Why was it different in two thousand and eight. I mean, they seemingly did let the market fall, and we did see the markets crashed by sixty five percent, and so now you're kind of saying that they can't really do that.

Why was it different in two thousand and eight. I mean, they seemingly did let the market fall, and we did see the markets crashed by sixty five percent, and so now you're kind of saying that they can't really do that.

Two thousand was less of a debt cycle and more of an equity cycle. The debt cycle in two thousand and eight really was the kind of end of the financial system. It was the point that we all knew was coming, which is like, you can't have this much leverage. Look at what's happening. We're decentralizing power. So now people can have the source of power at the houses. So therefore you don't need the huge storage. People say, well, you can't scale solo, Well you can at a house level. You can do it probably at a village level.

Two thousand was less of a debt cycle and more of an equity cycle. The debt cycle in two thousand and eight really was the kind of end of the financial system. It was the point that we all knew was coming, which is like, you can't have this much leverage. Look at what's happening. We're decentralizing power. So now people can have the source of power at the houses. So therefore you don't need the huge storage. People say, well, you can't scale solo, Well you can at a house level. You can do it probably at a village level.

You know. Sam Martman said that we might see the first single person billion dollar company.

You know. Sam Martman said that we might see the first single person billion dollar company.

So I think of it.

So I think of it.

There's both, right, the centralizing of the programming, but then it's decentralizing in a sense. It turns one big company into one hundred or one thousand companies. There's no future in this world where humans don't have problems, And as long as there's problems, we'll need solutions to those problems, and entrepreneurs will always be able to figure that out.

There's both, right, the centralizing of the programming, but then it's decentralizing in a sense. It turns one big company into one hundred or one thousand companies. There's no future in this world where humans don't have problems, And as long as there's problems, we'll need solutions to those problems, and entrepreneurs will always be able to figure that out.

So Nyture's going to traded a huge premium in a world of robots and AI when you can just kind of leave that all behind. If you ask a young kid now and say what do you want to be when you grow up, they will say, I want to be an influencer, and we think, are you crazy? But what is an influencer apart from a community leader where they have a community of people. It's actually maybe they're being adapted to already. They've done it in Fortnite, they've done it in the gaming world as well. But in the end, people want the human to human experience.

So Nyture's going to traded a huge premium in a world of robots and AI when you can just kind of leave that all behind. If you ask a young kid now and say what do you want to be when you grow up, they will say, I want to be an influencer, and we think, are you crazy? But what is an influencer apart from a community leader where they have a community of people. It's actually maybe they're being adapted to already. They've done it in Fortnite, they've done it in the gaming world as well. But in the end, people want the human to human experience.

Rapaul from Real Vision, you have been a man. You've been laying out some really good research. I've been waiting to talk to you. It's been going on for like a month waiting for this. So anyway, thanks for joining me today.

Rapaul from Real Vision, you have been a man. You've been laying out some really good research. I've been waiting to talk to you. It's been going on for like a month waiting for this. So anyway, thanks for joining me today.

I read again.

I read again.

Yes, sorry, I've been so avoiding, but I was on holiday and it all got a bit screen. But we're here now, finally.

Yes, sorry, I've been so avoiding, but I was on holiday and it all got a bit screen. But we're here now, finally.

We're here now, We're here now, so that everything code the Banana zone. Man, You've been putting out some really really good research that I'm excited to Again. I was just telling you, I just came back from the big conference, and I'm starting to see this big shift in the industry. It seems like where we're seeing, you know, all this institutional adoption that's just coming in and it seems like it's changing sort of the makeup of that industry. We'll come back to that, but let's go ahead and just set the stage here and Everything code. I've been loving it, this this phenomenon where you have like these metronomes that keep perfect time for playing music, and this phenomenon where if you set all these metronomes on a table and start them at different times over time, they all get to the same beat. And I think that sort of maybe sums up the everything code.

We're here now, We're here now, so that everything code the Banana zone. Man, You've been putting out some really really good research that I'm excited to Again. I was just telling you, I just came back from the big conference, and I'm starting to see this big shift in the industry. It seems like where we're seeing, you know, all this institutional adoption that's just coming in and it seems like it's changing sort of the makeup of that industry. We'll come back to that, but let's go ahead and just set the stage here and Everything code. I've been loving it, this this phenomenon where you have like these metronomes that keep perfect time for playing music, and this phenomenon where if you set all these metronomes on a table and start them at different times over time, they all get to the same beat. And I think that sort of maybe sums up the everything code.

Yeah, and what's weird about the everything code, And I'll explain what it is. What's weird is it makes everything so simple too, so that most people think, well, this can't be possible.

Yeah, and what's weird about the everything code, And I'll explain what it is. What's weird is it makes everything so simple too, so that most people think, well, this can't be possible.

Yeah.

Yeah.

We kind of knew it in bitcoin world because we could see a cycle forming, and we've been following this cycle kind of dumbly like, well, it's kind of maybe just the harving cycle. We don't really know and then I started digging in and realized that the business cycle was perfect. So the business cycle I used the Ism survey and it was a perfect cycle. I'm like, that's weird because if you remember, go back prior to two thousand and eight, we'd have these long periods of no recession, short periods and it was not it was variable. But suddenly it's like a metronome as you say, I'm like, huh, what's that all about? And eventually it led me to realize that two thousand and eight I think was the great reset, the one that people keep expecting happened. What they did is they basically four They told everybody they can fore go paying interest on all their debts, which was zero interest rates, and then they tried the new trick of printing money via quantata easing. Now, what that did is allow every single major government in the world to refinance all of their debts on this three to five year sector. And so they all did it, and what it did was force the business cycle into this four year cycle. And then all the asset prices are all correlated, whether it's tech, whether it's bitcoin, whether it's the economy itself, it's all driven by the same cycle, which happens to be the presidential election cycle, which happens to be the bitcoin harving cycle. It's all the same thing, and so when you understand that, it makes the game a lot easier. Now, this is not going to last forever, but for the period of time that we've got it seems to you playing out perfectly. And you can break these cycles down to four phases, which I call the seasons. So we have call it crypto or macro Winter. Well, that was twenty twenty two, that was twenty eighteen, that was twenty fourteen. There is four years. The next part of that is spring, where nobody quite believes that something is changing, but prices start moving higher. You know, bitcoin had a great year in twenty twenty three against most people's expectations, because spring is the time the shoots come up. Then you start transitioning into summer, which is this year, which happens to be the election year, which is when really the debt starts getting refinanced and they have to start using liquidity to finance it because there's not enough GDP growth to pay for the interest on the debts, and so they keep rolling forwards. These debts and they keep monetizing the interest payments, which is this debasement of currency that happens at about on a globalized level, eight percent a year their debasing currency and so and then next year will be macro full and then eventually the cycle tops out and we repeat it again, because it's based on the debt refi cycle, that this debasement of currency of eight percent. There's two ways of looking at it. You can say, rightly, so we're being robbed of our few your wealth because your future self is getting poorer because you're going to afford less assets with your income because income doesn't go up the assets do because of the debasement. Or the other way is you can say, I'm paying an eight percent put option fee on the entire system not breaking, because that's also what they're doing because they need to refinance the debt. They need to not let asset prices go too far down. So we can talk about that, but it's another way of looking at it, and you're like, would you pay eight percent a year to have the entire system not break?

