We Study Billionaires - The Investor’s Podcast Network - BTC086: The Macro Hurricane w/ Lawrence Lepard (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this week's episode of the Bitcoin Fundamentals podcast. As you've probably noticed, we've had a lot of macro conversations recently, and that's because there's something massive brewing. Well, this week, we are just doubling down on that theme, and we are going to be talking about even more macro with one of the best in the business, Mr. Larry Lepard. Larry has four decades of experience in financial markets, managing billions, in covering a wide spectrum of work like mergers and acquisitions, portfolios, and.

Starting point is 00:00:30 that are focused on commodities, venture capital, and of course, he's a Bitcoiner. On the show, we cover everything happening around the world and how he expects the coming two quarters to evolve. This is definitely an interview you're not going to want to miss. So let's jump right into it with the brilliant Larry Lepard. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. Like I said in the introduction, I'm here with Larry. Larry, welcome back to the show. Excited to have you here for another chat.

Starting point is 00:01:17 Yeah, I'm excited to be with you, Preston. I always enjoy our chat. So before we hit the record here, you had just made this really simple comment. I don't know how anybody's doing business in this environment. Right. And what a comment, because, you know, how in the world is anybody pricing things when we're seeing these swings? in the commodities alone, let alone things that are second touch, third touch in a supply chain. I mean, it's insane. Yeah. I mean, do we have massive inflation or do we have massive deflation?

Starting point is 00:01:52 Yeah. Both, right? I mean, until the Fed hit the brakes, we had massive inflation as a result of their prior actions. And now, you know, everything's turned on a dime and we're about to go into the Great Depression. So that would be my question for you. Do you see things really slowing down and are we going to see something like that or are we only going to see it in some particular commodities and sectors? Yeah, it all depends upon what their next moves are.

Starting point is 00:02:23 But let's just assume they stay on this path for a while. They're going to successfully destroy some demand, right? I mean, and we've already seen that. We've seen the price of oil drops sharply. We've seen the price of copper drop sharply. You know, we've seen a lot of financial distress. I'm sure we'll get into that later in the show. But it, you know, we know the housing prices are on a big spike and we know that mortgage rates

Starting point is 00:02:46 have doubled. I mean, that's certain to reverse. I mean, I know anecdotally in the areas I visit and live in and watch real estate wise, there used to be bidding wars and of course that's all disappeared. So it's as though somebody turned off the lights. I'm in the process of writing my second quarter report and I just penned the phrase, I said, it's like, The Fed showed up, turned off the light, said the party's over, go home. Yeah. And we're starting to see it. And, you know, in a society and a system that's built on free money, you know, you take away, you know, the heroin and, you know, the addict is going to have a, have a withdrawal tantrum.

Starting point is 00:03:22 And that's, we're in the beginning of that right now. What I think is most interesting is that, you know, the leading edge, the bleeding edge of it has been stocks and gold and Bitcoin. But those are just the two that are most sensitive. to what's going on with the money. I think, you know, what happened to gold and what happened to Bitcoin is about to stocks. I think the stock market is going to have an enormous accident in the next three months. Yeah.

Starting point is 00:03:47 And the reason I say that is you look at it, it's a bubble. It was a bubble. We know that. You look at the charts. I've got several in my report upcoming. And we've corrected about 20% off the high. And when a bubble burst, you don't correct just 20%. You know, and S&P 500 in 2000, 2008 was down over 50%.

Starting point is 00:04:04 The NASDAQ in the 2000 bubble was down over 80%. And so, you know, I think we can point to areas where we know anything that was puffed up based on free money is about to have the wind taken out of its sales. I suspect real estate's going to come down. Obviously, we see oil and copper coming down. And I think the stock market's got a long way to fall. It was priced for perfection and we no longer have the economic perfection. It is unbelievable to me when I'm looking at the central bank balance sheet and the expansion of it and now the contraction of it and how correlated it is to your major stock indexes. Yes.

Starting point is 00:04:44 The major ones, especially this recent COVID liquidity injection that took place and how correlated it is. It almost just seems like there's no, like we can talk about earnings and we can talk about all these these micro-executive. ideas of valuation, but when I'm just looking at the macro, it's just dominating. The currency itself is just dominating everything. I mean, everything. Yes. Yeah. I mean, these guys, you know, it's as Groman says, they're, you know, they think they're

Starting point is 00:05:16 dealing with a rheostat that they can change the temperature on slightly. And really, they're dealing with a nuclear reactor that's either on or it's off. Yeah. And when, you know, when it was on, things were running hot everywhere and we had a crackup boom underway. Of course, they saw that late, reacted to it, reacted to it violently, started, you know, reacting slowly. And then, of course, nobody listened to them. And they're like, no, no, we're really, we're serious.

Starting point is 00:05:40 Yeah. And how, you know, Powell is channeling his inner vulgar and he is indicating he really is serious. And I think he's, you know, he can't pivot immediately. He just can't. And he knows his credibility would be blown apart. Yeah. And so he, you know, they're going to have to create more pain. And they will.

Starting point is 00:05:58 And the question is, will something break or how much pain is it going to take before they do pivot? When I look at the global central bank balance sheets and I see how much they stepped in, not on this most recent one, collectively across the globe on the major four central banks, it was about $10 trillion in this last go-around. Before that, I want to say from like the 2016 to about the 2020 period, it was a $5 trillion insertion of liquidity that they let, fizzle out and then COVID hit. It looked like it was already starting to fall apart before COVID even happened. And I'm kind of curious if you think that did they step in with $10 trillion on this last round because up until that point, inflation was nowhere to be found. It was like, well, we keep throwing these trillion dollars and trillions here and trillions there. And we can't get

Starting point is 00:06:51 inflation anywhere as much as we try. So what the heck? Let's go in big and let's give it $10 trillion and see if we can even get inflation, and, I mean, they got it, obviously, in a major way. Was that an overreaction on their part, and they just completely got duped because they've been printing so much for literally a decade and never saw anything? I think that's probably right. I mean, I know there was a lot of talk. You know, you remember Cheney saying deficits don't matter. I mean, for a very long time, they've gotten away with a lot.

Starting point is 00:07:20 And so they just figured, why not? I mean, we can do it. And COVID looked like an existential threat. and it wasn't, but it looked like it. And they used it as an excuse to do what they wanted to do. I don't know. It's so sad. I mean, all of these policies, I mean, these guys are just the gang that couldn't shoot straight.

Starting point is 00:07:39 You know, I mean, they really, you know, I've said, I've used the phrase, they're driving a clown car. They drove it into the inflationary guardrail. They bounced off that. Now we're headed towards the deflationary guardrail. You know, we'll see how long it takes until we bounce off that or if we break right through. I mean, they let this really get going. You know, we're going to have a severe economic downturn here.

Starting point is 00:08:01 And, you know, everyone's talking about the deflation that they've started to see over the last couple weeks. And that's like the big story. I know CNBC, I mean, they're just covering it nonstop. But you don't see anybody talking about what you and Greg Foss and a few others are talking about, which is the CDS market. Oh, absolutely. Particularly banks, which I think is the real story here. and the real canary in the coal mine as to the fundamental issues that are cropping up in this

Starting point is 00:08:30 disaster right now. Well, that's right. And so that's the issue. I mean, we know that the Fed mandate, there's three parts, right? Part one is full employment. Part two is, you know, they've got that more or less. Part two, you know, is controlled inflation. They obviously don't have that.

Starting point is 00:08:46 And part three is financial continuity or financial stability in the markets. And that's where, that's what they're going to lose, in my opinion. that's going to break. And there's a lot of evidence of it. I mean, the Italian bonds blowing out in an emergency ECB meeting, and that doesn't happen every day, right? I mean, you look at the Japanese JGB market, you know, where they're using yield curve control. They're pinning it at 0.25, but overnight, it trades up to 0.45. And they've had to bring, I think, one chart show they had to bring $80 billion to bear, you know, to buy more Japanese bonds. On the CDS markets, I just tweeted a chart today that showed the Credit Suisse's CDS is almost as high as it was in the peak in 2008 is another

Starting point is 00:09:26 indicator of it. I'm sure there are some others that you can point to, but there are a host of factors that would seem to indicate that, you know, there are financial stresses popping up in the system in various pieces. And, you know, the strong dollar is a wrecking ball, right? I mean, the dollar going straight up. I mean, Sven Hendricks had a great chart that just kind of showed how's that financial stability thing you come and when the dollar is just on a tear and going straight north. And the whole world is based on dollar denominated debt. And, you know, things are going to break.

