TFTC: A Bitcoin Podcast - #462: Government Spending Leads To Hyperinflation with Peter St Onge

Episode Date: November 28, 2023

Marty sits down with Peter St Onge to discuss government incompetence, hyperinflation events, predictions for the 2024 election, and more. Peter on Twitter: https://twitter.com/profstonge 0:00 - Intro 6:46 - Bitcoin banning attempts and govt incompetence 15:12 - EVs 17:23 - Treasury auction and hyperinflation events 33:08 - Sovereign debt 37:15 - Swiss banks liquidity crisis 42:44 - The internet is bank run jet fuel 46:29 - Milei and dollarization of Argentina 50:04 - Fiat is always doomed 53:36 - “Far right” labels 1:00:16 - 2024 election 1:03:39 - The stakes are real 1:09:14 - White pill Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠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

what's up freaks it's your boy marty here to introduce this rip of tftc i sat down with the economics professor of twitter professor peter senange talk about hyperinflation how it may come to america how it has happened over the last hundred years particularly in weimar germany and argentina talked about a bunch of other stuff as well white pill white pill be optimistic freaks this rip was brought to you by our good friends at river river's the best place to buy bitcoin you can easily buy and sell using the app if you dollar cost average you're not going to pay any fees on those buys if you set up daily weekly bi-weekly monthly whatever it is you set that up set it and forget it you're not

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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. They're going to try a bad Bitcoin. Yeah, for sure. That should be the base case. I'm constantly shocked they haven't tried harder. It's the great mystery.

I think they just, they literally don't understand it. And they are little by little, but not fast enough to be a problem yet. that's what i can see this black rock etf being the beginning of them getting it and trying to corral it into this hyper regulated exposure where it's like all right you can you can get exposure to bitcoin but it has to be via these entities exactly yeah which oh are are we recording yet yes okay got it uh yeah i mean the trick with black rock you know kind of i think I think the biggest benefit to it is that BlackRock knows how to lobby Washington, right? So, you know, they've got so many friends that, you know, in a sense, it gives us like plot armor on this side to have BlackRock on the Bitcoin side of it.

And then the question is just, is BlackRock going to try to screw things up internally, you know, more than the sort of policy insurance that they give Bitcoin? Yeah. That's been a big debate in the Bitcoin space is, should we be funding these policy think tanks and these policy advocacy groups to go lobby on our behalf? And I've been a big advocate of, let's just piggyback on other lobbies. I'm more focused on the energy sector. I think we should get the energy sector bought in and then use their lobby to protect Bitcoin. Oh yeah. They're one of the most powerful lobbies in Washington. They're insane. the the kind of garbage policies they can get through you know if you were to aim that lobbying muscle at something that actually made sense it'd be pretty exciting yeah well nothing makes sense

right now yeah very little makes sense this is one of the great mysteries is you know like if i were rooting for joe biden you know if i were like a dedicated democrat activist i would be like what in the hell are you guys doing you know between like the border and the gender thing and you know the wars, you know, the retreat from Afghanistan. I mean, just the litany is astounding. Like, what are you people doing? And it's almost like they're behaving as if they really don't care what the voters think. You know, normally, if you look at, say, pre-Obama, you know, you look back to the Clinton era, for example, at least they tried to dress things up. Like they tried to do policies, for example, border fences and things, okay? Yes, they were, you know, doing them less

so than the Republicans might, but they were at least trying to respond to what they thought public opinion was. And in a whole lot of areas, it's like they really don't care. And, you know, I did an article on this recently talking about voter fraud, that this is what you would expect to see if a regime is engaging in widespread voter fraud, that they don't care about voters anymore, Right. Because the reason you do voter fraud is so you can ignore the other size voters. But as a side effect, you can also ignore your own size voters. So you become like divorced from voters. You really don't care what they think anymore. Rather, you know, the party gets handed over to special interests.

So lobbyists and cronies and the politicians themselves, the bureaucrats. That's really, I think, what the Democrat Party is looking like now. It, you know, there are all of these sort of own goals, you know, things like banning gas stoves. I mean, where the heck is that coming from? You know, like, what, what, what is the benefit to the party? Right? Like, like, again, you know, if I put myself in the shoes of like a pro, you know, Democrat activist, I'm like, what in the heck is up with the gas stoves? unforced error nobody was demanding it the climate freaks aren't obsessed about gas stoves you know it's like the white house just pulled this out of their rear end pulled it out of nowhere and you know i mean that's you're not going to win elections on things like that so it's uh just across the board they act like they're a party that you know whether it's confidence in the media covering for them or whether it's genuine voter fraud uh they feel

like they really don't care what voters think anymore no i mean just having joe biden go out there and interact with either the public or other world leaders is an example of that gaffe in china where he walked up to xi unannounced yeah probably whispered something incoherently in his ear without a translator probably sniffed him yeah yeah you can i mean you can tell speaking of sniffing the other powers in the world can smell the blood in the water i mean you have saudi arabia and china buddying up pretty pretty aggressively saudi arabia their foreign minister came out said we're gonna go to china and see if they can broker peace between israel and palestine and it's uh yeah it is perplexing the the in a sense i would welcome the incompetence if it was

paired with like a retreat from the world. You know, like if we became isolationist and then Joe Biden could sniff people here at home, that's relatively harmless. You know, but the problem is that you're pairing that incompetence with this just extremely aggressive foreign policy. You know, we've learned recently, I think it was the German foreign minister who was talking about early peace talks between Ukraine and Russia and that the U.S. was spiking them. Like they were essentially telling Ukraine, no, you cannot make peace. And, you know, why would they do that? You know, you've got, what, something like 100,000 Ukrainians now who have lost their lives apparently for nothing, given that the war is winding down at this point. So why would you do

that? And, you know, is it military donors? Is it, you know, to sort of maintain this sense of crisis that they enjoyed during COVID, where they could ram stuff through? And so they figured, well, you know, the COVID shtick is played out. And so maybe we can go for war this time. Now, I guess they found a new shiny war, so they don't need the Ukraine one. But I mean, really just, you know, pairing, if the US were isolationist, it wouldn't much matter if we were incompetent, right? But in this day and age, when the US is out there trying to pick fights with pretty much every conflict in the world, it's a big concern. yeah it's pretty disgusting too i mean when stuff began popping off in israel in gaza

the haste with which the ukraine debacle was swept under the rug it was yeah it was like uh you know the friday night girl you know she you you keep her handy and then as soon as you meet another one she's just out of there it was astounding and you know of course the ukrainian people, what they've been through, the Russian people as well. You know, early on in the conflict, you know, people were sort of choosing sides. And I mean, my argument at the time, I think you probably agree, is that, you know, I was on the side of the Ukrainian people and the Russian people. I was against the Ukrainian government and the Russian government. You know, so this entire debacle here, I mean, honestly, like, it's hard to quantify how little I care

