TFTC: A Bitcoin Podcast - #647: How Globalization Destroyed American Manufacturing with Infra

Episode Date: August 4, 2025

Marty sits down with Infra to discuss how decades of globalization and financialization have hollowed out American manufacturing, created massive wealth inequality, and led to a "silent depression" marked by declining real wages, rising deaths of despair, and social dysfunction that can only be addressed through economic nationalism, dollar devaluation, and a shift toward productive rather than financial assets like Bitcoin. Robert’s Linktree: https://linktr.ee/infraa_ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ 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/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

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. Robert, thank you. Thank you for joining me, sir. Yeah, good to be here. We got introduced by mutual friend Roberto, formerly known as and still known as popularly as Peruvian Bull. He reached out and showed us the email, said, had to talk to you. We've been going back and forth

a little bit through email this week and just really excited to touch on some of the topics that you're focused on and passionate about globalization silent depression triffin's dilemma and as we were discussing right before we hit record let's start with globalization because obviously i think this year particularly we're seeing uh political reactions to globalization in the form of tariffs and economic policy here in the united states making big shifts And so let's start with globalization. How did it get to this point, and where do you see it going in the future? Yeah, so it really started in the 80s, at least kind of from what I can gather from

Bounce of Trade current account data. It started in the 80s, and basically what we did was we offshored over 5 million high-paying manufacturing jobs uh in critical industries to the rest of the world and the reason that this was done was uh the labor in the developing emerging market economies is much lower uh and so if you're a multinational corporation you're able to uh you know increase your profit margin significantly by uh utilizing that that you know low um uh you know cheaper labor uh despite you know, uh, being an American company and, and eventually selling your goods in America and benefiting from, uh, the American people. So, uh, yeah, it started in the eighties and, uh, you know,

it also kind of coincided with some of the silent depression stuff. Uh, there were clearly some immigration policy, even under, uh, Reagan, you know, under both, uh, both, uh, political parties that kind of started to exacerbate some of the wealth, uh, dynamics that we started to see. But, you know, the other side to a trade deficit that many people don't talk about, they're talking about it more recently, which I appreciate, is this capital account. So if you are running a current account deficit, as the U.S. has, there is a opposite side to that, which is a capital account. And so we've been running a current account surplus, meaning we are importing the value of goods that we are importing is higher than the amount of goods, the value of goods that we're providing to the rest of the world. And the way that you balance that current account is by an inflow of capital. And so this kind of goes into the Dutch disease dynamics with the dollar, where certain industries have done very, very well from this.

You think FIRE is the little acronym that gets thrown around. Finance, insurance, real estate. Um, you know, uh, if you are a MIT grad, you know, in engineering, you're not going to build rockets, uh, for NASA, you're going to build a, a algorithm for Jane street, right? So certain industries have done very well, um, with these billions and billions, hundreds of billions, uh, cumulative, it is worked out to be trillions of dollars, um, tens of trillions of dollars actually in capital inflows. And this can be a real estate.

This can be, you know, equities, corporate equities, you know, the U.S. stock market. This can also be treasury bonds, of course. And, you know, certain industries have done exceedingly well. And I would also point out those that are wealthy enough to afford to own financial assets, you know, have also done well as not only the corporate profit margin has been boosted due to that cheaper labor boosting the profit margin for the corporation, but also due to the structural dollar bid. And this is part of the reason the dollar has become kind of so grossly overvalued.

And as the dollar continues to appreciate, our goods become less and less competitive in the rest of the world. So there's a lot of kind of concepts interlinked there. But I think it ties in well to some of the tariff dynamics that we're seeing now, you know, a rise of what I would call, I wouldn't call it protectionism. so much as I would call it economic nationalism. You know, for the longest time, we, for some reason,

our policymakers worried more about building the middle class of Indonesia and Malaysia and China and India than they worried about building the middle class here. You know, and of course, traditionally, you know, manufacturing jobs, you know, were kind of the cornerstone of the kind of, you know,

post-World War II American dream, right? The family, especially in the Rust Belt, we've seen that area been absolutely decimated. And this has led to not only the economic and financial consequences with this kind of huge amount, tens of trillions of dollars coming into capital markets, boosting the value of, say, stocks and keeping bond yields low, boosting the dollar, of course, and real estate. Not only that, but you also have this dynamic where, you know, socially in America, we see the highest suicide rate going all the way back to the Great Depression. We see deaths of despair that are double the rate that they were during the Great Depression.

So deaths of despair being defined as suicides plus drug overdose. We know that, you know, the prior industrial heart of America in the Rust Belt, it was especially hit during the opioid crisis. um and and you know i think a lot of these concepts are kind of interlinked and it goes into the issues with the dollar um you know dutch disease i think refers much more to the uh the benefit for certain industries right uh the netherlands discovered this uh great natural gas field that was going to revolutionize you know boost their economic output well it ended up hollowing out uh you know all all their other industries that had been core to their kind of economic success leading up to that. So, you know, we've seen this hyper financialization

of the economy. That's what's really driving kind of the wealth inequality story is those who own financial assets and those who don't. And, you know, the current account deficit, the trade deficit, you know, is really great if you're one of the, you know, top 1% that own the vast majority of U.S. equities. You know, the top 10% own 93% of household equity exposure. So we know the bottom 50% have debt, that debt has skyrocketed in cost due to the interest rate hiking cycle. And meanwhile, the top, you know, one to 10%, they own financial assets and financial assets have skyrocketed due in part to this current account deficit. I would say that, you know, the current account deficit on a quarterly basis is about $450 billion. And so if you take that

down to, to per month is about $150 billion per month that mechanically must flow into the dollar and then financial assets within America. That's $150 billion a month is a significant amount of money. Um, and you know, it per quarter that would build, uh, I forget the exact number. I did the math. It was like eight or nine, uh, uh, Ford class aircraft carriers, right? So it's a huge amount of money that we are, you know, needing to finance via other ways. And that gets into the Triffin dilemma with the need to run this current account deficit due to being the reserve currency issuer of the world. And so I think, you know, I'm not supportive of every single thing that Trump has done. But the one thing that I have been very outspoken in favor of is the tariffs and

at least the attempt to start to address some of these issues. I mean, it ends up being a national security threat when our industrial capacity is so hollowed out that we rely on what a lot of people would consider to be an enemy for 65% of active pharmaceutical ingredients. Or we see on the defense side, we're losing a proxy war to a country with 1 12th of our GDP. And then you look at the net international investment position, which has accrued over many, many years of this kind of prolonged current account deficit, that NIP refers to how much assets do we own of the rest of the world versus how much of our assets do they own. And that's negative 100% of GDP. So it's a level I've looked for another kind of, you know, parallel to that. And I've never seen

a parallel to that in history, which means all of our, whether it's U.S. treasury debt, even corporate equities, to some degree real estate as well, we saw in April what happens when foreigners start to dump U.S. dollar assets en masse. And it basically brought the president of the United States into capitulation on one of his core policy agenda proposals. So the power that that net international investment position being so insanely large in a negative direction, that power is immense. Foreigners literally own us to some degree. And we start to threaten tariffs. We put on tariffs and they don't like that. They can just start dumping treasuries and force Trump to capitulate. So there's a number. I mean, we didn't get here overnight. And a lot

of these issues are interlinked they'll they're complex and they'll be difficult to uh fully unravel but i do see positive steps in some of those areas yeah this reminds me of a conversation i had with lynn alden a couple of months ago after i believe from may or june newsletter which covered this sort of terrific like the effects of triffin's dilemma you flood you hollow out your manufacturing base flood these emerging markets with dollars so they can build the things that you're replacing. And then that flows back into financial assets. And I think what we sort of dug into is that works for a period of time, but eventually it falls under its own weight because you just have this imbalance socially, economically that exists domestically that is

untenable. Yeah, well, I would I would argue that, you know, looking at some of the societal KPIs, I'm a big, pretty outspoken on what I call GDP maximalism, right? This idea that GDP is the end-all, be-all for measuring the success of an economy. I much prefer to look at real wages, for example, or the suicide rate, or drug overdose deaths and deaths of despair, kind of broadly speaking. I think antidepressant prescriptions, which have 13x'd in the past 50 years, some of those metrics are pointing to a very sick society. Uh, and I think we see that with the political polarization, uh, that, you know, to some degree Trump is a symptom of, and I think it'll continue

to get worse. I mean, we, uh, see kind of, uh, you know, I, I said it, uh, uh, before mom Donnie, but I, I, I warned people, I said, Trump is a, you know, your kind of populism, right? The kind of populism, a lot of people might like, but be careful because you know, the, the natural consequence of kind of all of these things is that we see the other side of, of, you know, left-wing populism. And sure enough, mom Donnie kind of came out of nowhere and, uh, you know, did really well there. So yeah, politically, I think, I think most of the issues we see in America are downstream from economics. Uh, and, and that is not just because I'm a, you know, a macroeconomic nerd, but because that's genuinely how, uh, the correlations that I found, um, you know, that,