Starting point is 00:09:57 I mean, they're going to break in a lot of places if they continue with this policy. And so, but, you know, they have to because the politics indicate that they've got to get inflation under control and they want to try and maintain some shred of credibility, you know, to their credit, they admitted that they blew the last call. I don't know what they're going to say when they have to pivot here. I mean, I'm sure they're just going to say, well, you know, hopefully, I think what they're praying for and they're probably pretty pleased to see the price of oil starting to come down. And I think what they're probably praying for is a month or two of good comps. I mean, you saw

Starting point is 00:10:29 Powell say in his last press conference, if he got two months of good comparative inflation prints, i.e. down from 8.6, that, you know, they might think of backing off. And so, you know, since they can kind of cook that number, maybe they see where that might be possible in the next few months. I don't know. I don't, you know, I could print double digits. Who knows? The numbers that come out of the government, I never really trust anyway. Well, the numbers in Europe for me are even crazier because they're, they're getting 8 and 9% prints, and they haven't even budged on on raising rates over there with the ECB. I mean, it's crazy. Well, that's why the dollars are so strong. I mean, look, Japan's a really interesting case. And Luke wrote about this recently.

Starting point is 00:11:13 I mean, what's Japan going to do? I mean, what's the world going to do? I mean, you know, the Japanese currency is going to fall substantially and they're going to have massive inflation because they import all their oil. So, you know, it's no way to run a railroad. And, you know, it's making it very tough for all investors, you know, even sound money investors. But it is what it is. I mean, the Murmican chart is very informative, right? I mean, you know, before a system blows apart, it gets really volatile. And I've always said, you know, don't use leverage and know what you own and know A lot, man. You know, because, I mean, look at the crypto space outside of Bitcoin.

Starting point is 00:11:52 It's just been annihilated and there's probably a lot more to go. I think so. I think you're right. I think you're right. I mean, it's a lesson and I think it's a lesson for what's to come in traditional markets that I think a lot of people in traditional markets, especially if you're under the age of 35 or 40 years old, have never experienced because they've never gone through the 2008. and how much counterparty risk explosions there are.

Starting point is 00:12:20 Everyone in the digital asset space is experiencing that right now, and they're seeing how quickly that type of stuff happens. But I think of traditional markets, there's going to be a wake-up call here in the coming quarter to, with respect to that stuff, yeah. If your investment perspective is 2008 to today, the correct response at any point of a pullback has been to buy the dip. Yeah.

Starting point is 00:12:41 And, you know, the debt buyers in the first quarter just got their ass handed to them. and there are probably some people buying the dip right now, and they're going to get their ass handed to them. I mean, I fully believe, and this is just, you know, I'm wrong all the time, so don't bet on this. Personally, my gut tells me the market's going down another 10 to 30% in the next three or four months. And that's going to wake some people up.

Starting point is 00:13:02 I mean, market down 20%. That's bad. Everyone knows we're hurting and everyone knows things are changing. The market goes down another 10 or 20%, and you're going to start to see people thinking, you know, this is my savings, this is my retirement. I'm scared. I got to get out and I got to cut back. I got to do whatever I got to do. And everyone who's out over their skis is going to be in trouble.

Starting point is 00:13:22 And Larry, what would you say is the rash? So a person would hear that and be like, well, why do you think that? Is it the negative spread that you're still seeing between inflation prints and the yields on everything? Yeah. Yeah. It's that. And it's also just, it's also just, look, the Fed doesn't have any good choices right now. And so, you know, we can criticize what they're doing. But, you know, they almost anything they'd do would be wrong. wrong. You know, it more has to do with the symmetry of bubbles. I mean, you know, this bubble got so far out of whack that, you know, it's just, it's not going to down 20 percent. That's a rounding error. This thing is overvalued by 3x. I mean, for the value buyer to start stepping into the stock market, it's got to be at least 30 percent lower than it is today. It's already down 20 percent. So, that would mean, you know, a 50 percent wipeout. I mean, Ronnie Storffley had a great tweet on Twitter has showed that $31 trillion of global stock and bond wealth has disappeared in the last six months,

Starting point is 00:14:20 $31 trillion. U.S. GDP is $20.1 trillion. So we've wiped out one and a half years worth of U.S. GDP in asset valuations. That's going to leave a mark. Do you know what I mean? And by the way, it's going to get worse because, you know, people are going to look at those stocks and they're going to fear losing more. And they're going to say, I need that money to pay for these higher gasoline bills.

Starting point is 00:14:46 I need it to pay for my, you know, higher interest costs on my house. I mean, you know, this is just everybody, you know, it's the sad thing. It's what happens when you have a roller coaster bust and boom economy based on a Fed that's mispricing the cost of money. I mean, this thing happened in the 29 period. I mean, a quick personal story. My grandfather was in Ann Arbor, Michigan. and he was in the home furniture sales business out of a house. And the 20s were so big and so good for him that he was selling furniture hand over fist

Starting point is 00:15:19 and he selling it out of the first floor size. It wasn't big enough. So he went to the bank in 27 or 28 and he borrowed a bunch of money and he doubled the size of the house. He turned it into a store. So now he had a larger furniture store where he could sell the furniture out of it. That was in 1928. He got the wrong signals from the Fed.

Starting point is 00:15:35 We went over the top. The economy collapsed. He had five or six employees. He was doing great. And of course, nobody would buy any furniture because nobody had any money. And throughout the 30s, he spent the whole 30s, he and his wife ran it solo. And he went every week, he had to go to the bank and beg them not to foreclose. And all because the Fed printed money and stoked the stock market bubble of the 20s

Starting point is 00:15:59 and led business people to make the wrong decisions. Yeah. And, you know, that's what's happened here. I mean, all the money in cryptocurrencies, the wrong decision. all the money in NFTs, the wrong decision. You know, there's been, there's been a ton of malinvestment. And when you have broken money, which is what we have, you have interest rates that don't represent the true cost of capital, you end up getting huge misallocations.

Starting point is 00:16:23 And then everybody wakes up to the misallocation and says, oh, my God, we blew it. And, you know, suddenly everything resets to a new set of prices. They're more in line with reality. And that's what we're going through right now. And we've just begun. I mean, look, the first quarter, most of the stock indices were down low, mid to high signal digits. Now the stock indices are down 20%. And I know people who are saying, oh, this is still not that big a deal.

Starting point is 00:16:52 It'll recover. This is a good buy. No, it's not. This is a bubble bursting. And we've seen the pattern that happens when bubbles burst. They go back to their base. And we're a long way from the base. I have charts in my report that will show that.

Starting point is 00:17:06 There are a lot of charts out on the web. John Husband has done a great job of documenting how overvalue stock market is. It's got a long way to fall, in my opinion. And that negative wealth effect is going to be a big deal. Yeah. I mean, people, I know a lot of people who thought they were wealthy based on the stocks they own. They take their stocks down 50 percent, and they're not going to go buy that new car and use

Starting point is 00:17:28 leverage to do it. You know, their lives are going to change. Especially with interest rates being. Yeah. And interest rates are going. up and so on and so forth. I mean, it's, again, it's just, it's sad. It's really, really sad the way we allow a committee of people to set the most important price in the world. It's just, it's tragic. It causes enormous human pain. I mean, think of the human pain that people went through in 2008.

Starting point is 00:17:54 I mean, I was in the business at the time. You know, my sister lost her house. A lot of people lost their jobs. A lot of people lost their houses. I mean, you know, these, this boom, this boom, cycle is, you know, it's enormously painful. And it turns everybody into a gambler and a speculator rather than being just, you know, an honest citizen trying to add value and build businesses. And, you know, you can't build businesses when the price of capital is grossly mispriced. Because what happens is people speculate. And, you know, the speculators get rich theoretically on paper until it before it ends. And then they get wiped out. The people who follow them get wiped out too. It's a very bad system, as you know.