We kind of knew it in bitcoin world because we could see a cycle forming, and we've been following this cycle kind of dumbly like, well, it's kind of maybe just the harving cycle. We don't really know and then I started digging in and realized that the business cycle was perfect. So the business cycle I used the Ism survey and it was a perfect cycle. I'm like, that's weird because if you remember, go back prior to two thousand and eight, we'd have these long periods of no recession, short periods and it was not it was variable. But suddenly it's like a metronome as you say, I'm like, huh, what's that all about? And eventually it led me to realize that two thousand and eight I think was the great reset, the one that people keep expecting happened. What they did is they basically four They told everybody they can fore go paying interest on all their debts, which was zero interest rates, and then they tried the new trick of printing money via quantata easing. Now, what that did is allow every single major government in the world to refinance all of their debts on this three to five year sector. And so they all did it, and what it did was force the business cycle into this four year cycle. And then all the asset prices are all correlated, whether it's tech, whether it's bitcoin, whether it's the economy itself, it's all driven by the same cycle, which happens to be the presidential election cycle, which happens to be the bitcoin harving cycle. It's all the same thing, and so when you understand that, it makes the game a lot easier. Now, this is not going to last forever, but for the period of time that we've got it seems to you playing out perfectly. And you can break these cycles down to four phases, which I call the seasons. So we have call it crypto or macro Winter. Well, that was twenty twenty two, that was twenty eighteen, that was twenty fourteen. There is four years. The next part of that is spring, where nobody quite believes that something is changing, but prices start moving higher. You know, bitcoin had a great year in twenty twenty three against most people's expectations, because spring is the time the shoots come up. Then you start transitioning into summer, which is this year, which happens to be the election year, which is when really the debt starts getting refinanced and they have to start using liquidity to finance it because there's not enough GDP growth to pay for the interest on the debts, and so they keep rolling forwards. These debts and they keep monetizing the interest payments, which is this debasement of currency that happens at about on a globalized level, eight percent a year their debasing currency and so and then next year will be macro full and then eventually the cycle tops out and we repeat it again, because it's based on the debt refi cycle, that this debasement of currency of eight percent. There's two ways of looking at it. You can say, rightly, so we're being robbed of our few your wealth because your future self is getting poorer because you're going to afford less assets with your income because income doesn't go up the assets do because of the debasement. Or the other way is you can say, I'm paying an eight percent put option fee on the entire system not breaking, because that's also what they're doing because they need to refinance the debt. They need to not let asset prices go too far down. So we can talk about that, but it's another way of looking at it, and you're like, would you pay eight percent a year to have the entire system not break?

Maybe if you have assets, for sure, If you don't have assets, that's a different conversation, exactly right, right, depends on how much you have to lose, so to kind of just maybe rewind the clock just a little bit. Because we're in a debt based monetary system, then we have to have this debt expansion, and so then we have this debt that has then been become collateral for more debt, which means the debt always has to be ruled over. And as President Biden told us on the last debt cilliing debate, that the US has never defaulted, and so we have to raise the debt ceilion so we don't default on the previous debt, right, which is basically what you're saying. We have to raise more debt to pay out the existing debt.

Maybe if you have assets, for sure, If you don't have assets, that's a different conversation, exactly right, right, depends on how much you have to lose, so to kind of just maybe rewind the clock just a little bit. Because we're in a debt based monetary system, then we have to have this debt expansion, and so then we have this debt that has then been become collateral for more debt, which means the debt always has to be ruled over. And as President Biden told us on the last debt cilliing debate, that the US has never defaulted, and so we have to raise the debt ceilion so we don't default on the previous debt, right, which is basically what you're saying. We have to raise more debt to pay out the existing debt.

Yes, and then pay the interest on that debt, because it compounds every time by the interest payments, so you keep adding debts just to pay the interest payments on the old debt. Now, why is that phenomena there? It's pretty straightforward when you understand it. The US government and all the major Western governments, plus Japan plus a few others are about one hundred percent plus of GDP and debt. Now, let's say theoretically interest rates a three percent, Well, if GDP growth is at three percent, then all GDP growth goes to pay those interest payments. Okay, but the problem is is the private sector is over one hundred percent of GDP and debt as well, and it's got interest payments. So if they both have it, there's not enough GDP to cover it. So what they've essentially done is removed the government debt payments out by printing money, and that stops the whole system becoming illiquid. Because if you think about it, you talked about collateral. Collateral is the money pledged against the loan. If the colateral falls too fast or too far, then you break the covenant on the loan and it gets called on you, and that's the whole system. That's what happened in two thousand and eight. So the best thing to do is not let the colateral fall by debasing the currency, and optically it goes up, so it kind of stops the system imploding.

Yes, and then pay the interest on that debt, because it compounds every time by the interest payments, so you keep adding debts just to pay the interest payments on the old debt. Now, why is that phenomena there? It's pretty straightforward when you understand it. The US government and all the major Western governments, plus Japan plus a few others are about one hundred percent plus of GDP and debt. Now, let's say theoretically interest rates a three percent, Well, if GDP growth is at three percent, then all GDP growth goes to pay those interest payments. Okay, but the problem is is the private sector is over one hundred percent of GDP and debt as well, and it's got interest payments. So if they both have it, there's not enough GDP to cover it. So what they've essentially done is removed the government debt payments out by printing money, and that stops the whole system becoming illiquid. Because if you think about it, you talked about collateral. Collateral is the money pledged against the loan. If the colateral falls too fast or too far, then you break the covenant on the loan and it gets called on you, and that's the whole system. That's what happened in two thousand and eight. So the best thing to do is not let the colateral fall by debasing the currency, and optically it goes up, so it kind of stops the system imploding.

Yeah, now, you talked about this the phenomenon where it all got synced up in two thousand and eight. We'll get into that, but just going backwards, why was it different in two thousand and eight. I mean, they seemingly did let the market fall and we did see the markets crashed by sixty five percent.

Yeah, now, you talked about this the phenomenon where it all got synced up in two thousand and eight. We'll get into that, but just going backwards, why was it different in two thousand and eight. I mean, they seemingly did let the market fall and we did see the markets crashed by sixty five percent.

And so they did.

And so they did.

And we started in two thousand, right, we started in two thousands. On two thousand and eight. But now you're kind of saying that they can't really do that.

And we started in two thousand, right, we started in two thousands. On two thousand and eight. But now you're kind of saying that they can't really do that.

That's right. Two thousand was less of a debt cycle and more of an equity cycle. The debts cycle in two thousand and eight really was the kind of end of the financial system. It was the point that we all knew was coming, which is like, you can't have this much leverage. And if the collateral, which happened to be house prices, which is not a volatile collateral, once that starts, it put a colateral call on the entire system, and faced with the entire blowing up of everything, they decided to stop it. Now, I don't think they quite understood what they were doing at that point. But then Europe had the same issue in twenty twelve, four years later, this four year cycle. Then Europe, the governments couldn't pay the debt. Okay, Now, this was a sovereign crisis of giant nations, and Draggy said I'll do whatever it takes. What that was was, I will debase the currency to stop the collateral falling so we can shure up the system. That then magnified the whole thing.

That's right. Two thousand was less of a debt cycle and more of an equity cycle. The debts cycle in two thousand and eight really was the kind of end of the financial system. It was the point that we all knew was coming, which is like, you can't have this much leverage. And if the collateral, which happened to be house prices, which is not a volatile collateral, once that starts, it put a colateral call on the entire system, and faced with the entire blowing up of everything, they decided to stop it. Now, I don't think they quite understood what they were doing at that point. But then Europe had the same issue in twenty twelve, four years later, this four year cycle. Then Europe, the governments couldn't pay the debt. Okay, Now, this was a sovereign crisis of giant nations, and Draggy said I'll do whatever it takes. What that was was, I will debase the currency to stop the collateral falling so we can shure up the system. That then magnified the whole thing.

