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Language: en
I think this cycle is a cycle where we
break the sovereign debt markets where
every single major
country finally admits that we will do
anything it takes to make sure that the
government does not go bankrupt and so
we're gonna remove all this pretense
about caring about sound money and we're
just going to start printing money like
it's going out of
style and so I think this cycle is going
to be a bit different than the last
cycle where the fed and then every other
Central Bank said oh we've overdone
let's try to reduce it they tried but
the governments are still printing money
because they need to get reelected and
we're in an inflationary environment you
know there's too many old people
everyone's going to go to war at some
point so everyone's beefing up on
defense and so the central banks have
come back in and say okay we got to
print money but we can't really call it
quantitative easing or the you know the
things that we called it before so we'll
make up new names for it um but it's the
same thing and so we want to protect the
Government Bond Market going to make
sure the government can continue to
borrow at below the economic growth that
they're creating so I think right now
we're in this cycle where people are
realizing this and you have the
professional investor class are also
realizing it because they've had the
worst Bond performance at least in the
United States since the War of 1812 um
over the last three years us treasuries
30-year treasury is down 50% um on a
real basis that is the worst return
since 1812 now you wouldn't know that by
listening to the financial press but
Bond investors are getting absolutely
eviscerated and as they come to the
realization that this is not good maybe
we should own something else that's sort
of this secular rise and sort of of
Bitcoin so I don't think it's going to
be a similar type of credit event that's
going to cause prick the bubble and and
crypto and everything else that happened
in 2021 but there's going to be some
change in that mindset and that's what
I'm looking for and there's no real one
thing you can point to it's kind of just
be cognizant of the fact of why do you
think the Market's going up is there
something that's happening that's
challenging that worldview I really want
to push you on this this is very
interesting okay so you said uh a lot of
things in that so I just want to cycle
through recap what you just said make
sure I understand it and then I'm going
to see if we can start prognosticating
about some of the things that might be
the signs this time okay so in 21 um we
were at a point where for people inside
the know of crypto yeah sure everybody
knew about it but something happened in
2017 during that bull run where it
really started to like I was starting to
hear about it they were making
documentaries about it and at the time I
was not somebody that paid attention to
finance at all dude I could not have
been more heads down building businesses
and but I was still hearing about it
like it it sort of cracked that first
thing and then it just disappeared now I
didn't realize there was a you know a
retrenchment I wasn't paying attention
like that but it people just stopped
talking about it
then obviously I think it was in 2020 it
starts really popping off again and then
in 2021 it's insane so okay now we have
if I had to boil down what you were
looking at in that moment the rate of
adoption speed to awareness however you
want to think about that was just way
outpacing what you would expect to
happen from a this isn't Euphoria
perspective and in fact that's that's a
um a marker I want to put on the table
right now this euphoria
i' never felt it before cultural
Euphoria obviously I'd felt it in my own
life but cultural Euphoria is a very
different thing and man I I now know it
when I see it
and so that starts really popping off
okay so the rate of growth of just to
use FTX as an example was just too much
okay so question number one the second
thing that you look for is the momentum
in the credit Market credit liquidity
being the same thing it's money printing
so they're just the governments are
pouring artificial money into the
system those two things in 21 they gave
you the signals that okay we've got
heavy Euphoria things are moving too
quickly in terms of rate of adoption um
and the very thing that crypto is a
response to inflation of the money
supply has slowed time to get out makes
perfect
sense now um as we go go into this next
cycle you've said something multiple
times in this interview and sometimes
you say it very casually as you just did
which is everyone's going to be going to
war soon so they're building up their
military hold on uh that's a very big
statement so is that going to be part of
what you're looking at because um one of
my employees here was doing his
breakdown of what he's going to look for
what his selling signs are and he very
similar to what you just broke down for
21 but I worry that he's going to get
blindsided because he's looking at Old
signals in a new market um do you have
sort of the beginnings of an idea of
what you're going to be looking for in
this moment is it a build towards war is
it Euphoria if it's not credit like what
what is on your
mind well I think that we're going to
get some sort
of credit event in the Government Bond
markets um uh and say you thought they
were just gonna print print print print
print print print yeah they're going to
print print print and I think some
people are going to try to exert an
influence of saying hey we these Bond
markets they still matter um we're not
going to buy a treasury at 4% when
nominal growth is at 6% or whatever it
is right um and there will be a an event
and there'll be a s there will be a way
in off ramp to say okay we want to
reform the system or or change something
and we'll see what the authorities
decide to do I think they're just going
to keep printing more money and we keep
going higher can you say more about that
please if we think back to the stats I
just said so the bond market as of uh we
want to think about really when this
this bull market started to gain a lot
of steam was it October of last year um