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Starting point is 00:22:53 So the future is manipulating the spot price of commodity markets. And it comes down to the settlement. Explain some of this for people in a really simple way that if you were trying to explain it to somebody who really doesn't even understand the context of the question, lay it out for them. And then I'm curious to hear some of your thoughts on Bitcoin versus other commodities. Yeah, it's a great question. I'll do the best they can on it. I mean, you know, in theory, if you and I are trading something back and forth, we have the physical thing and we set a price and we sell it and we deliver the thing back and forth. But let's say a third friend showed up and said, you know, you don't necessarily want the physical thing.

Starting point is 00:23:34 I'll sell you a paper claim on the physical thing because you're not going to use it right away. And by the way, I've got a ton of those paper claims. And I'll put them all in the market and I'll put them all on the market at a lower price or a higher price, whatever. And that's a futures contract. And that futures contract can manipulate the underlying price of the thing itself. And if the futures market becomes, because every sale is created at the margin based on a price and the futures price and the spot price tend to track one another. And so if somebody comes along and introduces a bunch of paper futures or paper claims on something and introduces them to the market and sells into it, they can drive down the price because they've pretended that they have something. They don't have, and they've created a paper claim and supply.

Starting point is 00:24:18 And it all works until the person who bought the paper claim says, give me the real thing. thing. That's what's been going on in the gold market for decades and in enormous size. And the paper contracts in gold are hundreds of times the underlying physical commodity itself. And that's how they've suppressed the price. And that's why, you know, if we use the 71 standards, the price of gold today would be $80,000 an ounce plus. But it's not because there's a lot of paper gold that's been used to suppress the price. This is beginning in Bitcoin, but it's very early days and it's much smaller. The way we measure in the paper in the gold space, as you look at the total derivative context, outstanding, divide it by the physical trade, and we get the 100 to 1 ratio.

Starting point is 00:24:59 Today, Bitcoin, and I just checked it on coin market cap, Bitcoin's trading about $20 billion worth of value a day. And the total outstanding glass node tells us that the total outstanding Bitcoin futures contracts are about $20 billion. Is that cash or is that? The futures are cash settled. They don't have the Bitcoin, but that's just an agreement between, that's me selling you a Bitcoin that I don't have.

Starting point is 00:25:24 And you agree. And so at the end of the day, when we close that contract out, however, the prices move, either I owe you money or you owe me money. But neither of us have a coin at the time. It's just a futures contract, an agreement at some point in time when it gets closed out. And so, you know, with 20 billion outstanding and 20 billion trading a day, 20 times, you know, 365, so I don't know, there's 700 billion dollars worth of Bitcoin trading a year. There's roughly just under $400 billion with the Bitcoin out there. And the futures market is

Starting point is 00:25:55 $20 billion. I don't think the futures market in Bitcoin today is manipulating the Bitcoin price that much. I mean, these are not the kind of ratios and numbers that exist in the gold market, which is heavily manipulated. Having said that, the $20 million has grown steadily over time. And somebody on your thread asking questions did a nice chart that showed how it's been slowly but consistently getting larger. And, you know, the reason the people were able, the reason the governments were able to manipulate the gold market is they had unlimited balance sheets and they used Cayman Ireland entities and the BIS and lots of other proxies, including J.P. Morgan, to basically sell this

Starting point is 00:26:30 paper into the market and suppress the price. And they had a printer. And I think they do all this stuff off balance sheet and they can make up for whatever losses are necessary. And they view it as in the national strategic interest to hold the price of gold down because it makes the dollar look stronger. And my sense is when Bitcoin went from $5,000 to $50,000, that somebody in the alarm bells went off with the government.

Starting point is 00:26:50 We can't have this thing be a threat to Fiat. And they started thinking and becoming more active in this market. How active they are, I don't know. But as I said earlier, the numbers we just talked about, they're not big enough numbers that I think it's the tail wagging the dog yet. But it's something to watch. Caitlin and I have talked about it because they could become bigger and it could become an issue. one thing that defends Bitcoin kind of makes it like a porcupine is that gold never goes up

Starting point is 00:27:18 5x in a six month time frame. And so if you're manipulating gold, your JP Morgan and so on and so forth, I mean, they're pretty good at selling it when it looks hot and then waiting for it to cool off and buying it back. So they can actually even make money on the manipulation by capping it and buying, you know, creating negative sentiment and buying it when it's cheap. But, you know, as I say, gold doesn't do five baggers in six months. Okay.

Starting point is 00:27:40 Bitcoin, I mean, the volatility, which. some people criticize, it actually is a defense mechanism for Bitcoin because if J.P. Morgan were to nakedly go get short Bitcoin in the futures market without having the government backing them up, and then Bitcoin were to do one of its traditional five-bagger runs where it went from, say, call it 40,000 to 200,000, that would rip their face off. And they would need the backstop of the government to protect them from it. So the volatility in Bitcoin actually, I think, will help it to be less subject to futures manipulation because, and hedge funds too, I mean, you don't necessarily want to short something that's got a fixed supply and that can go up, and has historically gone

Starting point is 00:28:22 up 5x in multiple times, right? That can be a dangerous trade. So my hope is that we'll be able to, Bitcoin will be able to crash the Fiat system in a time frame that allows us to get Bitcoin-oriented people into government that allows us to ban these derivatives in general. Because derivatives allow the person with the biggest balance sheet to win. And the government has the biggest balance sheet by definition. And that's part of what's broken. Do you think the ease of taking a physical settlement also helps defend? You're talking about the ballroom?

Starting point is 00:28:57 It definitely does. And it's yeah, somebody else made this point in another podcast that was on recently. Yes, gold, the fact that gold was lent itself to derivatives, because it's so damn hard to divide, move and settle on. Yeah. It also led to the derivative market. Yes, it definitely helps. But don't make no mistake about it. If the government through, the Fed, the Treasury, the CIA, whoever it might be, decided that it was in the national

Starting point is 00:29:20 interest to have a lower Bitcoin price, they could figure out a way to get into the futures market and probably make that happen. I mean, I think they've done that with gold. Do you think that this is all part of the reason of why you're not seeing a spot ETF being approved? Oh, definitely. Yeah, Duneberg had a great piece on that, which I I recommend everyone to read. He just retweeted it this morning. There's no doubt. You know, they approve the futures. They didn't approve the spot ETF. I mean, the futures are just people gambling on the price, and they want people gambling on the price, especially on the short side. Spot ETF takes money out of their system. I mean, you know, what they don't want, they want

Starting point is 00:29:57 to keep people locked in their system. They want to block the exits. And gold is an exit and Bitcoin is an exit. They want to block those exits very, very clearly. And an ETF is an exit. So with that said, there's a whole bunch of other countries in the world that aren't blocking a spot ETF. That's right. And so is this one of those things that all you can do is kind of put some bandages on the wound, but the patient's going to bleed out? Well, I don't know.

Starting point is 00:30:30 I mean, yeah, I'm not sure that, you know, I mean, two things. And your question's asked this. I mean, one is GBTC is an alternative, right? although it sells it a discount, and I'm very well at risk of not your keys, not your coins. I know the people there. I think they have the coins they say they have, but, you know, obviously it's a honeypot and there's always risk there. Yeah, I mean, it's definitely an issue that they have not done it.

Starting point is 00:30:54 And, you know, back to Gensler for a minute, I'm quite sure. I'm not sure. I strongly believe that Gensler has faced enormous pressure from the banking lobby and the Treasury and to not approve this thing. I mean, I can't imagine, you know, hell, they approved a short Bitcoin ETF, didn't they? As I recall. Yeah, yeah. I mean, what's that all about?

Starting point is 00:31:20 You can have one where you can short it. We'll approve that. We won't let you have a regular ETF. I mean, what more do you need to know, right? I mean, is he hooking the plebes up? Is he hooking the people who have a long, well, I'm saying it more in terms of if you have a very long view on it and you just, just your goal is to accumulate as much as possible in the coming 10 years.

