What Bitcoin Did - The Debt Crisis Is Already Here | Lyn Alden

Episode Date: April 1, 2026

“This is like DEFCON 5. This is a catastrophe.” The debt crisis is already here. Governments are spending far beyond their means, inflation is quietly eating away at living standards, and the only real escape route is more debasement dressed up as growth. Add in an energy shock, AI driven job losses, and rising social unrest, and the question stops being whether the system is breaking. It becomes how long they can keep it going. In this episode, I sit down with Lyn Alden to break down the real state of the global economy. We get into why sovereign debt crises are a slow moving process, why the US has already crossed into a new era of fiscal dominance, and why Lyn believes the Strait of Hormuz is the biggest macro risk in the world right now. We also discuss inflation, war, food and energy shortages, AI replacing white collar work, the path toward UBI, and whether this debt cycle could be the one that finally pushes the fiat system to its limit. Plus, Lyn shares the personal story behind her rise, from homelessness as a child to becoming one of the most respected macro thinkers in the world. THANKS TO OUR SPONSORS: ANCHORWATCH BLOCKWARE LEDN BITKEY SWAN CLUB ORANGE CAPE FOLLOW: Danny Knowles: https://x.com/\_DannyKnowles or https://primal.net/danny Lyn Alden: https://x.com/LynAldenContact

What happens when people start losing jobs to AI? It all depends on how quickly it happens. You never want a short kind of multi-decade human productivity. But on five-year, 10-year timeframes, there are not magic. There's no way around it. That's rough. Is there a chance this is the last debt cycle? Like, could this be the one that actually breaks the Fiat system? I think it could.

The Fiat system, as we know it, only goes back to the 70s. Commerce is happening globally. It's those intermediaries that have all the power. Until the dawn of Bitcoin, there was no fast settlement. And now we have alternatives. Can this fiat system survive that? We are already in the period where debt matters. The debasement's already happening.

That's kind of the straw that breaks the camel's back. If people can't get the work, if they can't get the lights on, that's when you get revolution. This is like DefCon 5. This is a catastrophe. Lynn Alder in Bedford. How are you doing? I'm good.

Thanks for having me. Did you enjoy cheat code yesterday? I did. Yeah, always a great conference. You did an amazing talk, and then we did a fireside, all about the long-term debt cycle. I think we should kind of go over the talk you did and then get into it. Sure. So I think you started this by talking about when the long-term debt cycle matters. Do you want to pick it up from that?

Sure, yeah. I basically started out by saying that one of the most common questions I get, people ask, when will the debt matter is what they ask. As though people have it, I think, in their head that there's like some day of where suddenly, you know, a treasury auction fails or some crazy thing happens. I think I had this in my head. Right. It's a commonly what you think,

because that's how many debts matter, right? Many, you know, if you have private debt, it often matters all at once. It's like, it doesn't matter until it does. Sovereign debt tends to work differently. It tends to be more of a process. So one of the arguments that I was making at the start of that talk was kind of saying

that it has been mattering. Realistically, I would say it's somewhat mattered since the global financial crisis. But really, I would say in since about 2018, 2019, I think it's been really mattering, which is to say that it's, we're shifting more and more toward that kind of fiscally dominant environment. So it kind of reduces credit cycles because the U.S. deficits are so large, partially because of interest expense.

And then in addition, you know, the, I think the populism that we're seeing in the U.S. and Europe, especially, a lot of it does tie. into basically these very top-heavy entitlement systems with slowing demographics. And that's basically a debt problem. And even things like war that we sometimes see with a number of steps can be potentially tied back to debt problems. That basically financial imbalances build up,

and countries start making more extreme decisions in those contexts. So my view is that the debt has been mattering from a macro standpoint, even just from an investor standpoint, I mean, I use the phrase nothing stops his train in large part because we're running these six to seven percent of GDP deficits and a lot of it is so locked in because we already have so much debt, including so much interest expense on that debt. And so a lot of it is just kind of on autopilot at this point. So you say there's not like a moment that it matters. There's not going to be a failed treasury

auction, which is the key moment. It's a process. But what happened, like, when in 2008 or in 2018, 19, when did it start mattering? Like, what happened that meant this started to become a problem? Yeah, good question. I back up and say, like, there are moments where it matters more than others. Like, I would say it's punctuated by many crises. In the UK, for example, the guilt crisis in 2022, like the Liz Trust moment. Yeah.

That was like a moment where it mattered. But it wasn't like the apocalypse, right? It wasn't like the day it mattered all at once. But it was like a moment where the debt, the deficit were, we're being. basically called out in a sense. And the US has kind of gone through similar moments. The reason I kind of point to 2018 or so is we started to see overall deficit spending was larger than total bank lending in the country.

And even when you add total bank lending and total net new bond issuance, you're kind of taking a pretty big snapshot of private lending. And the US deficit was like as big or bigger than all of that combined. So when you say, well, where's more, where's like net new money creation coming from? You know, in the 70s, in the 80s, in the 90s, in the 2000s, the answer would have been mostly from the private sector, even though the government was running deficits too. But once we got over 100% debt to GDP, so we have pretty substantial interest expense, and we're running these entitlement systems that are kind of no longer mathematically as sound as they were decades ago, that combination of the demographic. and the accumulated debt made it so that even in a non-recession year. So it used to be that only kind of recessions,

would the deficit spending exceed like bank lending? Because bank lending would contract in a recession, deficits would blow out in a recession. So you'd have this kind of brief moments. But this was like the first time where in a non-recession, just as a baseline, deficits are bigger than private bank lending. Like all banks in the US combined, do you have deficits bigger than all their net new loan creation?

And so that starts kind of, it creates like a run-at-hot environment. So recessions start to feel different because you're almost pre-stimulating in a way before the recession would hit. You get more inflationary recessions, or at least less disinflationary recessions. Of course, COVID threw a whole wrench in everything.

But even apart from that, even just before COVID, we started entering that. And then even... Is that when we had like the repo crisis in 2019? I was, yeah, that was a key moment. I think about a year before that, some of these signs were, showing up. That's actually what I found Luke Gromans' work. He made very good calls about what was

going to happen. I looked into it at the time. And when the repo crisis happened, people were quite confused. Some people were like, the Dumers were kind of naturally like, oh, there must be major banks failing and such and such. And then the kind of the establishment was like, no, no, it's a technical problem. It's no, no, no, it's a technical problem. It's no, no, no, the view that I was taking at the time, the view that Luke was taking was, no, this is actually kind of tied to excessive of debt issuance. Basically, all these T-bills and debts were coming out. There were a bunch of other financial plumbing issues.

But at the end of the day, basically, the Fed had to go from balance sheet reduction to balance sheet increases despite no recession just because they needed more liquidity with their own liquidity rules to account for, like, how much treasury securities were coming to market. When foreigners were not buying enough, banks could only buy so much, insurance, like other kind of balance sheets could only buy so much. you add a couple other kind of topical factors on it that are kind of probably too wonky for this podcast.

And you get this moment where the Fed asked to step in and buy T bills just because it's too many T bills. So when we obviously got COVID early 2020 and then there was the insane COVID stimulus. And was that inevitable anyway, even if we hadn't have had COVID? Do you think that have had to step in and do something like that? I do think so. And it's funny because even like Black Rock had a paper out

before COVID. It was like the next recession that happens, we're going to have to get more direct. We're going to have to do more like helicopter money type stuff to restimulate. And I'd even read an article in mid-2019 called, I think it was called, is this a bond bubble or are we in a bond bubble or is this the new normal? And it was the whole thing, kind of like how bonds work. I was looking at the fact that there was now $18 trillion in negative yielding bonds in the world,

mostly in Europe and Japan, let alone very low, positive interest rates. in the U.S. and my, I took the stance, this is a bubble. This is like, people, like, I was like, people always ask me if the stock market might crash. I was like, I'm far more worried about bonds at this time. And I even talked about it.

I was like, people have gotten so used to disinflation. They don't realize that the next time we have a major recession, central banks and governments can do crazy things. Like, I didn't have, obviously, COVID in my mind. But I was like, basically, they can do much larger monetized. Like, they can always create inflation. Yeah. They have no problem creating that if they want to.

