The Tucker Carlson Show - Gold, Crypto, the Debt Crisis, and How to Survive When the US Needs a Bailout

Episode Date: December 26, 2025

The U.S. government is nearly $40 trillion in debt, a fact that pretty much guarantees exciting times ahead. Coleman Church on what comes next. (00:00) Debt Trading and Emerging Markets Debt (08:58) The IMF's Role in American Foreign Policy (28:57) How the Fed Is Secretly Destroying Free Market Capitalism (1:07:59) What Is the Alternative to Investing in the Stock Market? (1:12:07) Is Crypto the Next Global Reserve Currency? Paid partnerships with: Dutch: Get $50 a year for vet care with Tucker50 at https://dutch.com/tucker TCN: Watch our new outdoor series at https://tuckercarlson.com/americangame Last Country Supply: Real prep starts with the basics. Here’s what we keep stocked: https://lastcountrysupply.com Learn more about your ad choices. Visit megaphone.fm/adchoices

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featuring the ProFlex interior that you customize. You're going to dig it. We definitely, plus are good looking, I will say. So one of my midlife realizations is that people in my world, certainly me, ascribe too much to ideology and too little. little to money. The financial dynamics of the world drive a lot more than we acknowledge that they do. And we look at things. We're like, oh, these people believe this and these people believe that. And that's why they're fighting or that's why they're allies or whatever. But really,

we should all remember that the love of money is the root of all evil. And money really has a huge effect on outcomes. But nobody says that. And I miss it so often. So you spent your life in the money business trading debt tell us just to start but like you worked in Ukraine you traded Ukrainian debt

what was that like I never worked in Ukraine I've been to Ukraine on investor trip I have traded the Ukraine debt I traded emerging markets debt my whole life until May of this year I traded and sold it at a bunch of different banks

London and New York. Ukraine was certainly one of the one of the instruments we traded, traded through the Russia crisis. Can you explain, just for the truly ignorant, me among them, what is emerging markets debt? So emerging markets debt,

originally, the asset class grew out of the debt crisis in the 1980s. When money center bags were hung with primarily much Latin America debt, after the uh after the 80s crisis um nicholas brady treasury secretary of the time came up with the plan called the brady

plan to restructure the debt back it with collateral u.s treasury strips that would make it more palatable to a broader base of investors to get it off the balance sheets of the money center banks and to create a more of an institutional uptake of the debt and retail uptake of the debt So American debt, American banks are left with loans from other countries that those countries can't repay. Correct. I'm just trying to put it in terms like I can understand. And so then the Treasury Secretary basically says to those banks, we'll bail you out by guaranteeing these loans with American treasuries?

It's one way to put it. It's a way to clean the balance sheet up and to create, I think there are two impacts. One, you clean up the bank's balance sheets, get it off, get it off their sheet, and create a marketplace and a dynamic that allows liquidity for this debt and then creates a whole new marketplace and ability to issue and clean up the country's balance. So you're doing good for the banks and you're doing good for the countries and theoretically doing good for a whole new investor base. And that started in the early 90s and I kind of walked into Wall Street in the early 90s out of college, and I just fell into this market that was starting and really boomed for a while. And so what does that mean to attach a treasury to foreign debt? Can you tell us layman's terms what that means to treasury strips? What is that? Treasury strips is zero coupon bonds, effectively.

So you have collateral, you have risk-free collateral that's attached to the bonds. So to get investors who are obviously wary of subinvestment grade emerging market. At that time, it was called less developed countries LDC, then it ended evolving to emerging markets debt, which actually is sort of a misnomer at this point because it characterizes almost everything outside of G7 from single-A debt to defaulted debt. So it's grown over the last 30 years to incorporate sovereign debt,

debt of countries, primarily issued in hard currency, dollars and euros, down to investment grade corporates, government-owned debt, like oil companies, let's say nationalized oil companies that would be called quasi-sovereigns, down to corporate debt, all the way down to default to debt. So it's all of credit, all credit products in a number of countries. It's balloon. But at the infancy, it was really a evolving asset class to got to clean up the balance sheets and open access back to lending to these countries. And instead of just being relying on major money center banks for loans that really sat on their balance sheet and weren't that liquid, didn't trade much, let's open it up to a global investor base, trade Eurobonds,

put in your not necessarily put in your 401k but put in your pension funds and then hedge funds traded it

and from there it evolved from dollar debt into the local currency debt became

much more fashionable so investors can buy turk slier denominated debt or Kenya

shilling denominated debt and then obviously derivatives you can buy Kenyan debt in

Kenyan currency you can it's not that easy but the harder it is to trade the more the banks make money at trading it.

So it's certain countries are harder to access than others. So all of this debt originates from the desire of countries to raise money from the world. Correct. So if I'm Kenya and I want to, you know, fund the operations of my government, I issue bonds? Yep. You issue locally, issue local bills to local. banks primarily, local bank treasuries. Foreign investors can access that through typically plain vanilla kind of derivatives, and they'll issue dollar-denominate Eurobonds that are open to the

world to trade in dollars. So if you're the Treasury Secretary, that's a huge power that you have. You can bailing out other countries. Certainly. I mean, I saw it my first job for about a year i was an analyst on a trading desk and it's like six months in they gave me a trading book uh the mexico book this is 1994 and they gave it to me because i was a kid and it was the safest book you could you couldn't hurt yourself too much with it about six months after that the mexican peso crisis did so yeah that was robert reuben and friends i lived through that whole experience of the what did they do what did who do what did rubin then treasury secretary what did under clinton what did he do with the mexico well what's interesting is he i don't know if

it's a it's a function of just how the human brain works and you look back and you're like oh yeah the we basically bailed mexico out and cleaned it up and everything went on as it was but you forget as you're going through that these things all take a lot longer your memory shortens up right It took a lot longer, and it took a few go rounds. And what I learned to that whole thing was, because I went through a bunch of these crises, there was the 94 Mexico, Mexico, 97, the Asia crisis, Taibot. If you remember, Taibot crisis, and Korea Chi-Balls and all that. And then 98 was Russia.

2000 was Argentina-Peso crisis. And then we had the, you know, GFC. So there was a series of rolling crises all in like the first 10 years of my career. So that definitely kind of wounds your ability to stay permibolish when you're going through a bunch of rolling crises. But what I learned through these series of crises is that what you have to kind of start with is the bazooka, to go with the moab of bailout. You have to go with way more than the market thinks you need. Because in the Mexico crisis, if my memory serves properly, they kept coming. with not half measures, but sort of just enough

and what they thought would bring back market stability or market confidence. And just enough creates a bit of spike in confidence and then start to panic again and then come back again until finally they come back with the mega bazooko, swap lines, bailouts, all that sort of stuff. So now that was also early

in sort of the Washington Consensus era foreign policy and there was uh i guess my the macro point i would make or the conclusion i'm reaching is this is a huge feature of our foreign policy it is and you know the i mf it's funny i've been you mentioned ukraine and the trip i went to ukraine was an investor trip and part of the purpose of an investor trip is to go and to meet with their finance ministry their debt liability people meet with banks, meet with locals, get an assessment. And you know, you go to, you always go to the IMF there and ask what the likelihood it is of the next tranche being delivered.