So was it a change in their willingness to do whatever it takes to the point drive he said, you know, whatever it takes. Was it a change sort of in their willingness to intercede or was it a fact of that the system has gotten so over leveraged they have no choice now?

So was it a change in their willingness to do whatever it takes to the point drive he said, you know, whatever it takes. Was it a change sort of in their willingness to intercede or was it a fact of that the system has gotten so over leveraged they have no choice now?

Yeah, So I this is the time I got into bitcoin back in twenty twelve because I was living in Europe and you know, it got so bad that I was buying tin food and a generator because I thought, we're going to lose our banking system. Wow, because everyone you know, I was living in Spain. Spain was forced to take a bail out of nineteen billion dollars. They didn't want to take it, and we thought we're going to lose the banks. Cyprus obviously lost its banking system. They took the money out of everybody's accounts. But what was interesting at that point, I went around the world trying to start the world's safest bank with a bunch of friends of mine and family offices and stuff like that. And we had had a private meeting with the DTCC and Euroclear and the New York Fed. Now the DTCC in Euroclear, they're the custodians of the entire system. And Euroclear, I'd read somewhere had had to lend emergency money when Lehman went under fifty billion dollars, and so I asked them, I said, what was the collateral for that loan? And they said, oh, we had to use the positions from all of the members of Euroclear. And I'm like, is that customer or house account? Is it mingled? And they're like, oh, it's all mingled at our level. We have a claim in all assets. I'm like, okay. And then I spoke to the DTCC and I said, well, oh no. I spoke to Euroclear and said, what happens if Spain or Italy went bust? They said, then the entire colateral of the system is gone and it's a total wipeout of everything. That's when I realized how important the government debt was. I asked the DTCC and the New York Fed the same question, and they said, yes, they would lend if JP Morgan went under or something, they would lend money to the system and they would take customer positions as collateral. I'm like, okay, so you don't actually own anything. And I asked the New York feder said what is the leverage in US treasuries? And they said, we think treasuries are levered up to forty two times. Wow, So there's forty two claims on the same asset. If shit hits the fan, that's what they're scared of. And that I think they had the realization in twenty twelve, and I think they all understood the game, which was, Okay, we're going to have to continue to monetize this until we can grow our way out of it if we can.

Yeah, So I this is the time I got into bitcoin back in twenty twelve because I was living in Europe and you know, it got so bad that I was buying tin food and a generator because I thought, we're going to lose our banking system. Wow, because everyone you know, I was living in Spain. Spain was forced to take a bail out of nineteen billion dollars. They didn't want to take it, and we thought we're going to lose the banks. Cyprus obviously lost its banking system. They took the money out of everybody's accounts. But what was interesting at that point, I went around the world trying to start the world's safest bank with a bunch of friends of mine and family offices and stuff like that. And we had had a private meeting with the DTCC and Euroclear and the New York Fed. Now the DTCC in Euroclear, they're the custodians of the entire system. And Euroclear, I'd read somewhere had had to lend emergency money when Lehman went under fifty billion dollars, and so I asked them, I said, what was the collateral for that loan? And they said, oh, we had to use the positions from all of the members of Euroclear. And I'm like, is that customer or house account? Is it mingled? And they're like, oh, it's all mingled at our level. We have a claim in all assets. I'm like, okay. And then I spoke to the DTCC and I said, well, oh no. I spoke to Euroclear and said, what happens if Spain or Italy went bust? They said, then the entire colateral of the system is gone and it's a total wipeout of everything. That's when I realized how important the government debt was. I asked the DTCC and the New York Fed the same question, and they said, yes, they would lend if JP Morgan went under or something, they would lend money to the system and they would take customer positions as collateral. I'm like, okay, so you don't actually own anything. And I asked the New York feder said what is the leverage in US treasuries? And they said, we think treasuries are levered up to forty two times. Wow, So there's forty two claims on the same asset. If shit hits the fan, that's what they're scared of. And that I think they had the realization in twenty twelve, and I think they all understood the game, which was, Okay, we're going to have to continue to monetize this until we can grow our way out of it if we can.

Right.

Right.

So I remember two thousand and eight is when I sort of woke up to the macro world. I had been a real estate investor coming out of the two thousand crash, and then you know, I got woken up in two thousand and eight. I said, Wow, I need to go figure out this macro picture because it has all this ConTroll over my life I've been paying attention to. And that's when I really remember hearing the first you know, too big to fail sort of narrative coming out of it.

So I remember two thousand and eight is when I sort of woke up to the macro world. I had been a real estate investor coming out of the two thousand crash, and then you know, I got woken up in two thousand and eight. I said, Wow, I need to go figure out this macro picture because it has all this ConTroll over my life I've been paying attention to. And that's when I really remember hearing the first you know, too big to fail sort of narrative coming out of it.

And so they bailed out a lot of.

And so they bailed out a lot of.

These institutions AIG that were too big fail, but by doing that, they made even bigger institutions that are too big to fail.

These institutions AIG that were too big fail, but by doing that, they made even bigger institutions that are too big to fail.

It sounds like, so there's a really important point. I asked them directly why they let Leman go but they didn't let AIG go, and they're like, nobody was using Leman bonds as collateral. AIG were triple A and they were going to go to zero, and triple A bonds get used massively as collateral, and they thought there was thirty two times leverage in AIG bonds. They're like, we could not allow it to go. Leman wasn't as existential a problem as AIG. I was like, wow, that's fascinating.

It sounds like, so there's a really important point. I asked them directly why they let Leman go but they didn't let AIG go, and they're like, nobody was using Leman bonds as collateral. AIG were triple A and they were going to go to zero, and triple A bonds get used massively as collateral, and they thought there was thirty two times leverage in AIG bonds. They're like, we could not allow it to go. Leman wasn't as existential a problem as AIG. I was like, wow, that's fascinating.

And so now the system has gotten so levered up and it's there's so much collateral staking the other collateral that now we're sort of in this position that's gotten bigger, bigger, bigger and bigger worse that they just can't let it go now, which is what we saw in twenty twenty.

And so now the system has gotten so levered up and it's there's so much collateral staking the other collateral that now we're sort of in this position that's gotten bigger, bigger, bigger and bigger worse that they just can't let it go now, which is what we saw in twenty twenty.

And we saw it in twenty twenty two as well. So the moment the markets go down a certain amount, the liquidity comes back, even though the FED was still tightening and they were doing contains of tightening. The actual liquidity started picking up at the back end of twenty twenty two because they're like, enough, we don't want the S and P to full more than let's say, twenty five percent. And that's kind of a line in the sand that we've seen repeatedly that every time it starts to get a bit wobbly, magic of liquidity comes back, they debase the currency and everybody's okay again because if you think of the other big liability out there we talked about ordinary people. Ordinary people do have a pension and those pensions are in these assets too, and you've got this massive cohort of people that if you let the pensioners lose fifty percent of their wealth at what average age of baby boomer's average age is, what's seventy one, seventy two, Well, that's going to destroy consumption because there's seventy six million of these people. So then don't want to do that too. So that between a rock and a hard place. And I ask a lot of people who complain about what's going on rightly, so is what would you do different? Are you going to default on all of the baby boomers? And destroy their pensions and then destroy the entire economy, or do you let all of the system go under because you don't have any assets. It's very difficult to actually come up with an answer that is reasonable. They're all shits, they're all shit answers. So maybe the least shit is eight percent a year.