You know, it's harder to stop inflation than it is to create inflation. My rule was kind of like... The last few years have proved that. You've proven that. But in 2019, that was a non-consensus view. So then when it started to play out in 2020, I already had a lot of this mapped out. I mean, just from reading Ray Dalio's research and then kind of going even, like, I would quantify even kind of more than he did in a lot of his presentations.

I would kind of go and double-check the math myself and look at other apps. avenues and try to disprove it and really kind of made it my own research at that point. And so when all that hit, when all that COVID stuff hit, I was like, okay, this is bigger and sooner than I would have guessed. It didn't have to happen at that scale, but the numbers were already making it so that this was going to happen kind of one way or another over in the 2020s. Do you want to pay less in taxes and stack more Bitcoin? Of course you do.

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that you're most concerned about? Oh, entirely the straight-off removes. People ask me, for example, if I'm worried about private credit. I mean, there's always little pockets to be worried about. Like, for example, in the 2023 regional bank crisis, later the day, I think it was March 9th when it was kind of playing out. I just went on Twitter. I was like, I know it's like non-consents at the moment,

but most banks are going to be fine. It was a specific bank issue. a handful of banks that were like had very specific issues that they ran into. Yeah. And most banks were fine. And very small amounts of tweaks were able to just kind of put that fire out. What makes you think that? Because I did a show with your sparring partner, Jeff Snyder.

I can't remember exactly what it was, but I think it was just before the war started. So to be fair, he didn't have that to sort of tie into this. But he was looking at private credit and thinking this might escalate into being a real issue. And he wasn't calling for financial crisis now, but he was like, this is something we need to pay attention to. Well, I would agree with that phrasing. And even in my own research, I was like, I don't consider an issue yet, but I mean, it's notable enough that I'm watching it, especially because if people are always asking about it, I want to be able to give them answers that are backed by analysis, not just kind of like off

the cuff. But we need to quantify the size of private credit. So it's total bank lending to non-deposit financial institutions. It's otherwise known as shadow banks, which sounds scary. In some ways, they're less scary than the normal banks, because normally, normal banks do fraction reserve bank lending. They take your checking account, like your demand deposits, if you're running a business, like literally your payroll account,

and they go and make a liquid loans with it. And they, you know, and they just hope that not too many people withdraw at once. Now, but because they are so risky, they're also highly regulated banks, especially after the global financial crisis. So shadow banks are entities that make loans, but they don't use depositor funds. And if anything, so it's mostly like high net worth. investors, institutions that want to return, you know, insurance companies, pensions, just large

balance sheets as well as just wealthy individuals, we'll put money into this fund. And right up front, it'll say, like, we can't guarantee liquidity. You know, this isn't a savings account. This is you're putting capital in and we're making loans with this capital. And we'll, you know, when you want to pull your money out, we'll try to accommodate that. But I mean, if you're if you want at the same time, you're going to have to wait. Tough luck. Yeah. And that's, that makes sense for savings, not for a checking account or like, you know, near-term savings. So when they gate withdrawals, it's not nearly as bad as a company that who's like payroll. It's like, what do you mean it's not there?

What do you mean I can't access that, right? Or what do you mean by checking account? So it's in some ways less scary. But the part that, of course, freaks people out is that it's one, it's more opaque. It's less regulated. and they do generally engage in riskier types of lending than a regulated bank. And kind of the cheat code, I guess I'll use the word of cheat code because where we are, is banks want exposure to that area, but they want risk-reduced exposure.

So instead of lending the types of entities, like these smaller businesses that might be recipients of private credit, banks will lend to the private credit fund, and then the private credit fund will go out and make loans. Okay. Now, the difference is the bank's not lending all the capital. So the private credit funds mostly taking capital from investors, either, again, high net worth individuals or institutions, they're lending it out, but they're also borrowing from a bank for a smaller portion of their capital. And let's say they do make bad loans because some of these are risky. Some of them are consumer loans. Some of them are business loans. There's different specialties. And let's say they do start to go badly. The first people they get hurt are the investors, the ones that decided to put money in and they expected to make, say, 90% returns on these loans. But that risks on them, that's kind of fine.

Yeah, and that's fine. I mean, it's not great. Around the margins, it can, the negative wealth effect could hurt the economy. Because if you had a billion dollars in this fund and it got cut to 700 million, maybe you'll buy a couple of less cars that here. You know, it can affect high net worth spending around the margins. But it's not a grave concern compared to like a true financial crisis. It would have to get so bad that they lose so, so many, like,

loans, that even their bank loans, they have trouble paying back. Like, they're more kind of front-line creditor, not just the investors in the fund. And when you quantify the numbers, so banks in the U.S. currently have $1.9 trillion in loans outstanding to all non-deposit financial institutions. And that sounds like a lot, but that's out of $25 trillion in total bank assets. So something like 7 or 8% of their assets, which, of course, their assets, which of course their assets or someone else's liability, but of their assets, seven or eight percent is in non-deposit financial institutions. Of that, some of that is private equity, which actually has its own problems

at the moment. So only a subset of that $1.9 trillion's private credit. And so, you know, it's a trillion in change. And let's say half of that order to just go away. It's only half of all private credit is defaults tomorrow. Well, first, the investors take hundreds of billions in losses. Some of the worst hit funds, then might start defaulting on the bank loans. But the amount of that gets through to the banks, the losses, we're talking, you know, 100 billion, 200 billion. Dropping the ocean. $300 billion. I mean, yeah, but they have 25 trillion assets and they have, I mean, their bank capital, like the amount that their assets exceed their liabilities is well over $2 trillion. So while there might be individual banks, like probably banks you never heard the name of, that suddenly

we wake up and kind of like how Silicon Valley Bank had a very particular issue and a couple others along that. You could absolutely have a bank failure, but it won't be generally speaking the ones that you know the names of. Yeah. I mean, I even had that with Blue Owl was the one that I think Jeff Snyder was talking about. I'd never heard of that before. These are things that. And it's a bellwether. It's a canary in the coal mine. It's, um, there's aren't headlines that are like dismissible. So for example, when people ask you, are you worried about private credit, I'd be like, well, if I was a private credit investor, I'd be worried about private. credit. What people are really asking is, can this tank the whole economy or can this contagion

into the banking system? Those are the parts where my view is not that much other than what if it's combined with other issues. Like I mentioned the straight-over moods, if we have an energy crisis that then has all these negative effects. And then on top of that, we have some private credit also just, things can of course pile on to make a really bad outcome. But I don't view it as emanating from private credit per se. It's not truly big enough to be frightening in that. sense. That makes sense. I think when we're on stage yesterday, we were talking about the things that do frighten you. And you said when it gets to the issues, it's like straight up Hormuzes, number one, two, and three. So obviously the energy crisis being a part of that, but what are the things that

you're looking at there that concern you? Well, one is, I mean, 15 to 20 percent of global energy production is just offline or at least can't get to where it has to go and then starts going offline. Some of it's damaged. It's not clear when it's going to reopen. It could, you know, peace talks could break out a week from now, and then after some further weeks, we start getting things coming back online. So either way, it's going to take bare minimum weeks to get flows. But, I mean, that could take months or longer. And there's no kind of viable alternatives to get that energy out. And really, energy shortages or food shortages are about the worst case scenario for any economy. And they often even go together because it's not just,

oil and gas going through the straight. It's also fertilizer inputs. I mean, natural gas is a major fertilizer input. There's also other urea, sulfur, helium. There are things that either for fertilizers or for electronics manufacturing or for even just medical equipment, there's tons of components that are just... So when you talk about oil, food production, medical equipment, electronics, it's like, it's everything. It's everything. Yeah. And it's the foundation. It's like, you where the economy is based on pyramid and that little tip is basically raw materials

and that's the part that's disrupted because if you have a, let's go back to private credit, let's see have a $500 billion hole just shows up in private credit. I mean, that's, that's three months of like US debts at spending. Like, that's like literally,

you can snap your fingers and make that problem go away or just, it's like, it's, you know, we live in a fiat world. But when you have molecules that just can't get to where they have to go at that scale. The Fed can't print oil.