that's generally what the data supports, at least for me. Uh, and you know, like at some point, like you said, it has to come to an end. Uh, certain systems are not sustainable. And I would argue that a 7% pro cyclical deficit, uh, in combination with a four and a half percent current account deficit, uh, you know, is not sustainable in any, in any, in any reasonable world. Um, and you know, the, the unfortunate thing, you know, for us as Bitcoiners is, you know, uh, Lynn is great talks about broken money, um, and fractional reserve and debt-based money. And a lot of those concepts, which I think are great. I I've been talking about this concept of kind of global broken money, which is that, um, in trade, you know, going back hundreds of

years, uh, there have always been imbalances. There have always been countries that, uh, you know, run a trade surplus versus another country. The release valve used to be when it was gold, uh, gold backed money, the release valve used to be that the currency would, uh, move right to offset, uh, the currencies were valued on balance of payments. For example, the currency would move to offset that, uh, particular imbalance over time. You know, it's not an immediate overnight sort of thing, but over time, uh, the currency would be this kind of equalizing equilibrium force. Uh, well that's completely broken down with the dollars reserve status. Uh, the dollar, at least as of a couple months ago is even more overvalued on a purchasing power parity basis

than it was in 1985 leading into the um the plaza accord when we saw this historic uh you know weakening of the dollar so so the dollar has kind of remained way too strong for way too long and has just kind of exacerbated these issues and if we had a neutral measuring stick against which to measure fairly fund on fundamental basis, you know, uh, the, the actual strength of currencies, we wouldn't see any, any, anywhere close to the degree of problems that we see. So that's one of the really unfortunate things. And, you know, sure enough, we have a central banks kind of gold is over the past couple of years, gold has, uh, been, uh, kind of, you know, on the rise. My hope is that Bitcoin is kind of joining that in terms of use as a reserve asset.

The problem for America with something like, you know, a Bitcoin strategic reserve, however, is that because we run a twin deficit country, the only thing we can accumulate is debt. When you think of it in those terms, it's, you know, I think most people would agree that's not sustainable. you know if we start issuing interest-bearing debt to buy bitcoin for example uh then you know at some point china can just turn around and say look uh you know all those uh the 65 percent of active pharmaceutical ingredients that you rely on us for to keep your people alive well we're only taking bitcoin right and because we're a twin deficit nation there's nothing we can do so

the bitcoin ends up flowing out a twin deficit nation by by definition is kind of net unproductive So really we got to address kind of the deeper issue in my opinion, which is why are we running this twin deficit and what are some policies that can be done to address that actual underlying kind of root problem, if that makes sense. secure enclaves you create your private public keys offline the device never has to go online never does go online so you keep your bitcoin secure if you have your bitcoin on exchanges and you're looking to get it off secure it in the best way possible pick up a cold card queue go to coin kite.com find the cold card queue use the code tftc for five percent off if you're a

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are still some posturing hard lines policies decisions being made in regards to tariffs but it seems pretty clear combination of trump and besent specifically have sort of committed to this we're going to grow out of the debt situation and really turn it on turbo as elon said um a few months ago. And I guess that's the big question, like that capitulation, that recognition that the only way out is through, uh, is a bit unnerving. Yeah. I mean, uh, I think it was November when Elon started talking, we're going to balance the budget. We're going to cut 2 trillion from the deficit. I did some math and granted, I don't have a PhD in economics. I'm no mathematician, right. But, uh, just this humble nerds math, um, found that balancing the budget

would result in a GDP contraction worse than COVID and worse than 2008. So I always kind of faded the Doge thing because it just, number one, most of the spending, as you know, is entitlements and politically you can't really touch that. But then number two, if you were to really cut that much government spending, it would result in a contraction of GDP so severe that it would throw us into a debt spiral immediately. So I always kind of was skeptical of Doge. I support it, right? Like on a personal level, I very much support cutting all that waste and fraud and abuse. But from a, you know, just pure objective accounting standpoint, one man's fraud is another man's income, right? That USAID worker who's getting fraudulent, wasteful money, right?

They have a mortgage, they have a car loan, right? They have personal loans and credit cards, right? So, uh, they buy groceries, uh, they buy insurance. So yeah, I, I, I was always skeptical. Um, I was hopeful, right? Cautiously optimistic that they would cut something, but we look back and they cut like 1.6%, I think of the federal budget. So, uh, yeah. So, so I noticed that too, that pivot that you noted, uh, a couple months ago, I noticed that too, it was like all in one week. You had Besant, Elon, Chamath, all the key people coming out and basically publicly abandoning Doge, right? Just like, yeah, we're not going to cut our way out of this. The step, the key, how we're going to win is to grow our way out. And I thought to myself, okay,

so here's the negative real rate story, right? Like they're going to come in, they're going to propose, they're going to find some way, whether it's explicit QE, yield curve control, tinkering with regulatory levers like SLR and LCR, but they're going to find a way to get negative real rates. And that's kind of the direction I think things are headed in, generally speaking, for the next 12 months or so. It appears that they really want that negative real rate environment, especially in bills. And bills, it should be pointed out, that transition happened under the last administration with Yellen. And Besant was very critical. And, you know, as I just did a video on the QRA, the most recent one, you know, he is not changing the issuance schedule, right?

So I think he recognizes, you know, the reality of the situation of the bond market, especially at the long end. But, you know, we're talking about a shift even more into bills. And what's important for that for people to understand is, and you can find this on TradingView, right? Pull up a single percentage chart, right, and throw on like a short term bond ETF, TLT, and then like a five year bond ETF. And you can see that the that the short shorter duration bonds move very little compared to TLT, which has these big massive moves. And that's due to convexity with the with the duration. But because the shorter term duration, the Treasury bills, because those are less volatile, they can be levered much more easily and created into new dollars, treasuries

being the collateral for kind of the global financial system. So it's very pro-liquidity. It's very stimulatory. I think inflation is going to pick up. I've been saying that for a couple months. And I think that the treasury bill kind of focus and the ease at which they can be so readily levered into new U S dollars. Uh, I think it's very pro liquidity. Um, the thing I would say though, is like, you know, I per like, I just want to know who's going to buy this negative 2.5% real yield treasury bill, right? Because Trump's talking about taking the federal funds rate from three, uh, from 4.3 down to like one, right. He's talking about just massive cuts in the short-term rates, that would result in bills and shorter duration follow the Fed funds. And that would

result, we're talking probably inflations around three, maybe even 3.5 or four. So you're talking significantly negative real rates. I just kind of want to know who's going to buy those. Maybe it's stable coins. I don't know. But who wants to take a guaranteed loss where you're losing two to three to four percent per year in inflation adjusted terms and we know of course inflation is actually higher than cpi so it's even worse um so that clearly is their plan right and that's clearly like i think the direction that they're heading but um yeah for me i just kind of want to see like who's actually going to end up buying those because i i surely wouldn't want to no and you touch on like such great points here number one like besant completely shifting face

about the short end of the yield curve like berating yelling like the trump admin gets in like they messed up the curve and then silently sort of implicitly like recognizing all right maybe that was a good idea continuing with it but to your broader point and this is something that did not get enough coverage last year but funnily enough noriel rubini co-wrote a paper basically explaining why the over indexing or how the over indexing on the short end of the curve is actually stimulatory it's like stealth qe essentially in a way in which you describe because you can take that short-term paper and basically get dollars out of it and spend those or push those dollars into other assets and so it's like stealth qe without saying q it's with it's not the mechanics

of qe as we know it but i think the overarching point is like the system has gotten to such a point that politically you need to find those mechanisms to stimulate the economy and that they're doing on the short end of the yield curve and um the the other thing i wanted to bring up it's i lost it but like building on that um that theme oh it's the stable coins all right like it seems like the genius act and they're gonna try like i don't i i think they're i don't know how certain they are but i think they're basically exploring all the options possible to drive demand to these things and by really pushing the stable coin narrative which particularly here in the united states doesn't make any sense to me like like i as an american citizen my bank account

works well cash app works well then like i don't need stable coins but they're really trying to make fetch a thing with stable coins and i think what's underlying that is this need to drive demand for for these treasury bills yeah they need balance sheet uh to financially repress um They need suckers at the card table, as Luke Grohman says. They need to get those suckers at the card table to repress them. And look, maybe foreigners are willing to take a guaranteed 2.5%, 3%, 3.5% loss. I'm not sure. I also think that it could weaken the dollar.

I don't see how significantly negative real rates combined with a shift towards basically payday financing the government and just fully admitting, yeah, we're in fiscal dominance and we're going to run the turkey. You know, central bank has no independence, right? We're doing all the stuff with that. And the 1951 Fed Treasury Accord, we're basically reversing it, right? I don't see how any of those things are bullish for the dollar. And again, what I've been, I kind of got very bearish on the dollar, the Dixie, back in like January. And it was for a number of reasons.

