We Study Billionaires - The Investor’s Podcast Network - BTC084: Japanese Yield Curve Control, Oil, & Bitcoin Macro w/ James Lavish (Bitcoin Podcast)

Episode Date: June 29, 2022

IN THIS EPISODE, YOU’LL LEARN: 01:20 - What in the world is happening with the Japanese Yield Curve Control? 15:12 - James' thoughts on Risk Happening Fast (Luna, 3AC, Celsius). 27:57 - Frequencies of settlement. 32:07 - Are monetary policy-makers wagging the tail of politicians? 34:07 - At what speed is this current cycle going to play out? 35:29 - Has inflation peaked? 42:49 - Recent statements by FED Chair Powell. 49:47 - The battle between producer states and consumer states. 01:09:52 - The housing market cooling off. *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. James Lavish Twitter. Looking Glass Education Website. Related episode: Macro and Bitcoin Education w/ Greg Foss, James Lavish, Jason Sansone, & Sebastian Bunney - BTC080. New to the show? Check out our We Study Billionaires Starter Packs. Are you looking to start investing? Check out our article on How to Invest in Stocks: The Ultimate Guide for Beginners. Our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Check out our favorite Apps and Services. SPONSORS Support our free podcast by supporting our sponsors: Hardblock AnchorWatch Cape Intuit Shopify Vanta reMarkable Abundant Mines Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I have Mr. James Lavish, who's an expert on macroeconomics with the CFA and two decades of institutional investing experience and risk management. During our discussion, we covered the current anomalies happening with the Japanese yield curve control, the challenges facing Europe with the energy shortages, Bitcoin correlation with risk assets, why institutions still haven't adopted Bitcoin and what it'll take, among many other interesting topics. James is a total wealth of knowledge, and I have no doubt you guys are

going to really love this conversation. So with that, let's play the intro. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. All right. Hey, everyone. Welcome to the show. I'm here with James Lavish. James, welcome back to the show. I enjoyed our last chat with Greg and the others. It was a blast. And I'm excited to just go one-on-one here with you. Yeah, I'm excited to be here. Thank you for having me back.

That was awesome. It was super fun. So thank you for having me, Preston. Oh, yeah, my pleasure. So when we were talking with Greg, we covered this a little bit, which was the Japan piece. And this story just seems to kind of get more interesting by the day, right? It kind of exploded onto my radar, you know. And when you asked that question in the first interview or our first podcast, you said,

what are you looking at? Like what charts you're looking at? And I said, I'm really watching the yen because this is kind of, this is wild what they're doing. It is wild. And you know, it's not anything different than they've been doing all along. However, they've diverged from what the Fed is doing so severely now that it has just been like everybody, you start, you're starting to hear people talk about a lot.

You know, Luke is talking about, Lynn is talking about it, you're talking about it. Greg and I are talking about it. It's something that it's like you're watching this slow motion train wreck and there's nothing you can really do except just watch these guys continue this. So for the benefit of your audience, what's going on is that the Bank of Japan has instituted a policy that just like we've been doing all the way up until this point of quantitative of easing, they have said that they're going to keep the 10-year JGBs 0.25%. And they're going to buy every single bond that is offered to keep it at 0.25%. And as you know, as we've talked about before,

that puts a tremendous pressure, amount of pressure on their currency. Because if you have investors, other sovereigns who are selling the yen, selling these JGBs, and then they get yen for those, they're going to sell that yen out because they don't want to be holding yen. And of course, Of course, the yen just, it's skyrocketed against a dollar, meaning it's a reverse quote in the market. So when it goes from 120 to 130 to one, it's headed to 140, that's a major negative move in the yen. So it's just the release valve, you know, there's pressure building up and the currency is the release valve. And it's wild how they're just standing there, just swallowing all this debt. I think it was last week. Will Clementi shoots me a text message. And it's just the picture of the JGB 10 year. And it had exploded up to exploded 20 basis points up to 0.46 percent, which, you know, if you're if you're trying to peg it at 0.25 and it blows up there to, you know, it sells out to 0.45 or 0.46 or whatever it was. That's a really big deal. And so I pulled.

up the chart and I mean the every duration on the yield curve the 30 year down to the one I think the three year we're all blowing out. Yeah. So that's during our market hours, right? That's when their window, their windows closed. Yeah. So what you're seeing is that's the swap market. So that's the institutional traders, the hedge funds who are shorting the Japanese bonds

because they're expecting that the Bank of Japan's going to have to back away. They can't just keep doing this forever. So they're shorting the bonds and buying the yen against them in that trade. So that's kind of where it gives you, it's a little bit scary. And that's why I'm watching this every single day and to see what happens outside the trading window, outside the Bank of Japan's their open market window. And so it gives you an idea how quickly. this thing will move. And if they stepped away and let them trade freely, this is going to

half a percent without even blinking. So since then, you're seeing this happen every day when their market is closing. And so I pulled up the chart and I put it in hourly terms so you can see basically when it's blowing out, when it's not open, and then when they're opening and they're buying, try to peg the yields. They're just slowing them in. Yeah. It's crazy. I mean, it looks like there was a person that wrote in the comments on the chart that I posted, something like, hey, this looks exactly like when something mechanically is getting ready to have a systematic failure. And that kind of looks like, yeah, it looks like maybe like the tremors before a mate, like,

like when you, what are they, what are the tremors called before an earthquake? they're four shocks, right? Yeah. So they're kind of like the four shocks of this currency that's about to collapse. And it's not funny. Actually, it's not, it's terrible. I'm actually, I'm actually, I'm actually a little bit worried. I like, I like Japan.

You know, I've got Japanese friends. It's not a good thing. But James, this is the thing for me. There was a book called The Holy Grail of Economics written by Dr. Koo. And I remember reading this book. And it outlines the whole Japanese, you know, QE extravaganza. And it goes through like why it happened. How was a balance sheet recession and all this stuff?

All the avonomics and all that. Yes. And it was a really interesting read. But when I was done with it and I got to the end, I was like, nowhere in here does it talk about how any of this gets resolved or solved? Nowhere. It doesn't. It doesn't.

