The Last Trade E013: A Market Whistling Past the Graveyard with Gary Brode

What you're telling me is that music is about to stop, and we're going to be left holding the biggest bag of bodarous extras ever assembled in the history of doubtless 1974198792972 thousand. Whatever we want to call this, it's all just the same thing over and over. We can't help ourselves. I say when we. Sell, hey, I say when we sell. And we're live. Welcome back to Last Trade. We've essentially recorded a podcast in the 1st 20 minutes before hitting record. So we figured it's time to jump in. Our guest this week is Gary Brod, founder of Deep Knowledge Investing left the hedge fund world to work for you. Now it's on the good side as this Twitter bio says. Gary, welcome to the show. We're extremely excited to have you today. Thanks, I appreciate you having me. Glad to be here. Well, I mean like I said, we essentially recorded half a podcast before we even hit record. And on Tuesday we had an intro call. And I'm really excited for this discussion because I think your experience and your knowledge of markets more broadly and then your thesis on Bitcoin specifically is extremely valuable for the listeners of this show. And as we were having that prerecording pow wow, we decided we'd start with the 10 year. Treasury bond yields have gone up, they're about 4.3% right now. People are screaming that at their highest level since 2007. But you said it, you should pull up a chart that really looks at the historical yield in the US 10 year Treasury to put things in perspective. So what are we looking at here? Yeah, people have this sense that, you know, Oh no, the feds going to break the economy. It's not having shortterm rates at five, 5, 1/2% and longterm rates. At 4.3%, that's going to break the economy. It was the decade and a half of 0 and near 0 interest rates and massive amounts of quantitative easing, which is really just money printing, that created the problem. And so you know the advantage of looking at you know 50-60 year chart which is what we have in front of us here as you can see where the 10 year is right now isn't at all out of line with with historical norms. The What the Fed is doing right now is actually fixing the problem. And please don't think I'm a Fed apologist. They're the ones who created the problem over the prior 15 years. Interesting. So, so I'm going to jump to it Gary, because we were. Teeing it up a little bit beforehand. But So what does that mean going forward? Does that mean hard landing? Does that mean soft landing? Does that mean something else? Yeah. So I think first of all, there's no way to avoid the long term hard landing. The situation we have right now, everybody was focused during the debt ceiling crisis, which was really just six months of theater, but everyone was focused on the $31 trillion of nominal debt that we have, which instantly went to above 32 because we were accruing expenses and pretending they didn't exist. The agreement in Congress and the White House is to expand that debt to $35 trillion over the next year and a half. And So what we're hearing from Congress is there's going to be no effort at any kind of fiscal sanity. We're just going to overspend by trillions of dollars a year. And that's not even the big problem. The big problem that we have is that we have off balance sheet liabilities of over $200 trillion. These are obligations like Medicare, Medicaid, Social Security, Obamacare, our entire social safety net. The American government has made promises to people. And told them we will be here to pay for certain things to care for you. And the problem is that that's not accounted for in the debt. That's over $200 trillion. So the real liabilities of the United States are closing in on 1/4 of a quadrillion dollars. Okay. I mean, it's a ridiculous number. If you're listening to this and saying what in the world is a quadrillion? That that's exactly it. This will never be paid because it can't be paid. And so we'll be left with two choices. One will be an Argentina style default where we tell our creditors, yeah, guess what, we're not gonna pay you. We're writing off the debt and the dollar is no longer even remotely reliable. The other option, which is what I think will happen, will be a stealth default where we'll print so much currency. To fund all of this excessive spending, that the value of the dollar will plummet. And so maybe you're on Social Security, you get your $3000 check and you can go buy a few days worth of groceries with it. And that's, I think, the direction we're heading. Now The thing, I don't know. So it long. In the long run, all systems fall apart and these things always end the same way. All Fiat currency, it it, it all goes to zero. In the long term, all empires fail. This is just the nature of things. In the short term, the thing I don't know is whether the Fed can get away with another round of what we call extend and pretend. Which is just a cute way of saying, hey, maybe the lower rates again, start the party, start printing more currency, hand out more Stimmies, and do all of the kinds of things that they've been doing over the last few years or the last couple of decades. And you know, maybe the party gets started again. These things go until they don't. But trying to predict exactly when the whole thing falls apart is impossible. It's typically the bond market that makes these decisions. And you know, for anyone listening to this, when you hear people talking about or using the term bond vigilantes, that's just a fancy finance way of saying that at some point bond investors are going to say. We're not going to take the inflation risk on your bonds. So we require more yield, which again is a fancy way of saying bond prices would fall there, that it would indicate a lack of demand for more U.S. debt because people don't trust it and they don't trust the currency. And so whether we can get away with another round or two of that, I have no idea. And anybody who tells you they know that, you know it's making something up, but somewhere between the short term and long term, it does all fall apart. Yeah, I think it's very interesting how. You know with with the banking crisis and the BTFP they've implemented like a a different strategy than in 2008 where we had the kind of monolithic bailout and and it was all bundled into one big package that there was a ton of political opposition to. And with the banking crisis that we've we've already smoothed over, papered over, they managed to create like a a brand new facility that was just for the specific use case. And you know, technical enough that nobody really understood what was happening here, it was a bailout without those words being applied to it. And I and I wonder if like that's the new strategy, Like are they going to find spin up new little vehicles to bail out pieces of the economy as they fall apart, knowing that they can do that in this kind of decentralized way rather than a monolithic? A highly politically charged bailout program and and maybe that allows them to do this for another decade. Yeah. So I I think that's a phenomenal point and it's a great question. And what the Fed and the Treasury Department did here was the worst of all possible worlds because they injected uncertainty in this to a situation where they were giving people bailouts. And the reason these ballots need to stop, besides the fact that it's just immoral and wrong, and I don't know that the US taxpayer wants to be funding the banks again, but that's exactly what's happening. And the problem with these systems is it encourages the banks to take excessive risk. So imagine you're in a situation where you're basically running. I mean, these banks are basically hedge funds. And so if they make a lot of money, then they take home huge bonuses. And if they have gigantic problems, then the government bails them out backstop by the taxpayer. And the only reason we're not having riots in the street is because nobody goes to the taxpayer and says, hey, listen, we're gonna bail out JP Morgan and all the other and Wells Fargo, all the other big banks. So here's your tax bill for it. Because people would be rioting in the streets if that were the case. And instead what they do is they print currency and they hand it out to their favored people. And the US taxpayer never really sees the bill, although we're seeing it in inflation. This is where all of this comes out. And what all of this does is it encourages the banks to take on excess of risk. Because what would you do? Imagine going to a casino in Vegas and the casino says to you, hey, if you gamble at the tables and you win, we're going to give you your winnings. And if you lose, we'll cover your losses. Well, what you do is run around like crazy and make every high risk, high stakes bet you possibly could because you could win a fortune. But if you lose, somebody else will cover it. And that's exactly what our government is doing in our name. Now what the Treasury Department and the Fed did in this particular go around and we're going back to the first quarter of this year, is they made that horrible, immoral system. Even worse, by injecting uncertainty into it. And so questions that people were asking Jerome Powell, the chairman of the Fed, and Janet Yellen, the secretary of the Treasury, is who's covered, who's not covered, Who you bailing out, Who you not bailing out? Which deposits are we going to cover? Are we going to cover the deposits of foreign governments? And the answer that came back was it depends where you're banking. If you're at one of the two big to fail banks, then yeah, maybe. We'll probably cover you. If you're at one of the smaller regional banks, maybe not, we're not really sure. And so that created all of this uncertainty. And what it does is it drives deposits and business away from the smaller safer banks into banks that are backed by the government can offer better terms because they don't have to take on the expense of their own risk control and they're all backed by the taxpayer. And so it uncertainty in the financial system. Is just as bad as bad policy, and somehow these guys managed to nail both of them right. Bad policy and uncertainty. Yeah, Peter St. Ange had a really good video last week, One of his daily videos where he sort of dissected