 57:56 Positioning the Portfolio 1:00:11 A Centralized Metaverse 1:07:25 Closing & Disclaimers ------ Resources: Jim on Twitter: https://twitter.com/biancoresearch?s=20  Bianco Research: https://www.biancoresearch.com/free-trial/?source=TWTR  Bond Market Thread: https://twitter.com/biancoresearch/status/1480245516009152513?s=20  ----- 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 

Hey, Bankless Nation, welcome to another State of the Nation episode. This time we're diving deep into macro markets. There's been a downturn recently, David. I don't know if you've noticed it. Getting pretty ugly out here. Macro has taken center stage yet again. I think people are wondering, how is this going to affect crypto markets in 2022? So we brought on Jim Bianco to talk about the macro landscape. What are we going to dive into in this episode, David? Yeah, we're going to talk about the changing stance of the Federal Reserve. the Fed is taking things a little bit more seriously, taking inflation a little bit more seriously, not just rising interest rates, but going from quantitative easing to quantitative tightening.

Let's unpack what that actually is, because again, every time I hear the words quantitative quantitative easing and tightening, I'm like, okay, I knew that for about the five seconds that it lasted in my brain, but then like it just flies right back out. So what is that and why is it different than just fighting inflation? And what does that mean for the different types of markets of the world, the bond markets, the stock markets, and the crypto markets. How does risk on assets? How are they going to behave differently versus risk off assets? And a bunch of other questions. There's also some news that we talked to Jim before the show that he really wants to talk about with Microsoft buying Activision Blizzard for some crazy billion numbers of dollars and how they are just like Facebook

are also trying to co-op the metaverse. So a number of different topics here. But first, leading with the whole inflation Fed conversation. Yeah, I really want to know if like, first of all, the world is going to collapse due to inflation, okay? That's somewhere in my mind space. And also, like, is crypto going to collapse due to this quantitative tightening, this interest rate reduction or the interest rate increase going into the year? So we'll have to see what all of this means. We'll unpack that with Jim. Also, guys, before we get in, just an announcement from our friends at Alto IRA, I'm going to get tax nerdy with you guys. You're the perfect one to do it, Ryan. Okay. The tax optimizer, as you've called me before, David. All right. So I've had

this cool thing since, you know, as soon as I found out about it in crypto that this was possible, it's called a self-directed IRA, okay? And this is a brilliant for retail investors in the U.S. This is a way to actually have a taxed advantage. You don't pay any taxes until you retire account that is denominated in crypto, okay? And so like any of you guys who've tracked your taxes for crypto, you know, how much you pay when you go from like Bitcoin to Ether, that's taxable, a taxable event, not so inside of an IRA account. So I think everybody in crypto, who's on the bankless journey, should set one of these up if you live in the U.S. And if you want to get super advanced, there's another tool for you, which is you might have a 401K from a previous

employer. Okay. So you work for a while somewhere. You put away some funds in a 401k. You can actually take that 401k and you can convert it. You can roll that over, turn it into crypto, all right? And then you can start saving your retirement dollars in crypto. Some you guys aren't thinking of retirement yet. But like, are you thinking of not having to pay your taxes? Because that's something you can do with one of these structures. And what we found, there's lots of different solutions on the market. But the easy button, if you're kind of lazy, right? And you just want that easy button, just something that works. Okay, David might be that guy. Also, IRA gives it to you because it's completely integrated with Coinbase. Right. So that means they have 120

25 different crypto assets. You get set up just a few minutes. And it's a $10 investment minimum. Okay. So you could start at any amount. And again, you can put away as much as 6K per year. I think that's the current IRA laws or roll over your existing 401K. They take about 1.5% on that. Well worth it for my perspective just to get you the easy button to make it happen. So if you want to figure out, if you want to learn more about that and get your account set up, which I encourage you to do, everyone who's listening to this, just take some time and actually get it set up. You don't have to start depositing from day one.

Go to alto IRA.com slash bankless. As you could tell, David, I get excited about crypto. I was going to make that same joke. I was going to take it from the guy who gets really, really excited about this. It's awesome. Go taxes. All right. It's great.

Anyway, David, let me ask you the question. We begin every state of nation episode with, And that is this. What is the state of the nation today, sir? The state of the nation is denial, Ryan. I am in complete denial about the state of the Federal Reserve. And I want to pick Jim Bianco's brain about whether if that's a healthy denial or unhealthy denial. Am I really allowed to just ignore the antics of the Fed? Can I just assume that the crypto markets go up only forever? Or is that naive?

And should I actually be fearful? So I'm in denial and I'm trying to ask myself if that's appropriate. Should we have gotten a psychologist on and talking about your psychological state even? So what you're saying is like you're in denial because you don't want to believe that macro can affect crypto significantly, that crypto fundamentals should kind of stand on their own.

And maybe this is sort of a wake-up call from Jim that we're getting out of this episode. Yeah, yeah. So like I think that macro markets can throw crypto around a decent amount but can it throw it into a bare market? That's what I'm in denial about. I don't think it can throw crypto into a bare market. But maybe Jim has a different opinion.

Well, we're about to find out, guys. We will be back right after the break with Jim Bianco to talk all about this. We want to thank our sponsors for making this episode possible. Polygon is Ethereum's largest and most vibrant scaling solution to date. With millions of monthly users and all of the biggest defy-apps, the Polygon ecosystem has turned into a blossoming metropolis of defy activity. Transactions on Polygon are quick and cheap, allowing users the freedom to achieve their defy goals,

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wallets so that they too can get into the world of Web3. Bankless is proud to be sponsored by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system, where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum that lets you trade any token at the current market price.

No human counterparties or centralized intermediaries. Just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. The Uniswop Grants Program is accepting applications for grants. Do you have something of value that you think you want to contribute to the Uniswap ecosystem? No matter how big or small your idea is, you can apply it for a unique grant at Uniswopgrant.org and help steer Uniswap in the direction that you think it should go. Thank you, Uniswap, for sponsoring Bankless. Hey, everyone, we are back with Jim Bianco. Jim, welcome back to Bankless. It's great to have you, sir.

