TFTC: A Bitcoin Podcast - #410: The Fed Is Trying To Bring Down The European Banks with Tom Luongo

Episode Date: April 7, 2023

Join Marty as he sits down with Tom Luongo to discuss the role the banking crisis plays in the inter-cabal squabble. Tom Luongo on Twitter: https://twitter.com/TFL1728 Tom's website: https://tomluongo.me/ 8:14 - What the hell is going on? 13:08 - Communicating ideas 20:04 - Intentions of the Fed and big American banks 31:39 - Europe in trouble as rates raise 38:41 - Pivot to BRICS 42:20 - FIMA 47:52 - Keeping a finger on the pulse 51:03 - Multi-vector attack on America 55:36 - Trump's indictment and the need for trust 58:37 - Tom's take on Bitcoin 1:02:01 - Stablecoins 1:04:48 - Can the Fed fix what they've created? 1:15:17 - Shaping reality with headlines 1:17:08 - Credit where credit is due 1:20:03 - The Fed on Bitcoin and crypto 1:25:06 - Congealed energy 1:28:51 - Keep your eggs in more baskets Shoutout to our sponsors: ⁠⁠⁠⁠⁠Unchained Capital⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠CrowdHealth⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠ TFTC Merch is Available: ⁠⁠⁠⁠⁠Shop Now⁠⁠⁠⁠⁠ Join the TFTC Movement: Main ⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠ Clips ⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Website⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠ Follow Marty Bent: ⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Newsletter⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠Podcast

So freaks, it's your boy Marty here to introduce this rip of TFTC with Tom Luongo. Always fun having Tom on. Different perspective on the global macroeconomic landscape, particularly. The inter-cabal squabble is the Fed trying to destroy the European banking system. Tom seems to think so. It makes a very compelling case, too. I think you guys are going to enjoy this rip before we get into it. Got to shout out the top four boost from rip 409,

talking value for value with the podfather, Adam Carey. Great discussion we had a couple days ago. You guys seem to like it. At Auburn underscore Citadel, boobs boost, 80,085 sets, an eighth a day for 10 years. I'm going to rip a bong load and contemplate that. hope you hope you have some introspection there

I can't do it anymore at Eric99 50,000 sats, stay humble, stack sats thank you Eric, thank you Arborn Citadel at Absurdient 50,000 sats, lightning bolt value for value, B for V

thank you Absurdient and last but not least at Chad F., Chad Farrow, 33,333 sats. Great episode, Marty. Adam was a perfect guest for your first episode back. I agree, Chad. Very therapeutic conversation. Good one, too.

Go check that out if you have not already. Thank you guys for boosting, streaming, participating in the Podcasting 2.0 model and giving us value back. I love to see that you guys are getting value out of the show. If you want to send the value back and you aren't already, go download a Podcasting 2.0 app. Podverse, Fountain, Breeze, Echo on desktop. Support the show. Love you guys.

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you're a company or somebody looking to get a job in the industry and get set up with them. Tell them the TFTC sent you, please. Helps us out. Go enjoy this rip at Tom Luongo. Enjoy your life. enjoy your family hug your family tell them you love them yeah we're gonna win peace and love you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the

victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be oh we're live oh okay cool hi everyone what the hell is going on wow that's a good question um everything nothing all of it um i don't know um the uh to be honest with you when you really stop to think about it was anybody surprised that things were going to break when powell got the five percent no i never thought he's going to be able to get five percent because i think i thought things were going to break before that a lot of people did and i think maybe things probably maybe should have right but there's a lot of vested interest in from a lot of people who are out there you know trying to keep the system as it is currently constituted

alive hoping that they can get Powell to change his mind and go back down I mean I think that's what the when you really stop to look at like yeah I every time I do this like all I can see is a bunch of people's oxes being gored, right? And the people who squelch and squeal the loudest are usually the ones whose oxen are being gored the most, right? Because they're the ones who have the microphone and, frankly, they're the ones who control most of the official microphone.

The Bloombergs, the CNBCs, the, you know, all the financial press is all owned and controlled by what I call Davos. It's not hard. And it's all an extension of the British Crown and the British tabloid press and MI6 and you know the old european money and all that stuff and so and you know the old northeastern american money and all the rest of it right so if they're constantly frankly bitching that palace

will go back to the zero bound maybe it's because they want him to go back to the zero bound because maybe they're going to go broke if he doesn't go back to the zero bound because that's how they were built in the first place i mean how does a currency as fundamentally broken in conception as the euro survive as long as it has, unless you had a complicit global reserve currency liquefying your crappy architecture through an offshore shadow banking system that dwarfs the domestic banking system of the United States, of that global reserve currency, which in this case happens to be the United States. This is the point that Daniel DiMartino Booth makes all the time, which is at the shadow banking system, which is effectively where Davos's

power is. It's in all the non-bank offshore, non-bank transactions and leverage. And that leverage gets infinite the closer you get to the zero bound. These people went negative on interest rates for seven years. So do you think the leverage within European capital markets is a little crazy, even in comparison to the Fed? And if you don't think that that was coordinated by two open by an open communist named barack obama who put all these people in power and jannie ellen who's ultimately who when she ran the san francisco fed ran cover for all of these people going crazy during 2008 it countrywide indie mac all those guys and then did it all again silicon valley bank signature all the all the shit coins that were you know

being bankrolled out of these banks. And I use that word very loosely. Like, at the end of the day, do you really think that if you have a bunch of guys at the Fed going, you know what, we want to be in charge again? 25 basis points. Oh, you don't like that? 50. How about 75? You don't like 75? How about we do 75 again? How about we keep doing this until you break? Because the only reason that their balance sheets were even close to solvent at the leverage that they were at was because they could get money for nothing. And they're chicks for free, to quote Mark Goffler. I mean, that's what it comes down to. This is all just downstream of cheap money. It's why you're, it's why you have a podcast, Marty. It's why Bitcoin exists. It was created

in the aftermath of the global financial crisis to QE and Zerp and everything else. I mean, it's explicit right in you know in the original white paper which i read back in 2010 like i all this stuff is right there so yeah we're at five percent yeah and i think six but i i'm enjoying what he's doing i think the one thing that really validates your thesis too because a lot of people have been convention over the dot plots from 2021 particularly i believe they say hey we allocated our treasury holdings this way because the dot plots were telling us this and that's why we're effectively insolvent when this crisis is unfolding well i mean you know one of the things that i've been you know look two let's go back three years ago three years ago i was a

an offshore banking system shadow banking system neophyte you know i mean i i sat down i you know when people talked about this of my eyes glazed over i mean seriously i used to read jeff snyder over to lumber partners and not understand a word half of what he was writing about because he's a i mean jeff's an interesting guy and i happen to disagree with him now and we happen to be on opposite sides of the euro dollar fence divide now but he also taught me a lot and he but unfortunately one writer to know that jeff dude a lot less inside baseball a lot more clear concise writing like let us know what's actually going on if you actually want us to be if you actually want want to communicate to us when people when you you know and that should have been my clue because

when people don't write clearly and you can accuse me of doing this because i'm i'm very elliptical on how i write and it's never it's not always a good not always a good look right um but you know something that um daniel booth put in her book i just read just finally finished reading fed up the other day and um she was talking about zoltan pozar when she first met pozar back in the during the the financial crisis 2008 and she said you know intellectuals are really good at like obfuscating you know i don't know quite how she put it but you know dressing up there are arguments with all these little jargon and flowery ideas and everything else in order to obfuscate the fact that they don't actually know anything and then there are the real communicators who go who do

go out of their way to try and explain very complex things in the simplest way imaginable for everyone to get it and she of course talking about pozar when she was talking about the latter person and most of the people at the fed a la greenspan right so and i think that you know when i when you really stop to think about how i mean this is part of the reason i think why jeff probably started your dollar university podcast with emil was to try and make this stuff more cogent and more communicable to people but still i i still would listen to those podcasts and i thought i just had to like do the work myself yeah i'm the same way with jeff i think i've certainly learned a lot from him but

there is certainly that aspect of do you actually know what you're talking about like it's so complex that are you trying to convince yourself he makes it out to be yeah this is the point i I mean, that being said, again, you know, Pozar had a, you know, Booth talks about walking into Pozar's office at the New York Fed in like 2009 or 2010 or whatever with his entire map of the shadow banking system as he saw it. And it was like, you know, walking into Fox Mulder's office, you know. And worse, right?