It doesn't. And that's a crazy thing. thing. So if you look at it now, okay, so for the people who are listening, the Japanese yen, that's spread between the U.S. 10-year treasury and the Japanese 10-year treasury, as that widens, the yen follows that spread. So you can see, you can plot it against it, and you could see how the yen just follows it. And so the problem is that we're not loosening any times. soon. We're tightening. We're hell-bent on tightening into this recession, right? So that's where we're going, and our rates are going higher. So Japan has now taken in, what, 80 billion

dollars worth of, U.S. dollars worth of yen last week. So they're on track to buy over $300 billion dollars, U.S. dollars' worth of Japanese government bonds this month in June. And, you know, there's a metric that no sovereign has ever crossed, right? No central bank has ever crossed. And that's owning 50% of your own debt. And they're bumping up against it. So they're already at over like 228, 230 percent of debt to GDP. I mean, mathematically, the answer is there's no solution.

Yeah. The debt has to blow up, right? has to blow off. So if this blows, so let's pull the threat. So if this starts to blow up and it becomes unmanageable, now the central bankers collectively, right, this isn't just Japan. This is all of them have to step into this with easing. Would you agree with that?

Well, I mean, there's absolutely, there's going to be contagion, you know? I mean, I think I tried to burn through some of your questions that people posted. I mean, thank you for posting the questions today. And somebody said, well, what happens to the yen? So you just asked, like, what's the resolution? Well, the resolution is, you know, is people lose confidence, sovereigns lose confidence, investors lose confidence. They stop buying the Japanese bonds.

The bond market locks up. Japanese government has to just continue buying them or back away, whatever happens. And the confidence in the yen just collapses. The yen hyperinflates. Right. What does that do? It's what you just said. There's going to be contagion to other sovereigns and to, you know, major, major banks that have exposure to this. It's just it just, it's the kind of thing that it'll have ripples across the world. So one of the things that you and I have talked about and we're watching pretty closely. I know you are watching too is Europe. I mean, now we have this thing where Lagarde comes down and says that, well, we have this new tool, right? It's called the anti-fragmentation tool, right? And so they're watching the Italian bonds. Their Italian 10 years blow up over 4% yield.

And so they have an emergency meeting. They're like, okay, well, so we'll only do QE in Italy. And then everybody else, you're on your own, but we're doing QE in Italy. Oh, and maybe Greece. And if Spain and Portugal pop up, maybe we'll have to do it there too. But Germany is such a debaq because they've got all the different, they got all the different countries that are in different debt loads. Yeah. Yeah.

It's nuts. Yeah. It's like, I mean, your kids have. Yeah. That's a great way to put it. They're living in your basement. Mm-hmm. You know, they're 38, 42 years old.

They've run up this massive debt. Some of them are a little bit more responsible than the others, but not really, not by a lot. Not really. Not really. But then you've got the northern countries. You've got the responsible parties who are going to have to take care of them. And that's a recipe again for disaster. Yeah.

So it's going to be interesting. To say the least, it's going to be interesting. And it's, you know, I'm sitting here laughing. It's kind of a nervous laugh. It's not, it's super serious. I've never seen anything like this. People are asking like, well, is this like 1970? Is it like 1940?

Is it like the great financial crisis? Like, nope. Yeah. Nope. I don't think it's like any of them. I know that it's a little bit more like 1940 because of the, you know, the kind of lockdown from the world war and that supply chain issues and inflation. But this is something we've never seen.

We've never had debt to GDP like this. Yeah. You've never had an M2 supply. money supply go straight through the roof, right? Well, I don't think you've ever had nations able to kick the can down the road and avoid avoid economic reality for as long as this long-term cycle has gone. And I think a little bit of that has to do just with the knowledge that's kind of popped out of the last 80 years and the connectivity and the internet and the sharing of information has

allowed the globe to twist the dials to such perfection to keep this thing, quote unquote, stable for as long as they have. Yeah. And they've been kicking this can down the road, and they are all doing it in concert. Right? And that's the thing is that they're all doing it together, you know? And I loved your analogy with when you were on what? what Bitcoin did with Peter and your analogy with the Monopoly boards.

And they're the central bankers from each board are like, all right, you're going to, so are you have to, they have to. Because if they don't, the, it's going to be mutiny. Mutiny, exactly, which it will eventually be anyways, right? Because of the separation of wealth. When I was in college, we studied this as like a, and I couldn't relate to it. I mean, I'm going to date myself here, but back in 1990, 1993. And we were studying the separation of wealth in Latin American countries. And I couldn't really relate to it.

I was like, you know, they made so many mistakes. They should have retained a middle class or built up a middle class. And literally at that time, we're destroying our middle class. And so from then to now, now that we have virtually no middle class, right? We're just gutting it that we're ending up in the same position. Yeah. We're ending up in it, you know, so I wrote a thread a long time ago about why you should

have Bitcoin as a right to Bitcoin, right? Yeah. Why you should have a Bitcoin, why should have Bitcoin as a hedge against hyperinflation. I had some people come on that thread, you know, and kind of laugh it off and say, never happened to the United States and no way. And well, I do believe that the United States would be the last for it to happen to. That's my belief. Yeah.

We're super fortunate that we're kind of in that position, I believe. I don't know, but I believe that. But if you think it can't happen here, you're kidding yourself. Yes. It can absolutely happen here. Yeah. And it can happen faster than you. than you realize.

And do I think it will? No, I don't think it will happen, not anytime soon. I hope that we have an, I have this hope and this vision of an orderly operating system getting put in place and being used and working coordination as a, you know, like Bitcoin has a reserve asset and then for us to kind of switch over. But if we have things like they're happening in Japan and in Europe, and you get complete meltdowns, all bets are off the table. Every single bet is off the table.

People in the digital asset space this past two, three weeks have got a taste of how fast contagion and counterparty risk can blow up. They've seen the Celsius thing. You saw a blockfine needed somebody to give them some liquidity. and you saw people who had deposits that got totally locked. And it happened literally at the snap of a finger that all of this kind of came unraveling. And I think the catalyst was really Luna. It blew up. Then everybody's like, you're seeing who's swimming naked.

And then all of a sudden, Celsius locks up their clients and then 3AC. And so it just all, I think if people look back and be like, well, I just didn't even, it happened so fast. I think is what the common person. Risk happens fast. That's Greg, Greg Foss's favorite quote. And, you know, and I was watching the Luna thing happen. And I thought at the time, naively, I thought, well, it's kind of contained, you know. And, you know, looking back on it, like you just said, everything happened so quickly.