I'm a pleasure to be here. Thank you. Guys, Jim Bianco is a president macro strategist at Bianco Research. He's been a veteran of the dot-com era. He's an expert in global economy, macro stuff. I turn to his Twitter threads often when I'm trying to understand all of this stuff. He's also a DeFi crypto-native, which is a rare breed of those have transitioned, both the traditional world and this new defy world, had them on the podcast again. And I knew as David and I tried to unpack,

what is going on in macro? We had to have Jim on. So Jim, can you help us make sense of this stuff? I think a lot of people in crypto, they came to finance by way of, like, crypto. And so they don't understand when you're talking about things like the bond market and quantitative tightening,

quantitative easing. They don't understand what some of these terms means. We don't have those things in crypto. We don't, yes, we have these things. we just called them different things, right? So we're hoping you could help us out with that. Does that sound good? That sounds good.

In fact, I think the reason you created crypto was to get away from these ideas. I think so. But now they're coming full circle. As David said, we can't just keep burying our heads in the sand. So I want to start with maybe this to make sure we understand with the bond market. And we're talking about sovereign bonds right here,

which are very important financial instruments, it seems to me. And you've had a tweet thread recently that I want to kind of unpack and understand. This was from January 9th. And you open this tweet thread by saying, in some respects, what happened in the bond markets last week was epic? Something we might be talking about for many years. Okay. So something last week happened in the, I guess this is two weeks ago, happened in the bond market that was epic, something we might be talking about for years.

What is that thing? What happened? In simple terms, the bond market got killed. It had one of its worst weeks on record. Prices sold off quite a bit. The losses that one incurred in the bond market were very, very large. Quick word about the bond market. I'm hopefully not going to go too far into the weeds with some of the math. When interest rates go down, the prices of bonds get more volatile. We refer to that as positive of convexity. And so when you have record low interest rates, the amount that bond prices move right now is huge compared to 30 years ago or 40 years ago when we had 10 or 12 percent interest

rates. So you have these gigantic movements in bonds. And in the first week of January, you had one of the biggest plunges, weekly plunges that we've ever seen across the board, short rates, long rates, you know, in real rate bonds. Basically, the bond market got killed. And that's what I was talking about. What happened was epic, and we might be talking about it, and that the bond market got really took a left turn and had some, and got spanked pretty bad to begin the year. And what are the implications of that?

If we have a dead bond market, if it got killed, what does that mean for every other market? Why is that so important? Yeah, so interest rates are the price of money in the Tradfai world. It is probably the basis where everything starts. Whether you're investing in companies or running a company or buying stocks or buying commodities or whatever, you start your analysis, you start your idea with what does money cost me. And if the bond market is signaling to us that money is going to cost a lot more, remember lower bond prices mean higher yields. If it's signaling to us that we're going to see much and more expensive money,

that changes the valuation and the metric for everything else in the Tradfai world. And now, by extension, the crypto world as well too. So what the bond market was signaling was that money is going to become a lot more expensive to borrow. and that is something that we haven't seen or had considered until we got right to the beginning of the year. And by the way, real quick, why did it happen at the beginning of the year? These markets are so institutionalized. I'm talking about the Trad V fixed income market is so institutionalized. Every institution gets paid, you get paid a performance bonus usually on the calendar year.

So the most important date for institutions is December 31st. that defines their bonus, that defines their income for that year. January 1st tends to be like a new page that's been turned. And it's not unusual to see in these heavily institutionalized markets that when you turn the new page to the new year, all of a sudden a market takes a right turn and goes either up big or down big. This year it happened to be down big. Okay. So the bond market's going down big. So can you remind us when we're talking about bonds, Are we talking about like corporate bonds, sovereign bonds, like the bonds of nation states, all of that? And then who sets the prices?

This is free market. But yet, what is that caused by at the root of things? Is that caused by central bank what Jerome Powell and the Fed actually plan to do in the future? And the market's kind of anticipating that. So they go up or down based on what they think the Fed is going to do in the future? What are the dynamics that actually price the bond market? What bonds are we talking about here? So usually when we talk about interest rates, we're talking about the sovereign bonds of a nation. Now, in the U.S., that's the U.S. Treasury market. In the U.K., that's the guilt market. In the Japanese market, that's the Japanese government bond market. Those are the bonds issued by the government. And typically, not always, but typically they have among the highest quality of credit. With the U.S. Treasury, the concern is the risk is not that the U.S. is going to default. The risk is,

is that interest rates are going to rise and your prices are going to fall. So when we talk about interest rates rising, we usually talking about U.S. Treasuries. Corporate bonds, high yield bonds, municipal bonds, asset-backed securities usually get priced off of those. So we usually refer to where corporate bonds are as a spread or a premium over that risk-free rate of treasuries. So if treasury yields are going up, corporate bond yields are going to go up, usually by a a like amount. And if there's perceived more risk, because there's a credit risk, their spread might widen and they might go a little bit more. So essentially, if Treasury bond yields are going up, then they are all going up. Now, to your second part of your question, what's got them going?

It's the big eye word, inflation. And inflation has now become a point in the markets. And I'll talk about this a little bit. And not everybody in the market believes this, but it's not transitory anymore, at least in the short end of the bond market. What I mean by that is people that trade short term bond or short term debt securities, two-year notes, one-year bills, Fed funds. In that space, those players have decided that the biggest problem is inflation. It's not transitory. And the Federal Reserve is going to have to deal with that by raising rates many times.

And so that's what they've got as far as where we are in the market now. In the longer end of the market and in the equity market, there's a little bit of disagreement about whether or not the Federal Reserve is going to raise rates as aggressively as the short end of the market. Right now, you can go to things like the Fed Fund Futures Market, the Eurodollar Futures Market. There's a cash market called the overnight index swaps market. And what they're telling you is four rate hikes for this year are priced in. We're not that far away from a fifth. So there are a big aggressiveness that's priced in the market.