It's like the Pepe Silvia meme. What's that? It's like the Pepe Silvia meme from It's Always Sunny when Charlie's like pointing. yeah um i've never watched it uh it's always something in philadelphia so i'm not sure what you're talking about but i'll take your word for it like it's just a this crazy spider web it's like looking at a chart from uh who's the guy that um oh god we used to look at his charts all the time i can't remember his name now but his charts were just you know a whole bunch of

parallel lines and like and the candlesticks in the middle i can't remember the guy's name now um what's that bollinger no not bollinger is another goal it was a gold guy i can't remember I can't remember what I'm talking about now. Now, it'll come to me later, and I'll be like, oh, my God, I can't believe I forgot this guy's name. But it's the same kind of thing. It's just a tremendous spider web of stuff trying to map the whole thing. But, you know, it still just reduces down to it's allowed to proliferate like this because of zero-bound money. You move money away, the cost of money away from the zero-bound, and then 90% of that collapses immediately.

you know or at least starts to collapse and then you know holds on for dear life for as long as possible and literally these guys are huddling you know policy-wise in order to hope that they can get through this and that you know and then push from a political perspective you know powell out the door or make it untenable for him to maintain this policy so that he can then have to pivot and go back to the zero bound i don't think that's going to happen i also don't think he's going to keep rates at six percent five or six percent forever either i think he's going to keep them there for a year year and a half maybe even two and then they're going to come back then they're going to start coming back down the point being what i was trying to get out originally is

that thanks to jeff we understand something about the euro dollar futures curve and how it operates and how it's the tail always wagging the monetary policy dog and for that no argument in the guy's debt. I say that with no reservations, no ifs, ands, no buts, no commas, no nothing. That part of it. But today, I have to think about it going, okay, well, what you're describing and what Jeff has accurately described were all of these years where the Fed was complicit in helping blow up the shadow banking system. What happens when the Fed's not complicit in allowing the shadow banking system to proliferate what does that world look like it's a simple question does it look like what we've got today i think so i may be wrong

but it's certainly the question you should be that's the question i asked myself oh you know about a year into this about a year ago i finally asked that question i'm like why is why does Snyder not to see this. As long as the Fed's not complicit in this, if the Fed doesn't want to go back to the zero bound, eventually it'll retrain the market. Eventually it'll do away with the Fed put. Eventually the market will have to deal with what the Fed wants to do. Because the Fed's proven in the past, I mean, Volcker proved in the past that the markets can be mispriced for a long time and he can still wring out all that leverage. He did it in, you know, 80 through 82.

I mean, he did it, 79 through 82, you know. And it's been done before. And I'm a big believer in free markets. I mean, you all know this. I'm not trading in my libertarian or free market economics bona fides here for, you know, simping for the Fed. I'm just saying, look, the Fed's a real actor. They have agency.

They're going to use that agency in the way that they think is best for them and for the people whom they serve. Why would you not analyze their actions from that perspective? If you're not going to be willing to analyze their actions from that perspective, I'm not willing to listen to you because you're not a serious observer of markets. It's just that simple. You have to give the devil its due, even if you don't like him. So that's where this started. That's where I think we are today. So I look at it and I say, okay, well, if I were the Fed and, okay, I'll make it even better for you.

If I were Emperor Palpatine and I wanted to regain control over my own monetary system, what would I do? Well, I'd first cut off City of London by getting rid of LIBOR. I'd reindex all the debt in the United States on a domestic rate that is set by the marketplace, SOFR, which is set by the repo markets. not 18 bank 18 bank heads getting together and going yeah it should be this and g chat right right exactly yeah and then what would i do after that i might start raising interest rates when everybody didn't want me to and i'd start draining the offshore dollar markets of liquidity before i started raising interest rates if i politically if i wasn't able to start raising interest rates because in summer of 2021 politically he wasn't able to because he hadn't been reconfirmed for

second term yet. So the best he could do then was start draining the dollar pump, which Yellen was getting set to dump a trillion and a half dollars of CARES Act money onto the market raised by Donald Trump and Mnuchin. So he had to blunt that and then, you know, start bringing out the leverage. So what do you do after that? Well, you'll wait to see if you can get reconfirmed. if you if if you can get if you can put some behind the scenes pressure on Congress to not spend, just wait for the inflation story to, you know, run out the clock on Yellen and Biden and Obama and all the rest of them. Pelosi, well, then you get what you then the fall of 2021 makes perfect sense to you. That's what it makes the perfect sense to me. So and then you just, you

know you force the you force the moment to a crisis point force biden to allow to say okay i i'll renominate uh powell because i don't have any other choice because he doesn't politically has nobody else because he can't push lael brainer through the senate the senate basically told biden no we want powell the reason that the senate told biden that they want powell is because wall street wanted powell wall street writes the checks for the senate this is not hard this is the way it works this is the real washington dc as we all know so i'm not even like talking about anything here that we all already know so why is i don't understand why i get so much pushback on this when you really when you break it down those terms i'm not saying

you're doing it but it's like in general it's just it's really weird to me because to me it's just like really simple like these are the incentives obviously this is the these are these are the people and they don't like it's not tough the commercial banks in new york don't want to be you know subservient to klaus schwab and a bunch of commies over in europe well that's that's the one piece of pushback i've seen toward your thesis is that look they incited a banking crisis here in the u.s but it seems like when you consider who actually owns the fed which is like the larger larger systemically important banks and actually their game plan may be playing out perfectly where you have consolidation from the regional banks all the way up to these big

commercial banks as well. Well, there's I think there's I think that's a little bit overblown as well, because I mean, I've been talking about and I wrote about this and it's a fair criticism. It's a fair point because every other banking crisis that's ever happened in the United States since the formation of the Fed has saw a consolidation of smaller banks into bigger banks. And, you know, the bigger banks eat the smaller banks. But in every one of these in the past, this is the interesting part about this one, Barney, that I think the people should really consider and i and i thought about this comment i thought about that criticism long and hard and i've commented on it explicitly which is to say this in every other in 2008 long-term capital

management the savings and loan crisis you know whatever pick them all right every time it was the big banks that got into trouble 2008 it certainly was they were all broke they were all in trouble. The shadow banking system had blown up. They blew it. I mean, honestly, Bernanke blew it up when he raised interest rates and didn't know what he was doing. Didn't realize because to listen to Booth tell the story, no one at the Fed even understood that the shadow banking system existed and what it would do when they were raising rates. And you could ascribe malice to what happened? Sure. I'm not above that. I'm not above ascribing malice to Jamie Diamond in 2008, right? Or any of these guys, you know, we, we wanted to get rid of Dick Fold because he was

making us look bad. Okay. This is how we're in it. This is why we're not going to balance. You know, by the time 2008 to come around, Fold was, you know, basically persona non grata all across wall street. Fine. And there was a lot of people who were, you know, dead to rights. they were in trouble they needed the good assets on the smaller banks balance sheets in order to stabilize their own balance sheets in some in some ways and then start papering the process over with zero bound rates interest on excess reserves and you know qe123 operation twist all the rest of it right that's what happened that was bernanke's plan the entire time to try and recapitalize the quarter point you know basically a quarter point over the fed funds rate over time fine

this time is different this time it's the small banks that were in trouble the big banks are fine and so do the big banks really want some of the most of the loans that are on these smaller banks balance sheets not really they might want some of the commercial real estate that the that the regional banks got themselves into as daniel again keeps pointing out 77 of commercial real estate in the United States is owned by small and regional banks, as opposed to traditionally, it's around 50% of commercial real estate loans are made to small banks. A signature and massive. It was even worse. But my point, the point being is, okay, so the regional banks are in trouble