Starting point is 00:31:41 I mean, you can make the argument that he's doing all those people a favor by allowing the place to get suppressed. Very possibly. Yeah, very possibly. I'm not sure. I'm not sure he necessarily sees that way.

Starting point is 00:31:51 But you and I look at it. Yeah. Yeah. If it forces people to learn how to self custody, that's a good thing, right? I mean, an ETF is a third party. And,

Starting point is 00:32:02 you know, they're all inferior. I mean, it, you know, and GBTC is inferior. And there are a risk with, GVTC, and I recognize those, but it's a small piece of my Bitcoin holdings, but I like

Starting point is 00:32:11 how easy it is to trade in it. And I like the fact that there is some chance that over time, the discount will go away. I mean, I think the pressure, they're suing the government. And I'm not quite sure where that'll go. I've heard various legal people tell me different sides of that. But I think it's not, it's not inconceivable that they'll win the suit. And if that happens, there'll be an instant 30% pickup because you're trading in a nice discount. Yeah. Yeah. This question here, I think, is unfair. That's all right.

Starting point is 00:32:46 I'll take it. It's difficult. It's unfair, you know that. Near impossible to answer. People want to know that. When do you think the central bankers collectively are on a pivot here and when are they going to go back to their QE or additional yield curve control? I mean, Japan's still.

Starting point is 00:33:04 QE. I mean, they're doing yield curve control. It's QE on steroids. So I'm not, I'm not smart enough to know. I mean, I know Luke thinks it happens, you know, within days, if not months. I mean, it could happen tomorrow. Yeah. You know, look, I mean, show me a stock market collapse in the middle of July where show me a March 2020 like market event and you'll have your pivot. Yeah. I mean, in March of 2020, the, you know, the treasury bond market went no bit. And your pivot occurred, bank. And so that could happen in a week. Is it going to happen a week? Probably unlikely, but it could, which is why, you know, it's so hard to, you know, I haven't traded out of my risk asset positions in spite of the fact that I'm getting punched in the face every day for the last, you know,

Starting point is 00:33:47 three months. You know, I think a more likely probability is that, you know, and I think you can kind of see this. I mean, there's an election coming up and, you know, he said he wants a couple of months of down and kind of feels to me like this fall. You know what I mean? Yeah. You know, September, October. I completely agree with you on that. That's kind of how it feels. You know, they'll forgive, you know, they'll say, well, they'll be able to claim they're beating inflation, which they're not, but they'll be able to claim they are. Oil prices will be down a bit, gas will come in a bit, you know, unemployment will be going up for sure, but, you know,

Starting point is 00:34:22 things won't be desperate. The stock market will have come down a good bit more. They'll forgive the student debt and then they'll pray that they can win the election and and you know you think that's going to happen before the election then oh yeah they need those millennial folks yeah i think they're going to forgive all that student debt before the really oh absolutely not all of it but like a 10 000 kicker well the 10 000's done i mean they've already signaled that but i think they might i think they might forgive all of it yeah oh my lord oh yeah i mean why not right it's it's money for the people You know, I've said, though, to people, and I'm not trying to defend any of this by any shape of the imagination, but I say to students that are going down that path that they want the student forgiveness. I'm like, if you have any idea how much money they have pumped into the bond market over the last decade, it makes the trillion or whatever they would throw at that particular problem look like a joke.

Starting point is 00:35:17 Absolutely. It would be a total joke. And, yeah. Yeah. So the answer on the pivot is, and who? knows. I mean, look, if you want to get conspiratorial about it, you know, the boomers who have the money that are like Powell, they actually want their dollars to hold their value. And he does want to go down as Volker. And maybe he doesn't pivot. And maybe he really does drive this thing

Starting point is 00:35:39 into some kind of a depressionary condition, wherein they think it'll be easier to put in a CBDC and to use UBI. And we think about, I mean, you know, they're not going to be at a CBDC. I mean, I think technically, they just, they're not even close to being able to roll something like that out. You're probably right, but they've got guys at MIT working on. They had a task group. I don't know. I just don't know, but I'm just saying that, you know, as a game theory it out, you have to ask your question of, could they continue to be hawkish for a very long time? I mean, the answer is they can. The stock market's going to go to zero. You know, the economy is going to grind to a halt. I think you're going to have so much, so many issues in Europe and Japan by the fall to winter that they are going to be screaming, screaming for them to, you know, ease up on the dollar.

Starting point is 00:36:37 Like the dollar has got to get weaker. Well, you know, they'll create new programs. I mean, they're going to probably give Japan swap lines, right? And maybe we'll start buying Japanese bonds. You know, I think it's entirely possible that if the stomach. stock market goes down another 20%. Somebody's going to float the idea of, you know, maybe the U.S. government needs to support the stock market. I mean, Switzerland does it. You know, other countries do it. You know, it'll be the Save the USA's 401k program, you know, or IRA program.

Starting point is 00:37:06 And, you know, they're going to try everything they can to extend their broken system as long as they can. And that's, you know, they're the ultimate can kickers. And, you know, they'll just, they'll keep taking in another swipe at kicking the can. And what's so sad about it all is it just, it hurts people, it hurts us. It makes it very, very hard. Even when you understand what's going on, as I think you do and I do and probably most of the listeners of this podcast do,

Starting point is 00:37:33 it still makes it tough to figure out what the hell to do. Yeah. You know, I mean, we're just trying to stay on the right side of the trade. You know, I mean, I'm not, I'm not concerned with, you know, becoming a gazillionaire. And I'm just trying to defend what I got, you know,

Starting point is 00:37:45 so I can, you know, retire and feel like I'm secure in my old age. And I know a lot of people listen to that probably feel the same way. And it's probably tough. And if I was going to just kind of hit that with an exclamation is so when we talk about how they could pivot tomorrow, they could pivot next week, they could pivot by the fall, a person who's sitting in risk on or equities or however you want to phrase that, you're caught in this situation where if you pull your money out right now, you're going to pay an enormous amount of capital gains, depending on how long you've been sitting on the position, especially with the bump that you got since COVID. You're going to pay a lot in capital gains. And is that going to be enough by the time assuming you're right that it's going to continue to sell off? Are you able to buy it back at a level before they pivot again? And so it's almost like, what do you do? You just kind of kind of sit there, like somebody's robbing you. And do you

Starting point is 00:38:47 Ron, or do you stand there that they change their mind or like what's going on? It's a great question. But I, again, I think, I think, look, with respect to bonds, I think it's pretty easy. I mean, I think we know that they have to either let the whole system collapse. You know, it's debase or default. So I think bonds are pretty easy to get out of. I think even when they pivot, there will be a serious equity bounce, but we're not going back to the conditions ex ante.

Starting point is 00:39:12 I mean, we're not going back to those bubble conditions. Those bubble conditions were outrageous. I mean, people don't understand just how overvalued the stock market was. I mean, look at, you know, look at Arc, look at all the names that were in there, and look at what's happening to those names. I mean, look, there will be good things to buy at the bottom of this stock market, but we're not even in the zip code of cheap yet. I mean, we've still got another 50 to 60 percent to fall.

Starting point is 00:39:40 So I would not worry if I had stock positions with big capital games, I would sell them down hard unless they were in commodity producers or, you know, I think there's been a big shift. I mean, one thing we do know for sure is there's been a big secular shift from the disinflation theme to the inflation theme. We've underinvested in commodity in oil production. And, you know, oil is correcting now and we'll probably correct some more. But I think, I think in this new environment, we're talking about the next 10 years as being

Starting point is 00:40:11 an environment that's basically inflationary and basically favors commodities for versus technology. I mean, if you look at the ratio of technology companies to commodity companies, it just got so far out of whack, and that's got to mean revert. And so, you know, if I had big gains in oil stocks, I wouldn't necessarily sell them. You know, they might come down a bit because they've run up nice and heavily here. But I, you know, I don't think we're going to see $30 oil again in our lifetimes, you know, unless we have the Great Depression. And I don't think, I think they will stop before we have the Great Depression. That's one other thing I wanted to add to the pivot comment. mind that the longer they wait to pivot, okay, fine, that's painful, painful for all of us who are

Starting point is 00:40:51 in things that aren't benefiting as a result of that. But what it does what it means, and it's, of course, you know, they were, they were late on attacking inflation and then look how aggressive they had to be just to get oil to come down 20 bucks. Okay. If they're going to be late on pivoting, you know, it's, and when they do pivot, it's going to be because things are pretty damn bad and they are going to have to print until their eyes bleed, you know. So, so, I mean, they could pivot right now and maybe wouldn't have to be as accommodated. They could do kind of a soft pivot and maybe just talk back off the rhetoric. And that's what they're going to try to do.

