TFTC: A Bitcoin Podcast - #529: How The Yen Carry Trade Will Skyrocket Bitcoin with Peruvian Bull

Episode Date: August 12, 2024

Marty sits down with Peruvian Bull to discuss what's being done by the Bank of Japan. Peruvian Bull on Twitter: https://x.com/peruvian_bull Peruvian Bull on Substack: https://dollarendgame.substack.com/ 0:00 - Intro 1:02 - Yen carry trade backdrop 15:47 - River and Unchained 17:03 - Market caught off guard 20:10 - Liquidity alarm bell 27:01 - Current status 33:41 - Gradually, Then Suddenly & Zaprite 35:19 - What do central bank counterparties do? 44:12 - Treasury demand 48:55 - Predicting the timeline 51:34 - Good for bitcoin 56:50 - How to prepare 1:03:36 - Fourth turning 1:10:06 - Wrapping up Shoutout to our sponsors: River https://river.com/tftc Unchained https://unchained.com/concierge/ Zaprite https://zaprite.com/tftc Gradually, Then Suddenly https://thesaifhouse.com/gradually TFTC Merch is Available Shop Now: https://merch.tftc.io Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Follow Marty Bent: Twitter https://twitter.com/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://tftc.io/podcasts/

In the long run, it's very correlated with global liquidity. And if we have yield curve control and basically infinite QE, which is what yield curve control implies, there's no cap to the Bitcoin price. This rip of TFTC was brought to you by River. It's the best place to buy Bitcoin. Go to river.com slash TFTC and enjoy this episode. 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 probably should be we're live end of a chaotic week is this uh your super bowl week provable yeah yeah yeah i had a lot of stuff popping up popping off this week i think a lot of people were shocked by the speed of this uh move in the carry trade unwind um yeah it was a it was a big week for me and big week for bitcoin markets yeah well i appreciate you taking some time to sit down with us to discuss it because

for any of you freaks who are listening or unaware you peruvian bull has been following this yen carry trade in the bank of japan saga for for many years now you've been writing about it tied it into the dollar end game and obviously over last weekend into monday it became evident that that carry trade was blowing up but before we get into exactly what happened last friday saturday sunday monday why don't we give a refresher of the backdrop like what led to this moment what is the carry trade and how did it come to be in the first place sure so you know to to really get back you know to the beginning it's good to start with the 1990s credit bust that Japan experienced. Leading up to the 90s, Japan had been stimulating credit growth

to an extensive degree. They'd been forcing window quotas, which means basically making banks issue a certain amount of loans every single day. And that resulted in this massive credit buildup and an overvaluation of Japanese assets. At one point, the presidential palace, but the imperial Palace in Japan, in Tokyo was valued at more than all the real estate in California. And when this credit bubble burst in the early 90s, we had a slow rolling deflationary crisis where Japanese equities got crushed, real estate fell 50%. Bonds became the force du jour on their stock market or in their financial system. And basically, the Bank of Japan started scrambling to try to find ways to deal with the rising deflation. And this started with their 1999 lowering of interest rates

to the zero bound on their policy rate, which is their version of the Fed funds rate. And then it started to evolve into what I call in my writing, monetary experimentalism. So basically the Bank of Japan trying anything and everything to try to get out of this trap that they had created. um so after the lower rates to basically zero and 99 in 2001 in march they started quantitative easing um as you can see on this chart you know they did a few hiking cycles that were very small and very short-lived um one right uh right after the 2000 uh tech bubble and then one right after and during 2008 but then they had to cut rates after that obviously as as the global economy contracted and um in 2013 they began their their program of qqe which is qualitative quantitative

easing which basically means um quantitative easing but for only certain risk assets and then they began in 2016 their plan of yield curve control with which ben bernanke helped to implement by flying over to tokyo in the summer of 2016 to design and that program essentially entailed QE infinity for the bond market and suppression of yields basically to zero, including on the 10-year JGB, which was one of their benchmarks that they were looking at to ensure that the yield curve stayed flat. And what this resulted in is over the last decade or so, a massive buildup of bonds on the Japanese central bank balance sheet and an overall you know in increasing government and private sector debt so with interest rates at zero when

it costs nothing to borrow when money is free the japanese government and the japanese private sector levered up like excessively and japan in you know in some has gone farther than any other g7 country with this game and they've they did this before any of the other one any of the other central banks did. And so we saw a total buildup of public sector debt at 263%, total private sector debt at 120%. And a carry trade started to develop where traders could borrow in yen at 0%, sell yen, and then buy USD or buy AUD or buy GBPs, British pounds or euros or whatever. anything that had a yield and essentially capture the spread in between them. And by doing so, by borrowing in Japanese yen and, you know, let's say lending in USD or

lending in AUD, what they were synthetically doing or functionally doing is shorting the yen. And so, you know, we started to see a devaluation of the yen from, you know, the 2010s onwards, that was a slow rolling crisis, but it really started to accelerate rate in March of 2022. In that month, the Federal Reserve began raising interest rates and the rest of the central banks globally started to follow. And what that meant is with Japan pinned at the zero bound and the Fed raising rates and the ECB starting to raise rates, the delta between the two interest rates started to explode. And this eventually got to a record 5% by the end of the Fed hiking cycle, about 5.25%. And what that meant is that this pressure building up on the

Japanese financial system was massive. The amount of yen carry traders that exist in the system was north of you know 20 trillion by some estimates and that pressure put immediate strain on their on their fx markets so the japanese yen blew out from about 100 to the dollar to 150 or so by this um by this may and the japanese central bank the boj started to figure like think of ways that they could stop this right so first they started in december 2020 2022 with uh moving on the um on the yield curve control caps from zero percent to zero and a half percent um and that caused immediate shock to the bond market and it also you know helped to bolster the the fx market because they weren't at least at at the time they weren't printing as much yen now to keep the yield

suppressed because now they let the yield rise a little bit then they moved it again in the summer of 2023, so six months later, to 1%. And then they decided to do what they called yield curve control control, which is just as confusing as it sounds. It essentially means they're going to machine gun fire the rate back down, but not tell you exactly where their intervention lines are or when they're going to intervene. So if the rate starts rising to 0.8% or to 0.9%, they might jump in and do an emergency bond buying operation and bring the yield back down, but they're not going to give you an exact number at which they're going to intervene because if they do the market tends to test that right whenever they gave 0.5 percent or 0.1 or one

percent the market would test that level so they decided we're going to just give it an amorphous you know we will intervene at some point if the yield is inappropriate and attack that cap or attack the market when they hit that cap so that worked for kind of worked for a few months and it blasted the yen shorts and brought the yen back down from either 145, 150 handle. And then eventually they realized that the yield curve control policy was completely counterproductive because when you're doing yield curve control and trying to intervene in your FX market, you're printing yen at the same time that you're selling USDs to buy yen, right?