so essentially what happened and I'm
going to focus on the US Treasury Market
because that's the most important one uh
globally and every other Market sort of
depends on that from a Government Bond
perspective you have this thing
where interest rates on the debt was
Rising but at the long end it was Rising
faster so um post the September fed
meeting the the spread between the
10-year bond and the two-year Bond was
increasing meaning the 10-year yield was
Rising faster than the two-ear yield and
in general both are R the yields are
both rising at the same time which is
basically called a a bare steepener in
fixed income trading terms and that is
deadly for banks and the entire
Financial system because the entire
Financial system is modeled post sort of
1970s 80s on this assumption that when
backend interest rates rise too quickly
that the uh authorities will come in
andit money to save the system now they
did do it so the market got got to write
but in the meantime all these financial
institutions in the way that their
complex Financial derivatives are
structured ignore this particular
quadrant of the potential outcomes and
thus have massive losses and this is
what we were seeing across to the
banking system so if you looked at the
you know Regional Bank stock index or
KBW index which is all US Banks they're
getting crushed going into um late
October of last year and so what
happened
the you know US Treasury and Janet
Yellen she said okay I'm I'm going to
save this Market I'm going to issue a
bunch of short-term debt and take money
out of the reverse repel program at the
FED which is just this2 trillion
facility of cash just sitting there
that's outside of the financial system
and she offered a higher rate on
short-term treasury bills to entice this
money out and which reflate the system
gives more credit money into the system
and that sort of helped you know fuel
this bull run that started essentially
on November 1 um of
2023 so we're going to get another event
like that because if the fed the
treasury and their other Global central
banks and fiscal governments if they
continue to do what they're
doing but say that on the one hand we
want to try to fight inflation by not
printing money we're going to get
another situation like we got in the
third quarter of last year where the
bond record says hold on a second what
do you want to do do you want to
safeguard the value of fiat currency or
do you want to make sure that the
government is
funded and I don't know when that
situation is going to happen there's
lots of tricks that they can pull
probably a little bit too mundane for
this particular um venue if you really
want to get into US money markets uh but
there's going to be another situation
like that and you could see a general
you know risk off meaning Financial
assess decline on that situation on the
fear that maybe this time they're not
going to save the banks and print the
money and you know reflate the system I
I don't think that's going to happen I
think they'll do the same thing they've
done every single other time but you
could get a situation like
that but if I have to really think about
what could stop this particular bull
market it's going to be something about
the belief of Institutions buying
Bitcoin so what's the narrative right
now you never sell because the
institutions like black rock and
they're they have to buy all this
Bitcoin because there's all this pent up
demand from institutions who want to Inc
incorporate Bitcoin into their
portfolios and there's all these Diamond
hands out there who aren't going to sell
their Bitcoin just's a very low supply
of Bitcoin left to sell which means the
price goes Asm totic on on the upside
now obviously that can be true for a
while but it won't be true forever and
so at the point in time where we start
to see a a massive um leveling off of
the allocations of money into these
products then that narrative starts to
shift and people become less confident
that there will be you know a few
hundred million dollars of buying a
Bitcoin every day from all these major
ETF fund
managers and I think that might be the
thing that I'll be looking for which
says okay whatever the price of Bitcoin
is at that point maybe it's time that I
think about at least for the other non
Bitcoin and ethereum assets getting out
of all of those right and I have a I
have a very big Venture Capital
portfolio of early stage crypto tokens
that will need to be
liquidated and then on a more
philosophical level I have to think
about well if Bitcoin has risen to such
a high level relative to the energy that
it represents maybe I should own a power
plant or a massive stake and Exon Mobile
or something where I actually own the
fundamental energy source and I got it
at a very cheap price relative to the
price of Bitcoin and that's a way that I
can take some T chips off the table in
Bitcoin terms but what I probably won't
be doing is selling Bitcoin or ethereum
for Fiat because I still think that the
Fiat system is [ __ ] and I don't want
to participate in that but primary
energy if I can own those resources at a
very attractive price because Bitcoin
and ethereum and these other assets have
been bid up to such an insane level then
that's probably something I should be
doing okay so to recap the thing that I
found um really intriguing because I've
not heard this idea before is that
there's going to be an incident in the
bond market now what I took that to mean
is that something is going to happen
that will make the biggest buyers of
bonds step back and say we're not going
to buy bonds anymore and now the US
government is in a really dark place and
I think it was you that said um poell is
just out there flexing the person who's
actually in control is Janet Yellen
because the treasury can ultimately just
tell them what to do um and because I
think it was poell that said like we
can't keep doing this we can't just keep
printing printing printing yeah he says
it but he has no power he can't he can't
tell the federal government what to
spend his money on he's just he's just
you know the central
bank that's interesting you say it like
that so am I right is that what you're
saying that people will say um and and
enact we are not going to keep buying