But we've seen clearly kind of a bit of a short squeeze position and got stretched and whatnot. But I still think that if you just look at incentives, and Bitcoiners are big on incentives, and we can see kind of through a lot of things by just looking at what are the incentives, as much as they may say they want a strong dollar, they want a weak dollar. Going to the point of the current account deficit

and trade and reindustrialization, we need a significantly weaker dollar to make any of this viable. A 15% tariff is not going to suddenly make American manufacturing cost effective for the rest of the world when the currencies are, you know, 35 or 40% mispriced. Um, and so, so, you know, I, I was one of the kind of the first people talking about like some sort of accord, right? Like that's kind of their only option is to, to weaken the dollar sort of like

Plaza Accord. Um, and the reason was I watched, I think it was in like May or June of last year, Besant did a speech at the Manhattan Institute. And as soon as I, as soon as I got done watching it i watched it again and i thought it was very notable that he mentioned monetary reordering three times during that speech and and he said something like and i want to be a part of it or something uh you know i think that that inevitably is going if they're they're serious about reindustrialization they're going to need some sort of accord um and it when it when it first kind of came up as a topic it didn't have that mar-a-lago accord name you know like whatever it is whatever ends up being is it a mar-a-lago accord or you know the the hilton accord uh we

need to weaken the dollar if they're serious about re-industrialization and uh that you know has consequences to it right like all those cheap imports all that cheap alibaba plastic junk that americans have been you know piling up uh that gets more expensive uh but the good news is that over kind of medium to long term, high paying manufacturing jobs hopefully come back. Now, I fully concede some degree of automation and robotics will make that difficult, right? Reshoring 5 million is out of the question, most likely. But even Bloomberg, which I take as kind of a pretty globalist leaning organization, even they were forced to admit, this was a couple months ago on the morning show, forced to admit that Apple, an assembly technician, right? So

not a plant engineer, nothing crazy, not a supervisor, just a technician, US-based, the salary was $112,000 per year. So in the medium to long term, there is a world where inflation is rising at, say, 5% or 6%, because this will be very inflationary, especially if you mix it with negative real rates and all the bill dynamics. Both of those are inflationary, weaker dollar and that so you know there is a world though where uh inflation is five percent but real wage gains are eight or nine uh and that's what i would hope to see because going back to the silent depression stuff like you know the average hourly wage priced in gold has declined by 80 percent um going back to to 2000 so just just since dot com just since the the you

know y2k and all that just then since then uh the the real purchasing power of the average early wage has declined by 80% if you measure it in gold. And if you look at personal income divided by M2 money supply, that's fallen, I think, 30%. So again, in real purchasing power terms, the average American has been getting just decimated for decades. And a lot of the turning points in my chart happened to be that early 2000s. And I think it's not a coincidence that China was admitted into the World Trade Organization in December 2001. And that's when deaths of despair, like literally to the year, that is when deaths of despair just went vertical. And that is when these measures of real purchasing power wages started to decline

and personal savings has been declining. So I would argue that there are short-term consequences to a weaker dollar, whether that's via just kind of policy or via an explicit accord. Of course, there's consequences short term, but my hope would be that medium to long term, you would see kind of a de-financialization of the economy and a return towards a much more net productive economy that is not based around a bunch of people writing algorithms for high frequency trading firms, making millions and millions and millions hedge fund managers Right. But but reorient around kind of actual useful productive capacity, because whether it's, you know, kind of the medicine that I mentioned, 65 percent of active pharmaceutical ingredients, you look at chips and electronics, some of these key industry like this is a national security emergency, in my opinion. serious about your bitcoin start acting like it unchained just launched the financial freedom

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that not only that the quality is good, but you're able to make it yourself. So you're not dependent on, on geopolitical adversaries. Uh, and so that, like that whole, that whole sort of theme of like, oh, the jobs aren't going to come back. And even if they do, they're automated. It's like, I don't care if they're automated, like we should be making it here is, is my perspective. Yeah. And, um, you know, I have a firsthand experience with, uh, domestic manufacturing. um we have my family has had a company for i think 75 years uh that has has manufactured goods in in america and like i think that there's a a pretty large amount of kind of overestimation as well i think a lot of people that are talking about uh re-industrialization need to go look uh go down

you know to your local industrially zoned part of town and just ask for a tour like i know if it's our company we'd be happy to you know uh they they love showing people around and what they do i think a lot of people are kind of overestimating the degree to which automation will uh really play a role like we uh you know we have a couple robots that i think they got uh maybe five or ten years ago you know there's some degree of automation but like it i think people are overestimating the amount of automation but to your point even if you know 70 or 80 percent is automated, at least we are not reliant on countries that, you know, arguably at the, you know, turn of a hat, you know, flip of a coin, uh, might be our enemy, you know?

And like, how, how are we, if we're so reliant on, on say China for a kind of chips and electronic components for our own missiles and our own defense systems and our own ships and, and vehicles, like the minute that they like the minute we get into a war over Taiwan, which I hope doesn't happen, but like, they just shut it off as we saw them do with the rare earths. And like, yeah, I just, I, it's, it's kind of my mind boggling that, that our leaders let it get this bad, you know, it, it, it just makes you, uh, it makes you wonder like what, I mean, you know, you, you, you can, you can infer what the, what the incentive

was, but a lot of people got obscenely rich and, you know, now wealth inequality is even worse today than the gilded age uh which was so bad that we named an entire era of american history after how bad the wealth inequality was was even worse today uh so yeah you know that was probably the incentive to do all this but it just got to such ridiculous levels it kind of makes you wonder like what were our leaders thinking because it was both parties to be clear um so yeah that's on the economic side then socially you have like the rise of neoliberal progressive ideals and if you're a student of like yuri bezmanov and that interview he did in the 80s like have we been just under a slow rolling color revolution in the united states over the last four decades

yeah well i mean look at um i mean trade is trade's a great uh illustration of that i would say, globalization and the degree to which it was embraced at the expense of the average American. I would also point to immigration, right? We're talking economics. One of the key reasons, in my opinion, that the real purchasing power of the average hourly wage for the average American has declined so precipitously is both parties have, you know, our birth rate has been declining for decades. Uh, and, and the way that both parties up until Trump, of course, uh, the way that both parties dealt with that was to import tens of millions of, of immigrants from other countries to come in. These are, you know, willing to work for lower wages and, and, you know, the

law of supply and demand is no different when it comes to labor, uh, that if you dramatically increase the supply of labor while demand stays constant, or maybe slightly grows, you know, one, 2% per year, whatever it is. Uh, if you increase the labor supply by 10%, um, wages must go down just mathematically. Um, and so that's another kind of Avenue where you see like Reagan was the one that granted kind of started it, uh, at least from what I can gather with the kind of mass amnesty, uh, back in the eighties and look like multinational corporations benefited massively from that. Um, you know, that again, it boosts their profit margins, whether it's cheap labor here in America or cheap labor elsewhere. So there have definitely been beneficiaries.

The other thing I'd point out that I think is really kind of interesting is if you take the net worth of the top 1% and look at it as a share of GDP, so denominated in GDP, and then you overlay the balance of trade and you invert it, right? So it's the capital count surplus. It's almost a perfect fit, right? So the net worth of the top 1% as a share of GDP has basically been identical to an inverted trade deficit. So as a trade deficit has gotten larger and larger, the net worth of the top 1% is increasing at a faster rate than GDP. When you do one of those relative charts, when the line goes up, it means that the numerator is increasing faster than the denominator. So the net worth of the top 1% isn't just growing with GDP, it's growing faster than