who runs the Donbass region of Ukraine. I could absolutely care less. Both countries are corrupt dictatorships. Broadly speaking, it seems that Russia is slightly less corrupt. But beyond that, I really don't have an opinion. So why we got involved in the first place and, you know, along the way, how many thousands of Ukrainians and Russians were killed. So, I mean, in a sense, if you kind of zoom out, it's like the U.S. is almost like this dying scorpion who just sort of stabs everything it sees it stabs its own babies it just stabs anything in sight uh in its death throes yeah it seems like it was heavily driven by the military industrial complex i mean mitch mcconnell come out on one of the sunday news shows about a month ago saying hey this is good

for american uh weapons companies we're basically giving them all of our old ammo and then remaking it here yeah finally we're in the u.s yeah we're revitalizing the rust belt by making stuff and blowing it up as opposed to like making things that people could actually use like cars well they're going to be cars but they're all going to be electric cars by 2030 apparently they're yeah they're going to be you know there was an article just the other day that 0.2 percent of car registrations are currently electric cars for all the mind share they have for all the billions that they're going to plow into these charging networks and all this. Essentially, nobody has an EV. The other issue with EVs is that China has been plowing ungodly sums into

anything green. So they've been dumping free money into manufacturers of solar panels and electric vehicles and batteries and all across the board. And all of that stuff is set to flood into the u.s now right so we have all these crony cylindra style you know electric vehicle plants in this i think tesla is like the one company that's relatively sustainable on its own merits but the rest of this crap is just i mean it's just pure government welfare and then once you bring china flooding in what millions of electric vehicles are going to slash the prices are going to be half the cost. So, you know, between customers sort of waking up to the fact that EVs for the most part are a bait and switch, you know, like an EV truck, well, you know, you can drive it for

like an hour and then you get to spend a couple more hours at the charger. So between them understanding that the product itself in most cases doesn't perform anywhere near the promises and then you combine that with the Chinese flooding in with all this cut rate product, you know, I think we're just going to have an absolute wipeout in, you know, so-called green manufacturing. Now they're going to double down on it, right? Going back to the, you know, first point that they really don't care what voters think anymore. They're just going to double down, I think. So the Chinese are going to come in, they're going to try to put trade restrictions, you know, they're going to dump more money into these black holes because it's about the messaging.

It's about their own crony environmentalists, which are a big part of why Joe Biden, you know, took the White House. Yeah, well, it actually gets to a good segue into what I actually wanted to cover. I originally reached out to you a few weeks ago after that whole Treasury auction debacle. Apparently, there was a cyber attack. China couldn't get their trades in. The demand for the 30-year, was it 30-year or 20-year? I think it was 30-year Treasury. I think it was 30 years, yeah.

Since 1991. and i think that we can actually cover that subject and tie it into something that you've been covering a lot this week which is hyperinflationary events throughout history we just had the 100 year anniversary of the weimar republic's hyperinflationary event obviously argentina just had a big election with javier malay becoming their president uh in the midst of their fifth hyperinflationary event in the last five decades or however long it's been and i think we could use sort of that 100 year anniversary and what's going on in argentina right now to describe some hyperinflationary events over the last 100 years and i think that treasury auction

is a signal that if there's not demand for these treasuries we could have it here and even if the government does want to double down on the stupid spending that you're doing whether it's an energy or other areas of the economy they may run into a buzzsaw that is runaway inflation, potentially hyperinflation. Yeah. So what happened in the treasury auctions, this was, I think, two weeks ago at this point, and they hold these things often. But they were trying to sell, I want to say, 10 or 20 billion worth of federal debt. And they do that essentially nonstop. They've got something like $10 trillion in debt that they have to flog out to private markets this year. So they've got a lot of these treasury auctions.

And to put that in perspective, there's about $20 trillion in the US banking system. And the Feds this year are trying to sell $10 trillion. Most of that is refinancing old debt and then about $2 trillion in fresh debt. So it is really an enormous sum of money that they're trying to pump out into private markets. And there had been a concern over the past month or two that there's an accumulating risk premium on U.S. debt because markets are losing their appetite to buy it. Okay. So in that context, we had this auction a couple of weeks ago that was just really exceptionally weak. A lot of people have been watching auctions for a long time. Guys like

James Lavish, they said it was just catastrophic. You had very little demand for the debt being auctioned. It, you know, came out at a very high price, meaning at, you know, a high cost to the treasury to the taxpayer. And even so, about a quarter of it was left unsold. So that goes to so-called primary dealers who basically flog unwanted debt onto the secondary markets. So this was a near catastrophic auction. Now, subsequent auctions have been fine. Okay. So that's kind of the context here. But the thing is, it's a little bit like if you're flying in a plane and you hear a loud bang. Okay. You're still flying. You haven't gone down yet, But that is that's something that you might want to look into before you continue too long.

So that's kind of a canary in the coal mine, these treasury auctions. And I think the last time we talked, we talked about the fact that, you know, the pattern throughout really throughout the history of the Federal Reserve has been that they hike rates until they break something. And every time it's something different that breaks. And, you know, last time in 2008, it was what mortgages, mortgage backed securities, collateralized debt obligations. And it's often little obscure things like that. Right. So when 2008 hit, there were all these explainer articles in like the Wall Street Journal and Barron's Magazine, which the kind of in-house publications for Wall Streeters. and there were all these explainers saying, what is a collateralized debt obligated? What is a mortgage-backed debt? Because nobody knew what these were, right? It's not like these were huge industries. Everybody was, you know, watching like a hawk and then they blew up. These were more like ghosts in the machine, okay? These were like gremlins. And, you know, of course,

compared to 2008, our financial system is a lot more baroque. Debt is much higher. I think it's over twice what it was in 2008 throughout the system. A lot of the restrictions that were put on during 2008, you know, Wall Street outranks bureaucrats by like 20 points in IQ, right? So every time that the bureaucrats try to fix Wall Street, I mean, it takes them about 10 minutes to route around this thing. In fact, if by some freak of chance you happen to get a bureaucrat with a brain you can guarantee you goldman sachs is going to sit down and have lunch with them and talk about the bright future they shall have someday with goldman sachs all right all of these guys are either idiots or they're compromised so i don't want to imagine what kinds of gremlins

are hiding inside of our financial system waiting to break but you know treasury auctions is i mean that's that's a massive massive market if a treasury auction does actually break in other other words, you know, if it goes unsold, that or if the interest rate skyrockets, I mean, that would be something that'd be absolutely catastrophic for the economy. But even beyond that, the question is how many gremlins do we have tied up in there? So I think, you know, sort of the storyline from Washington, no matter what happens, is that they trot out Janet Yellen, Jerome Powell, even Biden themselves they all come out and reassure us how everything is just fine is blatant dishonesty you know to the point where like if you're a wall streeter and you're chilling out on sunday