bonds because um your fiscal policy is
irresponsible and it's causing um
strangeness in the the bond market that
makes it problematic for the reasons
that you explained earlier
um and that is I mean that that's
catastrophe for the treasury if I'm
understanding this right exactly they
number one job is to make sure that
Janet yellen's job is to fund the
president and whatever he or she would
like to do right if Biden wants to spend
trilon on through bonds so she must have
a well functioning us treasur market and
she will do whatever she can to make
sure that is the case uh and so if it
means changing the rules on the fly or
if it means co-opting the the central
bank to do what you need to do she will
do that or whoever is in the her seat if
she leaves after the Biden
Administration so that's that person's
job and they will do that and so when
this really bad thing happens in the
bond market then we get to the final
stage of essentially the Sovereign Bond
bubble which is okay let's stop [ __ ]
around we will print money in whatever
quantity is needed to keep the 10year
bond rate at X whatever that is right
they'll go full Japan that's the end
game then we get Bitcoin 1 million 10
million or whatever whatever and and
then it's okay at some point we get off
the train like okay well bitcoin's great
it's gone to this insane value because
they printed all this money
is there a real asset real energy
producing asset that we should
own that is more essential than Bitcoin
and I've gotten it at a great price
because of how high Bitcoin has been bid
to again it's more of a theoretical
philosophical thing of is there
something else to buy when you want to
sell Bitcoin that's not
Fiat well that that's the second part so
there's two things you said that I think
are really interesting one is what
happens the second one is how you
respond um okay so the what happen
scenario I was actually misunderstanding
it so I'm glad that you clarified so
what's really happening is the bad thing
happens in the bond market that pisses
the bond purchasers off they stamp their
feet and say hey you need to um calm the
bond market down which they're going to
do by saying we got you we're going to
print money until the end of time don't
worry um we're going to maintain the
price that you need to not end up being
underwater that is going to cause a
massive run into cryptocurrency and
that's going to create that just hyper
Euphoria potentially obviously I know
you're this is just the I've asked for
the thing that's in the back of your
mind this isn't uh the thesis you're
operating on right now but um that could
potentially cause a massive run into
crypto which creates that euphoria that
I was talking about drives the price up
the numbers you throughout a million 10
million whatever I know those are sort
of the fantasy numbers that you hear
people in crypto circles throwing out is
endgame but if it makes that kind of run
you're like okay now's probably a time
where I go um all the big wins have been
had I mean this is just like Warren
Buffett said uh all the eye popping wins
of Berkshire haway are in the rearview
mirror like you're not going to get that
anymore because there's I'm having a
hard time finding a place to put this
money um so you know that that isn't
going to be we're now getting into the
Zone I was talking about earlier where
Bitcoin just becomes sort of boring it
just chops side to side for the next two
decades and that's when you start
looking for in the example that you gave
the underlying energy producing asset
that you can be in once you've taken
sort of the max out of the value the the
volatile value of crypto it's a put
option on Government Bond Market and so
I think we're at the point where the
largest Government Bond Market that we
can't afford this so we're just going to
print the money anyways and that's
that's the option that you're really
trading on on bitcoin you want to you
want to be around for that because
that's going to be and if it happens
this cycle it's going to be absolutely
insane and so that's when I running an
essay right now and you know the tenant
of the essay is people don't have enough
imagination about how ridiculous this
bull market can get so if we combine the
Bitcoin is now available from a
financial perspective to be ingested
into tradify
portfolios and you have tradify
portfolios do not want to own bonds
because everybody knows that this is
what's going to happen in the treasury
market and you know jgb Market um ecb's
bonds Trina bonds all the different Bond
markets if these Confluence of factors
this is the situation where the 40% of
managed money that's in fixed income or
basically Sovereign bonds globally a
portion of that goes into crypto and so
you have a massive amount of Fiat that
can only go through a very very small
door you just get insane price
appreciations across the whole space I
don't think people appreciate that right
now they're like oh was bitcoin's at
70,000 maybe I should take some out the
table no you [ __ ] shouldn't this is a
time if this is the narrative that you
were operating under when Bitcoin was
16,000 we haven't even gotten to that
point yet we've just started this is
just like the amuz bou it's not even the
[ __ ] entree yet so it's we're just
getting started in this thesis of the
collapse in terms of we have this one
ret that's real we have this whole
fugazi Financial system for the first
time in history we have an ability to
express a put option on these Bonds in
an easy digital fashion versus you know
going out and holding a vault of gold
which is quite difficult so that is the
insane bull market thesis that I've been
operating under we're marching towards
that I don't want to be underallocation
if I'm right if I'm wrong we get you
know maybe Bitcoin goes to 100,000
200,000 whatever it is and okay cool
made a good good chunck of money we'll
prepare for the next cycle because it's
coming if it's not in the 2025 2027 time
frame it'll be when there's the global
World War of the you know end of the
decade or little bit after as we've come
to this situation where every government
is printing money because they're going
to war with each other so that's the
trade it only is going to happen once