Can't print oil. And it's not, you know, like, it's funny because the oil analysts I follow, I mean, I purposely try to follow the non-sensationalist ones, the ones, you know, there's, just like any field, there are perma bears, there are permables, you know? So the analysts I follow, or not either of those. If anything, they probably lean more bearish because that seems to be the, in oil, the sensationalist ones are more like, tend to be permaboles. like all this is going to go wrong,

we're going to get a massive. And they're always like, no, no, it's going to be fine. It's going to be fine. It's going to be fine. Well, this time, all those, like, my closest analysts I follow, they're always like, no, it's fine. They're like, okay, this one's not fine. This is like DefCon 5.

This is, you know, this is a catastrophe. Yeah. And everything I track says the same thing. So how does it work? Because all the oil that's coming through the straightforward moose, generally, I think, is going to South Asia, Southeast Asia. Yeah.

Obviously, it affects the oil price globally. Yeah. But it doesn't have a direct impact on production in the US or does it? It doesn't have a direct impact on production in the US. If anything, if prices are higher for longer, it could encourage a little bit of shale oil to come back online. So it could increase our production a little bit, but not 15 million barrels.

I mean, it might put again another million barrels, not 15. And the complicated thing is not all oil is the same. You know, there's lighter crude, there's heavier crude, and then refiners are set up to refine a certain type of crude. That's why even though a country can produce as much oil as it consumes, it might still have to import and export, because it might not be producing the right type for its own refineries, ironically. And that's like the U.S.'s case.

You still have to trade. And so it is true that almost all of what comes out of that straight goes east. But especially the wealthier ones there can then bid for other sources of oil and oil. liquefine natural gas in the world. And that's why these, that's why all already, I mean, it was three weeks into the war, gasoline in the U.S. was up 30% or more because it is like a global market. Some energy markets are more fungible than others.

One of the least fungible will be natural gas because transporting it is so cost and expensive. You either need a pipeline or you need liquefine natural gas, which is a very expensive, like, facility to freeze it, ship it, and then in the, get back into its gaseous form. There's a limited amount of LNG capacity, which means that when there are gas shortages, they tend to, they last longer than like oil price differential. So, for example, when Europe had a gas shortage, gas prices in Europe were way higher than U.S. gas prices, and it lasted a very long time. And it's, I mean, that delta is kind of always there because there's only so much LNG capacity that you can use to arbitrage that. Whereas oil markets, because

it's easier to move oil around, except for an extreme scenario like this or similar ones, you can arbitrage spreads easier. Okay. But the point is that basically, and using like, say, 22's example, when Europe had a natural gas shortage, they're wealthy enough to say, okay, we'll pay whatever we need to keep the lights on, which means that like LNG that was like headed toward Pakistan would just get outbid and just go to Europe. And then Pakistan can't, you know, I'm using them as an example.

They had other issues, but that was one of the issues. that they had that year. And so the poorer countries, often just they're the ones that actually end up with the true shortages. And I think we'll see a similar thing here, which is people will look at like Taiwan stockpiles or Japanese stockpiles.

It's like, well, they're pretty wealthy. They've got a lot of options to bid pretty much whatever they need to to keep the lights on. It's the developing countries in the world that I think are going to be the hardest hit, including South Asia, including Africa, for parts of South America, you know, many parts. I mean, you were saying again on stage yesterday that that's already happening in Egypt

where you spend a bit of time. Are they going into sort of rolling blackouts? Yeah, it's starting to happen, not just in Egypt, but elsewhere. So in Egypt, historically, because they've had energies in the past, they, like, for example, they built some ghost cities before they built, like, a nuclear power plant. If you're going to... Done it the wrong way around. Yeah, if you're going to, yeah, at least do the power plant first.

But anyway, so they had electricity shortages. But it shows up mostly in the summer months. because you're in the desert, people use air condition. So they'd have, in summers, they'd have rolling brownouts. And what's happening this time is here in the spring, they're already planning to say, okay, like, cafes are going to have to start shutting down at 9 p.m. Other times, you know, just a bunch of these kind of limitors, which is all these constraints on the economy, because their natural gas import bill, tripled, on a monthly basis, is tripled.

And it's a poor country upon a per capita basis. So they just get out rate shortages. And we're already seeing, I mean, there are countries in Southeast Asia that are kind of reporting similar things that are saying, you know, we're doing gasoline rationing. And those will just keep getting worse, kind of starting mainly with the poorest countries. So this might be a silly question after everything we've just spoken about. But when I had Luke Gromeman on the show recently, he was talking about oil 100.

I think he used the 130 as the benchmark. Oil above $130 is basically a catastrophe for the economy. When we were speaking last night, you said you think it can go far north of that. What is the constraint that puts on everything? Why is that such a big issue, aside from just like gas prices? Yeah, so if the straight is closed for a prolonged period of time, it can go well above 130. And I don't know, the magic number changes over time just because we keep growing the money supply. So $130 is not the same as $130.

barrels, you know, 10 years ago. Yeah. But generally speaking, when you do get to atypically high levels, the problem is that's a a raw input. And, you know, that, you know, when you have, let's say, private credit contagion, that's going to impact funds and things like that, people that have the spare capital. Gasoline impacts, I mean, there's consumers that are just, you know, they're very constrained in terms of their spending.

In the U.S., I mean, people have been suffering from high. higher food prices, higher insurance prices. I mean, even though the bulk of the price inflation is behind us, but it's still trickling out in these other categories. And the last thing they need is gasoline 30% more expensive, let alone if it doubles, you know, if it goes to record highs or something. There are many in many households in the bottom two-thirds of the income stack, that that's kind of a catastrophe if gasoline prices just double.

Then you add businesses. So many businesses that are not like software companies, they operate on 10, 20% margins. And especially if they're moving things around a lot, I mean, energy is a huge component of that. So business margins get eaten up by these energy inputs. And then like I mentioned, natural gas is a huge input for fertilizer. And so you start to get a situation where farmers,

their input costs have gone up substantially, which means they're going to happen. Well, one, they run into their own financial issues. If their crop prices don't go up quickly, so their inputs are going up but not their ex- so they're getting squeezed. If that persists, of course, then the crop prices go up, which means food prices go up, which, you know, again,

if you're in the top 10% of a wealthy country, you might not even know, like, you wouldn't even notice. But if you're in, most people will notice, and especially if you're in a developing country, you'll absolutely notice. I mean, a large part of what caused the 2011 like Arab Spring, like the uprising in a number of countries,

they were protesting against kind of dictatorial policies, but the catalyst was basically high food prices. That's what, that's kind of the straw that breaks to Campbell's back. If people can't get to work, if they can't get the lights on, if they can't get air conditioning on. That's when you get revolution.

That's when you get revolution. Yeah. It's scary. You said earlier that the debt crisis was one of the things that played in or can play into potential wars like this. How does that work? It works in two ways. One is obviously wars expensive.

So war leads to sovereign debt crises. I mean, this was true in World War I and World War II. But then also, very indebted sovereigns, especially if you're like the kind of incumbent, like hegemon, the empire. Usually you don't kind of give up your borders, your influence, your scale. Usually you try to put that problem somewhere else. you know if you're a smaller country uh maybe higher debt won't make you more billigerent because you don't really have the option uh too much but if you're if you're you know the u.s or previously

britain or you know before that and any number of empires um they tend to lash out when they start to have problems um and so they they get feisty so it's classic fourth turning stuff where it just gets more and more volatile until it just kind of finally settles um and of course like it you get more on average, you get more polarized politics. You get more populist politics. And you just get, yeah, over time, you need just more extreme decision making compared to times are good, business is normal.

