Shaun Newman Podcast - #861 - Brett Oland

Episode Date: June 2, 2025

Brett Oland is the President and Chief Executive Officer of Bow Valley Credit Union in Alberta, Canada. He has over 20 years of experience in the banking industry and is a Chartered Professional Accountant. We discuss the bond market and how the treasury functions. To watch the Full Cornerstone Forum: https://open.substack.com/pub/shaunnewmanpodcastGet your voice heard: Text Shaun 587-217-8500Silver Gold Bull Links:Website: https://silvergoldbull.ca/Email: [e-mail] Grahame: [phone]Bow Valley Credit UnionWebsite: www.BowValleycu.comEmail: [e-mail] Use the code “SNP” on all ordersProphet River Links:Website: store.prophetriver.com/Email: [e-mail]

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If you're listening or watching today on Spotify, Apple, YouTube, Rumble, X. Make sure to subscribe. Make sure to leave a review. Hit the retweet button, all the lovely things. Appreciate all your help in getting the message out. Now, let's get on to that tale of the tape. Today's guest is the CEO of Bow Valley Credit Union. I am talking about Brett Oland.

So Buckle-Buckold. up and here we go. Welcome to the Sean Newman podcast. Today I'm joined by Brett Olin. Sir, thanks for hopping back on the show. Yeah, not a problem. Just first right out of the gates. Thank you very much for throwing on Cornerstone there. It was a fantastic event. I had a ton of fun.

Getting a lot of good feedback. Just really, the highlight of my year, which is just fantastic to see. So, yeah. Well, I'll take that for people who didn't attend, Brett wasn't supposed to be on stage and then Vince Lanchie had heart problems. So I called Brett up like two days before. I'm like, hey, you want to, you want to hop in on this discussion? And I'm like, you know, so I thought, and then you did pushups on the bloody stage for Pete's sake.

And I was like, well, he's fired up and ready to go. And I got tons of good feedback not only from you, but from every other speaker from the guests, I mean. And yeah, I'm, you know, I'm actively working on Cornerstone 3.0. So I didn't think that would happen so fast. But as you know, trying to get a venue in Calgary again, even as far out as I am, I can't seem to find my date I want, which is frustrating. But regardless, it'll be back in Cal, what I can tell people for sure is it'll be back in Calgary next year, just waiting on dates and a venue and doing all the, the, the,

song and dance we did a year ago and I thought I wouldn't have that I wouldn't put any of that stress on me I was like I'm gonna take a month I took 12 hours I took 12 hours it was my brain I couldn't turn it off the next morning I'm like okay well here we go so yeah thanks for that you were a welcome addition to the panel you you fit right in with the cast characters uh this year yeah you bet I got more comments about my push-up form than about anything so whatever whatever I'll take it um Okay, so this, for the listener, you know, like I call Brett probably five days ago, roughly. And, you know, I'm going to butcher this, and this is why I want to Brett on, because, you know, I had a ton of people texting me different links, different interviews, different videos that people were sharing on social media. And it was all about the U.S. bond market.

And if I get this wrong at any point, Brett, you just point out and we can walk through it. But it was basically they put up their bonds for sale. Nobody bought them. So they bought them. And everybody goes, the banking system is collapsing right in front of her eyes. Go put, you know, all your money into X and hold on because the big storm is here. And I was like, I just need a voice for reason. I just need somebody who isn't going to try and get me to buy something or move somewhere or anything.

I just need somebody to make sense of what happened in the U.S. You know, I didn't want to. Is it seven? Is it 10 days ago now for the audience? it happened in the last two weeks, but essentially they put out their bonds. Normally they're bought. They weren't so they bought them. Walk me through what I'm trying to get across to the audience.

Sure. Yeah. And anytime somebody talks in sort of hyperbolic terms like that, you have to be very careful. The U.S. treasury and bond market and system is massive. And it just, it, it kind of bugs me. when people talk about it collapsing tomorrow and things like that. It just, it doesn't work like that. And probably first off, because, yeah, maybe there's some triggers out there that may cause it to collapse or something like that.

But you have to remember that there's always a push and a pole and there's going to be somebody on the other end fighting to basically prop up the system. And they do it inevitably through time. Now, to specifically your comment around the bond yields rising, so what you have to understand specifically about the U.S. bond market, well, in the Canadian bond market for that matter, is that when they go out into the market, the Treasury basically says, hey, we're going to run out of money. We need to be able to sell some of the sovereign debt or these bonds out into the market. Here's a price that we think this is worth. and they might look on the existing open market and say it's at three and a half percent for a 10-year bond or something like that. What people need to understand is that bond has to find a buyer. There's no if ands or buts is that when it goes out into the market, it has to find a buyer. And whether it's pension funds or other sovereign nations or whether it's individuals or banks or

or whatever, it has to find a buyer. But what they're talking about that actually happened a couple of weeks ago, the yield on the bond spikes. And so what I mean by that, so when they put it out originally into the market, the Treasury looks at it and goes, hey, yeah, I think we can get three and a half percent on this 10-year bond.

And what their incentive is actually to sell it for as low cost as possible. So the lowest yield possible. And what happened was it's called a tail when they go out into the market and there's no buyers for the actual purchase of those treasury bonds. And it forms what's called a tail. So rather than them getting that three and a half percent that they thought they could get in the market, all of a sudden they're selling it for 3.55 percent or 3.5 percent or 3.4%. And so the yield on the bond actually has to rise until they actually find a buyer.

