Lyn Alden on Japan's Unwinding, US Recession & Social Unrest
Summary
TLDRIn this comprehensive discussion, the hosts delve into the intricacies of global finance, exploring the impact of Japan's economic policies on the Yen, the potential for a US economic slowdown, and the broader implications for Bitcoin. They analyze the ripple effects of carry trade deleveraging and the role of liquidity in market crises, offering insights into investment strategies and the importance of understanding economic trends for long-term financial health.
Takeaways
- 📈 The conversation discusses the volatility of Bitcoin and its correlation with global economic events, highlighting its role as a liquid asset during crises.
- 🌐 The impact of Japan's economic decisions on the global market is examined, particularly the yen carry trade and its effects on asset valuations and investor behavior.
- 💹 The script addresses the broader implications of monetary policy, especially the role of interest rate differentials and their influence on currency strength and trade balances.
- 💔 It details the consequences of devaluing currencies through inflation, noting the 'hidden tax' on citizens and the socio-economic effects of such policies.
- 🌍 The potential for a global economic rotation is suggested, where capital may flow out of the US and into other markets, affecting various economies differently.
- 📊 The discussion touches on the indicators of a struggling US economy, including manufacturing weakness, job market changes, and credit spread increases.
- 🏛 The script reflects on the societal unrest in countries like the UK and the US, linking it to economic pressures and the decline of trust in institutions.
- 💬 The conversation emphasizes the importance of understanding complex economic issues, rather than focusing solely on social issues, which are often easier to discuss and politicize.
- 🚀 The long-term outlook on Bitcoin is optimistic, with the expectation that it will serve as an alternative to traditional money and benefit from a shift in global capital flows.
- 🤔 The script questions the role of Bitcoin as a 'lifeboat' during economic crises, noting its tendency to drop in value during liquidity crunches but also its potential for recovery.
- 🔑 The final takeaway is a reminder of the importance of holding Bitcoin with a long-term perspective, considering it as a structural solution to monetary issues rather than a short-term investment.
Q & A
What was the significance of the 37th conversation between Lynn and the speaker?
-The 37th conversation marked a significant milestone in their discussions, highlighting the long-term engagement and the depth of their dialogues on various topics, including Bitcoin and economic issues.
Why did the speaker mention the drop in Bitcoin's value?
-The speaker mentioned the drop in Bitcoin's value to illustrate the volatility of the market and the impact of global events, such as Japan's currency movements, on cryptocurrency.
What is the carry trade and how did it contribute to the market's reaction?
-The carry trade involves borrowing a currency with a low-interest rate, like the Yen, to invest in higher-yielding assets. The deleveraging of this trade due to Japan's monetary policy changes and intervention in the currency market contributed to the market's reaction and global volatility.
How has Japan's monetary policy affected the Yen and global markets?
-Japan's decision to tighten monetary policy by raising interest rates from 0.1% to 0.25%, along with intervening in the currency market, has led to a rapid appreciation of the Yen and a significant impact on global markets, causing a deleveraging event.
What is the concept of 'fiscal dominance' mentioned in the script?
-'Fiscal dominance' refers to a situation where a country's fiscal policy, particularly its debt levels, influences its monetary policy to the extent that raising interest rates becomes difficult, as seen in Japan's case with its high public debt to GDP ratio.
Why has Japan been hesitant to strengthen its currency aggressively?
-Japan has been hesitant to strengthen its currency aggressively because it benefits from a weaker Yen in terms of export competitiveness and has historically targeted mild inflation to manage its high public debt through debasement.
What impact has the gradual debasement of the Yen had on the Japanese citizens?
-The gradual debasement of the Yen has imposed a hidden tax on citizens holding currency and bonds, reducing their purchasing power over time, especially affecting imports and energy prices.
What is the relationship between the US economy and the global financial markets?
-The US economy, with its strong currency and deep capital markets, has a significant influence on global financial markets. Its monetary policy and economic performance can lead to capital inflows or outflows, affecting other economies and market conditions worldwide.
How might a rotation in global capital flows impact different economies?
-A rotation in global capital flows could lead to a rebalancing of economic strengths, with some countries benefiting from capital inflows and others facing challenges due to outflows. This could result in shifts in growth, inflation, and investment patterns across regions.
What factors could trigger a change in the current economic imbalances?
-Factors such as changes in US monetary policy, economic performance, geopolitical events, or shifts in global demand and supply dynamics could trigger a change in the current economic imbalances and affect capital flows.
How does the speaker view Bitcoin's role in the current economic landscape?
-The speaker views Bitcoin as an alternative financial system that offers 24/7 liquidity and serves as a solution for those looking for an alternative to traditional, 'broken' money. However, it is not seen as a typical risk-off asset and can be volatile during liquidity crises.
What is the speaker's outlook on Bitcoin's future performance?
-The speaker is bullish on Bitcoin's future performance over several years, expecting it to grow as part of a structural shift towards alternative financial systems, despite short-term volatility and its current association with risk-on assets.
Outlines
📈 Bitcoin Conversations and Japanese Market Turmoil
In this segment, the hosts discuss the frequency of their conversations about Bitcoin and reflect on past shows. They delve into a sudden drop in Bitcoin's value, attributing it to Japan's economic intervention. The hosts explain how Japan's low interest rates have fueled a carry trade, leading to a massive deleveraging event as the Yen appreciated rapidly. They also touch on Japan's fiscal dominance and its reluctance to strengthen the Yen due to public debt concerns, resulting in a slow debasement of the currency that impacts imports and energy prices.
🌐 Global Financial Dynamics and Japan's Economic Strategy
This paragraph explores Japan's desire for inflation to alleviate debt and the challenges of managing a weakening currency. The hosts discuss how Japan's fiscal policy and public debt have led to a gradual debasement of the Yen, affecting the middle class and those holding Japanese bonds. They also examine the potential for social unrest due to economic pressures and the global impact of Japan's financial decisions, including the effects on import prices and the potential for a shift in global financial focus.
📉 The Impact of Japanese Monetary Policy on Global Markets
The conversation turns to the recent actions by Japan to intervene in currency markets and the ripple effects on global trading. The hosts dissect the reasons behind Japan's decision to raise interest rates and the subsequent deleveraging of the carry trade, which led to a spike in market volatility. They also discuss the broader implications of these actions, including the potential for a shift in investment strategies and the impact on short volatility traders.
🔄 Market Rebound and Economic Cycles
The hosts analyze the quick market rebound following a significant drop and discuss the potential for shorter economic cycles and market fluctuations. They consider the possibility of an economic shift as the US faces potential headwinds and the Federal Reserve may cut interest rates. The paragraph also touches on the potential benefits and drawbacks of such economic rebalancing for different stakeholders.