GDP as the trade deficit gets worse. So, you know, there are very clear, you know, beneficiaries to a lot of these policies and kind of the capital class, right, that Wall Street and those that own financial assets. And it's the same thing with the housing market too. Like I'm a young person that liked to own a home. I worked really hard for 15, 16 years at a particular, you know, career climb the ladder. And it's the same story with housing. If you look at that, the average sales price divided by the average income for a family, say, and again, overlay it with the trade deficit, it is a perfect fit outside of QE2 and 3, where the Fed bought trillions in mortgage-backed securities. But interestingly, when they engage in quantitative

tightening, it came right back down to where the trade deficit or the capital account surplus would indicate that it should be so you know i whether that's a correlation without a causation and that's just a spurious correlation i'm not sure but it's like the more the more of these metrics that i've been finding over the past year or two the more i'm convinced that it's all it's all kind of one trade one story uh at the end of the day yeah the whole correlation is not causation thing it's like it's it's a whole it's like a way to obscure what you know intuitively to be true but it's like so hard to like directly connect the dots that they're able to hand wave it's like correlation is not it's like come on this is certainly happened like if you have two brain

cells to rub together and you can think about second and third order effects it seems like there definitely is some causation here yeah well you know m2 money velocity personal income as a share of m2 so real purchasing power of of the personal income uh smp in gold terms labor force participation rate all of these peaked um money velocity as well all of these peaked you know around the same time uh average hourly wage and gold terms as well also peaked in the early 2000s So it's like, okay, I understand, you know, contesting one of those or, you know, two of those, but like, I've presented so much data over the past year or two charts, right? This like, I, I, I just, it baffles me that people still try to dispute some of these

things, you know? Yeah. And let's get like, let's get into like silent depression and like something you said earlier, which is like let's get away from financialization let's de-financial it de-financialize the economy get back to a productive economy where people are actually working building things and not just creating sort of synthetic financial exposure to things because it's all it's all connected again in my mind correlation is causation with a lot of these things like yeah you're not going to tell me that these things don't have effects on each other

and it's like it's weird because we live at this time my go-to example whenever something like like we are literally you're on the other side of the country i'm looking at my laptop i've got my mic in my hand we're gonna distribute this on many platforms and it'll be accessible to many like it's inarguable that the tools that we have the technology we have is is incredible today and that's what they use like hey like things are great look at what we can do but despite that there is this silent depression these divergences in the quality of life between the haves and the have-nots and there has to be a better way right like i think we have all this in spite or despite excuse me despite uh all these things like they try to use um the fact that we have all

these technologies is evidence that everything is all well and good, but I'm a strong believer in it could be much better. Like we have all this despite all of that. Yeah. Yeah. I mean, look, it's great. Like I, uh, I worked in healthcare that, that was, that was kind of my day job that started working like very shortly after Lehman collapsed, uh, and, and was doing my first interviews at like 18, uh, you know, around that time. Uh, so that, that, that was the start of my adult life. And I know a lot of millennials, especially Zoomers, right? Like, you know, are kind of in this boat where, you know, then we had, of course, the kind of prolonged great moderation as they called it, but really kind of a lost decade of stagnant growth, very similar to Japan's

lost decade. And then we had 2020, right? All the craziness of that. But it really in my adult life, like, it felt like no matter how hard I worked, I kept climbing the ladder and getting the next better job, you know, from, from the bottom to, to, you know, middle management. And then from there to, to, you know, basically right below the owner as a director, making a good salary or what I had thought was a good salary. And like, just for, for kind of, you know, real, real concrete numbers that people can kind of wrap their head around here, at least here in LA in 2019, 2020, my salary of like 90, a hundred thousand dollars, uh, would have bought a, you know, starter home, a 70 year old, you know, starter home, not in LA, but like in one of the kind of suburbs, like the Valley,

for example, uh, I would have been able to do that. And I was looking at, at, at buying a home back then uh and and you know the income i could make it work with interest rates being what they were well today that same house in that same neighborhood not great neighborhood not great schools pretty high crime rate uh 70 80 years old right probably need some work um that same i would need to triple my income to qualify for a mortgage on that same house so you know like this, this, I understand why they changed the CPI calculation, but that's like a very real cost for a young person, right? Like if, if the income needed to qualify for a mortgage on the same house, increase it by 200% in five years, you're going to tell me that inflation is only

21, 22%. Like it just doesn't make sense. And yeah, you know, I think the societal KPIs anti-depression prescriptions 13x since 1970 uh you know the the suicide rate at levels rate right not nominal numbers of the rate per 100 uh thousand that rate not being this high going all the way back to the great depression that's the last time it was this high deaths of despair just going absolutely parabolic since 2000 um we see it with like political polarization as well like all these societal kpis all these like horrible events that keep happening in public right that um you know try and be careful like not to use bad words uh but you know the these things that just like every day we're seeing you know people acting out in in just absurdly violent ways and

there is there is this kind of like scream from especially the younger generations uh that just appears to be falling on deaf ears, uh, with, with the boomers. And, and if it was just deaf ears, that might be one thing, but instead it's generally met with righteous and indignation, of course. Um, but yeah, it, it, it, it's going to continue to drive all of those same problems until the actual issues are addressed. Wealth inequality will get worse and therefore the kind of political polarization will get worse. We'll see racial divisions get worse. We'll see the political extremes getting more extreme. I mean, if, you know, I've talked to a number of like, you know, kind of average Zoomer men, and these guys are going to make Stephen Miller look

like a moderate, right? Like, this is just a natural consequence of what happens when you default on the social contract. And I think that, you know, until we really address the underlying issues that are driving these uh these problems all of the things that are bothering the average american person are going to just get worse and worse and worse uh and and i don't want that like i you know i want a safe prosperous country i want you know my people to succeed and do well uh i want a land of opportunity again and and look to to your point about technology like there are certainly, there are certainly certain advantages, I guess you could say, you know, over the past couple of years, as I've kind of started doing all this, you know, markets and economics and

YouTube and all this various stuff, like it's a crash course for me in, in, in this whole new world that I didn't really know anything about. And look like it, I'll be the first one to say that it's, it's great. You know, I can, I can do spend an hour or two, you know, putting together a video, hopefully educate people, put that up on this website that people have on their phone, right? They like, there's some really cool stuff. Like I'm not trying to make it sound like it's all bad. Um, but you know, we, it kind of goes the other way too, which is like, you, you know, you look at the average zoomer, the average young man, and what are they doing? They're gambling, whether it's meme coins or, uh, sports betting, we've seen a dramatic increase in that.

like the financial nihilism i would say offsets the benefits from like look the internet's great the kind of uh everything being connected the world being connected it's great but like it also enables these very negative and destructive uh expressions of you know within technology whether that's you know the meme coin casinos and kind of all that craziness i mean i know a girl that just buys tech options every day, zero DTE tech, you know, Meta, NVIDIA, just buys calls every day. Doesn't know what a bid-ask spread is,

doesn't know what IV or Delta or Gamma or Theta, just buys calls. Like just totally gambling, right? Like this is kind of the norm now with young people is that without that 10,000X return, they feel like they're never going to get ahead. So just as much as the internet can be used in positive ways, right?

responsibly it also has has i would argue offsetting negative sides to it too which is it enables some of this gambling and kind of the financial nihilism piece if that makes sense completely agree that's exactly what i was trying to get to as well as like this financial nihilism the enablement of it and this like this strive for yield the younger generation specifically that feels like they have to play catch up and take obscene risk is real and it's having extreme negative consequences like you're talking about deaths of despair you brought up sports gambling if you look at it's not only affecting zoomers like it's affecting millennials and gen xers too like there was a i think some vandals getting sued by the wife of a guy who blew their

14 million dollar trust um because he was a high roller and just it's so easy to access that he blew eight figures of wealth uh within a very short period of time and that's i think the big question for me and a lot of what i've explored over the years on this show and just doing introspection personally is like can this actually be solved via political means or do you need something outside the system to actually fix it and that's why i focus on bitcoin i do tend to sort of bend that way and believing that you're not going to vote your way out of this like you need to create systems outside of the terminally ill system that got us into this predicament in the first place and to that point like do you view it that way at all yeah um and like you know uh

with with all this kind of uh you know uh youtube channel and all this stuff the hunger and and the degree to which it's resonated for someone who spent, you know, I don't know, 30,000 hours nerding out, digging into academic papers and Investopedia and TradingView and the Fed and all this stuff, right? Like digesting it for normal people, the amount, the degree to which it resonated, which is random, everyday, normal people, I was not expecting. So what I would say is that there's clearly, like I underestimated the appetite for that sort of content. Because I think everyone knows that things are deeply, deeply wrong. It's just that, you know, you shouldn't have to spend 30,000 hours, you know, nerding out in order to grasp some of these

concepts and understand how your own financial system works. And I would say that like the overton window the the the discourse is shifting you know like a lot of people have been talking about the uh the interview tucker did recently with um uh warner the economist and uh that was actually one of the first uh things that kind of i did like a twitter post or article on was uh i had listened to one of his speeches uh at at some university uh about about japan and and and uh The fact that, like, you know, that sort of discussion is happening on such a large platform, you know, and I've had invites recently for kind of not Bitcoin channels, right? Not, you know, economics or macro markets sort of channels, but like much more kind of political sort of channels. And like, there's clearly an appetite for discussion about economics and what's really

going on because part of the problem and, and, and, uh, what I always try to do is, you know, if you just look at the average hourly wage, which is what you hear reported on the nightly news, the line is, it looks great. It's up into the right. It's kind of even parabolic. You would think everything's great. Well, you got to go a couple layers deeper, right? Like all these numbers that they're reporting to the American people, it's like they're,

they're sitting there you know getting home after their third job right um and and and uh you know using a firm to pay for groceries hearing the nightly news talk about oh unemployment's only 4.1 and gdp grew at three percent and they're like huh you know like what i always say is what good is gdp if the average hourly wage or personal income is is is not keeping pace um so yeah like certain things have outperformed, of course. Government debt has outperformed GDP. That's why government debt to GDP has doubled in the past 40 years. The net worth of the top 1% has also doubled as a share of GDP over the past 20, 30 years. And then you look at financial assets, the S&P 500 just radically outperformed GDP. A stat that I think is really telling to

the hyper-financialization and the K-shaped economy is if you take the S&P 500 divided by the average hourly wage, what you get is the number of hours needed of work at the average job to buy one share of the S&P 500. And it goes all the way back to the 60s. And the average when my parents were coming of age and working was like 15 to 20 hours of work at the average job to buy one share. Now that number is 200, right? So what that indicates is that the S&P 500 has increased 10 times faster than the average hourly wage, right? So those that hold financial assets, those bureaucrats that have benefited from a massive expansion in the size of the federal bureaucracy, the top 1% that own all these assets, they are doing better and better and better.

