The Canadian Bitcoiners Podcast - Bitcoin News With a Canadian Spin - The CBP - Kevin Muir - Rate Decisions, Monetary vs. Fiscal, Concerns About Bitcoin

Episode Date: August 8, 2024

FRIENDS AND ENEMIES Join us for some QUALITY Bitcoin and economics talk, with a Canadian focus, every Monday at 7 PM EST. This week we welcome first time CBP guest Kevin Muir. Kevin is a former bank equity index derivative trader who for the past two decades has been trading purely on a proprietary basis for both himself and other individuals. He writes the lauded Macro Tourist substack letter, and I've been a fan of his for sometime through his podcast, The Market Huddle. From a couple of Canucks who like to talk about how Bitcoin will impact Canada. As always, none of the info is financial advice. Website: ⁠www.CanadianBitcoiners.com ⁠Discord: https://discord.com/invite/YgPJVbGCZX A part of the CBP Media Network: ⁠www.twitter.com/CBPMediaNetwork This show is sponsored by: easyDNS - ⁠⁠https://easydns.com/⁠⁠ EasyDNS is the best spot for Anycast DNS, domain name registrations, web and email services. They are fast, reliable and privacy focused. You can even pay for your services with Bitcoin! Apply coupon code 'CBPMEDIA' for 50% off initial purchase Bull Bitcoin - ⁠⁠https://mission.bullbitcoin.com/cbp⁠⁠ The CBP recommends Bull Bitcoin for all your BTC needs. There's never been a quicker, simpler, way to acquire Bitcoin. Use the link above for $20 bones, and take advantage of all Bull Bitcoin has to offer.

Friends and enemies, welcome to another episode of the Canadian Bitcoiners podcast. I have yet again been roped into an early interview session, not seven o'clock, four o'clock. The bell just rung on markets. We had a bounce back day. You guys probably already know that if you're in the Bitcoin world. And I have none other than Kevin Muir, the macro tourist. Great sub stack. I wish I subscribed to it. I don't. It's a little too expensive for me. I'm not an institutional investor. I just buy Bitcoin and index funds. What can I say? I know you guys don't like the second half of that statement, but it is what it is. Kev, also the co-host of one of my favorite shows, The Market Huddle. I like it for two reasons. One, like I said yesterday, I think Kev and Patrick Ceresna, the co-host, they have a really good rapport with each other,

the same way Len and I do. And the other reason I like it is because it takes the subject matter seriously, but they don't take themselves too seriously, which I appreciate. And it's a fine line to walk. So we're going to have a good conversation today. We're going to talk about markets. We're going to talk about the Canadian side of things, some risks, some things to look out for. And I do want to talk to Kev about what he thinks guys my age, millennials, maybe some of you Zoomers out there taking a break from your TikTok dances. What should we do? What should we be looking at?

What risks should we be aware of? But before we get started, as always, the sponsors. EZDNS. Mark is a friend of mine. He's a friend of the show. And as a sponsor and a partner, his company, EZDNS, has been indispensable. A couple of reasons. One, obviously, we run our website there, CanadianBitcoincoiners.com where we very rarely post stuff because we're both busy

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using that promo code as well. We're happy to be partnered with three great companies. We want you to patronize them. Kevin Muir is here. Kev, I was talking to you before the show. What I didn't say is I've been a fan of yours for a long time. I like market huddle.

And I got to tell you that I don't want the Kevin Muir who guests hosts macro voices to button up. Okay. I want Kevin Muir who co-hosts the market huddle today. I want swearing interrupted. I want all these things. My friend, how are you? It's great. Good. Great to be on by the way, with that intro, like I felt like I was on a CNB markets and turmoil special. Well done. Hey, thanks buddy. You know, I've been working on that for some time. Uh, it's, it's fun to do a podcast because you can kind of bring your own personality to it.

And the sponsors we pick, the only thing I tell them is do not give me something to read. I won't do it. I'm happy to promote the product and buy the product myself, but I ain't reading. Okay, so Kev, people don't know that much about you on this show, I don't think. They may know you from the market, they may know you from some other stuff you do. But for the people who don't, give them a little bit of background. Who are you? Tell me a bit about Kevin Muray.

So I'm an old guy, first of all, like much older than you. I've been interested and loved the markets from the time I was little, basically. I always loved playing games. My old man tells the stories of how I would bring Monopoly and all these games. I always wanted to play games. And what better game than the stock market? Nothing better. I fell in love

with like a book called market wizards when i was a teenager i read this thing it's a interview with a lot of the greatest futures traders out there and i decided that this is what i wanted to do um i got a job actually while i was going to university at an investor line which was a discount stock brokerage for bank of montreal i started working nights next thing i know i was working during the day next thing i know i was in charge of the whole um kind of group and i was like 20 years old and i was in charge like i was a bank five level manager or something like that and i was like this isn't what i wanted to do i don't want to work at a bank and so i actually hadn't finished my degree and i picked up and i moved to chicago because this was

i always wanted to work in the pits. Like, you know, the Ferris Bueller with the guys up in the hands up in the air. So I went there and I hated it. I couldn't stand it. I got there and it was just no, no real thought. It was just, you know, a bunch of huge gruff guys, you know, in the smelly pit screaming things out. And so I came home and I was lucky enough to get a job at rbc dominion securities and i got a job doing what's known as program trading electronic trading and the reason

that i got that job was my boss said there was guys that were better trading there was guys that were better computers but i had the right mix so i was lucky to be there in the early 90s and i was fortunate because it's a terrific place to work it's people who don't know, Royal Bank, the actual dealer itself is like the Goldman Sach tons of risk. And so I did that for many years until I was about 29. And then I decided that I was going to quit. And I was going to go off on my own and just trade for myself. And I've been doing that ever since. And along the way, I started writing a letter because I was kind of bored. It kind of gets lonely when you're not having the same trading desk to sit on. And so I started this letter and it ended up being a great way to meet people and interview people. And, you know, one of the things was the podcast.

And, you know, you were very kind in mentioning that. My partner, Patrick Ceresna, had me on Macro Voices, which is this really big top-rated kind of macro podcast. And I hated it. It didn't do very well. And then he said, do you want to start one of ours? You know, something you and I. And I said, listen, if we're going to do it, the Americans do it so well, we have to have something different. We have to have like a gimmick and we can't be too serious. And I said, what do you feel about drinking? And he was like, yeah. So we started drinking beers while we were doing it and having some fun. And, uh, it's been just a terrific ride

because I've got to interview some absolutely fabulous guests in terms of some of my mentors. And like I mentioned market wizards, I got to interview some absolutely fabulous guests in terms of some of my mentors. And like I mentioned, Market Wizards, I got to interview many, not many, some of the Market Wizards and the fellow who wrote the book was actually on the show. So it's been terrific. There's some love for Market Wizards in the chat. I have to give you some kudos. The one thing I like about Market Huddle that I think is just not true for a lot of other shows is that even if I don't understand the content, which happens, I think on market huddle, I don't know, 30% of the time, maybe a little more of the interview. I still listen because I think that you guys do a good job. You specifically do a good job of making it accessible and bringing the guests down to a level where if you have a little bit of understanding of

financial markets, you don't have to be the plumber, but as long as you know that water flows downhill, you can enjoy the interview. You know what I mean? I really appreciate that. No, it's my pleasure, Kev. So I recommend that show to everybody if you haven't started listening to it already. Now, I don't know where you want to start. And I had this kind of list of questions and notes and stuff. But I think you've kind of established yourself, at least on Market Huddle, as like the yen guy. Are you the yen guy, would you say?

Is that a fair characterization? Oh, that's just – no, that's just recently yes i i i have a big position i love japan i think it's dirt cheap i think there's lots of opportunities there but no you know like if i guess uh you know one of the things about me is everyone always says like how do you make your money you've traded for yourself for so many years what do you specialize in like are you a convertible bond trader? Are you an option trader? Are you, you know, what do you do? And I always say, well, the reality is I do something different wherever the opportunities are.