playing golf and you hear that there's a press conference tonight with janet yellen and powell you rush home i mean you you you get on the phone you find out holy crap what broke right so it's almost like you know the reassurances are the uh the crack and the plane wing so that's kind of where we are. And, you know, I had a couple articles this week that were talking about kind of the bigger picture here, which is hyperinflation, because fundamentally what's breaking both this, all these problems in our financial system and, you know, what's driving inflation we're suffering under, but also inflation in countries like Argentina. What is driving all of this, the single force of nature is really government spending. We had a massive ramp up

in federal spending during COVID. They had to buy the lockdowns. The way to do that was to pay a large proportion of Americans to essentially sit on the couch and continue getting paid. And that, it bought them the lockdowns. You know, a lot of us at the time, we were sitting around wondering, like, what happened to Americans? Like, how are Americans supporting these totalitarian restrictions? And well, the answer is they were being paid. And who were they being paid by? Why? The federal government, with the Federal Reserve financing it. So that was sort of the original sin this time around. That put us up at inflation rates in double digits. And, you know, when we ask what's kind of the endgame on this, I've got another recent article

talking about my base case, which is that we're essentially reliving the 1970s, where you had this double hump of inflation. So first it got real high, it got around double digits. That lasted for I think about two years. The Fed reacted the exact same way that it is now, which is that they hiked up rates to choke off the private economy. They did not have a tough conversation with government about spending. They did exactly what they did now, which is pretend they don't see it and strangle the private sector instead. What happened in the 1970s is that led to a tremendous crash in the real economy. So there was one point where the statistics at the time said that they had a 10% decline in economic output at an annualized rate in a single quarter.

And that absolutely panicked the Fed. They said, holy crap. They fear inflation because they know the voters will blame them for it, but they also fear a severe crash because they know that voters will blame them for that too. So the Fed panicked, they reversed course, they slashed rates. And what happened at that point, of course, that inflation came roaring right back because what was driving it was not Mr. Putin's war, or it actually wasn't even the oil embargo, which was the scapegoat in the 70s, along with overpopulation, by the way, literally blamed the 1970s inflation overpopulation uh the chairman of the fed had a number of speeches doing that uh at any rate um you know it turned out it wasn't these scapegoats instead it was government spending the government

spending kept going they were they were doing the guns and the butter so the vietnam war the military-industrial complex to face the soviets uh and then they paired that with this massive ramp up of welfare and bureaucratic oversight uh you know under nixon under lbj so they had their guns and butters spending was soaring so once the fed pulled rates back down and made money cheap again it was off to the races and at that point it was about three years that we had a inflation that was even worse than the first okay so you know you had a little bit at first chilled out for a couple years and it just came roaring back at that point there were a lot of people who felt like inflation was going to be permanent and what happened is basically we as

as a country got lucky, the very inflationist Jimmy Carter happened to appoint the guy Paul Volcker, who turned out to be really the hardest money Fed president that we've had since the beginning of the Fed, what, 110 years ago. And Volcker ramped up rates. He put rates at 17% or 18%. It costs you like 18% to get a mortgage. I mean, it was absolutely devastating for the economy. They had a pair of recessions. Those recessions cost Jimmy Carter the election, but, and they brought in Ronald Reagan, but what they did do was ended inflation finally. And my concern there is that, you know, from Washington's perspective, Paul Volcker ending inflation was a catastrophic mistake, right? Because Jimmy Carter lost his job. He got blamed

for the recessions. The Democrats had had almost a 50-year strangle, like monopoly on the Senate that they had first gotten under FDR. And they lost that during that pair of recessions, right? So from Washington's perspective, they are never going to do that again, not in living memory. They've, you know, lesson learned, do not take one for the team, do not fix an out-of-control inflation at the expense of the economy. And so if we get to that 1970s replay where inflation comes roaring back even worse than the first time, I don't think Washington's going to pull a Volcker. It's not in their interest to pull a Volcker.

They're going to keep scapegoating. They're going to keep hoping that the media can explain it in a way that Paul Krugman can declare more victory. yeah which begs the question like how quickly could this escalate because i mean i'm sure you've seen it i think i've seen you retweet it but like just all the anecdotal data out there people complaining that's the weird thing about 2023 is that people can get on their phones and take a selfie video of all the trouble they're experiencing in their everyday lives and it's this bad now it's hard to imagine what it's going to be like if that inflation comes roaring back

did it go away in the first place is another question yeah we've got a whole bunch of indicators that are basically saying that um the economic growth that we have you know uh gdp growth and the job situation um you know in the case of consumer spending economic growth those things a lot of that is just being funded by credit cards so you've got it was just uh out recently fidelity did a study of 401k hardship withdrawals and those are soaring right so people are cashing out their retirement accounts to keep the spending up uh you've got record record credit card debt you know essentially people ran out of cash and now they're running it on plastic but thing is most americans by almost 60 percent of americans they cannot cover a one thousand

dollar uh unexpected cost okay and so now you've got millions more who are draining their retirement accounts who are loading up on credit card debt which by the way pays 21 at the moment i mean it's and this is before the recession hits right uh before it hits in full right this is you know when allegedly we have this amazing growth uh we probably talked about jobs as well last time that a lot of that is is smoke and mirrors where you know you've got about five million americans who dropped out of the labor force during COVID. A lot of them retired early. Some of them went on to government benefits. For a while there, government was essentially no questions asked on benefits because of COVID. And so once people go on to benefits, it kind of becomes a poverty

trap. If you earn money, then they're going to take it away, right? So once you go into that, you might earn something black market on the side, but a lot of people, once they go on welfare, they're never, ever coming back. So we've got about 5 million missing Americans. And if you added those back on, then we'd be looking at an unemployment rate of six and a half to seven and a half percent right now, right? The only reason why we're not seeing the misery is because all of those government benefits are covering a lot of those people. Or if it's the older ones who earlier retired, they're draining out their retirement accounts. So, you know, this sort of sets the stage for where we are here before the recession hits in full. If we look back

historically, recessions, typically they lag the Fed. So when the Fed hikes rates, it usually takes something like 18 months for the recession to hit. So on that schedule, we're still a good year away from the full brunt of the recession. And taking it back to government spending, again, historically, if you look back at the last couple of recessions, every single time, government just cranks up the money printers, and especially the deficits. Because when a recession hits, a lot of people lose their jobs, or they have lower income if they have a business or investments. So they're not paying as much tax. And then meanwhile, you got millions of people who newly lose their jobs, right? They're laid off, or they're going through financial distress,

they lose their homes. So they go on government welfare now. So if we extrapolate from the past couple of recessions, then, you know, my guess is that next time around, we're going to be looking at not a $2 trillion deficit, which is what we're running now, we can be looking at a $4 trillion deficit. So at that point, the amount that the government's financing, it's not, it's not 10 trillion, now it's 12 trillion, you know, now it's 60% of the entire banking, all of the money in all of the deposits in the United States, it starts to get to a goofy amount of money. And, you know, taking it back to Argentina, for example, the kind of deficits that we're running in the U.S. right now as a percent of the economy, we're actually almost twice what they're running in