here. Fair enough. They were over leveraged, but why were they over leveraged? Because they needed to go out and get yield because they couldn't make any money in traditional banking. Just like the pension funds had to go into, you know, leverage CLOs with BlackRock and all this stuff, right? So everybody's screaming at the zero balance, looking, searching for yield. And the only way you can get yield in that kind of market is leverage. It's leveraged on overpriced assets and in the hope that those leverage, that that leverage will continue because the overpriced assets will keep going up because let's keep pumping more money into the system in order to get the nominal yield to pay people off and depreciating currency units, be they euros,

yen, dollars or whatever. But this is how, so in effect, they've already been defaulting on all the the pension requirements the the pension um uh unfunded liabilities through inflation they've been doing it for years right so but when you reach the the point where that's no longer going to work anymore well and there's another opportunity there's another way of dealing with this which is hey you know we could reverse dollar flow from around the world we can just become japan in this sense not in the sense of like the kyle bass sense and oh my god the japanese are 216 of debt to gdp and all that stuff that japan is going to explode no no we all

become mrs watanabe if the fed raises interest rates to five six percent and the and the fed sets up a virtuous cycle to bring those treasuries that are stuffed on central bank balance sheets home and allows which allows for the regional banks to start investing in treasuries and then paying interest um to passbook savings to people who don't have a u.s treasury direct account or any of this other stuff this hey man i want something better than 0.15 of my passbook savings like why and and if you think about what the real problem is it's that right now we're in this like we're in this ugly period where the regional banks were sitting here with holes in their balance sheets because the treasury portfolios were 20 to 25 percent under underwater they have

a big hole there in their balance sheets so they're continuing to pocket what they can get out of their investments in order to shore up the holes in their balance sheets. And they're not paying their depositors the VIG, you know, a part of the VIG. They're paying nothing still and they're pocketing five when normally they would pay us two and keep three or pay us three and keep two net interest margin. There was no net interest margin. Now their net interest margin has been rising, I guess. I haven't really looked, but I would imagine it is. But their balance sheets are in trouble so their cash flow better and um and balance sheet impaired okay well the fed just made them whole with the bank term funding program so they can pledge those securities those

treasuries are underwater on at par go out and buy new treasuries with them and their only thing they're on the hook for is the interest on the loan that is a way to immediately shore up a lot their holes it just sets up the virtuous it sets up the right cycle the right set of incentives for them to start clearing their deck so they can start offering positive interest rates on savings accounts and i'm even starting to see it you're starting to see it in cd rates you're starting to see it money market rates you're starting to see it in um here and there in high dollar denominated savings accounts i was in wells fargo i was in wells fargo the other day And they're talking about, you know, a savings account with a teaser rate of paying 3%.

And then, you know, two and a quarter percent after that or whatever. You know, six months, they'll pay you 3% to put $5,000 into Wells Fargo. All right, it's Wells. When I see that for my local credit union, and that's coming, then you know that this is working. what do you think the likely the likelihood that they keep the um the loan term to one year you think they extend that this time next year i think they may have to yeah i mean you know i i think it's possible i mean but again this isn't qe like this is you know again it's not qe it's not you know the fed adding to their balance sheet isn't qe like the fed added a lot of most of the

money to their balance sheet during the financial crisis before QE was ever admitted. They added a lot of money to the balance sheet in order to provide temporary liquidity to the market because that's what the Fed's supposed to do. Again, this is not an endorsement of having a lender of last resort like the Federal Reserve. To me, it's anathema, but it doesn't matter. It's the world we live in. It's the money we have. And until we get to a point where we have a better system, And how about this? How are we going to get from the system we're at unless we go through a transition period

where we try and bring the system back to where it was, say, 100 years ago, where we had rational commercial banking with a central bank, right? Which is what I'm... It's all I'm positing that we just... The Fed just goes back to something close to its original mandate,

which the old commie freaking FDR destroyed back in the 30s. Yeah. So... Yeah. So what do you think happens over the next year as they keep rates relatively elevated? I think Europe is in trouble. Yeah. I just think Europe doesn't have a leg to stand on. I think that that's part of the thing.

I think that's absolutely what's going on here. I think it's very, very clear that Powell can't say any of this. Okay. He can't say it. And people close to the Fed can't say this either. Okay. Okay. Because if they did, it's like, you know, it would immediately destroy them and destroy all of their models, their credibility and everything else. They have to keep couching in terms of inflation and we're fighting this and you know, all that stuff. That's what they're doing. And

that's what they're going to do. Like I look at the jobs report from this morning, you and I are doing this on, on, on the fourth, right? So I guess, I guess we're alive, right? But I'm just remind everybody in the future we recorded this on on tuesday the 4th and this morning the markets went you know haywire because the jobs numbers weren't any good all right well that's nice yesterday opec cut production by a million barrels a day you think cost push inflation is not coming back from a commodity perspective isn't coming back coming right back around when oil goes back to 100 a barrel like what do you think is going to happen here you don't think a powell is going going to use that that stabilizing of inflation at six and a half or five and a half percent when

it should be coming down and it doesn't to think out two three four months from now when inflation is supposed to be down back down in the fours and what if it stays at five six percent because oil is back to 95 100 a barrel natural gas is back over three dollars a million btus copper's holding steady at four dollars a pound as opposed to where it was before all this started at 250 270 a pound aluminum is at 250 a pound like yeah year over year inflation may quote unquote come down but we still have a structural problem that prices haven't gotten back to where they were and if oil stays high then the input costs for all the industrial metals timber diesel fuel everything goes up food production goes up and inflation will stay higher for longer which means

that the Fed will have to keep rates higher for longer, which is exactly what Powell wants to do. He needs market cover through the inflation data in order to keep this running. Now, whether he's going to be able to do that if the credit markets continue to implode like they have is a good question. I don't know if he will or he won't. I just know that Janet Yellen is going to fight him tooth and claw every step of the way, especially over the debt ceiling. She's going to do just like Pelosi, try and tie the debt ceiling to some other political um uh issue in order to try and you know blackmail the republicans into caving as opposed to what remember they won that fight oh it seems like she's beginning to posture for that too with

her climate change is a is an existential threat that we need to attack so you could see yeah yeah yellen is is is is pure pure davos at this point and you know when i asked danielle about this when she's on my podcast and you know and she sidestepped the question and fair enough that's fine it's her you know which is that do you think they were incompetent or do you think they were vandals i happen to think they were vandals she called them shockingly naive i happen to think that that's a that's a nice that's a that's a nice you know yeah polite way of saying you're right well i don't know you know you you you know y'all review the the tape and you know you uh you draw your own conclusions from now i will i will not put words in danielle's mouth

no one needs to let's just put it that way um which is so um you know from but when i think about it that's i'm on record beginning of the year i you know i put out 10 predictions for 2023 and inflation would stay higher for longer oil would net wouldn't break down much below the the the january low the january open what do we get eight bucks and now we're you know was there for an hour and a half and now we're back to 85 bucks a barrel we opened the year in the high 70s mid 70s high to mid 70s um the us is probably going to have to pull out of syria saudi arabia is going to jump ship and and uh you know align with china the petrodollar is going to end these all these things already it's already april and i'm already right on like six six or seven of these um and

Powell's going to go, you know, the one I think is in the most trouble is that Powell may go, that I think Powell will go to 7%. You know, that was January. I made a call. He only needs to get to six. Hell, he only needs to hold it at five until the end of next year, and he'll do 95% of the damage that he needs to do, I think. If he goes to seven, it's like, I mean, I don't know about you,

but Mises would be cheering it from his grave if he went to seven. Yeah, and now when you consider the inflation rates that came out of the U.K. and Germany the last couple months, too, oil moves higher, Europe is royally screwed. I saw something this afternoon. My friends over at Mittalcino in Italy posted a thing about the Eurozone's current account just posted a monthly deficit last month for the first time, like total across the Eurozone. And it's mostly France, Italy, and Germany. interestingly the danes posted a massive current account surplus which is which harkens back to

something a patron of mine said to me about oh three and a half three and a half years ago maybe we were we've been discussing you know brexit and you know whether hungary will leave or italy will leave all the stuff when we were hot and heavy into european politics and one of them said dude you want to watch the danes the danes are the ones you want to watch they're the one they'll they will jump ship first. And I'm like, huh, okay. Asked him for why, and he didn't really give me much of an answer that I could work with, but, you know.