And I go to whatever I see. And one of the reasons I left the bank was I kept finding opportunities and they're saying like, I'd go put the position on in my inventory and they'd be like, you can't trade that. You're not allowed to trade that. I'd be like, oh, then I'd go find something else. They'd be like, you can't trade that. You're not allowed to trade that. I'd be like, oh, then I'd go find something else. They'd be like, you can't trade that. So I, at times I have these kind of strange positions and they'll kind of move all over the

place. And that's why the macro tourist itself is kind of a, it's a tongue in cheek name. And someone once told me, he said, you know, that the macro tourists, like that's derogatory. And I said, yeah, I know. Like I'm making fun of myself. Like I tourists like that's derogatory and i said yeah i know like i'm making fun of myself like i like it's it's not it's my macro tourist is somebody who wanders into a square doesn't know anything makes a mess and then leaves and so i kind of laugh because i am the macro tourist i go do a whole bunch of different things so yes over the last year or two i've been doing a lot in japan But many years, I do different stuff. I'll give one of the examples.

I think it was in 2011 or whenever oil went down the first time, not the second time during COVID, but there was a time when it went down. And oil went down, and I got bullish oil. And I started thinking about, okay, how am I going to play this? And I went out and tried to look at buying futures and the trouble what the futures were they were anticipating that the market would rebound so like if the spot was 20 bucks like you know a year out was 25 or 30 so you'd have to you know you'd have to rise that much for you to make money so i said oh that's kind of like too much built in there maybe i should look at the equities so i went looked at the equities and the trouble about the equities was the companies had lost so much money. They had all gone down in price and they'd gone to a point where they were trading like call options

on the actual commodity, meaning that they had all this embedded premium in them. And the reason they were trading in call options is because there was so much debt on these companies that the debt had these companies that in the debt had actually gone down in value because people worried about their ability to pay it over like pay it back so i looked at this and i said okay you know i don't want to buy the equities because they're going to just the moment this thing rebounds they're going to have to issue a whole bunch of equity so that we can pay back this debt but i looked at all this debt and it was trading at 40 50 cents on the dollar so that year i was like this debt. But I looked at all this debt and it was trading at 40, 50 cents on the dollar.

So that year I was like a corporate bond trader. I was like, that's what I traded. And it was a great opportunity. And I think that's one of the benefits that I have is the ability to kind of look at something and go, okay, this is an opportunity for this particular set right now. And that's why I'm going to go do it.

So yes, I love the yen. Yes, I love Japan. I'm more than happy to chat about it so um yes i love the yen yes i love japan i'm more than happy to chat about it but the reality is i am not mr yen i don't want to ask too much about this except is this whole carry trade 20 trillion coming our way is this is this something that uh i need to be like watching youtube videos about or should i just not care uh it's already over you should have cared like two weeks ago when no one when everyone knows you know what so for those who don't know japan has very low interest rates and for a long time folks were borrowing in yen and then going and buying stuff and not only that the

japanese were doing it and there was a whole bunch of different things like i there's something called uh the ns nisa account which in essence is kind of a japanese rsp and in the past you're you're way too young to remember this but when rsps first came out they were canadian content only oh you couldn't you couldn't buy american you had to buy like tsx might be headed back there by the way but yeah listen it might not be the worst thing but um And then when they changed it, they opened it up. There's like this flood as everyone went out

and bought American companies. Well, that just happened in Japan this year. And so what you saw was a period when the yen and MAG-7 were deeply, deeply correlated. They seem to be moving tick for tick. And I speculated that this was

the Japanese investors, in essence, selling yen to buy MAG7. And that was part of the thing that was going on. And then you combine it with institutional traders that were borrowing in yen to buy Mexican pesos or some higher yielding currency. And you saw the yen go from, what? 140 or 130 all the way to 160. And in terms of yen, higher means that it's going lower. And when you went and talked to people, everyone was just like, oh, the yen only goes down. Literally, people told me that. I was like, the yen only goes down. Even my co-host Patrick was giving me a hard time. He's like, you're just like an idiot. You're sitting here buying it.

And I said, you know, the reality is if you go look at what's called purchasing power parity, which is like you look at the fundamental value of the currency, easiest way to think about it is like if you go the Big Mac index, go buy a Big Mac in Canada or Toronto and then go buy it in Japan. See what, you know, in terms of how much it is with your currency. Japan was dirt, dirt, dirt cheap. Like I can't tell you how cheap it was. It was just like off the charts cheap. And so you knew that once this kind of went the other way,

you were going to have a big move. And I think that the time to do it was a couple of weeks ago. And I have been long yen, but I sold all my yen yesterday. Like I was like, that's it. I'm,

I'm out for a little while. I think we're going to chop around here. The, the quote unquote, easy money. Not that it's ever easy has been made. And I, and I don't feel as strongly about it and stuff,

but I do feel very strongly about the equities and the equities got absolutely slammed. I think they're terrific long-term buy um lots of reasons but i think that they are going to be the market for the next decade is there an example i think the nikkei i might not be saying that right limit down obviously sunday monday morning and then limit up yesterday uh you ever seen that before like that can't be oh yeah so i remember trading um japan when they had their their tsunami yeah and i remember i was long and i came in and then there's this tsunami i started buying a little more and then they said the prime minister is going to address the nation i was like okay the prime minister is going to settle everything down. He comes out in like a hazmat jumpsuit.

And it's when it's silly limit down. And so yes, the Japanese, they are prone to being a little more all in, all out. So it's not that unusual that they had more violent moves like that. We're going to talk a bit about communication strategy today. I don't think Jerome Powell is planning on coming out in a hazmat suit, though maybe in September. I don't know. Really, it's anyone's guess. We're in the Tyson zone,

I like to say, where the Tyson zone is where I could tell you anything is going to happen over the next month the same way that I could have told you anything Monday morning in the 80s about what Tyson got up to on the weekend, and you'd have no choice but to believe it i think we might be there in a lot of ways and so i'm not ruling out the hazmat suit but i hope it doesn't happen let's talk about the feds talk about the states and move to canada federal reserve very keen on this messaging over the last you know i guess 18 months at this point they've been at five and change as a fund rate, as a policy rate. Inflation is cooling, but it's not cool enough. Economy is stable, maybe not strong,

but not weakening either. And now you've seen this, I wouldn't call it a crash. We didn't really get this move that would necessitate an emergency cut, although some pundits were calling for it yesterday morning. What is the Federal Reserve's next best move here, Kev, in terms of rates, do you think? And maybe as a secondary question, should they be telegraphing more clearly what they plan on doing? I know that there's not really much debate about them cutting in September between the messaging and yesterday. But my understanding as an outside observer is that there's value in expectation for these big economies and their central banks in terms of making sure that people

are expecting cuts or expecting hikes or expecting whatever. What should they be doing in terms of communication? Are they on the right track now? Do you expect 50 in September, 25 in September? And maybe if you want to talk a bit about the data they're looking at, one of my concerns, again, as an outside observer, is that I hear Jerome say a lot that he's a data-dependent guy. And yet it seems like almost every quarter, the Department of Downward Revisions over there changes the data that he seems to be depending on when he goes to the podium. Am I missing something there? What's going on over there, man?

So you're correct that they definitely want to communicate um that question about whether communicating and pre-committing the fed to a policy is good or bad is actually one that many kind of economists debate there there's a lot of a lot of debate about it and just to kind of remind you back before Greenspan, they used to go and they used to just change the rate and that'd be it. And not only that, when I first started in the 90s, I remember you didn't even get an announcement. You had to figure out that they changed the rates by going and looking at their open market operations in the T-bill market. So that was it.

They just went out and they were just, okay, they changed it. Most economists, I'll give you the kind of the argument that they'll tell you, is that they believe that by the Fed communicating clearly what they're going to do in terms of ahead of time, and not only that, what their reaction function, you'll hear them when you listen to them, they'll talk about the reaction function. Teaching the market about the reaction function helps the economy.