And so it works in inverse. So say you had a car that you wanted to sell and you said to yourself, well, you know, the market rate is $10,000 for this car that I'm selling here. If you don't sell it and you absolutely needed to sell it, what are you going to do? you're going to basically lower the price until you actually find the buyer. And so that's the same thing that happens in the bond market, except it works just the inverse is where the yield or the return that you get on that bond rises and the cost of that bond rises for the government in the U.S. And so that is a legitimate concern just because what are we seen in this past,

specifically in the great financial crisis in 2008 and in 2020, effectively the bond market went no bid. And so everybody's clamping down, they're saying, we're not spending anything. We're not doing anything. And so basically that yield on that bond rises and rises and rises until it actually finds a buyer. And when it gets to the point where it's too expensive, That's where the central bank steps in, which is a separate entity from the Treasury Department in the U.S. And they basically say, okay, we understand what's going on here. We don't want the Treasury market to get unruly. So they step in and actually buy those treasury bonds.

And what that is is called quantitative easing or QE. And so that's effectively what's happening is the central bank of a country is stepping in, and buying the bonds of a government so the bond yields don't get unruly because they recognize what would happen. So, for example, if they went out into the market and wanted to sell these things for three and a half percent, the government might look at it and go, yeah, we can afford the tax consequences of this yield being three and a half percent. But if there's no buyer for it and all of a sudden the yield on that bond spikes to six

percent, all of a sudden you can't afford the interest on the debt of that with the tax revenue that you're receiving. And so it's a tool that central banks have used. And is it funny business? Yeah, it kind of is. And it's effectively what Banana Republics do is the government says, hey, we've got all these social programs. We want to build this. We want to build this infrastructure. And as a result, then their yield on their bonds continues to rise. So the central banks have to step in. And it's a perpetual cycle. And so you may even hear some comments in the media of the Treasury Secretary,

Jerome Powell, or sorry, Scott Besant is the Treasury Secretary. You may hear Jerome Powell, who's the chair of the Federal Reserve, saying this is not QE. And that's effectively what he's saying is like the central bank is not buying the debt of the government. And in a lot of the cases, it is QE. And so anytime that the central bank is stepping in and buying the debt of the government, it can be inflationary. It may not be inflationary. And we can sort of get into the nuance of that. If I may, I just, I'm, I want to make sure that I'm falling along.

I was saying this to Vince Lanchie, that when you use certain words, I got to think about what the heck that actually means. So, treasuries is, they issue bonds. So they're just part of government. Treasuries is a part of the Canadian government, the U.S. government. Yes or no? Yes. But there's, there's different, there's nuance to it. So there's treasury bills.

There's, so those are T bills. There's treasury bonds, which are typically long-term. But if I look at a government of Canada, one of the departments is treasuries. Am I right there? Yeah, so think of it as the checking account of the government is the treasury. So anytime it's getting low because we're spending too much money, correct? Yep.

Then they issue bonds. And what a bond is, is basically a guarantee, a piece of paper that says, we're going to pay you back in 10 years, the money you give us plus 3% on every year. So if it was 100 grand over the course of 10 years, you'd get 130 back, correct? Correct. And so, yeah, and generally what happens is, well, it compounds. So you get more than that 130 back. Sure, sure.

Yeah, I'm sorry, my easy math, but then you can't. Right. It's going to be more than that, but that's a general idea. And forgive me for not giving you the exact numbers, folks. But like, just so my brain can situate it. So then if I'm looking at bonds, people, they're only as good as the guarantee. Right. So if you buy country X's bond, which is right now Canada, let's say, you could look at that and go,

what's the chances they can't pay me back in 10 years? There would be a probability or a risk matrix in there, I assume, going, well, you know, do I want it back? And then probably another thing would be, do I want it paid in Canadian dollars or do I want to put in U.S. dollars? Do I want to put it in some other currency? I don't even know. Can you do that? Can you say, I'll buy your bonds, but I want it paid back in U.S. dollars, for instance?

So that's a whole different rabbit hole that we could go down to and sort of the subject of our last conversation, which was around the beginning of April, where the Canadian government, issued U.S. denominated debt. So basically they have to pay that debt back in U.S. dollars, but they got U.S. dollars for it. In. So, but let's park that. But yeah, you generally have the right idea for. Okay.

Okay. So a treasury is a part of the government, the checking account. When it runs dry, they issue bonds. Is that the only thing they issue or they issue a whole bunch of different things? No. Well, there's there's always financial. trickery that can happen there. So think of it just as an in and out,

just like your regular checking account. So they bring money into their checking account through taxes and through tariffs and through, you know. Sure. And it fills up, right? It grows, it grows, it grows. And then they give $5 billion to Ukraine. And we all stare at that and go, what?

What are we doing? Like, wait, now we're going to issue bonds. We're going to, like, that doesn't make any sense to me. If you're sitting on, you're sitting on one trillion worth of surplus, if I may, I don't know if that's the word to use, but forgive me, that's, you know, you're sitting on this giant bank account and you want to go help your neighbors and everything else. At least you have the money to play with. When I look at this, you're saying, we're running dry, but we just gave money to, is it two other countries? Is it 50 other countries? I don't know if it matters.