um and people see that like they might not know the stats right they might not uh be able to kind of conceptualize it but they feel it and they see it and they know it um and so i i would say that like the the benefit or or or the the the side of me that's optimistic is that there is such a growing kind of recognition uh and willingness to talk about it even on the right wing right which I mean, both parties were equally responsible, uh, in my opinion, for a lot of the globalization, you know, a lot of the things we talked about. Uh, but you know, historically when I was younger, you know, you started paying attention to politics.

It was like, you couldn't talk about wealth inequality or corporate profits, greatly outpacing GDP. That's another one that's outpaced GDP growth. Um, like you can't talk, you couldn't talk about those things. Well, now not only are you getting it from the kind of mom Donnie side of things, but you're having a willingness to talk about it even on the right wing. So like that, to me, that's a positive sign because that's kind of the horseshoe theory in action. You know, we're seeing that on a political level, at least there's a willingness to talk about it. Now, to your point, whether or not

the solution ends up being a political one, I'm not so sure. But I would point to, you know, I think that I'm seeing more and more of a discussion around the struggles for young people, the structure of the economy, wealth inequality. Uh, I'm seeing more and more discussion about it. Like just over the past couple of months, it seems like it's just absolutely gone exponential, which for, you know, someone who is like the old man yelling at the cloud about it for two years, it's really like, it's good because I feel like, Oh, you know, I, I didn't do that much, right. To actually hopefully, you know, advance it. But it's like, it makes me feel a little bit more validated that like okay at least at least like everyone's kind of talking about this now

because we're we're not going to be able to get to a solution unless everyone knows what the problem is that's an incredible point it's funny that you mentioned that because literally i recorded an episode this morning with zoobie about this exact topic he wrote a substack piece last week about like tell 12 pieces of advice for generation z and we walked through that but like the whole point of his article in our discussion about the article is to sort of transfer knowledge to the zoomers of like hey we're a generation ahead of you like here's exactly what's happening you guys need to understand this and here's how you should operate with with that understanding and i completely agree like the recognition of the problem is greater than it ever has been for

somebody who was radicalized by the great financial crisis and like i went the the timing for me personally was perfect because i was a senior in high school it affected my dad my father's career and sort of like engendered me with the spirit of know your enemy so i went and studied econ and always even when i worked at a fund and was doing like sort of trad fi world things in the back of my mind was always like the system's broken and you figure out how and ultimately found bitcoin And I was like, all right, this is what I think is a key part to the solution of solving these problems. But back then, it was like an island. It was that crazy Bitcoiner, 2013, 2014.

People were like, shut up. And now, it's not Bitcoin specific, but I just think, to your point, the recognition of, because it's gotten to the point where it's impossible to ignore. And it sucks it had to get to this point, but you can only solve a problem if you recognize that it exists in the first place. Yeah, yeah. And like, if I had to give one piece or maybe two pieces of advice for the younger folks,

like, I think it's hard for them because we as millennials, like, you know, when I was climbing the corporate ladder and, you know, trying to get ahead and stuff, I could look to the Gen X, right? The generation ahead of me, they had the, you know, nice car and a house and the kids and a good salary

that they were comfortable on. And, you know, I think what is part of what part of what the zoomers have that is so difficult is they look to us, they look to the millennials and we're like directors making a hundred K a year and right, like not having any of that. So, uh, they have it, I, they don't have that like optimism, right? Like at least we, at least I, and a lot of the millennials, I know we could look to the gen Xers for kind of like optimism or hope. Uh, but the zoomers don't have that.

like all they know is bad. Um, and if I, if I were to give two pieces of advice, it would be, um, trades, right? Like, I think that, um, you know, the, the wall street journal did an article like the next millionaires, uh, where tool belt or something like that was the title. And I think that that'll continue to be a trend that, uh, some of the highest paying, most successful people, especially if we D financialize with a weaker dollar, uh, some of the best industries for a young person to make a living in will be trades. Um, and even now, like even today they're making like hundreds of thousands of dollars. I know a guy that drives a GT three and he's like, he puts in pipes. Like he, I still don't really understand like what

it's, it's probably more complex than that, but he basically like digs holes and puts pipes in and he has a GT three, you know? So like, it's already kind of at that point. So I would say trades uh you know the traditional four-year education i think is a scam and i think it's it's dead and gone and then i would also say of course save and scarce assets like bitcoin that will preserve your purchasing power and hopefully continue to outpace uh the amount of kind of currency debasement that i think you know i think most of us are whether it's larry lapard with the big print i i don't think it'll be that big you know i don't think it's one big print uh but i do see kind of a higher inflation period of, you know, regime that we're going into, scarcity is

the antidote, right? So like, you know, or as Jack says, you know, don't work for money that another man can print. I think that's great. And so, yeah, you know, saving your time and energy and your labor in an asset that cannot be inflated, cannot be printed. I think that that's another critical, I mean, if I had done, I, uh, I came across Bitcoin in like 2009, 2010, if I had even put just 5% of my kind of average, you know, weekly earnings in a bit, I would be insanely rich, like insanely rich. Um, I didn't know what I had back then. I thought it was just like a, you know, internet money thing. Uh, and I would, you know, it would have a little run up and I'd think, Oh, great. I'm rich. You know, that was great. Sell it. So I didn't really know

what I owned until recently, unfortunately. But I think that the antidote to an overabundance of fiat currency units is scarcity. And Bitcoin, we know, has one of the lowest supply increases of any asset. So when it comes to the scarcity side, it is one of the more scarce assets that you can own, even now more than gold. Yeah. And bringing this back to how do these overarching problems get solved in the long term like i'm a big believer that bitcoin can lead to the great definancialization the parker lewis's uh blog post and ultimately a chapter in his book gradually and suddenly about the great definancialization is something that i truly believe in something like 1031 we're investing behind like obviously uh you were just talking

about the individual saving scarce assets like bitcoin ideally but i think inarguably if you look at all the scarce assets, Bitcoin is still going in the very early stages of its monetization phase and has the highest upside. But then in terms of actually beginning to definancialize the world and sort of manufacture a soft landing in the long term, I think Bitcoin needs to be injected as collateral in credit structures. You need to refinance the existing pools of credit that exists out there with better collateral into what you were saying at the beginning and throughout this conversation really is like we've seen the financialization people are the people who understand what's going on and want to outpace inflation they're pushing it into real estate into

stocks into financial assets and now an alternative exists like instead of basically putting money in a house and using that as your long-term savings vehicle you can put it in bitcoin and Now we're getting to a maturation point of Bitcoin's sort of development where you can sort of replace, instead of taking out a mortgage on a house and just using the house as collateral alone, you begin to dual collateralize it with Bitcoin. And at that point, you're not really wholly dependent on the equity value of the house. You have the Bitcoin collateral in it as well. And to me, I could be wrong. I'm very interested to get your thoughts on it. Like that's how you manufacture a soft landing from the private sector and you're not beholden to the whims of the political apparatus and the ping ponging that goes on there.