Now, I'm not so sure I agree. And interestingly enough, when Poloz was the Bank of Canada governor, he was one of the few governors, central bank governors, that actually surprised the market. Meaning that if you go look at history for the Federal Reserve, every meeting, when you look at what the market is priced in, it'll be at like 95%, meaning that the market has already priced this in, and they go and they do it. Poloz left it at 50-50 and then, or even 40-60, and then surprised everyone and went go and they do it. Poloz left it at 50-50 and then or even 40-60

and then surprised everyone and went the way they didn't think he would go. And his argument was that, you know, you need to have some uncertainty in there. By creating too much certainty, you encourage people to take excess risk. And to that point of view, I happen to agree more with Poloz

than I do with the new age economists. But listen, they'll tell you very definitely they can prove to you that it is beneficial. I disagree. But all you have to do is look at what happened in the post-COVID world when the Fed got out there and said, we expect interest rates to be low for

a considerable point in time. And then people like all the regional banks, Silicon Valley Bank, went out and bought bonds and levered up their balance sheet because they had taken what the Federal Reserve had said, which was really just an opinion as opposed to a promise, to hard, and then they ended up getting crushed. So I think you'd be actually better off communicating less and letting there be risk out the curve. Like right now, the curve is inverted, meaning that as you go out in terms of tenor, longer bonds are trading with a yield that is lower than the front month. That's because the market is expecting the economy to roll over. But it also could be a function of this communication policy and their change of how they're doing

things and the fact that people understand that there isn't that sort of risk anymore because the Fed's kind of guided you. Now, in terms of the revisions, there's no doubt recently there's been a lot of revisions downward. One of the things that you should always remember is that when you're looking at an economy, the revisions actually give a good clue about whether the economy is strong or weak. And all you have to do is look back during 2021 or 2022, there's lots of revisions higher after the fact. So that's one of the clues that people look at. I happen to believe that the economy is actually much weaker than the Fed believes.

I think that they're late and that they should have been cutting before. But at the same time, it's going to appear a little paradoxical what I said. I don't think it matters as much as people think it does. Everyone's all up in arms because he didn't cut this time the reality was he's not going to cut and then even more importantly you asked me a question and you asked me kind of what i thought they should do and that's irrelevant like we shouldn't care what what we would do we should care what they're going to do. So I spend a lot of time just getting frustrated with traders or strategists to start talking about what should be done, best policy. Are you an economist or are you a trader?

Because if you're a trader, it doesn't matter what you think should be done. You could say, I think interest rate should be 2%. Who cares? All that matters is what will be done. So I say, don't worry about what should be done. Worry about what will be done. Like you could say, I think interest rates should be 2%. Who cares? All that matters is what will be done. So I say, don't worry about what should be done. Worry about what will be done. So on that basis, here's what I believe will be done when it comes to the Federal Reserve policy. A lot of people are talking about 50, 75 emergency cuts. That is not going to happen. Like Jeremy Siegel, very well regarded professor, was on CNBC talking about an emergency 75

cut. It's embarrassing. Like that is embarrassing. He should be embarrassed. He should go home and think about what he has done. Like he really should. Like at that point, the NASDAQ was still up on the air and he was all freaked out about this.

Anyway, so back to what I think the Fed will do. This Fed is very consensus-driven. It is not one to do anything too dramatic. You might say he did 50s and 75s on the way up. There was a lot of inflation. He was slow to get there. He's going to be slow on the way down. I suspect that he won't even do 50s.

People are talking about him cutting at 50. I suspect what he's going to do is he's going to put the economy or the monetary policy on a path of 25 basis points a meeting, just like Greenspan did on the way up in the post.com bubble world. In 2002, he started raising 25 basis points each and every meeting. And I think he went on for two years like that. Every meeting was just 25 basis points, 25 basis points. I think that Powell is going to go do the same in reverse.

So he's going to start you off. He's going to say, we're going to do 25 and then we're going to look. And as long as the numbers keep coming in weaker, he's going to do 25 and then look 25 and then look. So then the question becomes, is he going too slow for what the market expects? And does the market freak out and actually have an, a kind of a crisis that pushes them to do more? Because ultimately I think that will be what the only thing that could push them to do more. Because ultimately, I think that will be the only thing that could push them to do more is problems in the financial markets. Lots to digest there. Do you think that the expectation that leads to additional risk being

in the system is actually just driven by the expectation that governments, regardless of Stripe, will stimulate and give you bailouts and do all this other stuff on the fiscal side and is not necessarily tied to monetary policy guidance and expectations anymore? Okay, that's a good question. Because that's something we think about in Bitcoin a lot, right? Like the printer go burr, you know, I'll just, I'll sit in whatever mag seven equities, whatever high beta Bitcoin related stocks and Bitcoin itself, knowing that at some point the pain will be too great.

The election is coming and that the, the, the natural slant of that government and every other modern government is to fire up the burn machine. It seems to be the case now. It's the expectation of the people. And at some point that's going to rule the day. I think,

what do you think? Okay. So unfortunately the answer answer that question we're going to have to talk about fiscal and monetary policy sure and there's a big difference um so i i have seen the the printer go burr argument and i've seen people say that they you know they were buying you got to buy every dip because the reality is at the first sign of trouble, they're going to cut and printer going to do burr. I can tell you

that's not going to be the first sign of trouble. It's going to be some real pain before they do it. All you have to do is go back and think to 2018. Bernanke came in there. He started raising rates.

He raised rates until we had that Christmas massacre where the bond stock market went no bid. And then sure enough, he did go and reverse policy. So I'm not disagreeing that ultimately that is the way it is headed and that ultimately that is the decision governments will make. I will not disagree, but I will push back to this belief that that means you can lever

it up as much as you want, because I think people underestimate the amount of pain it causes them to go in to stimulate. Now, in terms of this different kinds of stimulation, it sounds bad. There's fiscal and there's monetary. And I happen to believe that fiscal is so much more powerful than monetary. And so when I hear people say they're going to print their way out of it and they're all mad at Jay Powell, I don't think Jay Powell is as important as everyone thinks he is. I actually think that the reason the economy and that we made inflation was because of fiscal policy as opposed to monetary policy. And it's much different. Let me just explain to you why I believe this. So if you think about QE, QE is quantitative easing, and it basically means the monetary authorities expand their balance sheet by a certain amount, a certain quantity. So they go and they say, we're going

to buy $10 billion of whatever. And it's usually, it was originally T-bills. It eventually became bonds. And even in the COVID crisis, it morphed into corporate bonds. In Japan, they've gone as far as buying equities. So it's just the central bank expanding their balance sheet by buying an asset. Now, depending on the asset they buy, but let's just first of all start with T-bills. If they go and they start buying all sorts of T-bills

and they push money into the system, the idea used to be that you would go and the economy would all of a sudden the banks would have all this cash on their balance sheet and they would lend it out. And that was really the idea. in the post-great financial crisis world, there was some very serious economists who wrote an open op-ed to Bernanke saying that he was going to cause a collapse in the dollar, a runaway inflation, because he was doing all this QE. The reality is we had one of the most, you know, crappy, shitty recoveries in history, even though we had this extraordinary amount of quantitative easing.

And the reason is, if you're Jamie Dimon running JP Morgan and the Federal Reserve comes and buys $100 billion of bonds off of you because they're the ones selling it to them, you all of a sudden have $100 billion on your sheets. You don't go and say, well, you know what? I'm going to give Kevin a loan. I'm going to give Joey a loan. I'm going to go give all these guys a loan. The reality is that they were never constrained by the amount of money on their sheets. JP Morgan could always go make those loans whenever they wanted to. So that actual quantitative easing operation did nothing to change the actual real economic desire for loans and money creation. And this is the part that everyone kind of confuses. And in essence, what happened is it

just sits on the bank's balance sheets. And that's why we needed the reverse repo program, because there was so much money on the bank's balance sheet. They were losing what's called the lower end of the range. In essence, they couldn't keep the interest rate as high as they wanted to. So therefore, they needed to do a reverse repose, which is just the Federal Reserve issuing T-bills. Yeah, that's overnight loans, right? One of the things that you kind of remember is there's a big difference between QE and fiscal. And the reason that it worked so well, why we had inflation,

was because this time we didn't just do QE. We did QE, but we also did a massive amount of fiscal. And all you have to do is look at the economy that did the best is the US. And it's no surprise that they did the most amount of fiscal. They did 24% of their GDP. They just shoved out the doors fiscal stimulus. Canada, we were at 16.