We can go look at Doge and see how they've been unearthing things in the United States. But essentially when they run out of money and they say, hey, we're doing a round of bonds. When that signals to probably the financial world then is the government is out of money. Yeah. Effectively what it is. And so I'm trying not to make it too nuanced, but the Canadian government actually holds something like 350 billion worth of US treasuries, even though there we are in this much. debt. But the thing is, again, let's, let's park that for the time being. But you're exactly right. It's, it's almost like going into overdraft in your checking account is, is effectively

what they've done. And by holding, honestly, by holding U.S. debt then, the reason you would do that, the reason other countries would do that, say, look at the U.S. you got the, you know, financial currency of the world in the U.S. dollar, and they look at them and they go, they're going to pay it back. Yes. Yeah. So you're, you're, you're, you're buying a bond and you know you're going to get money back. You're going to get more bunny back. So that's why people keep, when I, when I try and figure out why the heck did somebody buy $800 billion worth of U.S. debt, that's why, because they're not only getting $800 billion back, they're going to get way more net in the interest and everything else. And they're like, well, this is going to feed our economy in a different way,

essentially. Yeah. And, and the, the important nuance with, that is you're going to get paid back, and I have no doubt in my mind, that you get paid back every single dollar nominally. But the thing is, you have to start thinking about, especially in very inflationary environments, what is the real purchasing power that you're actually receiving back as a result of that $800 billion that you've contributed? And so that plays very nicely into what you were talking about earlier when there's the actual tail on that bond sale. So you can't sell it for that 3.5%. You end up selling it for 3.6% or something like that. You actually have to chase the yield on something like that. So about 14 years ago, the Chinese government

quit buying U.S. treasuries. And basically what they saw was this country is going to going into debt every year by another 7 to 10%. And they looked out on the horizon and said, well, if they're printing currency every year for seven to 10%, why are we only getting a return of say 4% on this bond? This doesn't make any sense. They're losing effectively the purchasing power every year of about 6%.

Not only they'll always be made whole, because the US dollar is the world reserve currency and they can always print more. But part of the problem is, is they were selling their goods and services. In return, they were receiving U.S. cash and putting it into U.S. treasuries. And then 10 years down the road, they'd be going, well, this is worth half as much as I thought it was going to be worth nominally. So when you have enough countries around the world that are actually doing that, so China quit buying in about 2014. Russia, you know, hasn't been buying.

They got their, their, their, their bonds confiscated from those. So they're sure is not going to buy any more U.S. treasuries. Can I just hold on Russia for one second? Sure. You're saying they got their bonds confiscated. So what, what that means is they had bought a bunch of bonds from the U.S. And when this all started shaking out, the U.S. said, oh, by the way, we're not paying those back? Well, they basically

put, they froze them. And so, which means they're not paying them back. Yeah. And yet to be seen. Which is very unprecedented. This is something that didn't even happen in the Second World War where, you know, you froze Nazi Germany's debt. That didn't happen. So it was in my mind, when they kicked Russia off Swift and froze their, their

treasury bonds, 370. billion worth of treasury bonds. It was basically the signal of the beginning of the end of the U.S. dollar system. Now, that being said, don't get hyperbolic. This is going to take 20 years to play out, 50 years to play out. But the thing is, when you do something like that, it basically signals to the world. You cannot trust to put any more debt into this instrument because you might not get paid back. Is there any undoing that? Could they just tomorrow say, hey, Russia, here's all your stuff back.

We made an oops. We fired the guy who pushed the, you know, that button. Or is there, there's just no coming back from this? Well, I think you probably could do the undo button. But it's, it's like, say if you were to lend your friend $2,000 or something like that. And then one day he got mad at you because, you know, your kid didn't pass his kid the puck or something like that. And it's basically, oh, you know, I'm not going to pay that $2,000 I owe you.

Forget about it. Type thing. That's always going to be lingering in the back of your head, even if he makes good on it and says, yeah, no, I don't, I was mad. You know, your kid made a good play, whatever it is, type thing. Even though you've done that, there's going to be that inherent mistrust, right? It's like, well, I don't know if I'll ever lend that guy. money again. Because effectively that's what a bond is, is the Russian government lending the United States money through a bond. Yeah, so there's no coming back. Like, I mean, you think about

it. Like, that would take monumental things to happen in the banking system, which is government, which you go, like, there's just no way. I mean, never say never, but we're talking about the 1% chance, probably less than 1% chance that even happens, which signals then more and more countries are going to stop buying U.S. bonds over time. Obviously, the large players are already doing that. And when people stop buying the U.S. bonds, you're going to start seeing more and more where the central bank steps in and buys the U.S. bonds then? Yes.

So we're not quite at that point yet. But so that's true. That a lot of sovereign nations with the economy. exception of like Europe and Canada are not buying US debt. What's really interesting, and you may have heard this term for it before, bonds have been known in the 40s called certificates of confiscation. So effectively you get the certificate and it loses value year after year. So in my mind, it's pretty foolhardy to buy long term debt of any sort right now,

especially when we're in the inflationary environment, because that purchasing power is going to degrade year after year after year. So now the U.S. and other governments around the world are usually pretty crafty on finding people to buy this debt. So they force banks to buy the debt. They basically say, you're mandated. Here's this risk-free asset that you need to hold on your balance sheet. And so they force banks to buy this debt.