one of the externalities of the Fed's recent policy decisions, which is that some of the weaker banks are essentially getting deposit loans from from the stronger banks at higher rates to sort of. Bolster their balance sheets, which is really just papering over systemic weakness at that layer of the banking sector which is one of these externalities and uncertainties that's been injected into the market, which is absolutely insane when you think about it. Smaller banks borrowing other banks deposits at extremely high rates when it's becoming abundantly clear that it's much harder to lend out money right now. Right. And add to that the the additional complication of the fact that the smaller banks have to offer higher rates because people correctly view them as more risky than the larger banks, right. And so I actually just saw it on a personal level. I saw that yesterday. I did have an account at First Republic when everything was going on there, I just pulled my money out. I just left the account active but with a 0 balance. And when JP Morgan acquired them, I thought, you know, maybe it might be a good idea to maintain this account. You never know when you want another bank. And so I took, you know, a certain amount of money and I put it back in the account and just yesterday I got my statement and the interest that they paid me on that is 0, right. And and we've got the 10 year at what, 4.24 point 3%. You got short term rates above 5%. You can buy CD's at 5%, right? You have all of these other options and and the smaller banks are now offering in some cases four, 5% on deposits. But here's JP Morgan offering zero. You know, when we get done filming this, I'm going to give them a call and find out what their story is. Yeah, that's. I mean, it seems like things are again being papered over, are very fragile in particular parts of the banking sector. Here in the US, Gary open the show talking about like historical sort of tendencies of Fiat currencies and empires. And I know we have the Japanese government bond 10 year chart to throw up as well. Like, how does the the nature of the interconnected global economy really change things? This time for for the United States and everybody else like it does. The trend towards globalization over the last five decades really put us in a very unique situation from a global financial system perspective. Yeah, that's two phenomenal questions there. Taking the the second-half of that regarding globalization, one of the things that I think people haven't focused on so much. Is the fact that we've had roughly 40 years or so of pretty consistent peace among great powers and lots of globalization. And so we've been able to outsource lots of manufacturing to low cost places in Asia. And you know that that worked really well in keeping prices and inflation down for many, many years. And you know, post pandemic and with ramping up hostilities between the US and Russia and the US and China for good reasons. But those hostilities mean that people are realizing, you know, what, we really need to harden our supply chain. We need to have better supply and be more reliable. And what that means is less globalization, more security and higher costs. All of this is going to feed into inflation. Somebody who I respect a great deal, who's written about this at length is Lynn Alden. And she's she's been talking about this for at least a year, maybe a little bit longer even. Regarding Japan, there's a reason why at deep knowledge investing, we've been watching Japan very closely for the last year. And that's because we see the problems that Japan is about to face as being the same ones that we're going to see in the EU and then the UK and then the United States. And I think it's going to go in that direction from East to West. And so what's happening in Japan right now is they are trapped. Their government debt to GDP is 260%. That is an enormous number of people usually start to get concerned when you cross over that 100% threshold. And the reason Japan was able to do that is because we had this period of insanely low global rates and the Bank of Japan had set their short term interest rates even below 0 for much of the last decade. And so when you have interest rates at or around zero, they kept their ten year peg that below 50 basis points, so half a percent. When you have interest rates that low, you can afford to have massive debt. Well, here's what ends up happening. Last year, the major economies, the US Federal Reserve, the European Central Bank, the Bank of England, all started to raise rates to deal with inflation. And what they did was that made the yield on the Japanese yen very unattractive. And so people did what was called the carry trade, and they sold yen. And the way they did that was by shorting Japanese government bonds. And they used that the the funds from shorting the yen to buy U.S. Treasuries and they captured the yield. Now the response when you have billions and billions of dollars selling yen and buying dollars is to cause the value of the yen to fall, right selling pressure will cause something to fall. And last year what we saw was that the Japanese yen fell from 1:15 to the dollar to 150. To the dollar, that's a 35 thirty, 35% drop. And so when that happens, you know, remember Japan is a small island nation without a lot of natural resources, without a lot of energy and so they have to import. So for everybody listening to this, if you were frustrated and upset last year because when you went to fill your car, it got really expensive or you went to heat your home and it was really expensive. Imagine being in Japan, where oil and energy gets priced in U.S. dollars and your currencies fall on 30%. Their expenses went up even more than ours did. And so the Bank of Japan now is in this no win situation where if they don't raise interest rates, the value of the yen is going to continue to fall and the quality of life for people who have a depreciating currency is going to come down and that's going to be a problem for them. But the alternative? Maybe just as bad, because if they increase interest rates to protect the yen, and that's the route that they seem to be going right now, which is what Deep Knowledge Investing advised back last October. Here's the problem. You raise rates and your debt is 260% of GDP and you end up in this Ponzi scheme world where you have higher interest rates. That leads to higher interest expense. Your budget can't. Support that. And so the only response that you have, you have to print more yen to pay the interest expense. Well, that's the definition of a Ponzi scheme. And so to take that back to the United States, that's exactly where we are at right now. Our interest expense here in the United States is heading for a trillion dollars a year. Well, we're overspending by $2 trillion a year on balance sheet. And then if you add in the off balance sheet items that we talked about earlier in this conversation. You end up with overspending of somewhere in the neighborhood of 6 to $8 trillion a year. Add to that a trillion dollars of interest expense. The only way we're going to fund that is to print more dollars. And so we're watching Japan as this perfect analog of what we're going to be facing down the road. And that's why we're concerned. And the biggest problem is there's really no solution to it. You're you're sort of caught. I mean, this is really the definition of being caught between a rock and a hard place. No matter which course of action they take, it's going to lead to the same place, which is inflation, a broken government budget and lack of purchasing power for the people. Yeah. And really diving into this a bit further to going back to like our unique context in history like the Fed and the Treasury here in the United States may have these. Big plans to attend to architect a soft landing. But does the situation like the one in Japan really throw a wrench in any plans that the Fed or the ECB may have individually? Like, there's been a lot of people saying that Japan is the Canary in the coal mine, and if they go down, they're going to drag people with them. You see that happening. Like, it really doesn't matter. In the long run, or maybe even the short to medium term, what the Fed or the Treasury wants to do, they could be dragged down by stress that the Japanese economy is falling under. I think it does matter. You know, we're very accustomed to sort of these meaningless failures, right? When Greece or Argentina, they fail, they default, they restructure their debt, everybody says OK, whatever, you know, it's Greece and Argentina and no big deal. Johanna's the world's third largest economy. So imagine a scenario where the world's third largest economy declares bankruptcy. Yeah, that that's definitely going to lead to massive problems. And what happens in that scenario is a huge increase in interest rates all all over the world, right? I mean, you think it's bad now? It's a huge problem. And the issue that we have at the moment is that everybody has been everybody, a lot of Wall Street has been engaging in this carry trade again selling yen and buying dollars. But if the Bank of Japan starts to raise rates that can reverse. And what the Bank of Japan has been doing is they've been selling U.S. dollar reserves in order to defend the yen right. And the way that the Bank of Japan has managed to keep their interest rates below .5% up until they threw in the towel in December and then again a few weeks ago, is they've been using their foreign exchange reserves to they've been selling those and using that money to buy their own bonds. And there were weeks last summer where the only purchaser of Japanese government debt was the Japanese government, right? I mean, it's a 100% manipulated market. There's no price discovery there. And that's also a problem we have here in the United States. Our market isn't completely controlled by the government, but one of the issues we've seen is a lack of price discovery as the government just sets the prices for more and more of the economy. It's a huge problem. Yeah. And we had the Treasury come out earlier this year and announced that in 2024 they'll be doing a Treasury buyback. Facility which they haven't done since I believe 2002. So that signals that they need to fill that demand as