And perhaps it's a bit cynical, but 30 years of trade and merchant markets will make it pretty cynical. But I'd always go into those meetings and walk away from those meetings like, well, what are we talking about here. Of course they're going to disperse the next tranche. That's what they're in the business of doing. They're in the business of lending money to these countries because that's what they do and that's where they make their money. So it's very rare that they won't or they don't unless it's a real sort of turn your thumb up, turn your nose up or thumb your nose at the IMF and is the purpose of the IMF to bail out mismanaged countries? I think it's

Simple terms, yes. I don't think that's the, I don't think that's the most euphemistic way of putting it or how they describe it. But effectively, yes, I'd say backstop or to keep them afloat and to offer them guidance as to how to run austerity programs and get themselves back on the rails so that they can move towards prosperity, democracy, all this. Does it work? Typically, no. Why? Because one, it's very politically unpopular as a domestic politician to be taking orders from any foreign power, but certainly the West. And those orders come with strict austerity, because how did they get themselves in those problems in the first place, right? a certain distinct lack of austerity living beyond their means correct so you know that's not it's not that's not it's not particular to emerging markets countries all sovereign all sovereigns do that right everyone in the west is doing that as well now right um living beyond their means

um but some of us like the united states are able to run what's called counter cyclical cyclical monetary policy because we have a reserve currency. So we have a special privilege to be able to maybe be somewhat more profligate than others. But the money runs out a lot faster in emerging markets countries when you can't finance your debt and you have a dual crisis of both your currency and your interest rates running out of control. And at that point, you've got nowhere to go other than to your friends in D.C. or in Brussels, and ask for the backstop. But in return for the backstop, you need to make some promises

about how you're going to conduct your business going forward. And as you can imagine, cutting expenses, raising interest rates, slowing the economy, doesn't generally get people reelected. Exactly. Hey, Chabragg, but we're pretty confident this show is the most vehemently pro-dog podcast you're ever going to see. We can take or leave some people, but dogs are non-negotiable. They are the best. They really are our best friends.

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So really you've got a democracy problem. These countries overspend because they're democracies and they're trying to meet the demands of their voters, and then it's impossible to fix because their democracy is trying to meet the demands of their voters? That's probably a little more euphemistic than I would say. Yes, that's one factor, but there are other factors at play as well. How many countries have been bailed out by the United States over the past 30 years that you're aware of?

Oh. I mean, there's hard bailouts and soft bailouts, so I couldn't really put a number on it. Like, how many are running an IMF program right now? How it would have to be in the dozens? How many, like, strict bailouts? I really don't know at the top of my head. I mean, we can go through the, we can go through, obviously, Mexico, Argentina.

In the, in the Asian crisis, there were a whole host Asian countries that had to post up. So there's, there's the hard bailouts, and then there's like the softer bailouts. coming back staying on the teat so to speak who makes money from this uh who makes money from this so the IMF theoretically makes money from the interest on the loans but it's typically below market loans so it's it's not a real profit motive um banks make money from this from facilitating the debt. So the trading of it, the issuing of it, the fees of issuing of it. Investors make money from higher interest rates, obviously. And then there's a subset of investors, like distressed debt investors that will buy a bunch of defaulted, defaulted paper, sit on it,

and then do workouts. Like, the most probably start. examples recently would be Argentina. And, you know, right now Ukraine will be pretty significant one as well. See what the workout is with that. What would you do with Ukraine as a banker at this point? Like what's likely to happen to Ukraine? Not on a military level, but... Ukraine is a different one than say in Argentina because it has at the moment more of a geopolitical put, so to speak than pick a random country like Bolivia or Argentina although now under this administration clearly there's more with sort of Monroe Doctrine part two there's there's more of a geopolitical put to Argentina but but Ukraine's a tricky one because there are you obviously up until recently

you had the entire west behind that right and there's this this week alone you've got um you got Larry Fink, Witkoff and Kushner over there working on, you know, stage two. What's going to happen? The peace process, but also the rebuild. So it's an odd one. I think that's going to be a combination of public and private because there'll be so much rebuild to do and there'll be, there'll be a lot of money to be made in the rebuild. What does a debt crisis look like? What is a debt crisis? Well, a debt crisis typically is not a debt crisis alone. It's accompanied by a currency crisis, the debt crisis, the external debt, and then a local market interest rate crisis, which is also dead in itself.

So the local TBOs, local interest rates will skyrocket at first to try to raise interest rates to try to attract money to the currency to stem the route on the currency. And that can work up until a point until you lose control of both. So what a debt crisis looks like is currency, runaway currency devaluation, runaway higher interest rates, which clamps down, the interest rates clamps down any lending locally, clamps down any local growth, creates defaults on domestic businesses, the currency running away depending on the country, but all countries, it causes inflation, but countries that rely on imports certainly even more right everything you're bringing in um it's going to cost far more in your local currency um so it's really a spiral um and then current typically what happens is bonds will drop to a level that's called recovery value and recovery values effectively what uh is a term more really more from i say the corporate credit markets where if you were to strip everything down and sell it for parts what could you get you know what could you

get for the cash value. So interest rates spike, bond values drop. Collapse, yes. What does this have to do with debt? Why is it described as a debt crisis? Because no one can function without borrowing. No one can function without debt. So if you can't borrow, you can't exist.

And there's no country that's not true of? I mean, there are countries that don't necessarily need to borrow as much as they do, but they still do. Why? Because, one, because they can cheaply, I would argue the GCC countries don't necessarily need to borrow as much they have. The Gulf, Persian Gulf countries. But they have recently, you know, Saudi, for example, because they're going on a massive expansion to diversify. themselves away from their core business, which is oil, which is actually a very wise thing to do because if you look at countries historically, Venezuela is probably the most extreme

example that had an opportunity. There was a single-a-rated country in the 80s. I went there in the 90s, gleaming infrastructure, like incredible highways, beautiful hotels. Amazing, amazing place. And they never took the oil wealth and diversified away from it in a meaningful way. And then when you have an oil shock and you've taken out too much debt against the, let's make up a number, a $100 oil price and oil drops to 30, you're all upside down. And so that's what, you know, that's what MBS is looking at for a multi-decade plan to build, you know, build these cities, technology. innovation centers and so forth, which is clearly learning from the past. But they're borrowing to do that.

They're borrowing to do that, yeah, but they're borrowing at fairly cheap rates. There's also a concept that you want to borrow as a sovereign level to set a benchmark against which your companies can borrow in international markets. It would be the broader the investor base, theoretically the cheaper the interest rate. so they'll set a benchmark level and then a corporation can borrow at that rate plus 20 basis points or 50 basis points well some americans have become cut off from the things that once kept us grounded are land the skills that tied our families to nature told you who's getting his next spot and remind us who made a new six-part series american game tales from the wild we

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So if every country's indebted, I mean, debt decreases your sovereignty, your ability to make independent decisions. That's correct. Yeah. So if every country's in debt, then there are no fully sovereign countries then right can't just it's not no country is free to do exactly what it thinks it should do in its own interest they're all connected no uh and again back to the u.s i mean theoretically we we are or were based on the fact that we have the global reserve currency but there is a limit to everything at some point so what's the limit for the united states it's hard to say um what the limit is the limit is what loses the global reserve currency status right and as i alluded to before these things don't happen quickly they happen over a much longer period of time than anyone would think um

so how do you you know in simple terms to me let's look at some global current global reserve currencies historically Dutch Gilder, British pound, US dollar, probably the most obvious examples in relatively recent history and what did they all have in common? They ruled the seas, military dominance, right? And you know, you'll see memes online and people like, you know, pictures of fleets of aircraft carriers in the Gulf and displays of military power and that's what backs my currency. And that's, you know, that is true. But, you know, at some point, you got to ask yourself a question, like, where, you know, also, how did empires from Rome to the Dutch, to the Brits, like, imperial overreach to an extent was what undid them, right? And if we continue to, I mean, what concerns me, what concerns me longer term of the potential to lose the reserve status is if we lose our.

military dominance. That's not happening, obviously, tomorrow, the next day. There's a few things that could, obviously. I mean, you're more versed than I am in this whole notion of modern-day drone warfare, but that's certainly levels of playing field very, very quickly. You see what the hooties were able to do with not so sophisticated and not very expensive drone technology. No. But that's, you know, that's the, that's the, that's pervy for some military expert, not me. The other thing that concerns me. But the structure remains the same. So the United States can continue being indebted to the degree that it is because it has the world's reserve currency. And it possesses that because of its military dominance. It does. But if, yes, I think what's a very important, was a very important moment. However, it was the seizing of the Russian reserves at the beginning of the Russia-Ukraine conflict. I felt that. And I think...

Can you tell us what happened just for people who... Yeah, so quite simply, the Western power seized the Russian reserves that were sitting in the New York Fed. I believe it's $300 billion is the number that they seized. And the Europeans still want to use that for... for rebuild and so forth in Ukraine. Now, not to get into who's right and who's wrong in the Ukraine, Russia conflict, that's not the point in this. The point is it sets a precedent that's a scary precedent.