Starting point is 00:41:25 I mean, they're going to try to drive the road somewhere between massive inflation and massive deflation. I mean, I can see why they got as hawkish as they got. I mean, things were pretty frothy. I mean, we all saw it, right? Inflation was pretty out of control. They had to do something and they did it. And so, but, you know, if I were in their shoes, I were running it today,

Starting point is 00:41:45 you know, I would pivot sooner rather than later. I think they've got a better chance of keeping their system together longer, you know, if they don't go too far in this direction. Because once this becomes self-reinforcing, you know, it's going to be very hard. It's, you know, they could pivot now and maybe not have to print any more money. You know, if the stock market falls apart and the bond market continues to fall apart, which would be ironic if it did in light of a deflationary backdrop, but it could if people are losing faith in bonds, then, you know, you're going to have, you know, you're going to have,

Starting point is 00:42:15 They're going to have to print like crazy to get us out of that deflationary spiral, right? Which happened so fast. Which is happening very fast. And so the last time, I mean, you know, the last time when we did $3 trillion in QE, one, two, and three, we did $5 trillion this time. I mean, what's the next one? Ten? Well, collectively, I would tell you from a global central bank standpoint, it was

Starting point is 00:42:37 10 on the COVID. I'm thinking, I was talking U.S. numbers. Just U.S. Yeah. Same difference. Yeah. Yeah. Yeah.

Starting point is 00:42:42 Yeah. Yeah, no, it'll be 20, right? So it's very problematic for them, obviously. Here's an interesting question that I'm curious to hear your thoughts on. How do you see Russia getting what they want and then what is it that they want? Yeah, I don't know. Yeah, I really don't know what they want. I can't get inside the guy's head. I know what he doesn't want. What he got fed up with was being paid. in script for things that are real. Yes.

Starting point is 00:43:16 And he finally said, okay, enough is enough. And you've gone too far. And I can see you're out over your skis. I can see you've manipulated the price of gold. I can see you've created a world that really benefits you. And I'm going to throw sand in those gears. You know, that, it's not working for me. He doesn't want the paper promises.

Starting point is 00:43:36 Yeah. And I just don't want these paper promises anymore. And so they're my commodities. It's your problem. And, you know, I'm not. I've contended. I mean, I don't love the guy. He's not stupid, though. I've contended all long. I mean, and our leaders are such idiots. I mean, I think truly, you know, again, he's an evil guy in many ways, but truly a part of what he wanted here was just a seat at the table.

Starting point is 00:43:58 And we haven't just given him basic human respect. And we argue because he's a bad guy, he doesn't deserve that. And I would submit that no, he's a human and he runs a country that's got nuclear weapons. We owe him basic human respect and we haven't given it to him. And I that's what caused him to throw sand in the gears. And it's sad because I don't think this war needed to happen and people are dying. And, you know, we made a lot of promises to them that we broke. And, you know. With respect to the NATO.

Starting point is 00:44:30 With respect to NATO and expansion and everything else. I mean, you know, I mean, he's, you know, if Ukraine were to become, were to have missiles and we were, you know, and we were to become part of NATO, I mean, And we would have a nuclear strike capability in under an hour from the Ukraine to Moscow. I mean, this would be like, you know, missiles in Cuba or to us. And, you know, I mean, I can understand why the guy's not, you know, exactly thrilled about that. And so, you know, it's, but again, you know, we're run by a bunch of people that are beholden to the military industrial complex. And, you know, they keep giving the Ukraine, you know, billions of dollars. and those billions flow right into the coffers of Raytheon and Lockheed and everybody who's supplying,

Starting point is 00:45:14 you know, these guys with the weapons of war. And that's good for those companies and the senators that live in those states. I mean, it's sick stuff and it just shouldn't be going on, but it is. And so, and again, it's all fueled by the fiat money. We've got to drain the swamp. And the way we drain the swamp is we get rid of fiat. And the way we get rid of fiat is we push and support and develop and go with the alternatives, non-state money, gold and Bitcoin. And Bitcoin's the fastest growing and the sharpest spear. But gold is there too. I mean, there are people who don't like the volatility of Bitcoin, so gold's a decent choice for them. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up,

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Starting point is 00:49:14 All right. Back to the show. I mean, at the end of the day, the paper promises have ruled, ruled the world for 40 years. That's been the environment. And it seems like we're at a very, and you see. You saw this with the Zoltan piece that came out, I don't know how many months ago, where it's really kind of money that is backed by energy itself is going to kind of rule the coming decades. I'm obviously very biased in that I think I know what energy money it is.

Starting point is 00:49:45 But, uh, Oh, look, I'm with you. I mean, don't get me wrong. I'm a maximalist. And I think Bitcoin will beat gold out over time. I just think there's a role for gold in the transition. Yeah. No, I mean, look, the fact that we didn't, the fact that we don't have a neutral reserve currency

Starting point is 00:49:58 that we created Triffon's dilemma by being, you know, the military power of the world and the monetary standard of the world, I mean, it's hurt us in many ways that we didn't foresee. I mean, look at the Midwest. I mean, we hollowed out our entire manufacturing base. I mean, we couldn't even go to war with China, basically because they have stuff we need. I mean, we could build, you know, all the modern stuff we need without a relationship with China. And, you know, the world is such now that we all need each other. And I think if you really look at the core of decent human beings and the world has many of those,

Starting point is 00:50:28 although there are a few psychopaths, most decent human beings just want fair play. And so, you know, a neutral reserve currency would lead to fair play, whereas it's very obvious that, you know, having a reserve currency controlled by one set of politicians who can manipulate that currency does not lead to fair play. And so that's really the fundamental issue. So, you know, we've got to get to a neutral reserve currency. But we will because, you know, I think it was you that said the contractions are getting closer, right? Yeah, speeding up.

Starting point is 00:51:00 I mean, it's picking up. I mean, this is, I mean, I can't believe what's been going on. I mean, I feel like I'm in an airplane and the dials are starting to go nuts. I mean, I don't know if I'm upright, upside down. It's, you know, it's like the AI. It's like the attitude indicator just tumbled. And I'm like, which way's up? This is a mess.

Starting point is 00:51:17 I can only imagine if you're a capital intensive business that requires a lot of cap, And here you are buying materials. And do I stockpile them or do I try to get them out the door as fast as possible? Because that's the shift in thinking that just happened over the last two weeks. Right. Do I do long-term contracts or do I do short-term contracts? Imagine you're a home builder. Oh, my God.

Starting point is 00:51:43 Yeah. Do I build that next set of homes? Mortgage rates just doubled? I mean, you know what? And when you look across like the things that are constructed. and built here in this country and all around the world, right? A house is really not that complex. Like you're dealing with, you know, I could go through and name the pieces and parts,

Starting point is 00:52:05 but when you get into some of these other technologies, like a laptop computer, I mean, and that's not even, I mean, it's at a whole different level of complexity and ordering and stockpiling parts and pieces and just trying to do economic calculation on that in this environment. I just can't even imagine. No. And that's why, you know, what I've, the metaphor I've used is kind of like the Fed is swinging this wrecking ball around.

Starting point is 00:52:30 I mean, it just made it. And, you know, I mean, isn't it ironic that, you know, raising. So part of the reason why we have these commodity price inflation is because we haven't invested enough in all the productive capacity that we need. Yes. Right. I mean, we've underinvested in commodities. And so, you know, now when we need them and things are tight, we have a commodity price inflation.

Starting point is 00:52:50 Okay. So what's needed? more CAPEX in those areas to create more production. Okay. But what would what would you like to have? In order to do more CAPEX, what would you like to have? Low interest rates. But what are we doing?