he's got to be around for it okay so
that is the uh I mean for anybody that's
holding Bitcoin that is certainly the
fantasy scenario
um do you
see going to 100K in this cycle as an
inevitability or do you see something
that could derail us from that now I
think it's an inevitability and more and
because now we have the banking system
at least in the west and obviously
there'll be ETFs in China and in UK
China being Hong Kong and Europe as well
so you have trafi now has a stake has
skin in the game and like this is
amazing we have had the fastest growth
in Assets in these products of any ETF
ever and so Black Rock largest asset
manager in the world this their best
selling product so far right trading
billions of dollars a day they're you
know getting injust hundreds millions of
dollars a day of inflows they're
charging fees on that Fidelity all these
other asset managers crushing it right
but you have all these institutions the
cells side financial institutions who
depend on the fee that black rock pays
them to access the markets so if you
think that you're a trading desk and a
JP Morgan a City Bank of Goldman Sachs
Morgan Stanley blah blah blah you're
like [ __ ] yeah
I love crypto black rock is has a price
and sensitive buyer all these people
allocating they need to buy and sell
Bitcoin every single day to manage their
fund there are people doing Arbitrage
trades who now need to interact with me
on a Triad fight basis to trade these
assets if there's an ETF ETF uh ethereum
ETF or some of the other altcoin ETFs
that these funds want to launch great
more fees more times for me that I have
to do things for these large asset
managers and it's volatile they're know
there's buying and there's selling
there's opaque markets people don't know
what the price of these things should be
as a sside Investment Bank you're like
this is [ __ ] amazing and so they're
aren't going to stop with Bitcoin you
know I think there was I read some tweet
today that some lawmakers in America
were Democratic lawmakers are saying oh
petitioning gendler to say don't allow
the ethereum ETF now maybe that would
have been a very convincing argument if
the banks didn't have a skin in the game
but Banks run governments the tri fi
banking system in the US runs the US
government and now they have a stake in
let's financialized crypto let's make as
much money in fees as possible off of
this amazing product that has been doing
gang going gang busters for the past
eight weeks [ __ ] that we're going to
launch every single crypto we can while
the going is good and earn these fees
and so I think there's just going to be
more Capital coming into play as you
have the tra
Financial ecosystem putting on a full
court marketing press to convince people
why oh yes look at the US government
it's unsustainable Jamie Diamond says
this about every single quarterly report
and his said US government is spending
too much money there will be a fiscal
crisis and now he has a way to directly
profit off that which is oh yeah we have
a Bitcoin ET if I'm going to change my
tune on bitcoin I'm gonna Safeguard the
way for my clients to own Bitcoin as
long as you custody with JP Morgan and
use a Black Rock product it's all gravy
because we're getting paid to do it and
so now you have the trafi marketing
machine out there saying it is safe to
invest in crypto here's a product that
you can do it it's custody by these big
Banks why wouldn't you own it so we have
interest aligned in terms of a price
perspective for a very short period of
time so I think again we're just getting
started it's just Bitcoin why wouldn't
you do more of it if it's so successful
an ethereum ETF a Solana ETF every
[ __ ] crypto you can during the cycle
do it it's literally just paperwork and
watch the billions of dollars gush in
the fixed income Market is however many
you know hundreds of trillions of
dollars obviously not all that's going
to go into crypto but even a small
portion of that that says I don't want
to own government bonds because of all
the things that we've talked about today
and now JP Morgan my my uh Raa is
telling me that I can invest in this
product and it's custody at the bank I
don't have to worry about private Keys
it fits into my investment mandate don't
have to do anything more forms [ __ ] it
let's go I get to import this thing that
is going to uh on its face solve the
problem that I'm trying to escape which
is a Government Bond Market that is not
paying me what I should pay to take on
this sort of risk hearing you talk it
really there's something about the the
energy the intensity around the bond
market that's making me see the
relationship between us the buyers of
bonds and the government in a way that I
never really thought about it I always
saw it as this is a place for me to put
my money that's safe that I'm going to
get some sort of mild return but when
you start thinking about it in terms of
hey you're asking me to fund the
government and all the things that it's
doing you better pay me a worthwhile
return in order to do that this goes
back to one of the things you were
saying earlier I don't remember what
triggered this thought but um the thing
I really want people to be able to do is
just something super simple to put their
money in to not have to think about it
to get that return um but of course that
for some people to win somebody else is
going to lose um but gets very
interesting with bonds helping fund them
grow uh to grow the things that they're
trying to spend the money on um very
intriguing let me ask you where what do
you think happens with
ETFs when the natural volatility of
crypto kicks in like when I think about
okay bitco coin yes volatility super
strong narrative eth yes maybe a little
bit less conviction on my part uh for
eth just because I think it's a harder
narrative around the distributed
computer just think it's harder for
people to understand how does that
translate the am I storing wealth in the
in eth like I don't so that one's a
little trickier once you get down to
like salana now it's like whoa now
really talking narrative you've got to
be deep in that com it it becomes like
do you buy into the tribe so that feels
like it's it's really going to have
volatility which could be amazing