That is your money that sits in U.S. treasuries or gold in our Federal Reserve is not safe if you run afoul of the powers that be. there's a very obvious and natural reaction function to that, which is powers like India, China, and Russia stop buying treasuries and start buying gold. The gold call was certainly we have inflationary pressures we can talk about, but even more to the point, it seemed obvious at that point that that's the trade. Yes, it's an inflationary. I bought gold that month. I remember. Yeah. And I've done better than the stock market's done. Well, it's funny if the move in gold this year,

I won't get it right off the top of my head, but it's over the last 20 years, I think, now is the gold's now beat the S&P now when you compare the two. Yep. It's really effectively just a debasement trade when you look at it. What's the debasement trade? The based trade is that the currency that we, the currency that we all use and think about every day has been debased against gold, right?

the value of the dollar, I think oftentimes people look at the dollars, the dollar strong, the dollar weak, and what people are looking at is effectively the DXY, the dollar index, and that's a basket of major currencies, or it's heavily weighted to the major currencies, Euro, yen, Canadian dollar, Aussie dollar. And it's really at this point kind of a ridiculous comparison because all of those countries are sort of in a basket case with their debt issue in their growth. But if you look at the dollar versus Bitcoin or if you look at it versus gold over the last 10 years, it's pretty clear that the currency's been debased in those terms. So if you look at it in that terms, the stock market returns don't really actually look quite

as great as wonderful if you're looking at it in what a dollar would, how many, how many dollars it took to buy an ounce of gold 10 or 15 years ago versus today? And all of that, or some of it, is downstream from the decision by the Biden administration to freeze Russian assets because that scared the crap out of the rest of the world. I think the gold move is for sure. The dollar weak, the dollar weakness against gold, yes. But there's also, I mean, I think the big move in, I mean, if you look at, if you look at what we did after the GFC in terms of interest rates, and global financial crisis where what we did bailout extraordinary measures fiscal and monetary keeping interest rates at zero emergency measures keeping rates at zero that remained in place for a good 10 years like I don't know how you stayed emergency measures at zero interest rates when the stock market quadruples over turples quadruples over 10 years

so what I think why is that bad all those investors got rich everyone's happy with their 401ks like why is that bad well it's bad for a number of reasons one is if you believe in a free market capitalist system you believe in the pricing mechanisms and the free market pricing is everything uh the price of meat at the farmer's market, set by the free market. Who's willing, willing buyers, willing sellers at a fair price. Once you start to put in price controls, the Soviet Union, it's definitely, we don't have free market capitalism. At the core of free market capital is the price of money.

So we artificially put price controls on the price of money. It's the way I look at it. We artificially kept interest rates way too low at zero when the market didn't. necessarily demand the conditions. Maybe at the time, certainly. Five years hence, 2015, I don't, I don't really see why we needed to keep interest rates at zero for that long. So yes, I think the reason, in my opinion, the reason of the people at the Fed, the dozens and dozens of PhDs at the Fed making these decisions, probably to a man, to a woman, wrote their PhD on the Great Depression and what the Fed did wrong

and dealt with the horrors of deflation. So really the depression was really a result of deflation, right? So that's the greatest boogeyman of all. So anything you can do to fight deflation. Deflation is the real killer, especially when you have an excessive debt load. I'm going to stick to the dumbest possible questions. I hope I don't offend you.

What is deflation? Deflation is prices going down What you kind of want is a gentle inflation to help inflate away the debt to show a gradual

The benchmark, the target Fed target for a long, long time has been 2% inflation. They soft up that to 3 recently and as you know just cut rates this week even with Core PC at 2.8 So they've kind of abandoned that 2%

target but what i think in that time why wouldn't i want deflation because that makes the value of my paycheck higher it depends on who i is who's who the i asking that question is right so if you're you and your wages are constant and you've paid off your house uh certainly deflation would be great go to the store every day and things are cheaper um i mean there's deflation certain parts certain sectors right they for years there's been deflation in all technological goods right you get a flat screen tv for 400 bucks yeah um so for you tucker carlson it would be wonderful uh for the economy as a whole that's really run on hyperfinanciality hyper financialization and debt uh if you have a deflationary spiral you are

are going to be left with a bunch of defaulted debt. So where we are right now, you know, to pivot, I guess, to where we are here with the U.S. is I think when this administration came in, they message pretty clearly that the move was going to be away from the Biden administration and more towards some austerity. There would be some tax cuts, but it would be offset with spending cuts. Doge, Elon, etc. People got very excited about potential cuts.

And then I don't know what happened shortly into the administration, but there was clearly a pivot that I didn't see coming. And it was around the time of the tariff tantrum and the big sell-off in the stock market. But out of that seemed to come that there was a shift towards what people are now calling run it hot, which is forget about. tamping down spending little tax cut maybe we'll take some slower growth but we'll reduce the deficit for that'll be good for the long term and instead let's let's just run it

both ways fiscal and monetary so let's let's cut rates and let's let's cut taxes and let's spend more and I don't know what what happened or if that was always the plan but or someone saw under the hood and said look the only way typically there's two ways to get out of a debt problem. You grow your way out or you inflate your way out. Right. And it seems to me we're going all gas, no breaks on both. Like we're just, we're going to grow and we're going to let some inflation go. And that's the way we're going to get out of this debt issue. And I think Trump this week was saying I could see 20, 25% GDP growth. I mean, that's a nice number, but that would certainly help our deficit issues. Well, it wasn't that long ago that many Americans thought they

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in 35 years of watching oh oh 20 25% GDP no no have you ever seen any country yeah sure approach a debt crisis with that sure sure i mean erdogan's probably the most famous in turkey did it work no

what happened um he tried to keep cutting rates into an inflationary environment and it and put pressure on the central bank to cap rates but the free market always you know i think i always say you can suspend the laws of of science of physics of gravity of market economy for a time but ultimately the gravity always always works so in the free market always always works um so no it didn't work

they have runaway inflation and um extraordinarily high interest rates and he's under been under a lot of pressure domestically for re-election obviously so what's the right way to approach it uh well as uh i think was it thomas sol says there are no solutions only tradeoffs yeah there are no solutions when you're in this situation when you're in this situation of 37 trillion dollar deficit um is that a lot sounds like a big number to me I'm not even sure how many commas are in there. It's a big number. It's really hard to grasp.

But I think you go back, you started with ideology. The answer is always going to depend to an extent on what your ideology is and what you're willing to sustain in terms of pain, short term to long term. For me, I was more a proponent of what I thought the plan was going to be, which is some deficit cutting through spending cuts. And from what was coming out of Doge early, it seemed like there was plenty of fat two cut that would have been politically rather popular,

I think, especially with the right PR guys behind it. You know, guys were getting out there every week and on Twitter and going on podcast and talking about sort of the absurdities they were finding. Now, maybe it's a drop in the bucket overall, but I think it was a worthwhile exercise to go with. I don't know. Again, I don't know.

I'm not on the inside, so I don't see what he's going to see. I mean, so the idea always was that federal bureaucrats, public servants, as we call them, were serving, were serving, and they were making less in their private sector counterparts, and there was suffering involved. but patriotism impelled them to do it. So they did. And now you look at the numbers and it's like, no, no, no, no. Your federal employee, on average, makes way more than your private sector.

2x. 2x. So they're the most privileged people, okay, in the middle class. And by far... That doesn't count their gilded pension plans. Is it really 2X? I think it's...

I think the number is average, medium, private sector, family it comes 70k and I think it's 110 or 115 for federal not including the benefits which are ridiculous work from home for five years

but then of course the population of federal workers or federal contractors which are I mean there probably is many federal contractors no one ever says that but there are Deloitte is a federal contractor right so there are so many of them now that we maybe have

reached that tipping point where no administration can pivot against its own employees because they're voters. Maybe, maybe, but I'm sure you've alluded to many times. You can't have, what is it, seven of the ten, top zip codes in the United States are all in sort of in and around Washington, D.C. I mean, I went to, you grew up there. I went to school there in the early 90s, and I hadn't been back for 15 years. I it's night and day

it's a gleaming gleaming office towers Rose and Rose I remember having an internship two blocks from the White House and you were passing you had to pass sort of bombed out

derelict buildings and now it's just From the 1968 riots They never were rebuilt 1992 they were still there Like literally two or three blocks from the White House I remember

and it's crazy I mean it's and flash is a Roman Empire right You go to Rome to collect your tribute. So I don't know. I don't know. I'm not as privy to that world as you are.