With one hand, you're intervening in your bond market with QE. And with the other hand, you're trying to intervene in your FX market by dumping your US dollar assets with these interventions, which the first most recent one started in September and October of 2022. So eventually they get rid of their cap completely on Yields of Control and they end the entire program in fall of last year. And in March of this year, they raise out of the zero bound. So they hike their policy rate from zero, or really it was negative actually, it was negative 0.1% to 0%, and they move the range to 0 to 0.1%. So a massive 10 basis points. And the crisis that occurred now came from the result of them hiking to 0.25%. And that may

sound small, but remember, with an economy this over levered and with a carry trade this large that exists in the backdrop of this 0% interest rate regime, whenever you raise rates to that level and you signal to raise more, that terrifies the market. And so it caused immediate unwind and a fall in the Nikkei that was the largest since 1987, since the Black Monday crash. And this entire, again, this entire game that they played is kind of shown that this central bank has trapped themselves, what I term as a black hole, in a black hole of their own designed so they've essentially gotten themselves into this trap and with this level of debt I think that their options are extremely limited with what they can

do moving forward yeah I mean again you've been writing about it and covering this particular topic for years and you honed in on it many years ago like this is very predictable what the outcome of this type of policy would be so do you think they had the intuition understand that this was inevitable or Or do you think they were backed into such a corner they had to move because of the arbitrage trade that was really exacerbating their ability to maintain the purchasing power of the yen and they just said, screw it, we're going to try it and see what happens, hold our breath and hope everything doesn't blow up?

Yeah, I think they didn't realize how incredibly fast things would unwind for them. You know, the BOJ has kind of been bumbling along for several years now. Like I said, they've been moving the cap on yield curve control, making it up as they go. They first move it to 0.5, then move it to 1, then they get rid of it, then they start raising the policy rate. Then they start doing interventions again, and then they tell the market no more interventions. And then once we test 150, then they do it again. And last month, just in July, they did $36 billion of interventions. So they've kind of been flying by the seat of their pants for a while now.

And I think even they were shocked by the speed and the viciousness of this recent move, right? They hiked to only 25 basis points on their policy rate and the entire financial system in Japan immediately starts blowing up. And USDJPY starts appreciating. So finally, they see their currency going from 155 to 146 to 142. And that is obviously a welcome sign at the BOJ. They wanted to have a stronger currency. because they have elections coming up in september and they want it's very unpopular to have a weekend and to have high inflation so strengthening the currency is is good but the question is do

they want to sacrifice their stock market um for that cause and i think that the answer is probably no you have to remember that in the 1990s the nikkei topped at you know 38 000 and then it entered a bear market, which took 34 years to recover from. So we only crossed $38,000 on the Nikkei in April of this year. This year. So think about that. They start their last bull market in the 80s. It ends in 1990. We see basically like 20 years of deflation in the Nikkei and then flat trading. And then finally in 2016 with the yield curve control and the QQE and all the stimulus, the the stock market starts to finally rebound it takes eight years to finally get back to its 1990 level um and within a few months they raise rates and now they're you know they the nikkei

collapses and and they're now worried that they could enter technical bear market if they keep hiking luckily things have started to um recover a bit but that's only because um ueda and uchida have uh both mentioned that you know we're gonna stop the hikes guys we're doing emergency meetings we're gonna figure out how to handle policy moving forward so that tough language they used last week in the um in their bank of japan meeting of future hikes is now basically off the table yeah they quickly pivoted like it's like the typical mean nothing to see here don't worry We're not going to do this anymore, because it scared the crap out of them. And the notion of not sacrificing the stock market makes a lot of sense,

particularly when you understand the demographic makeup of the Japanese economy, a very old aging population, which are probably dependent on a high stock market to be able to retire comfortably. And so with that demographic variable in mind, given the decision, it makes sense that they're going to go save the stock market instead of really try to strengthen the end. Yeah, exactly. I mean, one terrifying statistic I saw said that in – I think in 2018, there were more adult diapers sold in Japan than baby diapers because they just have such a large overhang of the population above 80. It's something like one out of every seven people in Japan is over 80, and their life expectancy is 89, 90 years, and they have not enough kids being born. And so they have this kind of persistent deflationary pressure on their economy, and to overcome that is very hard.

But ironically, the Bank of Japan has gotten the debt level so high that now a blowout of the yen seems inevitable. I mean, Brent Johnson has said, right, he expects the end of 200 and then 300 before all is said and done. it is. Now you can set orders to buy Bitcoin when it hits that price. Go to river.com slash TFTC and set up your account today. This rep was also brought to you by our good friends at Unchained. Unchained is building a financial services platform for a Bitcoin standard. They have over 7,000 clients that are securing over 90,000 Bitcoin with 12,000 keys on their platform. Their platform leverages Bitcoin's native multi-sig properties. Their cornerstone product is their Volt product, a two or three multi-sig Volt, which allows you to hold two of three keys

in a multi-sig quorum. That gives you full control over your Bitcoin. They also have an IRA product, a lending desk, and they're rolling out a bunch of other products, including an inheritance protocol and sound advisory. So go to unchained.com, set up a call with our concierge onboarding team today, tell them that TFTC sent you and use the promo code TFTC at checkout, unchained.com. And it does take two to tango. You have the Bank of Japan on one side of the equation, then you have everybody who's engaging in this carry trade. And similar to the question of, did the Bank of Japan realize that things would unravel this quickly once they raise rates? like on the other side of the equation the other dance partner the people uh engaging in the carry trade like they should have seen this coming as well um and it shouldn't have had to have been a panic sell-off over the weekend um for the smart money you realize once they started raising rates

earlier this year it's like all right this trade is probably going to unwind we should get prepared And it seems like many people were caught off guard. Yeah, yeah. But you can understand why they were, right? And they should have probably been more prepared. They should have been more hedged. But remember, this is a country where interest rates have been basically at the zero bound for 25 years.