briefly and then really traumatic so how
do you think ETFs will respond to that
level of volatility the banking system
is saved by the central banks and the
government squashing volatility and
printing money to save them every time
they [ __ ] up but at the same time they
essentially take all the fun out of
markets nothing [ __ ] moves anymore
passive invest is destroying the banks
because they can't earn any money
because nothing moves there's no
dispersion there's no difference between
Tesla Microsoft and Nvidia right so why
even invest in the stock market just put
your money in your you know in
retirement account check the box and it
just goes into you know spies and
qes so if you think about a trading
floor and obviously have a lot of
friends who working trading no one's
getting paid like they used to because
nothing's [ __ ] moving so now we have
a new asset class it's and you have
insane volatility you have a fundamental
appetite for a new type of financial
system and you are the gatekeeper
between Capital that can't exit the trfi
system and these crypto products it's
going to be amazing you can write
research reports for days you have
thousands of different things doing
thousand like different people
characters saying they're going to do
this that and the other thing you have
so much dispersion so much volatility so
many things to talk about you you call
your client maybe it's salana today
maybe it's you know dog with hat
tomorrow doesn't [ __ ] matter you have
a you have an ability as a salesperson
of a conversation with your client to
solve their problem Government Bond
markets aren't paying me hey guess what
this week it's salana next week it's eth
next week is Bitcoin this happened that
happened there's stuff going on you have
a conversation oh great okay I'm gonna
allocate here oh sell this by that sell
this by that so this by that trading
fees emotion POS this is What markets
are made of and what has been destroyed
by central banks over the past you know
30 years banks are going to love this
the trading Des are going to love this
they have a reason to call their clients
now these products are going to make
them billions of dollars because we are
unlocking human emotion in a form that's
digestible for these trafi institutions
in a way that hasn't been available to
them probably since you know 20 thou 20
1997 to 2001 in the dotcom area
so that's what this is going to bring to
trfi and they're going to [ __ ] love
it and they're going to do whatever they
can politically to make sure that
there's nothing stopping these ETF fund
managers from onboarding as many
different crypto assets as possible now
that they've gotten through the Bitcoin
hurdle and they've seen how successful
it is and how much money they're making
from
it okay
so uh that is a really interesting
picture that I have um never heard
anybody else say taking a um a different
angle on that it feels
like an angle that has to be considered
is the people that are in ETFs want the
set and forget thing that you think is
destroying the passive investing that
you think is destroying the markets and
that when there's volatility there there
is going to be an outcry to the
government to protect them uh louder
than anything you've heard in a long
time because you know when somebody's
thinking about
being in an ETF it's like they're not
going to the ass a to go and buy and
figure it out themselves so there is an
amount of I don't want to deal with it I
just want somebody else to do it so two
things are going to happen one
volatility hits and the they they a
subset of people will freak the [ __ ] out
and then it becomes a question of how
does the government respond I'm guessing
with regulation uh so that'll be
interesting and then the second thing is
um when you
have people having a reason to call
their
clients I worry that you get into The
Wolf of Wall Street days of penny stocks
and hyping people up and selling
narrative and there is a reason that
those guys went to prison are you not
worried about
the the way that people will get
suckered in by
conmen well the conmen and if let's take
it let's assume that this is what
happens the comment is your JP Morgan
salesperson is that guy going to jail
probably not Jamie Diamond going to go
to jail for anything that happened at JP
Moren absolutely not now again I think
that the trii banks will overdo it right
they're going to pump this narrative
they're going to beat the drum as loud
as they can because this is it's going
to be soon to show let's see maybe end
of the year there's going to be some
banks that will probably very crypto
forward and you're going to see in their
financial Resort results and they're
going to tell the market hey guess what
my trading operation beat Expectations
by some wide margin because we went hard
into crypto trading and facilitating the
flows related to these whatever the
suite of the ETFs are and OTC trading
and blah blah blah blah blah right and
then every other Investment Bank in
their you know managing director
committees like well what's our response
to that we can't let XYZ Bank have this
desk and we've been poo pooing it for
the last decade go hire a team now we
need to be this that and the other
that's how these Banks work it's you
know usually it's Goldman Sachs and JP
Morgan make the money first and then
everybody else scrambles a follow and
[ __ ] it up uh and so that's probably
what's going to happen here and I agree
with you of course the volatility is
going to be insane on the upside and
things go down as much as they go up
sometimes and when the bare Market
starts and maybe some of these more
questionable cryptos that got put into
some of these investment products go
down 95% because something happened to
the networkers you know some developer
rug them yes of course there's going to
be public outcry of oh no my in my
retirement account had this ETF and I I
watched the commercial on CNBC and you
know that guy in the suit said this was
a great investment sir and I put my
money in and oh [ __ ] I lost it um
representative XYZ you got to [ __ ] these
people because that shouldn't I
shouldn't have been allowed to buy this
product I absolutely agree with you and
the second that we start seeing that as