It's no, no, we need to make radical changes. And of course, whenever you have big imbalances growing in the economy, it's very easy to misdiagnose. Where the problems are coming from, who's causing it? Either subconsciously, people, you know, most people don't wake up and they're not macro experts,

and they don't know why a lot of this is happening. They have other jobs and other expertise. So they easily complain the wrong thing. And then politicians also can purposely target a group, an outsider or something, and say, this is happening to us. You'll see that a lot in developing countries when they have a currency crisis. They'll like, no, it's the outside speculators

that are breaking our currency. That's why we need to do capital controls. Yeah. And it's always, it's some other entities fault. I mean, that's happening in developed countries too, though. Yeah. Like it's blaming immigrants for, which like I'm not saying that we should have completely unfettered migration, but it's a very easy scapego when things aren't going great. Well, yeah, I mean, I think it plays into that that kind of pattern, that mindset.

And I think that another issue is that even some of the immigration policies you see, some of that ties back to the debt and demographics, because it depends on the country. some of them chose to have looser immigration standards to try to fix their demographics problems. So they would have these bloated entitlement systems that are very expensive. And when they were designed in the middle of the 20th century, it was kind of based on the idea that every generation is going to be bigger than the prior generation.

Populations are going to keep growing. So you always have plenty of young workers paying in to support the retired workers. But when birth rates slow down and people have fewer kids, you start to get very top-heavy demographics. You know, bring people in. Yeah, you've got major issues.

I mean, in the U.S., I mean, it used to be, you know, when Social Security came into being, it was like over 10 workers per retire, and then, you know, kind of steadied more at like six workers or five workers or four. It was like inching down. And it gets to the point where it's like three workers for every retiree.

And it just becomes more and more imbalanced. And so then policymakers say, well, maybe we shouldn't have a lot of immigrants. what could go wrong? You know, let's do all at once. And then, of course, that has its own ramifications,

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That's cape.com slash WBD. So in terms of getting out of the debt, there's really three levers. There's the idea of defaulting on the debt, inflate the debt away, or grow your way out of debt. Do you think, which do you think is the most likely of those three? Combination of inflate and grow your way out? They're never going to default.

I mean, almost never. Almost, well, any country that can print its own currency will rarely ever default. There are obviously developing countries that owe debt denominated in dollars. And sometimes they, I mean, the plate word is restructuring. That's kind of the plight word for defaulting.

It's not saying you're not going to get it back. It's saying, we're going to shift the terms around that you can get it back. And so, yeah, that can default. Same thing with like the Eurozone. You know, you can have bail-ins where, you know, you thought you had money in the bank and now you have less money,

but maybe you own shares of this now crippled bank, like, you know, a much diminished bank. So if the entity in question can't just unilaterally create its own currency, then default is an option, just like household debt, corporate debt. The main difference is that if you're a sovereign that prints its own currency,

why would you ever do that? They rarely do. They almost never. And so instead, they debased their way out of it whenever they, you know, if they ever have a trouble with a bond auction, whenever they have a repo spike like 2019 or more recently, they expand the base money supply as needed.

And so it defaults through purchasing power and inflation rather than through a nominal default. So in the U.S., for example, in World War II, I mean, the dollar was one of the least impaired currencies in the world. But even our currency, you know, we had at one point, we had 19% inflation, but we're doing yield curve controls who are artificially holding treasury yields at 2.5% on the long end, shorter on the, I mean, lower on the short end,

while inflation is 19%, money supply is growing dramatically. And so if you were holding currency or bonds, crushed. You're just crushed. You can buy less gold, less house, less food, anything that's kind of scarce to semi-scarce, you're going to get less of it. And over the past, I mean, I talked before about that article, are we in a bond bubble?

Yep. We literally starting in like from mid-20, until the next five years, that was like the worst five-year stretch for, like, developed world bonds roughly in history, anomaly, let alone purchasing power. And that's because

we are already in the period where debt matters. The debasement's already happening. The reason growing away out of it is a factor is because inflation feels less bad when it's partially offset by productivity growth. You know, if,

if we double the money supply, but we somehow use that money to build a bunch of power plants and manufacturing facilities and hospitals and we keep prices down for a lot of things, kind of the MMTers dream, then it'll still be inflationary for things we can't print more of, gold or Bitcoin or Waterfront property or fine art, for example, but the things you're actively making more of won't feel as inflationary.

If you're also benefiting from technological trends like Moore's Law, You know, semiconductors are always getting cheaper. TVs are getting cheaper. Computers are getting cheaper. Peripherals. You know, offshoring automation. So plastic toys went down like 95% in price from their peak. And, you know, textiles haven't gone anywhere in a long time.

And all that's happening, the effects of inflation in the basement are more subtle. You know, you start to see it show up in wealth concentration. Things feel a little harder, but you can't put your finger on it because you're kind of on a treadmill that's semi- balanced. Where it really gets painful is when you have inflation without productivity growth. You know, like, I don't know, war is a classic case of that because you're literally building stuff to break other productive things, and they're trying to break your productive things. So, for example, a closure of the straight of Hamos and then damage to energy facilities is a negative productivity shock because it's like all that stuff that was working and that was

abundant is now less damaged and more expensive to get anywhere. And so policymakers, their kind of optimal scenarios, okay, we're going to run it mildly hot, and then we're going to hope that Moore's Law and AI and all these other things can, you know, let's say you grow money supply at 8% a year and you've got 4% better technology every year and, you know, things would be 4% cheaper because of that.

Instead, they're only 4% more expensive on average. They're like, well, 4%. the population will deal with that. That's kind of how they will think. So it's a combination inflating and growing a way out. And for the growth side, do you think that that is all kind of pinned on AI now? Is that their real only option? I mean, that's the biggest one by far. I mean, for example, in the 1990s, so over the long arc of time, there's always kind of a delta between money supply growth and average price inflation. And it's because of that productivity amount. And some some periods are more productive than others. And it depends on the country. So,

For example, in the UK, in the late 1800s, money supply and inflation were highly correlated because it was already developed country. Whereas in the US, we had this big untouched continent, more or less, plenty of land, and plenty of gold. And so they could actually grow money supply quite a bit and not have a show up in prices because there were just fewer supply constraints.

So we had a bigger than normal kind of gap there. There are other periods of time like Japan after World War II. I mean, they were just most insanely productive kind of civilization for like several decades after that. It was like a huge kind of productivity miracle. Australia with the rise of China, there was a long stretch where Australia had a bigger than normal money supply growth compared to inflation because you were getting all this investment from China and all this demand of commodities from China. Yeah. And then in the whole developed world throughout the, especially the 90s and the 2000s, When you had the rise of offshoring, China, and just in general automation, so even domestic automation,

they dramatically lowered the cost of manufacturing. And that was disinflationary. And where inflation showed up then was things that were not getting automated. So hospital services, education services, anything that required other workers in developed countries doing things for you in some way. That's the part that wasn't getting offset product. growth. So you had kind of pockets of inflation and pockets of disinflation. Going forward, we've already kind of optimize a lot of what we're going to get out of globalization,

manufacturing automation, that sort of stuff, which means that kind of really the next realm to tackle is to try to make some of those white-collar services less expensive, more, you know, less human labor-intensive. And so I do think that AI's, you know, it's kind of the next major thing where depending on how good that technology can get and how efficient it can be used, that can keep costs down. And obviously, just like how manufacturing, automation and offshoring had, you know,

there were losers and winners from that because in the US, we had the Rust Belt, for example. Yeah. The UK is also a part of time, has been hollowed out industrially. Definitely. And so there's losers to it, but from a productivity growth standpoint,

AI is kind of the main thing. There's no other clear area, at least to me, where we're gonna get it rapidly better at making something other than kind of white collar services. See, this is where I have a couple of worries, and I'm hoping you can kind of ease my fears on this, because the big question I have is at what cost? Because we are definitely, I think AI is gonna increase productivity massively.

I think it's gonna replace a ton of white collar jobs. But what happens if that is the case? because we saw, like you said, in the Rust Belt, when a load of jobs went over to, like, manufacturing jobs went over to China, essentially, that there was a huge opioid epidemic. It was like the economy of despair, essentially. I think we could see something like that, but instead of it being the blue-collar workers in the Rust Belt,

it's going to be the white-collar workers on the coast. And then on top of that, that's question one. On top of that, what happens when people start losing jobs to AI? Because I don't think you need a huge proportion of the population to lose their jobs before you start seeing people, people defaulting on their debt, their mortgages, their car loans, all that stuff. And can this Fiat system survive that? Yeah, good question.