They force pension funds to buy the debt. They force insurance companies to buy the debt. And so what it is is giving these certificates of confiscation to the banks and basically saying, you need to hang on to these because we're going to make it law that you have to hang on to these things. And inherently, the bank knows, yeah, I know these are certificates of confiscation, but it's almost even the cost of doing business. And when you stick it with something like a pension fund or a bank, or an insurance company, they don't mind as much as, say, somebody like an individual,

because they report quarterly and annually on their financial statements. As long as they're making a margin on their money, it's okay. But in the long term, if you were just to hang on to these bonds for, say, 10 years, 20 years, 30 years, the purchasing power is just going to evaporate on those things. And so when you have a country that's thinking about these things like China, thinking in decades or centuries, they recognize that, well, this asset that I thought I have is just getting completely devalued year after year. Why would I hang on to this thing?

With insurance, you rattled off like three or four groups of institutions or whatever you want to call it. You mentioned pensions. You mentioned insurance. insurance companies. Is that why insurance is going up? Would that be one of the reasons why insurance is so expensive? Yeah, insurance is a really tough business right now.

And you've probably noticed a lot of consolidation in the insurance company space. It seems that everybody's with intact these days. And, you know, that's a separate conversation. But so when, say there's $100 million that an insurance company gets in within premiums per year. What they have to do is take those premiums and they, the insurance industry regulates them to put it in very safe assets like government bonds, like where you're not going to lose nominally on the value of these bonds.

Because the thing is, if an incident happens, say there's a wildfire or a flood or something like that. The insurance company has to make good on the insurance policies that they have. And so they don't want all those premiums just to get wiped out and you can't possibly pay back all the insurance claims. And so they put it in this safe and secure asset like a Canadian bond or a US bond or something like that. So you actually have the reserves to pay out any claims that you have on on those that you might have because of an insurable incident. So now when the return on those get very low, especially during something like the Great Financial Crisis or in 2020,

the yield that they were actually getting on, or return that they were actually getting on those bonds was negligible. So they had a lot of trouble even paying their staff and paying for infrastructure because, yeah, they're forced into having the premiums available if there's a claim, but the thing is they still need to be able to operate as an organization. So you're exactly right. Because they can't make enough yield on or return on the premiums, then they have to basically get blood from somewhere.

They have to get it through premiums. When you go watch like what Doge did, right? They walk in and they just start cutting. we're not going to send this amount of billions over here and we're not going to spend over here and they're going to take that all back. Do you go, oh wow, this is amazing. US is on the, you know, they can write the ship.

They can get the debt paid off in 15, 20 years. Like if they just stick to the course, they'll eventually, or do you think something different? Because like on my end, if I go back to your checking account with the treasuries, If you start putting money back into that, then you could then start paying off your debt, I think, right?

You could basically take back the money you're just sending everywhere. Your checking account would start to grow and then you could pay off the debt and you could start to, I don't know, do things that maybe make sense? Like do you look at Dogen go, oh, that was a great idea?

Well, if you look at my Twitter feed, I wish them Godspeed. on what they were trying to do, but inevitably I knew it was going to fail. And that's sort of been recognized even in the last couple of weeks. Just Elon Musk has sort of gone full circle with that. So, and there was a couple of reasons for that. Number one, it's the math. They cannot cut fast enough unless they take,

a machete to the major entitlements, specifically in the United States. So in the United States, there's some major items that are, some are discretionary and some are not discretionary. So some of these mandatory programs are Social Security, Medicare, Medicaid, other mandatory programs, they add up to about $5.3 trillion with a T in expenses. There are actual receipts that they're bringing in from all these taxes. There may be some tariffs like you're talking about topping up your checking account there. They add up to receipts about 5.5 trillion.

So not a lot of breathing room of about $200 billion of income over expenses. And now I haven't even talked about defense yet. So defense is about a trillion dollars a year in the U.S. government. And so all of a sudden you're looking at your expenses that are 6.3 trillion. And there's other non-defense spending that's another trillion dollars. So all of a sudden you're up at $7.3 trillion worth of expense. And so your receipts, your actual income that you're receiving from taxes and filling up your checking account is underfunded by about $2 trillion. And so right out of the gates, I would argue you can't cut Social Security, Medicare, Medicaid, because you'd have an absolute political riot on your hands.

And we saw it, right? It's any time Elon Musk went even close to one of those programs, he, they basically had to back down because they had too many politicians screaming at them. Another noticeable area, defense, like who in their right mind thinks it would be a good idea to basically slash the defense spending these days because of all that's going around on the world is it's just not going to happen. So there's only one other line item that basically makes sense to cut, and that's interest expenses. And so this will sort of lead into, I'm sure, your next questions, but interest expense on the U.S. debt is about $1 trillion a year. And so they have about $37 trillion in debt outstanding. And so it costs about $1 trillion per year to basically pay for that. So you can't cut the fence.

You can't cut Social Security, Medicare, Medicaid, and these other mandatory programs. The only thing that you can actually cut is interest expense. And so how do you cut the interest expense? You actually have to have buyers for the U.S. debt. So the yield, the cost of that debt that they're paying out interest goes down. And there's only a few people in the world that are big enough to basically absorb trillions, worth of of debt and can afford to get paid less interest on that and one of them's the central bank in the US, the US Fed.

Follow me? Yes and no. I'm like, he can see at Briar Wrigo. I'm like, ah, yeah, yeah. Okay. So when you, when you add up their expenses versus their, you know, you're going through everything. Yep.

You were, you were 200 billion. Oh, look, you're making $200 billion off of taxes and everything coming in from all this money going out to Medicare and other things. Yep. So you've got $5.3 billion roughly. And once again, I'm butchering the math and $5.5 billion. But then you take an effect defense, which is $1 trillion. You're like, well, nobody's going to cut that because look at the world. So now you're actually losing money.