🌍 Global Economic Imbalances and the Potential for Change
In this segment, the discussion centers on the imbalances in the global economy, particularly focusing on the US and its trade deficit. The hosts consider the potential for a change in economic dynamics, with capital flowing out of US markets and into other regions where opportunities may be more attractive. They also explore the potential winners and losers in such a scenario, including the impact on American consumers and foreign exporters.
🏛️ Socio-Economic Tensions and Their Manifestations
The conversation explores the socio-economic tensions within nations, exemplified by the UK's social unrest. The hosts discuss the role of economic pressures, such as inflation and cost of living, in fueling social unrest. They also consider the broader implications of these tensions, including the potential for political exploitation and the challenges of addressing complex economic issues through social debates.
📊 Economic Indicators and the Signs of a Struggling US Economy
This paragraph delves into the economic indicators suggesting a potential slowdown in the US economy. The hosts discuss the implications of manufacturing weakness, job market changes, and credit spread increases. They also consider the potential for interest rate cuts and the impact of these economic signs on global financial markets.
🌐 Global Threats and Economic Challenges
The hosts examine global threats and economic challenges, including high public debt and geopolitical conflicts. They discuss the potential for economic crises and the differences between private sector debt bubbles and public debt issues. The paragraph also touches on the role of energy policy and the impact of demographic changes on the global economy.
🕊️ The Role of Bitcoin as a Solution in a Fragmented Economy
In this final segment, the conversation focuses on the role of Bitcoin as an alternative financial system amidst economic fragmentation. The hosts discuss Bitcoin's performance during liquidity crises and its potential as a long-term investment. They also consider the future of Bitcoin in the context of a shifting global economy and the importance of viewing it as a structural growth story rather than a short-term risk asset.
Mindmap
Keywords
💡Carry trade
💡Deleveraging
💡Monetary policy
💡Fiscal dominance
💡Inflation
💡Debasement
💡Volatility
💡Liquidity
💡Debt-to-GDP ratio
💡Interest rate differential
💡Global financial crisis
Highlights
The conversation marks their 37th interaction, which is a surprising and significant milestone for both parties.
A discussion on Bitcoin's volatility and its status as a percentage of all shows made, highlighting its importance in their dialogues.
An analysis of the Japanese yen's devaluation, its causes, and the impact on global markets, particularly for carry trade investors.
Explanation of Japan's fiscal dominance and its reluctance to raise interest rates due to high public debt.
The role of Japan's monetary policy in intentionally allowing inflation to devalue the yen and its effects on exports and imports.
A comparison of Japan's economic situation with other countries and the unique challenges it faces due to its fiscal policies.
The potential consequences of Japan's gradual currency devaluation on its citizens, particularly those holding yen and bonds.
Insights into the social and economic impacts of currency devaluation, drawing parallels with Egypt's experience.
A detailed account of the recent yen carry trade deleveraging event and its ripple effects across global markets.
The potential triggers for the yen's sudden strength and the implications for traders and investors.
An exploration of the broader issues affecting global finance, including interest rate differentials and currency strength.
Discussion on the possibility of a global economic rotation and its potential impact on various economies and markets.
The potential benefits and drawbacks of a rebalancing economy, particularly for American consumers and foreign exporters.
Analysis of the current economic challenges in the UK, including social unrest and the impact of inflation on everyday life.
A broader examination of societal tensions and unrest in various countries, attributing them to economic frustrations.
Reflections on the Bitcoin thesis amidst economic instability and its role as a liquid asset during crises.
Final thoughts on the future of Bitcoin, its potential growth, and the conditions under which it may thrive.
Transcripts
Lynn Hi how are you pretty good have to
happy to have another conversation yeah
do you know how many we've done in total
I actually don't know how many 30 this
will be 37 really 37 yeah 37 that's much
more than I would have guessed well we
did about 14 in one year once um that's
why yeah but I thought in Norway that
was our going to be our final what
Bitcoin did show together but yeah we
couldn't we couldn't let that one be the
last one we had to do we had to do one
more you're actually 4.4% of all the
shows we've
made and a high percentage probably a
download um but yes with the we we
needed an emergency ly Oren
broadcast lot lots of stuff going on
Lynn I went to bed the other night and
Bitcoin had dropped a bit and I was like
okay well this happens you know Calm
before the storm and I woke up and I I
have an app that gives me the price and
I just had a look and I was like 50k and
I was like when we at 60k or were we at
50 like it was such a drop I was like
have is this in pounds is my mental
model wrong and I called up Danny I like
oh no because he's obviously in
Australia he's like oh no Japan's
collapsed Japan's finished Japan's done
everything's over uh what the hell
happened uh so a lot happened uh the
biggest one is that the carry trade um
had a deleveraging which is a lot of
jargon but basically uh because Japan
has unusually low interest rates a lot
of investors both Japanese and foreign
borrow Yen uh for nearly zero interest
and then they use it to buy other assets
including things like us treasuries or
US Stocks or just Assets in general if
you can borrow from a low yielding
currency and you can invest in a higher
yielding currency especially one where
the currency itself also appreciates
compared to the Yen um then that's a
very attractive trade as long as the Yen
keeps devaluing and as long as that
interest trate differential remains
where it is the problem is that um so
the the Yen got so weak in the past
couple years and uh Japan occasionally
comes in and intervenes because unlike a
failing Emerging Market they actually
have a lot of Firepower to protect their
currency if they want to they have huge
foreign exchange reserves they have a
ton of foreign Capital that they can
pull back um and so they they kind of
most part letting the devaluation happen
but whenever it gets too quick or too
disorderly they can go in and break you
know various kind of speculators and
shorts um and in addition they they've
actually tightened their monetary policy
to it's funny it's only 0.25% interest
rates but it's it's the tightest they've
been in quite a while and the
combination of these actions uh put a
lot of appreciation on the yen in a very
short period of time which is a problem
for people that borrow the Yen if they
were overleveraged and so we got a
pretty pretty massive deleveraging event
across Global markets um as that
partially Unwound okay Lo loads to unack
there as well okay so why has the yen
currency been been in trouble and if
they've got a lot of Firepower why
haven't they used that to strengthen the
currency and turn their economy around
so a couple reasons one it's been
weakening because uh you don't get
indust rates that um are comparable to
what you get from other currencies or
compar to the money supply growth rate
or or inflation um and so basically
Japan and I I talked about the subject
of fiscal dominance which is say that
when a when a lot of debt gets piled
onto the public Ledger they uh countries
start running into an inability or they
get a lot of consequen from raising
rates um because in add you know the
normal reason why a country would raise
rates is to either make their currency
more attractive uh compared to other
currencies and therefore strengthen the
exchange rate or two to slow down the
rate of Bank lending um because that's
that's usually the dominant force of
money supply growth but there are
certain eras where fiscal spending
fiscal deficits are a much bigger Factor
than Bank lending so Japan does not have
excessive Bank lending so there's little
reason to raise rates in in response to
that it's mainly about making their
currency not terrible compared to other