I don't know what people see when they get into office and realize that there's potentially no way. There's no way around it. All our intentions are, we're great, but this is the way it's going to be. I don't know. Okay. But you're also suggesting if this is not a soul. that you can't spend your way out of a debt crisis? I don't, I haven't seen it done before.

Right. How much magic would that take? The sense, a very talented individual. He's a lot of experience in markets, very successful. The right guy to have at the helm, if he thinks this can be done, I guess, I mean, we don't have any choice, but to see what, how it plays out. but um maybe that's the play the play is this is our only way out at 30 you know people on both sides people i speak to people i knew in the markets friends of mine people whose opinion

i respect on both sides of the aisle um the one thing we all agree on is that this is not a tenable situation um it's not some m mt Elizabeth Warren people were talking to this is like normal people that say like okay at this point we're kind of boxed at 37, 38 trillion. So maybe that's the issue. Maybe we're so boxed that we got to run this experiment because it's our only way out. And hopefully growth kicks in.

But it doesn't, you know, the growth, the growth scenario, the current growth scenario in the U.S. is really hard to get your hands around in one part because it's such a polarized economy. economy. People are calling it a K-shaped economy, which I think is a pretty accurate term. K-shaped meaning the lower end is hurting and continues to hurt more, and the upper end gains and continues to gain more. And we've seen through throughout history, that's not a tenable situation. No, it's actually what happened in Venezuela. It's how they got Hugo Chavez.

Yeah, it's a powder keg, ultimately. And it's also extraordinarily difficult to get a real handle on where the numbers are because we're not releasing any numbers right now because the government shutdown. So, you know, the Fed's flying blind to an extent. You can rely on certain private sector indicators that are kind of shockingly bad, frankly. When you look at consumer loan defaults, credit card balances credit card, the late credit card payments, auto loan defaults, I think October was 185,000. and now it's private sector layoffs, I think it's worse since 08. So you have a situation where you've got a, you know, the U.S. economy is a 70%, 69, 70% consumer led. So if we're going to rely on the

top 10% to continue to spend on, I know, Gucci bags and trips at St. Barts, I just don't know how sustainable that is when the lower end is you know swapping out New York Strip for for pork loin and Walmart numbers are great because middle and upper middle class is shifting from the publics to Walmart shopping like everyone

everyone's getting squeezed so I don't know I don't know that the growth is there the growth can come maybe the growth can come with these taxes cuts with industry cuts with certainly with deregulation will help and all this promised foreign investment but there's a lack to all that so we'll see it does seem from an ignorant outsider standpoint which is mine that there's an awful lot of emphasis on the public equity markets

and like the stock market's the measure of how we're doing whether or not that's a good measure you know, I don't know. Maybe not a perfect measure, it feels like to me. But how safe is the stock market in the United States as a place to put your money? I can tell this is an uncomfortable question. Be as diplomatic as you can be. Well, it is the largest most liquid stock market in the world. It does attract not just domestic savings, but.

huge foreign investment for you know there's expression that says money goes capital goes where it's treated best and we still do treat capital the best in this country extraordinarily dynamic markets from you know venture cap to private equity to public markets and that's something we should all be very proud of and it helps you know grease the skids of global commerce and that's great. There are some concerns, clearly concerns about the current valuation in the equity market and the structure, the economic structure of the flows. So one, there's a massive concentration risk. It was the fangs, now it's the Mag 7, the top 10 companies in S&P 500, I think it's accounted for something like 42% of the gains year-to-date, the big get bigger.

You had Nvidia at one point, tipped over $5 trillion market cap, which is, again, a hard number to really get your head around. At that point, I think it was larger in market cap than every market in the world except for U.S. and Japan, entire market cap of any other. trade any index in the world. Wait, bigger than the entire index of any country in the world? Yes. Bigger than the cumulative total, the value of all the companies traded on those indexes. On a random exchange, yeah. Except for, I believe, U.S. for sure, and I think Japan, again, I could be wrong,

but something in that, in that, you get the idea of what I'm... So just one company dwarfed all these economies. That's right. that you know we don't need to go into all sort of the price to book and price to sales and expectations of future revenue

and all that sort of thing you get into a market psychology event where stocks that go up continue to go up because people chase momentum I read something yesterday that the explosion in options trading the volume

option trade is now three and a half trillion a day which is larger than the entire market cap of the Russell 2000. So, like the 2,000 small mid-sized companies, 300 million to 2 billion market cap companies in the United States. And that doubled, I think, from 2020 and then doubled again. So you've got an insane amount of leverage. You've got margin debt at all-time high.

May I ask, why is it significant than the options market is huge? Because it's not just the options market's huge. also the structure of the options. They've moved to zero-day-to-expery options. So you used to be weekly or monthly options, and now it's one, like, same-day options. So the retail, with the gamification sort of... Yeah.

So an option, my understanding of an option is an option as a bet in what direction. In the direction with, and you get an immense amount of leverage, a immense amount of leverage. So... How does that work? How do I...

So, let's say that you... want to buy a call betting that Nvidia is going to go up between now and the close. And at the money, Invidia call, meaning let's say it's trading at 177 right now and you think it's going to go up. And the price of the at the money, the 177 call is till now to the end of day is 75 cents,

let's just say. So you're betting that it's going to go up more than 75 cents. If it goes up $1.50, you've doubled your money, you're not just making 75 cents on 177, which would be whatever, 31%, you're making 100% of your money. So you're getting, all you can lose is the premium to 75 cents you pay for that option, but everything over 75 cents starts to run exponentially in terms of profitability. So people are making an insane amount of money in this run-up on options, zero-day options,

and they're doing it from their phone. It's pretty easy with the... That's not really investing, though. That's betting. Yeah, that's gambling. But that's just one component of the structure of the market. But it sounds like it's now a huge component. It is a huge component.

But, again, with the gamification of, you know, crypto trading and options trading and Robin Hood and with gambling, you know, draft kings and all that stuff, It's sort of part of the culture. And I'll start in COVID, people at home with extra stimmy money and not much to do. And the market was ripping and people got hooked on it and people keep doing it. And generally, people are doing quite well.

I think retail is done better than institutional, largely speaking, this year. But the other part of the structure of the market that's somewhat concerning is just this passive flow. So then there's a guy named Mike Green, he should probably speak to who's done the best work on this. and passive flow basic a 401k if you put your money in every two weeks your money's automatically going to your 401k and it's you click to that it's auto invest

if you go and you look at most companies 401k options their options on what to invest and then you break down each one of them basically every single equity option fund you have has the same high concentration the same five stocks so you know apple microsoft and video so you don't know that necessarily you don't really know what you're buying or what percentage of the fund is in those but it's very highly weighted because the higher the market cap go higher weighting the higher the weighting goes

and on and on and on so it's an auto it's just an automatic machine like underlying bid to the market that continues to the big the big get bigger and bigger and bigger and you can say okay what's wrong with that these are great companies they're multinational they have great business models that were low capital intensive and high margin and they're basically a lot of them are monopolies in their space okay well two things can happen if unemployment rises if you lose your job you're not putting your money in four okay if you lose your job and inflation keeps ripping you might have to withdraw from your formal okay creates a vicious cycle the other way.

It's too much concentration and too few companies. It's too much concentration and the structure of it is perpetuates it. And then you add on the leverage of the option, trading with the momentum that keeps this trade going and going and going to where you get to $5 trillion market caps. Now, there'll be a whole coterie of Wall Street analysts that will justify why $5 trillion makes sense because of this, that, and the other thing.

but um i'm not i'm not sure what if they're of the five eight 10 companies that have the bulk of the value the plurality of the value of the entire s and p if one or a couple of those companies dramatically reset in its value and its share price what would happen well you're seeing it at kind of right right now as we speak is the a i i trade is starting to lose a little bit of favor There's starting to be some questioning on the AI trade. And the market can't continue to trade up when it's trade up if one or two the major components are falling out of bed. I mean, this week it's spent Oracle and, you know, last night's Broadcom, like took the market down, and Viti is starting to weigh a little bit.

