The Pomp Podcast - #916 Central Banks Are Showing Signs Of Extreme Stress

Episode Date: April 14, 2022

In this episode, I break down the recent news that the government of Sri Lanka has recently declared bankruptcy. This is a trend that we see occurring in nations all around the world due to reckless monetary and fiscal policies. ======================= Since 2018 Copper has been at the forefront of institutional digital asset development.   From award winning custody solutions, to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services, in lock-step with a rapidly changing world.    No other infrastructure provider covers as many assets, across as many exchanges, with the speed and security that Copper can offer. To learn how Copper helps the world’s largest institutional investors secure their digital assets, head over to copper.co   Copper - the unfair advantage. ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin.  Visit http://compassmining.io to start mining bitcoin today!  ======================= Bullish is a powerful new digital asset exchange built for institutions that delivers the innovations of DeFi in a regulated environment. The Bullish Hybrid Order Book pairs the high-performance of a traditional Central Limit Order Book with automated market making. Powered by deep Bullish Liquidity Pools, backed by the multi-billion dollar Bullish Treasury. So, you can trade with certainty and at scale across variable market conditions.   Learn more at Bullish.com or follow @Bullish on Twitter. Because the future belongs to the bullish.   *Not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish’s services are available in select locations only and not to U.S persons.    Visit https://bullish.com/legal for important information and risk warnings =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now, let's kick this thing off. Today's episode breaks down the recent news that the Sri Lankan government has declared bankruptcy. I really enjoy recording these podcast episodes, and I hope that you enjoy this one. Before we get into it, though, I first want to talk about our sponsors. Today's episode is brought to you by Copper. Since 2018, Copper has been at the forefront of institutional digital asset development from award-winning custody solutions to creating the first truly off exchange settlement function copper pioneers technology products and services

in lockstep with a rapidly changing world no other infrastructure provider covers as many assets across as many exchanges with the speed and security that copper can offer to learn how copper helps the world's largest institutional investors secure their digital assets head over to copper.co. Again, copper, the unfair advantage. Check them out at copper.co today. Next up is Compass Mining. Compass Mining is the world's largest marketplace for mining hardware and hosting. With Compass, everyone can mine Bitcoin. Their team makes it easy to start mining wherever you want, at home or in one of their 23 hosting facilities around the world. Through the Compass marketplace, retail miners can access mining hardware with similar prices

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Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish services are available in select locations only and not to U.S. persons. Visit bullish.com slash legal for important information and risk warnings. Go check them out at bullish.com or follow at bullish on Twitter. All right, let's get in this episode. I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast

are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Good morning, everyone. Bang, bang. We've been discussing the financial situation in Lebanon for the last two years. It started with the street protest in April of 2020. It continued with more severe social unrest as their currency devalued in June of 2021, and finally culminated in a pseudo-bankruptcy by the government of Lebanon earlier this month.

This has been an unfortunate situation to watch as it unfolds, but the outcome was obvious as the problems got larger and the central bank was unable to properly address the issues. This begs the question, is Lebanon a unique situation, or does it signal a bigger problem in the system? The short answer is that no one knows for sure yet, but we just got another worrisome data point yesterday. The government of Sri Lanka announced that they will be unable to service their debt obligations, which essentially renders the country bankrupt. In the announcement, the Ministry of Finance stated, quote, Sri Lanka has had an unblemished record of external debt service since independence in 1948. Recent events, however, including the

effects of the COVID-19 pandemic and the fallout from the hostilities in Ukraine, have so eroded Sri Lanka's fiscal position that continued normal servicing of external public debt obligations has become impossible, end quote. The situation in Sri Lanka is a good example of what countries are facing at the moment. They had already pushed themselves to the limit of risk through past monetary and fiscal policy decisions, which left them unprepared for the events that would transpire from 2020 to 2022. First, the COVID-19 pandemic raged globally and locked up citizens in their homes per government mandates. This drastically hampered the economic growth of a tourism-dependent country like Sri Lanka. Next, the undisciplined monetary and fiscal policy response to the

pandemic led to drastic devaluation of various currencies, including a race between central banks to devalue on a relative basis as well. Lastly, the Russian invasion of Ukraine was the last straw. Once various commodities from oil to natural gas to wheat to fertilizer skyrocketed in price. For two years, governments and central banks have been thrown curveball after curveball. Those in the strongest economic positions have been able to weather the storm, but the countries in a weak economic position are being exposed. My friend Marty Bent put it eloquently when he wrote, quote, what we're seeing play out now is something we've discussed many times in this rag. The weakest free flow fiat currencies in the world are failing first. Many may sit there and think,

who cares if Sri Lankan rupee fails? It's the Sri Lankan rupee. However, this is how the end game plays out. The weakest die first, and every weak currency that dies leaves behind a smaller pool of currencies that are doomed to the same fate. The Sri Lankan rupee may have been the weakest currency today, but at some point in the future, we'll wake up to discover that the euro was the weakest currency to fail on a particular day. We'll wake up to find that the dollar found itself alone in the ring against something like Bitcoin and ultimately faltered because it was the weakest currency at that particular point in time. It may be able to dismiss the Sri Lankan and Lebanese current governments defaulting on their debt as nothing more than a nothing burger,

but I urge you to recognize it as a leading indicator of things to come for the rest of fiat currencies on the planet. Lebanon and Sri Lanka were two of the first to fall. Failure is climbing up the ladder and it will reach your fiat currency in due time. When that eventually happens, you better have a contingency plan. End quote. quote, there are many Bitcoin critics who will roll their eyes and claim that Bitcoin enthusiasts are cheering on the failure of these currencies, central banks and governments. This is not accurate in my opinion. Bitcoiners have been warning about these issues for years, and now the issues are playing out. Everyone understands that the failure of a currency or the bankruptcy of a government

means significant pain for the average citizen. No one wants to see that happen. Most Bitcoiners wish that Bitcoin wasn't necessary. Ideally, the legacy system could self-correct and prevent the potential pain that lays ahead. It doesn't appear that is going to happen though. So Bitcoin becomes a unique solution that provides an escape path for billions of people. We have seen Lebanon and Sri Lanka declare bankruptcy in the last two weeks. Hopefully they are outliers and no other countries will follow, but I'm not counting on it. Many countries are buckling under the stress created by COVID, undisciplined monetary and fiscal policy, supply chain disruption, and the commodities boom post-Russian invasion of Ukraine. Stay alert out there. The world is changing.

and it is important to remain educated. Hope each of you has a great start to your day, and I'll talk to everyone tomorrow. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition

to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period.

Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.