I think the next highest was 19. America was off the charts. And so everyone's sitting there going, America cleaning this dirty shirt and all this crap, like this shit that I can't stand. And I'm like, no, the reason they're doing so well is because they had so much fiscal. And so now when you talk about the Fed put, I don't think the Fed put is as important now as the fiscal put. And so you have to ask yourself, are the next time we run into trouble, will the government just spend like that again?

I happen to think it's yes, but I don't think it's as quick as everyone thinks it is. I don't know what real pain looks like anymore. And I think that there's a number of people who were maybe coming of age during the GFC, myself included. I was 21, I think, in 08, 09. Yeah, 21, 22. I don't know what that looks like. I wasn't handling my own finances. I didn't own a home with a variable rate mortgage, any of these things that really do tell you, is the stove too hot for you to put your hand on it in terms of whether or not you're levering up and trying to buy equities or Bitcoin or whatever else. And so I wonder if, if what you consider to be real pain is actually below the threshold that

will trigger a response. There's no good answer for that. I really don't know. You're saying that because we become so immune, like so intolerant of pain, it's going to be faster than I'm expecting. Yeah. Could be.

I would say though, there's a lot of old guys still running governments. Unfortunately, you got that right. You got that right. Let's uh let's move to north of the border here uh our home our home and native land are all our sons command or whatever the lyrics are this week um i've heard you talk about uh tiff macklem in terms that i would characterize as less than glowing probably pretty soft actually that i think he's one of the worst central bankers yeah okay yeah that's that's what you like not for what not for what people think like you know the reality is i think he's been too tight yeah and and i know like that's kind

of against what everyone's saying ultimately here here's what i think happened america went and did the greatest amount of fiscal stimulus everyone underestimated how efficient that was going to be, not efficient, how powerful that would be in terms of running their economy hot. We did some, so our economy ran hot as well. But you have to remember there's two different ways that you can go and create money. One is that the private sector borrows it into existence, meaning, Joe, you go borrow from Royal Bank to buy a house. That's actually a loan being created.

That's the money supply being increased, right? And so generally in the past, because we've had no fiscal stimulus and everything has been monetary like if you think about every since the great volkler in 1982 every single time that we ran into trouble what did governments do they lowered interest rates to try to get the private sector to borrow more right and so in essence what we did was we created this environment where every time they had to put rates to a lower level to induce new people to borrow.

And so we made more and more debt in terms of in the private sector's hand, especially in America. It hit this point where it was absolutely crazy. GFC comes, they go to zero. Nobody wants to borrow. That's called a balance sheet recession. Okay. Then they do all this crazy quantitative easing stuff that still doesn't really work.

Okay. So that's the one way you can make, you can create money. The other way is for government to spend it into existence. And that is in essence, fiscal spend like deficits. Right. And so US did way more than we we did as canadians they did more but not only that their private sector their consumer sector they have this thing called the 30-year mortgage right so everyone that could refinanced it their their houses at like some stupid level one two percent and what in essence occurred is that they

had no consumer when when powell started raising rates it had less effect than it did in the past because everyone that was you know previously that affected the ability to people buy houses they'd all locked it in right so? So we didn't have that. Ours is like, you know, what's the, like most people do five if they do five at all. We don't have the ability to lock it in. So we were more exposed to interest rates. Number two is after the GFC, the US was at like 110% of debt to consumer debt to GDP.

They paid it back. That's another reason their economy was so bad in the post-GFC world. They reduced it. They went from 110 down to 75 or something like that. We did the opposite. We were like, yeah, we're so smart. And we just started buying more and more.

So we're actually higher in terms of consumer debt to GDP than the Americans were at the top of their peak. So we have more debt to gdp than the americans were at the top of their peak so we have more debt to gdp we have uh more exposure in terms of it floating and yet and we did less um fiscal spending on the government side and then tiff is thinking that he's the man and he's going to go you know toe to toe with powell and raise just much. And the kind of the really pisser thing about it is for a while, it looked like he was right. And the reason that it seemed like he was right was because at the same time that he was raising rates,

our government was doing an absolutely insane immigration policy. And Ben Rabideau is, you know, a real estate expert. And he's the one who really opened my eyes to this. And he's actually testified in front of the government and some committees and stuff. And he showed me how much we're doing. And listen, half of my side of my family was an immigrant in terms of my mom. She was not born here. I love immigrants i think

they're great but by doing too many we're not doing ourselves or the immigrants that we're bringing into our you know society any favors because the reality is that we couldn't house them we don't have hospitals for them everything is just like a shit show so but one of the things about it is when you bring all these people in it it makes your GDP look larger. And so one of the things that TIFF was missing was that our GDP was going up and it was going up because we had the greatest immigration boom that we've had. And if you look at a graph of Canada's population growth, This was like way more than the baby booms. Like this was off the charts growth in terms of how many people. So it made our economy look better,

but yet we were having what's called a per capita GDP recession. And so we might've had like the second best GDP growth out of the G7, but we had the worst. We actually lost money, lost value per GDP per capita. So that's why it's felt so bad in Canada. Why kind of you'd be like, hey, you know, it says we're not in a recession, but it sure feels like a recession.

And the reality is it is a recession for most people. Do you think it's actually fair to characterize that whole, you know, he didn't realize the immigration policy was driving up GDP as he didn't know? I think we're in the eighth straight quarter of that GDP per capita decline. reading and digesting and metabolizing every month when they decide whether or not they're going to cut rates, it's hard for me to believe that they didn't see that and didn't know it. Not only that, but I happen to know that at least one other major Canadian podcast that talks about that all the time got an audience request from Mark Miller, the Minister of Immigration. So I happen to know that there's at least one or two ministers spending their time trying to get podcasters to carry water for them instead of maybe looking at data or accepting that the data is going against them. Do you really think that he didn't know?

Or do you think that there's actually not this sort of arm's length distance between policy and politics when it comes to the Bank of Canada? So if you think about what I'm saying, i'm saying that he was actually too tight yeah he actually kept rates too tight and i think he had to be loosing them way ahead of time so imagine the shit he would have taken if a year ago he started talking about oh you know what it's actually worse than it seems it's just because of all this population immigration yeah and i'm actually going to go lower rates to to three percent and you talk about like this perception of the printer go burr and i'm sitting here telling you that he actually needed to do that imagine the pushback he would have got imagine what what what people would be saying so you really didn't have a choice.

Who would push back? I think if you frame that, especially because now, if I look at the sort of broader zeitgeist here in Canada, I know for people my age, it sounds like for people your age, everyone understands what the problem is and can describe it fairly well.

The pushback he would have gotten maybe would have been significant at the time. But now, as you pointed out, he would have been maybe would have been significant at the time but now you know well as you pointed out like he he would have been correct to start this earlier because of the reasons you described okay but if you think about let's just go back to my yen trade i sat there i was offside for a long time i got told i was an idiot i was an idiot i was an idiot all of a sudden it comes you know it falls you know 20 handles in three days and they're like hey you're not such an idiot but the point is like you you got to be willing to take

that you're an idiot and these guys aren't so i and i don't i don't know if he would be even allowed to take that because don't forget he is obligated with running policy based upon inflation. Yeah. And the truth of the matter was inflation was above target. Now, I happen to think that his raising rates did very little to change inflation. And that's ultimately what where I differ from a lot of people is that I think that if you really wanted to change inflation, let's just take America. It's easier to understand because it's kind of cleaner. Everyone was talking about the Federal Reserve raising rates.