It's just like 1998 with long-term capital management, you know. And I was sitting there on the desk and I get this call from another trader. at a hedge fund. At the time, I was trading risk arbitrage, trading merger arbitrage, helping manage this book of tons of positions of merger arbitrage. And for your listeners, merger arbitrage is where you buy the stock of a company that's going to get bought out, whether it's for cash or stock or a combination of cash in stock. It can get super complicated, but you buy the stock of the company that's getting bought out and you short the stock of the company that's buying them in the right ratio, and you annualize that return and you can capture

the spread for the only risk is that the deal falls apart, right? That's the risk, the deal falls apart. You don't care where the market goes, the market could go up or down. You're kind of hedged out of beta unless somehow the market movement impacts the likelihood of the deal closing, which is unlikely unless the deal is subject to financing. And if the deal is, see, the deal subject to financing and the market falls apart, then, you know, you could have issues. But pause, pause, because I got to ask you a burning question I've got right now. And we're coming back to your point here. I'm not going to disrupt your point.

Is the Elon Musk deal going to go through? Now that you just said that, the whole time, I was like, is that going to happen? I've got to dig into it. The market's telling you know. Okay. Or that it's going to get repriced. Okay. Go back to.

Sorry. Keep going. Okay. So, so, you know, So I'm trading the merger arbitrage. And so you're studying the likelihood of the deal closing. It's all you care about. You don't care where the market goes.

You usually avoid the deals that have financing risk because you don't want to have market risk. Right. So anyway, so we have this book of deals. I mean, we're in 1998, I want to say, Preston, we're probably, we probably have a half a billion dollar book at that point. of merger deals in this in this in this in this hedge fund get this call and it's a trader in another firm and he asked hey do you guys have any exposure to to Goldman Sachs I was like no who's asking why he's like he's like you've heard what's going on with long term capital management I said yeah of course it would be while watching the spreads kind of creep out anyway so what had happened

is long term capital management this hedge fund that's run by by by Nobel Prize winning mathematicians who have created the Black Shoals theory, the Black Shoals calculation for the risk of options trading. Right. So, and so these guys are really smart. I mean, super smart, right? Too smart for their own goods. So what they did is they took a billion dollars.

They levered it up and borrowed doing swaps with every single prime broker and counterparty they could find. they levered this book up to over $100 billion. So they're like 100 to one levered. And what they're doing is they're basically short volatility because they're playing interest rate arbitrage, which is one of the big things they were doing. And there's a lot of stuff they were doing. That was one of the biggest things that we're doing.

And a lot of merger arbitrage, a ton of merger arbitrage. But they weren't just getting at those deals. They were levering up their position. So they have a book of, you know, a billion dollars of the merger deals, but they only have a billion dollars of, they only have like a $100 million of cash in that book, right? So they're leveraged so far up. And they've done it with swaps. And it's just crazy. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo

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All right. Back to the show. Anyways, these spreads blow out everywhere. I mean everywhere. And it was, it happened. like that because everybody got a sniff that these guys were going under. And so it wasn't that everybody was selling as much as everybody just backed away and said, we're not offering liquidity. And we're going to let there be price discovery. And it was madness. I don't know. Do you remember this?

Do we? I was, I was just coming out of high school at this time. But I've studied the, I've studied the book and and talk to various people on the show. Well, the long short of it is, What's crazy about this is this remind, like I was thinking about it all last week. I was like, this is exactly what happened. These guys took super crazy, stupid risk, right? They levered way up, you know, they've got this collateral that is highly volatile that they're levered against. And, you know, okay, we're not going to get into mechanics of what happened.

You add nauseam, you can have Mike Alfred on the show. He knows all about it. So just like the spread blew out here. and there were major investment banks that were prime brokers that were going to fail. So they go to the New York Fed and they said, look, this is so bad that we've got to shore up the markets. We've got to rescue. You know, we've got to be rescued or else the financial markets are going to melt down. So that was the impetus for the real step in of the Fed put.

And I think I wrote about this. But the strange thing is, though, and the scary thing is, There's no Fed put here in Bitcoin and in crypto. There is only downside to the point where it gets washed out. Whoever is taking too much risk. Sorry, you have the consequences. This is why I'm here. This is why I'm here.

I believe in free and open markets. If you make bad decisions, you should lose everything. Exactly. There's no creative destruction. except for in these markets. Right. And so, you know, if you own Bitcoin and you're watching all this happen, I mean, my thing is I'm just holding it.

I mean, I haven't sold anything. I mean, I'm just holding it. Why? Because I think that this is going to swallow up whatever's left. Now, you know, as these other, as these other so-called protocols, these securities, they collapse. Well, there is obviously less market cap to go into Bitcoin. So even though Bitcoin's dominance is going up, you know, there's only so far it can go.

And you still have a lot of people who have not been wiped out who have some cash on the side, who are buying some other, some cryptos. You've got them buying Ethereum or Solana's been all over the place. So they're buying those thinking that, well, especially hedge fund. thinking that that has a high beta to Bitcoin. And so they know two things. Those coins have high beta to Bitcoin because that's the stable one. That's a stable asset of the whole group.

Of course, it's different in every way that we can think, imagineable. But that's the first thing they know. The second thing they know is that Bitcoin typically leads risk assets now. It's been doing it for months and months and months, right? So as risk comes out of the market, Bitcoin goes down first. as risk comes back into the market, Bitcoin goes up first. So you lever it both ways, right? So they're levering themselves to a recovery as these things have gotten beating down, knowing that, you know, if they don't die, which I don't think they'll die in the cycle, you know, I think they're just

going to keep going and they'll, they can make some great money that way. I love how Michael Saylor, I heard him talk about the frequencies of settlement. And he's talking about Bitcoin and how high frequency it is relative to everything else in the marketplace, call it equities, bonds, or whatever. And so when you think of it in a mechanical kind of term or a mechanical kind of way, it makes sense that it should front run the actions of everything else. So like if the market has reached max credit expansion and is starting to contract, Bitcoin should lead that. And on the recovery on the bounce, Bitcoin should lead that. I agree. I agree.

Yeah. It does make sense. It does make sense. At some point, though, it decouples. You know, it does decouple. It's got to get to a certain market cap. It's got to have enough liquidity that it is, it's a separate asset class, right? And we're nowhere near that right now.

Not even close. Not even close. No. No. I mean, it's, you know. The reason that we started going down this path is we were talking about the spillover for Japan. Like if this really gets out of control and they have to step in.

I mean, you're literally talking about one of the top five central banks on the planet and the currency that's with it and the debt market that's associated with it potentially. I mean, I mean, I don't know how the probability. Yeah. What is the probabilities we're at here? Is this really a rare chance or are we really at the end game as far as? No, I think I think it can go a long. I think go for a while.