And we saw it in twenty twenty two as well. So the moment the markets go down a certain amount, the liquidity comes back, even though the FED was still tightening and they were doing contains of tightening. The actual liquidity started picking up at the back end of twenty twenty two because they're like, enough, we don't want the S and P to full more than let's say, twenty five percent. And that's kind of a line in the sand that we've seen repeatedly that every time it starts to get a bit wobbly, magic of liquidity comes back, they debase the currency and everybody's okay again because if you think of the other big liability out there we talked about ordinary people. Ordinary people do have a pension and those pensions are in these assets too, and you've got this massive cohort of people that if you let the pensioners lose fifty percent of their wealth at what average age of baby boomer's average age is, what's seventy one, seventy two, Well, that's going to destroy consumption because there's seventy six million of these people. So then don't want to do that too. So that between a rock and a hard place. And I ask a lot of people who complain about what's going on rightly, so is what would you do different? Are you going to default on all of the baby boomers? And destroy their pensions and then destroy the entire economy, or do you let all of the system go under because you don't have any assets. It's very difficult to actually come up with an answer that is reasonable. They're all shits, they're all shit answers. So maybe the least shit is eight percent a year.

Yeah.

Yeah.

The other problem is I've talked about her, whereas the government can't really afford a recession either or a market crash, right, I mean a large percent of their revenues come from cap gains and just income overall.

The other problem is I've talked about her, whereas the government can't really afford a recession either or a market crash, right, I mean a large percent of their revenues come from cap gains and just income overall.

If the stock market crashes.

If the stock market crashes.

Through a recession, would typically see what a twelve to fifteen percent drop in tax receipts, and when we're already running deficits like we are, that would also be catastrophic.

Through a recession, would typically see what a twelve to fifteen percent drop in tax receipts, and when we're already running deficits like we are, that would also be catastrophic.

Yeah, particularly if a bear market lasts longer than a year. So a year they can pretty much buffer as long as it's not too big. But if it grinds on for two or three years, you're right, the tax revenues don't add up. People get tipped out of jobs, so there's less other revenues coming. So it's cap gains, it's earnings, it's household income, the whole lot and then before you know it again exactly the same isshow I hadn't really thought of it that way, but that makes total sense. Is you just can't have a long term recession right now because everything is resting on it.

Yeah, particularly if a bear market lasts longer than a year. So a year they can pretty much buffer as long as it's not too big. But if it grinds on for two or three years, you're right, the tax revenues don't add up. People get tipped out of jobs, so there's less other revenues coming. So it's cap gains, it's earnings, it's household income, the whole lot and then before you know it again exactly the same isshow I hadn't really thought of it that way, but that makes total sense. Is you just can't have a long term recession right now because everything is resting on it.

Right Okay, So that sort of sets the stage for the everything code, so we understand the mechanisms of why the leverage is there and why they can't really let their crash and they have to continue to inject liquidity to keep it going. Then, as you said in two thousand and eight, that metronome moment sort of happened when, of course, if the bank is going to give you zero percent loans, you're going to refinance. So to the point that you made everybody refinanced at that time. Now, that was most of the debt. I mean, that was corporate debt, household debt, business debt, everything, and that was also global.

Right Okay, So that sort of sets the stage for the everything code, so we understand the mechanisms of why the leverage is there and why they can't really let their crash and they have to continue to inject liquidity to keep it going. Then, as you said in two thousand and eight, that metronome moment sort of happened when, of course, if the bank is going to give you zero percent loans, you're going to refinance. So to the point that you made everybody refinanced at that time. Now, that was most of the debt. I mean, that was corporate debt, household debt, business debt, everything, and that was also global.

Well, corporates actually did longer term debt. It was the governments that really did. Households didn't get access to debt ever. Again, so you know, household debt to GDPs falling for a long time, and corporate debt to GDP has been generally falling because tech stocks have become more dominant and they don't have debts old economy stocks do it all shifted. That shrinkage of household debt and corporate debt is exactly the same amount of the increase of government debt. So it's just going from one balance sheet to the other, got it. Because on the government balance sheet, you can debase currency. On the corporate balance you or the household balance sheet you can't do anything.

Well, corporates actually did longer term debt. It was the governments that really did. Households didn't get access to debt ever. Again, so you know, household debt to GDPs falling for a long time, and corporate debt to GDP has been generally falling because tech stocks have become more dominant and they don't have debts old economy stocks do it all shifted. That shrinkage of household debt and corporate debt is exactly the same amount of the increase of government debt. So it's just going from one balance sheet to the other, got it. Because on the government balance sheet, you can debase currency. On the corporate balance you or the household balance sheet you can't do anything.

And then there's a mechanism also that you've talked about that sort of in place because of the demographics and with falling demographics that we're seeing sort of through the developed world, that's also forcing the government to continue to do debase or continue to do sort of add stimulus into the GDP.

And then there's a mechanism also that you've talked about that sort of in place because of the demographics and with falling demographics that we're seeing sort of through the developed world, that's also forcing the government to continue to do debase or continue to do sort of add stimulus into the GDP.

Yes, So if you think about an aging population, if you think about your parents, the older they get, the less they spend. So aging populations tend to have lower trend rates of GDP they all do. It's happened observable everywhere. Because old populations spend less, they also tend to not know how long they're going to live for after they retire. So when my dad retired, his spending must have fallen sixty or seventy percent because he's like, well, I've got this much money, I don't know how I'm going to live for is my wife's going to be taken care of? And so they change their habits, and so that drags down GDP growth, as does debt, and so it keeps compounding. This whole thing is right now. For example, interest rates are at five and a half percent, but trend rate of GDP over the last five six years is about one point seventy five percent. So you've got this big gap and you need to get interest rates down so you can refire them. But all the time, GDP keeps falling over time, and you can forecast it into the future. It's just the birth's deaths, and it gives you thirty years of understanding, and it's just telling us unless something dramatic change, which is technology, we're just going to keep dragging down GDP forever. And we're seeing it worse older populations, Japan, China, most of Europe. They're older than the US because they had less immigration. What you find is their GDP keeps shrinking. Australia, on the other hand, has a high immigration rate, as has Canada, and they tended to do better because of the immigration rate, because really GDP growth is driven by population growth, productivity growth, and debt growth.

Yes, So if you think about an aging population, if you think about your parents, the older they get, the less they spend. So aging populations tend to have lower trend rates of GDP they all do. It's happened observable everywhere. Because old populations spend less, they also tend to not know how long they're going to live for after they retire. So when my dad retired, his spending must have fallen sixty or seventy percent because he's like, well, I've got this much money, I don't know how I'm going to live for is my wife's going to be taken care of? And so they change their habits, and so that drags down GDP growth, as does debt, and so it keeps compounding. This whole thing is right now. For example, interest rates are at five and a half percent, but trend rate of GDP over the last five six years is about one point seventy five percent. So you've got this big gap and you need to get interest rates down so you can refire them. But all the time, GDP keeps falling over time, and you can forecast it into the future. It's just the birth's deaths, and it gives you thirty years of understanding, and it's just telling us unless something dramatic change, which is technology, we're just going to keep dragging down GDP forever. And we're seeing it worse older populations, Japan, China, most of Europe. They're older than the US because they had less immigration. What you find is their GDP keeps shrinking. Australia, on the other hand, has a high immigration rate, as has Canada, and they tended to do better because of the immigration rate, because really GDP growth is driven by population growth, productivity growth, and debt growth.

Right now, you know, I've read into the demographics quite a bit. I remember Harry Dent Junior wrote a book, The Demographic Cliff, that sort of kind of showed these predictable spending patterns as you age through life. But another thing that I've heard, though, is that the baber boomers have so much money. They're sitting in so much wealth right now, and a lot of them they're like, well, we're going to die, so let's just spend it all.