So we're very tech sector heavy. And the other thing that concerns me to an extent about not just for public markets, but for private credit markets, is that with this AI buildout and this data center build out, obviously an extraordinarily capital intensive. And I was speaking about before about how a lot of these MAG7 countries, companies had a great model of being capital-like. They're now becoming quite capital intensive. It's not writing software. It's building physical things. you're building physical things and you're borrowing a ton of money

and this is what the problem with Oracle is right now is they borrow a lot of money and now they're borrowing a lot of money to build things and build things that depreciate and value over time right? Like a chip that you buy a lot of this

a lot of the financing that's been going on too has been people who have been using collateral these chips is collateral to borrow against so there's borrowing and borrowing and borrowing but you're borrowing against a chip that naturally is going to be replaced by the next evolution of the ship. So that's a bit of concern about the value of the collateral

and when that daisy chain unwinds, it could be ugly. The other thing is that there's so much there's so much borrowing in the private credit markets for these hypers and these data centers that it crowds out, there's a finite amount of borrowing available, right? So it's crowding out, borrowing and investing in other areas of the economy. And that concentration risk concerns me to an extent as well. And the different, a lot of people have made the analogy to, you know, the 99,000 tech bubble.

And, you know, the good news coming out of that down the line is that, okay, we all got hyped up on the internet and we got carried away with Pets.coms, things like that. E-choice. But the truth was, in retrospect, we weren't hyped up enough about the internet and what it would do and how it would change the world. But there's still a cycle that comes along where there's the euphoric cycle and then the crash cycle. And then on the back end of that, you have the winners that survive, like the Amazon's, right, that you could have bought for practically nothing in 2002. And then there were, you know, companies like, similar to me to the hyperscale data center were the fiber companies like Global Crossing, WorldCom, right? And those were bubbles that crashed.

But what were they doing? They were laying fiber cable for the Internet, which, okay, we had a malinvestment boom. The company's crashed, but the cables still exist, and the cables are in use today, and the cables were very valuable, and the cables didn't depreciate because the cables have a useful purpose. So people are making the same argument now is like, okay, we may go through that cycle as well, it's maybe get a little bit fork. There'll be winners and losers out of this, and it'll be fine down the road, and AI's not going away. I'm not here to disagree with that. but there's a slightly different component where you're building these things that are that could you know you're buying all these chips that could depreciate download it's not exactly the same

tree no and the nature of technology is hard to forecast very hard to forecast yeah i mean so they were telling us six months ago that aGI was right around the corner nobody thinks that anymore so for just for example and so all of these infrastructure bets are predicated on predictions about what the technology will require in 10 years. The thing that we're really running up against. Do we know that? We don't, you're exactly right. And I think there's, the worm's turning a little bit on the efficiency of a lot of these.

Yes. And what they can and can't do. And people say, you know, I saved a half an hour or I saved an hour coding something, but then it took me three hours to check to debunk. the work that the actual, you know, clot or whatever did. But the real thing that we're going to run into is we don't have enough power. We don't have an electric and we don't have enough water to heat and cool all these things. That's just point blank.

And even, you know, Jensen and Altman and those guys will tell you that. And that's why they're going hat and handed DC and trying to make, you know, trying to make the case that this is a critically important. industry that may need some government backing. But even if you get that, the fact that matters the only way you can really power these things without spiking electricity bills another 300% and then creating a whole other political problem domestically is you need nuclear power. And, you know, we have plenty of natural gas that can work as a stopgap, but you need nuclear power. And it's a 10-year buildout minimum to get the nuclear power that you need. So when do we hit the somewhere between there here in that 10 years we hit the wall in terms of our ability

to to get the electricity for these at this growth rate now will this growth rate uh accurate projection maybe it's not and if it's not then we need to see a lot of these companies come off in value so also there are a lot of concerns about climate change yes oh just kidding that kind of ended quickly, didn't it? Yeah. I haven't heard that phrase in months, have you? Climate change. No, I did see.

I saw something about, I saw something that Nature had, Nature magazine had to revoke a paper they did a few years ago that said that climate catastrophe was going to create a economic catastrophe and that was all based on false premises. I think they did. Yeah, I think the. new idea is we're going to have an economic catastrophe if we think about the climate catastrophe in any way I notice Larry thinks not lecturing as much about the climate anymore climate climate in ESG is not as fashionable as it as it was a couple years ago that's for sure

so how did that like as a guy who has dealt in markets like emerging debt it's pretty pure it's like a pretty pure market right well pure is an interesting choice of words no i'm not saying unsullied it's pretty plain vanilla if that what you mean i mean like there's a willing seller willing buyer and but what i really mean is the price is uh an organic price it's like what people will pay correct so that is the definition of a market right how do you get to the price correct so as someone who's spent his life in that world and who you're clearly like committed to the idea of markets like you believe people should be able to decide what they're going to pay for something and what they're going to sell

something for how do you explain esg uh i don't know that funnily enough i don't know that even the experts can actually define it and i'm i'm not um i'm not joking when i say that when i i'm in my last job. We would do a conference every summer in Europe for investors, and we'd have a series of roundtable topics. And the one topic that was standing room only sold out every summer in Europe was the ESG, without question. It seems the U.S. is definitely faded, faded quickly from that, but Europe still seems very hooked in. It's not faded there. all. It's definitely a part of the investment process. But what's fascinating is if you go to 20 clients in London and you talk about ESG, you will get a different answer from each ESG

specialist as to, especially in emerging markets, it's a very difficult thing to work your way around the ESG constraints when most of what emerging markets are based on are hard commodities and there's also obviously the governance component the G component it's not always maybe up to Western standards

with the G so they're with the G there's a little light on the G the G the E's not great the S no one really knows what that means and the G is highly questionable so it's funny

it's just there it's still I guess what I call a work in progress but But just like conceptually, the idea that factors that are not really relevant to your fiduciary responsibility, which is to maximize returns for shareholders or something related to that, like, I don't know. That's just, it's just an interesting concept. Like, how did that happen? It's that my personal guilt as like an educated Westerner supersede.

your right to have me handle your money responsibly well it's straight government intervention is what it is um it's government it's it's government it's ideology and if you are of that mindset where you believe in control economy uh it is the dream of all dreams to incorporate your ideological bent into the last thing that should be left alone, which is the free market. You now inculcate all of this ideology into every decision-making process all the way down to setting the price of money,

which to me, I know I'll run afoul of plenty of people on this, but to me that's a bridge too far. That's not the place for it. But it's one in, once in, it's impossible to get out. You know, once you go into, that's involved in all the investment processes, it's really hard to take it back out again. So back to the AI infrastructure boom in the United States. If that slowed down or if people lost confidence in it,

are you concerned about a cascade effect on public markets? In the short term, yes. the question is how quickly does the market rotate how do the rotation trade so we're starting to see that actually the last week or two you're starting to see small caps really rally Dow components really rally old economy stuff really rally as tech is being soft so

there's theoretically the way you can thread the needle there but with the concentration risk and with the size of just actual size of these companies it's going to it's going to it's going to uh it's going to be a drag on the overall market as a whole best case scenario one of the reasons the stock market is my theory is so big is because it's the easiest and as you said most liquid way to park your money with some hope of return and i don't really think americans are encouraged to think of other ways i just have always noticed that absolutely and uh as an emerging

markets guy who's been able to look into other other countries frontier markets et cetera and how they look at it there there's always from if you're an argentine or a Brazilian or turk you're you're always looking outside of your domestic economy domestic market for opportunities um and we really don't too much no and it's so easy to participate in the public markets in the united states as you said you can do it on your phone. You can make bets on market movements from your phone, which is just like seems like it might have unintended consequences, maybe. Yeah, crosses the line from, as he said, from investing, straight gambling.

But, okay, so it's ease of use as, like, the key to any scale, I think. Sure. That was Amazon. That was, that was, yeah, there's a lot of, there's a lot of, there's a lot of applications to that. Well, yes. Yeah. That's true. Yeah, well, that's, by the way, why tobacco use went absolutely crazy as soon as someone figured out an automatic rolling machine for cigarettes.