well. Yeah. And remember, the currency they're going to be using to do it, they'll be selling dollars in order to, in order to have the currency to do that buyback. Yeah, Gary, I have a follow up question on Japan. I get this question sometimes from people about. You know well, Japan's been doing Japanification, central bank balance sheet expansion and and intervention in their capital markets on an increasing basis for 20 years. And they're doing all right. You know, they've got 260% debt to GDP and they're not dead yet. So why can't the US just do that playbook and and have it continue on for decades like Japan has done? What do you say to that, right. So that's the multi decade extend and pretend option and and here's the thing that that is where we are. I mean the US has had two big events for all of this. One was over 100 years ago the founding of the Federal Reserve. The other was Nixon taking us off the gold standard 71, right. So we've had these kinds of events before and we've basically been on extended pretend for more than 100 years. Japan is, they're an unusual situation. They've had demographic issues very, very different from from, you know what the rest of the world. I mean, we'll all catch up, but Japan is aging at a frightening rate. You know, it's a country that's very homogeneous in terms of their cultural and racial makeup. And they've also, you know, the thing that people have missed is they've had decades of very, very little growth. They have a stagnant economy. You know, the people who are saying, oh, it's fine, You know, is it really fine? I mean, we saw a situation where the Japanese stock market didn't move for 20 years. Try to imagine a situation in the US where so much of our, our pension money, our retirement money, our 401K plans are in the market now. Try to imagine earning A0, return on that for decades, right? I mean, that'll blow holes in people's plans. And you know, when people go, you go meet with a registered investment advisor, a retirement planner, somebody to help you with financial planning. They make assumptions that over a multi decade period you're going to earn a certain amount in the market, 4%, seven percent, 8% depending on what you're investing in. Now imagine all of that going to zero and tell me it'll all be fine. It will not be fine. Yeah. Michael, do you want to say something? No, it's, I think Gary said. Gary said it all, sorry. No, you're good. No, I mean, but going back like in the landscape that we just described seems pretty precarious when you factor in what's going on in Japan, what's going on here in the USI mean, even in Europe, Germany's in a recession was announced this week that Denmark's in a recession looks like oil's beginning to creep back up. So there is. Again, this pretty precarious situation that we find ourselves in on a global scale and with all of this in mind, how are you allocating capital Gary, and and how does Bitcoin fit into this mix? Like obviously we're talking hard landing or soft landing. You're talking to a bunch of bitcoiners, your bitcoiner yourself. I guess it's a good jumping off point to dive into how you got into Bitcoin and how you see it playing into this. Massive inflection point that we're living through right now. Yeah. So we're at an interesting point right now. Right now My Portfolio, I'm both heavily invested and heavily hedged. So what we have right now, I I own a bunch of stocks that I like and those stocks should do well in the current environment and I think will outperform inflation. I like to have that equity risk, but I'm also hedging by shorting market indexes. I have volatility hedges and also the kinds of things that you would want to own in an environment where everybody's saying, hey, this Fiat currency situation, we're heading for disaster on it. In that environment, you want to own things like gold, energy and Bitcoin, and you're talking about energy prices going up. That's exactly where they're heading. The long term global demand for energy is going to do nothing but rise. None of these these climate policies are reducing people's demand to live good comfortable lives and that means very intensive energy consumption. But we're limiting production of the most efficient forms of energy. And so when that happens, we're going to be looking at long term demand increases while at the same time that we're limiting supply of the most energy dense materials on the planet. And so you're going to be looking at higher energy prices. Our view on that is you know you can either complain and be unhappy about it or invest accordingly, right. If you don't like the price of gas when you're filling up your car, you could own exploration and production companies, you could own drilling companies, you could own pipeline companies, you could own uranium, right. There are. There are ways to sell yourself the gas and make a profit off of it. One of the other things that we really like right now is Bitcoin, and we've been involved for years. And the primary reason is exactly what we're talking about. Where you have the US government printing trillions and trillions of dollars of currency and still overspending, there's not going to be any kind of fiscal sanity. So we're going to be overspending by trillions of dollars a year and the only way that that stuff, those bills are going to be paid is by further monetization. Again, that's just a fancy way of saying more currency printing. And when that happens, the value of the dollar will go down because anytime you have an increase in the supply of currency without a corresponding increase in production, you're going to have higher prices. And higher prices means the value of your dollar is going down. And that's what people are experiencing with inflation. In a situation like that, I definitely want to be owning Bitcoin. And you know, one of the key things that I would stress to people, you know, a lot of people are saying, hey, I don't really understand what this Bitcoin is. Does it have any value? And those are valid questions, right? Does it have value? And my question to those people is, based on everything that we're talking about here, based on everything you're seeing, why would you trust having 100% of your assets in U.S. dollars? Don't you want something other than dollars? Because the dollar is 100% not reliable. And people say, well, bitcoin's not backed by anything. Well, the dollar is backed by faith and credit. And people say, well you know it's also backed by the US military, which the US military is fantastic at doing what they do. But I don't know how that's going to prevent the dollar from plummeting over time as more and more currency is created. The the US military can't change the rules of economics. It's not within their power. So again, we're, you know, we're backed by faith and credit. Take a 50 or 100 basis point position, half a percent, 1% and just have some exposure to something that could work really well long term in a Fiat world that that's just gone crazy here. And these things happen. They've always happened. Throughout history there have been 775 Fiat currencies, they've all gone to 0. The longest standing currencies in the world today are the British pound at roughly 350 years that over its time has lost 99.5% of its value. So at you know, at what point do you want to call it a failure, right? If you bought an investment in something and it lost 99.5% of its value, are you going to be saying, well, you know, it's still in there, it's still holding value? No, that's a failure. the US dollar is #2 and the the Fiat currency world roughly 250 years and the dollars lost 95% of its value since 1800. So these things are all failing. You know why anybody wouldn't want to have some exposure to things like energy, gold, and Bitcoin? You know, what you want are hard assets, something that can't just be created by somebody at the Treasury Department pushing a button. Does that make sense? It's a it's really fascinating cuz Gary you you walk through it and you you have had a background in financial in the financial industry would love for you to to share the the journey if you can but in the middle of you saying all that. Coming full circle, you mentioned hedging, financial instruments, protecting yourself, the different hard assets, energy, the thing that's tied back. And personally like I think we all kind of sit here and specifically anybody listening or out in the market. It's a very precarious time. It's like what is happening? Where do you protect yourselves? Do you buy a home? Sell the home. Buy the land. Don't buy the land. Hold Bitcoin. Hold dollars. Invest in business. Buy business. Have a business. And you hear growing up like there's this thing, and I think this is like whether it's in the Torah, I don't actually know where originates, but it's like you have a third of your money. You hold 1/3 of your money in whatever form of money. Ours happens to be Bitcoin or, or a lot of it in Bitcoin. 