And there it is staring at us. If they're funding, you know, if they're the only country with any kind of current account surplus, whether it's any kind of production investment, net inflow. They have a high incentive. that's trouble yeah and the fact that italy or excuse me france germany uh in italy the top three contributing to a negative deficit is not good or to a deficit right exactly it's not like we're talking about greece you know and you know montenegro well

we're talking about we're talking about the the three that that make up the tripod on which the whole european union stands yeah right without those three there is no european union so you know hard to say yeah and yeah i mean you mentioned it too like saudi arabia i mean the prince came out what was it earlier today or yesterday was like i don't really care to keep relationships with the u.s like what do you what do you see this bricks pivot that they're making how does that throw a variable into the mix i'm beginning to call it the bricks bricks because there's two eyes and there's two s's now two eyes india and iran and for years i've always said that india during the trump administration india wasn't even part of the bricks for all intents and purposes

it was iran that was really the eye in bricks and now now we add saudi arabia to south africa so you know and then brazil actually is kind of but no but then brazil and china just put just you know signed a bilateral trade agreement in their own currencies so you know every day you know every day that you make the dollar more expensive to use is another day that it's in someone else's comparative advantage to not use the dollar you know it's not the world isn't a series of step functions it's not a well this then that you know it's not a series of discrete on or off switches everything is a curve and a continuum right we all you and i have different needs and wants and everything else so it only makes perfect sense that our behavior

is going to be maybe roughly the same but not the same and so you may jump ship from the old system if you're you know india later than iran would because iran for example we made use the use of the dollar nearly impossible we raised the cost of using dollars to the moon right so it was important that you know iran had to then shift and figure out what else to do india we never really sanctioned so they're still in that zone well you know but now every day that everybody else starts to use the yuan or the ruble or you know whatever or we'll take the rupee as you know a settlement uh you know for you know in exchange for you know washing machines or wheat or barrels of oil or whatever well then that's just relatively speaking makes the the

dollar worth less to them yeah and it doesn't have to be you know overnight it just means that it's one or two percent or three percent and you know you compound one percent year over year over year it's pretty soon you're talking about real percentages yeah and it makes sense too it's all about network effects like the BRICS countries are building their network effect up and it's so short-sighted by the u.s with the sanctioning like they literally artificially constricted the potential for their own network effect i agree and this was the this was what jim sinclair warned us all about back in 2010 when obama went after ubs to open up the swiss banking system and threatened with swift expulsion so the mini you'd said it's a dollar he's a

full intensive purposes like the dollar is done now i mean we haven't seen it finished but he he opened up pandora's box and that's that and we all know the parable you know once you open up pandora's box you can't close it back up again yeah once you go nuclear in any negotiation there's no way to back down other than you know dropping the bomb yeah which is trying to like conceptualize like how this all plays out what you want settled ruby settled ruble settled trades they're talking about like their gold back commodity backed basket for a settlement network obviously we still have the dollar gold is gold did it close in all time today no no it it did not but it didn't need to uh a daily close above 2000 is pretty good

so let's wait for a weekly close above 2000 yeah i mean a monthly close above 2000 that's the way i look at that's the way i look at the world so if that happens what does that signal to you it signals that money is getting the ground bitcoin at 28 000 in this market is money going to ground people trying to find ways you know trying to find ways of protecting their their purchasing power you know they don't know what to do but at the same time look at the rates on treasuries people are scared now but at the same time people are what's what's happened this is an interesting thing martin armstrong brought this up the other day in a post i think it was a private blog post so if you guys didn't see it you know i'm i am a subscriber over at marty's service to

the at the lowest level just basically for the private blog and some um some basic stuff from socrates mostly i just have it for the private blog because i find the private blog where he really lets his hair down metaphorically speaking um and he was talking about fema fima that's the foreign that's the feds foreign repo facility right now i made a big deal about june 16 2021 when the fed raised interest rates the the rrp facility rate five place basis points about that funds rate all right but equally important and i haven't talked about it as much but i did talk about it here and there which was the next fed meeting they put fema into place so the first thing he did powell did was start draining the the world of euro dollars of of leverage within

the offshore dollar markets by starting to drain massive amounts of liquidity blow up carry trades blow up you know you know just to start deleveraging that system so now and then he builds a massive war chest of dollars sitting in the reverse repo facility because the money markets aren't regular he's still at the zero bound so there's no demand to put money into the money markets there's no there's no there's no transmission mechanism the classic transmission mechanism is broken and he knows it's broken so now we got to create a new transmission mechanism so you use the rrp facility as a means by which to get a create a big stock of dollars knowing full well that the us banks won't take european debt as repo collateral right

It means that the only person who can then be a source of treasuries are people currently holding them or the Fed, right? Because the U.S. banks won't give them to you. The primary dealers, the broker-dealers are like, yeah, no. Yeah, no, no. Yeah, maybe it's $0.70 on the dollar, but I'm not – no, I'm not trading you a German bun trading at minus 0.8%. I'm not giving you par for that.

I'll give you 70 cents on the dollar or 70 cents on the euro, but I'm not giving you par. You just, you know, sorry, Chrissy, it just ain't happening. So you create FEMA in order to control the ebb and flow of dollars and treasuries. And to allow those who need treasuries, need treasuries to come and get them from the Fed. And that's what's going on right now. Now, I think that's what the rally, I mean, this is what Marty mentioned the other day. And when he mentioned it the other day, I was like, and it's like, that's part of the reason why the massive rally in the U.S. Treasuries is that in order to keep the European banking

system from imploding because of the desperate need for dollars, they had to belly up the FEMA for $60 billion during the height of the crisis, Credit Suisse and Silicon Valley Bank. Previously, that facility, I think it hit like $1.4 billion was the highest. So clearly, there was stress. But here's the gig. The Fed didn't lend them those dollars at 0% like they did in the past. Those dollars were being lent out at nearly 5%.

Those Treasuries were being lent out at nearly 5%. Yeah, so FEMA is essentially like the cattle herding mechanism to get people to go to the Fed to get these dollars. Right. Well, because the U.S. banking system wouldn't deal with them, so now you've got to deal with the Fed. The Fed can now set the rate, now can set the cost of dollars. they are now controlled now this is your these two facilities the rp facility and fema

not completely but for the most part now they are the transmission system for fed monetary policy fed gets to control the value of them which is why i think jeff's jeff snyder's arguments about the euro dollar system and just analyzing the euro dollar futures curve which is inverted is you know it's it was very useful but i think it's not mechanics are different now the mechanics are different now thank you that's a good way of putting it the world is different because the fed is now actively attacking and is actively hostile to that system and wants that system brought back under its control and it's the dog and the dog's barking and it's and it's literally willing to chew its own tail off if necessary yeah they extend the metaphor into

you know lunacy well that's i mean it's insane that you have your finger on the pulse of all this because keeping up that's the thing they use these facilities right to create those cattle herding architectures and those mechanisms um the mechanics that really throw a wrench in how people view this system as a whole. And that's the thing, they become really addicted to spinning up all these new facilities. Yeah, there's that too. I mean, but I think it's like,

I think they're all a reaction to incredibly abnormal times. I think that if Powell had been Fed chair in 2007, 2008, he'd just let the whole system collapse back then. He would have never put the 2% inflation target in place. He's now having to, he's inherited it. He's now having to use it to his advantage in order to try and get rational control over the monetary system. Look, and again, this is in no way, manner, shape, or form do I think it's set in stone that he's going to pull this off.