Ask equity traders. Now, Fed's not going to move that much. Why? Why don't they think the Fed's going to move that much? Because they don't believe that the Federal Reserve would ever do anything when it comes to the markets that would upset the economy or the stock market. They don't believe that the Fed would raise rates. multiple times and put the stock market or the economy at risk. And from 2008 to 2020,

they were right. The stock market, the Fed would never do anything to put the stock market at risk, but something has changed now. And that's inflation. And it's showing up. And this is where I think a lot of strategists and economists are either unwilling or won't go, unwilling to go there, or don't want to go there, whatever word you want to use. If you look at political polling, and CBS News had a pull out this weekend. The president's approval rating is in the tank. The prospects of the Democrats getting reelected are in the tank. The number one issue in the country is inflation. It is not crime. It is not climate change. It is not COVID. It is inflation. Inflation hits everybody. There's no escaping it. 40% of the public has, this was a Federal Reserve study done

right before the pandemic, 40% of the public has less than $1,000 to savings and rents. Every single one of those people go to the grocery store, go to the gas pump, go to the mall, and they wind up buying less every month than they did the previous month because of inflation. That's what's showing up in the polls. And so when people say, well, the Fed, will never upset the stock market. Yeah, from 2008 to 2020, you had that 40% in the stock market's interests aligned on the same side. But now they're on diverging interests. Don't raise rates, Jay, you might take the stock market. Jay, do something about inflation because you got 40% of the people screaming that they're going to take it out on the Democrat Party in November. So he's in a bad

place right now. Which side does he go to? Does he err on the side of protecting the stock market or does he err on the side of dealing with this insipid inflation problem? And more and more, I think the markets are coming to the belief he's going to err on the side of this insipid inflation problem and get aggressive and raise rates. And if that puts the stock market at risk, and if that puts the economy at risk, well, then so be it. But they cannot not deal with this problem. That's the dilemma that we're facing in the market right now. So Jim, I just want to check my understanding and get back and pick up the inflation thread. So we had this big dip in the bond market where the asset prices of the bonds drop significantly. And as a result of that, that means

the yields go up because these things are inversely correlated. The prices of bonds go down, but the yield that they generate goes up. And that sets a new level for the cost of money. That's what you were talking about with how much money costs, because if you can get a dependable, you know, 3% AP yield on your dollars in the bond market, which is deemed very, very safe, perceived very, very safe by investors. Why would you go take your USDC and take it into defy, like, where there's a lot more risk? Like, you could just get a very stable return. And so, like, it pulls people back from the risk spectrum and says, like, hey, you know, 3% on your bonds. That's not too bad. I'm just making these numbers up, but this is the example.

And so this is why perhaps the stock market and the crypto markets are in the state of fear right now because they are seeing the raising rates, the raising yields out of bonds after prices have gone down. And they're saying, well, I don't have to take so much risk anymore in order to get the yield that I need. And that has caused a drop in risk on assets. And so that's what we're fearful about

with the stock market and the crypto markets, what I said I'm in denial about. And all of this is because, for the first time, in such a long time, the Fed has been presented with a new problem, which is inflation. So, okay, can you just, put ourselves in the shoes of the Fed for right now because they have they had the Fed has a dual

mandate for maximum employment and also stable prices. And it seems that they have thrown maximum employment, maximum employment by the wayside in lieu of stable prices. Can you just kind of do the cost benefit analysis that you think that the Fed is doing as to why they've determined inflation as the big problem? Well, one of the things that the Fed is looking at in we have to be honest here is political. The Federal Reserve is a 107-year-old institution that has gotten its reputation as an inflation fighter that they have, and whether or not it's been Paul or Yellen before him or Bernanke before her, they have repeatedly said, we have tools to deal with unwanted inflation. Okay, the public has just told you we have unwanted inflation today. And we want you to deal with it

today right now. And so the Fed has got a choice that they have to make. Do they continue to push this idea that no, no, no, you may think it's unwanted, but don't worry, it will go away on its own, otherwise known as transitory. So therefore, we have to do nothing. Or does the Fed decide that if they do nothing and they're wrong, there's going to be a pieced to pay from the Federal Reserve, or if they do nothing and a desperate Congress looking to get reelected. And I'm not trying to be partisan here by saying it's the Democrats, because if the Republicans were in the majority, I'd say exactly the same thing about them. But that desperate Congress might try and take on this issue themselves through price controls

or some other heavy-handed tactic to try and bring down prices in order to stave off a debacle during the election in November. The Federal Reserve, I think, is looking at those, although they'll never say it, but they are. And they're saying we've got a political choice that we've got to make. And we've got to deal with this inflation problem today by raising interest rates. The first part of your question, real quick, how does interest rates going up, how does that impact the stock market and then maybe the crypto market? Well, one of the other things the Fed does is what's called quantitative easing. And then the opposite of that is quantitative tightening. Now, what is that very simply? The Federal Reserve has a bunch of banks that are required to hold a reserve account with the Fed. So if I'm a bank of a billion dollars in size, I have a reserve account at the Fed and it roughly has around $110 million of reserves, around 11%. The Federal Reserve has the ability to add reserves to my account or drain reserves from my account. How do they do that? They just change the number.

of my Fed of my number. You know, if a commercial bank did that, everybody goes to jail. But if a central bank does that, that's called sophisticated monetary policy is what it is. So what is quantitative easing? They call up my bank and they say, we want to buy $10 million of five year notes. So sell us $10 million of five year notes. Okay, I did. Now, how's the Fed going to pay for it? They'll say to me, you know your reserve account? Well, we'll just erase that number and we'll add $10 million more to it. And so they created the money out of thin air in order to purchase these bonds. Why do they do it? Well, if the Fed is purchasing, if the Fed is purchasing $120 billion of bonds a month, a trillion and a half a year, that helps to hold down interest rates. That helps to create a buyer of bonds. What does the private sector do? Private sector

looks at these yields and says, I'm not going to buy these very low, overly prices, low prices, or very high price, low yield bonds that are overvalued. I'm going to go look somewhere else. Maybe I'll buy corporate bonds or maybe I'll buy stocks. Maybe I might even move into crypto as well, too. So they refer to that as moving out the risk curve. Milton Friedman had a fancy trace for this called the Portfolio Balance Channel. So the fear is if the Fed is going to start raising rates ending quantitative easing, then the bond market needs to find a trillion and a half dollar buyer. And how does the bond market find a trillion and a half dollar buyer? Well, it keeps raising interest rates by selling off its bonds to suck money in from corporate bonds, the stock market, maybe even the crypto markets too, suck money in to buy their instruments.