currencies that that people can hold
globally and so they've they've because
they have more public debt the GDP than
any other country they're deeper into
fiscal dominance they have much more
problems raising rates and so while
almost every other country has raised
rates try to get a positive real rates
Japan has really pushed the limit on
saying we're just not going to do that
the United States did the same thing
back in the 1940s uh during World War II
as did a number of other countries it's
kind of you know repress interest rates
well below the inflation rate and just
kind of let bonds and currency inflate
away for a period of time and the reason
that Japan was willing to do it is
because ironically they want some
inflation uh from their policymaker
perspective they kind of want to burn
some of that debt away um they want to
let things run hot because they they've
historically had some of the lowest
inflation rates um they're comfortable
with that if anything it makes their
exports more competitive competitive now
and their main constraint um is it it
basically makes their energy Imports or
their other commodity Imports more
expensive uh that's kind of the the
biggest thing that they have to kind of
are worried about getting disordered
um and so until it reached a certain
point they weren't really concerned
about it they kind of just let it play
out they didn't want to use their
valuable reserves uh when they're kind
of already getting what policy makers
want um and they only would use those
reserves when it got to a fairly extreme
point and there actually is starting to
be some you know anger uh among people
about you know the rate of their
currency to basement their their
inability you know their their reduction
in in foreign purchasing power and all
that so it kind of finally got to a
level where they're not really alarmed
per se um but they they be they did
begin to increasingly take actions to
slow down or or pivot that that loss why
not try and clear some of the
debt because it's really hard to it's on
the public ledger so I mean they they
can't really I mean they don't really
want to default on it uh because that
destroys your your Global your you know
your ability to borrow in the future for
a long period of time and so instead
they destroy it through de basement um
basically anyone holding for a long
periods of time Japanese government
bonds your ability to buy almost
anything else gradually deteriorates so
they're they're they're faulting on
people in very slow motion which is
generally easier to do than defaulting
on people nominally because then you
actually have to admit mistakes you get
all the disruptions you get all the
problems so instead you can have a very
high credit rating and just keep slowly
rug pulling people uh as long as you can
so and who's getting harmed is it is it
the is it the middle
class so Japan actually has less wealth
concentration than most other developed
countries um so in in their case it's
basically anyone holding currency anyone
holding bonds uh many of them uh invest
in foreign assets for that reason um but
yeah basically anyone holding um
Japanese currency and bonds basically
has this gradual tax imposed on them uh
fairly invisible visibly uh kind of just
his very mild slow rug pulling right and
has there been any response because
Japanese are quite a civil Nation quite
calm people I I can't even think of
times where I've seen of any form of
kind of like protests in Japan yeah they
have one of the the lowest kind of
measures of of political
polarization um you know compared to
many other places um they I actually did
a post on social media a while back uh
kind of when the Yen was depreciating at
the fastest rate and I was like Hey
Japanese investors here Japanese people
here uh what's you know how many people
there are talking about it what's the
what's the chatter like some people said
hardly anybody's talking about it other
people said no a lot of people are
starting to notice so obviously depends
on people's Social Circles uh you know
how how in a finance they are for
example uh people certainly notice it uh
in terms of imports um and I I've seen
this on Egypt in a faster scale like
I'll go when when I'm there I'll ask
people like what so what do you think of
this the basement that's happening it's
and that that's happening much faster
than Japan and where people notice it is
the Imports so for example in Egypt um
people will be like literally car prices
tripled in like three years um and that
you know it's not like so like certain
things like like you know domestic food
didn't really go up or like the rate to
hire another Egyptian to do something
didn't really go up too much but when
you're buying a computer or a car or
even like wood like foreign made wood
for example these things would go up so
dramatically and that's where the pain
points are um so I my understanding is
it was similar in Japan just at a slower
rate because it's it's a wealthier
society inflation was still fairly low
ironically um despite all that
debasement and really the main parts
where it can show up are in Yen
denominated Energy prices commodity
prices which can then kind of trickle
into other things right okay and and I
guess even though they've got a fairly
solid domestic car market themselves the
raw materials could be imported so it
still impact it yeah I mean it is a
those Imports of raw materials are a
fairly small percentage of GDP um and so
and they're wealthy Society so they can
generally absorb that and it's less of a
crisis than when an Emerging Market gets
like you know higher energy prices in
local currency terms um but yeah if it
goes on long enough and get significant
enough that's when you do get more
people kind of saying this is this is a
problem and then you're more likely to
get the government saying okay now the
risk wward is more in our favor to to
try to slow this down make sure we don't
have energy cost get too high in Yen
terms that kind of thing and what
triggered this d
leveraging a combination one is that in
the past uh number of months Japan has
been more directly intervening uh like
FX like sell you know selling reserves
to buy back Yen so the there'll be these
big bursts of like money uh you know
tens of billions of dollars being used
equivalent to um support the Yen uh and
this one seems to be triggered by the
fact that they increased their interest
rates from 0.1% to 0.25% % which is
still very low but uh it's the highest
rate in a decade and a half um and when
a country has um a structural current
account Surplus and then they're raising
rates they can actually be pretty
impactful uh given how leverag that
carry trade was how big it was um so
that that seems to have been the
proximate Catalyst and then there's kind
of things that feed on themselves so for
example if various entities that have
borrowed too much yen had to suddenly
deleverage they're selling some assets
uh which is then hurting other players
that might have to then sell those
assets as well and it kind of feeds on
itself in addition there was a separate
kind of mini bubble which was that a lot
of Traders globally were short
volatility uh basically they were
structurally selling options kind of
like selling Market insurance against
volatility events uh and so a lot of
them got caught off sides by the carry
trade partially uh deleveraging and so
you get a carry trade d leverage which
then hurt a lot of these you know short
volatility entities and so we got the
third biggest volatility spike in US
history uh compared to a fairly mild
event I mean the other two volatility
spikes were 2008 and 2020 so we had a
volatility Spike that least briefly got
up to roughly that level uh because
there was these kind of imbalances
everybody on one side of the trade right
but a but a
0.1% to
0.25% doesn't seem like a particularly
big rise so let me see if I've learned
anything over the years with you is it
is it a case of even though it seems
such a small rise knowing the levels of
debt that Japan has that brings a huge
amount of systemic risk into the
Japanese Market because of the the
interest pay the difference in interest
payments that will be and how that is
funded so that that is part of it that
basically that that small numbers matter
when we're talking 250% Deb to GDP um in
addition there's psychological Trend
changes like you know the the straw that
broke the camels back kind of which is
to say that this move in a vacuum might
not matter but when you when you saw in
recent months that Japan is increasing
willing to intervene uh in its currency
Market uh and is now raising rates uh it
kind of shows that maybe they're not