Right now, you know, I've read into the demographics quite a bit. I remember Harry Dent Junior wrote a book, The Demographic Cliff, that sort of kind of showed these predictable spending patterns as you age through life. But another thing that I've heard, though, is that the baber boomers have so much money. They're sitting in so much wealth right now, and a lot of them they're like, well, we're going to die, so let's just spend it all.

I hear this a lot. There was a paper written the BIS or somewhere about this, but it's not provable in any country anywhere. So I've gone through all the demographic data and there was this whole thing said, well it's inflationary. I'm like, well, show me some fucking evidence, and I went through every single country. There is no evidence of inflation. They tend to be hoarders. Now. What happened in Japan was that aging japan cohort their kids retired by the time they passed it onto them. So a lot of them actually passed it on to their kids. But in Japan it was so bad that it went from retiree to retiree, so it never recycled into the economy. So I don't see evidence of baby boomers saying, well, I'm going to spend it all because you know, that's okay. When you take the average pension or retirement savings. When you take the median, the medium baby boomer is one hundred and fifty grand saved and they need to live for fifteen twenty years post retirement, can't. Yeah, how they're just going to blow it on you know, cruises, they're not. Yeah.

I hear this a lot. There was a paper written the BIS or somewhere about this, but it's not provable in any country anywhere. So I've gone through all the demographic data and there was this whole thing said, well it's inflationary. I'm like, well, show me some fucking evidence, and I went through every single country. There is no evidence of inflation. They tend to be hoarders. Now. What happened in Japan was that aging japan cohort their kids retired by the time they passed it onto them. So a lot of them actually passed it on to their kids. But in Japan it was so bad that it went from retiree to retiree, so it never recycled into the economy. So I don't see evidence of baby boomers saying, well, I'm going to spend it all because you know, that's okay. When you take the average pension or retirement savings. When you take the median, the medium baby boomer is one hundred and fifty grand saved and they need to live for fifteen twenty years post retirement, can't. Yeah, how they're just going to blow it on you know, cruises, they're not. Yeah.

I mean in the US, I believe about half of them have no savings. And then I think the median that do have savings is about one hundred and fifty so it's even worse.

I mean in the US, I believe about half of them have no savings. And then I think the median that do have savings is about one hundred and fifty so it's even worse.

Yeah, which is terrible. But when you look at the average, it's like a million bucks. Yeah, sure, because Jeff Bezos is in it, right, But you know that skew is hides a lot of bad stuff.

Yeah, which is terrible. But when you look at the average, it's like a million bucks. Yeah, sure, because Jeff Bezos is in it, right, But you know that skew is hides a lot of bad stuff.

Yeah.

Yeah.

Now, when you're looking at this, you've gone back and forth seeming we were talking about the US, but then you pull in sort of the West, so Japan, China, and Europe, et cetera. So it's important to sort of look at this from a global perspective, especially when we're looking at like global assets like bitcoin.

Now, when you're looking at this, you've gone back and forth seeming we were talking about the US, but then you pull in sort of the West, so Japan, China, and Europe, et cetera. So it's important to sort of look at this from a global perspective, especially when we're looking at like global assets like bitcoin.

It is very important because I believe all of these central banks and governments understand the game that they're in, and I think the Japanese figured it out first. They were the first two quant stats of easing, and I believe that somewhere around twenty twelve, with the rescue of the European system, they all got together and said, we will all have to run a liquidity cycle to do this, and that there is a game that they play because they kind of know. What's interesting is people always assume central banks are stupid. I find that a bit hubristic to think that they are. Maybe they just don't want to acknowledge what they're trying to do, but it would make total sense. And the more you think about that, the more you see it how they're also connected in what they do and how they do it, and it's all like a tacit agreement. Is okay, time to go, and they all go again.

It is very important because I believe all of these central banks and governments understand the game that they're in, and I think the Japanese figured it out first. They were the first two quant stats of easing, and I believe that somewhere around twenty twelve, with the rescue of the European system, they all got together and said, we will all have to run a liquidity cycle to do this, and that there is a game that they play because they kind of know. What's interesting is people always assume central banks are stupid. I find that a bit hubristic to think that they are. Maybe they just don't want to acknowledge what they're trying to do, but it would make total sense. And the more you think about that, the more you see it how they're also connected in what they do and how they do it, and it's all like a tacit agreement. Is okay, time to go, and they all go again.

Yeah.

Yeah.

Now, so we have these problems and now we're in this SYNCD up cycle. You mentioned that it's probably not going to stay that way forever, but that's where we're at right now. What would cause it to get out of sync?

Now, so we have these problems and now we're in this SYNCD up cycle. You mentioned that it's probably not going to stay that way forever, but that's where we're at right now. What would cause it to get out of sync?

Well, most people tend to err towards the well it's all going to blow up. I'm like, show me how if you can debase the currency, a global reserve currency, how's the assets going to collapse? You can't. It's like the Venezuelan stock market goes a lot in Bolivard terms, in dollar terms, it goes down. That's debasement. So I'm like, I don't think that is the outcome. What I actually think of the outcome is remember that magic formula GDP growth plus productivity, growth plus debt growth. Right, debt growth is stopped, it's just servicing of old debts. Population growth we know is negative out for thirty years. And what is the answer? AI and robots they're infinite humans. And productivity? What is productivity? Productivity really is how much output per kilo jowl of energy. Now, think of that as electricity costs. If you then think about and a lot of people like the Europeans their nuts. Look what they're doing with this green energy. They're wasting money. They're not Their entire job is to lower the cost of electricity, because that is the only way, they can pick up GDP because it creates the multiplier to productivity. They don't have the tech industry in the same way, but they have them and China are the big pushes of renewables. So the cost of renewables has been collapsing over time. It's down ninety nine percent over the last fifteen years. So as it's getting cheaper and cheaper, eventually you can scale it enough that you will change productivity. On the other hand, you've got Japan, China, the US using AI and robotics, which creates infinite people. Now, if you've got infinite people, you kind of break GDP. I call it the economic singerlarity. You get to some point where GDP doesn't mean anything anymore. What does any of this mean? So if you've got productivity going up because of energy costs and you've got infinite humans or humans in inverted commas, then that changes everything. Now people are going to say, oh, rarely smoking crack, this is all weird. This is exactly what happened after World War two. So let me talk you through that, because really important for people to understand World War II. So the crash of twenty nine was the system failure same as two thousand and eight. World War II finished nineteen forty five. This was roughly like the pandemic because the global economy had stopped. Everybody was out of the economy because they were locked up at home or they were in the services back in the forties. They all come back into the labor force by stuff because they've been out of the consumption for ages. The factories aren't ready, They're not able to deal with it. It's no supply chains. Prices rocket in both equations twenty percent back then, nine and a half percent this time around. Okay, Then what happens is inflation fell, actually went negative soon after the first inflation re push. Then what the central banks did then the FED was yield curve control, which is money printing to service the debt, and they ran that policy plus fiscal spending to generate new cars, new factories. Knew all of that boom of the fifties that went into the sixties. Now, the other problem they had is much like now, we'd lost like twenty percent of the entire male population of the Western world from warfare to wars, So you had to replenish population or GDP couldn't grow what happened the baby boomers. So by the time they got into their twenties it was nineteen seventies, they all go into the labor force at the same time, start buying a house, a car, a suit, a tie, everything. It creates a huge inflation because we had all of this consumption. But that over that period from about nineteen forty seven to about nineteen seventy it was perfectly four year cyclical. It was exactly the same thing the stock market did nine hundred percent.