And so that's why the markets are worried about the Fed raising rates. You, the Fed, are buying bonds, so I don't have to. I could go play in stocks and crypto. Okay, well, you're going to keep selling off bonds and raising rates. And remember, interest rates are the price of money. You're going to make money more and more and more expensive until I make the decision, best place for me to put my money is in some safe, high-yielding treasury security. So what yield do they have to go to?

how much do they have to lower the price? So that's why the fear is, as the Fed starts to fight inflation, by raising rates, they're signaling no more QE, no more that they're going to be buying bonds, and maybe they're going to do QT, because one of the other things the Fed does is they own $7 trillion worth of bonds. Yes, $7 trillion. When they mature, so if $100 million worth of bonds mature, a billion dollars of bonds mature, billion dollars of bonds mature today, they buy another billion dollars to hold their holding stating. Maybe they just let them mature. That would be QT. That further adds to the supply that the

market has to take in. And that further puts pressure on other markets that we want to drag money out of those other markets to buy Treasury securities. So if the Fed is worried about inflation and interest rates are going to go up, it's a signal. The bond market wants a trillion dollars worth of and the bond market will find a way to get a trillion dollars worth of money in other places to transfer back to the bond market. It will sell, it will make its price go lower and lower and make it look more and more attractive with the higher and higher yield until it does suck all that money in. That's why you see stocks being wobbly. And at the end of the risk curve, even crypto's being wobbly too. It might suck money back the other way because what we saw

through 21 was all the money was going one way from the tradfine markets to cryptocurrency. This is, thank you for talking about that in such a clear way, Jim. Like, I think this is going to benefit a lot of listeners who are maybe for the first time actually understanding the dynamics at play here. So, you know, thank you for that. And I want to get back on the inflation train in just a minute. But before we do, something you said there, it sort of brought some more questions to, you know, into my mind. So it seems like the Fed is indicating signaling that they're going to raise interest rates, right? And the market has said maybe that's going to happen three times this year, maybe four times, not so sure. And they've also maybe signaled that they're going to stop

quantitative easing and do quantitative tightening. But like, can we talk about this whole signaling thing? It's like, it seems very bizarre to me, right? Why doesn't the Fed just say, hey, guys, here's what we're going to do. Boom, boom, boom. Why is there all of this like talking in code and this strange Fed speak that happens? The market. It has to analyze everything that Powell says and say, okay, here's what he really meant or like, here's what's going to happen as a result. Why can't they just speak plainly about what they intend to do? Is the signaling aspect and the element of how this whole system works? They have a fancy word for it. They call it forward guidance is what they call it.

So yes, the signaling is what they're afraid of in the market is doing something that upsets the market quite a bit. And so they like to signal it. In fact, that signaling even gets a little bit more nuanced than that. Robin Wigglesworth at the FT or Nick Timmeros at the Wall Street Journal will occasionally write stories like senior Federal Reserve officials are thinking about X. That's usually them calling up the papers and saying, hey, tell everybody we're thinking about doing quantitative typing. Wow, like a planned leak, a little bit of a planned leak. And then if the market likes it, okay, that's the policy. If the market doesn't like it, I don't know what the hell they're talking about at the Wall Street Journal. We had no plan on doing that whatsoever. So that's part of the forward guidance. Now, of course, I'm

embellishing about a little bit about it for just to be funny, but they do. They do kind of drop these hints, either through speeches or through conversations with the media as well, too, because they don't want the market to be surprised. They are, definitely afraid, especially in the 08 period, that they come up and they just say, okay, today we've decided something else. And the markets completely freak out and crash. They don't want to be responsible for it. So they want to try and lead us all. You ready? Here we go. We're going to do it. I'm telling you we're going to do it. Here it comes. Ready, one, two, three. There, we did it. So no one's going to be surprised when it happens. Again, they call that forward guidance.

So that is by design the way that they like to do their policy, which is why we obsess over every word they say and we look at the speeches and stuff because we're trying to define, divine the forward guidance of what they're trying to do. It's quite an elaborate dance between the Fed and the markets, but, you know, this is the way it works, certainly. So let's get back on that inflation train for a minute because it wasn't but six months ago that I remember Jay Powell talking about using this term transitory inflation. I'm not sure that whether this is part of signaling or part of the dance or whether he actually believed that inflation was transitory. What's your belief? It seems like now the Fed is ready to take off that label and say, no, we actually have inflation.

What's your belief about inflation? Like, is it a persistent problem and how persistent is it? Are there some elements that are still transitory? And could inflation go down without the Fed intervening? What's your overall take on the inflation story? here? Well, a couple of things. Just so everybody has a context, one year ago, the inflation rate was 1.4 percent. And now it's 7 percent. There were people a year ago like me that was worried, I was worried a year ago that inflation is going to be one of the big stories of the year.

And I thought, man, we could see three and a half percent inflation, maybe four on the outside. and it was seven. So I directly got a right, but I was way, way short of where the inflation rate was going to come up. The word transitory, the idea that a lot of economists were pushing in the Fed was the reason that we're seeing these higher prices was it was an echo of the lockdowns. In 2020, we were all sent home and we didn't spend money. In 2021, things opened up. So now, okay, now I'm going to buy that new car that I wanted to buy in 2020.

Now I'm going to remodel my kitchen, which I wanted to do a year ago. Or now I'm going to buy some new clothes or something like that. And so we're going to see this echo of this pent up demand to buy stuff in the marketplace. So we're going to see inflation go. We're going to see prices blip up higher and then dissipate. Well, they blipped up higher and then they kept going and going. Then we blamed it on the supply chain. Then we've started to blame it on other things.

Some people like me said all the stimulus, all the air drops of all the money we did, the $1,400 stimulus check and the $600 stimulus check and the $1,200 stimulus check. All of that led into a lot of people having extra money to spend in the economy. And so what we wound up with is much higher inflation than we ever thought at 7%. Now, I'm in the camp that inflation is more persistent. But the nuance here is all the data suggests that probably by March, you'll see a peak in the inflation rate and then for the rest of the year it will come down. Problem solved, right? Because it's going to come down. No, it has to come down to something like 2%. Or the Fed's old target around 2% to really say it's transitory. What it might wind up doing is peaking it around 7.5% or 8% by March. And by the end of the year, we'll still be at 4%, maybe five, maybe three and a half.