Argentina. That's before Millet comes on. So basket case Argentina running 143 percent inflation is apparently far more fiscally prudent than the U.S. government at this stage. So I think, you know, when we sort of go through the usual suspects for what's going to break this time around, I think there's a very good chance that it could be sovereign debt. Sovereign debt is too big to bail out. Okay. There is not enough money in the world. These sums involved are absolutely astronomical. Yeah. And when you consider the fact that we need to roll over, what, one third of the $33.7 trillion that we have in the next two years. Then that's essentially a race between

does the recession come soon enough to force the Fed to lower rates so that you refinance that at lower levels? Or if that doesn't materialize, what's that look like when you have to refinance all that debt at these interest rates? Yeah, and I think a lot of the problem was it kind of came from 2008.

I think 2008 gave them a false sense of confidence. And the lesson that the Fed took away from that is that if anything breaks, if anything goes wrong, just shoot it with a trillion dollars. It'll go away. And, you know, but you want to zoom out for a sec. So the amounts involved in 2008, you know, the main bailout mechanism back then that was TARP, that was about $800 billion. $800 billion is nothing now. You couldn't make a dent with that. Right. When we had the bank crisis earlier this year, they I mean, we don't know how many fictitious assets they basically allowed banks to pretend that their assets were worth what they bought them for and not what they are today.

Even said, which would be trillions involved, even beyond that, you know, their first reaction was to say essentially that every FDIC or every uninsured bank deposit in America was going to be guaranteed. which is about $20 trillion. Now, they can't actually fulfill that promise. The FDIC itself has about 1% of that. I think it's, let's see, $100 billion on $20 trillion. They're essentially promising things that they can't possibly do. But the point is that, you know, we've gone from $800 billion. And I mean, that was a big deal back then. A lot of people were upset. They were like, you know, you're going to hand Wall Street $800 billion? And now, I mean, it sounds naive. You like we're talking about the 16th century about three million dollar national debt or something it's just a silly number so uh i think i think at this point uh they really are going for broke

that you know it's the loot the treasury stage of the decline of empire and you know the question is whether there's some like is there some break on it right is there some guardrail that's going to head this thing off and for a long time in american politics the republicans were the suckers You know, they would be the ones who there would be an election. The Democrats would say we're going to have this this, you know, the party is just going to be outrageous. You guys, you never seen how much we're going to spend on this party. And then these idiot Republicans would be there like, yeah, what I'm going to do is clean up for I'm going to charge everybody, you know, one hundred dollars to clean up after the party. So they always lost. And, you know, you had first Reagan and then Trump, who discovered that that's a chump game. You know, you're not going to win an election promising to close down the party and clean up what's been done. In other words, to cut spending and to start paying down debt, you are not going to win that way. And so at this point, both major parties in the United States are essentially on the same page. The only thing they disagree on is what they're going to spend the trillions on. Is it going to be on war?

Is it going to be on equity or climate? But either way, it's hard to see what could actually stop the runaway federal spending beyond just literally going off the cliff and having some kind of sovereign debt crisis, at which point it fixes itself because you can't borrow money anymore. So, you know, it's kind of the quickest way to get a balanced budget is to go bust, default, and then nobody will lend you money anymore. yeah i mean and that's just the problems here at home i mean rumors started spreading last week who knows how much validity there are to them i wrote about it on friday but then i saw some stuff over the weekend said it may have been fake news but there was two headlines out of ubs first their ceo at some risk management association event uh for some reason or another saying that if ubs was going to be bought he'd prefer to be a private entity buying the bank which is something

you wouldn't expect the ceo of one of the largest banks in the world to say and then there was that screenshot of somebody saying that they couldn't withdraw money because some of the ubs branches were having liquidity issues and so that i mean that's why i had you on earlier this year was in the wake of the banking crisis that popped off here in the us but it seems like Speaking of gremlins, those gremlins within the banking sector specifically are still there popping up, obviously, with treasuries being the liquid reserves on a lot of these balance sheets and the treasury markets moving in the way they have throughout this year. It seems like that problem's only getting worse and people are just trying to keep it out of mind, out of sight. But it seems like anything could happen at any moment where a liquidity crisis could pop up. Yeah, well, Switzerland, just a couple of weeks ago, they news leaked out that they had floated the idea of capital controls.

They call it friction tech, quote unquote. And the idea is to make it difficult for people to withdraw their money from banks. And, you know, of course, once it once it got out there, they they you know, they immediately said, no, no, no, that's that's crazy talk. Yes, we were talking about it, but we're not really considering, you know, so they want to damage control mode, which I mean, of course they have to because Switzerland at this point, so traditionally they had two giant banks, Credit Suisse and UBS. And Credit Suisse went down earlier this year. So there was kind of a shotgun marriage brokered by the Swiss government. They had a huge sweetener. I think they gave them like 55 billion or something to take on Credit Suisse. But at this point now, UBS is like a third of bank deposits in Switzerland. In U.S. terms, that would be

like an $8 trillion bank. I mean, that is too big to bail out. Like the amount that the Fed pumped out for COVID, right, that was about $6 trillion in the first couple of years. So I mean, you would literally have to, what, put that down on a bank. Something like 90% of the publicly traded companies in Switzerland do business with UBS. I mean, it is absolutely too big to fail. And this is happening in a lot of countries now. We're seeing in the US where the smaller banks are failing. They're being gobbled up by the too big to fail gang. And it's understandable why that happened. I mean, partly, you know, the regional banks have been particularly reckless. But fundamentally, ever since 2008, the message that's gone out to the banking sector is that you've got

to get too big to fail as soon as possible so that you can hold taxpayers hostage, right? You want to get to a situation where the government is compelled to bail you out because 2008 worked like a charm for the American banking system, right? They got to run for 10 years making money hand over fist by taking on risk and by lying about the assets. And so, you know, every year they banked that, they got to go with the, you know, with the yachts and the hookers, the blow and gave, you know, fantastic dividends back to their shareholders. And then when it came time to pay the piper, the taxpayer covered it. I mean, just what a racket that was. So banks all over the world are in the same situation where if they can just get big enough, they can get over

that line to the point that they're too big to fail, then the taxpayer will give them anything they need to avoid that. So that's really where Switzerland is at this point. And it's shocking for those of us who remember Switzerland as a paragon of stability and prudence. I mean, it's shocking for the Swiss government to be sitting there carrying water, talking about restricting depositors, locking them into failing banks with this so-called friction tech. It's astounding. And it's also something the Fed, the Fed has been putting out a lot of papers about friction tech. You know, they were caught blind on the Silicon Valley bank run. You know, traditionally, traditionally meaning past 20, 30 years, bank runs would occur over a course of weeks.