Yep. And then the other one, forgive me was their, the interest. Sorry, the interest. And the interest you want to get rid of, but you need to pay that every year. Yep. And so the only way to get rid of that, or at least to lessen it, is to offer bonds with a lower rate than what the interest is. Am I saying that right? Well, you're offering, yeah.

So it's basically, if you were to have a mortgage on your house, say you have a $100,000 mortgage, good luck. with that these days. Say you had a $100,000 mortgage rather than paying 5%, basically you're trying to get somebody to buy it and only pay them 3% or 2% on that debt. And so good luck trying to find that these days. Well, you've already, at the start of this, you said Russia isn't doing it anymore. China isn't doing it. What other countries could do it? Well, the thing is, Saudi Arabia might be buying a bit of that, but that's hundreds of billions. It's not trillions. But, and sir, this is sort of something that you brought up five days ago when we had a conversation, is this new genius bill. And so for those that are unfamiliar with the genius bill, it's a

bill that they're trying to legalize cryptocurrency and specifically they're trying to legalize stable coins. So a stable coin is basically just a, a derivative of an actual cryptocurrency of and maybe a Bitcoin or something like that. But a stable coin is basically supposed to act as a stable vehicle that will always be there, that will always work and you can get access to it all the time. This new genius bill was doing the same thing that they've been sort of forcing upon pension funds, banks, insurance companies, and basically saying you need to hold this specific amount. of treasuries to be able to operate as a stable coin.

And so when you talk about a $2 trillion stable coin market, all of a sudden there's a whole new bucket of groups out there wanting to buy U.S. treasuries to basically, the more buyers that there are for U.S. treasury, the lower the yield gets on those treasuries. So you can start to imagine why they're doing this is because they need a spot for all these treasuries that are coming due, as well as the new ones that they have to issue.

And they don't have enough pockets to stick all this debt into. And so they need to find new buyers for this debt. All the countries have basically said, no, we're not interested in that. The pension funds and the insurance companies might, their pockets might be full. Saudi Arabia might be full. individual buyers aren't going to buy it because they look at it and go, no, inflation's 5%. Why would I buy that for 3.5%. So they look to something like this genius bill to actually buy these outstanding U.S. treasuries.

Sticking with this genius bill and all the cryptocurrency, what is it? Can you paint me a picture of what that would actually, I don't know if it's a look like, But like, are you, so they passed a genius bill. What happened? Like, are you saying Bitcoin would have to hold or, or is it specific cryptocurrencies? Well, specific, the big, big dog is probably tether would be the stable coin that would have to hold the US treasuries, which it already does. So the whole idea behind tether is it supposed to basically be pegged to the US dollar.

And so if you have one US dollar, it's equivalent to one. U.S. Treasury. And basically they're saying, okay, you can't fictually create these tokens and say they're worth one U.S. dollar, even though there's nothing backing up. And so Tether, what they've done is they've gone out and they've bought in gold, Bitcoin, and U.S. treasuries to basically stabilize the background. And they almost work like an insurance company does. It's like when you come in with $100 million and say, hey, I want this in U.S. dollars. I want to trade in this this tether for 100 million US dollars, they can actually make good on being able to do that.

What stops, you mentioned tether, but what, what stops Sean from creating his own stable coin, buying a crazy amount of, I mean, obviously I'd need to have the money, but from buying,

like all it is is on a computer, it's just numbers going to a different spreadsheet. Like what, what stops 100 stable coins, firing up and buying all the U.S. debt. Well, and that's exactly was the problem because you could get your Sean Newman coin

and you say, oh yeah, this is a stable coin. It'd be a stable coin, folks. It'd be a pretty good coin. I can tell you, we'd have lots of gold and we'd be very, very stable, but we'd be forced to take some U.S. debt, which wasn't our

thought process, but the Sean Newman podcast coin would be great. Yep. But here's the thing. There's a lot of people that aren't as forthcoming as honest as the Sean Newman podcast coin. And they basically say, oh, yeah, we backed all this up. And little do they know, they've just issued a bunch of coins and it's backed up by nothing. And so I think that kind of sounds like, kind of sounds like banks, doesn't it? Sorry, sorry, Brett. I know, I know BVCU is different, but I'm like, isn't this the whole, is a, this is where I'm like, I'm, I fumble because I'm like, I don't know. all the bloody terms. There's so many terms in banking, you know, you go, oh, we can lend against

$1 in, we can lend it 10 times. And then other banks have 50 times and on and on and on. Like you, when you dig into that, you're like, oh, my God, this is, this is a house of cards at times. And the stable coin thing could be like the mother of all house of cards. Could it not? Well, the thing is, and I think that's why they're trying to put in this bill with the genius bill is because it puts some regulatory standards around it because you can't just have every other podcast out there issuing stable coin debt and eventually these things. Ours would be the best. Well, you know, it would be.