That's still unacceptably too high. Now, let me go back. Remember, what's driving a lot of this is a political decision. The 40% that have less than $1,000 savings are not happy that everything costs more money. Look, the upper 10%, we have homes, stock portfolio, maybe crypto portfolios. So maybe my paycheck didn't go up 7% in the last year, but my house did. My stock portfolio went up 29%. My crypto portfolio went up in 21. So I got cushioned from the higher prices. They didn't. So now they're up unhappy about it. And so the Fed is going to have to deal with

that. They can't tell them, oh, it's going to peak and it'll be 4% by the end of the year. That won't satisfy. That's still unacceptable. So that's why I think that even if it does peak and it comes down, it's probably not going to come down fast enough in order to bring inflation back to heal so that we could go back to a 2008-2020 scenario. Because right now, again, you've got the market on one side with the economy and you've got this 40% on the other side. Both are very unhappy and the Fed's got to pick one. And it's probably going to pick the 40% and deal with the inflation problem, which is what's got markets upset because it's not, it's going to provide by bond prices going low and lower, providing that competition for everything else.

So touching on that everything else side of things, one of the narratives that has really been hammered into my brain over the last two years is that we can't let the stock market go down too much. Like too many people's retirements depend on the stock market, so many people's pensions. So a lot of things rely on the stock. market at least staying flat. And so you're telling me that the Fed is kind of leaning into the other side of things, the average consumer, the people that are meaningfully inflected by inflation, that have to pay rent and don't have too much savings. But like what happens, what happens on the other side of things? Like what happens if the Fed prioritizes that too much? And then all

of a sudden the stock market does indeed go into like a pretty significant prolonged bear market. Isn't now, isn't there just an equal and opposite reaction where a different side of of the world is unhappy? And like, what's the Fed going to do about that? You're right. And this is why they're in a bad place. They've got no good choices. There isn't the perception now, and I happen to agree with this, is there isn't a magic policy that makes both sides happy at the same time. So they've got to pick one or the other. And so that is the risk. There's a phrase that we like to use in the markets that the Fed has a history of raising rates too much until they break something. And they've, break something is either the stock market plunges, the economy goes into recession, or some other

financial crisis seems to occur. And that is a fear. Look, a number of surveys done of professional tradfai managers ask them, what is the number one fear you have for 2022? And the answer is a policy mistake. The Fed's going to raise rates too much and they're going to break something. To your point, they're going to raise rates to deal with this inflation problem too much and they're going to break the stock market or they're going to break the economy or they're going to break the plumbing of the traditional financial system and create some other kind of mess somewhere along the line. So a lot of people are very worried about. That's why these markets are very sloppy in the way because that's their fear. So yes, they've got a very difficult point that they're going to have to deal with.

Raise rates some and then the stock market gets sloppy and then you say, okay, I can't do any more because rich people might become less rich. Well, they'll 40 percent. will be very, very unhappy at that point. And or do you say, I have to address the inflation problem or at least look like I'm addressing the inflation problem? And I got to keep raising rates. And if the stock markets keep stumbling, so be it. You never want to be put in that position.

And that's exactly the position that the Fed has been put in. And partially because they waited way too long to deal with this problem of inflation. They should have dealt with it. maybe over the summer, maybe last spring. But by waiting too long and letting it get to this point, it's left them with no good options. Can I just ask a higher level question? Because the Fed has been pursuing a quantitative easing type policy since 2009, basically. That's like printing tons of money, adding to the balance sheet. Why are we just suddenly seeing inflation crop up? I remember people who used to talk about inflation, you know, coming. It's coming right around the corner in 2012,

of 2013, and it never came, but we saw massive asset price inflation. I'm wondering if this time things are different partially because of fiscal policy. So a lot of the money that you were just talking about with kind of the stimulus checks and employment, that didn't go to the banks and asset prices and that went directly to the consumer, which also makes me, you know, wonder if the Fed can really fix some of these issues, right? Or if this is not a fiscal policy type of issue causing some of this inflation too. So the Fed's been printing money for the last 10 years. Now suddenly, CPI inflation is a problem. You have to ask yourself why. And if that is more a result of fiscal policy, then actually monetary policy. And if it is fiscal policy, it's something the Fed

can really change. Is that something that they have any sway over? Do their dials work for that sort of thing? What do you think? Well, a couple of things. First of all, there was a Fed governor who was there from 2009 to 2017 named Dan Torillo. And he's over at the Brookings Institute. And Dan has given a number of speeches since he's left the Fed. I've always joked the best Fed governors are the ones to listen to or the ones that just left because now they tell you their opinion and they just don't spew the party line. And he's been arguing that we don't have, we being the economic community,

don't have a good theory of what causes inflation. And if you actually look into it and look at, well, it's too much money chasing too few goods. It's the idea of inflation expectations, rational expectations, whatever theory you want and you backtest it, if you will, it doesn't really work as well as you think. So inflation's kind of this monster that we don't really totally understand, which is fine. But the Federal Reserve wants you to believe that they know how to, they've got these little tools and knobs and levers that they could move it to the third or fourth decimal place anytime they want, they give you that illusion that they have that kind of control on inflation. So let's start with,

it is really hard to understand it. Second of all, you're right. Something changed in the last two years that was not present in the last previous 12 years that gave us inflation. And I would postulate, it was the pandemic itself. The event of the last generation was we sent everybody home for a year. And because we sent everybody home for a year, a lot of things have changed in the economy, and we don't understand how they change. Wall Street loves to use this phrase when things go back to how 2019 was. No, we're not going back to 2019. I don't know where we're going, and it doesn't have to be a bad place. It could be very good, but we're not going to go back there. And I've postulated that one of the things that's changed is that in the lockdowns, work from home, our lifestyle choice,

that we've made, we now want more stuff and less services. Now, that runs counter to what a lot of people think, but that's why we have a supply chain problem that is not getting better. It seems to be intractable. That's why we pay up for things like use cars and the like, because we're at home more. We've made a lifestyle change and that we want more stuff. And then you add into that, we stuffed everybody full of money. And we've got a supply chain that can't handle it. And that's why you've got these higher and higher prices. Now, to your question about fiscal policy, yeah, who, who, where'd those checks come from, the $1,400 check, the $1,400 check, the $600 check? They came from the federal government. They didn't come from the Federal Reserve. They're the ones that airdrop

the money to everybody as well. But the Federal Reserve, through quantitative easing, it's argued by buying up bonds, right, where did the federal government get the money? They borrowed it in the bond market. They issued a bunch of bonds and then they used the proceeds of that to air drop all this money to everybody. Who bought all those bonds? The biggest single buyer was the Federal Reserve. And that they allowed the government to borrow trillions of dollars without interest rates meaningfully going higher. And so that's what happened. And now we're seeing the effects of all that stimulus. So I think lifestyle changes. Like I said, don't discount the idea, as something that we never thought possible before the beginning of 2020.