I think instead of the Federal Reserve raising rates, they should have been spending less, the government, because that was the problem. There was too much money being spent out into the system. Now, the other problem is there was too little money spent into the system during the GFC. And that is why interest rates were so low and why they kept trying to do it, stimulate through interest rates. And yet nothing happened. Because if you think about it, think about like of Europe. And I like using Europe because Europe went to negative rates. So you actually could go borrow and to buy a house and your mortgage was going down on its own.

If I got that right. It's crazy. Like it's madness. So let's just think about if you're like a company that makes widgets and you're sitting there in somewhere in Europe, you're in Spain. And all of a sudden you can borrow 10 years at zero. You think, okay, great, that's free money. I should build a plant. I should do all this stuff.

The reality is if there's nobody to buy your widgets, the zero is not your decision. That's not the factor that's mattering. It's the demand that matters. And when you look at it, you'll actually see that when you go talk to CFOs that are making those decisions, the cost of funds is not as important as everyone thinks. And this is the thing that pisses me off is that everyone thinks, oh, I can just lower rates and change behavior. No, it's actually you can't. And ultimately, the government spending money into existence when it needs to be spent is actually more important.

And that is the problem with the GFC. They just kept trying to lower rates, thinking that they would induce somebody to spend. And there was nobody to spend because there's no demand. I can't believe you called Tiff Macklem's testicular fortitude into question just there. That is hard for me to believe. you know, that is really something. But listen, he seems like a decent enough guy. I don't want to be too harsh on him, but I really, truly believe that if he was more forward looking, he would have got out ahead of it.

And I think he was too scared because at the time inflation was going fast and not only that america was was especially going fast and it seemed like you had to you know we can't decouple as much as we think we can and i i would have done it i would have taken it but he he just was not gonna he was not gonna take it so i understand why he did what he did. Do you think it's a reasonable characterization to put something like ballooning public sector employment under the same umbrella as government spending for crises? I look at these charts. Damn near hockey sticks, honestly, since the beginning of COVID in terms of, I don't know, federal public service is a good one. But there's others as well. Some municipal public services provincial employees basically people

who are being paid by the public coffer has ripped to the upside uh in a time where the economy has been you know by some characters in some people's opinion broadly weakening or weak um is that is it a fair sort of description to say that that's also fiscal you know sure is it yeah one in the same but let's let's the the problem i have is that i hate absolutists i hate like people that say this is absolutely bad absolutely good and the reality is that almost everything there's a middle ground that kind of is where the truth lies. So let's just think about what happened after World War II. All these GIs come back to the U.S.

There's no jobs for them. So what does Eisenhower do? He says, okay, well, we've got to put these people to work. We're going to make the greatest interstate highway system in the world. And he went and did that. And he spent money on that. And federally employed workers exploded. But yet, that was a good thing.

That ended up being part of the reason the U.S. outperformed for the next 20, 30 years was because they had invested in that. So one of my worries is that when you go and you focus on just getting deficits down, you're missing whether it's an investment or it's just money wasted. So think about your company here, the Canadian the bitcoin or canadian bitcoin your spot podcast you guys get some money from your all your sponsors your numerous sponsors cnbc and everyone's knocking on the door and you have all this money and you can you know you could decide to have a party and you can go and you can blow it all in an evening with free booze and have a great time or you can invest in some new equipment you You can buy, you can get another staff

that helps you out doing stuff and making the podcast better. And this is one of my issues is that too often people just either, they say like deficits are bad, deficits are good. Like they don't differentiate. Like, although I do lean kind of more on the deficits aren't as bad as everyone thinks,

the Paul Krugman who argued you could literally pay someone to dig a ditch and then fill it in, no, that's wasted. And that's a problem. But at the same time, all I have to do is go look at the Ontario government. They had this mad desire to show that they were getting the budgets in control. And it was, I can't remember which government it was, but it was one of the governments. They had promised that they'd get the budgets in control. So what did they do? They sold the 407 highway. And so for those who don't know, this is a highway that runs north of Toronto. It's probably, I think, one of the most expensive highways in the world. Do you know what it costs to take it and so for those who don't know this is a highway that runs north of toronto it's probably i think one of the most expensive highways in the world do you know what it costs to take it length at

length kev it's like 70 i think during rush hour now yeah take it and in in the private sector guys are saying thank you very much you sold this for a heart you know like for a song and it was a it was a case of the government being so focused on trying to balance stuff and get their deficits down that they gave this away. So money spent on infrastructure or making our society better is a good thing. Money wasted. And I'll be the first to say that I think America was crazy for mailing everyone checks. Like I have a guy who sat beside me. He has like he's my age.

He's like I'm he a guy who sat beside me. He has like, he's my age. He's like, I'm, he's a little older than me. And he's got some kids that are like, he's an American and he had some kids and they were just getting mailed checks for like 2000 bucks. Like we wondered why GameStop was ripping. These guys were literally just getting like,

no, honestly. And it wasn't even just one check. It was like three checks. Yeah. And, and so that money, listen, did some people need it during COVID? 100%.

But you should have means tested that. There was no reason to send him the money. He didn't need it. It was just money wasted. And so anyways, so I have a real problem with just saying, oh, ballooning or increasing government jobs is bad. It might be. It might not be. How concerned should we be as Canadians with a weakening dollar?

I've heard you call for CAD USD all-time lows in the next year. I don't know exactly the timeframe you've mentioned on the huddle. But as a younger Canadian, one of my concerns is that we don't produce anything here. Everything is imported. Increasingly, we don't even produce energy here, which is alarming for a number of other reasons besides the currency thing. But one of the things I think about is if the currency is weak, everything's going to start costing me a lot more money because we seem to be unwilling to produce it here. And as you mentioned there, the government spending we're doing doesn't seem to be productive government

spending in the most technical sense. Not necessarily people not doing hard work, I'm not saying that, but things that you need to run a modern economy are not being made in Canada, let's say. Is that a fair fear for someone my age and even someone your age, I guess, especially if you're on fixed income? You really need the dollar to maintain some equilibrium between strength and weakness if we're going to continue to be net importers of basically everything that drives quality of life. Where do you come down on that? So you're correct. But I'm going to push back a little bit on this like we don't do anything right. Okay. I'm going to push back a little bit on this, like we don't do anything right. If you actually go look at, for example, tech,

there's a lot of things that we're doing much better. Like, you know, Mayor Tory was a great champion of getting tech into Toronto. And if you look at the greatest expansion of tech employees in North America, I think we were number two behind Silicon Valley. We beat out Texas. We beat out New York City. We've had a huge amount of people. For example, we went and did this thing with the H-1B visas in terms of the America had this thing where

you were trying to, you know, if you were there on an H-1B visa, which is like some sort of visa that they get to get like people with certain skills in, and you wanted to, you could just come to Canada and work and we would just take you. And that was like a genius move because the reality is these people are super productive. We could use these people.

So it's not like we're not doing anything right. Like, yes, a lot of the things you highlighted are, are correct, but as a true Canadian, we just kind of like, you know, you've highlighted all the things that we're bad at, like, you know, and I get it. I understand, but I just want to kind of say, there's some things we do well there, there is, and there's a lot of things we could do better. Now in terms of my call about the Canadian dollar, if you said to me, where do I think Canada, you know, the Canadian dollar will be 20 years

from now, I think it's going to be higher and we're going to do better than America. So you need to be careful in terms of my trading opinion versus my long-term allocation of capital and whether I'd be worried about it. Like if I was allocating capital that I could not touch for 20 years, I think I would probably be more likely to leave a higher proportion Canada than the U S wow. Okay. Yeah. I don't think it's as bad as everyone thinks. And I think that the U S is an expensive economy that were,

or at least market and that everything is priced for perfection and the reality is everyone's overweight there and it's going to be difficult over a long long period for the u.s to continue to outperform now having said that going back to my thing about tiff macklin being the wrong you know disaster he's going to be forced to do this and the reality is he like a recession is probably inevitable and it's probably going to be worse than everyone thinks and we should have never let our housing get to this point it's been a disaster we have so much debt and one of the things is that the easiest way to solve your problem when you have a problem with an asset that's going down is to just kind of inflate your way out. And that's, in essence, what you're going to do.