Starting point is 00:53:01 We're raising interest rates. We're making that CAPEX more expensive. And once again, it's because, you know, because the capital was mispriced, we didn't invest in the right things. And that's, how can I mean, we were, we were trying, you're trying to build a house with a, with a measuring stick that, you know, that, I mean, imagine your measuring. just kept changing. You just can't do it.

Starting point is 00:53:23 Well, you're seeing it with the oil industry. Yeah, you're seeing it with the oil industry right now where they're like, you need to produce more. And they're like, yeah, no, we're good. We're not going to make any investments in that because they know what's coming next because they've seen it for a decade straight is they've made a little bit of margin. And now they want them to reinvest that into their CAPEX and to expand and do all those things. And they're like, no, I think we're good. Like, we don't want to go out and do that risky type thing. only for you to pull the rug out from underneath. It doesn't help when the president is saying that they're evil profit mongers, but they're

Starting point is 00:53:58 going to get taxed, so on and so forth. I mean, yeah, there's no industrial policy here. There's no thought. You know, there's just a bunch of wokeism, stupid people, you know, running our government. And, you know, Lynn talks about the comparisons. And I think Dahlio's pretty big on talking about the comparisons to the 1940s. And I think that there are a lot of parallels. but when I'm looking at these types of behaviors and you look at the at the just sheer stupidity

Starting point is 00:54:28 of where we're at right now and in the demand for handouts in the demand for let's not do anything let's just print it and hand it into it and stuff it into the hands of everybody with more paper promises I don't think that you had that cultural mindset back then No, I know you didn't. From from the experience of my grandparents, I mean, you know, the whole notion of, I mean, of taking help was something to be very embarrassed about, whereas now it's, you know, it's almost like people feel entitled to it. I know on the student loan forgiveness, you know, a lot of people feel like it's their right and they just should have those loans forgiven. And what does that say about everybody who paid those loans? You know, it's just,

Starting point is 00:55:11 again, the fiat money corrupts everything and corrupts the moral. of society all the way through, you know, it leads to profiteering, it leads to the wrong incentives. It, you know, and we're so far gone, Preston. I mean, it's really sad. We are so far gone that it's going to take a really difficult and brutal, painful collapse for people to go back to the basics and learn some of those fundamental lessons. But I sincerely believe that that will happen and that people will learn those lessons, that there's a remnant of good, hardworking, honest people in this country. In fact, it's the largest group of people in the country and that, you know, they will help one another and, you know, we will go back to some timeless values that will make

Starting point is 00:55:58 this a much better place. It was much more the way it was when I was growing up, you know, and it wasn't perfect then because I grew up in the Vietnam era, but it was different. It certainly wasn't the way it is now. Yeah. Hey, here's a fun one. Advice for Orange Pilling Retired folks. Yeah. Yeah, it's hard. I mean, I try an orange pill everybody I meet. I show them a mun wallet. I transfer some money to them. I show them how easy it is. You know, I keep it pretty simple. I say, look, this is a new form of money that a lot of people have accepted. The dogs are eating the food. There's increased adoption all the time and there's a limited supply. So think that through. If there's increased adoption, a limited supply, what's going to happen? Price is going to go

Starting point is 00:56:41 up. Some people in the gold community, a lot of people say to me, I don't like it because it's not physical. It's not real. It's funny money. They point to all the other cryptos, which anger me. And I say, this is different. It's a true technological innovation, solved a problem that hadn't been solved before. Think of it as being like the printing press or the light bulb. It will never be solved again. But now that it's solved, it really matters. And it's a secure digital ledger. We never had digital scarcity before. Now we do. And this is what this is what it looks like. And so you've got a chance to buy your spot on the ledger. And you might think, well, it's not a commodity.

Starting point is 00:57:16 A lot of people say, well, you can't touch it or feel it, therefore it's got no value. And I counter that by saying, well, okay, but before gold even existed or we used anything like cattle or wheat as money, we sat in caves and we had ledgers on the wall where, you had sticks and you marked down how many deer I killed and how many deer you killed and we kept track of who owed who, how many deer. So really money is just social obligations. at its highest level, money is just a ledger. I mean, there's nothing physical in your bank.

Starting point is 00:57:44 There's just a statement that you see that says you have X number of dollars in your account. So once you understand and you can grok that money is a ledger, and then you can further understand that technologically, there was an innovation here that created a completely immutable, secure ledger with 100% guarantee mathematical certainty of not dilution and not being overprinted and no double spend, And then you should go, aha, this is a superior form of money. It's even better than gold.

Starting point is 00:58:14 And it's easy to move. It's easy to transfer. It's easy to store. And it's defensible against armies because you've got your 12 words unless they beat it out of you. They can't steal it from you. So, you know, those are the arguments I use. And smart people generally eventually come to it. And they have a lot of concerns.

Starting point is 00:58:30 But I just, I have an answer for every concern. And I think you can orange pill people at any age. age, the people who don't seem to be very susceptible to being orange-pilled are people who are arrogant. Seriously, I've kind of noticed that. It's so true. Right? I mean, you know, Peter Schiff, I mean, Nassim Teleg, I mean, it's almost a perfect correlation. It's, you know, and to me, that's because they're trapped. I mean, we're moving into

Starting point is 00:58:57 a paradigm where the ego is not as important. I mean, Jeff Booth just started this great venture capital firm called Ego Death Capital, which I think is a great name for a firm. And so with the ego being less important and kind of collective, you know, this kind of wooey stuff, but collective, you know, all of us doing well together, working as individuals and in a team is kind of, I think, the paradigm that's going to emerge in the next hundred years. Decentralized, not centralized. Centralized stuff is evil. Centralized stuff leads to guys like Hitler at the top doing bad shit.

Starting point is 00:59:30 So it's all based on, you've got your ego out of it. And you're kind of trying to think, well, what's the best for everybody involved? Not what's the best for me, not what's my reptile brain telling me, oh, ego-wise, I got to do this. But there are a lot of reptile brains out there still running around, you know, pounding their chest because they're fearful and they can't see what other people see. And, you know, they think that by, you know, professing their own brilliance on subjects and stroking their ego, that will keep them secure. and it prevents them from seeing something that's very obvious when placed right in front of their face. That's kind of how I see it. I love that.

Starting point is 01:00:11 You go death. It's a great name, right? How does the bond market finally find Bitcoin? Well, I don't know. I mean, the bond market's going to have to. It's because it's in a lot of trouble. Is it a persistent negative spread? Yeah, I think so.

Starting point is 01:00:27 I think that's right. I mean, I think, and one of the things that, you know, a question that, has been asked a lot is how do we live with a world that's deflationary? And for that, you've got to read Jeff Boo's book. I'm sure you have. I think others on the listening should read it. I mean, it's going to be different. In the world that's coming, there's not going to be a need to build up the big credit structure that we've had, like the world we've had looking backwards. You know, you're actually, if you just hold your wealth in the form of Bitcoin or even other property, you're going to get wealthier every year because prices are going to continually

Starting point is 01:00:56 fall. I mean, technology leads to everything becoming cheaper over time. And that's always been true. So, you know, there won't be as big a bond market. People say, well, how are there going to be loans in a deflationary environment? The answer is, yes, there will be loans. But again, you'll really want to make sure that the project pays back the loan. And the person making the loan will probably be willing to make it at a low level of interest. And the reason they're willing to do that is that they know that the fundamental principle will have more buying power in the future. I mean, imagine a world where your money got more valuable over time. I know that's really hard to understand, but it's actually a much better world. It's actually a much, much better world. And we

Starting point is 01:01:34 had a version of that between 1789 and 1913 because we didn't have a credit-driven society. And so at that point in time, everything, there were a lot of gold mines built, there were a lot of businesses built in that time frame. And they were all built with equity capital, not debt. There was very little debt in that time frame. And I think that's how it'll look going forward. I don't think the debt market will be nearly as important or nearly as big a thing. The debt market is as big as it is because we're trying to build a Keynesian system that relies on continual growth as the metric for success and that creates that needs debt to create that growth. And both of those are a dead end road. I mean, this is the St. Matthews Island, you know. Everyone's a slave in the end.