What if we decided that we're going to send everybody home for a year? And no one's going to work for a year. And then how are we going to, and then we're going to turn it back on. And we're all going to pretend it's 2019 and go right back to the way it was before. It's pretty obvious we're not going to go back to the way it was before. I'm not going to tell you I know where we're going to go. I just would argue again, I don't think it necessarily has to be bad where we're going to go. And I would argue it's not going to be, don't look to how were things in 2019.

and how do we get back to that? Again, working at home, wanting more stuff, I think is a big driver of this inflation because it's been driven more by capital goods than it has been by services. So, Jim, the average bankless listener, bankless viewer has some sort of portfolio that's very, very heavy crypto or could also be very, very heavy tech stocks. For these individuals, what should they be paying attention to? And should they be concerned if they might be overexposed on? on the risk end of the spectrum.

What would you say to somebody that has like, you know, 80 to 90% of their overall portfolio in crypto assets right now? What should they should, what should they be paying attention to? David, are you asking for yourself, sir? Not at all, Ryan. Asking for a friend? You're asking for a friend. Yeah.

Let me start off by saying, I'm a big believer in this face and I'm a hoddler. And so at the end of the day, think ahead longer term. And you're going to see this space expand greatly and you're going to see coin prices go up quite a bit. The whole space is. But over the next year or so, what was the big adoption of 2021? It was traditional institutions coming into crypto, thinking of it is either a hedge against inflation or a hedge against the financial system, but using it as part of the same spectrum, right? You've got super safe government bonds and corporate bonds, high yield bonds, equities. And then within equities, the more riskier equities are tech stocks.

And then at the very end of the spectrum is crypto. It's part of the same spectrum is what it is. So if the Fed is going to raise rates, if the Fed is going to deal with this problem and the bond market isn't going to, you know, the bond market's going to sell off. The stock market doesn't like it. The end of the risk spectrum, cryptos, is going to feel it. And so it's going to continue, I think, a struggle. Now, longer term, I would argue to you that the crypto market is not going to always be a adjunct to the tradfine markets. It is now because that's the way that a lot of the adoption came into it. It was just they viewed it as the next end. We've extended out the risk, the risk parameter. It doesn't end with tech stocks. There's another, there's another. There's another. world after that, which was crypto. Eventually, I think that the crypto market is going to become independent of the financial world as well, too. And once it becomes independent, then it won't be

stuck with all of these problems of what is the Fed going to do? Where interest rates? How are tech stocks? What Kathy Woods portfolio did this week or that week? All of those things will then be important for themselves, but not necessarily for crypto, but crypto has to break that link with tradfied, but it's probably not going to do that anytime soon because they just got everybody in on the idea that it was the further out part of the risk spectrum. So you're anticipating choppy waters for 2022 for crypto because it's classified as a risk on asset and all risk on assets suffer kind of a similar fate. And that could be kind of bearish crypto in 2022.

Longer term. Can I just jump in and say, that's already been happening. I was just looking at some numbers this morning. I went back to April 30th. Bitcoin's down 25% since April 30th. The DeFi Pulse Index is down 50% since April 30th. The Bloomberg Crypto Galaxy Index, which is an index of all the points, is down 15% since April 30th. We've been in eight or nine months of choppy waters already. And I think we're going to

seem more of the same as we go forward from here. So what I'm arguing is what you have seen over the last several months will probably continue as we sort out, you know, what the Fed's going to do and that the biggest risk off, or risk on asset, excuse me, is crypto. Guys, we have so many more questions for Jim, including talking a little bit more about, you know, bull, bear market, how long this lasts, talking a little bit about the politics here, transitory inflation, also the metaverse. But before we do, we want to thank the sponsors that made this episode possible. If you're enjoying this conversation, make sure you like and subscribe during the sponsor break. Thanks a lot. We'll be back in just a few minutes. So you've got some money and you want to spend.

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Jim is just schooling us on the macro landscape here. We ended that commercial break a little bearish, like wondering what 2022 is going to do for crypto as an asset class. I want to throw this idea by you, Jim, which is an idea I think that was articulated fairly well by Arthur Hayes. He's got a post about this. He's the CEO of Bitmex, also kind of a trader. And his take was similar to yours.

in some respects. Basically, you know, the Fed's in this uncertain territory, it has to do something about inflation. It will do these things. We'll probably get that in Q1, Q2, Q3 as well. And then one of two things might happen. Either something will break, as you were saying, and the Fed will be like, okay, time to dial it back, or midterms will be over. And all of the political angst that you said is actually contributing pressure on this Fed intervention on inflation will be over, because, you know, November midterms have passed in the U.S. And so his take is basically, I'm going to play it safe for the next three quarters. And then I'm kind of expecting maybe a rebound in Q4 after some of this misery and volatility and chop has passed with the Fed.

And then it's back, happy music again, Fed continues printing money, asset prices go up. What's your take on that? Do you think that could be a possibility or do you think that's naive in some ways? No, I think that's exactly a possibility. that's why I said him in a hoddler. Let's go backwards in time. March of 2020, March 20th of 2020, ETH dipped under $100. I think it traded $93, $94 on its low of the day at that point. March 23rd of 2020 was the day the low of the stock market. And when the stock market turned, what happened with ETH? It didn't just rally like the stock market. The stock market turned and it doubled.

and ETH won up 50X is what it wound up doing. So yeah, when the Fed keeps raising rates, something breaks, when this game ends, the far end of the risk spectrum comes screaming out of this thing, comes just flying out of this thing. Orders and orders of magnitude bigger than the tradfine markets do. That's what we saw in March of 2020. That's what we saw last summer when the stock market took off in July and we bottomed out around 1700 on ETH and it took off. as well too. So I would argue to you, it's about expectations. I'm a hoddler. I'm holding. I don't expect my coins to do much for me in the next several months. But I know when the game turns, I'll be wondering, did it turn? I'm not sure it turned. It'll be up 5x before I've realized that it turned.