So starting with the first one. It all depends on how quickly it happens. I mean, this has been a pattern going back really since kind of the dawn of hydrocarbons. So before then, population growth was pretty slow. Technological growth was pretty slow. The reason hydrocarbons accelerate everything is because, like, for example, a barrel of oil is the energy equivalent of thousands of hours of human labor. And that's just an enormous productivity boost. Once we got coal and then especially oil and gas, huge effect. And it started, like for example, we used to be,

depends on the area, but two-thirds of the population would work in farming or kind of close to farming. And that's just subsistence farming or near-subsistence farming was kind of just the baseline. But when you have hydrocarbons and you have tractors and you have other kind of high-tech equipment. And this is, of course, high-tech a century ago or a century and a half ago. It allows vast majority of farmers to stop farming and to go to other things. They will be engineers and doctors and accountants and the rest of civilization. So it ends up being that 2% of the population can feed everyone instead of half the population having to do it.

And of course, if that happens in 10 years, you've got a lot of, out of employed farmers. But if that happens over a generation or two, it just means that, yeah, it's an adjustment. It means that someone who was a farmer's son and was going to be a farmer, instead goes to medical school. And most people would consider it a good thing.

It's kind of like, okay, the next person will be kind of more educated and more able to travel and generally do other things. But, you know, if it happens quickly, it can be disruptive. The same thing is generally true. I mean, if it takes 20 people on a manufacturing line, and you find ways to automate that and make it so you only have two people overseeing bots and fixing them sometimes and fixing edge cases and occasionally calling in a tech expert

when you really need something help, that's a good thing. It's obviously bad if it happens in a 10-year stretch for people that they can't retool their careers and change everything. So I think AI is no different, which is, you know, a lot of iterative tasks. we on average we want to spend less time doing those yeah now obviously if you make your living from doing those things that's disruptive if it if you know if you'd wake up one day and compared to two years ago your services are just greatly devalued that's that's there's no way around it that's rough but if it you know happens over a longer stretch it's fine

and then even if it happens over a shorter stretch there's an inevitability to it which is you can put kind of artificial constraints on it, but it's just, it's like a jobs program at that point. It's like we have a cheaper way of doing things, but we have to kind of slow it down on purpose. Yeah, but the genie's out of the bottle. Geneas out of the bottle. Yeah, Pandora's box is opened. And, you know, I still think there's, we don't know for sure how quickly this is going. Like, I'm an AI bull, but not like the super bullish kind. Like there are people, you'll see people kind of talk in their own book, like, oh, in 18 months, it's going to make all jobs useless. or kind of these, and like, not really.

It's, you know, there's obviously a lot of things that require conscious thought, and there are a lot of things that can be iterated on. And of course, the longer you look out in, like, more, you know, you never want a short kind of multi-decade human productivity, but on five-year, 10-year timeframes, there are, you know, these, they're not magic. Yeah, I don't think this is like an 18-month thing, but I could definitely see it happening in a decade. And yeah, that could also be too,

quick. And I think we saw in COVID when people were losing their jobs and they were like retrain as a computer programmer and now computer programmers are completely getting disrupted. I find it hard to believe or hard to imagine the future where, you know, your 50 year old accountant or lawyer has to retrain to do become a plumber. Like that seems like a crazy timeline. Yeah. I don't think that happened. I think so your second question is how can this potentially impact like credit cycles and things like that. I mean, basically I, so we've been under a two speed economy for a while. That's one of the kind of the risk factors when you have fiscal dominance. So in the U.S., for example, if you're an older American, you're on the receiving side of

Social Security and health care. Obviously, they're richer, older Americans. They're poor, older Americans, but on average, older Americans are richer and they're the recipient of bigger deficits. In addition, you know, someone works in defense, and that's where a lot of our money's going. People in the receiving side of the deficits are generally doing well. Those that own assets that are getting inflated by all the deficit spending are generally doing well, whereas those who are not on the receiving side are generally the ones that are more struggling. And I think that AI is going to be, it can actually probably add fuel to that fire, which if someone is an earlier adopter of AI and is using AI to be more competitive than

their peers or their competitors, then they'll probably view it as a good thing. if someone just wanted their status quo and they start getting disrupted by AI, I think it's going to be a rough time. And I think, I mean, kind of like how we see in the U.S. and other places, you'll see wealthy people, and then a few blocks away, you'll see, like, tent cities. Like, I do think that there's...

That risk is going to keep happening, which is that there are some people that it just... Everything kind of aligns. And there are other people that just can't find an avenue to get a handle. of things because they might have they might have spent they might have done an educational path and taken all the student debt and then their their income is now sharply reduced because of AI. See this is like again getting back to the debt cycle. This is where I see it as an inevitability

that we have UBI at some point because the social unrest if we did have the rich suburbs next tent cities will be insane. And like you say, this is when revolutions happen. And so surely to kind of stem any of that, they're going to do something like UBI. I think this is a good chance. I mean, yeah, you could have like a robot tax, you know, basically. Like, so, yeah, the equivalent, yeah.

I think on a long enough timeline, that could become more commonplace. And, I mean, there are, like, Japan is an economy that's very interesting because they have the worst demographics issues roughly in the world. I mean, other ones are now kind of catching up, but they've had the long-term bad,

demographics. Really aging population. Aging population. Now, I mentioned before how some of these things tend to cascade into other issues. They've actually managed to mostly avoid the cascading problem. So they were highly productive for a long time. So they had huge trade surplus, which then turned into a current account surplus because they would, you know, they take all their capital and then they buy bonds and equity and commodity deposits and all these assets around the world. So they're getting interest in dividend income from the rest of the world. So they've kind set up a financial fortress, even though they have a high sovereign debt in their own currency. They also have tons of assets. So this is why they could have such high debt without really

seeing inflation. That's why they're an outlier. And then in addition, they, I mean, the early adopters of automation, I mean, they were kind of known for automation and, you know, robotics and things like that. And then they also have a very kind of harmonious society. And they didn't fall into the pattern of saying well let's fix our demographics issues by dramatically increasing our immigration and so they kept they just said we're going to just tank this issue they also did things like i mean even though they're older than the average american or the average brit they spend way less money per capital on on health care and yet live longer uh so there's social aspects there there's also how they structure their health care system they've had very low military spending for a long time

So they're running on average pretty substantial deficits, not as big as people think. But they've been running fairly large deficits, but actually go back to the people. Their deficits are just going into health care, going into kind of well-being. And it's not, I mean, obviously, Japan has a, it's known for workaholicism, not very productive corporate sector in terms of like how many hours worked versus output. When you look at like quality of life for happiness. gradings. They did not not be near the top, like, say, some of the Nordic countries are. Those two seem very aligned. Yeah. But they've avoided a lot of the crises that you'd otherwise expect when you're 15 years. I mean, they're further into fiscal dominance than any other country.

And that, I mean, that just kind of shows that, yeah, it's a combination of debasement and then trying to keep the wheels on the car in terms of productivity growth. I mean, they've also, they've managed their energy policy pretty well. They've made any crazy decisions around energy. So, I mean, yeah, the things can be softened when there's a social contract in place and people kind of feel part of a nation that they're not just being, it's not like one side is just kind of screwing over another side. But yeah, I guess if things get more automated, certainly from the left side of politics, you're going to get more and more calls for UBI, and it'll probably be more and more enticing to a larger share of the population should some of these AI technologies

keep taking off as the polls expect. Yeah. And then what does that do to the debt crisis? Because we've had debt cycles in the past. You've talked a lot about the 40s and comparing now to the 40s. Is there a chance this is the last debt cycle? Like, could this be the one that actually breaks the Fiat system? I think it could. I mean, well, the funny thing is the Fiat system, as we know it, only goes back to the 70s. I think if we go back a little further, we can say it kind of goes back to the dawn of the telecommunications age. Because, and I talked about this lot in broken money, which is for most of human history, like information couldn't really go faster than humans could get somewhere. So by foot, by horses, by ships, the fastest you could do is like, you know,

birds or like fires in the night or something, but that's not high bandwidth. So you really, you were kind of constrained. Once we had the telegraph, so it was invented in, say, the 1830s, it wasn't widely deployed, like, cross-ocean until, like, the 1860s. You started to be able to share fairly high bandwidth information around the world.