just willing to yet let the Yen devalue
as it as it was when it was devaluing
for a while people were like aren't they
going to do anything and the answer
keping no not really no they're just
going to leave everything how it is um
but it kind of showed that at these
levels it has gotten you you know some
of a concern for them and so if if
you've been years you know borrowing yen
to buy other assets and you're quite
leverage and you start to see increasing
signs that they're going to defend these
levels to some extent uh a lot of people
at once can realize I want to get out of
this trade or I want to minimize my
exposure to this trade I I want to
deleverage myself relative this trade
and like then it feeds on itself it
sounds like an easy trade but the the
the risk is whether you do get caught
short with it
yeah it's kind of it short volatility
trades as well as carry trades it's kind
of one of those things they work until
they don't yeah which is to say it you
know it makes sense to borrow zero
yielding Yen and buy 5% yielding dollars
right uh and it's like why wouldn't the
Yen keep devaluing relative to the
dollar um but eventually it reaches such
an equilibrium point where Japanese
goods are absurdly cheap on the global
market um so it can really benefit their
their current account and then you also
get more you know willingness by
authorities to intervene and so you what
was once a very easy no-brainer trade
starts to get risky and if you're
leveraged you know a 5% currency move
can wipe out a year of profits for
example um so fairly small differences
can really um matter all at once and and
are we aware of anyone who got wiped out
was is there any like public disclosures
of uh people who are in a difficult
position with us I don't think we've
really seen the you know the proverbial
bodies float to the surface yet um Bank
Japanese Banks had some of the biggest
um stock price impacts on the day um but
it's it's really a pretty broadly
diffused trade there's just a number of
entities that had to deleverage that
that you know would have taken pretty
significant p&l hits on that day we've
you know we've already seen a pretty
sharp rebound yeah um uh but you know
because a lot of that is now deleveraged
um but there are kind of broader issues
associated with it
all right so let's do both so so it was
one it was like the I can't remember the
actual stat but it was the biggest drop
in um uh in the in the nick since what
Co or something I think 1987 was 87 okay
so it was worse than that so worse than
2008 okay uh but it's bounced back
pretty quickly so I've got a couple of
things on that firstly why did it B
bounce back so quickly but secondly
we've talked a lot about this in the
past where uh economy start to fail that
you would expect to see a more kind of
shorter cycles and this kind of uh yo
yooing between uh of of rates is this is
this what we're starting to see are we
seeing something breaking in real
time well I would phrase a little bit
different I think a lot of people I mean
when the Yen was weakening people were
saying oh it's the end of Japan all all
the stuff's kind of coming back to hit
them now and then ironically when we had
this period of Yen strengthening and the
Nik down people like oh it's the end of
Japan all this stff coming back to hit
them it's like well what is it is it
when it weakens is it bad for them or
when it strengthens is it bad for them
like what exactly are we calling you
know the crisis here um I I view this as
this individual instance as less big of
a deal than many Market participants
made it out to be which is to say that
um this was a fairly mechanical uh shift
um there was a deleveraging that
happened there's probably more
deleveraging ahead but but less abrupt
because now the now the pivot is in
place now the trend change is more
obvious uh kind of like the the fear of
God has been put back into anyone who
was running a leverage book like the
reminded yes there's risk uh yes you
know it kind of like changes psychology
um in the market um and I think the I I
I think Japan still has a big Runway
ahead and all the different levers they
can pull um their stocks are not
particularly expensive right so it's not
like uh you're you know in the late 80s
when they got their famous uh Japanese
bubble um the valuations were Silly back
then uh whereas now the stock market is
fairly reasonably valued compared to
their cash flows and things like that so
it's not surprising that you know when
there's a 12% drop there's a number of
people that said wait a second most that
was almost entirely mechanical um you
know so I'll I'll go and buy names that
are that are inexpensive and oversold um
you know uh there unlevered entities
could come in and take advantage of the
fact that levered entities basically had
to sell um kind of like if you see a
Bitcoin get a liquidation uh if you're
unlevered you have some cash sitting
around some people come in and buy it so
we've seen some of a rebound in Bitcoin
as well um and so I think that's normal
I think the the bigger story is that
aside from just the carry trade the way
that Global Finance works is that most
currencies trade against each other
based on interest rate differentials and
current account flows so if you're
running a structural trade balance and
your interest rate is not attractive
your currency is likely to weaken until
you kind of find more of an equilibrium
the dollar has this extra monetary
premium on top of it as the most liquid
most attractive Curren in the world the
deepest Capital markets um there's a lot
of entities around the world that hold
dollar denominate assets and so we get
like a structural premium to our
currency uh which makes us really good
at importing we have tons of importing
power but it makes our exports less
competitive and so to meet that kind of
global demand for dollars we're kind of
forced into running these structural
trade deficits uh and they accumulate
over time more and more dollars flows
out into the world they take those
dollars and they buy us assets and so
everybody's kind of crammed into our
stock market and our bond market and our
private Equity market and our real
estate market everyone's kind of crammed
in but especially equities um and so
it's like a a really kind of a an engine
that just keeps spinning um and uh
there's a decent chance that can start
to reverse in the years ahead that as we
as our economy slows down a little bit
as the the weak exports weigh in our GDP
as um there's Rises
political concerns around that trade
deficit and the broader concept of
restoring and kind of actions we might
take in terms of currency or in terms of
trade to uh try to reduce that you could
get a partial uh you know kind of flow
out of that Capital um which would be
benefit some countries uh but would
would would you know harm others um and
I think that that we're probably on a
setup like that the last time we
actually had a setup like that was after
the dot bubble when the US cut indry
rates uh you know in the late 90s and
early 2000s the dollar was very strong
uh and there was the Asian financial
crisis because they all had dollar
dominant debts uh you a lot of them blew
up but when our economy softened and we
cut indust rates uh it kind of gave the
especially the developing world uh more
Breathing Room on their liabilities and
so from say 2003 to 2007 there's an
Emerging Market boom that's where we
actually got the term bricks from every
was like that was kind of hot trade that
was like the mag seven or like that was
the that was the main trade of the of
the day was these booming Emerging
Markets um and maybe on a smaller scale
we could get something like that again
which is that the US finally runs into
some economic headwinds trims interest
rates this some of this Capital that is
just so on one side of the boat so
stuffed into US markets could start to
come out and go to certain pockets of
the globe where things are cheaper where
their dollar Diamond debts are now like
under control um and and you can start
like a a virtuous flywheel into those
types of of areas would that not be net
beneficial though yeah rebalancing
because at some point it's you know if
you go back to the market cycle I mean I
know only the basics from Ray Dary has
Market Cycles but you have to rebalance
at times yeah I think basically it's
it's it's more dangerous when you're in
a very imbalanced condition uh and so
then the question becomes timing you
know there have been a lot of people
calling for rotation and a mean
reversion of that trade um the last time
there was a good window for it was 2019
that was the mid 2019 the FED started
cutting rates so was before Co yeah uh