okay i'm just describing what i see the incentives the mechanics and where we are do i think the fed has the better set of whole cards in a poker sense absolutely i do i mean the fed's the one that prints the dollars the political situation in the united states is clearly anti-inflationary it's clearly against what's happening on the hill like you know they've had to steal elections for christ's sake in order to pump the democrats up to and then indict trump in a show like this is all just theater now and people are like they're sick of it they just want people they just want their leaders to act like normal people and then refusing to do it and they're all you know god's forbid that i even like have to you know use the

term you know i look at all of them i go and trump's the most normal of the bunch like that makes me sick to my stomach in many ways right yeah but i had an interesting experience with this over the weekend i was in philadelphia at home and uh we went to brunch in the city at a french restaurant called park and the biden family walked in and ate breakfast while we were there but they literally just sat down and ate i don't even think they said hi to anybody it was very weird it was very uh you'd think it'd be like a big appearance where he's going around shaking people's hands but now they just sat down to eat and left like he can't go and glad hand with anybody without like you know embarrassing himself

you know they let him out in public i hope i hope they had changed his depends right before you know he went out the door well it was like they were flaunting it too because hunter was with them and i was like yeah it's like how are you bringing him around uh considering everything that's going on with that, that laptop report. It's like they're shoving it in people's faces almost. They really are, Marty. I mean, this is the thing I think, I want, you know, when I think about, when I tie all this stuff together

and I start thinking about the Trump indictment and everything else, I'm like, this is very clear that the strategy is being employed here are multi-vector. You are, the United States is being attacked and western culture and just in general just capitalism for lack of a better term individualism for you know in an ideological sense is being attacked from multiple vectors okay from every vector from an institutional perspective from economic cultural political legal and every every myth that we have of america as a land that is has some semblance of fairness and decency i think

the way i put it the other day that you know we're all we're maximally americans are maximally cynical about their politicians you know we know that they're lying when their lips are moving but at the same time we have this we still have this belief that this that the system itself gets it right often enough to keep the lights on right yeah people fall back on checks and balances which is just on everything you know yeah but our systems are strong enough that yeah people Some people get away with murder and yada, yada, yada, and bad things happen. But the system itself is still strong enough to make sure that the whole society keeps operating. Well, not if it's being actively attacked from within and without by multiple, along multiple vectors.

Some of whom, for example, would anybody blame the Russians for engaging in, you know, and engaging in hostile activities against the United States? I wouldn't. I don't like it. But at the same time, you know, I get it. And, you know, actions have consequences. Right. And, you know, we can argue about what China's motivations are. We can argue what Iran's motivations are. We can argue about.

But, you know, when we see it from our we see it from our supposedly European ancestors, who are just literally treating us like, well, no, your job is, you're the shock troops to go fight and die, charge the light brigade. You're supposed to go and kill the slobs and the slopes. I hate to use that term,

but that's the way they think. That's their term, not mine. Like, when you think of it that way, that's what they think of us as Americans. That's our job to them. You know, the Eastern Europeans get to be their is it us right oh we just lost you there for about 10 seconds yeah i could see i was on the replay wasn't good it happens i'm on starlink so every once in a while you know you ship from

satellite to satellite so what i was saying is you know i've said this before you know when you think about the european aristocracy and you really think about who they are and what they believe it's clear that they just look at the rest of the world as you know a bunch of serfs that are supposed to serve them it's the way they prosecuted their history for the last eight nine hundred years like why would anything change so um i mean when you stop the you know when you look at it that way it's clear that like that's what we should be worried about it's that mindset that we have to be worried about.

The Chinese are negotiable. The Russians are eminently negotiable. The Russians know they have a relatively weak hand. I mean, in the grand scheme of things. But at the same time, you know, come on, man.

Europeans are trying to have us tied at the hip, which is dragging us down. Or cake and eat it, too. It's really that simple. They want to control us. They think, you know, Soros couches it in that you know those ideological open society flowery terms but really it just comes down to

he wants to run things or he wants his son to run things and and you know wants that's what he wants he wants the United States torn down and you know he's willing to stop at nothing to get it

and he's not the only one he's just one of he's just you know he's the PR man same thing with Schwab and the rest of them yeah they're just front men even worse when it's the other people behind the scenes yeah maybe I'm too optimistic or too naive

but when it's rotten at the top it seeps down to the lowest levels of society and I think people are getting to a point particularly in cities like San Francisco or Philadelphia where we're having all these smash and grabs

like what the fuck how are we not I mean, Trump's whole situation with him, launching a felony on him, something that's never been done before. Right. Literally rewriting the law in real time to create political prisoners. Yeah, when the Southern District of New York won't touch Trump's case with a 10-foot cattle prod, I mean, these are people who can indict

a ham sandwich and get a conviction 95% of the time. and they wouldn't touch the case that tells you how weak the case is but they don't care now we can go into trump's indictment there's about 18 different ways to look at it and you know i go through the the flow chart i go through davos's flow chart and i say no matter how this turns out it's good for us because the united states has brought low in the process unless of course trump survives this runs for president and wins because not that i really want trump to be president again i don't i i i'll vote for him again because you know why not because if for nothing else because i know that's what they don't want you know and maybe you know

a second trump term would be stronger simply because he now he knows just the depths of how you know vile these people are and he understands the rules of the game better than when he was in office the first time but what's really important about this is that they know that by making a mockery of the legal system and the election system and our you know rule of law all day and they they attack all the foundational myths and all the foundations you destroy the society like society is a shared hallucination dude like it's you know we all

abide by the rules because it's in our best interest to abide by the rules but when the rules don't serve us why should we you know why should we follow them at all I mean and don't get me wrong I realize I'm on a bitcoin podcast here and you know that I I get on the bitcoin

maxis a lot and i do it for this reason i get why there's a kind of religious fervor around bitcoin because of what i just said that desire and need to for trust to be brought back that need it's it's the same it's the same thing that that many christians are holding on to it's like what happened to this country what happened to our society like this is our way forward. This is the thing that can help us. I'm not even unsympathetic to it. I'd be ecstatic to be wrong that Bitcoin doesn't rule the world. I'd be ecstatic to be wrong. Nothing would make me happier than to be wrong because I know that Bitcoin would help bring the world back to

some semblance of rationality. But I also know that Bitcoin has never operated in an environment without profligate central banks doing their thing? What happens when the traditional finance system decides to clean up its act? Now, does Bitcoin rule under those circumstances? I don't know. Does it take longer for Bitcoin to come into its full bloom? Maybe. Does Bitcoin act like gold as a very powerful check and balance to bring the system, the old system back into some semblance of decency not that even if that's all that happens that's an amazing amazing thing to have pulled off and you should take that win yeah no safety actually in the bitcoin standard in the last chapter of the bitcoin standard i think that's

a point safe makes is what you just said if the only thing bitcoin does is force more rational monetary policy at the Fed level, then it's done its job. Yeah, it has done its job. What happens if Bitcoin winds up on the Fed's balance sheet? You think that's a possibility? Absolutely. Another thing we have to factor in here, do you think Bitcoin is actually

affecting this in any way, the policy decision? I think it is in some ways. Powell has made it very clear that he's at war with stable coins, because stable coins are just euro dollars. The offshore just happens to be in cyberspace as opposed to in brussels or hong kong yeah bitcoin is a bearer

asset like gold it's the thing on which a it's on which a a um the foundation of rational monetary policy and a rational banking system is built so you know i can make a very credible i can do i can do a whole schizo post i've talked about this in other interviews i can do a little schizo posting right now saying look you know i've and i've chatted with um one of my patrons who happens to be a a quant and he's a young guy i think he's probably about your age actually uh i've met him He's a very cool, good kid. You know, I say that when I'm 55, like, good kid. It's so funny.

But it gives me hope for the future when I listen to some of these. I see this kind of energy from the generation coming behind me. It's really important, you know. And, you know, I would hope that it's the same kind of thing that guys like Lou Rockwell and Ron Paul see in people like me. that they would see the kind of energy that I have to try and take it forward the next generation. The same thing, you know, like guys like myself and Tom Woods and others, Peter Canones and others are doing. And then the generation behind us is now taking it and running, running the ball and running with the ball. And some of the things that, you know, we've discussed internally within my patronage is the idea that it's very possible that Bitcoin is in there

actually helping to liquefy and and collateralize part of the sofa market because you know what if tether isn't what if tether has been taken over by the fed wouldn't be shocking like what tether or circle like i want to be shot i want to be no it wouldn't be shocking i think circle would be higher on there like easier for them to take i think i think they're going to take out coinbase i do too that's okay so i i think tether is actually because i go back to the leticia james slap on the wrist she gave him the jp morgan treatment like you know the jp morgan gold treatment i pay a fine and give us a give us a and and and file a bad uh quarterly report with not nearly enough information in it every quarter um and yeah you're off the hook um

What if Tether actually does have treasuries backing up? I mean, like on a one-for-one, all the Tether that's out there. I mean, that's what they're marketing, at least a portion of the treasury. Now let's wonder if, you know, like why has Tether not been taken out yet? Is it just because it's the next one in the chain that needs to be taken out? Powell's been on a... Powell's, like, been knocking down all the stable coins one by one by one,

from the least vulnerable to the, you know, to the most vulnerable to the least vulnerable, right? What if you need one left? In order to liquefy Bitcoin, you don't want it trading directly against the dollar because that creates a whole class of problems and reporting issues and everything else. What if you just want to keep that market liquid?