By the time, it wasn't until the early 1900s you were going across the Pacific. And at that point, you could do transactions at the speed of light, but not settlements. Settlements, how do you do irreversible value transfer? Well, you ship gold and you audit and ensure the gold and it's a whole expensive, lengthy process. And that delta, that mismatch between fast transactions and slow settlements, was like a godsend to the banks and the central banks. It said, oh, you need a middleman. It centralizes all the money.

It centralizes all the money. It's a massive tailwind for the money centralizers. It's not that banks didn't exist before then. It's not even that central banks didn't exist before then in some cases. It's that their services are more optional because you can still just really hand a coin to someone. But when you literally are doing, when commerce is happening globally and most money's slow, It's those intermediaries that have all the power. And so from the dawn of the telegraph, until the dawn of Bitcoin, there was no fast settlement.

And so Bitcoin gets developed. And then even then, of course, it's worth nothing. It has no network effect. It's a novelty. So even, you know, for the first, say, decade of its life, it wasn't moving the needle at all. Even today, now it's increasingly part of the conversation, but it's still a small asset in the in scheme of things. But basically, I would say that we've reached the height of fiat currency in the sense that we've been in this period of time where there was no

alternative between fast transactions and slow settlements, and now we have alternatives. And then while fiat currencies enjoyed that kind of monopoly on what works, they broke all their ledgers. They blow to their entitlement systems. They built kind of social insurance with the idea that every generation is going to be as bigger, bigger than the prior one. and all those things are kind of coming home to roost. So I do think that, one, I think this cycle will last a lot longer than people think. I mean, that's part of why I use nothing stops his train. There's two sides of it.

One is, no matter all these attempts, they're going to try to reduce the debt of spending, they're almost all going to fail. So people were really excited about Doge. I was like, nope, here's why. Didn't even move the needle. So on one side, it's bearish. But it's also saying, it's also the wheels are going to be on the cart longer than think just because I think this is going to be a very stretched out cycle.

So how long do people think it's going to last and how long do you think it's going to last? I mean, there were people that thought the global financial crisis was going to break it all. There are people that thought COVID was going to break it all. Then there are people that every crisis, when the regional bank crisis have, like, this is it. And it's always, you know, it's always like next year or next, you know, five years. I mean, I, there's only so far you can look out because like literally you can have political structures to be entirely different in, say, the 2040s.

Yeah. You know, so I look out something like a decade. In the U.S., for example, that's when our Social Security trust fund, technically the surplus runs out. We've got something like a $3 trillion surplus in there, just from prior overpayments. That's now in draining mode because we're very top heavy. And then either Congress has to kind of say, well, all retirees. you're now going to get, you know, 80 cents on the dollar or 75 cents on the dollar, or we're going to print the difference.

I know which one that won't be. Probably, yeah. That actually requires a decision at that point because it's kind of a set pool of money, so it'd be interesting to monitor. And I mean, the political discourse around that time is going to be like lit. And so, but I think I look mostly into the 2030s

and say nothing really seems like it's going to slow with this down at any time in that investment. time frame. You look out further than that and you get the science fiction. Yeah. So science fiction. We will get on to that. So if this is going to take longer, what should people be doing now to protect themselves through this? Well, one, I mean, for people that have the luxury, it's making sure you're living in a spot that you're comfortable with, either in terms of the political structures, the social structures, you know, all the things that you somewhat can control, on average wealthier people have more optionality there than people that are lower on the income stack

trying to make sure either your job is AI resistant or that you're using AI that you're not just kind of ignoring the trend that you're you're trying to use the tools to be as competitive as you can be yeah for long i mean owning where possible scarce assets and trying to avoid bubbles because even scarce assets can have five, ten years of price declines if they were bid up into a manic bubble. Is this gold that you're really talking about here? I think gold was overbought. I hesitate to call it a bubble

because if we do have a long-term popping of the whole sovereign debt crisis, gold has to get pretty insane numbers to truly have like a 10-year loss, like a lost decade. But I mean, gold had a lost decade really after 2011. It got bit up to high levels. And I think it's obviously taking your breather now

for a period of time. But I think, I mean for example, I use Costco stock as an example. It's like people look at it as like the most bulletproof company in the world. It's one of the few companies where like employees generally like it, customers like it and investors like it. Usually you only get one or two out of the three.

Somehow they, you know... It's the trifecta. It's the trifecta. A lot of it probably rests on the hot dog. But Costco trades like 50 times earning. Crazy. For a 40-plus-year-old blue-chip retailer, they trade it. Yeah, that's like tech stock evaluations. Yeah, tech stock valuations.

So nothing stopped that from one day going down to 25 times earnings, which is still actually rich. That's still a premium multiple. And it doesn't have to happen all at once. A really good example is in the late 90s, we think of it as the tech bubble. But for example, Walmart was trading 50 times earnings. Coca-Cola is trading at 50 times earnings. They had very good growth in the 90s.

And over like the next 10, 15 years, their stock prices basically just went sideways. You know, sideways can be up, up 20% down, 30% up. You know, it's not literally sideways, but it was a chop. Solidation. Chop consolidation for like 10, 15 years while their earnings would double or triple until literally through time they'd be trading at 20-something times earnings. And that could absolutely happen to stocks today that look like Costco. or like a couple years ago, I mean, recently we've had selves in the Mag 7, you know,

these high quality companies that some, in some case, people were paying really high multiples for. Their fundamentals are still doing fine in many cases, but, but, you know, especially with CAPEX and AI, they've been running into frictions. So the point of all that is whether it's, whether it's gold, whether it's high quality real estate, whether it's high quality equities, those are generally things you want to own, obviously Bitcoin as well. And you just want to be careful of your enthusiasm when you're buying it.

You know, you want to, you know, when it's just all over social media, when it's had a strictly high valuations, that's when you generally want to have a pause and say, okay, even though there's money printing, can this thing still have five or ten years of being dead money? But other, you know, basically buying scarce assets at reasonable prices, trying to manage your location, if possible, trying to make sure on the right side of trends where possible. So there's obviously, I'm sure a lot of people listening are psychos like me that are just basically 100% Bitcoin. But for an average portfolio, how heavily would you weight Bitcoin in it? So for a lot of people, they have like 0, 1%.

So I mean, I say, well, I think zero is the wrong number. Yeah, that's kind of my kind of baseline is like there's a lot of numbers that can make sense. Zero is not really one of them, I think. So it starts by getting off zero. I think 5% is reasonable. I mean, it's funny. If you look at Port- portfolios, gold has been underweighted in portfolio for a long time, despite a lot of evidence showing how useful it is for portfolios, especially replacing some of the bond component. So my view is always have more gold than like the baseline, which is almost nothing in a typical kind of managed portfolio.

And with Bitcoin, I mean, I was early to put, say, 5 or 10% in. Now, in my personal like hold hold coal storage Bitcoin. I do venture in Bitcoin. So for me, it's obviously much higher than that 5% to 10%, especially if you go through a couple cycles and you don't really sell. It just becomes higher. It just becomes higher. But the way I kind of look at it is, like, I think 5% can make a lot of sense.