And raising out of the negative territory is one step, right? Raising from negative 0.1% to 0.1% and then keeping it there, that's just bringing it back to basically zero or near zero. but starting a real bonafide rate hiking cycle is what the market didn't expect and in that meeting um a way that had signaled right he said we will bring the policy rate to what we consider a normal rate for the economy and the reporters were like what does that mean and he said does that mean for the rate hikes are on the table and he said potentially yes and so that's what terrified the market is not only did you know ueda hike and bring up the policy rate to 0.25 percent he also

signaled that we could have you know one or two more rate hikes before the end of the year and that was terrifying to the market because remember all these people borrowed trillions of yen at zero percent and if the rate starts going up all those carry trades start to become you know unprofitable right especially if they're highly highly levered which a lot of them are because leverage is free and basically infinite when money is free so a lot of these carry traders had not only you know borrowed a couple trillion yen they'd done it on leverage on an equity position on their account which was tiny and so that's why you saw all these liquidations and that combined with the derivatives and uh you know on the nikkei and then you know cross-border flows that have occurred

over the last few years where foreigner japanese investors own a large section of foreign assets for example you know they own the largest share of foreign treasuries both on the bank of japan and ministry of finance on the governmental level and on the private level japanese private investors are the largest foreign creditors in the world their private sector so you know when this carry trade unwinds it affects all markets globally and that's why we saw bitcoin sell off to you know at the low 48 000 because bitcoin is probably another one of the assets that a lot of these carry traders hold as as you know as collateral yeah i mean i think bitcoin really shined particularly over last weekend because it acts as this liquidity alarm bell

as most markets are open 35 hours a week bitcoin's open 24 7 365 so after the bad employment numbers here in the us on friday and then the realization that the carry trade was unwinding uh and so sat on saturday and sunday like bitcoin starts selling off friday night saturday morning and essentially signaling to the market like there's going to be a liquidity crunch from markets open back up sunday night and it it's almost counterintuitive because bitcoin i think is a long-term safe haven store value asset but it also has these other properties which which are that it is extremely liquid, saleable, and trades 24-7, 365. So it made complete sense to me that Bitcoin would be the first to sell off,

particularly during the weekend. It's also the quickest to recover, up almost 20% from the lows that it hit on Monday. And that's part of Bitcoin's value prop, is that it is a true free market, the only free market in the world that actually trades 24-7, 365 is extremely liquid. You can send it wherever. And many pundits on Monday were sort of trying to rub Bitcoin's face in the mud saying, oh, this proves it's not a store of value or safe haven asset, but completely missing the signal, which is that its liquidity profile actually has a lot of utility, especially during these volatile events yes it's hilarious isn't that like that they that they say that it's it's

hilarious that they use the they'll immediately jump say hey look bitcoin isn't isn't a store of value it dropped it dropped on a knee-jerk reaction to you know an event like this and it dropped when israel invaded you know gaza it dropped when uh you know we had the march banking crisis and then it's like yeah it did have a knee-jerk reaction but did you see what happened in the couple weeks afterwards like it always re-appreciates as a global liquidity floods back in and i've been writing about this right that bitcoin is the ultra sensitive liquidity asset it's more sensitive than qqq it's more sensitive than spy it's more sensitive than even you know any other crypto um and it's better than any other crypto because it's you know has just better

intrinsic properties, but also it is the most liquid money that's available to trade 24-7. And so if you go back and look at the interventions, for example, and I tracked this on Bloomberg, you can see local bottoms in Bitcoin forming when the Bank of Japan does an intervention. So you see Bitcoin last April on the 28th when they had their, this last April when they had their Bank of Japan meeting and they first decided to basically signal to the market that they weren't going to intervene. And then yen started to blow out during that meeting by two or three yen. Then they have to intervene. Bitcoin hit a local bottom of like 58K right after the meeting. And then they intervene. And right as they intervene, Bitcoin bottoms and it

rockets back up to 64K. And then a week later, there's an FOMC meeting. The yen is blowing out again and they intervene again and you see bitcoin again bottom at like 62k and go up to 65 it's like almost like clockwork and that shows the you know interconnectedness and the liquidity profile of the global economy and bitcoin's role in it right it is that barometer of liquidity and so whenever liquidity is falling in the system bitcoin is the first thing to notice it because bitcoin is the only thing that's traded 24 7 that has a deep enough liquidity for all these hedge funds and family offices and institutions to trade in mass. And so, you know, a knee jerk reaction of it falling for a few days is, that's like one of the dumbest arguments I can think of for why Bitcoin

is not a store of value. And, you know, currently it is, they are correct that Bitcoin trades a bit like a risk on asset. But if you look at, you know, if you look at its behavior after these crises, it starts to trade like a risk off asset actually, you know, after the knee jerk reaction is done. So just like what you said, we see Bitcoin fall to 48K and then now it's back up to 60K today and it was at 62K in trading yesterday. So it's almost fully recovered. And in March of 2023, when we had the Silicon Valley banking crisis, I looked at the numbers, Bitcoin fell to around 22K and then it rocketed back up to 28K by the end of the month. And then it kept on rallying through the rest of the next month. And that is always missed by these pundits,

They never want to mention that Bitcoin always, in the end, over a long enough time period, recovers and even just outperforms the rest of the market. Yeah, because there's different layers of Bitcoin understanding that exist in the market. And during these events, I mean, I think I could be an example of somebody who's not extremely levered and exposed to other markets. And so when these events happen and those that are exposed to that need to sell their Bitcoin to meet margin calls somewhere else in their portfolio, like the people who understand Bitcoin, its long term potential are there to smash by as the price is falling and they have the opportunity to buy Bitcoin at a 20 percent discount. And so I'm an individual who fits that profile, but there are definitely more and more high net worth individuals, family offices, institutions that are beginning to understand Bitcoin's value prop and acting as a similar bargain buyer when these liquidity events. And I think the number of that type of Bitcoin buyer will only increase from here. People will recognize that you don't need to go levered long and extend far out onto the yield curve to try to get insane returns. Like Bitcoin's historical 65% CAGR should be enough and could lead to some delevering by some large traders that hone in.