Yeah. And Luke was like way Luke Roman was way kind of, you know, out ahead of this concept, but they need something to to inflate. right and uh ideally that is a kind of uh it's not a a commodity that's needed as an input in critical industry or or global trade right so you need kind of an asset uh that can that can absorb some because we know financial repression is coming we know it's really the only way out of a seven percent pro-cyclical deficit with interest expense eating up 20 percent of tax receipts and mandatory spending over 100% of tax receipts. It's getting to a point where we know the only way out is to inflate the debt away, run it hot, whatever term you want to use. And Bitcoin emerges as a perfect asset because it's small, right? To your point, it's still

early days. $2 trillion is a lot of money on the one hand, but when you compare it to say gold or equities or certainly bonds, it's still relatively young, very young. So, you know, it offers kind of an escape valve for the coming financial repression. And Luke, you know, was kind of the first person to frame it that way. And I think it's a great way to look at it. I would say, you know, like with the young people and Bitcoin versus homes, the only kind of pushback that I usually kind of think of when I hear that argument in the Bitcoin circles is the real secret with housing is that you get insane leverage. So, you know, you go and put 10% down on a million dollar home. And, you know, when that million dollar home inevitably doubles over, say, five years, six years,

you get the equity of the whole home, right? You can then tap the home equity line of credit for 2 million to you know however much was right so so your your your equity is is the entire value right even though you only put up 10 so the leverage is really where like owning a home builds wealth like it doesn't actually build wealth because the home price is just going up as the currency is debased uh but you know in in dollar terms like that leverage is really the secret. Now we know Bitcoin has an insanely high CAGR. So it could be the sort of thing where Bitcoin continues to appreciate a, you know, 45, 50% CAGR. I think that that would be enough to offset the leverage side of, of that's why I always say like home ownership and the wealth

that you get, what it really is, is just levered exposure to currency debasement. The house goes up, you know, it's optical illusion. The home price goes up as a currency is debased. You have a large amount of leverage right and can then you know tap the equity so you know if people if there was a company that came out to offer like bitcoin mortgages that that would i think be probably the single best thing that could be done because then you're getting the benefit of leverage and the bitcoin's appreciation and that's where people that's where the young can really kind of get ahead in a quick way. Cause that's really what the, like the home situation, that's really what it is. It's just leveraged exposure to debasement. And because Bitcoin, I mean, you can

get leverage with Bitcoin, but it's not as intuitive and it's certainly not as large of an amount of money. Like no one's going to give some zoomer that's got $5,000 of Bitcoin. No one's going to give them, you know, crazy amounts of leverage. So in a, in a, you know, 30 year structured product like that with a relatively low interest rate so yeah i think i think it you know i've heard people saying we want to create that sort of product uh you know and like we were both saying you know it's early days so maybe something like that comes comes along and is able to kind of really accelerate the degree to which the the young people can get ahead yeah and it's not not catered towards young people at all but we invested and sort of helped incubate

this idea of battery finance where they're starting out focusing on commercial real estate which is a market that desperately needs um uh more creative financing options and they basically go and find high-grade properties that are sort of at their pick of the litter refinance getting the cash they need to pay off their original mortgage a little cash for a little cash for improvements if they need it and then a chunk of cash to put into bitcoin that sits in and structure and uh just having been close to development of that product like i'm wholly convinced that like this is the way you manufacture sort of like a transition from aping your your leverage and your uh your sort of savings and value uh into real estate and

begin sucky and the bitcoin will start like dual collateralized and then hopefully over the long long run like these these assets that really aren't optimal to be stores of value long term long-term stores of value because they have uh other use cases consumable use cases that that more people should have access to that's how you get them to reprice to what i would argue is um like a like a real a real price for these assets yeah and um the thing i would say about bitcoin in particular like kind of going to the what we were talking about with uh the direction the fed and treasury and all that is going um i would say that like you know in a world where there's you know basically a political puppet as fed chair and uh monetary policy is now a political

decision uh i would just say for those on the right that support trump and you know all of that Just imagine a Biden-controlled Fed, right, where everything about monetary policy was a political decision. I don't personally think that that's going to be very good, no matter who is in charge of it. And I think that as we see that kind of go the emerging market sort of route, probably higher inflation and a worsening of the K-shaped economy as asset prices really kind of take another leg higher. all the, all the dynamics that we've been talking about today. I think, I think something like Bitcoin emerges is like, you know, what, what's so cool for someone who's so immersed all day in macro and, and markets here in us and Europe and Asia and all this stuff, following every word of every fed speaker and watching every bond yield in the entire world. Uh, what's cool about

Bitcoin that I keep coming back to that I always tell people is like, look, you know, the monetary policy of Bitcoin. You know, the monetary policy of Bitcoin today, six days from now, six weeks from now, six years from now, 60 years from now, you know, the monetary policy of Bitcoin and these kind of, you know, bear assets that are neutral, right, this ability for neutral reserve asset that a lot of people have been talking about, like, I think that the appeal of that is going to grow just generally speaking like i think corporations i think in the real estate sector like i know uh grant cardone is doing a lot of cool stuff with bitcoin and in real estate i think on the individual level right like there's so much chaos and kind of instability and all this kind of

stuff i think normal people like the you know the emergence of a of a of an asset where it is so predictable you know exactly what the monetary policy of it is it's consensus derived it's hard-coded in in in lines of code that are you know confirmed and and and secured by the the strength of the network which keeps growing all the properties that of bitcoin that bitcoiners talk about i think are going to start to really become appealing uh amongst kind of normal people if that makes sense yeah it's this anchoring mechanism gives you a high degree of certainty in an incredibly uncertain world right and like if you can i think that's just like the like when you get back when you get to like first principles austrian economics perspective of bitcoin like

that is the sort of stabilizing nature of the asset is like and then conversely like why everything is so instable is because you have an inability to know at any given point in time what's going to happen with your money because it's centrally controlled once you can have certainty and anchor into that certainty by using bitcoin you can then begin to coordinate economically with a higher degree of certainty and have to you can take less risk and you don't have to financialize everything to get a return like i think succinctly put first principles austrian perspective of bitcoin that's what it does right yeah and it's also outperforming so many other assets right like the first thing i do when someone when i see someone you know advocating

oh buy this stock or buy this the first thing i do is just divide it by bitcoin and it's almost always just down into the right you know what i mean so it's like it's outperforming the vast majority of assets like yeah over certain time frames you can find you know some tech stock that whatever but like the vast majority of people don't have the skill to be stock pickers so like it it's very simple it's very straightforward you just you just buy it and hold it and it goes up and it goes up forever because the dollar has no bottom right there's no top in the bitcoin price because there's no dollar on the bottom there's certainty with with what it is how it works the monetary policy right the the the new supply all of those things and i would also point out that

like since kind of the the trad fi adoption uh which at first i was kind of like knee-jerk reaction was negative because the whole reason I found it in 2009 or 10 or whenever it was, it was some like anarchist blog spot. Right. And it was like the, the cypherpunk ethos and the, uh, the kind of, you know, revolutionary, uh, sort of side of it. And, and, and like, so then to see it kind of, you know, be adopted by like BlackRock and, and this, it was, my first reaction was negative, but now that I've had some time to kind of, you know, uh, really think about it, it's really decreased the amount of volatility that we've seen. It's almost like, you know, Bitcoin pre-ETF versus after ETF has been just a different thing. And I think that to your point

with the stability, I think that the lack of that volatility as we build, you know, derivatives complexes on top and, you know, all these different products are offered and there is, it becomes a bigger market i think that we'll see less volatility and that'll that'll uh encourage more inflows right so it becomes a it becomes a strange game where the only winning move is to play um yeah the uh no that then i i completely agree like the i had similar aversions initially But now when you see it, I do. It would be naive to think that there aren't going to be some actors in the traditional financial system getting into Bitcoin in size that make mistakes, get over their heels, get over levered, ultimately blow up. But I think in aggregate, the most important thing of this wave of adoption is it's growing the number of different archetypes of demand for Bitcoin. And I think we're getting to a point where there's so many different demand drivers, whether it's an individual looking to outpace inflation and save their their value in an asset that can't be debased or a company that realizes a private company, small, medium sized business that's profitable is run by a Bitcoin or who understands that if you're unprofitable and I'm skimming some of those profits in the Bitcoin is going to be good for the equity value of my business.

So you have individual states who are saying maybe we should have a state level Bitcoin treasury, obviously countries doing that. And then you can see going to like Luke Roman's thesis of a Mar-a-Lago accord or something like that probably won't happen this administration. But at some point down the line, I think at the geopolitical level, it's going to be impossible to ignore that this neutral reserve asset that nobody can control is optimal and preferable to this sort of system of barter that exists in FX markets. Yeah. And like I would say, you know, we saw a very early glimpse of what the dollar trading on a balance of payments basis looks like. uh you know we basically saw kind of the the early stages of a balance of payments crisis in that right after liberation day um and you know like it we're in a tricky spot like there's not a ton of room to to to really navigate politically uh you know because this nip is negative 100 of gdp foreigners own tens of trillions uh you know of of our assets they

have us, they can control us if they don't like a particular policy. So ultimately, you have to get to the root of the problem, which is the structure of the system. And I would say that nations, if I was a current account surplus nation, either in the Middle East or Asia, traditionally, it was you put those surpluses into US treasuries. People say the dollar, but really it's interest-bearing dollars like treasuries uh and you know traditionally because we're in the secular bull market that was a good move um but you know it's not a good move right like that bull market um that down that you know secular uh downtrend in rates we've broken that in 2022 and you know i'm i like uh peter turchin and neil howland those got those demographic guys