You know, I'm watching it. But I think it can go for a while. I mean, what are the, what's the bank of Japan's choices, right? So as this pressure builds, they can either scrap the yield curve control entirely, just walk away. They can move the, the peg from 25 basis points to maybe 50 basis points, you know. Is that the next move? You think they're just going to move the peg up? And then all these people that are causing these massive gyrations as of the last,

week, they just kind of disappear for a little bit? I'm not sure, but let me see. Let me walk through all of them. So then the other thing they could do is they could target a different maturity on the curve, right? They go to the five or the seven or the five year or the seven year. Sorry, I try really hard not to talk in financial speech. It's hard. Because it's hard sometimes because I know you understand it, but I know there's a lot of people

who don't know these things that are Bitcoiners that listen to your show that don't know some of these things. So I apologize if I'm doing that. I'll try to keep it super simple for people. So they could target a different point on that yield curve, a different bond to control. Okay. Or they could another thing they could do is they could try to save themselves by selling US treasuries, right? And showing, which they've been doing, I don't know how much they've been actively selling versus how much they're just letting treasuries roll off their balance sheet, but they're definitely allowing their U.S. Treasury balances to decrease, which helps them. They get dollars by yen. It helps them support the yen, right? And then the other thing they can do

is they could come to an agreement, which is kind of crazy. This would be like global QE where they come to the U.S. or to another nation and they say, all right, you buy our bonds, okay, and we'll buy yours. And it just, we just push the QE, you know, down the road on each other's balance sheets. So it's like in your monopoly game, you know, it's the central banker goes to the other central banker says, you know, if, we'll buy some of those that. I'll get, yeah, I'll give, you know, your. players 100 bucks each. You give my players 100 bucks each. And then it's not really QE.

And you're getting so detached from the representative, the political representatives. I mean, they are along for the ride. They are not making any decisions. These central bankers are really kind of calling the shots as to everything that's happening within these jurisdictions. Purporting that they're experts on all, which I don't think. And nobody knows what's going to happen. Clearly their health or their food recommendations are. Exactly. They're spot on. So, all right.

Eat your fake meat. So James. What I think, what I think they're really doing? And this is the scariest part. I think they're playing chicken with the U.S. Fed. Yeah. Yeah. I think they're waiting.

They're watching the U.S. economic numbers closely. We just had a negative GDP print, right? And then we get another one next week. If that comes in negative, it signals we're definitely in, recession. We're heading down that road, you know, energy prices are up, food prices are up, stagflation, you know, you're going to have the unemployment rate start ticking up, and then the GDP turns negative. So they're playing chicken and they're trying to hold out

to the point where the Fed pauses. And when the Fed pauses, that takes so much pressure off them. Why? We'll go back to what we said in beginning. The yen follows the spread between the 10-year, the 10-year JGB and the 10-year U.S. Treasury. So if that spread stops, then the pressure stops. It's like, okay, okay, we're okay. Everybody okay? We're okay. Again, it just kicks it down the road, right?

But I think that's what they're doing. And they're hoping that we'll have to reverse course by early next year. which at the rate we're going. Yeah, it seems like that's that that timeline is like it's going to happen. I mean, what do you think? Does that sound plausible? I think it's going to happen sooner than that. I think you're, and it's funny because everyone that you hear on CNBC and whoever,

they're all saying, oh, yeah, we're maybe just starting to get into the recession. They're going to continue to tighten for, and they drop this one years with an S on the end of it. And I'm thinking, how in the world are you going to do this for 12 months? Well, they have a goal. They need to get the rates up high enough that then they have room to back off and ease again. So they need to get them up. Yeah. Pressing they've got to get them up to three and a half, four percent minimum.

I mean, they've got to get them up there. And they'll do it fast. That's why we had a 75 basis point hike. Yeah. They've got to get it. It's not because they're admitting they were wrong. They're like, oh, dang, we've got to get these up fast because we need these rates to be at a that we can then back off.

Because what we don't want to do is go negative. And we saw what happened. And Jeremy ran negative rates for so long. Just this last fall, there was over $15 trillion of negative yielding. Negative yielding, not nominal, not real yield. Take out inflation. Real yield, it's everything. It's everything.

Everything is. But yeah, there was, we don't, we want to avoid that, right? it's mind-boggling. Has inflation in the U.S. peaked? You're seeing a lot of people trying to make that call right now. And I'm just not going to, you know, people have asked me. I just don't know. I don't have anything that signals to me that that's a very clear answer.

Well, I think what we haven't seen is the full effect of energy prices. Amen to that. In all the things it affects, right? So energy, oil prices go up, gas prices go up. I mean, every single delivery is more expensive. Every single item that gets moved from one place to another is more expensive. Every single piece of food that's created is more expensive. That's created, you said, there's garbage food.

But every single piece of food that's processed, it's more expensive. So, I mean, again, you would think that we've reached this point that surely prices must come down. You, I mean, look, with where the rates are on the mortgage, the 30-year mortgage, and how much home prices have appreciated over the last two years, you need home prices to come down 50%, 50% to get the same monthly mortgage that you got on your house back then, just two years ago. 50%.

So surely, now here's the problem. The CPI is a super lagging indicator, right? So, you know, it's hard to tell where even if we're starting to see prices come down, you won't see it in the CPI because that's, you know, that's past data. So it's kind of garbage data. And the Fed has admitted numerous times, you know, Powell has stood up there and he said, we're reactionary. We're going with what we've got, you know.

Now, you and I have heard Target, Walmart, they've, Target, has decreased their earnings estimate by massive amounts because of the price of shipments, energy. Oh, yeah. It's impacted them in everything. It's not, this is not them shipping goods from the target store to the people's houses. This is them getting the goods from distribution facilities or overseas from China or from India or wherever it's coming from.

It's everything. And so I do think, the funny thing is I saw in the PMM, I, right? The manufacturers index and the purchasers index, right? In the PMI, it indicated that the purchasers were worried about supply chains, but their inventory levels went up. A lot from what I had heard or saw. Right. So their front loading Q3, Q4, which is where they have all of their, like, It's a huge percentage of sales. Over 50% of sales come in the last quarter.

Some of these companies, it's 70, 80%, right? Christmas, Thanksgiving and Christmas. So the holidays are a massive, massive driver of retail sales. So they front-loaded it. When the trend's going up on the prices of everything, you're incentivized the stockpile inventory. And you're worried that you can't get inventory heading into that period.