like oh maybe the smartest easiest move is just to accumulate as much spot bitcoin and not lever it up and just have cash to deploy when when these events happen it's hard to beat that hurdle rate right it's hard to be 65 cagger that's real hard to beat for any trader i mean you could almost say it's virtually impossible yeah yeah unseen at least in modern day markets um with all this in mind like what what happens now we we had the chaos earlier in the week as you mentioned the bank of japan came out and said don't worry we're not going to do it anymore it's too volatile we would never raise rates when when markets are this uncertain um things have cooled off a bit i think equities are selling off right now or now they're up today actually um equities have

recovered a bit um they're about flat actually today um what are we experiencing right now are we in the eye of the storm is this a temporary lull what happens moving forward in your mind well i think right the banks japan is now they're they were shocked by the speed and the viciousness of this move like i said and they immediately started retracing their statement and um on tuesday they held an emergency meeting of the boj the ministry of finance and other monetary authorities in japan basically realizing like whoa you know what just happened we just caused a five sigma move in the stock market and it was equivalent to black monday of 1987 and it was just because of a 15 basis point hike to 20 you know 0.25 percent like you know they were like whoa

what is going on and i think you know them walking back their statements on wednesday and then saying basically like a majority of the BOJ governors saying, look, we're not considering raising rates any further. We prioritize financial stability over all else. It's kind of helped them realize that they are truly in this trap, in this black hole that I've described of debt, of financial gravity. And so their options from here on out are pretty limited. it. The reason why I thought in the beginning that they wouldn't be able to raise rates, and I didn't think that they would even try, I didn't think they'd be that dumb, is because of something called the policy trilemma or the impossible trilemma, which is a triangle

that has independent monetary policy, open capital account, and a fixed exchange rate on all three corners. And you can choose one of the three. So you can say, either I want a fixed exchange rate, but then I give up independent monetary policy, which means you'd have to raise rates and lower rates in synchronization with the Fed because the Fed controls the global interest rate of, you know, the dollar, which is the world reserve currency. Or you can close your capital account, which basically means no international trade flows. So, you know, for Japan, which is net exporter, that's basically off the table. You can't do that. Or you give up the fixed peg, right which was kind of that that's the battle that japan has been waging for the last two or

three years the you know the yen has been devaluing to 160 to the dollar or 150 to the dollar and every time it goes there they hit a red line they do interventions they spend billions and billions of dollars in a single move within a few hours and they blast the shorts on the end they use USDs to do so. And in doing so, they hope to create volatility and fear among the carry traders to prevent them from building up again. But remember, any carry traders that liquidate are always just temporary and they're always the most over levered and the closest traders to that red line, to the 150, 160. There are carry traders who shorted the yen back at 100 and they just kept levering up and levering up as we've gone up and so to liquidate them you have to get

the currency to retrace all the way to 100 which is virtually impossible and so in my opinion right they wanted to give up the they knew they couldn't give up the open capital account because they needed that open for international trade they knew that they had to maintain monetary policy because at least i understood um you know in april and may when i was writing about this that they, if they raise rates, that it would cause an immediate crisis. And I think that they didn't realize the extent to which that was true. And so they tried to switch their triangle to that other corner. So they were like, okay, let's focus on the independent monetary policy and have that fix the exchange rate problem. And they very quickly realized, sure, that does fix, very

quickly, that does fix your exchange rate problem. That does bring, you know, USDJPY down to 140 handle. Even you could get it down to 130 or 120 maybe by raising rates to let's say half percent or 1%. But in doing so, you deflate the entire financial system. You deflate the Nikkei. You deflate the topics. You could blow up the Japanese banks. I mean, something that most other people didn't notice was during that week, the Japanese banks got absolutely slaughtered. I mean, Nomura was down 10%, SMFG was down 16%, right? Most of the Japanese banks across the board were down 15% or so in a day. And, you know, if that were to continue, that would have potentially portended of a crisis for the Japanese financial sector.

And so I think they realized very quickly they can't do that. And so now their options are, you know, pretty limited. So like I said, you can't give up the independent monetary policy. So that means you have to stay at the zero bound even while the Fed stays at 5%. You can't normalize rates with the Fed. You can't close your capital account because you need it open for trade. And that's – in an export-based economy, that's your entire – that's essentially the basis for most of your economic growth and production. And so you have to let the fixed exchange rate blow out.

And so I think the answer here is they're going to have to lower rates to zero. Or even if they stay here, they're going to have to – there's going to be pressure again put on the USDJPY pair, and we're going to see the rate – we're going to see the foreign exchange rate move back up to 150, 160. They can try interventions in the short term to blast shorts and to cause volatility. But in the end, it's futile. they'll run out of ammo. And as they run out of ammo, the pressure continues to build and we'll see USDJPY to 175 and then 200. And then like Brent Johnson says, eventually 300. Because this much of an overbalance of debt to GDP, you can't solve this problem with anything other than money printing. And so with debasement inevitable, the exchange rate is one of the first barometers

that's going to blow out. So I think that that's the eventual path. And I think, you know, at this point, the BOJ understands that further rate hikes are basically off the table and they just have to sit on their hands and let this thing ride. Quick break here, freaks. This rip is brought to you by Gradually Then Suddenly, a framework for understanding Bitcoin as money by Parker Lewis. I wrote the foreword to the book. I'm honored to have done so because it's the best zero to one primer if you're looking for a logical explanation of why Bitcoin obsoletes all other money buy one for yourself and maybe a few for your friends go to the safehouse.com slash gradually that's the safehouse.com safe spelled s-a-i-f the safehouse.com slash gradually

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Monday, you had a bunch of economists and pundits getting on CNBC and screaming that the Fed needed to intervene and institute emergency rate cuts and then cut rates immediately in September on top of the emergency rate cuts. But it became pretty obvious very quickly that that would just exacerbate this yen carry trade problem. And so you have economic influencers here in the U.S. who don't understand this at all. And their market is pricing in a probability of rate cuts in September, the highest that they've been at all this year. But with what's going on in Japan, how do you think Jerome Powell is thinking about this? Do you think he understands that if we were to lower rates, it could exacerbate that problem, which would have knock-on effects in the U.S. as well? Yeah, I think he does understand that. I think that's why he didn't do an emergency rate cut.

Yeah, it's ironic, right? Like lowering rates into this problem will actually make it worse. And the reason why is because the carry traders, again, their margin, their profit is that spread between Japan and the U.S. And so if that spread reduces, if that spread drops, their volatility and their risk increases. And they might be asked to post more collateral or liquidate cash or liquidate to cash and post the cash as collateral, right? So that means a selling of U.S. equities, a selling of U.S. bonds, a selling of Japanese equities and Japanese bonds, right? It portends further selling. And so a rate cut in the U.S. would be actually deleterious to the carry trade and essentially blow it up before it even needs to be blown up, right?