And then as someone, you know, if they do a podcast circuit and, you know, listen to like your show and other shows and then they read the books and they, you know, they spend a, you know, 500 hours in the space. I mean, then they know, maybe they, want to dial that number up, but they're the ones that know when to do that, not not me telling them that they want to do that. Yeah, that's fair. And last question on this, before we move on some other stuff. We've spoken in the past, and you said your base case was that we were going to have money printing, but it was going to be sort of gradual money printing

that was sort of aligned with GDP growth. Does this war and around change that? The short answer is potentially. So I started pointing out the gradual print scenario. I mean, in my research service, over the past couple of years, I've been kind of aiming that roughly in this 2025 period we would have we would have had it and that was actually the fed's own projections roughly too it's one of the few times i agree with the fed because a lot of it was just kind of pretty like unavoidable math um and so when we got to late 2025 we started to get that gradual print scenario he started to kick in in december uh so we're actually a few months into the gradual print now in spring of 2026 um so i ran war aside that's the baseline is that the baseline is that the

growing the in the U.S., they're growing the base money supply roughly in line so that it's a pretty standard percent of GDP. And they're not trying to do that to stimulate. They're trying to do that to keep fractures or bank lending, just the wheels that just kick the can down the road indefinitely. The war in Iran, it doesn't immediately threaten that, but if it stays closed for months and you start to get, if gasoline in the U.S. doubles and other countries just, I mean, you know, like Egypt starts to shut off at 9 p.m. every night and the Philippines is gas rationing and Europe is freaking out. If it's just across the board, if there's economic turmoil, you could start seeing on average rising U.S. deficits. And then the central bank, you know, it can run into like liquidity issues

and they have to kind of up their expected rate of money supply growth to kind of keep the treasure market functioning, to keep the interbank lending market function. And then it comes down to will, will a highly polarized Congress agree on a stimulus, especially for a war we began, right? That's tricky. It's like, oh, hey, your gasoline prices are high because we initiated a war, but here's a gasoline stimmy, you know? Yeah.

That's good looking at that through Congress. And so there are certain, like, kind of binary decisions at that point that I'm not going to try to predict what even, because it's not even being tabled in Congress. Congress yet, really. But the first step is to just, if asset prices struggle, if consumer struggle, if the economy struggles, all that impacts tax receipts, and that starts to widen the deficits. Do you start to inch out of a potential gradual print scenario? But I don't think we're there yet. Very interesting. Can we do something a bit different? Sure. Because we've done, I don't know, on what Bitcoin did, you must have been on 25 times or something crazy like that. And I don't

think we've ever really talked about you. It's always about macro. And when we were at dinner last night, you've got a pretty crazy story. Everyone knows you as one of the best macro analysts in the world, but you came from very little. Can you talk about your childhood? I mean, it's a lot. Yeah, I think there's a couple podcasts where it's come up, but he says not use something I kind of talk about a ton. I mean, I was homeless for a few years as a kid, and then grew up in a trailer park is kind of short of it. How old were you when you were homeless? Roughly four to seven.

That's crazy. Give or take. And so you were on this, were you living literally on the street when you were homeless? So it started out. First, we were living with my aunt. Then we left and we were living in a homeless shelter and a couple different homeless shelters. Then we lived in a motel, like a cheap motel.

And then at the last stretch, we were living in a car. And like we would, for example, to bathe, we would sneak into a public restroom and crack a dawn before anyone's there and clean ourselves off. So not quite like street street. Like not like, but if you're in a car, it wasn't like a camper. It was like a sedan. Like so, yeah, living in a sedan. Whenever you like look back at your childhood, like I had a great childhood, very privileged.

But I think you always look back on it and you remember there's good times. Are there any parts you look back on that fondly? Well, when we were in the homeless shelters, especially because we were in two different states, the first phase of it wasn't that bad. It wasn't a very crowded shelter. There were other kids there. And so it didn't feel that normal from a kid's perspective.

Kids don't need a ton if they feel safe. And did you feel safe? I did feel safe. That's the thing. I felt safe at that time. Wasn't like actively, never got to. got to the point where I didn't have enough to eat, right?

So it wasn't like third world poverty. It was like developed world homelessness and not the most extreme kind. But that, it didn't, yeah, it was, it was totally, certainly workable. I think the bigger issue was conflict between my parents. That's the part that a kid gets kind of tuned in ton, not necessarily the physical stuff.

Once we kind of got into the motel and then the, especially the car, that's when it, becomes a lot less, even for a kid, a lot less fun. And is this why you got into MMA? Was it like an idea of defending yourself while you were living in these places? That might have been part of it. I think it's actually contributed to why I got into investing. Because from my, when I went to go, so all that homelessness, I was living with my mother.

It got so bad that I went to go live with my elderly father in his trailer. And from that point on, I was like a super saver. Like if I got Christmas money or I got Easter money or I got allowance, I would save it. I even got into precious metal collecting, like literally as a kid. No way. Yeah, little silver coins and eventually like little like one tenth ounce or up to like a half ounce gold coin. This is back when gold was only like $3 an ounce.

So I was like a little bit of a coin collector. I could have told you about inflation back then. No way. Yeah. I was just for whatever reason. Did you keep any of those coins as like a momentum for? from then. I held them until 2011.

It was the only time I ever sold physical precious metal because it was like a bubble. So I actually sold my precious metal collection then. I eventually rebuilt it much larger. But yeah, for years I had coins. And then I got into, when I was a teenager, got into equity investing. And I think a lot of that was because I went through this period of instability. So I think the pendulum for me, you know, like how people in the Great Depression, to use a Moorchrome example, like you'll have like a grant, like,

especially in the U.S., we have like a grandparent that like saves the rubber bands where like never, this never throws anything out. It's super economical because they lived through the Great Depression or they were a kid through the Great Depression. So it's kind of got imprinted on them. Waste not, what not. Exactly. So I never developed that tendency, but I did develop like a high savings tendency from

literally childhood. I think in part because I was used to chaos and wanted less chaos. And so how did you go from there to, you know, going through college, college expensive in America? Like what happened there? So my dad helped with the first year of college. After that, it was all student debt and part-time jobs. So I had to work my way through college, which is, I mean, especially if you're doing an engineering program.

I mean, they're not easy. So it's like I was envious to the kids that they could just, you know, they did just, it was all covered for them. They had no debt. Yeah. For me, it always kind of felt like I was on a timeline. I always had to, you know, try to find time for it. But yeah, I was working my way through college. graduated, got a job, had 50,000 in debt, which, I mean, today is probably the equivalent

of like 90,000 in debt. Yeah. Like it was equivalent to like basically a full year's gross pay. But of course, when you factor in your own expenses and everything, that takes many, many years to pay off. So then I just over time gradually paid off the student loans while continuing to invest and just kind of snowballed. So if as someone who was investing from really young, why did you not go into that as a field?

Why did you choose to go into engineering? I was torn. I, when I came down to university, I was like either finance or engineering. I had always, in school, I'd always been interested in kind of the math and science classes. And for whatever reason, it was kind of arbitrary. I had picked engineering. But then I, over time, I found out that my heart was in finance. Like, for example, there were like other kids and other students in university.

they'd already been like building circuits and stuff in like high school. And I was like, oh, you're like a real engineer. Like I'm just showing up. Like, so I never was like a hardcore like super engineer. When I eventually graduated. I eventually, you know, like for me it was the common, it was engineering. Like we were building aircraft simulators. But from the beginning, I kind of realized I want to do a hybrid approach.

I want to be an engineer, but I eventually want to get like say maybe a master's in business. and then be like a manager of engineers or managing the finances of like an engineering so kind of the hybrid technical decision and kind of more business, that hybrid. So I said, okay, I'm a decent engineer, but I'm not the type of engineer that's like clearly born to be an engineer.

Okay. They were just absolute psychos. And I'm like, I'm good, but I'm not like a psycho. But like I was the kid that was like watching, like I could, when I was like eight, I could tell you what the Niki was, you know, and like what the price level was of the Niki. because I would watch the financial section of news.

I was like that, I was like that, I was like that kind of slight go. So I was like, okay, clear that I have to get more into finance. So in my engineering job, I gradually transitioned it toward managing engineers and running the finances of the engineering facility, making kind of big technical financial decisions. While I was writing about investing in the early kind of blogging days of the internet, and I had like a little blog about stocks, and I eventually sold it to a larger publisher.

and then at some point I started Lin-alden.com and it just grew so big I had to leave my engineering work. Why do you think there's such a crossover between Bitcoin and engineers? Like Michael Sayles and Engineer, you are, Checkmate, I'm sure there's a ton of others that I can't think of. But there seems to be a real crossover there. I mean, I think because Bitcoin is a hybrid of finance and tech. I mean, in order to assess it,

you have to have at least a decent understanding of its tech. I know if you're, because, I mean, if you're comparing, One is, can this thing even work? Two, okay, now there's thousands of all coins, and they're all claiming to be the next Bitcoin or better than Bitcoin. They fix, you know, Bitcoin's too slow. We have to, so you have to build a set.