1/3 in your business, which you know ideally is recession, proofer is a business that the that individuals want that will continue to produce cash flows. And then a third in in the land, in the land I think is it can be like physical land. Your home could be you know actual energy resources that are producing. But it's this like that was for for very long time. I would say thousands of years of standard practice is 1/3 in the land, 1/3 in your money to hold for expenditures, and then in your business. And then we created all this financial engineering and all these things. And and without going through that because my background wasn't in traditional finance, but coming back to the other side of this and it's like I'm figuring out how to play and it's like I have a third. It's not maybe equal parts, but it's indirectionally in that area where you know acreage, BTC and then businesses that ideally are producing cash flow. And when a market, you know, takes a turn, because to your point, there's only one way this goes with dollars come in, in the system and we all know where those dollars go ultimately. And so, yeah, it's just a very interesting, it's on the other side of the barbell of of what you described and how you're you're playing it. But I found it. They're very similar strategies in the sense that you need to derisk all of the kind of craziness in the markets while having fundamentals and where, you know, you're purchasing power, you're storing value long term. Yeah, So really interesting question. As you were talking about that, I started to think like, you know, do the math in my head, like what's my exposure? And what I realized is about a third of my assets are actually in my home and, you know, maybe a third in stocks and maybe a third in alternatives. Again, things like energy, gold, Bitcoin, stuff like that. So I'm actually probably pretty close to the model you're talking about regarding what people should be doing about this right now. It's it's a tough situation in the housing market at the moment. So deep knowledge investing warned people in November of 21, almost two years ago, that inflation was a huge, not transitory problem. We said to people like here's how you hedge, here's how you prepare. And one of the things we did in the fourth quarter of 21 is told everybody refinance your mortgage now, do it now. And so I think right now it may be a little late to do that. Housing is insanely unaffordable right now. We're hitting record levels of unaffordability. I just saw something this morning saying that between housing prices and mortgage rates where they are affordability, people's ability to buy a home and afford the mortgage payments is worse than it was in 2006, to give you a sense of how bad things are there. So you know, if you had a time machine, you know, we were telling people in 21 keep your home and refinance it. And that's worked out really well for people. And I, you know, I did that. I refinanced my mortgage October, November of 21 and then, you know, you saw prices go crazy and affordability went crazy. So I like that it it was actually a debate I had with James de Volos from Horizon Kinetics. He runs their Inflation Beneficiaries Fund. He's a phenomenal investor, somebody I like and respect a great deal and he's been a guest on multiple webinars. The deep knowledge investing has done and one of the things he and I have debated he liked the model of owning asset light businesses in an inflationary environment. My and and to his credit his returns last year were phenomenal like absolutely top top in the class. He did a terrific job. My view on it was a little bit different. In an inflationary environment, I like the idea of owning hard assets like land, real estate especially where you can leverage it up then at ridiculously low interest rates. And So what you really wanted to do in that situation was own hard assets with debt against it, where the debt is denominated in dollars that will be paid back with depreciated dollars, right. So I'll finish paying off my mortgage in 30 years. What do you think the value of the dollars that I'm giving the bank 2526 thirty years from now is going to be? My My standard joke is that I will pay off my mortgage with either, you know, 3 shares of Amazon, one Bitcoin, or, you know, a stick of chewing gum and a loaf of bread. And speculative attack your future mortgage cost is it's probably a wise decision right now that what it is and a lot of people are feeling the pain. That's one thing I've actually been very focused on this week is because there's been a bunch of viral videos going around Twitter, people on TikTok complaining about inflation, whether it be here in the United States or up in Canada. Last week, obviously, that Oliver Anthony Richmond north of Richmond went. Pretty viral, very viral, extremely viral. And that's one thing I worry about something obviously we're focused on here at the Last Trade, and everything we do professionally is really educating people about what the core issues that are driving these inflationary pressures throughout the economy. Because a lot of people, excuse me, want to blame capitalism. They want to blame rich people for some reason or another. The political landscape and the discourse here in the United States particularly is really focused on red versus blue, rich versus poor, when in reality people really need to grok the fact that this is a monetary issue. It's the core of the issues that everybody is feeling today is driven by the monetary system and the policy that the Federal Reserve employs to manipulate that policy. And so, yeah, it started really as a statement. But I guess the question is like, how do we begin to shift people's frame into understanding that this problem is a monetary problem, not really a political or a rich first poor problem? Well, one thing to add to that Marty that I wanted to bring up earlier, but this is the perfect time when we were talking about the banking situation and. You know, there's only one way out. But to print and people already feel in the pain that bent, I think what was it yesterday or the day before you wrote it was it was fantastic. And I think a lot of people, it summarized what individuals are seeing currently in the market or when you go on Twitter or wherever where you see people ransacking. I don't know. There was one on Monday or Tuesday I think this week where 50 people put on mass and went into a Nordstrom's and and SF and just completely like. Took everything out of it. The cops, you know, obviously came at some point but I don't think until everything was taken out. But it says civilization starts and society starts to like, you know the fabric underneath in starts to crumble that you get where Gary was bringing up. And we talked about it early in the week. The the stimulus, the the stimmies that went out in 2020. And you get people fearful and you get people really concerned about the market. And so they accept what the, from a top down, what is the bailout, what is the way to ease the pain. But it's very scary because to your point on the education side, if it's not there, you're looking at that as this is the savior of the saving moment and it's with open arms. But the reality it's like the it's the it's the trap. And so a good example, I think we're certain people have raised the the issue or the how it's a big concern and others are like oh it's not is the whole Fed now situation where the fit the Fed now in my mind is just a precursor. You know and I think a lot of people agree as it to a CBDC which is effectively just Ubi from a from a central planning perspective. It's very hard to get the money down to the people that are hurting. The most or are the most willing to go out and do this, you know, crazy stuff in the market. And so there will be this way that's like, oh, please stay home, You know your loaf of bread is now $25 or your your stake is now $150.00. We're here to help. Here's our here's your digital wallet, here's your digital token. But as we know that that is very slippery slope, one that seems pretty straightforward. I think that we've all kind of looked at this, as we always knew, is unsustainable. And the only way out from like societal collapse is to get some form of money in the the lower rung. So they can you know not go out and do the things that you wrote about we've seen in the in the the videos. But the answer isn't to give somebody a digital currency because we know ultimately more units does not increase the purchasing power it ultimately ends and hyperinflation all the things associated. So I don't know if there was an actual question or I know the question pros was what do we do to educate. But I think the education is important that it's the money, but it's also there. You want a form of money that cannot be controlled or not delivered from the government. Because the 2nd that you opt into that is the second you're basically opting into almost the digital gulag in my mind. Because at that time you have no control of your finances or how you decide to operate in an economy. And after that you're basically stuck. So both of you talked about educating people, and I think that's the key thing, right? One of the things that I'd love for people to understand is that the entire narrative that you're being fed about all of this from the media is a lie. It's all lies. One of the great examples of that, right, We were talking about the Stimmies. The policies that are being advocated to help poor people are actually making things worse for them. Right. So the government gave out. That was the trillions of dollars of stimulus checks. And everyone said, great, we've got free money, free money from the government. Terrific. Well, here's what happened. So say a family gets $1000 and everybody's getting free money at the exact same time that the government is preventing people from working. So you have more money flowing into the system. But fewer goods and services being produced, your demand is going up, your supply is going down. Guess what? We have higher prices. And so if you're a poor family and you got your $1000 stimmy check, you might have thought, hey, this is great, I love this free money. Life just got terrific and everybody went out and spent. But what if as a result of that, you end up with higher rent, a higher price to put gas in your car? Higher prices at the grocery store, at restaurants, everything. When prices go up that much for a lot of these people, their monthly expenses might have gone up by 100 or $200.00 a month, right? So what do you do in year 2IN year two you might be looking at an extra, you know, 1200 twenty $400.00 of expenses and that is permanently baked into. The expense structure. And so all of these policies that they're talking about, which supposedly are there to help poor people. Yeah, it helps poor people for a few months and then they're stuck with an unaffordable lifestyle just a few months or a year down the road. Now, these same policies that that these people in Washington talk about as being great for poor people, not only are they bad for poor people, it works out really well for people who could buy homes. And finance them for people who could take on debt and buy assets, for people who are wealthy, had assets, had a great credit rating and the ability to borrow in dollars that will be worth less when we pay them back. And so everything you're being told about this is a lie and you have to explain it to people that you know a policy where we say we are doing this to help poor people, but that's not really what's happening. And maybe they have good intentions, or maybe they're incompetent. I don't