But eventually you're absolutely right. The Ponzi scheme runs out a Ponzi and the thing collapses unless there's something actually propping it up. So that's effectively, you're right. that is the banking system, but it's just so big and so ingrained in society that people prop it up. If you play this out long term, though, this is why the hyperbolic, you know, people going, it's here, right? You can see it. They're buying their own debt. And now they're trying to get it, push it into this other. But when you say, well, they could just create this new pocket, that's what

could keep this going for longer than anyone thinks, because you're like, well, they could find a whole new way to prop the system up. that's through cryptocurrency. Yep. Or the SLR in the US. Tom Longo has breached this topic of banks, US banks, being able to hold more US debt. And so when you remove the capital requirements to hold US debt within the banking system in the US, all of a sudden you've opened up another $4,5, 6 trillion with a T dollars

room to absorb these trade. And the thing is they're going to need it too. If every hundred days the US is adding another trillion in debt, you know, I said this as jokingly when they were sitting around 25 trillion debt. It was like before you know it, you're going to wake up and there's 50 trillion dollars in debt. Well, we're not that far off. I'd say in less than five years, we're going to be well over $50 trillion in debt in the

US, which is just obscene. But that's that's the way the world goes. And the thing is, it's not, this has happened before. Nothing's new underneath the sun. The most recent time, you know, people talk about, hey, this is an inflationary as the 70s. And I push back against that and go, no, I think this is more like the 40s, where something very similar happened. And the central bank in the U.S. and other governments around the world had to fight World War II. They basically monetize the debt, which really means that they're buying the outstanding debt of the government.

The central banks are buying all the debt of the government. It's eventually massively inflationary. And once the debt level gets inflated to a more reasonable manner, people carry on with their lives. And so this has happened before. And really what we're trying to do as an organization is help people and educate. people of getting on the other side of this thing where they're somewhat intact. Whereas if you're carrying low income bonds in your pension or something like that, then they're just going to get normally going to be fine, but a real value is just going to get killed.

When you say like educating people so they can come through this somewhat intact, so what would be some of the ways you can come through this intact? We're not talking about days. We're not talking about weeks. We're talking about years. Heck, in theory, this could be the rest of our lives. Like, you know, as I sit here, I don't like to put it in that terms, but, you know, closing in on 40 and you just go like, this, this thing has been getting, you know, the more I look at, it's more I see that it's been kicked down the road, it's been kicked down the road. And you, you know, you, you go, you assume they find a way to do things with cryptocurrency, which means they're going to kick it down the road a little farther. When you're, when you're trying to

educate people and try and like give them some things to think on or ponder or some ideas to come through this intact. Like what comes to mind? Well, hard assets is really what it is. And that's why we're big proponents of gold and Bitcoin and people I think should have exposure to both. And you know, you don't need to get completely over your skis with this. A little bit will go quite a long way. And other hard assets, real estate. I expect to do well, although your municipal taxes might go up considerably and you might get that whittled away. Believe it or not, the stock market will probably do pretty well, but it's on a nominal basis. It's digits on a screen and it's not real value.

So from here, the S&P 500 could double. But the thing is, if your purchasing power gets cut into a quarter and you only double, on your stock portfolio, you're not farther ahead. But the thing is, throughout history, gold has held up very well in this type of situation. And that's why I don't think it's unrealistic to see gold from here, which is close to old-time highs, to doing a triple, to quadrupling, maybe even a five-bagger in this case, because the thing is, This does speed up. And I get where people are trying to be hyperbolic and we're going,

this is it. This is the end. This is happening. I can see it because the thing is it does speed up over time where eventually all these Western governments that have made these promises to all their citizens over the years are eventually going to have to dump a significant amount of currency on the market and just, bam, to try and solve this problem. because unfortunately, we've gotten ourselves into position in the Western world that inflation is baked in the cake.

It is coming. It doesn't matter what you do. And we've proven that twice, even in the last couple of months. Number one, you mentioned already, Doge. They tried to make some cuts. Didn't work. The politicians would not have it. And then all the Doge cuts that they made, they just ended up spending them on defense or some of them. program didn't happen. I think it was a big result of the latest federal election in Canada of why

people voted in Mark Carney. Overwhelmingly, Mark Corney was favored by the baby boomer generation. I heard numbers around 65% of baby boomers voted for Mark Carney. And really what I boiled it down to was Pierre Poliev was positioning himself, hey, we're change. We want to make change and make things different. And if a baby booner is looking at that and going, I don't want any change, I have my pension, I have my old age security, I have my CPP, I have all these things. I don't want change. I want stability.

And so they overwhelmingly voted for Mark Kearney, even though they understood, I'm not sure if we actually even have a budget right at this point. But he was not. Yeah, there you go. But while he was campaigning, he was suggesting 250. billion new debt, new amount of debt, which is twice as much as Trudeau had. So understanding that baby boomers still voted for him. And I think it's at behest of their kids and their grandkids.

So we're going to be paying for that. And your kids are going to be paying for that for the foreseeable future. But the thing is that they don't look long term in the fact that as long as they keep going farther and farther into debt. This beast just keeps on getting faster and faster and faster and de-valuating faster and faster and faster. So we had a chance for fiscal responsibility. We didn't take it. The U.S. had a chance for fiscal responsibility. They didn't take it. This is going nowhere. And that's why I've sort of taken the position that's like, get out of the way. financially you can protect yourself as an individual and your family by getting into

hard assets gold silver bitcoin real estate if you can stomach municipal taxes that might come as mentioned stocks i think will do quite well uh but nominally they'll they'll lose compared to something like gold or bitcoin when you say inflation is coming Walk me through. So every year, the government has to pay their debt, or is it every month? I don't know if it matters. It's just a total. You mentioned in the U.S., it's $1 trillion roughly the debt they have to service, correct?

No, the debt they're actually servicing is about $37 trillion, but the interest payments, the interest payments alone is about a trillion. Okay, interest payments and trillion. So every year they get a bill where they, need a trillion. Yep. And they look in the bank account and they go, we don't have a trillion dollars.