a movement catching Steam and the bank's
ability to beat back that narrative
they they can't forall that that's
probably a sign that we probably might
we've Reed a peak s Peak saturation of
like the institutions in crypto and
whatever the price is at the time it
might be time to take things off the
table so I hadn't thought of that before
but as you say that that is probably
another thing I'm going to keep in the
back of my mind as a signpost of okay
has it gotten so out of hand and loss
has started to creep in that the banks
political power to just Ram things
through um has been checked a bit by
some outraged um small bomb and pop
investors what are the signs that you
see on the horizon that a financial
crisis might be headed our way I
absolutely agree there's going to be a
major financial crisis probably as bad
or worse than the Great Depression
sometime near the end of the decade
before we get there we're going to have
I think the largest bull market in
stocks real estate crypto art you name
it um that we've ever seen since since
World War II and the reason I believe
that is if we back up to like
1945 essentially Europe blew itself up
China was destroyed by a Civil War and
and Japan uh Russia essentially fought
the War for everybody else and you know
massive destruction so if you look
across the world the only country that
was left was uh the US and you know they
had a manufacturing base that was
unharmed from the war and they
essentially rebuilt the war and reaped
them enormous benefits and we're still
you know people who are American are
still living off of uh those benefits
today but at the end of the day
everybody started believing this thing
called you know kyian economics which
basically is if something gets in
trouble the government should rush in um
spend money if they don't have the money
the Central Bank should print it and you
know everybody collectively in the world
depending no matter if you're you know
what sort of ism you believe in
subscribe to this this Theory
and what that means is you know we all
have collectively agreed that the
government is there essentially to
attempt to remove the business cycle
like there should never be um bad things
that happened to the economy and if
there are we want the government to come
in and essentially destroy the free
market so every time we've had a
financial crisis over the last you know
80 years what happens the government
rushes in and they essentially destroy
some part of the F of the free market
because they want to you know save the
system and what does that mean it's like
wack-a-mole so every time there's a
disturbance you know the central banks
like you know the Federal Reserve in the
US they come in they print money they
enact a bunch of regulations and they
basically say okay we don't want this
sector to fail we don't want you know
the creative destruction that is
so-called you know capitalism if you
actually believe in that um we don't
want that and every you know five seven
years there's another sector of the
economy that's essentially price fixed
and so we've gotten to this point where
you know globally central banks have
basically destroyed the free pricing
mechanism in just about every single
sector of the financial economy except
for one which is the the Government Bond
markets because there's so large so
unruly that it's practically impossible
to essentially remove the market forces
from this part of the market but the
problem is right now we're going to try
we've you know gone from I know 100%
debt to GDP globally to about
360% um as per the World Bank and we are
accelerating the amount of debt that
we're adding onto the pile why because
in the rich world including China Russia
and Brazil we've stopped having enough
kids so the population is actually
declining so if you have all this debt
and you don't have more humans being
born to essentially do stuff to pay it
back um the only way to ensure this
system is solvent is for the governments
and the central banks to start printing
money uh and now we've gotten into the
situation where we have all this debt
that needs to be rolled over we have a
population that has been told that hey
you're good anything ever happens we the
government are going to come in and
we're going to make sure that you know
you have enough food to eat you got
Health Care um we're going to protect
you blah blah blah right and all that's
expensive especially as you have less
and less hum who were doing productive
stuff and so we're just going to keep
adding on debt because that's the only
way the government can stay in business
and now we've gotten the situation where
there's so much debt that and it's
accelerating in an exponential fashion
that in order to save the market this
time right so I think in the next three
to six months there's going to be some
sort of Major Market disturbance and
probably in the US Treasury or other
large Global Bond markets and the
solution is going to be let's print the
most money that we've ever printed to
try to save essentially this Fiat
Financial system that we've created um
since World War II which is going to in
the first instance create a massive bull
market in anything you know like stocks
crypto real estate things that have a
fixed Supply um maybe they're productive
they have some earnings and then after
that we're going to find out actually
the government can't save everything
they can't just print as much money as
they think to try to save themselves and
um fix the price of the the yield of
their bonds and we're going to get a
generational collapse and hopefully that
doesn't coincide with a major global
conflict usually it does I hope it
doesn't uh because I don't really want
to live through World War II While I'm
Alive um but that's sort of the my
overarching like macro cycle thesis so
you know massive top 2026 time frame and
then um you know some sort of you know
Great Depression like situation
happening towards the end of the decade
if you want to take a look at the
progress of human civilization of the
past 150 200 years it's all predicated
on
hydrocarbons um the moment we started
extracting oil uh commercially out of
the ground and turning it into thousands
of different products that we all use