know. That's up to everyone else to figure out. I've given up trying to figure out whether they don't know what they're doing or whether they're trying to break things. But these low interest rate, free money, high inflation policies work out really well for wealthy people. And really poorly for poor people, but they're marketed as being something completely different. And you know, Marty, you brought up this great point. People are blaming capitalism. There is nothing about this that's related to capitalism. Capitalism. People will succeed and fail on their own merits. What we have right now is a situation where the government is handing out free money and picking winners and picking which companies are going to do well if capitalism has failure, not government bailouts. Right. Capitalism has consumer choice, not the government supporting certain banks and not other banks. The whole situation we have right now is ridiculous and what we really have is a tight partnership between government and business that is not a feature of any capitalist system. So you know, people are blaming capitalism for the failures of a non capitalist system. The other thing that I would add here as we're educating people. Is that Bitcoin is a great way out of all of this. Ideally, you want to have some assets that are beyond government control, assets that can't be diluted by government, and it's okay to change your mind about these things. You know, my background is in traditional finance. I've got more than 30 years in the hedge fund business, 3 1/2 years of running deep knowledge investing, helping other people get great returns. And so my background is really in traditional finance and the first time I heard about Bitcoin. You know, I what is this? I don't, I don't really know. I don't understand. It wasn't that interested. And then, you know, a couple years later, I started to realize the corrupt system. We have a Fiat currency where the government can just print trillions of dollars of currency without going to the taxpayer without anybody getting a bill. And they spread that money around to their favored constituents, their favored industries, their favored people, the companies that they like, the people who give them. Donations, right? And so they're basically printing money in our name and using that money to further their own political ends. This is absolutely a disaster. And so I thought to myself, this whole central banking model is horrendous. And so I didn't want to buy Bitcoin at the time. This is years ago because I couldn't value it. But I thought, I'd like to see it succeed just from a moral point of view, from a pragmatic point of view. This is the kind of thing that I want to see it succeed. Anything that is a viable competitor to central banks, something that I want to see people give it a shot. And then a couple years ago, when I saw the government printing trillions and trillions of dollars of currency, all of a sudden my view of the world changed. And one of the ways to be a great investor is to be flexible. Right. Everybody says you have to have your style and stick with it. Well, you know, that's great, except your style may be out of favor for a decade or so. So what are you going to do, sit with losses for a decade while other people are making money? That's not really the approach that I want. And so a couple years ago, I started to reevaluate all of these asset classes that I hadn't been interested in before. Things like Bitcoin, things like gold, right? My view on gold was always where you can't earn a return on it, you can't earn a yield, things like oil. And energy thinking, I don't really want to be involved where a company tells me, well, our assets are underground but don't worry, we'll tell you how much is there and there's no way for you to check. I don't like being in that situation. But all of a sudden trusting these companies and trusting that energy would be worth more. And Bitcoin is in some ways an energy derivative. These these I I just didn't want to be in a situation where I was trusting Fiat and all of a sudden having trustless. Assets seem like a really good idea. And so I revised my point of view. And so you know, for the people listening to this, it's OK to learn more about this stuff. It's OK to let your view evolve over time, right. It's it's OK to say I don't really understand this, but I'm going to look into it and just be open minded about realizing maybe you want to have some different exposures rather than let the Federal Reserve or the Treasury Department tell you how much your portfolio is worth or how much your bank account is worth what you can buy with it. And how so Gary, I'm sure you've you've had plenty of conversations now with your peers, hedge fund types, Wall Street folks. How have, how has is that messaging landing with them now and how have you seen that they're thinking evolve over the last few years with regard to hard assets like gold or Bitcoin? So as I talk to people on an individual one-on-one basis, what I've typically found is that people, they have their point of view. And I'm not an evangelist, right? I I know what I think is right, and I talk to people a lot about the dangers of inflation and the dangers of Fiat currency, the dangers of the Federal Reserve and the Treasury Department, governments overspending and taking on massive amounts of debt, and the best role I can play in all of this. Is to help people understand why the system that we have when they have a sense that things are rigged. Yeah, they are. Let me explain to you why. Let me explain to you how the system is corrupt and how it's not working for individual citizens. It works really well for the people in Washington. And so that's my role in that. But where I do see? A huge change in attitude is on the institutional side. And you know, we can go back I my original paper telling people, you know, I'm, I'm buying Bitcoin. This is why, This is why it's valuable. Part of the thesis was to say we've got a situation right now where you know Bitcoin issuance is roughly 900 coins a day. You know, a current pricing, it's a little under 30 million dollars, $25 million, something like that. A day. And so, you know, right now we're at a point where enormous asset managers like BlackRock and Fidelity are filing for Bitcoin ETF's. You know, these firms have trillions and 10s of trillions of dollars of assets under management. So they start to allocate, you know, 1%, half a percent, right? I, you know, $10 trillion. It's $100 billion sloshing into a market where your issuance is 20, five, $30 million a day. That'll skew your supply demand curve. And so we're at a really interesting point right now where even if you're not a Bitcoin believer, even if you don't understand it, what you do have at the moment is a very clear signal based on SEC filings that there are all of these large financial institutions that are lining up to buy Bitcoin. So we've got a really maybe once in a lifetime situation where you can legally. Based on publicly available information, frontrun BlackRock, you can frontrun Fidelity, right? They've, they've put in public they've in their public filings notice that they're going to be buying billions and billions of dollars of Bitcoin for their exchange traded funds that they proposed the ETF's. If you know they're going to be buying that, why wouldn't you load up ahead of that? Again, it's one of these weird situations where, because they've had to announce this in public, you have. Public information. You can legally frontrun them. I love the opportunity to be in position when institutional money comes pouring into the space. It's such a funny thing that we're excited about BlackRock and other ETF filings because of what they could mean for capital inflows. But we're not excited enough, and I think collectively as a group, Bitcoiners aren't appreciating how rare of an opportunity it is. To Because of how the system works, these giants that are normally playing their cards very close have to show that they're about to make a big splash in Bitcoin months in advance of being able to do so. You're right that I can't think of any other example ever. When you have an opportunity to frontrun BlackRock, to use black rocks signals against them and profit off of their intent. Yeah, it's it is really a ridiculous opportunity. You know, normally you can't do anything with this. It's first of all this isn't information that most people would have, right? What what big firms are going to be trading in advance and typically the people who have that information, it would be considered material, non public information. You wouldn't trade on that. Now they've got, they've announced it in public and to give people, you know, you're talking about bit corners, recognizing the opportunity. I saw something the other day earlier this week that right now there are something like 60 million or so millionaires in the world, right? And that's that's in dollar terms. So Bitcoin Max issuance, 21,000,000 coins. Based on the numbers I've seen, 34 million of those have been irretrievably lost People who, you know, threw their hard drives away or? Just, you know, couldn't remember their password, whatever it was. So that takes us down to about 1718 million. And then you have, you know, certain people that own hundreds of thousands or even millions of Bitcoin that are in diamond hands. They're not selling anytime soon or at any price near where we are now. And you know, the amount, the number of Bitcoin that trades is very, very small. And so compare that. Right. Even if you had 21,000,000 Bitcoin, that would trade and we don't and we won't. You know, you have basically if every millionaire in the world wanted to buy one Bitcoin, they can't do it. I mean, talk about a luxury good. You can be a millionaire and not be able to buy one. Can't even buy all of them. Can even buy half of 1 if they wanted to. Right. Or or a third. Yeah, exactly. If if every millionaire in the world said I want to own 1/3 of a Bitcoin, you can't do it. Yeah. Right. I mean this is, it's, it really is an unusual opportunity, particularly when we're looking at Japan on the verge of a sovereign debt fault. The EU has massive financial stress. A lot of people didn't, they didn't panic over this. But last fall the Bank of England came