The Canadian dollar will be the outlet for the housing correction. So ultimately, I'm probably not as bearish as some people are about Canadian housing because I suspect what'll happen is they'll just skate themselves on side by letting the dollar go. Kev, you've imparted so much wisdom here in the last 50 or so minutes. No one gives a shit about any of it on this show.

I want to talk about Bitcoin. Here we go. You guys call it, we got like five minutes left. You guys call it on the show. I want to talk about Bitcoin. Here we go. You guys call it, we got like five minutes left. You guys call it on the market huddle, the asset that shall not be named. I love that. I got to say, okay. I think that's great. I think that's more your listeners telling you not to call it Bitcoin, not to talk about Bitcoin than it is you guys. You can tell me if I'm wrong. Now, Kev, you are, in your words, I got to find the email you sent me. I don't have it up. I think you call yourself a coin skeptic? bitcoin skeptic let's hear it lay it out for me man um okay so the reason we

call it the the asset that shall not be named is because i think we said something bad about it once and the the friggin hate mail that we got was just like off the roof. So we were like, oh, this is obviously not smart. Now, you're going to realize I am a trader and I and I like my positions that move around. And to me, none of this is personal. Like, I don't care. One of the things is I sat on an institutional trading desk. I saw people that I was trading against. I realized I need someone on the other side of my trade.

Otherwise, you can't trade. So the first thing I just want everyone to understand is if everyone believed that Bitcoin was the be all and end all and they all owned it, it would be over. The trade would be over. So the fact that you're still skeptics out there like me is actually the greatest thing ever. The second thing is the moment you convince me to buy it, you should sell it because as the skeptic, you know that that'll be the end of the move, right? Now, let me tell you about Bitcoin and I'm going to just show you how stupid I am. And just so that when I tell you why I don't like Bitcoin, you're like,

Oh no, that guy's an idiot. And you understand why. So I actually got told I, so I ran my own little shop. I mean, another guy. And then we hired this computer programmer out of school,

really smart guy. And he's sitting there and he tells me, comes up to me, he goes, you know, there's this thing called Bitcoin. And he starts telling me about it. And I look at him and I say like, you know, what's the price? And he says, $5. And I go, $5. I'm like, that is the stupidest thing I've ever heard. And if you ever mention

it again, you're fired. So then he comes back a month later. He goes, you know, that thing you told me was the stupidest thing in the world. He said, it's 50 bucks. Like this is how long ago this was like 50 bucks. And I'm at least smart enough to know, well, if it's 50 bucks, maybe it could be 500. Maybe it could be 5,000. What the hell do I know? So I go, okay, let's start. Obviously this is not the dumbest thing in the world.

Let's start doing it. So we started trading it. We, one of the things that i had done is interlisted arb so i was very you know between us and canada uh i made systems and programmed systems to do it so it was very easy for us to arb between like the different exchanges we made up something like that we also started mining we own these butterfly machines because i couldn't bring myself to actually buy any i'm like i know we're not going to buy any we'll just we'll just mine them all and trade kevin you're the bitcoin miner oh my god so we had our office got so hot we had to move them into our garage because we

had like just racks of these butterfly machines anyway so we do this and we did really well like it was a great trade and this was like from i don't know you can go look at your chart it was from 50 to i think it went to 2000 that's gonna be 2013 ish probably yeah yeah then it collapsed and people forget this like it collapsed and it went to 200 bucks and it sat there for a couple years and so at 200 bucks our machines were all worthless like we were just like so i was like okay great we had a great run you know that's it uh We'll hang up the sheets. So like hang up the skates. And so we got rid of it all.

And I'll tell you, I do have some issues with Bitcoin. And then the kid comes to me later and he says, you know that, you know, all your issues with Bitcoin? He goes, I think I found something that is like addresses a lot of them. Because like my issues were like, this is actually hard to get a private account. Everyone thinks that they have a, you know, an asset that's not anyone's,

you know, liability. But the reality is most people just hold it in exchange and you have exchange risk and there's all sorts of issues. And like actually getting the ability to transact it, especially back then, it was very difficult. Oh yeah.

You go. So I think I figured out like, there's something that I'll address all this. It's something called Ethereum. No. So he told me, I think it was a penny. And I told him,

I said, listen, I'm not going to buy an ad. I can't buy any of this. You should buy some. And I told him, you should buy 5,000 bucks. Just take 5,000000 and buy it.

And if he'd done it, I'd be working for him. He didn't do it. He was having a kid. He didn't have time. He didn't do it. Ultimately, so that's what an idiot I am. Okay, I'm the idiot that knew about Bitcoin at $5, mined it, and just did all this stuff. And then I was the idiot that knew about ethereum at one cent but let me tell you why i have issues with it and kind of my evolution on it and again i i you know

if you're please don't send me anything telling me but you haven't thought about this you haven't the like i get it i i've i've listened to a lot of it i've really thought long and hard about it you're not going to convince me and not not only that, for your own sake, if you convince me, it's going to be a problem for yourselves because it'll be the top. But I'll tell you what my issues were with it. For a while, I was on this kind of,

everyone says the supply is limited, but the amount of total Bitcoin, or sorry, the total crypto that you can make is infinite. So I was kind of like, it's infinite. This, this thing you can just create as much as you want in terms of making a coin and stuff like that. I didn't appreciate at the time, Michael Saylor's argument that no, you need the one and the only the Bitcoin and the network effect.

So I think it's kind of funny because if you remember back five years ago, maybe even longer, there was a whole bunch of very prestigious kind of finance guys, dudes saying, I don't like Bitcoin, but I think the technology is interesting. The best. Those guys are the best. And they're the biggest douchebags around because they basically didn't want to be long it, but wanted to show they were into the technology okay and michael saylor's like screw that like it's basically the reason it exists is because of the network effect so i think saylor is in that way a complete

and utter genius he understood that he understood that this was kind of the one and the only and if you actually had the other ones doing well, it would actually be negative for Bitcoin. Yes. Right? Like I think it would be negative for crypto in general because it would increase the supply. So I probably misunderstood that.

And you know, Saylor, he's quite a piece of work, but I got to give him credit for it. I think he understood that better than most people did because a lot of people had other I got to give him credit for it. I think he understood that better than most people did because a lot of people had other assets. Like, you know,

there's like, pick your, your favorite finance guy that was buying, like, you know, tattooing shit on their arm. Yeah. Novogratz.

Yeah. Like there's just, anyways, crazy stuff. Okay. So ultimately this is what it comes down to for me in terms of why I have issues with it. Cause people say you own gold. If you own gold, why can't you own Bitcoin?

Isn't Bitcoin just the young person's gold? And I'm going to tell you why I think it's not. And again, please do not send me anything. I know I am giving you my opinion. You should just be happy. I don't own any of your thing because it means it's going to still go up. Everyone says it's crypto. Bitcoin is nobody's liability. And this is ultimately what I think is the issue with it is that it is someone's liability.

And who that someone is is the network and this is ultimately what i'm worried about is that you people that own crypto or bitcoin in general have an asset first of all that is a legitimate competition to the government right like i hear like you all you know it could be i freely admit that yeah it's in competition with the government. First of all, I'm always nervous being long something that is not in the government's best interest for it to do well. Okay? And just so you know, by the way,

I'm going to tell you one quick story. Do you have a hard break? Do we have to go? No, no, no. I'll give you one quick... I'll do it for the guests, but if you want to keep going, I'm good okay it's all i'll give you one time kev i'll do it for the guests but if you want to keep going i'm okay um so i'm gonna give you one quick story about like when i used to talk about something like i i actually got lucky and i timed a negative crypto

piece that i wrote properly like i i on the last time it went up here it went from 60 back down to 30 or something or there's the move and i actually i was quite negative and that was kind of a trading call and i got it right and uh so i was on twitter and somehow got out that this is happening and the the mob came after me right and uh and i was kind of like when they come after me i'm like oh you know what like you think i'm stupid about this trade you haven't heard the half of it. I'm the idiot that, you know, passed up on Ethereum at one cent. Like, I have no desire to argue with anyone about it.