Okay, what are the tradeoffs then? How do network effects and protocols historically develop? What, you know, what are these other coins sacrificing to be, quote, unquote, faster, more programmable and all this? That requires some degree of technical knowledge. So it's an inherently multidisciplined fields. So engineers that also like finance is kind of the perfect background to find Bitcoin and sort of appreciate it. And I think I'm right in saying you first started writing about Bitcoin in like 2017. Is that right?

That was the first article, yeah. But you weren't really all in Bitcoin in a sense until maybe 2020, 2020, 2021. Is that right? It was the 2019-2020 period. Yeah. So I wrote about in 2017. And by that point, I was convinced on the fundamentals. I still my, I had two main hangups at the time. One was, I wasn't sure that the network effects would be strong enough so that, okay, there's Bitcoin. That was also when Bitcoin Cash was, and I hadn't done like a thousand hours on that. Ethereum was really big. And I was like, I don't know five years from now what the market share, how fractured the market share is going to be with all the different coins. So that was number one. And number two, I was like, okay, in late 2017, I mean, this is a bubble.

It might not be the end of the world bubble, but this is, I mean, this is a very euphoric pricing. So I was like, not going to, I was like, interesting tech, not going to touch it. But what I did was that in, so before that I had watched prior cycles. I saw like the, I knew someone who mined it in 2010. And I was like, oh, that's neat. Super cool. But I just, I don't know. I was like, I was always like, I should look more into that. I was never like dismissive. I was like, oh, that's neat. I should look more into that. I just don't. And then cycle comes and goes. And then it was like the 2013 kind of cycle. And I was like, oh, it's like the cool like libertarian money. That's, you know, I hope they.

do well. They did follow. Yeah. I didn't follow up on it. But in 2017, when we had that kind of third, it was like my third kind of awareness, I was like, I'm not going to just forget about it this time. So then

I was correct and it did have a big correction. It did do a long stretch of underperforming most other assets. But I watched the block size were play out. I kind of kept thinking about how to analyze, how to value it.

And so by 2019, I started to get pretty convinced and I was kind of like, but what's a good entry? And then COVID happened. And I was like, well, that's my entry. So, I mean, that's a pretty good entry. That's still my proudest buyer. I think it was March 9th, 2020.

That's good. I got it in April. So it hit the bottom and it's coming back up. And because I had a long stretch of history of kind of investing in precious metals, I mean, silver had a big drop. Gold had a big drop, a smaller drop than silver. But silver was like a really brutal. And if Bitcoin was behaving just like them,

so when they kind of the V shape, I was like, I see, like, I could sell it where this was going to go. So I got in pretty heavily in April and afterward. When you see your friends from the engineering days, are they weirded out that you're this like macro superstar now? I don't think so. I mean, I, you know, I think they, you always see people you know the same way. And also, we're, we're in kind of a bubble. Like, you know, they, it's funny to them that they can see me on YouTube everywhere and, and, like, crazy number of followers on social media and stuff. But we're, you know, people outside of our niche, you know, we're like little micro celebrities, you know.

So it's, I think you're kind of outside the niche though. You're in multiple niches at least. Multiple, but yeah. I mean, it's, I think they find it interesting. But yeah, it doesn't, you know, it's just nice catching up with them. And when did sci-fi come into this? Oh, yeah. We've got to plug the new book. Plug the new book, sci-fi, the Stolgard incident. I wrote a sci-fi book. I told you I've started reading this, but I need to read it when I'm not going to bed so I can actually concentrate. Yeah, it's not a, it's not one of those like light like beach reads. No. It's pretty dark and pretty, um, but I, so I, I mean, I've long been interested in the kind

of fiction. Um, and I, I mean, the story idea for that has been in my head for well over a decade, but I was like, when am I possibly going to find time? Because I was like, working engineering while also on the side, writing about investing. And then eventually that took off. Then I was like, then I was adding, I got into venture investing with ego death capital. Um, I said, on boards of companies. Like, when am I possibly going to find time to write? But in 2024, I wanted to just kind of improve work-life balance a little bit. And then also just because of just kind of logistics,

I had a little bit more time in the evenings for a period of time. As I finally was like, you know what? I'm actually going to write the thing that's been distracting in my head for quite a while. Did you use AI at all to write it? Nope. All your hard work. That's the way. Just me.

I used AI as like a research assistant. So I would, like, for example, VR, virtual realities in there, or gene editing, or, like, how good will batteries look in 50 years, right? Like, I have an engineering background, but I mean, these multiple, it's a multidisciplined thing. So I would say, like, okay, what is, like, here's my conception of VR in the 2070s. Like, what do you think of this? And the AI would, you know, give me its analysis or, or like, how energy dense could batteries be in the 2070s? and what type of batteries are they likely to be? Or here's this laser design.

Does this make sense? So it was like a useful, it was kind of a second search engine or a research assistant. Sometimes I would also, I would give it a chapter and be like, what do you think of these characters? Do an analysis of this chapter or something like that. Just kind of see almost like a beta reader. Or I would say, do you see any proofread this?

Do you see any obvious errors? I still gave it to human editors, but it's like i don't you know so the first cut yeah the less the less time editors have to find periods and and you know misspellings the more time they can focus on substance so it's funny i was excited to read this book anyway but we were at dinner the other night with erik hursman and i was going down my matthew pine's conspiracy crazy shit and every time i mentioned something you're like read the book so i'm very excited now um i say on behalf of everyone is really annoying that you can just do everything like how do you just pump out what i'm sure is an incredible

sci-fi book. How long did it take you? So actually the funny thing with both this and broken money is the actual writing process was very quick because with broken money, I had been thinking about doing a book for a while, but books are super tedious. Nobody should really write books for money. If you work in finance, like books are not where money is. It's not a good investment. Not a good investment. So my strategy was don't write a book unless you feel like you have to. and when broken money, like the pillars, the core concepts just built in my head so much, the book was there and it became more distracting not to write it.

Okay. Like I had to just get it out. So by the time I actually go to write it, it took six months to write it and another six months of polishing it. And literally within a year, broken money is out. And it's rather polished 500-page finance book, but it's based on years of research. But the actual process was actually surprisingly quick.

And I was so passionate about it that it was like, just hours and hours of late night just grinding and it just kind of came together very quickly, like a fire hose. And this was kind of the same way, which was the first draft was little over two months to write a 400 plus page book. I added a couple more chapters in like the month of two after that. But then actually, that took a longer refining process than even broken money because fiction is not my expertise. So that went through, like, broken money and went through fewer rounds of editing

and fewer beta readers because I was more sure of it from the beginning. This was, like, writing exactly in my area of knowledge. So other than a handful of people seeing it, I just knew it would go out and just kind of... People would experience it the way I experienced it. Whereas this one, because it's fiction, I was like, I have to get more eyes on this.

I have to go through more iterations. I have to have editors that can make sure that my prose is like in line with genre conventions and things like that. So it was a shorter writing period, but then a very like a year plus long revision period. Which one was more enjoyable to write? Actually, equal. They both, both of them, what they had in common was that they both consumed me when I was writing them. I wanted to get other work done so that I could like work on my book that night. for both cases.

So if anyone is interesting, what's the premise? How do we hook people then? The premise is near future. And it's not a just open world, but it's kind of like our world further along into like surveillance and AI. It's like a black mirror episode.

Yeah, kind of. It's a black mirror episode. But it's action-oriented because basically what happens is a terrorist with strange abilities starts kind of doing a series of violent attacks. And this investigator, tries to figure out why she's doing it and to find and stop her.

And there's a rabbit hole that they go down. I love it. I've started the book. I've got a long flight coming up, so hopefully I can get through a big chunk of it. But go and check out the Stolgarde incident. Buy it. Thank you, Lynn. You're awesome.

This has been fun. Anywhere else you want to send anyone apart from the book? People can go to Lynn Alden.com, but yeah, I think they know where to find you. They need to buy the book. They know where to find you. Thank you, Lynn. Yeah.