government action away from having their pension funds fail, right. I mean they they were buying millions of dollars of gilts. It turns out that their statement of support was enough. To stabilize the market. But they came an inch away from their whole pension system failing. And you know I've spent half of today talking to you guys about the issues that we have in the US system. So again, you know, I think now is a phenomenal time to have exposure to something that's not Fiat backed particularly ahead of massive institutional buying. You know another good way to play it, as well as the Grayscale Bitcoin Trust GBTC. Which is a closed end fund, not an ETF. They're trying to convert it, but it trades at a discount so you can basically buy Bitcoin cheaply. My bet on this is that if and when the fidelity in BlackRock. Bitcoin ETFs are approved by the SEC and and the Sec's response indicates they're looking for ways to approve it. When that happens, you have to figure the Grayscale Trust will start to trade at or closer to net asset value as people realize they'll be able to convert it. I I think that's, you know, it'll be a two step process, but over time that's a way to buy Bitcoin at a discount right now. And shifting gears. A little bit, because you did send us over the Vic's chart and really sort of tying this conversation back together with what's going on right now. What are your views on the market right now in terms of capital allocators and whether or not they're being a bit too complacent or they understand what's going on and are moving their pieces on the chess board to prepare for that? Like, do you think people are being too complacent right now, or do you think many people are getting this signal and beginning to react? Other people are hugely complacent at the moment. You know, one of the things that we said at Deep Knowledge Investing about 14 months ago, it was about 14 months ago I I said to people the estimates for the S&P 500 for earnings have to come down. At the time, the estimate for 2023 the S&P 500 for earnings was about 2:50. And right now, depending on which estimates you're looking at, it's more than 215 to 217 range. But in that time, the market has gone up. So what you have are declining earnings, declining earnings estimates and an up market, right. So everything's gotten much more expensive as interest rates have gone far beyond what people had been expecting 12 months ago, 14 months ago. So that's that's where we are on that. I think the market is expensive. I'm heavily hedged right now, partly because of that. In addition to that, let's take a look at the risks that we have. Right within the last couple of weeks you had the Bank of Japan throwing in the towel and acknowledging, Oh no, you know we're heading for a sovereign debt default. We have to do something and that's why you brought up that chart before. That's why you saw that massive spike in interest rates on the Japanese 10 year. It's almost doubled in the last month or two. You have the US dollar treasuries being downgraded. That happened a week ago or two weeks ago. Sorry. You have a war in Ukraine where people are talking about bringing Ukraine into NATO. So, you know, listen, for the people who are very enthusiastic about defending Ukraine, great. I get it. That's a totally valid, reasonable point of view. I'd like them to be, you know, free and independent as well. But before we start, you know, beating the drums about let them into NATO, somebody should. Take a minute and realize that if you let Ukraine into NATO, then that obligates the United States to go to war with Russia right away. And that's not gonna be good for the market. You have a frang of relations with China and we're starting to cut off. Tech products to them, they're starting to cut off natural resources. To us, at some point, they've made it crystal clear they're going to take Taiwan. I don't know that there's a whole lot we can do to stop that, but we may be drawn into that conflict. And so, and you also have added uncertainty for what the Federal Reserve is going to do. Are we, are they going to have to keep hiking? As you know, we found out yesterday, they're concerned about that. Are we going to do another round of extended pretend there's all of this uncertainty. And so you have the VIX which is a measure of forward expected volatility. It's typically referred to as the fear gauge. There you go. And so if you take a look, you see how low it is by historical standards, how much it's come down and then just take a minute and think about all of the risks that I just mentioned, everything that I just listed and think is risk right now really at relative historical lows. And so, you know, one of the things we've done. Is we've bought a hedge for that. It's not a perfect hedge and it's it's risky. But you know, I own the VXX, which is an exchange traded fund which will benefit if volatility rises. And if that happens, you're almost certainly going to be looking at a down stock market for obvious reasons. While volatility technically would encompass moves up and moves down, people tend to worry a lot more about big moves down than they worry about big moves up. So yeah, I think we're in a situation right now. What's the old expression, whistling past the graveyard? Everybody's just pretending the party will keep going. As mentioned before, heavily invested and heavily hedged. Right now, it's been a very eerie, quiet summer. Yeah. Well, I mean going back to the regional banks. Borrowing deposits at higher rates, that's been my thesis since the dust settled after Signature First Republic went under. Obviously we had Pack W get acquired by the Bank of California BANC earlier this summer, but it has very similar vibes to 2008 where you had these tremors in the beginning of the year that are relatively quiet summer and then. My thesis has been like come fall winter, we'll see some of the dead bodies rise to the top and really begin to see some volatility reenter the markets. Yeah, that's that's a fantastic point, Marty. And I agree with you. The guy who's been talking about that a lot over the last year is Michael Guyed. He's been talking about a credit event that's coming. And what he's meant by that is you have all of these companies that have taken on huge amounts of low cost debt over the last, you know, 10-15 years and they're going to have to refinance. And when they refinance, they're going to have to do so at much higher interest rates. That's going to blow holes in their their budgets. In their income statements. And so we could look at companies and banks more, banks failing or just huge decreases in earnings as as their interest expense goes up, especially these companies that have taken on huge amounts of debt during the pandemic and are more and more leveraged. It's going to be a huge problem for a lot of companies. Yeah. I mean, we're beginning to see this further out on the risk curve with the less least successful zombie companies. I mean that stat was going around last week that we works corporate bonds trading at like 90% right now. In my mind, that's like far out on the risk curve and obviously risky business with all their commercial real estate exposure. But you have to imagine that closer towards the front of that curve, there's going to be companies experiencing some stress as well. And that's just the Canary in the coal mine. Yeah, I agree with that. And let's talk for a minute about what a zombie company is, because I I think it's a a term that finance people throw around a lot, but you know, maybe nonprofessionals don't follow it. So what a zombie company is, is a company that is still in operation, but that's functionally bankrupt, right? So imagine you're in a situation right now where you're not making any money and in the next year you have to refinance your debt. And when you refinance your debt, your income is going to turn negative. You're gonna have negative free cash flow. The business is basically a failure. It's just walking around dead, which is why people refer to it as a zombie, right? It's moving, it's doing business, but it's basically dead. And one of the areas where I disagree with the standard narrative on this is everybody's on Twitter saying, well, the Fed told you they're going to be, they're going to go, they're going to raise rates until they break something and look, they're breaking things. And I disagree with that characterization. My view of it is it was 15 years of 0 and near 0 rates and quantitative easing and blowing up this huge asset bubble that created the problem and. All we're getting right now is something closer to a normalization of rates. And when that happens, we're just finding out who's dead right. It wasn't raising rates that killed any businesses. It was a decade and a half of ridiculous fiscal and monetary policy that created these zombie companies. We're just finding out now who's alive and who's dead. This this process of normalization of rates. It's just revealing what's already happened as opposed to causing something to happen. Does that make sense? Yeah. It makes complete sense. I actually just shared a chart. I think if we can pull it up, Logan, it's a good proxy for it. I believe what you're describing, Gary, is a lot of the companies that were just fundamentally not sustainable. I think there's the. You know HelloFresh is the DoorDash is the Ubers of the world that were products of what we're talking about in here. I don't know if it can be seen, you might need to zoom in if we can. But ultimately the the left side shows from the change in job listings since it was a year ago. So it was like 771 to July 1 and you can see down Oracle 75%, but then year to date it's down 23% from its peak 80% and you can see all the red and there's like snow Microsoft. All the major companies here and there, you know when when interest rates go up, people are spending less companies, you know all the things that they're doing, you see it directly and then amount of people they're hiring and that's not even accounting for the people that they've laid off as well. Yeah, I think a lot of these companies had also been hiring defensively. They felt like the good times would go on forever. And so they were just stockpiling talent. And when you're in a position where you know you're a huge