So you front-load it. So I think we're going to see, eventually we're going to see a collapse of prices in those places. But here's the problem. Those are goods that we don't necessarily need. Yeah. Yeah. Those are not food. It's not rent.

It's not energy. You know, it's not your utilities. Like every, all those, all those are going up. The rent might come down. But if you have a, if you have a mortgage rate that is, is, it's not fixed. It's variable. That's gone up. So you're getting hit there. You're getting hit on your gas costs. You're getting hit on your food costs. So you're definitely lowering your just your discretionary spending.

This goes back to what we were talking about earlier with with Sailor referring to Bitcoin as high energy money because of the frequency. When we look at food, okay, this is a high frequency good relative to the junk that they're selling at Target or Walmart that you don't need. This is a high frequency good. This is a high frequency good relative to the junk that they're selling at Target or Walmart that you don't need. This is. a high frequency desirable, consumable good that people have to have. So do we not see this thing that I just, you know, slapped the whole bunch of adjectives on? Does it, does the price of that not contract and come back down and actually become affordable again? Is that, is that what we're up against? Because I can only imagine what that supply chain looks like. when you're delivering a high-frequency consumable good, I mean, I'm just looking at like, you know, my wife is all about having whole foods in the house and not eating processed crap. And, you know, she's constantly going to the supermarket.

She's constantly getting these items that will literally die in three days if you're not going back to the supermarket and buying more. Super short shelf like, yeah. Yeah. Like real food. Yeah. I think you're right. Same goes to fuel.

Like, right? So like there's a very high frequency good that that people have to have. They have to have gas in their car to drive the work. Right. But there's their solution there for a long time. The problem is we have suffocated the growth of that industry for so long with certain narratives. And with, you know, the big time. The, yeah, there's been no incentive to build.

there. So infrastructure is kind of a capacity, you know, so. And there's been the Fed put. There's been the Fed put, right? So like anytime they were going to pack in margin, like right now is a perfect chance, James. Yeah. For them the pack in margin so that they can make capital investments into their infrastructure and their cap. They need, yeah. But there's, there's, they're not being incentivized to. They're being there. Yeah, they're there they're, who who in their right mind would build into an environment that the politicians are saying, oh, we're going to have a windfall tax on you guys. We're going to make sure that your margins aren't too high. We're going to make sure that we regulate how much you're pumping and how much you're refining when and where and how. Who in their

right mind wants to go into that industry right now? Especially after the last, call it seven years, they've been shellacked. Shalick. They have not had, they pull up their 10ks. Look at them. Yeah, exactly. Not free cash flow and positive. They've been shillacked. Exactly. So it's their time to actually, you know, solidify their balance sheets and make sure that they're a whole going forward.

Yet you've got people that are just career politicians that all they're doing is trying to have the next sound bite to get that margin of vote so they can stay in office so they don't have to go to work. Here's the Fed Chair Powell's quote from today during his, you know, conference with or his discussions with Congress. Raising interest rates will not bring down the major drivers of inflation, namely gas prices and food prices. So they admitted it. And I mean, they know that they, so what do they do? What do they do?

They do the best they can to throw up smoke and mirrors and to adjust that CPI in ways that kind of obfuscate the realities of the prices of the goods that people need and they're hurting them the most. How can people not realize that if you provide a gas credit by dropping the price, you know, because this is what they're talking about now. If you give a credit of a dollar off on the gas, people will consume more gas than if it was a dollar more, which drives the price higher because there's less supply in the market.

How in the world... How in the world... Do people know this? I think they know this. And the best part is that they have to print money to do it. That's right. It's just another form of QE. I mean, this is like a, well, yeah, or, you know, UBI or UBI.

Yeah, yeah, exactly. It's a foreign UBI. So, yeah, I just, yeah, it's crazy. But, you know, look, when this all started happening back in the beginning of the pandemic, I have a lot of friends who were not in finance and who, you know, when I started talking about how the money printing is really actually hurting the little guy, how it's not, you know, the canty on the phone. And I try to explain that to them.

They're like, but they need that money. They need that $1,200. Yeah, but it's going to hurt on the back end. Like, they're going to get hit with inflation. It's going to hurt. And arguments about this. Now, it's not that they're not smart. They're smart people.

They're not thinking about it the way we are. They're not looking at the, like, we're looking at this stuff every day. What do you do the first thing you wake up in the morning? Yeah. Besides, like, I absolutely look at charts. First thing I do is I don't look at Bitcoin to see, oh, how's my portfolio doing? I look at to see if there was a systematic shock last night. Like, did something come out?

Because that's the leading risk indicator right now. Like, what happened last night? You know? That's why we get along. No, you're right. I just go through it. Like, I have like 10 or 15 charts always up in my browser. I'm just plowing through each one of them to see what the deltas were while I was sleeping.

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and expenses. This and other information can be found in the income fund's prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Here's an interesting one. Bricks currency basket. And we're talking about bricks. This stands for Brazil, Russia, India, China, and South Africa. There's talks of them trying to basically stand up their own, I guess you'd call that like a mini SDR of their currencies and their currency basket.

And, you know, I recently did this interview with Pablo Fernandez. and he made this comment because he's from Argentina. And he said, what happens when you really start to get like real inflation, not like 8%, but like double digits, like large double digits. He said people run to a stable currency that they can trust for us. It was the dollar. And he says what happens is because the government's trying to implement all these controls and trying to prevent people from going to the dollar and to use their currency.

and preventing the collapse of the currency, he says what happens is that local currency gets shoved into the hands of the consumers, but the producers are desiring the stable and the one that actually restores their buying power. And so it appears like this is the play for these BRICs currencies, the Brazil, Russia, India, China, and South Africa

against the US, the euro and the yen. what we've seen. I mean, this is, it doesn't surprise me at all. Now, whether or not they're successful, I don't know. I mean, I would expect long term. I mean, I've said this before. I expect long term, not in the next two or three years, but long term, that you have a couple of currencies that are the base currencies in the world. Like, US loses its sole status. And you have the US, Euro kind of collapse into each other and some other, the yen. And then you've, you've, you've, you've, you know, You've got the Russian China, and this is it. This is the bricks, you know, the bricks currency. But why it shouldn't surprise us after what we saw with Russian sanctions and with the United States seizing U.S. treasury assets owned by foreigners? What? I mean, if you're one of these countries, do you want to be holding U.S. treasuries?

Of course, that's why they're all selling. That's why the Russia owns none. That's why China's been selling them with abandon, you know. And they all own what we have suddenly realized is actually important, not just our good word, that we're going to full faith back by the U.S. government. Great. But having oil and gold and food and fertilizer and wheat actually matters, that's no surprise. They actually have something to stabilize the currency with.