the US economy is already softening the
Federal Reserve cut interest rates by
late 2019 because the repo rate spiked
they actually went back to balance sheet
increases as well um and so and you
started to get this kind of mini you
know the dollar weakened a little bit
you started to get a little bit of a
mini rotation into some foreign markets
uh but then covid and lockdowns and
everything so that rotation never really
materialized um a lot of countries were
hit harder than that especially
developing ones um because of all the
the you know the effects of that whole
situation um and so this is probably the
first window since
2019 where a serious um possibility of
rotation is at hand and it's hard
because you don't want to be you know
early like in you know my base case in
2019 was okay look we're probably going
to get a rotation then of course you
know the pandemic happens you got to
change all your outlooks um so there are
certainly things that could derail that
view um I do think a rotation would be
healthy should it occur um generally
speaking when you get that kind of
rotation so in in the prior times where
we had that kind of rotation in addition
to being good for those you know select
foreign equities it also tends to be
good for Commodities gold and presumably
Bitcoin um Bitcoin was not around in
Prior rotations but presumably it'd be
good for them because you generally have
a a weakening dollar um and and kind of
just you know Capital more broadly
dispersed and a little bit of a boom
who's it bad for though it can well it
can be bad for American consumers right
the the the ones that have kind of been
on the winning side of a lot of things
um they you know you can kind of get
more inflation in the US you can get
more higher energy prices in the US um
it it's kind of like a a bandaid being
taken off because it does increase our
export competitiveness to some degree um
so there are kind of winners and losers
from that but basically if you're a
foreign exporter it might not be amazing
and if you're an American Consumer it
might not be amazing but that's it's
it's it's kind of so imbalance right now
in favor of foreign exporters uh and in
favor of American consumers and it kind
of reaches like a a Breaking Point
eventually and those groups generally
will not not love that type of period um
whereas anyone who's a consumer in um
all these places with Beaker currency uh
they generally do better uh and American
exporters could could you know maybe not
do amazing because we we've got
structural issues there um but they
could get breathing room for example all
us being equal it's it's some tail ones
in their favor an American uh consumers
already been hit pretty hard the last
couple of years with high inflation I've
seen it myself traveling to the US like
just I'm just amazed at the cost of
everything it's it's kind of mindblowing
even going for a Starbucks you just
cannot like me and Daniel were going we
get a couple of coffees and a couple of
sandwiches and it's like $40 you're like
what the what have I spent here
how's that happened um that's true but
it's on a relative basis American
consumers have generally done better
than other countries um especially when
looking at Global purchasing power so
for example our our ability to buy
energy has generally been better than
say a Japanese person's ability to buy
energy um or yeah or American's ability
to travel abroad you know it's easier
for us to go to Japan or go to Europe
than Europeans or Japanese come here let
alone Emerging Markets um and so
especially on the on the upper half or
upper third of American consumers that's
where a lot of the strength has been
focused and they could take you know a
fairly big hit that if you have a cycle
of capital outflows um and again I don't
think it's going to happen overnight but
if you do get one of these more
sustained flows like like we did in the
early 2000s um a lot of those kind of
upper middle class American consumers
that have been able to fly everywhere
buy whatever they want energy is cheapap
um some of them run into issues and
unfortunately it will also impact some
of the lower income consumers that have
already not been in great shape um and
so that's the type of of where there are
winners and losers now some of those
lower income consumers could be off
offset by the fact that you know there's
more exporting jobs for example maybe
more manufacturing things like that so
more opportunities for income but also
damaging to their consumption um but at
the end of the day a lot of this isn't
really intentional it's just kind of
like imbalances in the system some
potenti you're reverting back when they
can no longer be sustained like when the
rub rubber band stretch really far and
you're trying to hold it and your
muscles are getting tense eventually it
just kind of starts to kind of let go um
and that that that we could see
something like that ahead I'm kind of
monitoring for signs that as the US Cuts
interest rates in face of a at least
somewhat softening economy um I'm going
to pay attention to really how that
affects some of these dollar indebted
countries that have otherwise held up
pretty well but that kind of under the
boot of of a strong dollar so so what
are those uh signs of the struggling
economy because there has been talk of
recessionary pressures it feels like for
a for quite some time now and there have
been calls for uh the FED to cut
interest rates um people have expecting
a CH like I I think I saw this week the
calls for like 50 basis points
reductions in interest rates what what
are the signals that exist right now
well see the market is now pricing in
probably a 50 basis point cut in the
next fed meeting um and that would be a
significant cut right that would be yeah
I mean it wouldn't be that significant
considering that they're over 5% so it's
it's less than a 10% reduction in
interest rates um so it wouldn't be that
unusual but it it is it would be
interesting to go from zero to 50 basis
points that quickly um uh and so the
signs generally are you know the us
because we're running very strong like
very loose fiscal policy and really
really tight monetary policy we've had
kind of like two different types of
economies in the US if you're on the
right side of deficits you've been doing
pretty well meaning for example if
you're catering to upper middle class
Travelers the travel industry has been
doing great uh whereas the commercial
real estate markets obviously been
terrible and the manufacturing sector
has been in basically a mild recession
for like a year and a half um and the
labor markets have been fairly strong
the consumer uh especially the upper
half of consumers has been fairly strong
uh but we saw in in um the last week was
manufacturing weakened more than most
economists thought um and um payrolls
like jobs uh weakened more than than
most of them thought um and so you know
we started to get a that that probably
contributed to some extent to the Yen
care trade and winding as well because
in addition to Japan trying to tighten
their own currency we also got weakness
in US markets more rate Cuts priced in
and therefore that that contributed to a
weaker dollar there as well so you have
kind of a one-two punch um in addition
partially because of this you know Carri
trade unwind we got a uptick in credit
spreads which is basically saying that
the the the indust rate gap between uh
junk credit and like say treasuries
widened um it's still fairly low but it
it it's now moving in an upward
Direction uh which is generally signs of
of basically financing stress and some
of the more sensitive parts of the
economy um so there's number of things
that are kind of pointing to at least
gradual economic deterioration in the US
which generally leads to interest rate
cuts and just kind of more accommodated
policy um which you know it might not
might not even be that helpful uh for a
lot of us businesses but then ironically
could as I mentioned before boost some
of those emerging markets that have
dollar dominant debts so it feels like
it's almost like a it's like a relay and
you know that the Baton is just being
handed on to other markets in you know
in that the US has a weakening economy
you know reduce the interest rates uh
stimulate uh domestic businesses hand
the strength back over to uh other
economies and when to the US strengthens
like the reverse will happen is this
just like a global relay just pass the
Baton on that is how it works it's kind
of this control system and it kind of
floats around and so for example in the
you know the 80s it was really kind of
Japan was kind of you know pulling
everyone along with their massive like