Well, most people tend to err towards the well it's all going to blow up. I'm like, show me how if you can debase the currency, a global reserve currency, how's the assets going to collapse? You can't. It's like the Venezuelan stock market goes a lot in Bolivard terms, in dollar terms, it goes down. That's debasement. So I'm like, I don't think that is the outcome. What I actually think of the outcome is remember that magic formula GDP growth plus productivity, growth plus debt growth. Right, debt growth is stopped, it's just servicing of old debts. Population growth we know is negative out for thirty years. And what is the answer? AI and robots they're infinite humans. And productivity? What is productivity? Productivity really is how much output per kilo jowl of energy. Now, think of that as electricity costs. If you then think about and a lot of people like the Europeans their nuts. Look what they're doing with this green energy. They're wasting money. They're not Their entire job is to lower the cost of electricity, because that is the only way, they can pick up GDP because it creates the multiplier to productivity. They don't have the tech industry in the same way, but they have them and China are the big pushes of renewables. So the cost of renewables has been collapsing over time. It's down ninety nine percent over the last fifteen years. So as it's getting cheaper and cheaper, eventually you can scale it enough that you will change productivity. On the other hand, you've got Japan, China, the US using AI and robotics, which creates infinite people. Now, if you've got infinite people, you kind of break GDP. I call it the economic singerlarity. You get to some point where GDP doesn't mean anything anymore. What does any of this mean? So if you've got productivity going up because of energy costs and you've got infinite humans or humans in inverted commas, then that changes everything. Now people are going to say, oh, rarely smoking crack, this is all weird. This is exactly what happened after World War two. So let me talk you through that, because really important for people to understand World War II. So the crash of twenty nine was the system failure same as two thousand and eight. World War II finished nineteen forty five. This was roughly like the pandemic because the global economy had stopped. Everybody was out of the economy because they were locked up at home or they were in the services back in the forties. They all come back into the labor force by stuff because they've been out of the consumption for ages. The factories aren't ready, They're not able to deal with it. It's no supply chains. Prices rocket in both equations twenty percent back then, nine and a half percent this time around. Okay, Then what happens is inflation fell, actually went negative soon after the first inflation re push. Then what the central banks did then the FED was yield curve control, which is money printing to service the debt, and they ran that policy plus fiscal spending to generate new cars, new factories. Knew all of that boom of the fifties that went into the sixties. Now, the other problem they had is much like now, we'd lost like twenty percent of the entire male population of the Western world from warfare to wars, So you had to replenish population or GDP couldn't grow what happened the baby boomers. So by the time they got into their twenties it was nineteen seventies, they all go into the labor force at the same time, start buying a house, a car, a suit, a tie, everything. It creates a huge inflation because we had all of this consumption. But that over that period from about nineteen forty seven to about nineteen seventy it was perfectly four year cyclical. It was exactly the same thing the stock market did nine hundred percent.

So the productivity was led by the return of the people at that point and the demand that they had, and the rebuilding of the world and the rebuilding of the world, reindustrialization, especially over in Europe there was completely destroyed.

So the productivity was led by the return of the people at that point and the demand that they had, and the rebuilding of the world and the rebuilding of the world, reindustrialization, especially over in Europe there was completely destroyed.

Yeah, but the US too. You know all the factories you think of, you know, all of the famous goods of you know, washing machines, cars, TVs. That's all that period, right, So it was a huge productivity game.

Yeah, but the US too. You know all the factories you think of, you know, all of the famous goods of you know, washing machines, cars, TVs. That's all that period, right, So it was a huge productivity game.

And it was also an explosion of debt because we sort of went off like an equity based system to rebuild the world at that time.

And it was also an explosion of debt because we sort of went off like an equity based system to rebuild the world at that time.

But that didn't happen un till later. And why that happened was the baby boomers starting hitting there by the early eighties, when Margaret Thatcher and Ronald Reagan kind of opened the debt's bigots to households. What had happened because you had the largest cohort of people ever at the same time into the labor well, guess what, their wages didn't go up because they're competing. Then as you go out further, obviously we had the World Trade Organization Agreement and China, so now you're competing. So these people's wages in real terms never really went up. So the American dream was shot in the head somewhere in the you know, once their parents had them in the nineteen fifties, and they didn't nobody realized what was going on. So what they started to do as asset prices started to rise, they borrowed. And you can pretty much measure the difference in the rise of asset prices and the need to fund a future retirement by debt. And so they were doing a logical thing, which is I need to get on this ladder. But what happens is it just kind of got out of control. And then the governments did the same because you have to fund the pensions of this older group, you know, the corporates got screwed with defined benefit pension plans for the same group. So it was the baby boomers were to blame. But they were all rational actors. They weren't evil people. If you want to blame anybody, blame their parents for having too many kids at the same time. And you can blame that on Adolf Hitler. And before that, you can blame it on the Treaty of Versailles for trying to force the Germans after World War One to pay for the debts of World War One, and they had the hyperinflation. Hitler comes into power world War two, a bunch of kids. The kids spend too much money, caused the great inflation. They're all funcked because there's too many of them. They don't earn enough wages, they start borrowing money and there it goes.

But that didn't happen un till later. And why that happened was the baby boomers starting hitting there by the early eighties, when Margaret Thatcher and Ronald Reagan kind of opened the debt's bigots to households. What had happened because you had the largest cohort of people ever at the same time into the labor well, guess what, their wages didn't go up because they're competing. Then as you go out further, obviously we had the World Trade Organization Agreement and China, so now you're competing. So these people's wages in real terms never really went up. So the American dream was shot in the head somewhere in the you know, once their parents had them in the nineteen fifties, and they didn't nobody realized what was going on. So what they started to do as asset prices started to rise, they borrowed. And you can pretty much measure the difference in the rise of asset prices and the need to fund a future retirement by debt. And so they were doing a logical thing, which is I need to get on this ladder. But what happens is it just kind of got out of control. And then the governments did the same because you have to fund the pensions of this older group, you know, the corporates got screwed with defined benefit pension plans for the same group. So it was the baby boomers were to blame. But they were all rational actors. They weren't evil people. If you want to blame anybody, blame their parents for having too many kids at the same time. And you can blame that on Adolf Hitler. And before that, you can blame it on the Treaty of Versailles for trying to force the Germans after World War One to pay for the debts of World War One, and they had the hyperinflation. Hitler comes into power world War two, a bunch of kids. The kids spend too much money, caused the great inflation. They're all funcked because there's too many of them. They don't earn enough wages, they start borrowing money and there it goes.

And we blame the Treaty of Versailles on the war World War One, and really the War of England, which was really which was really to blame because of the creation of the Bank of England. They created a fiat monetary system that allowed these endless wars to go on.

And we blame the Treaty of Versailles on the war World War One, and really the War of England, which was really which was really to blame because of the creation of the Bank of England. They created a fiat monetary system that allowed these endless wars to go on.

Yes, and just you know, I guess the UK Navy is the other one, but.

Yes, and just you know, I guess the UK Navy is the other one, but.

Yes, but came from the monetary system that was created, yeah.

Yes, but came from the monetary system that was created, yeah.

Which probably came from John Law, from the friend very much. You know, it's all connected. And that's what people don't see. People get angry with each other. We see the polarization of politics, right, but people don't realize that this is this was set off, as you're rightly saying, two hundred years ago, maybe even longer. I don't even know where this thread begins. I haven't bothered to go back that far, but it probably goes back further and further and further. And it's just the mascinations of this whole thing. And you know, we have these various blow ups. Nineteen twenty nine was one of them too.

Which probably came from John Law, from the friend very much. You know, it's all connected. And that's what people don't see. People get angry with each other. We see the polarization of politics, right, but people don't realize that this is this was set off, as you're rightly saying, two hundred years ago, maybe even longer. I don't even know where this thread begins. I haven't bothered to go back that far, but it probably goes back further and further and further. And it's just the mascinations of this whole thing. And you know, we have these various blow ups. Nineteen twenty nine was one of them too.