So I don't want to miss that. And so therefore, I'll just sit there and just ride this out for right now as well, too. So I would agree with Arthur that that's exactly, I think, way you need to play it. And don't check prices 38 times a day and go, damn, it's still 3,100. When's it going to keep going? It will. It will. It just not might be anytime soon. But that's great. And like I think people in crypto, honestly, you need to hear the long-term perspective, right? And we're not even talking about like years here or decades here. We're just talking about like months. Let's get over this uncertainty and then like see where we are on the other side. There's another idea that I want to float by you. And this is, um,

I think put well by Raul Paul, who's been on the podcast, is he actually doesn't, so if, I don't want to put words in Raul's mouth, but I'll just try to paraphrase, which is he doesn't think that inflation is going to be a big deal over the next decade, as many, as many others do. And like, they think in crypto, that's a very popular narrative that inflation, like, is going to be precipitous into the decade. And the reason for this, according to Raoul, is demographics. So, like, demographics, the baby boom generation is over. People aren't having kids, populations not growing as it used to. And so, you know, like, it's kind of the economy is a snake and it ate the baby boomer generation. It's like working its way out of the system. And that's a deflationary force if, you know, population growth decreases.

And the other deflationary force is, of course, technology, which tends to decrease. prices. That's his case for why we won't have a crazy high inflation 2020s. What do you think about that? Do you think there's merit in that argument? Or would you take the counter perspective on that? Well, you know, first of all, let me start with this whole deflation debate that you have out there is unusual even in the traditional markets. It's like the baboon cage at the zoo. Somebody offers an opinion and the rest of us throw shit at them is basically what happens. And, In fact, most of Wall Street is like that most of the time as well, too. So is crypto.

Exactly. Crypto Twitter, especially. But I think really this inflation thing, I agree that Rolls right in that the three big things that have driven inflation down for the last generation have been demographics, globalization, and technology, DGT. They have come and they have been pushing and pushing and pushing. The problem I see is that demographics are not going to change. That should continue to be a downward push on inflation. Globalization is changing. There is all of a sudden, you know, China's not our friend anymore. And we just don't view China like we did even three or four years ago. We view them with suspicion and are very careful in how we deal with them. Technology is is there too. But, what we're not factoring into this is I still come back to the big event of the last generation

was we sent everybody home for a year the way we do things, the way we spend our money, the way we view the world has changed. And because of that, we're still not getting our head around it. Look, I know a lot of people in the financial markets that are now permanently work at home. And they live in Jackson Hole, Wyoming or Tempe, Arizona. or they live in somewhere in Florida. They no longer live in Manhattan anymore. Or they no longer live in San Francisco or Chicago. And so that's a big change as well, too, in these markets.

And that's where I think this inflation thing has come. And let me remind everybody, I think that once we get through this peak on inflation, we settle out three, four percent inflation, not 10, not 15. not 20 or something along those lines, but three or four percent inflation. Well, the 10-year yield is at 185. The Fed funds rate is at zero. If we've got a three or four percent inflation rate, those interest rates are way too low, and they're going to have to come up a lot, maybe even approach those rates of three or four percent. And that's going to put a lot of pressure on traditional financial market. So I agree with, Raoul, we're not going to see the 70s. We're not going to see not

10, 11, 12% inflation. But if we see three, three and a half, that's going to be a problem. And again, I think it comes down to a big event just happened. And our attitudes about a lot of things have changed. And whether you want to call it the great resignation or whatever phrase you want to put on it, but things have changed. And I think what we're seeing out of that is a change in the way we spend our money. And that's why we've got inflation. So, Jim, how are you positioning yourself for this year? These things have just recently changed, right? So like inflation just came on the radar. Some of these Fed actions have changed things.

Is your take like, hey, whatever, it's all noise. I'm a long-term holder anyway. I'm just going to hold the same assets that I've always held. Or are you a bit more active in that like you want to hedge against some of these events and change your portfolio as a result of what's occurred? What's your take on how you're positioning yourself for 2021 in the next couple of years? Well, in crypto land, I only do one thing I buy, and that's all I ever do. So, you know, if everybody wants to if you want to panic, if you want to panic, if you want to panic, Eaths down under $2,500, I'll buy,

is what you'll wind up seeing. And I'm not in the mode of selling. Now, in Tradfine land, I'm going to probably have a different attitude. I've been reducing risk. I've been getting out of the markets a little bit, probably since around Thanksgiving. I've been investing more in stuff that benefits from higher inflation, whether it's cyclical stocks or basic material stocks or something along those lines as well, too. And even a little bit in financials, although longer term, I think financials are terrible investment. But for a rental, if you will, higher interest rates should definitely help the financials as well, too. That's kind of how I'm playing this game right now. So I view crypto differently than I view the tradfired word.

Because remember, like I said before, when it turns, I'll be sitting there going, did it turn? I'm not sure it turned. It'll turn it. It'll turn it. It'll do the 2x before that. I don't want to miss that. So I'll just write this thing all the way through. And every panic, I'll try and just buy a little bit more and buy a little bit more and buy a little bit more.

And when this cycle turns, watch it go, just like the last cycle that we saw in March of 2020. Really good advice, really good thought. And I think also, I hope people heard what you're saying, the benefit of having some dry powder on the sidelines to take advantage of some of these dips that might be ahead if that's the way we move. Also, Jim Bianco, buy only when it comes to crypto assets, spoken like a true crypto native. And something that I think is also going around in the world of crypto natives right now is the conversation of the metaverse, because while markets are dealing with this crazy volatility due to inflation, the meta. continues to get built out. And something that is happening in the wake of that, that happened this morning, Jim, that I know you're paying attention to is Activision Blizzard is getting perhaps bought by Microsoft, the world's largest companies buying one of the world's largest gaming companies.