And they talk about these long interest rate cycles. And if you look at all the structural drivers of inflation and kind of if you look at negative catalysts for sovereign bonds, it's just you just go down the list. there's like half a dozen right catalysts whether it's deglobalization whether it's the fiscal side of the kind of you know the government's balance sheet whether it's kind of a move in a different direction in regard to immigration policy that's also inflationary just as increasing the labor supply keeps wages suppressed the opposite is also true right so you'll get inflation driven by wage gains so yeah you just go down the list and it's like it's all it's all bad for bonds you know and so i think that that long interest rate cycle uh you know i think there's truth to

that now they could always do yield curve control right and just totally nuke it but i think that the the bias is towards higher rates especially at the long end i mean we've seen a since the fed started to cut rates uh you know prior to the last election they cut by 100 basis points and the 30 years up 90 like it went in the opposite direction by 190 basis points of course it wouldn't be one-to-one on the cuts but you know it went it went in the wrong direction uh and since the cutting cycle began we've been in a bear steepener um now you know today there's a big uh kind of bid into bonds especially the short end because the nfp was weak but yeah like bonds just especially long-term uh you know duration like i i just i don't see how it's appealing to all these current

account surplus nations especially after we did what we did to russia where we basically just turned off a bunch of cusips you know and defaulted on treasuries that they rightfully owned like what was it 200 billion yeah it was 100 it was over 100 billion it was a lot of money and so yeah i just it's like you know the appeal of something like bitcoin if i was you know a an emirate country with a lot of oil running a current account surplus like it would it's perfect it's a bear asset that's not centralized. No one can control it. It's scarce. And it's easily divisible, easily transportable, like all the properties we know. And it'll hold its value. Because if you're a current account surplus nation, that is really the purpose. That's really your goal is to,

you know, you're accumulating national savings via that current account surplus. You're trying to store the value of those savings. And, you know, Japan did it in U.S. Treasuries. They also bought a lot of real estate, you know, of course. Um, and I think that there will be on the margins, those, uh, you know, a shift towards Bitcoin. It's not going to be like, you know, 20% of current account surpluses overnight get put into Bitcoin. Uh, but you know, around the margins over the next five, 10 years, I think we're, I think it's inevitable that we will see that kind of start to grow, uh, and, and, and really just, you know, around the margin slowly, but surely very gradually you know stable sort of increase i don't think it'll be violent uh but you you never know

if there's a black swan event that that just collapses trust of the system you could see uh you know you i think you could see a little bit more of a dramatic uh move into bitcoin from not just not just nation states but people corporations and and everyone involved yeah yeah when you think about long-term bonds particularly the 30-year and then like you have people like chamath saying we should do a 100-year bond a 50-year bond it's like take a step back and like what are you doing you're literally lending money and your counterparty has proven that they spend that money terribly and uh they're only racking up more more debt they're tapping the credit line the revolver more and more every time in 30 years uh is a long time to take that risk like why when

you have alternatives like bitcoin would you ever take that risk and then you pile in the sort of geopolitical situation the fracturing the bipolar multipolar world that is manifesting before us and it just doesn't make any sense at all yeah and look like buying list listening to the power centers like the Fed and Treasury, you know, blew up regional banks, right? Like, they listened, they bought all those really, really, you know, long, you know, long duration, treasury bonds. And, you know, as soon as rates started moving higher, like due to convexity, those 20, 30 year bonds just collapsed in value. And, you know, ended up taking down, you know, some of the, I think it's three of the largest four bank failures in US history occurred

during that time period. So yeah, I could not be more bearish on long-term bonds. There's no world that I could ever see where I would... Now, as Jim Bianco says, there's no bad bonds, there's only bad bond prices. If the thing was yielding like 50%, like some emerging market bond, then I don't know, maybe I would buy a 30-year treasury. But then you get into the interest side too. If you take all of our marketable debt, the average interest rate on all of our marketable debt is 3.3. As of yesterday, there's nowhere on the curve where you can issue a 3.3, which means interest expense will only continue to go higher. If they are not able to gain control of the Fed and really force rates down through mega dovish forward guidance, yeah, interest expense is only

going to go up. And so, yeah, you get into a situation where you're stuck. I think that they're very close to admitting, look, it's fiscal dominance. Can't blame us. It wasn't our fault. We just inherited the situation. Here's what we got to do. We got to run negative real rates. I think what I was saying last year that I think would be smart is to strategically, we know they need negative real rates. Use those negative real rates strategically to help uh domestic industry right use it as a create some sort of structure like japan had uh they might still have that uh i'm not sure but you know some sort of way to to try to approach uh fiscal monetary policy and meld it with industrial policy domestic industrial policy

i think look like it maybe you know people might think that that sounds like very anti-american but if we got to run negative real rates and and financially repress the bondholders like uh shouldn't we at least be doing this you know using it as a benefit by by uh cheap financing for things that we need like critical infrastructure and defense and all that yeah yeah i'm thinking here the i could certainly like if i guess the point i would make there is like yeah if you have to do it like and you're trying to optimize for optimal outcomes for american citizens that makes sense but what i would worry about like particularly when it comes to yield curve control and building on a point we made earlier is that more like you're seeing it

with your channel like more people are hungry for this they're recognizing it and the it sort of seems like it's a foregone conclusion in many circles that like yes implicitly it's very implicit right now it's not quite explicit but it's beginning to become more and more explicit by the day that they want to sort of officially eliminate the independence of the fed tie it in with the treasury and go towards uh the japanification of sort of uh the treasury market and i like i totally believe that's their intent and their goal and their what they're going to try to do but i always wonder like we have we can just look at what it's done to japan since the 90s and it's arguably not good going back to like silent depression like in japan like

it shows up there in the fertility rate like they're going to have population collapse and And I just wonder socially if enough people become privy to we're doing what Japan just did. Let's look at Japan and see how they're doing societally. Is that optimal? And people say, I don't know if we should be doing that. Does that throw a wrench in the yield curve control plan? I don't know. Yeah, I mean, one of the videos I did looked at the World War II, the last time we've seen this sort of thing.

and inflation was like 18 percent during uh one of those years of yield curve control uh and granted it was you know wartime and there's you know we were industrial economy it's not a one-to-one thing but like yeah there's there's certainly consequences to it um for sure and uh yeah like i i just don't see how we don't have you know higher inflation for the next decade or maybe even more. It depends really on how negative they can get the rates and how far below nominal growth they can get those interest rates or the average cost of the debt. That, I think, will determine how long they will have to run the particular regime. But yeah, what I always say is you can't defy financial gravity forever. America tried to defy financial gravity for decades and was

successful and you know at some point like the bill comes due um and it and there is no easy way out there's no painless way out there's no way out that is just perfectly you know risk-free and without consequence and pain uh due to you know like accumulated policy decisions by the prior administration prior generations so yeah it's uh it's gonna be volatile i think it's going to be unstable it's going to be um uncomfortable probably uh i yeah you you know generally you don't want to see uh monetary policy become a political tool um like turkey did that right erdogan did that and they had 45 50 annual inflation uh and you know the price of gold in lira is like the craziest looking chart um when when he started to to to really make it a

political organization so um now of course you know we're not turkey but like it's not gonna be without consequence for the u.s um and i just yeah like i i i feel that sentiment building that like people know something's not right i think people also know that like something's coming There seems to be this really pervasive sense that I get from like reading comments and stuff of people like feeling like there's something right around the corner, like some shoes got to drop. And, you know, maybe it's all I hope it's not war. You know, maybe it's all this kind of stuff, you know, negative real rates, yield curve control. You know, they probably won't call it yield curve control. Like, I think if they end up going down that route, they're going to make an effort to make it sound as different as possible from Japan.