In order to keep Bitcoin liquid enough, It's going to need to trade against something. Well, can it trade against a synthetic proxy for the dollar that the Fed controls? Yeah. So you only need one stable coin to do that. And you only need enough of them to liquefy the trading on enough exchanges to keep Bitcoin, to keep price discovery in Bitcoin rational. You get rid of all the leverage. And look, Bitcoin's trading.

I don't know about you, but Bitcoin's been trading really, really rationally the last five or six months, certainly since FTX blew up. Yeah. I mean, all the marginal sellers got blown out. All the bullshit's been whipped out of the market. If you want to see what the dollar trade looks like after the euro dollar, the shadow banking system's been collapsed back to a rational size, you're getting a preview of it right now with the way Bitcoin's trading. Yeah. Yeah. Well, that gets to another question, too, which is, let's say Jerome Powell is issuing policy going after this plan.

We're going to get more sensible monetary policy. even if that is the case is it possible for them to fix what they've created you consider like debt to gdp okay there's many there's many ways to recapitalize the united states the first thing is start to start the virtual cycle of bringing the dollars and the treasuries home and then allowing the vested and allowing our commercial banking system to then reinvest in america as opposed to sending all that money overseas and doing spacks and all those other you know crazy building factories in china to build build nothing and you know and uh build skyscrapers to nowhere and you know all the rest of it right like what if we're just going to get back to you

know i don't know fixing the bridges fixing the roads you know fixing the railroads fixing the railroads fixing like all the stuff that needs to be fixed i i could tell you right now that jp morgan doesn't care who they lend to this is as long as they lend to somebody at a profit They just want their 3%, man. Like, so go get it. And you can do it, you can send it overseas, or you can, you can, you know, they're not going to want to build new libraries,

and as I say this all the time, they don't want to build libraries in Palatka, Florida, right? They don't want to build, you know, they don't want to build a tire shop in Dubuque. Like, that's not what they want. That's for the small banks, that's for the regional banks, that's what they're supposed to do. There's still way too many banks in the United States.

Okay, there's 350 million people in this country who have, what, 14,000 banks, you know? So we could have the banking sector in the United States, and we'd still have enough banks to do all the lending we need to do, the rational lending we need to do. Like, that's okay. So, again, there's, like, part of the hysteria during Silicon Valley Bank was you know from all sides of it was just off the charts it just feels to me like these were

talking points seeded into the marketplace by malign actors which we libertarians ate up because we're all just like and the fed and the fed and the fed without thinking it through in a real sense about you know what how real business gets done like what if it's not that sinister what if it's What if it's bad? Don't get me wrong. Like, I'm not, you know, I don't, it's not like I'm even trying to whitewash the fact that they may have, our big bankers might have all sorts of friggin' terrible plans for us in the future. But you get rid of zero-cost dollars, man, and so many of those plans just become untenable. Immediately.

And, you know, if the BRICS, going back to that talking point, that phase of the conversation, if they go to a trade settlement system where they use effectively credits for gold as the means by which to satisfy their trade imbalances on, say, a quarterly or monthly basis, then they can do bilateral trade. They can trade rupees for reals or yen for, you know, yuan for rubles or whatever. And then at the end of the quarter, go, okay, well, you owe me five tons of gold and I've got a, you know, and I've got plus two tons because I owe three tons of this guy over here, yada, yada, yada. And then they just hold it on a freaking blockchain with a, you know, a distributed ledger. And then, you know, once a year, they may send a couple of tons of gold, you know, around to each other and then settle it all up. or just credit them and you know you know what i mean like it's very doable the the when gold coins had to move to settle the trade a century ago that became a problem but today if it's all i mean if they go to that system marty we're gonna have to go there we're gonna have to

remonetize gold and or bitcoin in order to back the dollar there's no other option if they want dollar to survive period because superior money will outcompete inferior money yeah and this plays into the narrative too because the european banks have capital requirement reserve requirements where they can allocate the gold too so that would naturally create demand and but but at the same time right the european the europeans though the dot these dub oceans desperately want to go to fully unbacked money that they control and then they control the value of it by controlling your access to it and then everybody becomes iran that's what they want just think of it this way you're just you know you're venezuela and i'm iran to them

yeah the listeners are russia now that's what a c that's what cbdc is ultimately reduced to yeah so we can get around that it's not hard we just you know and there's a whole and there's all a group of people that represent over 50 of the population on this planet admittedly these are the 50 of the population that davos wants to get rid of useless eaters to them the useless eaters ai is going to there's all this ai is going to do away with all these jobs blah blah blah blah the robots are going to run everything it's all this you know it's all i mean i'll be honest with It all sounds like these people just, you know, did too much ayahuasca at a Venus Project symposium 15 years ago. And they're just like, you know, let's make that happen.

That sounds great. I'm like, okay. You know, doing ayahuasca or MDMA out in Burning Man. It all seems like half-baked ideas. Yeah, we were just talking about AI in the conversation I had before this. And there is a lot of hype. it does seem pretty cool but i don't know if it's going to be what uh silicon valley's making it out to be like i think no of course not silicon valley's oh look

again dumb ideas you know don't dumb ideas proliferate like you know beer wart at the zero bound yeah you know i mean like it's not hard well that's what uh we need to be a five percent for quite a while and i think the the long-term well i think you know eventually the The dollar futures curves are all signaling that the Fed will be back to 3% by 2025. Maybe 4%, but not 3%. I just think these markets are – I just don't believe in the – and this is where I'm getting angry with Zero Hedge. They are literally arguing the Fed funds futures curve is like gospel handed down from on high.

And I'm like, yeah, no. I mean, going back to the beginning of the conversation, the dot plots in 2021. would have led you to believe that rates were staying very low. It just gets worse and worse and worse when you start thinking about... I mean, look, if nothing proves to you how mispriced those markets can be,

I give you the last six weeks or eight weeks since the FOMC meeting on February 1st. like those markets are broken yeah i mean they're as broken as oil was two weeks ago like it's crazy yeah and that fed funds curve set by the market could just be the market really wanting it to happen but as we said the fed's getting its autonomy back yeah yeah yeah but i'm sure that this kind of thing was was real back in the 70s and the early 80s when volcker was doing this now we didn't have the same types of markets we didn't have fed funds i don't think we had

fed funds futures back then um you know we certainly didn't have euro dollar futures and you know so i mean and this all comes you know this this you know if you ask me where this stuff comes from why i was able to like put this stuff together i've been watching them manipulate the price of the gold for 20 years through the futures curve through the futures market right like you manipulate the futures market you can create reality okay so once you see it bodily happen to you in one market it's not hard to see the same behavior in other markets so So, you know, the Bank of Japan is still engaging in yield curve control and still subsidizing a lot of, I think, this futures curve inversion.

But, you know, again, I think the point I didn't finish making about Martin Armstrong and FEMA earlier, which is that what Marty pointed out in that blog post was that, yeah, I did make the point, which is that when the system came under stress, The foreign central banks went to FEMA to get dollars, or to get treasuries, sorry, because they were desperate for them. And that's why, and maybe that's why the U.S. yield curve is so inverted. It's not because, oh, there's a recession coming, blah, blah, blah, blah.