okay and in the case of silicon valley bank it was like hours i mean it was lightning fast that freaked out the federal reserve and so now the federal reserve is also floating friction tech and you know they're kind of playing the washington game which is at first you put out a bunch of academic papers talking about this this very clever idea you decorate it with jargon you try to make it look sciencey and then you get you know your cronies in congress to carry this stuff through and say well you know experts say that we're gonna have to lock people into failing banks no doubt they've come up with some cute words to describe it friction tech is already pretty cute um but you know that that is i think where we're headed um and you have to go that route if your

banks are too big to bail out then you know you've got to make uh the depositors bail them out instead right you gotta lock everybody in there uh to the crashing banks yeah that that may be the biggest difference when comparing hyperinflationary events of the last century to the potential hyperinflationary event that could happen in the U.S. and just in the West more broadly, because it seems like the global economy is so interconnected that if it happens here, it's going to happen pretty much everywhere. And like social media, particularly this digital age, just throws jet fuel and accelerant on all of this. Exactly. Yeah. The level of connection between countries is probably comparable or maybe even a little bit less than it was going into certainly in the 1910s.

That was kind of the golden age of globalization. But, you know, if you go into 1929, that's probably comparable to what we're looking at today. But you're right. The huge difference between now and then is that news travels very fast. A lot of banks offer 24-7 service. You can take your money out at three in the morning. And that is going to accelerate these bank runs. And it sort of puts back into focus the fundamental flaw of our system, which is that the global banking system everywhere in the world, it is permanently insolvent because of fractional reserve banking. So it permanently owes more than it has on hand. And, you know, this is very common in businesses. It's very common for a business to owe more money than it actually has. And that's called insolvency. That is bankruptcy.

And, you know, if you actually go through all of the banks in every single country in the world, they are all always insolvent. So why aren't they wound up? You know, why aren't they bankrupt? Because central banks stand ready to bail them out. That's been the deal ever since the beginning of central banking. That's Walter Badgett, lender of last resort is the term. And Badgett is like, he's the Jesus Christ for bankers. Okay, like whatever he said is law. He was writing in 1870 or something. That is how the system is built. It is built to be bailed out.

And, you know, but again, that was designed in an age where bank runs didn't run to the size that they can today or at the speed. It's also built for an era where banks were not as concentrated as they are today. So, you know, if you're looking at, you know, what I think JP Morgan has passed $2 trillion at this point, and you combine that with 24-7 bank withdrawals, then you have to massively ramp up the bailout mechanism. And if you do that, then you are doubling down on that moral hazard from 2008, right? You're doubling down on that lesson that banks get that you should be as risky as possible, right? Because you'll always get bailed out. Because remember, one of the iron laws in

finance is that more risk equals more return. Okay. And across a large number of asset classes, this is essentially always going to be the case. If you take bigger risks, you're going to make more profit for it. So if you are building this massive, like it's not a safety net anymore. It's more like, you know, you're like enveloping them with taxpayer billions so that nothing bad can ever happen. If you're doing that, then your entire banking system is going to go for broke on the risk and you know in the context of how big it's become uh very quickly it it outgrows the ability to bail it out by governments and at that point the only way to bail the thing out is to siphon it from everybody right take people's life savings and give it the bankers yeah are you

optimistic that mulay will be able to create a blueprint for beginning to get away from this with his staunch stance over the weekend that abolishing the argentine central bank is not negotiable it's going to happen i believe in malay i think he's the real deal the concern is that he does not have a majority in congress and so at that point the question is you know can he keep the argentinian people focused and passionate about reform um dollarization so the idea is that the country would throw away its current currency it would it would it would get rid of a central bank but like you know it wouldn't go into like the libertarian paradise of um you know of like free banking or anything um it would essentially just trade it would give like the bank supervisory

functions presumably the treasury we know this because there have been other countries that have dollarized like el salvador and ecuador uh and then the argentinian peso would either be discarded or it would become more abundant. El Salvador still has a currency, but it's not used. Everybody in El Salvador uses the dollar. That's the idea, essentially, of what he's pushing is that the Argentinian economy would shift from the crappy peso that it's been suffering to the US dollar. The results on that are really strong. Countries that have done that, such as Ecuador and El Salvador. Inflation, of course, collapses. It goes down to the US level, which until very recently was quite good. But even the inflation of the past couple of years is a heck of a lot

better than what Ecuador used to suffer and what El Salvador is getting today. So you get good results out of it. In Ecuador and El Salvador, these passed under regular governments. It did not take the libertarian dream team to get these reforms. So, I think that there are people in some of these countries, like there are bankers even, who would like their country to be more stable, be a better environment for them to make money. So, I think that even without having a majority in Congress, he may be able to get through dollarization just because it's not that controversial, right? When we look at other countries that did it. In terms of slashing government by 60%, now that's going to be controversial, right? So something like one

out of three Argentinians work for the government, that's going to be hard to keep them on side. Doubtless, they're going to play the same game they do here. So anytime you propose to cut spending in Washington, they'll be like, well, we can cut spending, but we'll really have to start with social security. You're like, yes, but do we have to do that? Is there nothing else we can cut? So they will play the game. He was talking about getting rid of the, it's like the Ministry of Equity or something. And for sure, they're going to trot out. They're going to find some beneficiary who's super sympathetic, hold her up in the newspapers. The media down there is relatively left wing like ours uh so that i think they're gonna fight tooth and nail uh but

you know dollarization itself i think does stand a good chance just because the record is so good and it's happened in relatively normal countries it would be a great shame though if they dollarized and then we just completely mess it up for them here right right it's like great timing guys you're gonna jump on the dollar as soon as we break it yeah i mean there's you know I think that the trick with the U.S. dollar, all fiat is doomed. I mean, this we know because fiat has been tried many, many times in history. Every single time it's the same story, which is that fiat subsidizes government spending that then leads to inflation and eventually gets out of hand. They can't pay the soldiers and then something changes. So we know that fiat is doomed.