industrial base and you know their asset
price is doing really well and and just
kind of you know kind of dominating all
the stuff they're they're doing um in
the 90s the Baton really passed to the
US um uh and uh then you know when we
kind of softened in the 2000s then you
got the the bricks were really kind of
running the the the Baton and then after
the global financial crisis uh kind of
the bricks you know they did less of it
it it was really kind of China focused
for a while China was kind of the
world's growth engine
uh them kind of pulling everyone along
um in this upcoming one uh China's
probably not going to play as big a role
as they did uh in the 2010s they they
might have um their consumer might might
pull things a little bit but they B you
know their demographics and their debts
are more of an issue now it could be the
indias of the world it could be Latin
America it could be parts of Africa kind
of a more dispersed um but basically
some of these economies that have decent
demographics that are reasonably
well-governed um that are just kind of
held down by the fact that they borrowed
in dollars and then those dollars got
stronger um this is a pretty consistent
pattern that happens every 10 15 years
or so you get a little bit of a rotation
is there any significant uh Global
threats because the reason I ask is it
feels like everyone's kind of a little
bit
jittery and uh like Japan said boo and
the rest of the world freaked out um are
there other big structural issues and
could we have an you know something
similar to 2008 but much worse
well I think a lot of countries are in a
similar position as Japan but just less
thorough right so I think us death of
GDP is a problem European de of GDP is a
problem and while we are stronger in
some areas than Japan we're weaker in
other areas so Japan like I mentioned
before they're a huge creditor Nation
they ran structural trade de trade
surpluses for years that's how they
build up this big war chest of all these
foreign assets that they own they
they're very high public debt but they
also have very tremendous amounts of
foreign assets um and uh the United
States is actually in the opposite
position which is that we ran structural
trade deficits so we're running twin
deficits um and so even though we have
better demographics than Japan we have
more energy security than Japan um we
have um you know like uh you know less
Public public uh debt of GDP than Japan
we also have this this trade deficit
issue with more po political
polarization than Japan um you know we
don't know what's going to happen with
the upcoming elections uh and then even
if however they go we don't know who's
going to accept it or not accept it we
have just kind of like a lot of mistrust
a lot of lost faith in institutions
across the board um and so I think it's
right for people to be jittery in
addition to of course this really
ongoing war in Eastern Europe and
ongoing conflict in the Middle East with
increasing instances of escalation
especially in the Middle East uh in
recent times um and of course anything
that that damages uh the flow of energy
globally uh can be a big problem uh for
a lot of energy importers um and so I
it's there are heightened risks I would
say um one of the you know basically as
we get to kind of late 2025 that the
Federal Reserve might have to go back to
balance sheet increases for treasuries
uh which could be a problem if you still
have above Target inflation um so I I
view it less like 2008 because that was
a private sector debt bubble um so
private sector debt bubbles tend to be
big deflationary events um whereas I
view now most of most of the problems
are on the public ledger so very high
public debts uh which which when they
have issues tend to be somewhat more
stagflationary um when they unfold uh
now obviously there's different things
that could happen to adjust that so I
try to I monitor things as we get it but
I do think that um it's not quite the
same as 2020 or or 2008 are you
following what's been happening in the
UK to to us a moderate degree yes I'm
sure not as close as as you have but yes
yes I was discussing it with my son this
week um and you know he was asking
asking why it's happened you know what's
going on and like on the face of it it
feels uh like
polarization uh certainly between
there's a a right-wing element to it but
there's also a youth element to it so
you're seeing clashes between uh groups
of what are considered farri protesters
and uh mus Muslim communities but also
when you see the footage you're actually
just seeing a lot of young people what
you would we would call yobs uh young
people with hoods up and their faces
covered lobbing bricks and looting
stores and and so I was trying to trying
to explain it to my son I said look
there's lots of things going on here and
there's lots of ways you can look look
at it there's a lot of nuance to it um
we have we had a sadly in Southport we
had a stabbing where uh a young man went
into a community group and stabed three
young girls like terrible event and it
was very quickly jumped on with
misinformation blaming it on a Muslim
person that's created this kind of
conflict and tension but when you layer
in there's lots of young people also
going out and know looting stores and
lobing bricks and fighting the police
and seem to be enjoying it I I said to
him part of this I think is an overall
tension uh that exists within the nation
it feels like it's more workingclass
communities but you know I know for
example with the businesses I have here
I've seen the inflationary pressures we
have less people spending money and when
you ask people why they say well I you
know my rent's gone up or my mortgage
has gone up and I can't afford it and so
I'm just I've got this kind of like
underlying feeling that that really
what's going on is that it's like a
there is a match which is like like
striking uh the Tinder and it's like
creating uh these these in these moments
where it's you know where people are are
protesting or fighting but I feel like
it's it's tension that's been built in
them
economically yeah that's I mean the one
of the quintessential examples I turned
to is some years ago in in Chile they
had massive protests they were uh the
trigger was basically like train prices
went up by like a nickel that but of
course yeah so you were okay you so it
wasn't the nickel you know it wasn't the
nickel that did it the nickel was this
Catalyst for accumulated um frustrations
that people had um and you know that's I
think what we're seeing now in some
developed countries we're seeing in
United States we're seeing it in the UK
we're seeing it in in parts of
Continental Europe um and basically you
know there was this there was this chart
I saw it was Michael Green that shared
it basically it's like uh it was America
but it was like real disposable income
uh after like you know shelter food
transportation and all this and it shows
that it ever since about you know the
past 10 years or so it's been going kind
of sideways to down which means that
most people's everyday experience of and
it's like the median person so most
people's everyday experience of of
affordability and quality of life has
not has went from structurally improving
to not really doing great uh in addition
in United States it's kind of the you
know the first period of time where life
expect is actually going down uh to some
extent which is a really bad sign um UK
is in a similar position in the US where
you have trade deficits um so you've had
a little bit of hollowing out of your
industrial base uh which you know you
you you've you've kind of observed that
as well is just kind of like industrial
towns on harder time working class um so
it's a similar position as as the United
States and so people increasingly sense
that something's wrong they're not
really sure what it is like you know
they're not really sure what mechanisms
are there um and then you get more
distrust in institutions uh so both the
US and the UK and elsewhere people that
say you know I think I think
government's doing a good job or I think
the media is doing Fair reporting or I
trust medical authorities or I trust you
know whatever the case may be across the
board that trust is generally declining
to to fairly very low levels more
polarization more frustration build up
economic frustration and then you have
like you know very real policies that
that do you know people do have say
rightly criticism of like how you know
immigration's good but how if you
immigrate a ton of people all at once
and there's a lack of
assimilation people can I think right
get concerned about that to some extent