Yeah, I mean you can go back.

Yeah, I mean you can go back.

It's more like the volatility of life, right, the volatility of humanity and the pendulum that swings too far one way and over correct the other way. I mean, you go back to their fourteen hundreds when Spain went and found all the silver in Peru, brought all the silver back, and then you had massive inflation because you increased the minitary base too much.

It's more like the volatility of life, right, the volatility of humanity and the pendulum that swings too far one way and over correct the other way. I mean, you go back to their fourteen hundreds when Spain went and found all the silver in Peru, brought all the silver back, and then you had massive inflation because you increased the minitary base too much.

It's exactly right, so you know, it's all the same it's all the same thing. And you know, I actually don't I'm not actually a gold standard guy either, because we had the same problems then too. So I don't think we found an easy answer because humans a greedy and they want leverage, and we've never solved that. You go back several thousand years and humans had leverage then as well as if there's something about humans and leverage that we'd like to bring our future forward that is just like inherent in humanity.

It's exactly right, so you know, it's all the same it's all the same thing. And you know, I actually don't I'm not actually a gold standard guy either, because we had the same problems then too. So I don't think we found an easy answer because humans a greedy and they want leverage, and we've never solved that. You go back several thousand years and humans had leverage then as well as if there's something about humans and leverage that we'd like to bring our future forward that is just like inherent in humanity.

Well, it's our ingenuity, right, So we are trying to get leverage, if you will, trying to get more output for the less input, So create a willbear out to carry eight rocks at a time as opposed to carying one at a time. And so the problem is our ingenuity maybe takes it too far, where then we start to steal from the future as opposed to just like trying to improve the future.

Well, it's our ingenuity, right, So we are trying to get leverage, if you will, trying to get more output for the less input, So create a willbear out to carry eight rocks at a time as opposed to carying one at a time. And so the problem is our ingenuity maybe takes it too far, where then we start to steal from the future as opposed to just like trying to improve the future.

Maybe that's right.

Maybe that's right.

I mean a lot of people say that, you know, kind of human GDP per capita and standard of living increases came from the ability to use debt to borrow a bit from the future to leverage it to create better outcomes. But then, yes, we always go too far right, just what we do.

I mean a lot of people say that, you know, kind of human GDP per capita and standard of living increases came from the ability to use debt to borrow a bit from the future to leverage it to create better outcomes. But then, yes, we always go too far right, just what we do.

I think the difference what misis broke down is the difference of commodity credit versus circulating credit. So if I grow eight bushels of wheat and I consume six, I could loan you one of those bushels of wheat on credit. But that came from my supply, right, versus being able to create the debt out of thin air. I think that's maybe where we sort of jumped the across the rub of glass.

I think the difference what misis broke down is the difference of commodity credit versus circulating credit. So if I grow eight bushels of wheat and I consume six, I could loan you one of those bushels of wheat on credit. But that came from my supply, right, versus being able to create the debt out of thin air. I think that's maybe where we sort of jumped the across the rub of glass.

But no, because if we think about the gold standard, we had nineteen twenty nine. You know, we had plenty of those debt crises.

But no, because if we think about the gold standard, we had nineteen twenty nine. You know, we had plenty of those debt crises.

It wasn't nineteen twenty nine because England left the gold standard. And when Churchill tried to go back to the gold standard, Keen said, hang on, hang on, you've inflated the currency too much. You need to now reprice it at sixty bucks an ounce. Churchill said no, went to thirty, which then caused a massive deflation.

It wasn't nineteen twenty nine because England left the gold standard. And when Churchill tried to go back to the gold standard, Keen said, hang on, hang on, you've inflated the currency too much. You need to now reprice it at sixty bucks an ounce. Churchill said no, went to thirty, which then caused a massive deflation.

Yeah, that's possibly right. It was possibly the increasing the value of the dollar over the time versus the pound as we shifted from one economic system to the other.

Yeah, that's possibly right. It was possibly the increasing the value of the dollar over the time versus the pound as we shifted from one economic system to the other.

So that frank So it was leaving the gold standard and trying to come back to a manipulated standard that maybe caused that whole thing.

So that frank So it was leaving the gold standard and trying to come back to a manipulated standard that maybe caused that whole thing.

Possibly, Yeah, who's to say so.

Possibly, Yeah, who's to say so.

Back to the GDP plus productivity plus debt growth.

Back to the GDP plus productivity plus debt growth.

You talked about the rate of wage growth.

You talked about the rate of wage growth.

And so the rate of wage growth is going up with the GDP growth, which is, to your point, about one and a half percent. But the problem is that asset growth or price growth. Let maybe the inflation isn't really the CPI we've been sold, it's the rate of debasement, which since twenty nineteen has been averaging about ten percent.

And so the rate of wage growth is going up with the GDP growth, which is, to your point, about one and a half percent. But the problem is that asset growth or price growth. Let maybe the inflation isn't really the CPI we've been sold, it's the rate of debasement, which since twenty nineteen has been averaging about ten percent.

Exactly.

Exactly.

That's the real hurt rate.

That's the real hurt rate.

What you've got to understand is for each one and a half percent of earnings growth, assets are growing up, going up by ten percent, so each year you can buy less and less assets. Now, what is an asset. An asset is future deferred consumption, whether it's for use yourself in retirement or your kids or whatever it is. But it's a saving of wealth that needs to be to grow to compensate for the how long it's locked up for, and therefore your future self is protected. It's your wealth, and if it grows enough, you make a lot of money. But the issue is your everybody's future self is getting poorer because every year you can't afford as much assets. And so therefore all of these millennials are just finding this in front of them that they can't buy a house anymore, they can buy less of the S and P. It's just a really messy, ugly situation.

What you've got to understand is for each one and a half percent of earnings growth, assets are growing up, going up by ten percent, so each year you can buy less and less assets. Now, what is an asset. An asset is future deferred consumption, whether it's for use yourself in retirement or your kids or whatever it is. But it's a saving of wealth that needs to be to grow to compensate for the how long it's locked up for, and therefore your future self is protected. It's your wealth, and if it grows enough, you make a lot of money. But the issue is your everybody's future self is getting poorer because every year you can't afford as much assets. And so therefore all of these millennials are just finding this in front of them that they can't buy a house anymore, they can buy less of the S and P. It's just a really messy, ugly situation.

Yeah, I have two daughters and here I live in a little beach down here in southern California. That the average home price in this little town is like one point six million dollars, And it's like, how are my daughters ever going to be able to live in this town like that they grew up in?

Yeah, I have two daughters and here I live in a little beach down here in southern California. That the average home price in this little town is like one point six million dollars, And it's like, how are my daughters ever going to be able to live in this town like that they grew up in?

It's incredible, that's right.

It's incredible, that's right.

It's like when I was when I was in my twenties, I bought an apartment in London, and yeah, I was working finance. I had a relatively high salary, but the apartment cost me three time salary, four time salary. There Now the same thing would be ten, twelve, fourteen times. How can anybody afford that?

It's like when I was when I was in my twenties, I bought an apartment in London, and yeah, I was working finance. I had a relatively high salary, but the apartment cost me three time salary, four time salary. There Now the same thing would be ten, twelve, fourteen times. How can anybody afford that?

Yeah, So now we have the tech explosion, so cheap energy, I mean, China's building the one hundred and fifty nuclear power plants right now. That's cheap energy for sure. Cheap energy plus you know AI robotics that you're talking about, which increases productivity. But I would assume that would also put downward pressure on wages as well.