People used to have to smoke pipes, cigars, take snuff up their nose. The second you made it super easy to burn tobacco, the whole world became addicted to it. Makes a lot of sense. Right. And that's what the stock market is in the United States from my perspective. So, but if you're trying to be a little more creative or hedge a little bit, your future, your family security, where else do you put your money? Again, it depends on who you are, net worth, et cetera. Let's see you have an extra $100,000. What would you, what would be a good call?

Well, the problem is the great, obvious trades run a lot already, right? Gold and silver is already a run a ton. So long-term investing is try to look at stuff, the ideal cross of, you know, what sort of fairly valued or cheap or distressed or out of favor that people have. really caught on to because you see a trend that's about to emerge right right now we're in full-throated recognition of the debasement trade and silver's breaking out for not for that reason but also there's a notion that there may not be uh as much physical silver out there as derivative has been written against so there's been a bit of a bit of a squeeze going on two weeks ago that the Chicago Mercantile Exchange shut down for a cooling issue overnight, just as silver was

spiking, which was kind of convenient. So there's some technicals in that market. Wait, so you think it's possible there's more paper against silver than there is silver? Yes, so yes, there definitely more derivatives written against all commodities than exist, but no one ever asked not no one but typically if you're an investor you don't ask for physical delivery of the commodity i do i know you do i know you do and i'm going to find out where that stuff's buried too um so you don't typically ask for the physical delivery of it when you're trading in in tens and hundreds of millions of dollars of derivatives against you cash settle your derivative against mine cash settle the loser pays the winner and you move on um so where do you go uh

At this point, given where valuations are, I think you go abroad, you look at multiples on U.S. stock market where we are trading historically, extremely high P.E. ratios for the index on historical basis and very high against foreign markets. I think what this administration's doing in Latin America particularly, as I mentioned earlier, sort of Monroe Doctrine 2, there's clearly a movement of foot to stabilize the region and to partner with those that are critical to us. I would imagine that will open up

a ton of investment and growth there. There are plenty of Latin American countries that offer pretty cheap historical PE ratios. So I think it's probably time to diversify a little bit out of the U.S. and diversify out-of-tech-heavy stuff. That's where I would go simply.

I think you still have to own some gold and silver just have to own some but just not as much as you wanted three years ago given how far it's run so but you're basically making a pitch for the venezuelan stock market uh not specifically but there may be a there may be a catalyst coming there that could create create a big move on way or the other it seems in the next in the next couple weeks what about real estate land real estate land for sure that's why i asked like it depends on who you are um i think productive agricultural real estate state anywhere is always a good investment, sort of a disaster hedge. But yes, land as a whole yes.

I don't think I'd want to be rushing into blue cities and paying high interest rates and taking out a bunch of debt on overpriced co-ops in New York City necessarily. What about buying a 70s era office building on 6th Avenue in Midtown, New York? If you can convert it to residential, perhaps, and get a lot of tax breaks. But I may want to see what our friend, Mom Dani says the first couple weeks. So you made the point that for a bunch of different reasons, Ukraine War, but other structural reasons, we are on the path to losing our privilege as the holders of the global reserve currency at some point, right? Well, because all empires are. Yes. So we know that. The question is, when does that happen? And what replaces it? And my read is, as of now, there's no obvious, like, national replace. We're not going to, like, adopt the British pound or the euro or the yen or the ruble. But instead, gold is the stopgap, as it has so often been. But crypto seems like the next global reserve currency. Is that fair to say?

Um, yes. I mean, I would say this. There's, they're kind of, I think people bundle together the notion of like blockchain and cryptocurrencies. And what I'd say, I can't necessarily make a pure prognostication on any one particular crypto. I mean, it's been a phenomenal exercise and wonderful. to see is sort of like adherent to Austrian economics to see the experiment work I don't think we want to get into like the the dynamics of individual cryptos I think you know at some point probably Bitcoin as a crypto will be usurped just by sort of a better technology but put that aside. What, to me, unequivocally, and the next venture I'm going into, it's related to blockchain, is, blockchain is here and is not going away whatsoever. And blockchain is going to transform the financial services industry, pretty much everything we do financially transaction was and fortunately we have the wind at our backs with this administration and david sacks and

genius act etc and nobody nobody who maybe was somewhat skeptical three four years ago is it all i mean larry fink and as an example is i think he continues to say all assets are going to be tokenized just this week DTCC said all assets are going to be be tokenized and put on the chain and that's going to remove a lot of little frictions in the system, extra costs that don't need and extra time lags that don't need to exist. So the cryptocurrencies exist with the layer of the blockchain. You can't have crypto without the blockchain, but the two are somewhat distinct. So a couple questions. One, is it safe?

I mean, it's reliant on electricity. Yes. But so is, so is every, and I guess I mentioned, the CME went dark, right? The other day. Chicago Mercury College Exchange. So the NASDAQ could shut down, right? Everything we do is reliant on, except for you coming over in your golf cart with a bag of gold coins for me

is relying on energy to that extent. Is it safe? Is it hackable? The theory, you know, one of the theories being proposed of Bitcoin, I'm not really sure if this is,

you know, Bitcoin's had a pretty decent drop from high 120s to around 90. You know, part of the thing being floated that with quantum computing making the leaps that it's making that Bitcoin might be able to be hacked at some point. Perhaps.

But again, I'll put that separate to the blockchain. The blockchain, deeply encrypted, safe, these are the rails on which everything's going to run. Okay. Will it eliminate corruption?

or curtail it I think I mean because it's kind of I think the question coming from you is is a funny question because you know that nothing will ever eradicate corruption in the human spirit unless it changes the human art right now of course

yes it should eliminate corruption because what the blockchain is going to do what it does is it creates a permanent electronic unhackable ledger So think about something who's basic is like title insurance. I don't know if you've ever had to deal with that. But first of all, like, why do we need to pay?

Have I ever to deal with that? Yeah, I pay constantly for title insurance. So why? Like, it's an absurd notion, right? There's a title. You own the title. You put it on the blockchain. It's there forever.

And when I buy my house from you, the title gets transferred to me. It's registered on the box. The transaction's there. Now it's mine. It's there forever. We don't need to pay a couple grand or whatever. Sorry, one of my best friends runs a title company in Maryland. But, you know, he's my age, so he's probably almost done anyway. But that's just an example. Like, why do we need to pay five grand for title insurance? I just sold a house in Westchester, and I found out that there was, from two owners ago, there was according to the paperwork, there was a $650,000 mortgage still on the property. and that never got expunged but the time the brokers just kind of waved it back and forth and everyone just kind of stamped it like that stuff that's just a good example i think that everyone can kind of uh relate to but also like why we'll be able to send money uh immediately you know

with no you know if i send money to you'll immediately get the money get the get the care get the interest on it why should i be paying thirty dollars to send a wire from jp morgan like that's pure $30 of margin like all that kind of little stuff and um so the company that that i'm start it's going to be starting with jan 1 it's called liquidity dot io and we um we have one of only six fully registered licensed alternative trading systems which is a trading system that's going to be able to trade all these tokenized and financial assets and what we want to do is help democratize the financial markets and tokenize all kinds of assets but we're working with our with our backer just made some

acquisitions with a couple of consumer loan businesses auto loans and manufactured homes mobile homes for example like there's a great story these two young guys in Dallas they're working at JP Morgan and with their fourth bonus they said we're not we're gonna we're not gonna blow at this time let's buy some rental property and they couldn't find any rental property they're in Dallas so they just cold calls like 250 mobile home uh parks and they found one put in 50 grand turned around was a six million dollar trade uh they were going to do a bigger one and what they realized they were better off doing was revolutionizing the lending business for mobile homes uh because guess who the

biggest player in that is was warren buffett so uh great business obviously hard margin business But what I didn't learn until recently is that there is no refi on a mobile home and there is no lending available on a secondary purchase. So if I take out a loan for my mobile home and then want to sell it to you, you can't get a loan. You have to buy it for cash. And if rates go down from eight to four, I can't refinance it. So they're going to, with their business and tokenization, they're going to eradicate all kinds of costs, which and create the, you know, two separate markets which is a solution to is a partial solution to the home affordability crisis like that's something everyone can get upon how does this new technology figure into like monetary

policy like well that's a great question so um you familiar with the stable coins yeah i am but will you describe what they are sure so stable coins i let me think about this way in simple terms say crypto like a like a bitcoin is sort of a free floating currency the market dictates the stable coin is more like a pegged currency so pegged to fiat in this case uh like tether circle they're pegged to the u.s dollar and try to keep it stable at parity one to one uh so what they are is a and there are national currencies like this there are countries like the bahamas or whatever just pegged one to one exactly Yeah, Panama's dollarized