Like, zero. If you want to listen to my opinion, listen to my opinion. But if you want to, like, argue about it, I have zero desire. So most people, when they hear that, they realize there's no sense arguing with me. But there was a couple that just kept coming after me.

And I was like, what's going on? Like, this Twitter account just won't like every day. It's like they get up and they're doing this and doing it. And eventually I kind of look and it's like Susie from Oklahoma and like Dave from Nebraska. And I go look and I go through their accounts. And I go looking through all their tweets, looking at what they're doing and stuff like that. And I go back and I go back and I go back until I find when they started it and there's a couple of Russian tweets.

And I'm like, these aren't Dave from a... This isn't mid-America guys. These are Russian bots. Okay. Right? So the first thing I'll say is that Russia, China, part of the reason that they aggressively

marketed it is because they realize it is competition to the U.S. dollar. I think that's a fair criticism. Yeah. So it is. It is. So just be aware you are owning something that might or might not be something the government eventually won't like. Yeah. OK.

And I'm not saying like, listen, Trump gets in there and he's convinced the all-in tech bros to get it all in it might be the greatest thing in the world but there is a potential that the government says hey wait we are the issuer of money and by taking that away from us it's actually a threat to us and we're going to outlaw and before you say you can't do that just remember that in 1930s they outlawed gold that's right door-to-door if they had to right yeah right so now so just be aware of that now the real reason that i that i what i worry about is that you say well it's nobody's liability like i own this you can't take this away from me and i'm like do you really think that the internet is that like who do you

think controls the internet this is a yeah it's an interesting point it's interesting like the reality is that the internet goes on seven big route there's like seven big routers or something like that that controls the whole internet and have you ever thought about like you know when you think about what happens if China invades Taiwan, which I don't think is going to happen, just so I'm saying this correctly, I am not a big China's going to invade Taiwan guy, but there's lots of people who say it will.

And then all of a sudden, we go to war with China, and they go, and do you think that the internet is going to continue to go between the two of us? It's not going to look the way it does now, for sure, I'll give you that. Well, I think they're going to just shut it off, and so then it's going to continue to go between the two of us it's not going to look the way it does now for sure i'll give you that well i think they're going to just shut it off and so then it's going to fork yeah and so you're going to have you're going to have half of your assets like do i own this or do i not own this and then the reality is that the government goes and

controls the internet yeah okay i i hear you so that's ultimately my point is like if you own gold and you can you own it and i get it if you buy gold on an etf you don't really own gold it's not the same as owning it like you know in your person but gold is truly something that if you own it physically not your your it is nobody's liability. Zero. Agreed. You don't need anybody else. I agree with that. I'm Italian, Kev. I love gold.

It's in my DNA. There's two things I can't avoid. A nice gold chain and putting a shovel in a wheelbarrow of cement. I can't avoid these things. And so no matter how much I like Bitcoin, I'm always going to be a fan of those things. The thing I would say about the internet argument, I hear this a lot. And I think it's a fair, don't get me wrong, it is a fair criticism of some of my colleagues in Bitcoin. I think my co-host would even be in this camp, would say that it doesn't matter if you shut down

the internet in some places, the network will keep running. Maybe, maybe not. I don't know. I don't have a strong feeling about that. Much like you, I think there's a potential, the potential that that happens if things really go sideways. My base case for Bitcoin has always been the same, that if the worst thing, if the only way Bitcoin drops is the last signpost before I'm killing my neighbors for food, then I'm okay with that. I think that's a decent investing thesis. If it takes that much to shut it down, I'm good. The thing that gives me pause and has always given me pause about Bitcoin is this bit about the threat to the state the leviathan does not take kindly you know someone chipping away at its foundations right no matter how much i think the foundation is built on sand and i do

they're still not going to like me out there with a pickaxe no matter what the size of the pickaxe is and 10 years ago at a dollar five dollars it was just a couple of guys you know shawshank redemption with the ice cream spoon digging into the wall now there's a guy with a fucking front loader at the gates and like i worry that at some point someone is going to take a time away from the vodka and the the women inside and go hey buddy there's a guy at the gate here and i don't think he's going to stop until he gets in i think we we're close to that now. And the only thing that I think is working in our favor in terms of whether it's successful or not successful is, God, I'm going to earn some ire from my peers here. The coin bases of the world, the ETFs, in my opinion, although these things are decent ways to

buy Bitcoin for newbies, ultimately they are going to become arms of the state if they haven't already. Oh, 100%. Right. And so if you lose this idea of the peer-to-peer element of Bitcoin in favor of ETFs or transferring on Coinbase's Excel sheet, you lost already. Yeah. I think that is the most legitimate criticism of Bitcoin.

The network itself, I don't know how much you know about things like network fees, for example. So one of the things we tangle with now is as network adoption grows, and it's growing. By any metric, it's growing. You can look at the price, you can look at the wallets, you can look at the stock price of Coinbase and their active users, their DAU, whatever, it's growing. The problem is that layer one, the peer-to-peer portion of that network that everyone knows, loves, and really I think is at the core of the value prop, can't scale. And right now there's a competition between developers on Bitcoin, these guys who have put their heart and soul into the network, the protocol, and the asset, trying to build

out something that works for everybody with very limited resources so they don't have to use Coinbase and ETFs while Coinbase and ETFs have the backing of the government. And that, to me, is very much an uphill battle that I don't know who's going to win. And to me, that's the thing that really freaks me out a little bit. I completely agree. When you go give them money and sitting at Coinbase, you don't really own Bitcoin. You own Coinbase's promise that you own Bitcoin. Yeah.

And ultimately, until you put it in your own private wallet and own it privately, you don't own Bitcoin. That's right. And then my problem is even then, you're still expecting the network to continue to work. Yeah. There's a lot of ifs. And I think the ifs, they dissipate every day in some respects, but the other respects they don't. I think a lot of people view the idea that the state

will decide to go door to door to confiscate Bitcoin unlikely. I think it's unlikely too, but the chilling effect of getting a couple of big names to bend the knee is enough to really do damage to the likelihood that someone will ask you for Bitcoin, accept your Bitcoin or pay you in Bitcoin or whatever. That's a problem too. And I'm a big disciple of the sovereign individual thesis. This book that was written, I don't know, 23 years ago now at this point. If you think about all the things that are happening now, we use the Canadian example.

In the recent budget, recent, a few months ago at this point, but I don't know if you saw the rules around crypto reporting changed from having to report only your sales of Bitcoin for capital gains, expected, they're treating it as a currency, fine. Now there's a proposal that you also have to report your buys. And I'll tell you kev i can't think of a reason why anyone would want to know what i bought unless they planned on getting it from me sometime down the line or taxing you whatever and to me that's a scary thing too and you kind of see this other places the eu talking about like asset uh disclosure forms and all this slowly Slowly but surely, you're heading this direction. And my fear is that the cooperation between governments

seems to be non-existent until they really need to limit capital movement. And then they figure it out. They all put the same jersey on. And they're like the fucking 92 dream team. You know what I mean? And when that happens, for me and you and for everyone else, it's going to be difficult to weasel out of if it does go that direction. Yeah, you saw Michael Saylor, though, say that you just lose your wallet.

You lose the passcode. Yeah, good luck with that. See, basically, the guy at the door with a gun is not going to care if you went boating on the weekend. And by the way, listen, I think that your ability to trade Bitcoin supersedes everything else and i am not trying to suggest by any means that we should be outlawing it 100 this is what's going to happen i believe free markets for free people if they want if you want to buy bitcoin knock yourself out i have zero

like zero need and i'm just explaining why i it's for me. And ultimately I'm a trader and I just, I don't get hung up. Nothing's a religion. Everything has a price. Like I hate the gold bugs that tell me, you know, there's no price that they'd sell their gold. Well, that's ridiculous. Like that doesn't mean anything. Like for me, there's a price for everything.