So does this battle, so, you know, when I look at them trying to do this, you know, and I'm trying to look at it very objectively, it makes sense to me that they would, that they would want to do that and force the network effect over to their currencies, that they know they're controlling and they understand whether they're basing it or not. But does this drive a wedge between, I mean, the split in the world between these energy producers, these fertilizer producers, these things that the world has to have? I've said this, I think, multiple times on the show, but I think it's a very apt example of your body has a bunch of mitochondria that produces the ATP that supplies the energy to your body.

If you suddenly lost 30% of them in your body, how in the world do you possibly expect to go perform any type of energy consuming demand on your body. Michael Saylor likes to use the bloodletting example before a fight. If you went and forced the person to bleed out 30% of their blood, how in the world are they going to be able to do what they're doing? And so when I look at our global cooperation that's required and you separate the world into, let's just call it, NATO currencies and these bricks currencies. Right. Does this battle, because both have something to offer each other, right, maybe some

a little bit more than others, but collectively, both of these parties need each other to get along. I think I don't see a world where these two entities like break off and don't coordinate with each other anymore. I think they have to coordinate together. I think they do have to. So, you know, honestly, if you look at the, and I was looking at this because I saw that somebody asked that question in that thread that you posted today.

And if you look at the weighted average of the five-year sovereign CDS is the credit default swaps. So for your listeners, a credit default swap just is a, it's an insurance instrument that institutional traders use, that when they own a bond, they can buy. insurance against that bond failing, you know, defaulting. So credit default swap. And so, but the five-year default swaps on the bricks is at least 20 times wider than the CDS for the SDR currencies. Okay. I mean, Russia is rated at 100% to default. They're absolutely defaulting. It's just question one, right? Now, of course, we have a hand in that, but that's what's happening.

So, but I mean, the credit risk will make it hard for people to deal in that currency. So they will absolutely have to back it by hard currency. They'll have to back it by gold. And I think that they would back it by Bitcoin. Now, China's a funny one, right? Because they've banned Bitcoin mining. Of course, there's still mining going on there, which is odd, although maybe not surprising. And I don't, and there's a question about how much Bitcoin.

the Chinese government may own. Nobody knows. But if you had something that's backed by gold and Bitcoin. Yeah. Energy, energy, work, oil. Yeah, I mean, like, those are. So they could stand it up. They could.

But just like to your point is that China needs the United States. Yeah. Yeah. I mean, they don't, they certainly don't want us to default. right that would be that would be terrible and i think you can you can also say that the u.s can't go cold turkey on any of those countries of course not of course not of course not they can talk they're talking a big game as politicians yeah you know yeah but so but but but look at what's happening in europe you know i mean they're they're allowing they're allowing countries to buy energy from from russia

and gas because they don't want a problem this this coming fall and winter of citizens freezing to death because they don't have heat you know of course they they dug their their own trench there by shutting down the nuclear plants but you know we've put ourselves in a spot where just like you said we're so interconnected that we're going to have to come to an agreement and it almost seems like Because there's going to be this battle for whose basket of currencies are going to win versus the other. And it's the political piece, the maneuvering and all that. Meanwhile, you got Bitcoin who's just chugging out another block that's completely apolitical. And it almost seems like because of that, it's going to be the only thing that all those parties can ever agree on.

It's almost maddening to sit here and watch the system, just try as hard as it can. to repel it, it's maddening. Because you and I know how it can fix so many problems. We won't get into that. People have heard that ad nauseum. But it's almost, it's unnerving to watch. And like you're seeing it act like this leading risk on asset for so long. It's, it can be frustrating.

I know it's frustrating for people who have been, who are saying, well, that narrative's dead, you know. There was a, there was a remark on one of my Twitter threads about, well, It's no longer, it can no longer, and this is by somebody who's very smart that I respect. It's, you can no longer claim that it's CDS on sovereigns. Well, but the answer is it's not going to act like a CDS that trades in the open market, you know, it's going to act like a CDS the moment you need it. Yes.

Like the moment you need it. If you're Venezuelan, if you're in Lebanon, you know, if you're in the Ukraine and you need it to across the border with your net wealth, then you need it. And if you don't have it, your currency is deflating against Bitcoin so rapidly that you won't get a chance to get it. So the point is that it saves you in spots, but we're seeing this. We've seen it play out in real time, a number of times. Yeah. Yet the system is still battling against it. Clearly, the market hasn't viewed it through the optic of this insurance policy like you're describing it yet. Why do so many people in traditional finance not understand this?

It's a good question. I mean, I can tell you from my experience, Preston, I, back in 2018, I had some discretionary capital. I wanted to put to work in something a little bit further out on the risk curve. Something I hadn't really dug into yet that, because I had private equity, you know, obviously on real estate house, public equity, you know, and venture capital. I want to go a little bit out on the risk curve and do something different. So I heard about this Bitcoin thing and run up to 20 something thousand, come all the way back down to four or five. And so I did what you do as an institutional investor.

I went and asked my traditional technology analysts at the investment banks, hey, what about this Bitcoin thing? And I mean, to the T, every single one of them that said, it's super speculative. It's just, or it's a scam or it's a Ponzi. There's no fundamental value to it. Don't just avoid it at all costs. And of course, made the worst trade of my career, which was avoiding it and not buying it and walked away.

Okay. So you have some of that that's been going on all these years. Now it's front and center. It gets a lot of negative press. We see it all the time. You guys are out there trying to battle against it constantly. But the problem is, institutional investors are, they're super close-minded because, number one, the system's worked for them perfectly. Yeah.

I mean, it's been fantastic for most of these guys. They've crushed it. Especially fixed income. Crushed. Yeah. Crushed. Yeah. Not this last year.

But yeah, the last 10, 15 years have been. 40 years. Yeah. Yeah. And then beyond. Yeah. So, but they don't need it. Okay.

So that's number one. They just don't need it. And so their instinct is, hey, they know that it's, it's disruptive. So when you hear of disruptive technology and you're in the technology that's going to be disrupted, of course you're going to battle against it. It's your first instinct. You're going to battle against it. Whether or not you know anything about it.