Starting point is 01:02:17 Yeah, everyone's a slave and it's the reindeer problem. I mean, continual growth in a finite planet with finite resources. I mean, how does that work? Yeah. I mean, the only way that it can work is with increase. I mean, the issue, the thing we should be measuring, not growth is the thing we should be measuring is productivity. How do we get the most for the least?

Starting point is 01:02:37 And more productivity is a deflationary thing. So everyone's got to change their mindset. We've got to throw canes out. We've got to get rid of this whole growth mentality. We've got to get rid of this whole credit-based growth mentality. and we've got to go back to a mentality of equity-based capital for doing things more efficiently, better, cheaper, faster for less. That's what it's all about.

Starting point is 01:02:58 How do we get more for less? And that's a deflationary mindset. And that's the mindset we've got to go toward. And by the way, that fits perfectly with Bitcoin because Bitcoin is a deflationary currency. It's how nature operates. You know, this is kind of silly, but my kids and I, we recently were growing. in crystals. We got a little crystal kit and we mix the solution together and then you put it, you know, in a dark spot for two weeks or whatever. And just naturally, the molecules that are all

Starting point is 01:03:33 of the same type are trying to assemble themselves in the most efficient way possible. And that's how they grow their shapes. And so you just think about like fundamentally. And that's not even anything that's living or alive, right? And it's trying to figure out the most efficient use of energy in order to assemble itself. And so it just makes sense that that's how, you know, things should work, right? If that's how nature works, that's how you'd think that we would assemble ourselves as well. Hey, this question I really liked, and I'm curious to hear your answer to it. What are your top three charts that you pay attention to? That was a great question. So I keep it pretty simple, to be honest with you because I just look at big investment categories. And I, you know, look, I drill down to

Starting point is 01:04:18 things like the two year and so on and so forth. But in general, I'm looking at the stock market, you know, just equities. I'm looking at the bond market, the 10 year yield and the pattern there. I'm looking at the dollar. I'm looking at gold and I'm looking at Bitcoin. And these are all interrelated in terms of investment choices and investment flows. And, you know, they all tell you part of the picture. I mean, the fact that the dollar is as strong as it is right now tells you the Fed's not printing enough. You know, we've got a deflationary impulse going on right now. The fact that the bond market's rallying right now, same story, although I'm not sure that rally is going to last. The fact that the stock market's rolling over right now tells you in my mind

Starting point is 01:04:59 that we had a bubble and there's not any real value there. And the fact that Bitcoin and gold are getting hammered right now tells you that, you know, the cutting edge of the liquidity spicket, which is, you know, Bitcoin and gold, the most, I mean, Bitcoin is the most volatile and Bitcoin is the leading indicator, in my opinion, of liquidity in the system. And that's why it's been hammered so hard right now, because the Fed is working very hard to take, they've signaled that they're going to take liquidity out of the system. And so the most liquid thing is telling you where everything else is going to go. And bonds are going to follow, bonds and stocks are going to follow Bitcoin lower. And then they're going to pivot and Bitcoin is going to rip and it's going to go

Starting point is 01:05:43 to 200,000 and gold's going to go through 2000 and silver's going to go through 35. And, you know, we're going to have an inflationary impulse that's going to blow people's minds. Gold's going to go, our oil is going to go to 200. But right now, we're in one of those downwaves. I mean, you know, Google the Murmican chart on Twitter. And, you know, when you get a monetary system breaking up, you get really wild swings. It's very tough. It's very tough as an investor. I mean, I feel for everybody on this call, this is not an easy environment to be investing.

Starting point is 01:06:15 And you've got to have a steady hand on the tiller. But I'm also very convinced that we're all on the right side of it. Because, you know, the government is faced with one of two choices. They can either debase or default. And, you know, they will not default. They can't. That's instant death. So they will debase.

Starting point is 01:06:33 Now, on what time scale, what, you know, in what ways, what measures, who the hell knows? I mean, that's, they're good at, you know, hiding that, moving the piece and shells there. But, but they'll do it. They have to do it. We know that. And there's no debasing Bitcoin. You know, they're 21 million, period. And, and there's adoption continuing to grow.

Starting point is 01:06:53 So I sleep very well at night knowing that my wealth is safe in Bitcoin. I mean, I'm just, I'm absolutely, you know, very peaceful about it all. I worry for the country and I see all the stuff going on and that all really upsets me a great deal. But in terms of knowing that my savings capital is in the right place, I'm extremely comfortable with that. That makes two of us. Yeah. Right. I mean, it's, you know, but watching the, watching the moves.

Starting point is 01:07:25 I mean, Jesus Christ, right? Oh, it's wild. Yeah, it's wild. Hey, I would summarize the charts you're looking at is really trying to understand the liquidity in the system. My three charts, because the person asked Preston, they said, what were my three? So I have a chart that was inspired by that Yardini PDF that's updated every day, and it's a consolidation of the central bank balance sheet. So I've created one inside a trading view that I consolidated the Fed, the ECB, the Bank of Japan, and the People's Bank of China.

Starting point is 01:08:01 I've consolidated all those balance sheets, central bank balance sheets, into a single chart. And then I'm looking at it and, oh, my Lord, you can't believe how much correlation there is to the major stock indecy. So I'm looking at that and I'm seeing and you're talking about the liquidity coming out of the system. I can tell you in the last 10 years, this is the fastest pace you've seen the liquidity coming out of the system since the 2008 crisis. The other chart that I have is a consolidated global equity market where I've taken the U.S., Europe, Japan, China, and the Hong Kong stock exchange, and then I market cap weight them based on their size globally, and I've smushed them all into a single chart. And the reason I'm looking at that is also to kind of identify where I think, whether I think liquidity is

Starting point is 01:08:55 coming into the global economy or being sucked out. And then like you, I'm looking at the Treasury yields. I've been paying a lot of attention to the oil market recently and obviously the dollar index. But those are the ones that I'm really watching because, I mean, at the end of the day, I'm seeing it as a, you want to own cash or you want to own Bitcoin kind of world these days. And if they're tightening collectively on a global scale, I want to be stacking dollars so that I can buy a bunch of Bitcoin when they change their mind. That's pretty much it. I think that's right. I mean, I, yeah, some people on the questions ask, do I think, you know, I think the bottom's in for Bitcoin at 17.5, but I've often been wrong on this.

Starting point is 01:09:33 It could go lower. I've got a really great chart that maybe I'll shoot you and you can put it in the show notes that was done by an Elliott Wave guy that shows 13.8 on Bitcoin is a 78.6% retracement. So if we have one more impulse move down there, that would probably be where it would stop. And if it does, my sense is you might have to be very quick. It might not be there for very long. Yeah. But I actually honestly think we're kind of done.

Starting point is 01:09:57 That 175 was it. But to be fair, back in 2017, when we went from 17,000 down to nine, I thought we were done at nine, and then we went to 3500. So, you know, I could be wrong. It could go a bit lower. But, you know, they're not making any more of it. I mean, they are making more, but it's, as you know, the supply is growing very slowly. And the adoption is just, I mean, the only two things that would ever concern me would be if the technology were in some way proven to be flawed, it hasn't been for a long time now. So I'm not too worried about that anymore.