and of course it can be taken out in in
harmful ways but then people start
debating what's going on socially while
all these other economic things are
happening and and then people can
unfortunately take it out in in violence
and hate when uh it's it's some of these
problems are very hard to solve and I
tie a lot of it back to Broken money not
everything yeah um but if you kind of
catalog over time over decades as a
species we consume more energy per
capita so that's good uh our technology
is way better than it was years ago uh
some of it's actually got harmful
effects but either way we at least have
better technology than we once did um
but our money's like worse than it was a
a while ago especially if you're outside
of these major countries but in general
money is bad it's like that one area
where Technology's not really made it
better um and and it causes all these
imbalances and all these all these you
know one one part of economy gets
hollowed out and this other thing has
like this unfair advantage and then it
kind of rotates and people the these big
forces happen around them and they don't
really know how to frame it how to
contextualize it it's it's much harder
to have debates over fiscal policy than
it is to have over social war stuff so
when the fiscal policy or just the
overall economic situation when that
gets Messier fewer people are able to
articulate it uh and so they articulated
in more visible ways more social ways
that's where a lot of that anger gets um
expressed a lot of the time
well look I mean we said at the start
we've done 37 interviews now on this and
I've essentially been fortunate to have
you almost like a onetoone mentor for
the last three four years where I get to
ask you every question but it's a lot to
take in it's a lot to understand it's
complicated I mean I'm trying to explain
it to my son thinking I wish ly was here
she' do a better job than me but it's a
complicated thing to try and understand
I was trying to explain it from a
personal perspective in that as I'm a
taxpayer but also a business owner and I
my my corporate taxes are going up my
personal taxes are going up it's getting
harder to get rid of Staff but I have to
pay my staff more yet we've got less
money coming in there's economic
pressures in every direction essentially
less money coming in more money going
out very hard to streamline your
business and and trying to navigate this
this path is getting kind of Tighter and
Tighter you know when you see like in a
film there's walls that close in and
someone's trying to run through it
that's what it's starting to feel like
and try trying to explain that or
articulate that to people is is very
difficult and I think like you say the
social issues are easier to argue yet
we're sat there with political parties
who are incentivized to tell us what the
problem is and what a solution is and it
seems to be almost that there's now an
opportunity for yeah well not
opportunity that PO certain politicians
are using this as a way of driving votes
and I just feel like this doesn't have a
good historical
precedent historically not historically
you tend to overshoot right so the
pendulum goes to one side people want to
go break it up and then it swings to the
other side and uh people can misdiagnose
the problem blame the wrong groups and
and it can get unfortunately pretty dark
um to say the least um yeah you know
it's it's when when the pie is growing
people are way more accommodative you
know they might be frustrated about this
or frustrated about that but the pie is
growing things are getting better
they're optimistic that their kids going
to have a better life than they had um
people are more tolerant when that pie
stops growing uh or it starts shrinking
and we get a more of a zero sum game
that's when people start finding someone
else to blame you know wanting to take
away from someone else and give to them
because it's kind of the only way that
that that they get a that they come out
better because the pie overall is not
growing and again there's a lot of you
know it's broken money I also think it's
broken energy policy right that um you
know a number of countries have not
managed their energy well uh they get
they get into this like mindset that
like the only thing matters is say
carbon emissions right they get they try
to quantify everything by one number uh
like you know most people if you ask do
you want to keep the uh environment
healthy around you you want to have
clean air and fresh water and of course
um but then so many politicians put into
one number and then they'll base all
this energy policy around one number at
the end of the day if people you know if
their energy costs are going up if if
they you know their real standard of
living is is running into frictions
that's when they're willing to take it
out not not just on you maybe they are
protesting around energy price in some
cases but they're also then looking
around and saying well who's who's
eating my lunch you know and they might
blame someone who's not eating their
lunch but someone's got to eating the
lunch and so you start to get more like
you know issues and of course then but
then you can tie it also back to to see
real you know questions around how
should we structure immigration policy
or what you know there there's you know
legitimate concerns there I think but it
it can get taken out in very destructive
ways when a lot of things happen at once
I saw a really good meme today on
Twitter I don't know if you've seen it
it's a it's a table there's a politician
in the middle there's a there's a white
guy on the right and a Muslim on the
left and the muslim's got a plate with a
cookie and the white guys got a plate
with no cookies and the politician's got
a plate full of cookies and he's saying
he's taking your
cookie yeah there's a there's actually I
saw a video was like a dog was eating
from like a food and another another dog
came over and attacked it and they're
like then barking and yapping at each
other and fighting and this third dog
just kind of came over and ate all the
food there you go uh and and it's
literally like you know there's always
it's misdirection that's how a lot of
politics Works um is very kind of
misdirection oriented um like it's their
fault you know go go go after them and
you know it's it's it's you know
politicians rarely will ever take
responsibility for things they did um
and some of these things things
politicians might not even understand
like some of these Financial Plumbing
stuff you know it's like most people
don't want to be a Chief Financial
Officer on their side in addition
whatever other their main you know area
of focus is and so that's that's kind of
why it's easier to blame the social
issues than some of these more economic
issues yeah but that comes I mean when I
was out in Argentina I don't know if
I've told you this I went out for dinner
on the first night I was with my friend
Yan and his friends and they all said
everybody in Argentina has two jobs they
have their job and 30% of their time
they're a financial director they're
having to manage their money and by the
way sorry just go back so is that the
second book bro broken
energy you know actually Eric Townson of
the macro voices podcast Su just I write
that book I mean probably not but we'll
see um it would be an interesting book I
think so is broken money it's broken
energy policy but it's broken media but
it's broken media just Downstream of
broken money it's broken politics it's
like it's all it's all been
broken yeah I mean a lot I think so
there there's that book fourth herting
which you're familiar with um the the
reason I think that there's an element
of truth to it is that um institutions
can develop entropy which is to say that
they're built in a certain era it kind
of makes sense in that era and then over
time they are Antiquated the world has
moved on Technology's moved on things
have moved on uh their own internal
things just get kind of like corrupted
um companies or organizations or
governments rarely disrupt themselves
right so if you're like a paper maker uh
you're probably not going to invent
email right um you know you're going to
you're going to want to people to use
all your paper all the time right so
companies rarely they it's usually
startups that disrupt incumbent players
it's very rare for that not to be the
case um and that same is true for
governments the same is true for for
supernational uh organizations the same
is true for um old school media there's
rarely enough like self-reflection
intentional self disruption and staying
vibrant and and changing so normally
what happens is you kind of replace you