every day that basically Powers our
Modern Life um development supercharged
right you know we went went from I don't
know how many billions of people in the
1970s to today a population more than
doubled right and that's all because we
were able to harness this particular
type of potential energy of the earth
that's underneath us okay and we we've
piled on all this debt we've brought
forward all this future growth and we
haven't really innovated on another form
of energy that makes us that much more
productive you know maybe if the world
started adopting nuclear um today
immediately like small nuclear reactors
in our cars our apartment powered by
nuclear energy maybe we'd have a chance
at growing our way out of this debt or
you know if there's some magical alien
that comes down and gives us you know
some basic resource that allows us to
tap a new source of energy and like we
can commercialize it instantaneously yes
then we could pay back all this money or
if the population doubled overnight
right to 16 billion people then okay
great we've built all this stuff there's
more people that need to use it okay we
can pay back this debt but borrowing any
of these you know
you know I like to say it takes 18 years
to make an 18year old so it's pretty
much impossible to create humans on a
thin air no matter what any politician
tells you and you know we're not really
you know what we've seem to be doing is
um in certain countries is saying you
know hydrocarbons are worthless we want
to use these other forms of energy that
are less dense less productive and
somehow think that we're going to grow
our way out of this debt which is
mathematically impossible there's just
no other way other if the government
wants to save itself by than printing
money and printing money isn't growth
it's just a piece of paper out of f air
and once the population thinks hey
there's more and more of these pieces of
paper floating around there's only so
many real Goods there's only you know
there's only so much oil there's only so
much electricity well I guess I should
be consuming everything I can now that's
not actually generating real growth if
we could just print our money and
generate real growth then Rome would
have survived Zimbabwe would be the
richest country in the world same with
Argentina we've had you know the the Yar
Republic in Germany like if this was the
answer there's PL of other you know
societies that have tried this and the
sit the result is always the same
massive inflation and then social unrest
and collapse with the government so I
think we've proven over thousands of
years of human history that printing
money is not growth it's a Shima and at
the party lasts for only so long and
then you know it's bad newsp
this is the thing that really freaks me
out about what R alio is talking about
is the predictability of this cycle and
what I want to do you're really good at
explaining this I want to go through the
different things that build up to this
moment this this inevitable moment and
then one of the things I want to make
sure we talk about later is getting the
timing right on this is next to
Impossible and so uh that's going to
loom in the background but first I want
to I just want to go through the things
and I used said that you hope that this
doesn't all happen in a moment of
political instability but I would like
to quote Arthur Hayes to Arthur Hayes
here real fast uh this is from th this
is the opening line from one of your
recent articles you said World War III
has already begun whether the mainstream
media and political Elite wish to
acknowledge it or not
um so let's talk about the political
instability we're going to get to the
debt we're going to get to the banking
crisis inflation all of that um but set
the context for us right now what what's
happening right now that unnerves you
from a a political standpoint so for
whatever reason and I don't know why
Western Europe starting and then America
following has it in for Russia and I
know if you read the I think it's mender
um his um Global home Island theory that
he wrote I want to see in the early 19
early 20th or end of the 19th century
whatever he was a very famous um uh War
strategist and he basically said that
the the home island is essentially
Eurasia right so think of China
Russia um Western Europe right whoever
controls that portion of the world
controls the world and so if you think
about the naval Powers such as Great
Britain and the US let's talk about
great bit first right what was the
British foreign policy all about in the
19th century and early 20th century
preventing a strong continent whether it
was France or Germany they didn't care
they just don't want a unified Europe
now as Russia industrialized in the late
19th century they started to worry about
okay what about Russia right we can't
have an alliance of German strong
Germany after bismar uh United Germany
and and Russia because Russia has all
these Commodities that would be the
worst thing that could ever happen for
us Great Britain at Naval power so what
do they do that you know a series of
alliances that we know precipitated
World War I which was let's make sure
that Germany and Russia are not friends
and essentially that was a strategy
going into World War I you know
obviously that blew up what was the
strategy in in World War II you know if
you take a look at the rise of Hitler
and you know all the different you know
Western powers that were okay with
Hitler as long as he was going to turn
his army and just fight Russia right you
know Hitler wrote about this he said we
want to create the space for the the
German people to ESS eradicate the Slavs
in Russia and and go in there and the
Western NE was perfectly happy about
that because again what do they want
they don't want a United Home Island
they don't want a United Eurasia because
that threatens the the heiman you know
Great Britain at the time obviously that
didn't work out so well Hitler turned
his army on on the other half of Europe
um and then everybody started fighting
again uh and then we ended that war
and then what we were left with we were
left to the United States versus Russia
again and again it was all about let's
make sure that you know Russia and China