Whoopsy. So then they go, well, we'll just issue some bonds. Yep. And then somebody pays them, nobody pays them. Regardless,

they're creating more U.S. bank notes, correct? Correct. Yeah, or bonds, yeah. Which are the same thing. Notes, bonds, T-bills, same thing.

Just by adding to the money supply, they're devaluing it, and that's where your purchasing power of any $1 year over year is dropping by whatever that percentage is. Yep. What is the percentage, by your estimation right now, every year, you're a Canadian dollar or a U.S. dollar, whichever you prefer, is dropping year over year right now? Well, the best indicator, because the government has incentive to lie about consumer price index or inflation. And so they say it's about around 3%. I would at least double that.

And what I do as a gauge for something like that is just look, look around you. Look in the grocery store. How much is a loaf of bread increased? How much is a jug of milk? Eggs. Look at the fuel pump. See how much that's gone up. Look at your utility bill. How much is that going up? Look at your insurance. How much is that going up? That is a way better indication of inflation happening than the government's numbers. Or, you know, you could look at something as simple as gold. And we've seen a rise, even from, I think, about January of 2023, we've doubled the price of gold in terms of Canadian dollars.

And so that's a pretty good metric that I'd take a look at, because gold throughout history has pretty much bought in, the same amount, the same basket of goods throughout history for the past 2,000 years, 3,000 years. I was saying to you when on the phone call, you know, I was like, oh, I feel like we've beaten, you know, we've had sound money, we've had that discussion on the Cornerstone forum two years in a row. And in my brain, I was like, well, we can finally move on from it and we can carry on.

And then we started having this conversation and this conversation again. And I'm like, this will never, whether it's called sound money or if it's just called the economy or whatever. you know, you want to call it. Like this is going to be a year over year discussion because every year your money, like there's no way to drastically change it. I think you've almost hammered that point home to me today. It's like, no, every year, maybe it's only got to be out of 3%. But if that's what the government's saying, it's probably 6%. So like you go every year your money, just your paper money, buys a little bit less. Yep.

There like has there been times in history where a country like Canada or US or take your pick has, oh, yeah, you can see it's buying less, being less and also boom, it's buying way more. Like is that possible? Uh, there was there was a deflationary period, I think sort of thinking, um, sort of late 1800s there was when 200 years ago. No, no. Uh, yeah. Or not.

150 years ago, yeah. So 150 years ago, we had a time where you woke up one day, your dollar bought you two eggs and you woke up the next day and it bought you four and it was like, whoo, here we go. Now 150 years later, you're like, no, every day you get to buy a little less eggs. If you started out at 12, you're down to, I don't know what the price of eggs is right now, but regardless, you're down to three. But you bring up a really good point of there is another way out of this.

And it's if the productivity of a country or the Western world or of a community really ramps up production. So sitting in Alberta, if all of a sudden we got, let's just say a pipeline and it went to BC and all of a sudden we started shipping a crazy amount of oil and gas to, let's say India, China, take your pick, folks. That all sudden would be just a giant boom where you could see it come or like a deflationary period then. Yeah, a deflationary period or probably better yet, it would be the value of the assets within that particular region increased and the productivity of the area increased significantly. There's no real better method to calculate productivity other than, you know, the amount of dollars that particular area produces divided by the number of people. And that's the productivity of the area. So you're absolutely right.

If we doubled the oil production or tripled the oil production, all of a sudden the productivity of this area would skyrocket. And energy is a really interesting thing to bring up because that's why the Trump, administration is really beating the drum on let's get those that oil prices lower. We need lower cost of energy and they continue to beat on that drum because they realize inflation is a major driver of inflation is the actual input of energy and you'll notice even in the last couple of weeks that the US administration has also started talking about nuclear again, which is another way to get out of this is if you can get get the cost of energy to a very low price, all of a sudden the productivity increases significantly

in a region. And so the US has said a few different times, it's going to try and grow itself out of this problem because they look at this and they go, uh, we can't cut enough. And we, we effectively need to grow our way out of this. But here's the problem is governments get in the way of that. So I was just going to say, Carney And Canada's, you know, okay, take all the elitist globalist stuff and let's just park it there for a second. Let's just go. Let's build a pipeline across Canada. We're going to do that.

We're going to, we're going to hammer these industries. We're going to get them up. We're going to roll. Then you have the government step in its own way with all the regulations. Yep. And now a project that should take, I don't know, three years, takes 12. Yep. It takes 15.

It takes 20. And it just goes on and on and on. And so even if, even if you want to grow your way out of this, right? We're going to grow out of this. Canada is going to become this boom. We're talking about decades, not, not even years at this point because of the way government is set up and how many different branches of it and how many times we've got to do an environmental report to make sure that this and then that's not even including