And eventually we do need to lower rates in the U.S. So this is all inevitable. The free party punch bowl isn't going to be open forever. But the carry traders at least have the US portion, the US dollar portion of that leg somewhat hedged. The problem is on the JPY side, it's virtually unhedged. unhedged. And the reason why is, you know, the reason why is it dates back to why Japan and the yen was used so, you know, so commonly and so aggressively as a funding mechanism for the carry trade. And that's not only because the zero interest rates, which we touched on before,

which makes it prohibitively, you know, cheap to borrow, right? It's extremely cheap. You can just go out and get loans for nothing and pay no interest. But the other reason was the lack of volatility in the monetary policy itself. As any carry trader will tell you, they are functionally short vol because they're expecting the spread to open up and they don't want it to move. And even if it moves in a positive direction, it can cause worry among the bank or the institution that's riding one leg of the trade. And that will cause collateral calls, margin calls and liquidations. And so they want as low volatility as possible. And so historically, what carry traders would do is they would hedge both sides of the carry trade, which would eat into their

profits, obviously, because there's a cost to hedge. But the benefit was they would be hedged and the banks would potentially not call them for a margin. The problem is with the Japan leg of it is because of this lack of monetary policy volatility in the last eight years, nine years, the carry traders left that leg completely unhedged so while u.s markets did sell off right we had saw nowhere near the severity of a sell-off as we did in japan and the reason why is because the u.s leg of the trade was at least mostly hedged and the the jpy leg of it was completely unhedged because again these traders the market expectations for the july 31st meeting of the BOJ was maintenance of rates at 0.1%. And so when they hiked to 0.25%, suddenly fear entered

the market and everyone was on watch. They realized, holy shit, Ueda might be actually starting a bonafide rate hiking cycle. If that's the case, I am completely unhedged on all my equities and all my Japanese bonds. And I'm going to get margin called by the dealer. And so that's exactly what happened. They all got margin called. And that combined with some derivatives from equity linked notes at the 35,000 and 36,000 level in the Nikkei just sped up the decline. And we, you know, ran all the way down to 34,000, 33,000 on the Nikkei within the space of a few days, right? We entered at literally a technical bear market at one point on Monday in the Nikkei. And now we've rebounded, but that's only because, like I said earlier,

you know, the Bank of Japan has started to retrace their statements. The monetary authorities have said that stability is the number one thing, that they're not going to actually enter a bona fide hiking cycle and that's calmed the markets enough to allow them to rebound um but overall you know this i think this and other events are indicative of the global central banking regime being stuck in this black hole in this trap and japan is the furthest one you know trapped here and anything they do makes it worse so they're going to have to basically realize that this carry trade that's opened up is something that they can't you know it's a result of their own incompetence and poor decisions and there's not really much they can do about it without blowing up their own

financial and economic sector. It is such a quagmire. Next month's FOMC meeting is going to be historic. Again, going back to the fact that markets are putting a high probability on rate cuts, but I would not be surprised if it doesn't. I mean, going back to what we just said, like if they do it if they lower rates too early um it could just exacerbate this yen carry trade problem and that is the really interesting part of this global central bank predicament it's like it's become so interconnected that the u.s federal reserve looking at unemployment on the rise depending on what rule you look at we may technically be in a recession may technically be on the cusp of recession we've got credit card debt at all-time highs commercial real estate

rolling over like it seems like um the market is signaling like all right you've raised rates high enough and for long enough that you're seeing these corrections throughout the economy it may make sense to lower them again but due to the interconnected nature of global monetary policy like the fed may be forced not to act because acting by cutting rates may be a much larger problem than keeping them high and um further leading to economic stress here in the united states it's just completely fascinating yeah yeah it is it is right they've finally walked themselves into a situation where it's a catch-22 and it's it's a situation of damned if they do damned if they don't right if they keep rates at this level or hike further

they exacerbate the u.s debt problem both the private and the public level and then if they lower rates they cause an unwind of the carry trade but they also will you know re-stimulate lending growth and increase debt in the private sector as well and you know eventually lead to inflation right because low usually with a rate cutting cycle comes qe and comes monetary accommodation and with fiscal deficits at seven percent of debt of deficit to gdp and debts gp at 132% and rising every single year, we're seeing this acceleration of the debt problem to the point that we're having $1 trillion of debt every 100 days. And last year, we passed $1 trillion of gross interest expense within nine months of the year for the first time in US

history. And if we keep rates at this level, that will just continue to accelerate. So that financial gravity will start pulling in the public sector debt, the private sector debt, and everything will just start to get repriced higher and higher and higher. And no one can swallow that amount of debt issuance other than ultimately the central bank. And so what I've been writing about has been this dilemma that the Fed faces, right?

This monetary dilemma. And there's not really any good options there. They're in their own version of the Bank of Japan's black hole. But luckily we're not as far and as deep into it as they are, but we're getting there. You know, we're getting there.

We'll be there eventually. Well, I think that's the question. like do the black holes collide and doesn't matter if we're not as far along as japan is do the ramifications the black hole they've created suck us into it right and uh going to like treasury demand like nobody like look at the 10 year and 30 year auction earlier this week like piss poor demand and that's the other signal in all this too is that it seems like at least the treasury is recognizing this predicament by opening up the buyback window for the first time since 2001 so that opened back up in march of this year and so the treasury is essentially

stepping in saying we're acknowledging that there's not natural buyers for these treasuries at auction so we're going to do everything we can to help these markets by stepping into secondary markets and creating this window to buy them back from people want to get rid of them um it is fucking insane yeah yeah and you know um the funny thing is i've actually been writing about this a lot right the the treasury and the fed have been finding new ways to stuff the bank system with with treasuries so started in 2014 with the reforms to money markets um and then also in 2011 there was the basel 3 reforms and liquidity controls on on major banks on the g-sibs globally that they have to own you know government debt and of course in the u.s that meant u.s government

debt. And then it culminated with the 2020 exemption of the SLR. And that allowed banks to basically borrow infinitely against treasury bonds and not hedge any capital against losses in those treasuries. And so that expired in 2021. But the banks in March of this year wrote a letter to the Fed and the OCC to basically beg the authorities to allow them to make treasuries exempt on the SLR leverage ratio again. So allowing the banks again to swallow treasuries without putting capital against them because they realize that with this level of debt issuance, right, they can't fund that. They can't hold that.

They don't have enough balance sheet for that. And if you clear up the SLR as basically like a bottleneck, you allow the banks to swallow a lot more treasury debt without it clogging up their balance sheet and using up the capital on their balance sheet. So they've been using very inventive ways to get around doing actual QE but finding other ways to do basically monetary easing. And this is, all this is not even to mention, right, the TGN reverse repo, which on Tuesday, right after the, right after the, you know, collapse in the Japanese stock market, reverse repo fell below 300 billion for the first time since 2021, since like April of 2021. So, you know, they are able to use that as a liquidity source, but that was at 2.1 trillion in 2021. Now it's at 300 billion. It's soon going to be at zero if they continue at this rate. So, you know, they're running out of options before their next cutting cycle.