Like at a certain price, every, you know, everything is either a buy or a sell. Yes. And ultimately it's just from, I look at this, this slight chance of an out of the blue thing occurring on Bitcoin is making me scared of it. But having said that, like, you know, I get it. Trading it is great. It's like, it's, it's getting adopted. There's lots of positives.

I think that this network effect is in terms of what Michael Saylor understood and took advantage of is great. And knock yourself out if you want to trade it. I have no problems with it. My son trades the shit out of it. I have no problems with it. So I don't want everyone to think, oh, he's advocating the government, come and take it away, or he's worried about this. I'm just saying, just not for me. Yeah. No, I appreciate that.

And you make some fair points. Those are better criticisms than I've heard on this show before. We had Mike Green and Doonberg on, I think, last year, back to back. And I think it was- What were their complaints? Doonberg was that Tether is propping up the price of bitcoin which you know may or may not be true i doubt it now tether's i think the ninth largest holder including nation states the us tbls at this point which is crazy uh and mike's uh case for it was that it's not an inflation hedge and i don't know i don't really view it as an inflation edge

myself but anyway story for another time yeah and listen but but like if you actually look at it uh because i was joking with the guys on the desk because i said i'm going on the podcast and they were laughing because they're like how dare they how dare they no no they just no they were laughing at me because they're like you know like i am a crypto skeptic like i'll be the first two minutes they're like do they know who you are like like, and I go, yeah, yeah. He seems very, like I was very clear to him that I'm not going to come on and say how great it is. But when we were laughing about it,

they were saying like, go look at Bitcoin. It's basically trading like Qs. Yeah. It's high BQ. I know. Yeah. And I'm not, that's great. Like it really is.

It seems to be a liquidity. Yes, sir. Glad you said it. Like as opposed to an inflation hedge. And I, like, listen, do I think gold's an inflation hedge? No. Like it's a complicated instrument that has all sorts of different things. And actually, if you look at gold, gold is traditionally traded more against real interest rates,

meaning the interest rate after inflation. And when you lowered interest rates below the cost of inflation, that's when it's been taking off. So gold went up in the 80s because inflation was so high and interest rates were still relatively high, but they weren't as high as inflation. So therefore, gold took off. But gold also took off in the 2000s for even in a period of very low inflation because interest rates were even lower. So traditionally, gold has been a function of real interest rates. Now, having said that, I actually am a huge gold bull. And I'll just tell you briefly why I'm a gold bull. And yes, I could make the argument that governments are going to inflate their way out of it and we're going to have lower real interest rates but right now we actually have

high real interest rates if you go look interest rate inflation's two and a half u.s you know overnight is five and three eighths so we've actually have the highest real interest rate that we've had in a while yet gold's up why is that ultimately it's because when the u.s government um after russia invaded ukraine they confiscated their t-bills and their bonds yeah they basically just zeroed them yeah because ultimately everyone thinks that the actually you actually own something no you just own an entry at the Federal Reserve. That's right. Okay.

And they zeroed them. And then everyone else, if you think about it, if you're China and you're sitting there as the world's largest holder of U.S. treasuries, and you're like, holy shit, U.S. just kind of arbitrarily zeroed these guys. They could do the same to us and you have to from a fiduciary point of view say it makes sense to start buying something else now you could argue that they should buy bitcoin i don't think they're going to do it so that what else can they buy that's one of the things that you can buy that is truly nobody's liability is gold so the real thing that over the

past year and a half that all of the even the guys that were gold bugs were actually quite bearish gold it was and i kept saying you guys are looking at the wrong thing yeah gold has changed its personality it's no longer trading on interest rate differentials it's trading on this central bank uh kind of diversification of their foreign exchange holdings and ultimately that's why i think the gold is headed a lot higher because i think that's just started yeah i think that's a fair characterization yeah so and my point is that i don't like i find gold bugs really annoying you don't like peter you don't like listening to peter schiff's podcast an hour an hour of flow of consciousness about. You don't like listening to Peter Schiff's podcast? An hour of flow of consciousness about gold? You don't like that?

I'm surprised. Because ultimately, if gold goes to $5,000 tomorrow, whatever the number is, it would be a sell. You would hit a point where you go, okay, this has got to a point where every mine is going to start producing tons, and everyone's going to go out and try to find the next big gold holding and gold will go down. So it is not a religion.

It's not something you can own forever. It is something you own and buy and sell based upon the investing merits of it. And I just happen to think that right now it's positive for gold. And I think that as they lower interest rates combined with this central bank tailwind it's going to actually do really well um but it just it it annoys me anyone that doesn't doesn't understand kind of that is uh so wedded in a position or sweated in a way of thinking as opposed to just kind of looking at the positives and negatives. Yeah, there's really no benefit to being religiously tied to any asset, whether it's Nvidia or gold or Bitcoin.

I mean, I like all that stuff. But like I said, I take a lot of shit on this show because I do have an equity position and my wife and I have a TFSA that has equities and no Bitcoin, right? I think, heaven forbid, I do something besides Bitcoin to try and make sure that I'm liquid. I find it's a poor joy.

Yeah, exactly. HFSP, right? Fuck that guy. Yeah, good luck out there. forbid i do something besides bitcoin you know to try and make sure that i'm poor joy yeah exactly hfsp right fuck that guy yeah uh good luck out there by the way he's got a great i have to give him credit that little video he made or someone made of uh michael saylor oh there is no second best yeah that one uh no it's oh maybe it is no no there's one with like a edm dance beat it's catchy like it's well done no gold guys doing's one with like an EDM dance beat. It's catchy. Like it's well done. No gold guys doing that. I got to give you guys credit.

Like it's by far and away, it's awesome that way. We know that the mimetic warfare is the key to success here, Kevin. We understand that. You've been outstanding. I want to thank you for going a little long. Oh, my pleasure. It's fun to talk to guests who, you know, one of the benefits of doing a podcast is you get to talk to a lot of people who are experts in their silo. And I like talking to Bitcoiners, of course, but talking to a guy like you who's got experience

in markets, understand some of the things that we're concerned about, even though we're not necessarily 100% aligned on the fix in terms of what we hold. It's good to have these discussions and let people know, especially in Bitcoin, where we are siloed, that other people are out there thinking the same way we are. They're just not wearing the orange jersey, maybe not wearing it yet. Now, I have one more question for you that I haven't asked in a long time. I used to ask this question when we were first starting out. Great marketing tool, okay? You should use this on Market Huddle when people inevitably are tired of talking to you and when you're doing interviews. At the end of the show, instead of asking what your favorite book is,

nicest thing someone did for you, those are good good questions but this question is how you get other guests do you think that you could beat patrick ceresna in a 40 yard foot race if you guys were in the parking lot together right now i don't know that's a good question i know if we were it was a drinking contest he would definitely win and and if he and i i would stand a better chance if i could get him after the drinking because he definitely has a problem i don't know if you've seen the guy but he's a complete lush like he just drinks yeah no he's uh he's got he's a recreational alcoholic is what i call him so i i i don't know it would we'll have to get him out.

We'll have to do it. Yeah. Actually, one of the guys at the desk, you know, our Blue Jays, the back catcher, the chubby guy. There's this chubby guy. I don't watch enough baseball.

I don't really watch it either, but the guys watch it. And there's some back catcher that's this really chubby guy. And when he goes and he hits it and he has to run to first base, it looks it's it's hilarious like it does it like he's he's like and this one guy's like i that guy's so slow i bet you i could beat him and the guy's like he's like he's like older than me he's like late 50s and i'm like dude like there's no way in hell. Like as bad as that guy's backcatcher looks, he's a professional athlete.

You're not going to crush. And so we want to have this kind of like we want to time him. We haven't got it out, but maybe we could get Patrick there at the same time. We got to do it. We got to do it. Kevin Muir, tell people where they can find your stuff. MacroTourist, the floor is all yours. They can go to themacrotour tourist.com or you can go follow me

on twitter at kevin muir outstanding thanks everybody for listening watching and uh take care of yourselves thanks for having me on joy