What do you think of this big merger, is that, or buyout? What's going on here? So, just to put some numbers on it, Activision Blizzard, Call of Duty, has been, is being bought by Microsoft for $70 billion. Stock is now up. I'm looking at my screen right now. It's trading at $82, up $16 for today. So about a 30% gain for today. This is salvo number two in the Metaverse.

Salvo number one was Facebook changing their name, the Meta. Salvo number two is Microsoft spending $70 billion to get a gamer. They know they being the Web 2. world, if you will, Facebook and Microsoft, know that the Metaverse is coming. They know Web3 is coming. And what they're going to try and do with the Metaverse, and let me not mince words here, they're going to try and turn it into Metaverse 2.0. They're going to basically try and co-op the Metaverse with their centralized version of the Metaverse as well to, whether it's meta, whether it's what Microsoft's going to do. We'll see what some of the other players, you know,

wind up doing, whether it's Twitter or Google or anything else, if they make some kind of a metaverse type of play as well, too. So it worries me that what we're going to see is we're going to jump from a decentralized kind of metaverse that we're all envisioning right to the centralized version of the metaverse. And I am one that does believe that everything has to start with decentralization. And anytime you get centralization, whether it's these alt layer ones or whether it's going to be what they want to do with the metaverse, that ultimately you haven't accomplished anything. If we wind up with a centralized version of the metaverse, I quit to you guys before we started, maybe when Facebook creates meta, they could just take everybody who's been canceled on Facebook

and say, okay, you're automatically canceled now in a new metaverse as well too. Is that really where we want to go with this. And unfortunately, a lot of these big companies want that to be the place that we're going to go and they're making big bets on it. And I hope it's not the case, but they're trying really hard to grab control of whatever the metaverse turns out to be, whatever Web 3 turns out to be. They want to try and roll it, call it Web 3, but make it really Web 2.2 is really what they'd like it to be as well. And hopefully at the end of the day, it does become its vision of being a truly decentralized world. Do you think they'll be successful, Jim?

I hope they're not successful at it. And the reason I say, I hope I, you know, I say that is, let me throw into the world. And I can almost throw the question to you. I get a little dismayed by a lot of these Alt-Leyo-1s that are basically so centralized. And all they kind of continue to do is just push TPS speeds. Oh, look at how fast we could do all of our trades. Yeah, well, you got like seven validators. Oh, who cares? But all you get is cheap fees and real fast turnaround. And that's all you really want. Well, if that's really all we really want, then we're never going to really realize the world of a bankless world. We're just going to have a digital banked world is what we're going to wind up doing. So I'd like to think that they're not going to be successful at it. Like I'd like to think a lot of these alt layer ones are going to be forced at some point screaming and kicking to decentralize in one way or another, because because that's going to be the only true path to where we're going to go in this world.

But at times I think, yes, that's where we're going to go. And at times I go, man, we're just going to wind up recreating a digital world, a digital version of the trad-fight system, and we're not really going to accomplish a whole lot. So you tell me, I mean, I kind of go back and forth on it. I want to believe we're going to go decentralized, and I hope we go decentralized. Because you wanted you guys tell me why we will. Oh, I think it's definitely a complete. edge when so much of the crypto world was decentralized coming out of the bear market,

really the only things that made it out of the bear market were Bitcoin, Ethereum, and Dogecoin, which is actually meaningfully decentralized. And so, like, centralization actually was, like, a competitive edge. But I think with what we're seeing exactly what you're talking about with Facebook pivoting to meta and Microsoft buying Activision Blizzard, like, they're cornering the centralized version of the metaverse, right? like they can do centralization way better than we can. And so like while perhaps centralization was a competitive edge in 2021,

and maybe a syllable will be in 2022 with regards to crypto, the long game is decentralization. And so maybe the strategy for these Altlayer ones is like start centralized because you got to go to market and onboard people with cheap fees, but then learn and carve a viable path towards decentralization because now you're got to compete with the centralization of Facebook and Microsoft. and like you're never going to compete with their level of centralization. They lean into it.

I hope you're right. I would say that preaching decentralization, like a couple of things I've learned. It's like it's very difficult to preach decentralization when numbers going up like on the other side of things because people don't really care in like the bull market fervor. But one of the reasons, I guess the investment case for decentralization is that basically that is that is, That is the rock on which we build all of crypto. And the metaverse is about property rights. It's not about virtual reality that Zuck thinks. It's about property rights.

And if you believe that, then the entire thesis of the space, everything in the space has to be built on decentralization. And the investment case here is like decentralization is the only true moat. And I think that'll prove itself out over time. But you have to be sort of the profit in the wilderness kind of like talking about that and believing that. sort of contrarian for a period of time. But we've also seen this play out in other, you know, bull markets with bearcums, maybe maybe 2022 will bring the market back to the realization that,

hey, decentralization is the thing that matters. So yeah, we're still uber bullish on it and want to be on that side of history. But also, I do think that there are some centralized solutions that are onboarding the masses into crypto in a very healthy way that will, like reinforce and, and come back to some of the more decentralized elements of crypto, too. So in the end, it's all increase the pie, net win for everyone. And I think that's how it plays out. But we'll see, man. It's a journey.

It's really impossible to predict the future, isn't it? And thank you so much for spending some time with us, Jim, today, helping us understand the, like, what's going on in the macro markets. I think this has been a fantastic education for everyone today. Last question for you, man. We really appreciate how into crypto culture you've gotten recently. I noticed you're wearing a crypto shirt. What's on the shirt?

Yeah, so there we go. This is really a way that you got it. I try to, this is for all my old, my no-coiner friends. I wear this shirt. Do they think you're crazy? Do they think you're crazy? Oh, yeah. Oh, yeah.

By the way, I think the biggest D-Gens in this space are the no-cointers. They just are so obsessed with the damn price of these things going up and down and get so irate when one number go up. They're the worst. Hopefully I can get them to change their opinion. Keep representing. And we appreciate it. Thank you for like being a bridge once again between traditional finance and crypto.

You're welcome on anytime. I'd love to have you back soon, Jim. Thank you. Thank you. I enjoyed it. Guys, recent disclaimers, of course, we have no idea what is going to happen over the next six months over the next six years. None of this was financial advice. Eat is risky. Crypto is risky. So is Defi. 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.