No, it's because there's a need out there that the Fed set up on purpose. you know i post you know when i said when i asked that question to to daniel booth i said you know that everybody's out there screaming policy mistake and i'm like to me this is what he needs to do and she's like yeah it was a policy mistake but it was a policy mistake made with eyes open yeah they did a purpose yeah and you can you can default to they did it because it's because they're evil or you can do it because it's the only way to break these people you know yeah so yeah maybe i don't know that's what this is this is i mean i'm not you know again i could be wrong about even if i'm wrong about 25 even wrong about 50 of this

it's still completely different than what you're getting on cnbc what you're getting on bloomberg when i i can't bloomberg is unreadable anymore i can't even get into the articles anymore i feel I feel like they pay well. Well, I mean, just even the headlines. And half the time when you run the articles through archive.is and you see the headline and you read the article, the headline, they know that nobody can read the articles over Bloomberg. They also know that the algorithms are just scanning the freaking headlines anyway.

Yeah. So they're creating reality through headlines on articles that nobody's even reading. FedSpeak has moved to the to the media and the articles don't even the text of the articles don't match what's the headline at all

this happens all the time I mean I may read 10-12 articles a month from Bloomberg 80% of the time the meat of the article is completely 180 degrees out of phase with the headline that's very interesting say the media elite european banking elite yelling against pal so in this context and diamond and diamond and goldman

and a few others don't leave diamond diamond is very very very very instrumental in this i mean he really is and you listen to him talk and you can see it you can see it i can see diamond very clearly telling you what the policy is and what's going on what do you come out last week and said there's gonna be like a two trillion dollar shortfall in the system yeah i mean he knows there's a problem but i think he's you know he knows it but he knows he has to we have to deal with it and you know there's only one way to deal with it you've got to liquidate a whole bunch of stuff it's going to be hard it's going to be terrible but you know nothing worth having isn't worth you know suffering a little bit for we've had

it a little we've had it pretty easy and i think you know it's been it's been good times for i mean relatively speaking it's been good times but those good times are you know it's a party they come with the cost a massive hangover no you mentioned it earlier like what a pal was fed chair with the same perspective that he has now in 2008 what would the world look like the world would look a lot better than it does right now we would never have known the dame klaus schwab we would have never gone through covid we would have never done any of this the fed's balance sheet would have went up to about two trillion dollars and then it would collapse back back to around 800 billion and you know bitcoin would be fifty dollars yeah

yeah here we are and what do you think happens do you think they you think they nudge him out replace him with something i mean without the only way they can get rid of powell before 2026 when his term is up is to revoke the feds charter you think they'd be that far which is what elizabeth warren is is is prepping the narrative for the the the fed will be the central campaign talking point for the 2024 election cycle you think so they are going to scream bloody murder and say the fed made you poor the fed cost you your job the fed did this the fed raised interest rates the fed created a recession it's the fed's fault it's the fed's fault it's the fed's fault i'm telling you and i hate to say it but my

libertarian our libertarian brother brethren are going to eat it up and they're going to be the useful idiots of fucking davos to and they're gonna and and i can i can see it coming a mile away and i can see it coming it's coming on my twitter feed hot and heavy at me every day i got people calling me grifters calling me a grifter now well i think because they think you're a fed apologist is that yes that's the grift yeah i don't think you're a grifter thank you i appreciate that i think you're explaining the mechanics in a way that i understand them it makes intuitive sense to me um and i've been following in fed policy i did it professionally for a couple years out of college so like over a decade now um and like that policy under yellen and bernanke

was terrible yeah it was awful and we had every right to be screaming at the fed every right and we still have every right to scream at the fed but you know give them give credit where credit is due at that moment in time it's like look when Trump was president I lambasted him for the things he did wrong and I praised him for the things he did right

same thing with Powell it's the same thing with any of these people you know at the end of the day the forces of decentralization are winning we wouldn't be having this conversation if they weren't winning but the those that want to control everything are going to fight tooth and claw to hold on to what they have so you know expect the pushback expect the fights

expect them to try and you know to attack the very people who may be working in your you know who may be your temporary ally. Yeah. I mean, you're saying... I was going to say, I'm seeing it with Elizabeth Warren right now with her anti-crypto army. I mean, that's a big theme. And Bitcoin right now is Chokepoint 2.0.

Are they trying to cut us all off? Right. But at the same time, don't think that the Fed isn't trying to also choke off aspects of the crypto markets. But again, aspects of crypto. Not Bitcoin. Yeah. they want she wants to go after bitcoin the european union wants bitcoin gone

powell never says a bad word about bitcoin like go go look for it i he's talked about it in humphrey hawkins testimonies i don't care about bitcoin doesn't matter to me the stable coins are what matters to me yeah and they've been very consistent throughout the years we're actually doing a research paper on this all the fed's comments on bitcoin they're like yeah it's a commodity everything else yeah maybe and they don't care about it one way or the other yeah they're like okay great it's a commodity it's you know and that's fine and it doesn't have to be anything and that's but the but the synthetic dollar market is the issue because if once you can because look

most of those stable coins were cbdc's okay they were they were cbdc's they were trackable on a blockchain they're programmable you change the value you change the rules governing them every day they were all they were prototype cbdc's and if we got to escape velocity in terms of trust in that system and those then you're talking about magic beans as our monetary system

which is exactly what they want us to do circles KY seed you have a circle particularly in coinbase as stablecoin like you can only use them in certain certain exchanges and yeah

it's coming even the stuff that existed even the other even the stuff outside of that right even the even the the crypto projects that you you know the the even the crypto projects that you know um you know the developers went into it with the best of intentions you know they wanted to create their you know a thing a new you know deep you know like distributed finance distributed forex you know whatever i mean i can go through i i was involved in you know a number of these and i don't for any reason believe that you know they weren't that these guys weren't you know on the up and up but they got subsumed

into this whole big ugly mess as well because they couldn't stabilize their valuations and and the rest of it without money coming in from the outside levering everything up and then all the cross-platform you know bridges and and all the stuff that happened which destroyed a lot of good projects that you know had some good ideas of how to you know create foundational assets how to create you know and but again at the end of the day did you not think if you thought that they were going to you were going to create your own private central bank that the central banks wouldn't want to take you out yeah i mean maker dow is a perfect example of this they're completely completely uh capitalized with usdc now circle stablecoin yep so i mean and you know there may

come a day when and this is why but this is this is where the bitcoin maxis are absolutely right again i'm again i i my i just just stripped the whole religious iconography outside of you know off of the the top of it the further and i'm all i'm all i'm all on board right i yeah like 90 of the crypto market is crap 95 but 99 of it is garbage i don't i i i'm still just a proof of work maxi i believe that proof of work is the thing that matters it's because that's the thing that's that is the thing that makes those coins commodities where everything else is just not It's a tie between the physical and digital worlds. Right.

And it's tokenized electricity, whatever you want to call it, right? Which is what, really, at the end of the day, what all, you know, all of these things are. I mean, gold is just congealed electricity, diesel fuel, whatever you want to call it. Gold is like congealed diesel fuel. Yeah. You know, and human labor. That's the 90% of the cogs of any frigging gold company. Go read a gold company's balance sheet.

You know, it's not hard. Like, that's what it is. Like, aluminum is congealed electricity. That's what it is. It costs an un-fucking-believable amount of electricity to make aluminum metal. Yeah. Yeah. I agree with this.

So, and you want opportunity cost, you know, in your production of new monetary units. And so, re-monetizing, so re-capitalizing the U.S. through the tying of the dollar in some way to an opportunity cost, you know, a commodity that was created through the opportunity cost of producing it versus doing anything else with your time, right? That's ultimately what we're talking about here. That's the important link. That's why I've always been, that's from the moment I read the white paper in Bitcoin back in June, late June, 2010. First time I read it.