You know, different names, different acronyms, different terms. But like, yeah, with one of the one of the silent depression kind of pieces that I did looked at total bank loans and leases. right and and this is what drove private bank credit creation was what drove you know the post world war ii kind of booming american economy uh and if you look at like total private bank loans and leases divided by m0 uh the monetary base which is that government money private bank credit just fell off a cliff in 2008 and like hasn't recovered um and and you know this is something that Warner was talking about with Tucker in that interview, is that, you know, where the funding is going can be just as important. Well, you know, if we're going to just, you know, if the banks are

going to, you know, create private, you know, private credit creation, but it's going to like securities purchases, like that's not going to benefit most Americans. And in fact, if you look at GDP divided by M2, we had GDP growth outpacing the money supply, again, up until the late 90s when that turned over. And we've been getting negative returns for each new dollar of debt that we print. We're getting less and less actual GDP. And it's the same story if you look at it, the GDP divided by the debt. And GDP outpaced debt growth up until I think it was 82. and then in 82 83 in the early 80s it rolled over and we have been getting less and less return on each new dollar of debt so they they got to do something and if they if there is smart policy

that can get uh that side of the economy the bank and the lending side uh to somehow direct into more productive like you start getting into uncomfortable conversations though because like you know what if you take that one or two steps further that's like you know socialism or uh some pretty ugly industry yeah like it you get into some uncomfortable conversations but like uh and and to be clear like i don't support you know a lot of that craziness but like i think that there is a way that we can um i mean japan had that right that was one of the things that they had like the trade and uh industrial ministry or whatever it was and it coordinated with and look like japan did great after world war ii um you know up until kind of the bubble started uh they

were doing amazing i mean they thought there were people here in america that were worried that japan was going to overtake america like this tiny island country was going to overtake america so like you know there i think that uh you know free markets are generally good uh generally the side you want to err on but i think that like to ignore any and all evidence that uh to the contrary i think you know like japan made it pretty clear that like the average japanese person from call it you know 1960 through to 1985 did really well and the economy as a whole did really well um and you know i think you know even howard lutnick is calling for some of this kind of much more like not typical conservative stuff like he did that interview with pomp where he was talking

about basically nationalizing the defense companies, right? So this is not the Republican party of my, my parents, right. Or my grandparents. And so I think, you know, there, there, there will be some degree of coordination to try to direct much more productive lending. Cause I think that's a big story. I mean, if you look at that you know, private bank credit creation, it if you look at it as a logarithmic trend, it fell off in 2008 and it's just been, you know, just anemic going sideways and i think that's a i think it's a big problem and werner was uh was very on point with with his discussions about it well you're seeing the the product of that be the manifestation of all these private credit funds that are you're spinning up to service this market because the

banks either won't or can't for some reason yeah and last question because this is a big meme and part of like that we're going to grow out of this like do you have any hope or optimism about like the productivity miracle provided by ai like is that is this a silver bullet like black swan that we're getting handed it's possible um i am not the biggest like just on a personal level uh i try not to let like my personal beliefs or feelings influence like my analytical right uh but just on a personal level like i'm much more in the like get me a cabin in the woods of montana right and like this i'm not one of those like tech accelerationist sort of people that is like begging for the singularity and all this craziness it's generally not kind of

who i am as a person um so so that being said my bias you know being clear uh i don't think that it's very likely i think it's certainly maybe 10 20 25 percent likelihood um that you see productivity but as luke groman points out and and it's it's it you know what he says i i i have found as well through like looking at it independently it would have to come at the right pace not too quick not too slow and just the right amount like because otherwise you know if it comes too quickly, you're talking about, I don't know, 20, 30, 40% unemployment. If you throw robotics in there, you could see such massive disruptions. And then how do you fund the UBI, right? That ends up becoming necessary for that in that world. You know, some people say,

look, for every job that's lost, one will be created. I don't fall into that camp. I think more jobs will be lost than created with this, especially once you throw in robotics into the mix. So yeah, I think that we know how inefficient the government is and the cost of administering some of these social programs. I did a post maybe last month that looked at Medicare outlays, Social Security outlays, and VA outlays relative to tax receipts. And I think it was Medicare has grown 7.4 times faster than GDP or tax receipts going back to 1965. Social Security, I think, was 3.4 percent uh 3.4 x faster 3.4 times faster than gdp our tax receipts and va i think was in the in the low threes as well so government programs kind of by definition aren't efficient

so if you have high unemployment it you know it'll take money to then administer the programs that do all the ubi so you end up talking about like even more money and then efficiencies yeah I ask the question for tech stock kind of people, how are you going to fund that? The only way that I see that being funded is by just massive taxes on Google and Meta. Whoever has those tools, just massive taxes on them.

Then it's like, well, why own the NASDAQ? Yeah. And then also to that point, and i'll hand my i'll put my bias out there like i'm probably more optimistic because i've just like we've been leveraging ai here and it's made us more productive and i haven't fired anybody for it i've just like equipped people with it like extend your capability but to your point like i think it's very unclear like how how many if any of these companies are profitable yet like i think that's the big question like how much cash are they burning behind the scenes like how much

of this is just like uh an attempt to try to create enough energy and attention and adoption to try to get to profitability but like certain companies at least i think it's pretty clear they're burning incredible amount of cash and not getting huge amount any return in terms of profits and it's like have we reached a point where these companies can actually do it profitably yet like i think no and like will will it ever manifest like that's i think that's a big question yeah i mean i would say like i at first was like very opposed to adopting ai just myself um but then i was like no i'll try it out right and so i kind of started like tinkering with it and i gotta say like i i've come around personally to ai like i was one of those people that kind of hated it in

the beginning and was very skeptical but uh it's helped like immensely for kind of like i can throw into it some complicated, I can say, you know, country XYZ has a current account deficit, they got it, they're running a fiscal, right, like, give it all these conditions, all these kind of like inputs or variables, and then ask it to interpret how a particular policy on this, you know, side can, like, the degree to which it can think beyond my capacity so quickly has enabled me to you know it's helped me a lot and of course it helps with like little things like help me write a introduction to my video right like stupid stuff like that that saves you time and so then that's more time that i can spend reading you know uh you know academic papers at

the fed or whatever and uh yeah so i i do think i'm not trying to say that it's like a horrible thing i think i think that the productivity uh i think that you know if people are skeptical of it I would encourage them to, to, to try and try to just adopt it. Uh, it's not perfect yet, of course, but like it, you know, I was one of those skeptics and I got to say like, it, it's, it's been a massive boost, uh, for just a single guy that's trying to do all this, you know, YouTube and Twitter and right. And all this stuff, it's, it has, you know, massively benefited. yeah fun times exciting times you optimistic pessimistic i'm optimistic i think uh you know i see a spirit um of that's kind of re-emerging um especially amongst like younger people

it beneath the anger beneath the uh resentment and hopelessness and despair like there is this kind of bubbling up of a you know this is the first turning that neil howe talks about Um, and I think, you know, we're, we're certainly in a foreturning and it's certainly, you know, I, I think the next couple of years are going to be very volatile, very unstable, uh, uncomfortable maybe, but like the benefit is that coming out of this, we are going to have such a golden age of American exceptionalism that I think, uh, you know, might, might, might even surpass, um, kind of the, the, you know, the, the last golden age of America after world war two. Uh, and so that part gives me hope, you know, and I would say for the people that like

are worried about where we're at today and where, you know, the volatility and the chaos and this and that, I would just say like, just try to, to, to weather through the storm because it, I do have hope that it gets better. Um, and you know, that's what history that thousands of years of history, right? Like Peter Turchin goes back like hundreds and hundreds and hundreds of years and finds the same cycle. So, uh, yeah, like the inevitably kind of coming out of this four turning will be, uh, you know, a golden age, unlike any other, uh, cause now we're going to have tech. Right. And, and look, one of the things to, to, to say about America is like, we by far have the best tech companies and the best kind of innovation. So that's a positive. Um, and yeah,

I think, uh, definitely medium to long-term optimistic, short-term it could be, you know, but you just got to like weather the storm, right? Like don't do anything stupid. Don't use leverage. Um, you know, just kind of keep it simple and just hold on. And I think, you know, 10 years from now, things will be a lot better. Hopefully. I agree.

And that, that sort of energy that you're describing, it feels like for a period of time, particularly post 2000, there's been a lot of complacency. like we were given like us as millennials we were given the roadmap like you go to school you get a four-year degree you get a job it's done a lot of us went i didn't do it but like a lot of people i went to college but like i didn't like stick to a career because i had basically sniffed out pretty early like this doesn't seem like the right thing to do but many of our generation did and recognizing like ah the roadmap didn't lead me to where i thought i was going yeah and i think particularly with zoomers and millennials that are privy to what's going on like yourself

there's a degree of agency that's re-emerging where it's like i'm not just gonna take the the roadmap and basically use that for my life like i'm gonna try to figure out and actually understand things and make my own way which is incredibly encouraging yeah it's the the weak men's weak men create hard times and hard times create you know strong men strong men create good times it's kind of, I mean, it sounds stupid, but it's kind of the pattern that I see as well. Yeah. Robert, this was incredible. Where can people find out, where can they find your work on YouTube? Yeah, on YouTube, it's infranomics, I-N-F-R-A-nomics, like economics. And then on

Twitter, it's at infra, I-N-F-R-A-A underscore. And I have the blue check. There's, I guess I'm at a size where i get the imposter so just make sure it has the blue check um and the underscore at the at the end there and uh yeah that's basically uh most of where i am i do spaces and stuff so i try to respond to all the comments on on youtube so i try to engage with with people as much as possible if you ever want to talk come to one of the spaces we're in and you know just hang out ask your questions talk oh yeah we'll link uh we'll link to all that in the show notes We should definitely do this again. This was fascinating.

Yeah, it was a great time. Awesome. All right. That's all we got today, Freaks. Peace and love. Freaks, thank you for listening to the show. I hope you liked it. If you did like it, please make sure you subscribe, rate, review the show.

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