But let's just pretend, okay? Because I do know that there are institutional investors that the ones who know it, who are playing it right now, press and our hedge fund guys. The institutional, the true institutions, the ones who control the massive amounts of capital, right? The ones you have that control the hundreds of trillions of dollars in investment. assets. These guys are your pension funds, your endowments, your nonprofits. You know, these are sovereigns. These are, these are players that are so big that they, these are the ones who

really move the market. Okay. But why have they not done it yet? Well, the problem is it's structurally very difficult to do. Number one, when you're at a pension fund or an endowment or something, you've got, you've got mandates of what you can do. Okay. Let's talk about a pension fund. You've a mandate of in your fund of what you can buy. And it's very, it's tight. You can't just buy, if you're in a growth stock fund, part of that pension fund and you're the portfolio manager of that portfolio, you've got a really tight, narrow, narrow mandate, right? So, but let's pretend that a portfolio manager digs in, reads a Bitcoin standard, Okay.

Reads the price of tomorrow. Jeff Booth's awesome book. Understands the deflationary versus inflationary pressures that are about to collide, that are actually colliding, right? And they see it. They get it. They understand it. And they see it as a separate asset class.

And something that is insurance and is more like a bond than they've admitted that it should be something they own in their portfolio, even just 1%. Just 1% of the portfolio, okay? So let's say they get there. They get to that understanding. Well, the first thing they've got to do is get their chief investment officer to buy into it. So they've got an orange pill back guy. Okay.

Then they've got to get, if they're successful there, then they've got to get the investment committee to agree to it in order to adjust their mandate. Okay. So they've got to say, you want to say something? No, I was just going to say. So this is like point one raised to like the ninth power. Like the math, the math. The math is exactly. Then they get all those guys.

So now we're talking about weeks or months of meetings just to get those people, the investment people, the risk takers, okay, on board. Now you've got to get the risk mitigators on board who are the general counsel and the compliance officer, the chief compliance officer and the compliance committee. So you get the general counsel, the chief compliance officer, you've got the compliance committee. Now you want to talk about meetings. Holy mother, like, you cannot believe what this is like. So then they go through all those meetings.

Okay, they finally get everybody understanding it on board. They're all gone on and done their homework and they're on board. They at least get to majority where they can start pushing this through. Well, then they've got to get everything in place. Like, who's going to trade it? Is the exchange worthy enough to handle the capital of this pension fund? And is it going to breach any fiduciary duty of this pension fund by using them? That's number one.

Then how are they going to settle it? Like, who's going to, who's going to be their prime broker? Like pension funds don't hold stock certificates in their back or office. They have a broker who holds everything for them, custodian bank, holds everything for them. So who's going to custodiate? And who's got the keys? Are they going to do multi-sig? Like, who's going to be in control of those signing devices?

is like, how is that going to work? And then get all that done. And you still got to figure out when are you going to market? Like, do you market at midnight London? Do you market at the closed in New York Stock Exchange? Like, because it's open 24-7. So there's just a litany of steps you have to go through. And so for the first time.

So this is a great thing, though, Preston. And it's unfortunate that the price has collapsed here. But I think it's giving people a lot of opportunity here. Big opportunities, yeah. So you were around in high school. You got, maybe you were, you were in investment club and you played the dot com bubble a little bit, right? So, and you, and you saw how some of these prices, they got released, IPO, and just went tenfold. Yeah.

Yeah. The first day, okay? So I was sitting on an hedge fund desk at the time and, you know, you would go in. So what happens in an IPO allocation, you know this, but for the benefit of your listeners, what happens in an IPO? allocation as an investment banker or as a hedge fund or an investment firm, you ask to be allocated a certain amount of that IPO. You say, we want 100,000 shares. We love this Google thing. We want to own some of it, right? And so the investment bank works with their syndicate desk and they decide who gets what. And back then, it was like,

Well, who knew who? What kind of favors did you need? How many commissions do they give us as an investment bank? Have they done a lot of business with it? You know, like, it was ridiculous. But you'd go in for 100,000 shares and you're this huge hedge fund. And you get one, two, three, four, five thousand shares. That's it.

So a thousand shares of this IPO. But Preston, this thing will go up, you know, $100, $200, $300. You'd make a quarter of million dollars without even blinking, you know? And so there's a point to this. So for the first time, you're sitting in the same seat as those hedge funds. If you're an individual investor, because you don't have to go through all the garbage that the institutions have to go through to buy Bitcoin. You can buy it right now.

You know, you don't have to go through all that. Isn't that crazy? It's just crazy to me that retail actually has the advantage here. They have the advantage and they have the edge. And it just, I mean, it's like, and when they come in, when they do come in and they've got, you know, but because they're going to say, I need one percent. They're not going to say, well, it's trading at $47,000. Wait until it comes back to $42. No, they're going to say, I need 1%.

Yeah. Go by 1% of my portfolio. Yeah. Sorry. I need 1% of my portfolio. I've got, I'm managing, you know, $100 million. I need, you know, a million dollars. Or a billion dollars need $10 million worth.

And if you're Apple, if you're Apple, their balance sheet is, what is their balance sheet now? It's gigantic. Gigantic. Gigantic, yeah. Make people's headspin. They make people headspin. And they're just, and that's just one company, one pension fund, you know? And when these guys come in, so I actually wrote this down somewhere here, Preston, there's five, there's five asset managers who control 30,

trillion dollars of assets. Okay. BlackRock, Vanguard, Fidelity, State Street, and Morgan Stanley. $30 trillion. When all those guys come in and they get one or two percent, they're not going to get one percent until the world. They're going to get three percent, five percent, until the world. And then everybody's going to be going. I mean, that's just the way I see it happening. And people got to realize that if they buy a trillion, you know, if a trillion comes into this market. It doesn't move the market cap by a trillion. There's a friction. There's a friction. It's called trading friction. They've got to find the price that people are willing to sell. Yeah. Exactly. Yeah. Okay. There was another topic I wanted to hit with you here. And I know we've

covered a lot of space here. And I'm looking at the time. I want to talk about the real estate market with you because my Lord, this just looks like a total disaster. Yeah. It's incoming. Disaster incoming, right? Now, I don't think it's going to be... You think it's worse than O-A-A-N? No, because I don't. Because people aren't levered the way they were in O-8. I mean, you remember, back in O-8, there wasn't Uber,

but you were taking a cab in San Francisco. Somebody was, you know, the cab driver's like, oh, yeah, I own six houses. Yeah. Like, wow. Well, and the values have appreciated so much a nominal terms just in the past year alone, that that puts people way further in the green.