Stephen Hanky was a big dollarization component They tried to do it in Argentina It didn't work Hong Kong's got a dollar peg So So the stable coins They They try to keep parity with the dollar

And they're back theoretically backed by Treasury bills So Money comes up in the money gets invested in treasury bills one for one you're backed by triple a rated short dated no risk uh but it become these become a conduit for all these transactions uh on the chain automatic through these so it could go through go through the uh the stable coin and into other things

from there as it sort of a conduit now that's all good and well as long as they we're sure that those stable coins are taking dollar for dollar investing in what they say they are without a lag or without moving too far away from that. Tether at the moment, it seems to be diversifying away from strict heavils and they've been moving into gold, which is working for now. But you know, yet to be determined how that works out. So does that make, does all of this make the U.S. dollar stronger or weaker? Oh, I'm sorry. Yeah. So the good, that creates a, uh, actual bid for our treasury bills, which is a great thing for percent and friends, because that creates a whole new demand vehicle for our treasury debt on the stable coins. And what these

stable coins do allow for, again, a lot of emerging markets participants, allows them to quickly access dollars and avoid depreciation risk in their own country. So you're getting a lot of foreign money into stable coins that will be bid for T-bills, which should hopefully help with our funding. Is there any way for the U.S. government to use Stablecoins as a weapon in the way the Biden administration used Russian assets at the New York Fed as a weapon? I don't know. I don't know.

I imagine there is. I don't know what that mechanism would be. I don't think. I mean, in the Russia Reserve instance, it was a bilateral seizure. This would be a seizure of untold amounts of investors. You're seizing that. I'm not sure what the purpose would be other than just stealing the money. Well, we've seen that before.

True. What do we know about global gold reserves since it's such a huge component now? what we know we don't know everything that we know because it's not fully transparent but what we do know is the direction of travel which is massive increases particularly uh from india china russia that doesn't seem to be abating at any time that means they're importing gold uh that means they're buying gold and there has been a lot of movement of physical gold uh particularly over the summer but the movement appeared to be more from the London vaults back to the United States rather than elsewhere. But we don't know, we don't have complete clarity on any of that stuff. How and why? So if you're going to have an ancient commodity that's like a huge part of the global system, economic system, how can you not have transparency?

Maybe I'm answering my own question. You're looking at me like I'm an idiot. I saw you answer. I saw you answer it before you finished a sentence. In other words, if it's so important, why aren't people being honest about it? Because it's so important, that's why. It's totally weird that the Chinese wouldn't tell us exactly how much buoyant they have in the vaults. Yeah.

Yeah, there's no reason they should or would or have to. I guess my question. Also, you don't actually show your hand on how much you're accumulating as you're trying to accumulate in that. Oh, is that true? Well, yeah, typically. It's typically. I'm learning a lot about markets from you. That's great. That's great. So I told you, I promised you stupid questions. I know. I said there are no stupid questions, but I was wrong. So, okay, then let me reframe the question this way. If we got somehow full transparency on global gold deserves where they are, who has gold, how much?

would we be shocked? Is there a big spread between perception and reality? We still don't have the audit of Fort Knox that we were supposed to get a few months ago. Really? Yeah, you might be shocked about that too. I don't know. Do you think Fort Knox just has a lot more gold

than they're telling us? They may have 10 times more. I don't know. I really don't. I don't want to speculate. I mean, I like to speculate, but I don't want to speculate on that. I'm guessing if there is a spread between perception and reality, it's to the negative,

but what do I know? Not sure. There's talk about revaluing the gold as well. What does that mean? That means if you automatically revalue our gold reserves to market, we automatically have a higher effective capital base that should make us more credit-worthy, for lack of a better term? So gold now, the U.S. reserves are valued at, like, under 100 bucks an ounce, something like that, something crazy, right?

I'm not sure exactly what it is. But, but I mean, that's like 1933 levels or something. Right. And, of course, gold is over $4,000 an ounce. So, like, why would we continue to value our own gold reserves thousands of dollars below what they're actually worth? I have no idea. That's weird, though, right? It is.

Yeah, especially when every other metric in the economy, you know, we've cost of living. adjustments based on the CPI basket. I don't know. Sue, how much, just to go back to your career trajectory in emerging markets debt? Yes, sir. How much chicanery is there in that business? Like, so if, you know, you're dealing with emerging markets. So some of those are like, you know, solid, transparent, well-governed countries and some of them are Nigeria. Right.

What's that like? Well, I would say there's two components in the emerging markets trading business. There's the trading thereof in sort of the big money centers like Hong Kong, London, in New York, and then there's the domestic stuff that happens. Now, I could say in terms of chicanery, there's a clear 80 BC line at the global financial crisis on how we conducted business across the street in all products. pre-GFC post-GFC and all I could say was a lot more fun pre-GFC was it fun it was a lot of fun it was as much it was as fun as you could have having a job really job what was so fun about it

um every day was different uh you're on a trading floor everyone every every every day's different you had a front seat uh you have a front seat and you're participating in global events every day mark's moving up moving down you're working with like a truly diverse bunch of people from all walks of life that are close probably to merit meritocracy on trading floors you could get and it was very clear what the motivator was uh it was making as much money as he could every single day and uh there was nowhere to hide from that so as a young person it couldn't be a better learning experience because every day at the end of day there's a number next to your name and whether it was through your good luck bad luck hard work whatever the number

doesn't lie and that's the number it's just a great way to learn and to have to face yourself and improve upon yourself and uh you know train forward's guys you know like PhDs from Princeton to guys that dropped out of college and we were all kind of in it as a team. It was really fun. What were the personality traits that allowed people to be successful? Like what's the perfect profile of a trader? You know, it's funny, I found that the best traders, there's investors and there's investors, and there's traders, right?

Different, it's a different mindset. The best traders I find were guys like to think we thought more in two dimensions. so if you thought in three dimensions you could out think you're you could outsmart yourself way too much the what ifs and oh oh but and if you're in one dimension you're just not at the IQ level to function

so the two dimension that kind of took the factors of play saw what the trend was took it at face value didn't overthink it went with it and wasn't too much had enough risk appetite but wasn't too much of a cowboy I guess would be the perfect trader they saw the the

worst describing my dogs yes the worst traders I saw uh were oftentimes the smartest people really yeah because they just overthink you just overthink your way you over trade it you overthink it uh you're always looking at the you're always looking at the but this and that and And I have all this from your analysis, paralysis, and or talking yourself out of a good trade. How did it change after the financial crisis? We were egregiously overregulated from all sides. Did that make market safer for retail investors? I don't think so.