Yeah, So now we have the tech explosion, so cheap energy, I mean, China's building the one hundred and fifty nuclear power plants right now. That's cheap energy for sure. Cheap energy plus you know AI robotics that you're talking about, which increases productivity. But I would assume that would also put downward pressure on wages as well.

Oh for sure. That's the biggest, single, most deflationary thing that has ever happened to humanity.

Oh for sure. That's the biggest, single, most deflationary thing that has ever happened to humanity.

But if they if the productivity is pushing GDP up, then you would think they would also if wages are growing at the rate of GDP, and GDP is growing now because productivity increased, wouldn't bring wages up with it.

But if they if the productivity is pushing GDP up, then you would think they would also if wages are growing at the rate of GDP, and GDP is growing now because productivity increased, wouldn't bring wages up with it.

I mean, wages are, yes, but don't forget the population shrinking, the human population, right, so net aggregate demand actually doesn't increase as much because you're going to have all of these seventy six million boomers dying off and that's a huge dropping population because the replacement rates of population is so low.

I mean, wages are, yes, but don't forget the population shrinking, the human population, right, so net aggregate demand actually doesn't increase as much because you're going to have all of these seventy six million boomers dying off and that's a huge dropping population because the replacement rates of population is so low.

Got it?

Got it?

Okay, Well, so that's that's sort of this liquidity sort of fin refinance cycle sets the stage for that. Now the next thing that that's the everything code sort of summed up one thing I've been studying. I had Michael Howell on the show, and I've been studying his work, and he was showing how basically, when you get global liquidity.

Okay, Well, so that's that's sort of this liquidity sort of fin refinance cycle sets the stage for that. Now the next thing that that's the everything code sort of summed up one thing I've been studying. I had Michael Howell on the show, and I've been studying his work, and he was showing how basically, when you get global liquidity.

I'm not sure.

I'm not sure.

He doesn't really break down exactly how he measures global liquidity, and you guys have your own proprietary I don't. I'm not sure how much those correspond with each other. But the S and P five hundred is basically moving up almost I think ninety to ninety five percent correlated to the global liquidity. But then we have other assets like gold with a sensitiv ratio of like one point five and bitcoint with like a sensitivy ratio of like nine. So how do you look at the global liquidity in relation to like the types of assets we should be buying.

He doesn't really break down exactly how he measures global liquidity, and you guys have your own proprietary I don't. I'm not sure how much those correspond with each other. But the S and P five hundred is basically moving up almost I think ninety to ninety five percent correlated to the global liquidity. But then we have other assets like gold with a sensitiv ratio of like one point five and bitcoint with like a sensitivy ratio of like nine. So how do you look at the global liquidity in relation to like the types of assets we should be buying.

So, yeah, this was the this is what got me on the journey. I got to this bit before I actually got to the everything code is. They're all correlated, some lead, some lag a bit, but they're basically all correlated to the business cycle. We always have been. But if everything is being driven by this one dominant factor, which is debasement of currency, and your hurdle rate is let's say eight percent debasement plus three percent inflation or something eleven percent twelve percent for easy maths on a globalized level, So unless you're making twelve percent returns, you're not going anywhere. Then at Exponential Age Asset Management, the asset management firm that I co founded, we have this table of all of the different assets, and basically the SMP is about twelve percent so owning equities, which is why all of the millennials who have four to one k's and they put it in the SMP still can't afford a house because they're just matching the debasement. They're not beating it right, so they're not getting paid for locking up money for extended periods of time. The Nasdaq about seventeen percent a year since twenty eleven. Okay, so the NASDAK, because it's a secular technology trend outperforms makes sense. And then you've got the bizarro world of bitcoin, which is one hundred and fifty percent. Gold actually doesn't beat it gold about eight or seven, so it's actually actually worse off in gold than you are. Only the S and P five hundred, which is why that ratio keeps moving. So bitcoin makes such a dramatic difference. So all I started doing was then dividing every chart by the total global liquidity or even the FED balance sheet or M two whatever you want to use us, right, and you found that the S and P go sideways, Gold go sideways, real estate go sideways. Roughly, the NASDAK goes up, and bitcoin does that. Okay, So now you've got two assets, only two assets in the world that outperform the debasement. Tech stocks we get it tomorrow is more digital than today. Of course they're going to do well over time. And second is bitcoin. So you divide one by the other, and the nasdak's down ninety nine point nine seven percent versus bitcoin. And once you see it like that and you realize it's all driven by one cycle, which is one dominant factor of debasement, then it makes it really easy, which is just on the one asset that outperforms. Yeah, and because they're all correlated and risk adjusted, it's by far the most superior asset we've ever been given on a risk adjusted basis. So just do that.

So, yeah, this was the this is what got me on the journey. I got to this bit before I actually got to the everything code is. They're all correlated, some lead, some lag a bit, but they're basically all correlated to the business cycle. We always have been. But if everything is being driven by this one dominant factor, which is debasement of currency, and your hurdle rate is let's say eight percent debasement plus three percent inflation or something eleven percent twelve percent for easy maths on a globalized level, So unless you're making twelve percent returns, you're not going anywhere. Then at Exponential Age Asset Management, the asset management firm that I co founded, we have this table of all of the different assets, and basically the SMP is about twelve percent so owning equities, which is why all of the millennials who have four to one k's and they put it in the SMP still can't afford a house because they're just matching the debasement. They're not beating it right, so they're not getting paid for locking up money for extended periods of time. The Nasdaq about seventeen percent a year since twenty eleven. Okay, so the NASDAK, because it's a secular technology trend outperforms makes sense. And then you've got the bizarro world of bitcoin, which is one hundred and fifty percent. Gold actually doesn't beat it gold about eight or seven, so it's actually actually worse off in gold than you are. Only the S and P five hundred, which is why that ratio keeps moving. So bitcoin makes such a dramatic difference. So all I started doing was then dividing every chart by the total global liquidity or even the FED balance sheet or M two whatever you want to use us, right, and you found that the S and P go sideways, Gold go sideways, real estate go sideways. Roughly, the NASDAK goes up, and bitcoin does that. Okay, So now you've got two assets, only two assets in the world that outperform the debasement. Tech stocks we get it tomorrow is more digital than today. Of course they're going to do well over time. And second is bitcoin. So you divide one by the other, and the nasdak's down ninety nine point nine seven percent versus bitcoin. And once you see it like that and you realize it's all driven by one cycle, which is one dominant factor of debasement, then it makes it really easy, which is just on the one asset that outperforms. Yeah, and because they're all correlated and risk adjusted, it's by far the most superior asset we've ever been given on a risk adjusted basis. So just do that.

Something I talk a lot about is a lot of different cycles on different different types of cycles, mainly political revolution cycles, financial cycles, and then tech cycles.

Something I talk a lot about is a lot of different cycles on different different types of cycles, mainly political revolution cycles, financial cycles, and then tech cycles.

And you have like this conjoinit and wave, like this K wave cycle.

And you have like this conjoinit and wave, like this K wave cycle.

Right, it's like a forty to sixty year I just call it a fifty year sort of like a tech revolution cycle, and you know, there's been five. I say that we're entering our sixth one now. So the last one started nineteen seventy one, which was the microprocessor, which brought telecommunications, personal computers, and the Internet. Before that, it was nineteen oh eight, which was you know, the automobile, oil futures, but also mass production.

Right, it's like a forty to sixty year I just call it a fifty year sort of like a tech revolution cycle, and you know, there's been five. I say that we're entering our sixth one now. So the last one started nineteen seventy one, which was the microprocessor, which brought telecommunications, personal computers, and the Internet. Before that, it was nineteen oh eight, which was you know, the automobile, oil futures, but also mass production.