First Nations. I got nothing against First Nations. I'm just saying like all these different branches have to sign off on one project that if it just got green light and they just boom it's in, you could have this huge skyrocket, but then you go, but the regulations all put in there and the US would be no different. No, and they've, they've proven that in the last couple of weeks is they cannot cut the budget and they cannot cut the red tape. So, but you're absolutely right. If, if we got really drill, baby drill, doubled the energy output, we tomorrow, we announced that we were going to build

five nuclear reactors within Alberta, which, believe it or not, they're a lot safer, and I've done a lot of research on this, are a lot safer than even oil and gas. Nuclear reactors would be just so you get that cost to energy to a lowest point as possible. All of a sudden, your productivity will start to skyrocket. But you're absolutely right. We can't get out of our own way to save ourselves. And that's why I don't have much faith in being able to handle this problem without inflation. Let's bring in AI. So all of a sudden, if we have an AI boom, what happens to all those people like me pushing paper around? Our jobs disappear, right? So all of a sudden you get people clamoring on the doors saying, hey, we need some kind of support. Oh,

here we go. Here's some universal basic income. All of a sudden, that's math. massively inflationary because they keep on printing the bills to be able to do that. So we have to have the only way out of this is a really good productive solution where we're basically improving our productivity as a nation, as a province, as a community to be able to get out of this. And you've probably seen some of these reports is Canada is the least productive nation in the G7. And that's exactly what it speaks to is all that red tape. We cannot get anything done per capita. We're not producing nearly as much as any of other G7 nation.

If you build things, you'll attract capital. If you're into the energy industry, you could lower the input costs to build said things, correct? And then on top of that, you would attract people to come work because they'd be good paying jobs, etc., etc., right? I'm using political terms now, but that's roughly the thought process of building your way out of this. Well, exactly. And if you think about it, Alberta is absolutely positioned in the perfect spot if we can get out of our own way. We've got the energy. We've got the people. We've got the water. We've got the agriculture. We've got the land. And it's like, what are we waiting for? I don't know if I can fit any more terms in my brain today.

I, after we had our first phone call, I was driving to pick kids up and I was like, I got to, I got to think about this all. You know, like, there's just, there's, just doesn't come easy to me. I sit and I listen to not only the Long Goes and the Craners and on and on the list goes talking about the banking side of things. And then now knowing yourself and guys at Silver Gold Bowl, right, we get in these conversations. I'm like, I literally have to take economics 101 just so I can learn the terms because

it's just, there's certain things. I got to sit there and do mental math on my head. I'm in my brain, sorry, folks. Like where I'm like, okay, a bond, that's what this is. And then it's not like, I position it to Vince Lanchie after we were done. It's not like watching the Oilers play hockey. And then, you know, they're doing something. And you immediately can tell what it is.

And you say it. And it's just, it's so natural because I've grown up around it all my life. This is, it's foreign to me. And if it's foreign to me, I wonder how many people are foreign with it. And then you think, no wonder at times, an individual can just struggle with money and struggle with where to put it because there's just so much going on and you realize like and there's a lot of house of cards right now where you know do they fall and everybody just one day wakes up and they have nothing to to say to their name no

probably not but the inflation is this this slow silent killer of people's money it's just it's just constantly moving and you know if if i go back to it's like for the last 150 years, it's just been, it's just been a little bit. Maybe it's 1% one year. Is anybody going to notice that? Probably not. But over the course of a lifetime, it's, it's ridiculous. That's where you can hear your parents talk about the house they built or bought or the land to where we are now, where, you know, kids are like, I can't afford a house.

It's like, well, no kidding. Like, look at, look at how much they've gone up. That's over the course. It's this timeframe thing again. If you look at it over the course of a year, what's 2%? it's not that big of a deal. But when you stack that on to 10 years of liberal government, let me tell you, it's pretty freaking brutal.

Yep. Yeah. And I think we'll look back in 2030, 2035 and go, wow, was that an inflationary time? And whether you kept all your money in a bank account or whether you socked away in gold and Bitcoin and some real estate, you're going to have a significantly different outcome, especially if you're invested in something like government bonds, like most people's pension funds are. So if there's, sorry to the baby boomers in the audience,

but if there's any sweet justice for the baby boomers voting for the liberal government, their purchasing power of their pensions is going to get absolutely wiped out in the next 10 years. because a lot of it's in bonds and the real value of those bonds will get deteriorated. Once again, for something you said earlier, their dollars they're getting aren't going to change. It's just the purchasing power of those dollars is definitely going to change. Well, and think about it this way. So maybe you're getting $400 a month for CPP or something like that. Okay, great.

Maybe you're getting buy on $400. a month, you're going to be getting that same $400 in 10 years from now. And when a cup of coffee is, you know, not three bucks, it's six bucks. And a carton of eggs is $14, not $5. That's, you know, nominally, they will make good on their promise. But the purchasing power of your dollar will not be the same. Brett, I appreciate you hopping on and doing this. And it won't be the last time because every time I see things happen in the

financial world, you're kind of on my speed dial of like, can we, can we please make sense of me? Because I find your, your, your navigation of it. I'm sure there will be some, some people take issue with certain things, but at least it's a balancing act of trying to explain it in a way that at least I can understand. Because every time I watch somebody go hyperbolic, you know, it's like, okay, I got to sink in. I got to, I got to do these things. The world's coming to an end. And it's like, or I can just make a phone call and figure out what, what Brett thinks about it. others, I might add. There's a whole list of people I got now on the old phone dial that I can try and make sense of some of the things going on in the world to, like, understand as an individual

how it's going to impact my life, you know, and what that looks like over the course of a year, two years, or, you know, just take it out further. Yep. Well, and we've tried to make it simple and we've done the research in the background and we feel that things like gold and Bitcoin will do a good job of protecting people against what we see is in a very inflationary period going forward. And we want people to at least consider it. And you don't need to get over all zealous and put every red cent into gold and Bitcoin and that type of thing.

But you should at least understand what it does and have some, a little bit of exposure to it. For sure. Thanks, Brett. Appreciate you hopping on today. You bet.