Because the picture you painted over the last hour and a half. is not one of like impregnable safety. No. Let me just say that. I mean, there's obviously a lot of unattended consequences from the excess regulation. But it just, you know, it's funny out on Wall Street, I think we were actually at the vanguard of hyper-regulation, hyper-monitoring. I mean, they were monitoring every Bloomberg chat, every email, every. phone call, everything was taped. Then they ran algos against it for keywords. Um, you just like

way more scrutiny in everything. So you lived in the Panopticon before everyone else. Yeah, I did. And I, and I think there's also, you know, a lot of going back to the global financial crisis is such a similar moment in this country in a lot of ways because it actually, we made this deal with the devil. I, you know, I, I, I'm a beneficiary to bail out. I worked at a big bank that got bailed out and, and, I make no, I won't, I'll never deny that. But in doing so, we, we let the Trojan horse in and we married the government effectively. And we, they came in and they basically wrote our policies. They wrote our policies for us and from HR policies to recruiting policies.

policies to, you know, all the regulation and the stuff that I saw from a distance in terms of sort of arbitrary, uh, finding for violations was kind of gangster like. And I saw a lot of good people sort of thrown on the funeral pyre sacrificed, um, just just tossed out. Like, let's, you know, this guy, this guy was in violation. These guys weren't, but they were on the same Bloomberg chat, so let's give like 10 bodies. Everyone's fired. Everyone's career's over. It was a, that was a bad, that was a bad time. It's a bad time. And so everyone started trading scared. People tried trading scared and it lost the joy and it lost the... But famously, none of the, you know, the CEO, the executive level seemed pretty insulated from punishment. Yes. You know, if I were going to give, if I were going to give a more sort of generous take on it, you know, the CEOs really didn't have much of a choice in some regard. It was like, look, here's a deal. You could keep your job and keep making $25 million a year. or if you agree to this fine for mortgage-backed securities or whatever, live war rigging or whatever it is, this arbitrary number, you can keep your job and you can keep your salary

or you can get fired and the next guy will agree to it. So like, and they kept it afloat. And they had to be in good stead with the government or the fines and the regulation would just come and come and come, come. But once you get bailed out, once you ask you to bail out, they own you, and that's what happened.

It always is what happened. They made the deal. Yeah, and it was like the tobacco companies, right? Like, they kept the tobacco companies alive just long enough to keep bleeding them for fees. Like, then they figured out, there was money there to take, and they just kept coming back about it.

Yeah, and the country did not get healthier. Life expectancy went down, and if I can just be honest, I don't think the quality of the cigarettes improved at all. No, I'm serious. If you smoke a sort of pre-settlement Marlboro Red, not that they exist anymore, or a current one, it's like it's not even the same product. I was a pre-settlement guy, I quit. Yeah, me too. I'm just saying I've heard that. So, no, I don't really think anyone won except for politicians.

Right. I don't think there are a lot of lung cancer patients. Yeah. Well, a lot of nice new regulatory buildings were built. And I think also one of the great stories that hasn't really been, maybe this was for you, one of the great stories that should be investigated is where did the proceeds from all those post-GOC fines go? Because I saw some stuff in around the time that was kind of staggering as to where it went. Now, obviously it went back into building more of the regulatory bodies, like more SEC regular, whatever. But I think some of the money flowed to some very specific political organizations.

There's no question about it. It went to the swamp. Meanwhile, the whole pretext for this, the justification for doing this was, I lived here then. I just saw my house that year, so I was a victim of all this, too, even though I never participated in it. But I lost my job along with a lot of other people. And just because the economy contracted, so people lost their jobs, including those with four children. But the justification was, which I wasn't against, it was like these people are totally reckless. Like, they're completely reckless.

Like, what is a mortgage-backed security? What's a derivative? And, like, no one outside your world has ever heard of any of that. It was like, I thought when I, you know, signed up for a mortgage, like, the bank I signed with held the mortgage. Like, we had no idea they sold the mortgage. most people didn't know again there's a lot of ignorance including in my house about the stuff and so the idea was like this is crazy and we need to rein it in you've just described the quote gamification gamification yeah of markets and it's like that doesn't seem like a decrease in

recklessness what actually reminds me something the for the part of the previous conversation which is you know people say you never know when you're when you're in a bubble until it's over yeah and that's entirely incorrect. I mean, I've been through a bunch and we all know. Like, we all really? Oh, yeah. We just didn't know when it was going to end. I mean, give me an example. People were talking about the bubble in 05. No, if you fought it in 05, you were out of a job pretty quickly. Like, it went on for a long time. I could tell you the reason I want to bring it up is, again, the perilous to today is, you know, so in 07, I had been on trading bonds for whatever, 14, 14 years. So not the smartest guy, not the most quantitative guy, but been around

enough to trade enough stuff to understand kind of how stuff works. And all this stuff they're coming through with like CDO squared and CLO, and like synthetic this and that. And like, I didn't really understand it. I didn't have to trade it. But like, I didn't really understand it. I don't really want to get into it because I didn't need to. But it's just, it's thinking if, if I'm already in the whatever percent of financial experts just by nature of where I sit every day. And it doesn't smell right to me. Yeah. Something's not right. And you trade Nigerian death. Right. Right. Right. So, yeah, I'm taking credit derivatives on Bulgaria and stuff. So, like, yeah, yes. But. And if you're taking derivatives of Bulgaria, but you're like, this is too much for me.

It's just like how many acronyms? Also, I'm just, I'm substantially averse to any acronym. And then when you take the acronym and square it, you know you're in trouble. But then this latest go-around the last couple months with all this circular financing and hype with all the AI companies. And every day, you know, somebody's buying chips from somebody who's going to lend the money to buy the chips to invest in the scale or who's going to do this, like, Every day, four companies are, you're like, dude, I suppose I could figure that out if I sat down and really tried to, but it gives me a headache just even thinking about it. And clearly, it smacks of some kind of, it smacks of desperation or something. That's just my gut is just having, you know, the sniff haven't been around a long time.

It's like, dude, if it doesn't smell right, it's just, it doesn't smell. Don't put it in your mouth. Right. Right. so you remember thinking like what about the tech bubble in 99 2000 did you think oh i got blown out personal training trying to short that like the fall of 99 on the lot of other people yeah i mean everybody yeah oh i've hilarious hilarious and that's i was with my wife uh in march of 2000 at a dinner at a lunch with a guy who was chairman

of a major broker dealer, famous broker dealer. And where she's 30 at the time, never invested in anything. And we're sitting next to me. She's like, oh, I've been day trading. Stocks.

He's like, explain that. What do you mean you've been day trading? She's like, oh, yeah, I just buy whatever IPOs. I just, if it comes out, I buy it. Do you remember that in 2000? All the iPhone front, everything just went up. Like, she's like, yeah, I just, I just buy it. And then I sell it.

It's awesome. And I saw, I saw his eyes just go like this. And then that was like, that was like the Joe Kennedy shoe shine moment. I mean, it was literally like February or something. I think it was probably within probably two days. No, it's when your housekeeper is investing in condos in Clark County, Nevada that you were like, I think maybe this is overheated. Just a little bit.

No, for real. Or you get your Uber divers like trade crypto on with one. Completely. Yeah. Whenever people are going hard on like Cape Coral, Florida real estate, who don't know anything about real estate, not against Cape Coral, but you know what I mean? And those were the hardest shit zip codes. Yeah.

So you think it's pretty obvious is what you're saying? I just, it's, it feel. There are sort of like the Russian, just sort of like the letter that they wrote about the Hunter Biden laptop, it has all the hallmarks of Russian disinformation. It is all the hallmarks of late stage rally, let's say that. Yeah. Well, you're very diplomatic.

I have to say, though, just like with the baseline fact that you spent your life trading emerging markets debt, I think if you're uncomfortable with something, it's fair for the rest of us to be uncomfortable with it. Appreciate that. Yeah. Last question. You've been through all these bubbles and bursts and debt crises and bailouts. And at the end of every story is the United States or U.S.-lined institutions like the IMF coming in and kind of saving the day. That's a thread that runs through all these.

Yeah, in simple terms, sure. I only deal in simple terms, Coleman. But what happens if that happens to the United States? Who bails the bailer? Nobody. Okay. So then what happens? I don't think, I hope you bought that agricultural land in Brazil at that point. So then what happens? I don't think we get to that point anytime soon. But just theoretically.

As we've mentioned before, you know, there is no, there's no alternative right now, right? People still, as bad as it could get in the States, like, we're still the cleanest dirty shirt in the pile for the time being, right? We still have this free and open markets where capital flows and gets treated well. There's time, there's still time, to course correct. I'm not willing to go to who bails out, who fails out, who fails out the base. Taylor, I just, I'm not willing to go there. You're not. I'm not willing to go there.

We'll be all right. We're still, still the United States of America, and we've got a lot. I mean, this administration's got a lot of mental firepower and a lot of experience. We still got time. Coleman Church, ladies and gentlemen, thank you. Thank you so much.