company like Microsoft, that mince money? They're sort of thinking, let's just have more people. Like, if their employees aren't particularly productive, it won't really matter that much. They're hiring to make sure they've got the people they want in place. And then, you know, now they're finding out, yeah, we don't really need them. And you know, that was something that we saw when Elon Musk took over Twitter. Would he let 90% of the people there go? And you know, people have complained and said it's not working as well as it used to, but the truth is outside of a. Few moments of discomfort the the platform has remained up and stable and it's still working. People can complain, but anytime you can let 90% of your people go and the product still works and things are still working and then it tells you that maybe you had too many people to begin with. Yeah, the the thing I can't figure out about how jobs are kind of playing out right now, employment in general. Is how that manifests in the in the housing market if and when? Because like strangely we're seeing house prices go up as a result of of how few people want to sell their homes because of how they don't want to take on a new mortgage at a much higher rate. And so there's like not enough supply to end as a result of that in the last quarter house prices have gotten up despite. Despite the mortgage rates being at 7, 1/2% right now and you know are we in the early stages of like a true unemployment recession which will cause people to not be able to afford the mortgages and and have to sell and there will be more supply. What do you make of all that, Gary? You know, I think the housing market has been really interesting. We I thought a year and a half ago. That housing prices would fall as interest rates went up. And what's happened is exactly what you've talked about. As interest rates have gone up, people have realized, wait a minute, you know, if I were to sell my home where I have maybe a 3% mortgage and then buy a smaller home but have to take on a 7 or 8% mortgage, well, these people are realizing is that they'd have the transaction expense live in a smaller home. And their monthly expenses. Their monthly payments might actually be the same or even higher, depending on. How much less space, how much of A smaller home they get and what market they're going to. And that's, you know, that's what you would have expected to have happened. But now we see a situation where like you said, people don't want to let go with their existing mortgages. So you have very little supply on the market and that has kept housing prices very high, I think the employment market overall. Is very strong right now, despite the fact that we have some tech companies that have been letting people go or who have been reducing their hiring overall. The employment market is really strong. I don't know that that's so much going to be an issue. I think you know where there's going to be exposure are the large commercial companies that have bought huge amounts of real estate and all of a sudden realizing, hey, wait a minute, you know, maybe we can't rent all of this out on Airbnb or maybe renting to people who can't afford more isn't going to be such a great market. The other thing is at some point affordability has to matter and things can remain out of line for a long time. But remember. What we're seeing are the result of people making choices. But let's also think about the people who have to move and who don't have choices. You have some people who will reach an age or become ill where they can't live on their own anymore. Unfortunately, you know, people who are homeowners will die at some point and those homes will have to be sold out of estate sales. You know, people do change jobs or they decide they want to live in a different state. You have massive migration right now out of places like California and Illinois toward places like Texas and Florida, South Carolina. Half of Connecticut's moved to South Carolina in the last three years, I think. And so we're looking at at all of these trends and I think you know over time you're going to see a situation where people. Have to make sales that won't be necessarily based on choice and at some point the market will have to normalize and that'll be at lower prices. It just hasn't happened yet. Could be a while, could be, could be 5-10 years even depending on how determined people are to to not be forced to move and and it could be a generational turning that that rights the market. In that sense, me and my family were like indicative of this. We moved to Texas in 2021. We didn't feel comfortable buying a house because we were new to the city. We decided the rent and then by the time it was by the time it came due to renew our lease or go buy a house, it was a nobrainer decision. It's like, all right, we're going to keep renting because I'm not going to buy a house at these interest rates in this market right now. And that's discussion my wife and I have quite often. It's like, all right, when are we gonna buy? And it's. The same Marty, same. I'm typically like, hey, we're gonna rent. As long as conditions are like this, we'll wait for a good opportunity. Yeah, I think that makes a lot of sense. Like I said, a couple years ago I was telling people buy and refinance. And then a year and a half ago, I was telling people, if you're thinking of selling. Really want to get on that because at some point prices are going to drop. So you know right now I'd probably wait a little bit. We've like I said, we've got affordability that's below where it was in 2006. At some point people have to live somewhere and so there there has to be a reduction in price. You you you mentioned employment how you're not necessarily concerned or you feel like it's strong. I. Without, I know that there's numbers that say that would agree and there's ways of looking at the numbers and say there's multiple forms of employment or part time that are helping choose it from up here. Like practical sense when you think about higher interest rates, so reducing companies margins their debt, you mentioned zombie companies that are going to go out of business and then inherently limits the disposable income, the amount we know credit card expenses are going up. For individuals. So they're out less. I think even sass all the things that are associated with the company and their spend has been reduced which would be net revenue for the the company which would ultimately lead to layoffs. I I think I would take the other side of that As for like long term or even even in the short term that employment is a is a big issue. Simply because if we know that money juiced into the system that was subsidizing these zombie companies that either shouldn't have existed or shouldn't existed at the size. Then as you suck it out that there's less spending which would net out to less employees, less people facilitating or servicing different companies, corporations. So can can you talk about that like how you how you see the other side of it that employment continues or is not an issue and that that we're gonna we're at a good spot and the number of people working in the economy. Yeah. So where we are right now is actually a pretty good spot, but there's a lot of evidence to support the points that you're making. And so the way I'd support what you're saying, which is all true, is first of all, you know we're seeing. Huge growth in the job market. But you're right, a lot of those jobs are part time. And one of the reasons why we have so many employed people is because a lot of people are working two and three-part time jobs. And depending on which data you're looking at, whether it's the payroll data or the government data that will capture. Those people multiple times. The other thing is we're seeing a shift from goods to services away from maybe some of the high end information technology jobs and more toward lower end service jobs. And so, you know, somebody could argue, well the jobs available, there are lots of jobs available, but they're lower quality jobs. You know, a lot of people don't necessarily want to work retail or work in food service, which I understand. Another thing supporting your point of view is that we've had a long term slide in the labor participation rate. And that's really important right somewhere in the neighborhood of 1/3 of people in the United States who are working age are actually not working. And so, you know, you we've got a lot of people over 18 who are unemployed and maybe they're on public assistance. And so, you know, one of the things skewing the numbers, we actually saw something kind of quirky. A couple of months ago where we actually saw an increase in employment, an increase in wages and an increase in unemployment and the unemployment rate and people said, wait, that doesn't make sense. It absolutely makes sense because people are only counted as unemployed if they're looking for a job. And so as wages go up, you fortunately have people come in and off the sidelines and saying, you know what? I'm unemployed, but I'm only making, I'm only getting a certain amount of money on welfare, but at a certain price. People say, you know what, I'm going to go back to work and and earn my own money, and that's actually a good thing on that. But right now we saw the low labor force participation rate. I would love to see that go up, particularly as as the country ages. We're not where Japan is, but it's not great either. The other thing, and I haven't checked the statistic, but somebody on Twitter put up something really interesting. A week or two ago, noting that on any given day, 30% of the people who are employed aren't working and they weren't talking about weekends. And I'm thinking myself, who who are these people who like, you know, two days a week, you know, just they're not. They don't show up to work. I have no idea what they're doing or you know how that works for them. You know, I'm frequently working 6-7 days a week, so. You know, this is certainly going on and and we're just seeing report after report of people who are employed, but they're talking about, you know, quiet, quitting, doing the minimum. Don't don't get mad at me for this. It's not my term. But there's someone on TikTok who got millions and millions of views talking about