So here's the problem. Yeah, exactly. Well, you just hit on it. That's going to be the problem, right? Because, because, okay, housing prices have to fall 50%. I think we talked about this earlier on the show. They have to fall 50% to have the same mortgage payment as you did two years ago because house prices went up so much. And so did interest rates, right? Interest rates have doubled and so housing prices. So they have to come down 50% just to have the same, right? But the problem is they're coming down. Demands coming. demands coming off, it's just falling out of bed, right? There's no demand right now in so many

cities, right? So the problem is, as those prices come down, people's equity, that they are expecting to be sitting on as part of their personal balance sheet is evaporating. They may have borrowed off of it because they've got lines of credit, you know, they've got home equity lines of credit that they're borrowing off of, that are now upside down because, you know, they they took on extra hundred grand at the wrong time or whatever it is. And so that's going to start squeezing people's credits. Now you're watching the credit, the people's credit card debt tick up, back up to the 2008 levels, right? And so here we are again. I don't think it's going to be as bad in the housing market as it was back then because, I mean, look who's buying up all these

houses, BlackRock and Berkshire Hathaway. All they're going to do is rent them out, right? And they can to them forever, right? So I think it's just a different structural problem, but it is a big enough problem that, again, it's going to cause more stagflation, where you've got inflation of goods that people need, but a deflation of their assets at a time when, you know, the Fed is raising rates. It's just, it's a recipe for more pain. Yeah. Period. What are your thoughts on it. I'd be interesting to know. Yeah, no, I think the, I think the thing that is at least a little bit of the saving grace is I think you've got a lot of people that, you know, if they had 20% down or 30% down already paid into the house and the house doubled in value because

housing prices are going bananas everywhere, that's going to help ease the burden a little bit. Now, my concern is for people that are new home buyers or have to move because of work or whatever and they're just not going to be able to buy as much house for the price that they can afford coming out of it. So that's, it's a noose that once you drive those rates, especially you do it systematically over a 40-year period of time is you continue to tighten those yields down to nothing. And you get everybody locked in with not much down on the house. They're there.

Like they're going to have to stay there because. Because as rates rise and based on the inflationary environment that I kind of expect in the coming decade, I just don't know that. Yeah, all the people are moving from, okay, from San Francisco to Austin. Austin's not cheap. That is not a cheap city. Yeah. Right.

So now you have, of course, you can get a whole lot more house in Austin than you can in San Francisco. But like you just said, it precludes them. from going and taking a mortgage at six, seven percent now on the house that they is now going to be comparable to the one they're leaving. So what's the point? Yeah. Yeah.

It does. It restricts movement. Yeah. It's interesting. It's something that hasn't been talked about much, but you're starting to hear people chirp about it. And I think you can sense it's just another thing. We need a few more data points there.

I want to see a few more data points. points to see where this is going and how it's really affecting people's bottom line. And where the consumer credit is going, how much it may be affecting that. People that have locked in very low interest rates and they don't plan on moving. I mean, they're going to be huge beneficiaries of it if they can continue to hold down a job and make their payments because as you well know. You're deflating away your debt. Yeah. Exactly. So I was, yeah, I mean, I was at the bank the other day because I had to send a wire. So I had to sit down with a banker and fill out like 17 pages of paperwork.

I've literally sent 250 wires with this bank. But I do it every time. So I go and fill out all the paperwork. And this young banker, you know, he's a kid, but he's like, well, what do you suggest I invest in? Because he asked me what I do. And I was talking to him about it. He's like, well, first I want to pay down my mortgage.

I was like, I go, what? Back up the train. What? Why? He's like, I just feel like I should own it. I should have that debt. I was like, you understand as the dollar inflates that you're paying off your house with cheaper dollars.

Yeah. I never really thought about that. This is a banker, you know? The Dave Ramsey. The Dave Ramsey pay it back as fast as possible and all that stuff. I think it's, I think I don't want to bash Dave for trying to get people to get their finances under control. but in this particular scenario,

like this is... I wouldn't agree with that, that's all. Yeah. Yeah. I wouldn't agree with it. Yeah. Yeah. Get your credit card debt off.

Yeah, exactly. Pay that down. Make sure you have no credit card debt, especially now because that is ballooning. Yeah. Do you see that chart? Over 20% I guess is the national average on it. It's insane.

APR? Ow. It's insane. Yeah. I didn't see that chart. Yeah, it makes sense. James, we got to do this more often. And I thoroughly enjoyed the chat with you.

Likewise, man. And I'm sure there's going to be, I can only imagine what the coming quarter is going to bring. Holy moly. God, hang on tight. I don't profess to know, you know. No, I know. I mean, you know, I just look like, I'm just looking around for where you may see the risk. Where is a systematic risk?

Yeah. So, and you do the same thing. That's why I like talking to you, too, me. Yeah. We'll see where it goes. But we'll definitely do something here in the future. And boy, thank you so much for coming on the show. Is there anything you want to highlight?

I know you work with different organizations or you want to maybe. Yeah. Well, you just had us on, you know, with our looking glass education platform. You can find it on my Twitter profile in my bio. And that's the thing that Greg Foss kind of pulled me into, Seth Bunny, Dazbia, you've got Pled music on there, Pahlia Platt, Jason Sansoni, is a surgeon in Wisconsin. These guys are super smart, guys and gals. They're so smart.

I just, I basically, I'm the old, you know, the old guy with Greg. We just help with a little bit of advisory. But Greg, he helped them really kickstart it. So he's been a very important part. I don't want to be little to that. But the guys that are running it, they're awesome. And so this is just a simple platform, educational platform for your listeners. If you want to know more about money, how money works, the system and how it all kind

leads to Bitcoin. It's not Bitcoin heavy. It's really money heavy and, you know, and the history and how, and it's super simple. And it's in easy modules to go through just like a coursework online. I highly recommend it. That's the one thing. And then part of that is my informationist newsletter. So I write a newsletter every Sunday comes out that I take one complicated financial topic and simplify it. Super, super simple for anybody to understand. And I, I love doing that. I think it, I hate the fact that my industry is so opaque. I hate the fact that people are scared of it.

They don't, they don't know what to do. They don't know how to, they hear all this jargon and they don't know what it means, and it just goes right past them and it shouldn't. So that's, it's a great thing for people. And it's free. I just, I just really like doing it. It's like one page, boom, knock out like what's a yield curve control? Yeah.

Or what's the Fed put or so I do that. And that's it. James Lavish on Twitter, you know where I am. James, thanks so much for making time and I really enjoyed the chat. Thank you. Honor to be on here and I look forward to the next time, Preston. Absolutely. See you.

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