But I think what's interesting about the U.S. dollar is that on the way to fiat death, I think the most likely scenario is that the dollar may actually get stronger along the way, because what happens is even weaker currencies, they go first. OK, and either they, you know, are abandoned like like Ecuador did and they just swap over the dollar or, you know, they die on their own like Venezuela. And in Venezuela, people are shifting over. A lot of them are shifting the dollars. Many are also shifting to stable coins. Many are shifting to Bitcoin. Right. So but either way, each currency that dies, it's like it's like the U.S. dollar absorbs the corpses of all the other currencies on the way to Ragnarok. So, yeah, it would be nice if they could just like make a jump to either a gold backed currency or to to actually, you know, having the first Bitcoin backed currency. uh i that's probably outside the over 10 yet i think we're gonna have to get a lot more failed

currencies uh before you know any country is going to be willing to consider that yeah the milkshake theory every currency fails into the dollar exactly interesting though it seems like markets are beginning to price this and obviously bitcoin's up well over 100 this year gold is up at like i think 2012 dollars today so yeah there is at least a hedge being put on people looking at the sovereign debt crisis and all the chaos in the world right now and putting their their dollars in the hard money for sure it's it's um i don't know whether it's good or bad but like since bitcoin was invented the world has stumbled into like every argument for bitcoin right like you know first it was a banking crisis and then it was widespread censorship you

remember under trudeau and you know you had you had uh bitcoiners going over there and you know trying to get the truckers funding in the face of a totalitarian government uh then you had the inflation now you got you know now you got bank crashes uh i mean it's like every argument for bitcoin is just playing out in real time one by one and it's funny you know because like if you were there at the very beginning of bitcoin you said you know okay so bitcoin fixes this that and the other that's like a running joke in the bitcoin community right how you know we always say bitcoin fixes this and you know they're like yeah yeah and you know so all of the yeah yeahs are actually happening now right you know you've got double digit inflation even in the u.s

which uh that was certainly not on anybody's bingo card uh and you know you've got what 143 percent argentina you got something like 10 countries now that have 40 to 50 percent inflation are higher. Net numbers is spreading. The IMF thinks that the next two years are going to be at least as bad as we've been going through with high inflation, slow growth. The slow growth then feeds into even higher inflation because you don't have enough stuff, right? So if the government's still printing money and you're not building, you're not making more stuff, then the inflation accelerates again. So yeah, it's almost like the world is like a running commercial for Bitcoin at this point yeah and on top of that i mean we talked about malay but you also mentioned the

populist win in the netherlands over the weekend as well it seems like the economic pressure is becoming so immense that people are throwing their hands up and saying hey we need to figure something out let's go with these populist candidates that that are promising to clean things up yeah and that that kind of goes back to what we were talking about at the top where this sort of ruling left-wing elite, almost on a global basis, they have become so divorced from voters that they're opening this massive gap now. And I think so far they've been counting on a pliant media. They've been also counting on captured institutions to sort of put out propaganda for them to cover it up, particularly to try and taint any opposition. I mean, they just reached

for the F word like immediately, you know, they call them far right. And I mean, they were calling Javier Millet far right. Okay. So when they say far right, they're referring to like German corporals in the 1930s. A radical libertarian is the precise opposite. Like Ron Paul and Austrian corporals are the exact opposite um but they're you know shameless and any anybody who is promising something that voters actually want uh they go after the messenger right there they they try to tar them and i mean again if if i were rooting for them if i were on their side i'd be like what the heck are you doing like why don't you just adopt the policy like you know if you're afraid of these policies because the voters like them too much what am i missing guys to adopt this stupid policy

but they're not and you know i suspect that's because uh they believe that media and these captured institutions give them give them enough insurance give them enough protection that they can just cater to the special interests the cronies military industrial complex the financial industrial complex the censorship industrial complex uh you know they're just multiplying yeah Yeah. Yeah. The marginal return on throwing the far right label on people is diminishing rapidly. People are like, all right, you're. Yeah. Yeah. You've got people ironically embracing it just because they're sick of the slander. And I mean, the irony is that if they actually hated the genuine far right, then they would not try to conflate normal things with them,

right? Rather, they would, you know, they would keep the actual bad guys isolated. So, you know, I think this is just coming from fundamentally an evil place. In other words, they are actually promoting the genuine evil far right, because they're trying to look for an electoral strategy where they can shut out a bunch of guys who are, you know, trying to do pretty common sense policies for people, bring prices down, get job growth up, not let every single undocumented human in the world waltz into your country and go on welfare. I mean, these are fairly common sense for a lot of voters, really every single place in the world. For the record, if an undocumented Guatemalan sneaks into Mexico, they have camps with razor wire that they put them

into. The only reason they're letting them slide now is because they're moving on, right? But historically, Mexico has been absolutely brutal to illegal immigrants. Every country on earth has always been. People don't want that. If you're invited in, that's one thing. You know, if somebody visits your house, you invite them in. That's one thing. If somebody just, it's very, very different if people just show up uninvited. But yeah, you know, if you look at the dynamics and you kind of look at the trends on it, I don't think it's changing. You do see a lot of media hand-wringing about how biden is unpopular but a lot of that is sort of still on the tactical level where uh you know he needs better messaging and like i think if you're a new york times

reporter a bloomberg reporter and you come out and say you know what maybe we do need a wall on the board i mean you are you're out of a job like you know you better line up your interview with daily caller before you put out that article yeah and i mean we saw it pop off in ireland yeah over the thanksgiving holiday as well it seemed yeah people are just being pushed to the edge and there's too many of these instances back to back to back where it's like all right what is going on here i'm waking up in a country i do not recognize anymore it's completely running competently by these governments are pushing us into debt inflation's high i can't get a good job and you're telling me i'm a racist yeah and and i mean that's that's why they're so obsessed with

censorship. You know, like if you believe that the voters want your product, then, you know, just show them the product. You know, this emphasis on shutting down the other side and shutting them up, whether it's by, you know, calling them far right or whether it's by literally taking away their voice, that is not a show of confidence, right? That's what you do when you're convinced that you've got a losing message. And, you know, again, I'm just mystified, like if they know they have a losing message why don't they change the message but they don't no i mean here in the u.s it's actually pretty frightening they're locking people up the one guy is in jail for 18 months for a hillary clinton meme it's astounding the january 6

political prisoners and then that video that all that footage came out last week it's like are these people really that uh that bad are they really trying to overthrow the government i don't think so yeah people still talk about the jailing of socialists uh eugene debs i think i think that was wilson it might have been fdr um but you know that was uh he was a socialist he was popular back then uh he was arguing against the war and so they put him in jail and 100 years later we still talk about him apparently not all of us remember which war he was but we still talk about we still talk about it as a dark stain on American history that we actually jailed political opposition. And where we are today between, I mean, from the Hillary meme to the J6ers

to, you know, the prosecutions of Donald Trump, I mean, it's just absolutely shocking. This is the kind of thing, this will be discussed for centuries. This is not a, you know, one week news story here. This will absolutely be discussed. This is a concerning, you know, step on the path towards banana republic yeah which brings us to the 2024 election what are you expecting or looking for my best guess i've had people tell me i'm an idiot so that is always a possibility okay my best guess is that they're going to run the primaries part way like through march so that joe biden wins a bunch and they're going to get him to win a bunch uh and then at that point he's going to retire for health reasons and i think it's going to go to a convention so this is what happened in