I think they know that QE is inevitable again. Yeah. Now, the other mechanism they've been using is just over-indexing on bills over longer-dated treasury bonds, which has had a stimulating effect in the economy. We're issuing shorter-term debt. I'm not sure if you read that paper. Funnily enough, what's his name? Nouriel Roubini wrote a couple weeks ago basically highlighting this, which is typically these auctions will be made up of 10% to 15% of short-dated bills.

But over the last 18 months, it's been something like 47% of the auctions have been these bills. And that has a QE-like effect on liquidity profile markets at any given point in time when you over-index on the short end of the curve. It does. And it's also, I mean, this is what emerging markets do, right? Like emerging markets are the ones that do 80% funding on the front end and 20% on the back end. It's usually developed markets that have the inverse, that only have 20% funding on the short end on the bill side and 80% on the long end. And so this flip that the U.S. is experiencing is endemic of an emerging markets crisis. So you're saying the U.S. is back to emerging market status?

I mean, Luke Groman called it, you know, obviously way before I noticed this, he calls it U.S. with Argentine characteristics. And I think that's a really good way to phrase it. Yeah. Yeah. so what do you have a timeline i know people don't like timing things but how slowly or quickly do you think this can take to play out especially taking into consideration the the pivot from the back of japan earlier this week um well it depends on what you mean by by play out right if we're talking about you know an eventual move to a full-on emerging market where we're funding

completely on the front end obviously we're still a few years away from that but the recent trend have not been heartening. They haven't been encouraging. And so I would say, I've said this before, I think COVID was the real catalyst that brought this entire debt problem and the inflation problem up by seven or eight years. And that accelerated all these trends. And we're continuing to see an acceleration of these trends into the latter part of the 2020s. I think the US debt crisis, it's already started and it's going to continue. And I think by late 2025 and early 2026, we're going to really start seeing the pressure for almost permanent QE begin for the Fed and essentially like maybe QE for the banks, like I said, SLR exemption for the banks

starting in 2025, late 2025 or early 2026, just because of the rate of path of the debt growth is accelerating to the point that you can't really absorb that by the private sector. And foreign privates are buying, but again, their buying has been weakened as we saw with this recent auction. You know, they aren't swallowing as much of the debt and we're having to fund more and more at the short term at the front end of the curve. And that's not encouraging. It's not a good sign for a market as developed as the US.

And remember, we're the only country with the global reserve currency. So, we're the only one with large external buyers of our debt. Every other country has a small amount of foreign private investors and that's basically it. The US is the only one with – we have north of $7 trillion of treasuries held by foreign central banks. No other currency can claim that. And so, with our own debt problem accelerating and foreign central banks slowing down their buying since 2015, like Luke Grumman has noted, I expect that this debt crisis will finally come home to roost and we'll just have to do yield curve control at some point. Again, I'm not thinking that until 2026, probably at the earliest, but it's coming down the pipeline for sure. Ooh, doggie. Should be good for Bitcoin though, right? oh it will be massively good for bitcoin i mean bitcoin's more sensitive to liquidity than anything else like i said yeah do you think people are too bearish now like how

like if all this materializes i don't think people are um thinking in exponentials yet and they should be because if the u.s goes the old curve control i mean it's been said for well over a decade now like the u.s is just doing the japan playbook delayed by a couple decades and if you watch the end state of the japan playbook playing out right now like one can make a very strong argument that if markets do take in information digest it and make decisions based off of that like i don't think the u.s is gonna have the luxury of multi-decades of yield curve control like like the japanese have had because people are just gonna be like all right they're doing what japan just did and japan is functionally hyper inflating right now

yeah i think i think that's right i think if they do try yield curve control right we will see i mean first of all all liquidity sense of assets will rise but bitcoin trades on a multiple of those right so historically it's been seen to be around 3x of qqq but even more so just based on on global liquidity, and Fed liquidity, it's more sensitive. And again, it always isn't completely immediate and isn't completely accurate because we do have temporary contractions like what we saw this week with the Bank of Japan hiking. But in the long run, it's very correlated with global liquidity. And if we have yield curve control and basically infinite QE, which is what yield curve control implies there's no cap to the bitcoin price um you know you got to remember that

several million coins are basically permanently frozen uh either in just cold wallets and lost seed phrases or you know satoshi himself who hasn't moved his coins in in over a decade so you know the amount of actual available bitcoin that's circulating is very small right 75 i think of all bitcoin is held by hodlers who've held it for more than one year and so to get those people to sell you need to give them very very high prices and some people will probably never sell right a lot of bitcoiners are extremely adamant about that fact and so what that means is that the liquidity on the exchanges can dry up and it could dry up fast so the actual price we could see per bitcoin could be you know incredible who knows how high it could go

i think that there's truly no you can't you can't price uh a finite asset you know with an infinite one in the end it's going up forever laura it's going up forever yeah no i i do i mean not trying to not trying to be like the fomo uh hype guy but like i do think people have cute like 250 to 500k targets and maybe that is the limit to which bitcoin goes next cycle but i think uh considering everything that's going on with central bank monetary policy and the global debt crisis um they're moving in exponentials and it seems like japan is really going to see um like hockey stick exponentials at some point in the next couple years um this week was just like the nail in in the coffin like you can't raise rates you're you're fucked um and then at the u.s because

yield curve control similar situation played out in hyperspeed and um and if between now and yield curve control the fed is forced to hold rates up um higher than they'd like that's just gonna really exacerbate the interest expense on the debt um it's gonna force the treasury to issue bills over long term bonds, because they don't want to roll over that debt at higher rates. And if they do that for long enough, the market just similar to the end carry trade, it's like, they're just gonna keep loading up the short end of the curve. So this is the new normal. And I don't think people understand that we're in new normal. Yeah, no, they don't. And I mean, I even mentioned this in one of my pieces, right? Like, the Fed itself, if you look at the breakdown

of the tapering that they've been doing right there lay off of bonds if you break down by maturity on fred um you know our own central bank has only been laying off the bills they've only been able to get rid of bills on their balance sheet everything on the long end past 20 years 20 and 30 year bonds they haven't been selling in fact especially on the 30 and 30 year um they've been accumulating bonds so their taper is kind of two-sided they're selling extra bills so that they can make it up by swallowing more bonds but on net their balance is decreasing so they can claim that they're tapering but again it's it's kind of a quasi taper because yeah sure they are tapering but they're tapering with only bills which is a lot less um restrictive to the financial