get to a point where it's so out of
touch that those other institutions
either get taken down or just become
irrelevant and new institutions get
built or new and an institution can be
multiple things it could be a way of
thinking you know it could be it could
be an actual institution but it also
could be a way of thinking it could be a
protocol uh there's all these things
that you can kind of Orient around to
say these are kind of pillars of society
that are now consed considered more
structurally relevant than things that
were you know put into place a century
ago president
AI well I hope not there's that there's
that actually there's that old um IBM
quote never let a machine make a
decision because a machine cannot be
held
responsible that's yeah we're struggling
to hold some of these politicians
responsible okay um so what does this do
to your Bitcoin thesis because um at a
time where things are breaking uh and by
the way I've had two emails today alone
they basically asking you this question
is likew what about the Bitcoin thesis
because when things break uh Bitcoin
dumps the most um Danny told me he had
he read a very good I can't remember who
tweeted it he said he had very good read
a very good thesis on this in that
Bitcoin being the most Global liquid
Market um will always respond best to
what's going on uh in the global economy
but either way it's the the people
who've written to me have said well
every time something breaks in the
economy it's Bitcoin that dumps I
thought Bitcoin was meant to be the uh
the
Lifeboat yeah so one is yeah Bitcoin
provides 247 liquidity so on a Sunday
night in America time while you know
Japanese uh Monday morning while they're
blowing up um you know the the safety
option is that if you hold Bitcoin you
have 247 liquidity if you need it or
want it which you don't have with almost
any other asset uh the downside is in
terms of price it's not great for those
that are still holding it is good for
those that like to buy dips um I I
generally don't view Bitcoin as being a
riskof asset in the way that we that
that portfolio people would think about
it meaning that price normally goes up
during crisis um because it's still not
well understood uh it's still um you
know it's just there's sometimes there's
leverage in the space um one thing I
point out is that there's there's like
pr- liquidity crises and then there's um
anti- liquidity crises most crises are
anti- liquidity which is to say that you
know bitcoin's biggest correlation from
what I found is liquidity um and when a
crisis breaks out normally it's not good
for liquidity and so Bitcoin is G be one
of the first things sold especially
because it's like that phrase you sell
what you have to not what you want to
especially if we're talking about a 247
Market on a weekend um and just a
volatile asset as long you know as long
as Bitcoin has upward volatility which
you want it to have because we want it
to get much larger uh that's going to
come with of downside volatility and
then as long as it has both upside and
downside volatility in in large amounts
um people are going to often treat it
like a risk asset until it kind of
reaches some much larger more
distributed steady state or at least you
know like kind of gold gold like in size
um an example of a of a PR liquidity
crisis was ironically the 2023 American
Regional Bank crisis so Bitcoin
performed poorly in say late February
and early March because that's where
actually liquidity was worsening uh
under the surface um but when the crisis
actually hit Bitcoin did well uh and
that's because the market immediately
realized uh okay the fed and treasury
going to provide liquidity uh things
broke uh and they kind of knew that
that's something they had to respond to
and they did and so Bitcoin did quite
well after you know some some hours it
actually did quite well pretty quickly
because that was a pro- liquidity crisis
um things like the covid crash or things
like um you know this dislocation we
just saw these are generally anti-
liquidity events um so we should not
expect Bitcoin to do particularly well
during them it still serves its function
of giving people 247 liquidity should
they need it or want it um but I think
it's more like I think Parker Lewis has
said this it's not a hedge it's a
solution in the sense that this is an
alternative system that's being built
and so I I wouldn't think of Bitcoin
anything less than like fouryear
increments um because it's a structural
as long as a thesis is correct it's a
structural growth story um but one that
is likely to be sold during most um you
know negative liquidity crises so you're
you're buying for problems four years
down the line yeah yeah and you're
buying you're buying a solution for like
if money's broken you buy the least
broken money buy the good money um you
and you try to build you know systems
like when people ask me what do you
think about this recent bitcoin price
drop and like my answer is like I hold
key and geographically separated areas I
invest in Venture you know with EOD
death capital for you know like decade
long like intended
timelines um it's that that's that's the
the kind of the time frame I'm thinking
of when it comes to bitcoin and I I
generally warn that in any sort of
intermediate term sense Bitcoin is
highly coed with liquidity does not do
well usually during bad liquidity
environments um if we do get this more
gradual rotation like if for example
if the US trims interest rates in
response to weakening us activity and we
start to get some life out of Emerging
Markets because their dollar Domin debts
are you know eased a little bit and you
start to get that kind of flywheel of oh
look you know investors say they're
doing decent I can take some money out
of overvalued US stocks and put it into
country XYZ then that ironically
strengthens their currency even more and
weakens the dollar even more which is
good for their dollar diin debts and so
you get this kind of self reinforcing
flywheel that would be probably quite
good environment for Bitcoin you know
that that'd be an environment where
foreign equities are doing decent Gold's
probably doing decent bitcoin's probably
doing great um that's where that would
would probably be paying off pretty well
you know in this current period you know
is is the last few years as good as
Bitcoin was in dollar terms it was even
better in Yen terms you know if you're a
Japanese person holding Bitcoin you're
like a a king or a queen relative to you
know what most people around you are
experiencing if we get that other type
of rotation you could have a similar
thing um so I'm I'm I'm quite bullish on
bitcoin with I guess the shortest the
shortest time frame I give is maybe two
years I'm saying okay I'm bullish on
bitcoin with a two-year view um but more
realistically I look out several years
and say well I think Global Equity is
goingon to be higher years from now I
think Bitcoin is going to be higher um
and but I don't expect it to be a riskof
play in the price sense uh unless a
particular crisis happens to be one of
the Fairly uncommon Pro liquidity crises
h all righty well listen look that's it
37 shows we've done it feels like a good
time I want to end on bitcoin I did have
other questions but on end Bitcoin 37
shows Lyn it's quite the catalog that's
quite a lot I would have guessed 20 I
think so I undershot that quite a bit I
just checked the website um there's a
there's a there's a rumor we're
launching a new show so we may get you
on that at some point but I've heard the
I've heard the rumor we we'll have to
get you over to the UK for that because
I'm not traveling anymore uh Lynn it's
been an absolute pleasure over these
last few years making new shows with you
but we will friend the fact that I
didn't know how many it was shows how
much I liked it because it shows it
never got old there you go well look a
lot of people got a lot of value from it
I you know what I'll do I'll go and get
the total downloads for you at some
point it would
be I would guess millions and millions
so we will get those numbers for you but
um we will stay friends I will see you
in various places like Norway and but
I'm going to be traveling less but when
you're next in the UK we will try and
find a way
of going through and turning all 37
shows into one at some point of course
right you're the best Lynn I adore you
thank you congratulations on the book uh
I love everything you've done and uh
your career trajectory has been
incredible and long may it continue
thank you and congrats on your your your
kind of show changes and and all that
you've done all right peace out
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