1968. Essentially, if the candidate drops out partway through the primaries, then how do you decide who your candidate is? Well, you fast forward to the convention in July or August or something, and all of the delegates, all of the party officials, they vote on who they want the president or who they want their party's candidate to be. So that's my guess, just because everybody in the democratic party knows that biden can't do it but on the other hand i think they also believe that nobody else uh is actually popular among voters among democrat voters um and so you know if they do that then come let's say august at the convention uh i guess they'll vote for somebody like gavin newsom uh and and and then he'll be candidate uh i you know if i had to bet um they're

they're going to cheat a whole bunch again, probably more than last time, because the stakes are higher after what they've done to Mr. Trump. So I would guess that they cheat. And that's really, I think, where the battlefield is going to be fought is, can we pass laws in purple states to prevent election fraud to the point that, you know, it's actually a competitive election? Yeah, I think they're going to trot out Michelle Obama. I think they might. They might. that's that's what my wife thinks as well it strikes me as goofy but like a lot goofier stuff has happened over the past couple of years so yes distinct possibility i mean we're talking about it earlier maybe that's part of their strategy like just letting joe biden speak in

public multiple times a week it's becoming glaringly obvious it's like this dude is not fit for the job you're gonna have to replace him with somebody um yeah obviously they forced rfk to run And as an independent, Gavin Newsom, I think it would be very easy to attack him, just point at California and be like, we want this for the country. Yeah, exactly. Napoleon Michelle Obama would be like, first woman president. First woman president. She's untainted by failure because she's never actually been in office.

So the easiest way to never fail is to never do anything. She's been excellent at that. So, yeah, no, it is entirely possible. Yeah. It's also tiresome, though. I get extremely exhausted from the election cycles. It's like we do this, nothing ever changes. And yet a bunch of the country's intellectual capital has sucked

and their attention has sucked into this election process. And it's not even a four-year cycle. Election starts, what, 18 months before each election. And you have midterms. So it's maybe get a 12-month break between the bickering and the attention suck no it is and you know we gallows humor is pretty much all we have left so you know we do uh laugh about it uh the clown show in washington but you know i mean the the issues are serious right i mean you've got you know

millions of americans uh who are on the edge um you were talking earlier about the videos right You've got all these millennials and they're talking like, you know, the lifestyle that they grew up in. Right. Where, you know, they had like, you know, a two family. What is it? A two person income. They lived in a house that like their parents actually owned. And, you know, they can't imagine that lifestyle now. Right. Like, for them, what they have to look forward to is maybe living with roommates, right, eating ramen at 40. You know, I mean, like, they're not going to be able to get married. They're not going to be able to have a family. They're certainly not going to own a house. So these people are in distress. And then meanwhile, right, you know, Washington is just playing games.

At least the Democrat Party is playing games, which I think is still the odds-on favorite to win, unfortunately, in 2024. for. So, you know, and you do hear this from a lot of these videos where there are people who they would consider themselves old Democrats. Okay. So they had joined the party. They had grown up in the party when it was like genuinely fighting for the little guy, you know, was interested in like workers and, you know, working class families and things like that. And, you know, now, of course, I mean, the party has all but declared war on the working class because it associates the working class with Trump. So anything that the working class does, like if they go to McDonald's, if they watch football, if they like fireworks, if they buy pickup trucks,

like anything that the working class does is just automatically tainted as, ideally they call it far right, of course, or privileged or whatever combination of terms they're using. But it's such a betrayal really, like if you were that sort of old Democrat, if you believed in that original message is sort of fighting for the little guy. It really is a betrayal to just completely turn on the base. And for what? For, you know, a bunch of crony billionaire green, you know, companies or what for like, you know, the university eggheads sit around feeling superior. I mean, it's just, to me, it's just like the unforced error of the century. Because, you know, if most of my life, like Republicans have been the party of those jokers, right,

of either big business or of, you know, people who feel like they're superior to the rest of the country. And like, why would the Democrat, and that always hurt the Republicans, right? Like I grew up in Philadelphia and, you know, normal people were Democrats and, you know, plutocrats and, you know, corrupt millionaires out of the country club, they were Republicans. Okay. So that was like not a good spot to occupy in a democracy. Okay. You want to be for the common man and so why the heck they threw that away i mean just what an unforced error uh i think they just got bought they got bribed out of you know really a commanding position in u.s politics yeah and that's the real scary part too and something i've been trying to get is like how

is this situation to set up different than these historical examples of hyperinflation or just empire dissolving when you watch those videos and i'm a millennial talk to your friend group and you look at gen z as well like there's a psychological aspect where a lot of these videos that we're talking about essentially by the end they tap out and say why am i even doing this and you can have that right psychological breakdown where people are going to jobs to be excel monkeys that do things that they really don't think are adding value to the world and is there a point where they tap out zone out just go on the teat yeah yeah yeah right i don't think that's being factored in at all is this generational tap out yeah you're absolutely

right and that's that's kind of one of the you know challenges in economics is that we're often talking about like gdp and inflation and and job growth and productivity and things like that And the thing is, when you translate those into the real world, that's exactly what it looks like, right? It's people who, you know, they can't do what they always dreamed of doing. They've got to do some BS job that, you know, they're going to be doing that until they're 70. They're depressed. They don't see any purpose to life. they often vote that depression you know they they uh they end up feeling like nothing is really particularly worth preserving uh you may as well watch it all burn because it sucks right now so you know it's like if you're playing billiards you know and you don't have a good shot and so you just kind of hit all the balls in the center and screw it let's just see what happens and you know i think for a lot of millennials that's almost the approach that

they're now seeing in the world is it sucks. So what the hell, we may as well change it. You know, whether it's communism or, you know, whatever, it can't be any worse than this. And I mean, A, that's never the case. It can always be a lot worse. But, you know, that's really when you sum up, you know, the slow growth, the high inflation, the tapping out retirement savings, the not being able to accumulate any kind of savings, not being able to build up a down payment for the house. When you sort of translate those into the real world, that's exactly what it looks like. It looks like people who just don't see any reason to get up in the morning. Yeah. Black pill. Let's end it on a white pill though. I know you got to go here

in like five minutes. I mean, I think there are a lot of things to be optimistic about. People are waking up to this. Yes. You know, a lot of talk about the strife. First part of solving a problems identifying it exists in the first place people are getting to identify the problems they're seeing it in their everyday lives obviously we have bitcoin um you know that's the only things to be positive about how do we that's the other thing and they're noticing the tax problem as well like i'm working this hard the income tax is very high paying states tax tax at the grocery store taxed everywhere. What is the things that people can be doing external to government influence that begin to call back to some sense of sanity? Yeah. I mean, honestly, I'm extremely optimistic.