system than than bonds yeah how are you preparing personally for this buying as much bitcoin as i can um you know uh i i used to trade uh usd jpy but with with all the volatility that the bank of japan has brought into the market right with their random interventions and moving to moves and rate hikes i just decided i'm not going to trade to try to day trade this it's too easy to get stopped out um i'm going to just let this thing ride and i'll just bet on the horse that know will win at the end which is basically to me bitcoin a small amount of gold and us equities yeah yeah and that's one thing i'm thinking through like if obviously bitcoin podcasts uh i'm sort of pot committed to bitcoin at this point professionally um socially uh family

family-wise uh bitcoin doesn't succeed i've got a a lot of introspection to do personally i don't think it's not going to succeed but um that too and trying to think of i mean it sucks to say but all this turmoil is going to bring economic stress in terms of people not being able to hold on to assets whether that be real estate energy assets whatever it may be i'm like looking for cheap opportunities to step in when the timing's right to try to get hard assets similar to bitcoin whether it be energy or real estate at good prices um not as an investment just to hopefully purchase and and maybe monetize particularly the energy assets but it's um it's going to be uh an interesting couple years here that's to say and bitcoin is the lifeboat and it is the alarm system

And anybody who's out there looking at the price swings from earlier this week thinking, oh, it proves Bitcoin's use case is not what it's marketed as is do some more research. It is exactly how it's marketed. People are going to leverage the most liquid and always open market if they need to. And that is that fundamental use case has utility that does not exist anywhere else. Yeah. And think about that. They were saying that with Bitcoin at 500, at 1,000, at 5,000, at 15, right? They were saying that all along the way.

So it's kind of hilarious that it's the Peter Schiff meme, right? It's Bitcoin is no good. It's crap. Don't buy it. It's all a bubble. And yet every single year that bubble keeps rising, right? And, you know, talking about my own portfolio, I, again, I do own a little bit of gold and little bit of equities, but I understand that Bitcoin is the most sensitive thing and it should

be a large, at least for me, I think it should be a large part of your portfolio if you're getting ready for this next wave of coming to basement. I think it's going to be the thing that rips the most. And I see a strong argument for why you should have it be a majority of your portfolio, or at the very least, a small fraction. And we've seen that start to play out. If you've noticed, Like the state of Michigan or it was the state of Wisconsin, maybe, pension fund started buying Bitcoin to their – adding Bitcoin allocation to their portfolio. The Jersey City also pension fund for firefighters and policemen also started adding Bitcoin to their pension fund. That's just in the last few weeks. We're seeing an increasing acceleration of institutional adoption.

And these ETFs have also really opened the door for this, right? It's allowed financial advisors, fiduciaries to have a legal, safe, and regulated way to buy Bitcoin. And again, it's not the best thing for them to do is to buy actual Bitcoin. But for the normies, that's kind of scary. And so buying an ETF can kind of be the entryway, the gateway for them to get into Bitcoin ownership and start to understand what this asset is. And hopefully, eventually, we're going to see better and better custody solutions, especially

on the institutional side for buying and holding Bitcoin long-term that will make the boomers comfortable with holding this asset that's unique, that they've never held before and they don't know exactly probably how it works. Boomers, the products are coming. Products are coming. We will help you get the safe shores. No, millennials too.

like i think for people our age like i think it's not financial advice not a financial advisor but just like speaking compassionately to people out there like it is riskier to have a zero percent allocation of bitcoin than it is to have a one percent it's been the case for 15 years but um the risk of having a zero percent allocation is only increasing significantly as time goes on so it gets riskier and riskier uh as each day passes and you're sitting on the sidelines and i think excuse me that um if you're a younger person you're pissed off that the state of the world is the way that it is because central planners have forced us into this corner that they can't get out of and we're sort of stuck in the corner with them then bitcoin is a vote of

confidence in a new system and a way to use your your wealth to say hey i don't think these central planning games are working well for me i'm going to vote for this decentralized system over here yeah exactly and that decentralized system is a way to preserve and protect your wealth long term you know independent of the actions of any individual central bank or the whims of any individual trader, right? You can't, even despite the fact that a lot of TradFi guys, even very smart ones like Mike Green have said that, you know, Bitcoin is compromised now because of the ETFs, right? Oh my God, the ETFs own a massive two or 3% of the total Bitcoin. It's like, yeah. And that has zero effect on the actual consensus making properties of the network.

Just because you own a bunch of Bitcoin doesn't mean you can change the rules. And I think that that's something that they still are having trouble wrapping their heads around because they're used to the securities world where, yeah, if you own a large majority of Apple, you can actually make changes to Apple's governance, to the board, to their strategic plan. That's not the same with Bitcoin. It's a completely new animal. And so for these TradFi guys to wrap their heads around, it's a difficult task to undertake. Yeah. And I know you're hyper-focused on the financial side of all this and the implications on markets and central bank policy. But do you have any thoughts on what this means for the social side of things moving forward?

You mean Bitcoin or what? Just what's going on with the uncarried trade and if we have the black hole moment, the dollar endgame. um like socially do you view it as something as a mad max type scenario that plays out a mandibles type scenario or is going over the event horizon a catalyst to actually affect meaningful change in terms of people throwing up their hands pointing at all the politicians and central planners and saying you got us in this situation and having um something not like wall street Occupy Wall Street, but a moment where people realize things are so messed up beyond the pale that they need to depend on individuals and institutions outside the governments and

central banks to fix this problem. Yeah. Well, wasn't it either F.A. Hayek or Milton Friedman who said in the 70s, right, we will never get rid of the government control of money unless we, we introduce in a roundabout way, an asset that they can't stop. Yeah. That's Hayek. And so I think Bitcoin presents that, um, that solution, right? Um, this, I think about all of what's happening with, you know, the political cycle and the economic cycle in the, in the context of the fourth turning which is a great book by neil howe and uh strauss and um in that book right they describe how history is cyclical it's not linear that the main way we think about history which is in history books of things progressing quickly to another and then the

next thing and the next thing and it's like a logical linear progression of time is actually incorrect it's much more cyclical because the generational problems keep reappearing the generation that deals with them solves a problem or at least mostly solves it and then causes a boom period and then that boom it starts to erode into basically like a topping process and a spiritual awakening and then a decline and then a crisis and then another boom and so this cycle of death and rebirth is kind of it's kind of foreseen in every single society right it's it's It's observed in every single advanced society since, you know, the Greeks and the Romans. I mean, even in the Bible, right, in the Old Testament, they talk about the debt jubilees, which would happen every 52 years, which is approximately the lifespan of somebody living back then.