aren't aligned or um Russia and the rest
of Russia in Europe aren aligned that's
why you know us poured however many
billions of dollars through the Marshall
Plan into rebuilding Western Europe to
make sure it was a Bull workk against
Russia and the virus of of Communism and
you know I forgot I was reading a recent
book it's called the wars of Asia
um 1911 to
1949 and the author made a very good
point about why communism is so hated as
a form of government to anything that's
not communism and the reason it is
because you know obviously communism has
its flaws but at its the kernel of Truth
for lots of people is we're going to
completely uproot the the social system
we're going to replace the classes that
are oppressing us it's not like okay
it's one class of Elites who was running
things we're going to go over to the
other class of Elites which is like
socialism fascism you know capitalism
it's just one group of Elites versus the
other communism is let's destroy the
whole class of Elites and bring the
people up to power now obviously that
never actually happens but in the
beginning it does and so if you're a b
intellectual and you know and one of
these other systems you're like I can't
have communism take over I can't have
the actual workers rise up replace me as
an entire class and then try to rule
which is why they hate communism so much
and so you know the Russian system and
what they're trying to export in terms
of an ideology is so is so hated in in
the you know liberal Democratic or you
pseudo fascist
West in any case the the US is now you
know locked ah hedge with Russia to make
sure that a divided Eurasia because a
strong Eurasia um will control the world
because it controls most of the natural
resources of the world and most of the
population and that's been the US
foreign policy since the end of World
War II
fast forward to you know the 90s when
the Soviet Union collapses the US
response was not let's do another
Marshall Plan and rebuild Russia it was
let's um incentivize a bunch of former
gangsters now called oligarchs to come
in and take all the natural resources
impoverished their people and move their
wealth to London and New York right and
so that was the policy now out of that
came you know essentially Putin who was
all about let's build a strong you know
revisionist the Russian ideal believe it
or not whe whether you think that's good
or bad but that's his appeal to the
Russian people is hey you guys suffered
through the end of the Soviet Union the
West was not your friend you know they
stole your [ __ ] I'm here to rebuild the
Russian for the Russian people believe
you that that's his message to his his
constituents you know you can like it or
not like it and so now we're at the
situation where um Russia invades
Ukraine and the West pumping in
resources to essentially fight them
using the blood and the Blood and Tears
of the Ukrainian people it's not
Americans fighting it's not European you
know NATO Europeans fighting yet right
so it's a it's a proxy war between
Russia and the West obviously Russia is
tacitly supported by by China and the
rest of the world is like well we don't
want to part of this this we're trying
to be non align we don't want to get
involved in this thing so we have this
sort of the setup of all over again of
what was happening in in the late 19th
century of the West aligning to create a
divided Eurasia and so you know we can
call it a conflict or a skirmish or
whatever but you have I don't know how
much how many billions of dollars have
been authorized by US Congress to
essentially ship weapons into Ukraine
you have NATO shipping and weapons um
different countries providing
intelligence so that the Ukrainian
forces can attempt to sty the Russian
Advance now while yeah there's not boots
on the ground from from the west and in
Russia to our knowledge maybe there are
I don't know it's it's basically a war
um and so you can you could make the
argument that World War II has already
started um it's just not this hot super
kinetic you know I'm gonna throw my
nukes at you kind of thing um that we
had in the last World
War now why do you think this matters is
this going to play out in Energy prices
is it going to play out as a debt
problem um why does this become uh part
of the backr drop of uh the the context
that will lead to this coming financial
crisis so at the end of the day right
human civilization is the transformation
of the potential energy of the Sun and
the Earth into useful economic work
right so cheap Energy prices equals
Prosperity Russia is the largest
commodity exporter in the world um they
have oil they have natural gas they've
got you know Metals they've got food
right Ukraine the kinian bed Bread
Basket was one of the largest wheat
exporters in the world sunflower seeds
oils all this stuff is is in this in
this region and now we've the West has
decided that we're no longer going to
trade with Russia on paper now if you
actually look at the details you know
India China some of these other
countries are basically buying the
Russian stuff refining it selling it
back to the Europeans and the Americans
at a higher price right so the the the
the result of this policy of let's
ostracize Russia is let's just raise
prices on our energy inputs globally and
so they just the war is causing the
inflation that now the central banks
have to fight by raising interest rates
which then bankrupts the banking system
because they now have all these bonds
you know that are underwater so the this
ideology we need to fight Russia to you
know keep the Eurasian Island um
fractured is the proximate cause of the
inflation that's causing the financial
crisis in the west itself so it's a dumb
policy but it is the the natural result
of what happens when you say I'm not
going to trade with the largest
commodity exporter in the world I think
it's important to break down exactly the
cocktail of things that go into making a
um an economy weak this was something it
took me a long time to learn and for
anybody that's been watching the show
for a while they they've gotten to go on
this journey with me of figuring out how
all this works the debt cycle exactly
what happened with the banking crisis
inflation all of that u