I know it sounds goofy because like, you know, most of what I talk about, you know, what I try to talk about in the videos is I want people to wake up. Okay. Like a lot of us understand what's happening, but a lot of people still don't. Okay. And like, I want the frog to wake up before the water is actually boiling. All right. So I do accentuate the bad things that are happening. There's tons of good things that are happening. You know, if you look at school choice or second amendment rights, I mean, they've just been on an absolute tear, like as catastrophic as the economy has been for the past 10 years. When you talk about things like that, which I mean, you could argue those are just as important, right? The ability to save your children from

the propaganda machine, your ability to defend your family. Those are, you know, those are similarly important things. We've been absolutely on a tear. There are a lot of ways where we're making ground, but really when I zoom out, like the reason I'm optimistic is because if you compare similar situations in history, okay, so even just in the U.S., there have been many times when things have been as bad or worse than they are today. You know, if you take FDR, heck, you can take the post-World War II censorship era where we had essentially a socialist in charge of the entire US government, you had zero way to get your message out. Murray Rothbard, the economist, he talked about in the 1970s, you get the entire liberty movement in America into a single living

room in New York. The liberty movement in America in the 70s was by far the most developed on earth of any country. I mean, you're talking two, three people in New Zealand or something. I mean, it was just absurd, right? And you compare that to today, right, where yes, we're censored on the internet, but compared to a living room in the 1970s, my God, we didn't get our message out. So if we survived those times, then I mean, I am extremely optimistic for what's going to come next. Democracy is also, of course, you know, we were just talking about the censorship and the cheating. But again, compared to most of human history, and particularly compared to the eras when liberty won, okay, governments are always trying to crush liberty. It is like a

historical constant. There is no moment in history when governments were not trying everything they could to crush liberty, and yet it won over and over. And, you know, now we have, not only do we have certainly a formal democracy that it still has a lot of elements, right? We're still at a point where it is theirs. If like 80% of Americans reject the candidate, they're not going to cheat past that because they don't have confidence that they're going to be able to get away with it. If they can't get away with it, then the other side is going to punish them afterwards. Okay. So between the quasi fair elections that we have, certainly in a historical context and the ability that we have to communicate over the internet, I am extremely optimistic. In a sense, I think that

the next couple of years is going to be a pretty tough storm. I think there's going to be a lot of misery. But I think on the other side of that, that the severity of the storm is going to bring enough people on side that I think that we're going to have a renaissance. I think where the water is going to start boiling, but I'm confident that because of the size of our movement, not least the Bitcoin community, which is extraordinarily passionate and spreading like wildfire now um i think that you know you put those together and we are gonna get to a javier malay style you know frog jumping moment a heck of a lot faster than we would have you know in the 70s or then indeed then it took argentina to get to yeah it's all right in front of us we have

the tools the communication tools the monetary tools the software tools to build our way out of this. Just like you said, waking enough people up to be like, all right, there's a problem. Let me go focus on the solution by leveraging these tools. Right. And in that context, if you've got a ruling elite that is like willfully, you know, ignoring the people, I mean, you could not ask for a better setup. Holy cow. Thanks guys. I mean, they are, they're like, you know, you don't have to fight them. You just have to wait until they screw it up bad enough. The key is that you have to connect the dots for people, right? You have to make people understand, no, no, this isn't people buying too many Pelotons. You know, this is actually government spending or, you know,

they're going to throw up excuses. But I mean, the excuses are flimsy. And as long as you're able to talk to people, I think you stand a very good chance that, you know, the more they screwed up, the more people come over to your side. And at some point, quote unquote, everybody knows that change is needed. You know, like you take the Soviet Union, right? So Tuesday morning, everybody was a committed Marxist, believed in it very deeply. Wednesday morning, nobody had ever been a Marxist. Everybody knew that it was, you know, silly. So I think that we do get to that moment. And Victor Davis Hanson, he had an article just out, I think yesterday. And he was talking about the fact that, you know, a lot of these people like these, you know, captured academics

and, you know, all these institutions, even the journalists, even the politicians, all of these people who are having a hand in the evil, they don't actually believe in it. They don't believe in anything. They don't care about anything. They are spineless. They will go to whoever is the highest bidder. Okay. So academics are all communists at the moment because that's what pays best, right? That's how you're going to get promoted. That's how you're going to have a bright career in academia. You know, somebody like Nancy Pelosi or Chuck Schumer, they don't believe in anything. You know, if it's in their interest, okay, if donors plus voters sum up to position X, they will adopt it in a second. So we forget, we often complain about how spineless politicians

are, but there's a very big silver lining to that, which is that you almost don't have to fight them. Once things are bad enough and that brings enough people over to your side, once you've skillfully explained exactly how the bad thing is causing misery to them, there is some point where the numbers flip and the entire thing just folds. It folds like the Soviet Union, right? I mean, just, you know, all of those captured institutions, all those lifelong committed Marxists whose entire careers were tied up with the, you know, system, they just like, poof, flipped, right? Like an Othello board, just put one stone down and bam, every single person in the entire society flipped. So I'm actually excited about it. You know, when I look at the

tools we do have, I'm looking forward to what comes next. It's going to be tough between here and there, but I am very optimistic. I am as well. I am as well. And hopefully this, this episode is just a snowflake on the snowball gaining momentum that forces people onto the side of sanity. It is without a doubt, without a doubt. People like you speaking, you know, reaching, convincing new people, but also giving them arguments that they can then take to, you know, everybody in their life has convincible friends and family and whatnot. And yeah, you're an absolutely huge part of it well you've quickly become the economics professor of the internet so i think you're you're doing a hell of a job yourself sir thank you how's it feel

you're the official economics professor of twitter now i think i think uh i you know there's a lot of pressure so i'll have to go out of my way to make a really really stupid video at some point i actually did that like the very first video we did it kind of took off and i was shocked i was like what why would you want to watch this and so but but i got nervous right because like you know you go from like talking to 50 people to a lot and so uh the second day we did a video that was it was so bad it's still up because you know i figure it's uh it's a teaching moment or something i don't know maybe it'll inspire the next producer to do the same thing but um i mean it's just so awful and i'm like i'm like staring down and like the camera's at the ceiling well the quality and

consistency is extremely impressive so thank you for doing it i watch every video yeah well thank you i mean you've been in the game for years and years so seriously carrying the torch well carrying carrying the light to people yeah seriously appreciate it we're uh we're optimistic here more people are going to see the light it's just going to take time we just got to keep showing up being consistent that's what it is giving our daily lessons um professor st notch. It's been a pleasure as always. As always. It's great seeing you, Marty. Yep. We'll have to do this in the, uh, in the new year. Yes. I'm looking forward. Yeah. It'd be exciting. Maybe we'll be closer on that, uh, uh, on the nomination there. We'll see how those played out. If it's

going to be Michelle or Gavin Newsom. I'm telling you don't sleep on Michelle. She's going to come out of nowhere i can feel it all right we'll see all right you enjoy your day yes sir again keep crushing it thank you peace and love freaks