So every long life, they'd have a debt jubilee and a reset of their financial system. And I think given the 80-year period from 1940, 2020 is right at that 80-year mark. And so we are right now in a fourth turning, and I think that this problem with our money, the problem with central banks and zero percentage rates and this financial gravity we've trapped ourselves in has – it's finally coming home to roost. And I think that the general public is slowly waking up. Just look at the conversations that people are having. Look at the amount of interest that's brewing up in Bitcoin and in other solutions and in the problems with inflation, right? Stuff like that wouldn't have happened 10 years ago, 15 years ago. And now thousands and thousands of people every day are getting interested in Bitcoin.

Millions of people on Twitter are talking about the Fed and rate policy and QE where 15 – 10, 15 years ago, I mean it was not popular or interesting to talk about this stuff just because it wasn't front of mind. there wasn't a crisis, really. And so as we progress through this fourth turning, I think, unfortunately, you know, most people, they don't wake up until this really starts to affect their day to day life. And the first awakening you could say happened with COVID and the lies perpetrated by the government and the health authorities, and then the subsequent inflation and the gaslighting and lies from the Fed that it was transitory that it wouldn't, know affect the real economy that uh you know it would we retrace and get back to normal price levels after the pandemic which of course has never happened and people's own anecdotal experience

seeing inflation rise much more quickly and much more aggressively than even their their statistics mentioned also caused this lack of faith so i think people are are waking up and unfortunately most people don't wake up until it's very late in the game um you know i'm not thinking that we would have a mad max style you know just zombie movie shotgun your neighbor kind of apocalypse right even if you study other hyperinflations there is severe strain on the economy there's severe strain on people and on you know their mental and psychological well-being for sure But people find a way to survive. People find solutions. People look for new opportunities, new ways to cope with it. And that means, right, they could mean in Zimbabwe in 2008, they started using, during their hyperinflation, they used fuel coupons as money instead of the Zimbabwe dollar. So they got these fuel coupons from the government.

They would use them for each one was valuable or valid for one liter of fuel. And they would just trade that as a form of money in between themselves to facilitate trade and to settle transactions. So who's to say that that couldn't happen with Bitcoin? And so I think ultimately that would accelerate Bitcoin adoption. But unfortunately, again, most people, 80%, are not going to get the memo until it's really late. and we see Bitcoin at 500K and inflation's at 30% and the Fed is doing yield curve control and they're like, holy shit, I need to get some of this.

Yeah, well, you probably should have gotten some like five years ago. But that's why we're here early and that's why we're right ultimately. Yeah. And it's not only the fact that people are having these conversations, I think it's like a layer deeper than that, which is like they're actually able to have them in the first place because of the communications technology social media and all of that and i think i agree with everything i think there will definitely most people will be laggards but the rising tide of

bitcoin lifts all boats at the end of the day and bitcoin just one part of the equation i think on the back end of this event horizon we really do need some structural societal change and And conversations like this, the ability to have this conversation, distribute it, give me immense hope that the signal will get out there once people recognize that there's a problem, go and search for a solution. And there's more of these types of conversations available than ever before. And they will obviously continue to happen. and not only that but continue to increase in terms of the amount of people that are putting this type of content out there and trying to educate people and so it is um very heavy to sort of grasp the fact that the global financial system is in a very precarious situation but uh conversations like this and more importantly the ability to have it and distribute to give me a lot of optimism for the future

that we'll actually be able to affect change. And despite what many people will say about the efficacy of the mainstream media, I mean, the proof is in the pudding. Those media entities are dying. I think we saw Universal had to write down like a billion dollar loss because CNN just isn't selling ad dollars

because people aren't watching it anymore. And so I do think socially people are shifting towards these types of interviews, these conversations with people outside the mainstream, which should have an overall net positive on actually being able to affect change moving forward. Yeah, I completely agree. I mean, look at the decentralization of, you know, basically every form of media, whether it be podcasts or YouTube, right? The growth of Bitcoin podcasts like your own, the growth of alternative media podcasts, the growth of, you know, independent writers like on Substack, like I write. And there's other, you know, plenty of journalists and independent, you know, analysts and thinkers. The future is decentralized. And that means more than just the money.

It means our media. It means our entertainment. know uh potentially even our our tv and cinema right we could have decentralized studios that just raise money for certain projects that people want to see a movie of rather than these large centralized corporations that shove the woke agenda down your throat you know and i i think that's massively bullish for the next turning for the next you know first turning and i think it's best massively bullish for freedom in general and i think like i said bitcoin is one of the catalyst to get us there completely agree completely agree we're gonna win we're gonna win

it's gonna be a little chaotic but hold on to your hold on to your uh hold on to your butts freaks make sure you've got some bitcoin and make sure you're staying on top of all this and i really appreciate you taking some time out of your super bowl week to come have this discussion because i think it's important that people really grok what's happening and the uh the larger game that's being played particularly at the central bank level um it's really important work and kudos to you for being on top of this for many years leading up to the events of earlier this week it was a good call you stuck with it and it seems to be manifesting in real time thank you yeah no i i did start following it well over a year ago and i actually it's almost

two years ago now where's my first posts about it um and most people were like why are you talking about japan you know why why are you so interested in in japanese you know monetary policy and their fx and all this stuff that's going on and i was like look guys i think you know it's become almost a meme now but i think japan is the canary in the coal mine right they're the first central bank to go this far down the monetary experimentalism rabbit hole and the consequences for japan are a foreshadowing of consequences for every central bank that has followed their um you know qe and zero percent interest rate uh policy and so um what happens what's happening to japan right now is eventually going to happen to every uh central bank globally where raising rates at all will not

be an option and they'll just have to pin them at the zero bound do qe and you know let the let the currency blow out and so um seeing that on the writing on the wall is good because people can get prepared buy some bitcoin protect themselves and you know get ready to ride through the rest of this fourth turning yeah and i was just typing there to make sure i have the url of your substack correct so go to dollar endgame.substack.com peruvian bulls um writing about this carry trade and many other economic topics on a weekly basis and it's high signal content that should help you weather this storm better than this so if you're not subscribed already go check it out thank you yeah yeah and i also have a twitter obviously at peruvian

underscore bull and i have a youtube as well where i'm going to start transforming my weekly sub stacks into also videos so if you're interested in that kind of content you can go check it out and subscribe there awesome we'll link to all that in the show notes sir go enjoy the rest of your friday and i'm sure we'll be catching up at some point uh as soon awesome sounds good thanks so much, Marty. Appreciate you having me on. Thank you. Peace and love freaks.