And I went, oh, look, wow, cool. They figured out a way to digitize opportunity cost. Yeah. Great. It satisfies me. This is a regression theorem. I'm good. i literally was like you know i keep going back to this like back in the original bitcoin forums

i'm like talking about this stuff going i just said it satisfies mrs regression theorem yeah keep it simple stupid it's all about the energy keep it simple stupid yes it's it's about it's about the opportunity cost i used to argue with i used to argue with freaking monetarists about this shit now i mean this is why i'm no fan of milton friedman because it was clear that they would just say oh but you you take the gold you dig it up and you stick it in a vault and then it's that's just wasted capital that you could then deploy we should take that money and send it out in the world now if you do that then all you wind up with is nothing backing the currency which is where we are today and then we just have you know and then we have to back it up with the

full faith and credit of a corrupt government and a corrupt central bank managing the value of the thing oh but the market will keep everybody honest yeah what if they're all in on it together ah cartels don't yeah they don't okay but they can do an awful lot of damage before they fall before the cartels fall apart or did you not watch the last 15 years of the world yeah since since lehman brother like do you want a better you want a better example than 15 years of coordinated central bank policy to blow up the freaking world okay fine yeah i believe in the market but you know we can all get crushed in the in the meantime yeah and you know i just i i need to give people actionable information before i'm dead and you

know i mean don't get me wrong i stack gold coins i stack sats and but at the same time you know we have to be able to operate and function in the real world because we only get one life and so i don't care that peter schiff's going to be right 30 years from now agreed have to come to grips with reality that is one thing like it's not interesting i was home and talking to a lot of people some of which are very successful have successful businesses therefore have a lot of money and they were mentioning me off the cuff they know me it's like family and friends uh at home they know me as the bitcoin guy the one thing they mentioning like they were like texting me and in person coming out to me like how do i get into

bitcoin because they were scrambling in the midst of svb it's not really the inflation hedge but the access to their money when they need it um that was really giving them the bear asset part of it was really beginning to uh have the light bulb go off in their head because they were like i moved millions of dollars between like 10 different bank accounts in the last two months because i'm scared shitless i'm gonna wake up and my money's not gonna be there yeah no i mean i i've been you know i've been telling people you know for years since i started first started working for newsmax a decade ago crisis had been a decade already um you know it would you know with their gold specifically because that's what i was so what i was focused on um was spread your

geographic risk keep some at home keep some as miners at a brokerage account keep some in another place you know if you have depending on how much you have i mean if you got you know five grand it doesn't matter but you know if you got a lot of money you you're not don't keep all your eggs in one basket and i tell people today i'm like don't be religious about this cash gold and bitcoin have some of each have a little silver don't be don't be doctrinaire about one thing about trying to win. Don't be, don't be so bound up with being right about a thing that you may miss some other thing. There's going to be a bull market. Gold is going to be in a bull market when Bitcoin's in a bear market and versus Visa and things are going to happen, you know, and

you know, there's a lot of truth, I think, in some ways that Bitcoin, that the gold bugs have a chip on their shoulder because Bitcoin stole a lot of their thunder during the last cycle. But guess what? Now that we know what's happened, Bitcoin was pumped up on purpose to create this whole crypto mania to start the transition to CBDCs, if not to create an entire secondary monetary system outside of the control of the Fed. as a counter and i think you're going to lose me here for a second you're back you're back okay um so think of it this way when sofa started in 2017 powell was put on the fed pretty much the moment when you think okay now it's time for us to

we need to come up with another system to shift people over to and we don't want gold winning we're going to create this we're going to we're going to subvert bitcoin and all of crypto by creating magic beans as a function of of uh of that and we're just going to lever up the bitcoin to the moon it's very interesting because that bear market after the 17 bull run is what ftx was really birthed out of and ether and this and all of that stuff yeah and you can and a lot of people have done a lot of forensic work to trace it all back there's a who did what when and where and how and you know there's a good there's a good body of evidence now that that's exactly what they did they did it on purpose and they use futures to wag the dog

cash settled futures to wag the dock yeah it would also and volatility would also explain why they haven't approved an etf yet exactly even though you know it's not hard i i i physically settled etf and bitcoin would be easier to do than a physically settled one we don't do they made the same arguments for you about not wanting years for not wanting to do one in gold we screamed for a gold ETF for 10 years before we got one. And then when we got one,

we got GLD, which they then used to wash, you know, GLD, the futures, the fundamentals exchange and all that

in order to lever up the paper gold market to suppress the price of gold. Like, be careful what you wish for. Yeah. I personally don't want an ETF. I want people,

if you're listening, you haven't already, take advantage of the bear instrument properties of Bitcoin. Hold your own keys. Drain the exchanges. Yep. No different than the gold market. Keep, you know, just keep, same thing.

Gold is a little different than Bitcoin because Bitcoin, with every halving, right, the stock-to-flow ratio rises because the amount of flow of new Bitcoins into the system makes it harder to liquefy a futures market because the miners who are generally net short Bitcoin because they have to sell in order to cover their operating costs, no different than gold miners, by the way. No different than gold miners, right? You know, Barrick and Newmont and all the rest of them for years

were always, you know, having to sell into the market in order to cover their costs. And they would hedge out into the future and they would do, and that is the means by, part of the means by which gold was kept under control for years. So I'm like, well, it's the same story is going to play out in Bitcoin. and it has and then they let it rise when they want it to rise again another lesson going all the way back to jim sinclair in 2005 saying doesn't matter i hate to break this to you folks

he said this many many times i'm back on js mindset you go back to the archives hate to break it to you folks don't get angry about it the very evil people who are suppressing the price of gold today are going to be the ones who make the most money in the gold bull market that is to come. Your job is to profit on the move when they flip from bear to bull. That's all you can do. You can't fight them. All you can do is work with the trade. Grab the middle 60%, leave 20% at the top and 20% at the bottom for the God of greed, and you'll make life changing money for you. And if everybody took his advice, the gold market would be healthier than it is today same thing with bitcoin so with every bull run and every bear run

be smart you know shop smart shop that smart don't be dumb buy low sell high and learn how to read a chart and you know keep your emotions in check yeah when you've made good money in any trade always take your original stake off the table put the other stuff away i i did a great podcast with chris sullivan uh who runs uh uh hyperion decimus which is a bitcoin hedge fund and all we talked about for an hour was money is a not a not an end unto itself it's a means to an end it's a means to real wealth and that's what drives the that's what drives the bitcoin guys i know it's what drives the gold guys and i've used and i've said this in previous places and i'll say it again here then i'm gonna have to run because i it's been it's been an hour and a

a half i'll leave you guys with this if you haven't watched the show yellowstone watch the first episode hell all you have to do is watch the first 10 minutes of the first episode because kevin costner's character dutton tells you everything you need to know about the ethos of the show and of what wealth is in that first 10 minutes we're discussing with his son jamie i don't know if you've watched yellowstone or not but it's that first episode when they're talking about, you know, hey, you know, they're talking about the potential to sell a part of the ranch to the property developers. Jamie's talking about how, hey, I said no, but it also gives us leverage. And Dutton turns to him and goes, leverage is knowing that if you had all the

money in the world, this is what you would buy, the ranch. That's it. That's the mindset of those people. They have that. They bought the castles and they have the lands and they have this and have all those the real wealth all the rest is a shadow play and everything else they do is to try and separate you from the process of building real wealth for yourself what they're scared of is the serfs get wealthy and they want us to be surfs again and cbdc's of all and all forms and all shapes and forms are that and i don't see the i don't see the young money relatively speaking the american oligarchs banking oligarchs are the nouveau riche of the west they aren't the old money some of them are right some of them are from old money sure but it's it's a different thing

there's we we are still look and we are still looked down on as the uncouth yanks they still think we're their colonies and that they just want their colonies back and when you when you put it through when you think of it in those terms yeah um we can say no to that yeah flip your perspective we have the right people in place we can we can say no to it and we can move on and we can bankrupt i think that's what's going on i agree i'm happy you said that because my big plan during the next bull market is to buy a ranch um yeah that's what uh very laudable goal marty i bought my little slice of heaven with almost no money back in 2003. i've been here for 20 years now yeah so my goal now is to finish it

well if it happens in the next two years I'll be on the same trajectory as you I'll be 33 you're 55 now you've been there for 20 years

yeah goals goals to set for there you go all right all good man it's so good to I bet I really should run

yeah you go enjoy time with your family all right thank you for doing this and it's always a pleasure sir I love your perspective thank you

appreciate it you're really doing it I enjoy coming on so we'll do this again in a few months yeah let's do it again in a few months all right sounds good all right man you can and everybody watching you take care you guys have fun keep your stick on the ice you guys know what to do all right do the thing peace and love freaks