Starting point is 01:10:27 or if the adoption were to stop or slow or reverse. And I just don't see that. Everywhere I go, everything I read, everybody I talk to, there are just more and more people using it every day. The use cases are just so fabulous. I mean, this whole, you know, I don't know if you've done transactions with Munn and the Lightning Wallet, but if you've read Alex Gladstein's book about how he's orange-pilling people all over the world,

Starting point is 01:10:49 I mean, I'm telling you, man, people everywhere are starting to use this stuff more and more. And, you know, once you get hooked on it, you realize what you can do with it you know you're not going you're not going back no so there's a fixed supply so it's it's all it's all pretty good what other questions did you have this this is my last one for you larry and boy that hour went fast let me tell you that was an hour we can go longer if you want that went really fast your philosophy values on living a worthwhile life for my last question that's a great question well i um i'll say right up front i'm proud I'm a Christian, you know, kind of raised and believed deeply in that, but I don't criticize

Starting point is 01:11:33 anyone who's not, because I think more broadly I'm spiritual, and I know a lot of people don't like organized religion. I think we're all put here for a higher purpose. We all have a mission, and we're, you know, we're here to do our job, and we just got to do the best we can do and live honorable lives and contribute what we're capable of contributing and respect to everybody else in what they're. they're trying to do and what they're contributing. And to the degree that we see things that we think are right, we're told to stand up to it and to try and fight it. So in my particular case, like my highest and best use is figure it out. I've always been an analyst. I like analyzing

Starting point is 01:12:11 stuff. It's fun. And I'm decent at it. And then, you know, what I see is wrong is what has happened, what some powerful people have done and have lived off a system that has benefited them at the expense of millions. And so I view it to the degree that I've got to have. the strength and the will to do it is important to fight, you know, to fight that. So I'm very vocally and not, not ashamedly, an advocate for sound money and critical of people who I think have made this world a worse place. And I aim, you know, I point directly at the central banks. You know, I want to see, I want to see Ben Bernacki's not a hero. I want to see Ben Bernacki in the history books as John Law, you know, which is where he belongs. He says,

Starting point is 01:12:57 He's a fraud and a charlatan. And he's caused enormous pain for lots of people. And he wasn't the first. I mean, there have been plenty before him and there'll be more after him. But so I guess, you know, you could call me kind of a Christian warrior for what, for the values that I believe in. And, you know, I want that to be my legacy. I love that. I love that.

Starting point is 01:13:24 It's not being a parasite like the, the, the, The behaviors that we're seeing right now are so parasitic where they're taking energy from others for themselves, right? And you're trying to look for how can we make this an environment that is beneficial for all? Well, that's right. Yeah. That's right. I mean, I think, you know, I think all human beings have an innate sense. I mean, and they say it's even in animals, chimps, has an innate sense of fairness.

Starting point is 01:13:54 Yes. And I think that, I think that, you know, if there's one role that government can serve or should serve is to try to be a good referee and to keep the playing field level and fair. And unfortunately, I don't think our government comes anywhere close to that. It doesn't even begin. But that, to me, that's, you know, once secured, you know, enough food and shelter to live a decent life, then, you know, helping others or fighting for fairness, I think are two very noble causes. Yes. And in my case, I don't help a lot of others, but I am fighting for fairness. Well, you're sharing knowledge, and that is a very important thing because then they can share it with others at minimal to no friction, right?

Starting point is 01:14:39 I guess so. Yeah, I guess so. I mean, I'm happy to share knowledge. Yeah, no, it's good stuff, folks. I mean, we're all going to be fine. We just got to hang out and keep fighting. This Munwall, it's a powerful thing. M-U-U-N, anybody who doesn't have one should get one.

Starting point is 01:14:52 you can instantly send an electric transaction. I'm sorry, a lightning transaction. The last one I sent cost me seven sats. I don't know what seven cents. It's not much. It's not much. 49 sats to a penny, right? Roughly right now.

Starting point is 01:15:06 So what's seven sets? It's one, you know, one seventh of a penny, something like that. Yeah. Okay. Yeah, it's unreal. It is unreal. And I like to send a very small amount over it to demo it. And it's like, well, I just sent you half a penny.

Starting point is 01:15:21 And it's like, and it's like, it's like, it's like, it's like, it's like, it's like, It's like, what do you mean you sent me immediately, right? And if I wanted to be 10,000, I could have sent you $10,000 immediately. Like, it's just, it's unreal. Yeah, I usually send a buck. And they're just, I did it the other day with a professor. And he was just blown away. He was like, what?

Starting point is 01:15:41 How much does that cost you? So it cost me less than a seventh of a penny. He was like, that's impossible. No, it's not. No, it's not. No, it's not. It's working. Yeah.

Starting point is 01:15:50 And I love when you can route it through your own node. And it's like, hey, that's encrypted over tour. Yeah, exactly. Like that went and pinged my house and then sent you. It's just crazy. How does anybody stop that? They don't. And that's the other beautiful thing about lightning.

Starting point is 01:16:07 My understanding of it, as you know, the chain is pretty easy to do analytics on and track. I think lightning is going to be really hard to track. Super hard. Super hard. Right. Yes. So, you know, this whole CBDC, you know, we're going to surveil you. We're going to know where all your money goes, et cetera.

Starting point is 01:16:22 etc. You know, oh, really? You know, with lightning, I'm not so sure. And then if you listen to Odell and this Fetiment thing that he's working on, I mean, that's going to be another layer of security. I mean, the good news is these technologies are coming along so quickly that they don't have a chance. I mean, they just don't have a chance.

Starting point is 01:16:41 We're going to run these people over. And it's going to be so much fun. It's really going to be fun. And they so richly deserve it, you know, they really do. It's an exciting time to be alive. It is. It really is. I mean, you know, if you can just get over, the number go down.

Starting point is 01:17:02 It's been a painful couple months for people that are comparing it to the dollar and not looking in a very long time horizon of five to ten years. Life's a lot more than number go up, number go down. Having been in the financial markets for a long time, I can assure people that things are never as bad as they feel in a bear market and they're never as good as they feel. at a bull market. Yeah. And it's just, you know, you got to take the good with the bad.

Starting point is 01:17:27 I mean, you know, going from 5,000 to 69,000 is pretty damn exciting, a lot of fun. And, you know, that brings it check back to 17.5, so be it. You know, the next run, I think the next run will probably take us into the low 200s. So that'll be nice. Bill Miller talks about him riding Amazon the whole way up and talking about how much volatility was involved. Oh, really? And that ride, yeah.

Starting point is 01:17:52 And it's just like, you know, people look at it and are like, oh, well, you bought Amazon and rode it the whole way to the top. Like, it was just this smooth sailing, like adventure of just making money the whole ride without any type of volatility that you're stomacing through that rise, meteoric rise. And this is obviously, I suspect and you suspect that we're in every single. Same thing. Same thing. It's funny, too.

Starting point is 01:18:18 Amazon informed me on Bitcoin. It was a network investment. And I didn't understand it because it didn't make money. And so I never bought it. It was a big regret on my part that I didn't buy it. I mean, partly it was funded by pre-capital. So that, you know, that was, I just couldn't buy something that didn't make money. But the network effect there was extremely powerful.

Starting point is 01:18:36 Yeah. And that's what we got going on with Bitcoin. I mean, I invested in the internet back in 95 or 93 actually and did well with it. And I was saying on another podcast the other day, this reminds me exactly of the internet. It's the exact same story. Yeah. And this is, you know, we're at the point now where this will be ubiquitous within five or ten years. Yeah.

Starting point is 01:18:55 And those of us who are in it now will, you know, have benefited very substantially from being in it. So, you know, it is exciting. It's extremely exciting. Let's just hope that, you know, the central banks don't completely crater the world economy and that some of the psychopaths in our society don't decide that having a nuclear exchange is a worthwhile thing to do. Yeah. Well, Larry, give folks a handoff to your Twitter account, which, is awesome to follow and anything else you want to highlight. Yeah, no, I'll just say my Twitter account.

Starting point is 01:19:24 I do a lot of posting, but I also put some useful stuff on there too. It's at Lawrence Lepard. And then I have a website that has my quarterly letters and a lot of things on there about sound money and a white paper on Bitcoin that I wrote six, four years ago, I guess now. And that website is EMA. My business name is Equity Management Associates, but EMA, Edward Mark Alpha, the number two.com. And that's all free, just information.

Starting point is 01:19:48 Awesome. We'll have links to that. Thanks very much, so it's great to see you again. I'm sure we'll see you. Oh, yeah. Likewise, Larry. It was awesome seeing you and looking forward to the next time we're able to meet up in person. Yeah, likewise. Okay. Thank you. Thank you, too. Take care. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I'd love to have you as a regular listener. you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I'll catch you again next week. Thank you for listening to TIP. To access our show notes, courses, or forums, go to the investorspodcast.com. This show is for entertainment purposes only.

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We Study Billionaires - The Investor’s Podcast Network - BTC086: The Macro Hurricane w/ Lawrence Lepard (Bitcoin Podcast)

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