lazy girl jobs. Again, it's not my term. Don't send me hate mail. I'm not the one who came up with it. But literally people advertising, hey, you should be a lazy girl. You should get a job where you don't really have to do much, don't have to work hard. You know, we all saw those videos of like, you know, the employees at Facebook and Instagram and you know Google, who were they were product managers. And they they do these videos that they'd get up and they'd go to the gym and they'd write affirmations about how it's so wonderful that they were cute. And then they'd get coffee and then they'd do 15 minutes of work and then they'd go meet a friend for lunch and they do another 15 minutes of work and then go get another coffee out on the roof deck. And so, you know, people saw that there seems to be this trend of people being employed and not getting. A lot done. I don't know that every company could necessarily go the way of Twitter and get rid of 80 to 90% of their employees and still be functional, but they can still cut further. And so, you know, I think all of the points that you're making are valid points and you know, there's no way in the world I would argue that our employment situation is perpetually strong. I just think right now anybody who wants a job. Can get a job and the consumer at the moment is actually in pretty good shape. Yeah, I think what I was gonna say is like, I think we're starting to notice a trend. We had Dylan come on and we're talking 2 percent, 3% and soft landing. And I think we noticed halfway through the discussions like we gotta be careful on the Fed speak or the. You know the numbers that are are being given and I don't have nearly amount of time, some of like some of like yourself, Gary or others to go into these numbers and there's different data sets. But I think on the other side of that and the inflation numbers at 3%, you know one of the comments that we made previously was at the 2% that we all were accustomed to just saying that was what inflation was year over year. It was baked into lease contracts and everything that was, was probably closer to, let's call it, I don't know, 4 to 6%. And that that 8% we experienced last year was probably closer to 10 to 15%. You see where I'm going with this, there's like a 5 to 10% delta and whatever they're saying. And I think of that in the same way as these numbers on employment, because if anybody listening to this or just on this group probably knows more people today that are unemployed than a year ago or two years ago. And I think this trend actually only continues in the numbers that we look at and we see our Fed to us are going to continue to get more and more dislocated from like the fundamental. Underlying aspect of what the economy really is because that's the only way you can keep the Ponzi going effectively. And I know it's very controversial, there's no numbers that's just anecdotal. But I I just by looking around I think we all see in the market what we're seeing whether it's inflation, unemployment, all the things that are associated with a failing economy and Marty's Bent was a good example. And so anyway, that that's where the the employment comes in, because all I'm hearing from others is that they're out of jobs, they're looking for roles. So, yeah, and Gary, when you were going on that monologue about the jobs market, I couldn't help but think that like there's three ways in which perverse incentives have been introduced into the job market. I mean the 1st is welfare, essentially disincentivizing people to work in the 1st place because they know they're going to get a a check from the government month in. A month out too is like the bloat that we see at the corporate level with the easy monetary policy of the 15 years proceeding or following 2008, which created a bunch of easy money, allowed people to hire people that maybe shouldn't have been hired and to run these high OpEx operations. And then three is the inflation, which underlies all that. And you're printing money to give it out to individuals on welfare. You're printing it out to give to corporations and like, thinking about, like the lazy girl work archetype. Like, they're completely disincentivized too, because maybe they were, they did start a job and they thought, hey, I'm going to work hard, make my way up the ladder, but they get their paycheck at the end of the month and they're fighting inflation and they don't see the reason to keep working. They're not incentivized. They're more incentivized to do the least amount of work possible to get that paycheck and stomach inflation on the back end. So there's no, we've created an incentive system in multiple different ways that really doesn't reward. Hard work at all. Yeah, it's a huge issue. I mean, I certainly understand the inclination of some people to want to help their fellow citizens who are going through a rough time, especially on a temporary basis, right? I understand that. But what we have right now is a situation where the government is competing with corporations for employees and the government is saying, you know, well, we'll pay you X to not work. And, you know, people are doing calculations the same. Wait a minute, if I were to go to work, I'll get less money or maybe I'll get a little bit more, but I'll have to work 40 hours a week and commute another 10 hours a week. And, you know, for 50 hours a week, even though, you know, I'll make a little bit more, it's not worth it. They'd rather have their leisure time. So you're 100% right again. We do not have a capitalist system here. We have a system where the government is competing with companies. To employ people or you know, the next generation of entrepreneurs. Going back to the other point that was made, one of the things that we've talked about at length, there were times last year where my calculation of inflation was double what the CPI was the consumer price index, which people typically refer to as inflation. And as a result, you know, we ended up putting out multiple tweets and articles literally saying all government statistics are lies. They are not designed to relay the truth or any complete understanding of what's happening in the world Those government statistics are manipulated and designed to. Fit a narrative so they can tell you what they want to tell you. And one of the things we see often is these statistics will often be massively adjusted and changed and revised months later when nobody's paying attention. So the day that it comes out, everyone says, oh good, you know, the CPI is good or the employment number is good. You know where the PPI is good. And then you see a couple months later, they adjust those numbers. And nobody's looking at that point, the market doesn't trade off of that. But the adjustments tend to go in One Direction, which is, oh, maybe it's not as good as we thought it was. So we're seeing that a lot. And you know, that's just been a regular. It's almost become a meme around here, right? All government statistics are lies, death, taxes and the government lying about the state of the economy. I think that it should be baked in all forms. They wouldn't do that, Gary. There's nothing in it for them to lie. Well, so the question I would ask you then, right on the last debt ceiling drama, right, it wasn't a real negotiation where McCarthy is claiming victory because he's like, I wore Biden down, We got meaningful spending cuts. No, you didn't. You had no spending cuts, right? What we have is an agreement to spend an extra $4 trillion between now and the next election. And it is not a coincidence that they funded they they set the debt ceiling at a level to fund the government through the next election, right. It's not a partisan problem. Everybody in Washington wants to get reelected. So let's kick the problem down the road. And that's the problem for the next Congress or the next president. Yeah, that's a partially about the education and the the messaging great work you're doing Gary is that if you're waiting to hear on the the news that your currency is inflating it's too late this is. Wait, sorry. You broke up a little bit. I'm. I'm not getting everything you're saying. What was that? I was, I was saying a part of like the importance in the education and the work you've been doing. At your firm and previously is educating the market to get ahead. And how do you plan for this? And if you're waiting for the news to tell you that your currency is inflating, you're way too late. You're kind of stuck. You're in a bad spot if you're waiting for the news to say that your currency is hyper inflating. God, I'm so sorry. Everything got glitchy here. Like, I can hear you talking, but it's all starting and stopping. Interesting audio sounds good on my side. I've got you now. Now it's coming through clearly. Yeah, Michael's point was, if you're hearing it on the news that inflation is happening, it's too late. Right. Yeah, that's, you know, there's something we wrote about as well. You know, I mentioned we put out that first warning on inflation in November of 21. And somewhere between, you know, six and seven months later, we got the acknowledgement from firms like Goldman Sachs, JP Morgan, Deutsche Bank that, hey, you know, there are issues with inflation and the economy may have trouble and interest rates are going to have to go up and this is going to affect real estate prices. And these guys were announcing this stuff like, like they were coming out with news. They were 6-7 months late. I mean, you know, Jamie Dimon was talking about a possibly hurricane. In the economy, we were calling him Hurricane Jamie for a year as a result of that. But, you know, Hurricane Jamie comes out and says, oh, you know, the economy is in for some sort of storm. It could be a hurricane, a tropical storm, maybe a little shower. We're not sure it'll happen at some point. I don't know. And I'm thinking to myself, you're, you're six months late, right? The market is already created. We were shorting the market in January, the first week of January of 22. And so six months later, Jamie, saying, you know, there may be some problems and at that point the market was down 2030% depending on which index you were looking at. You know, these guys were late and they didn't have a plan. You know, they warned about problems. OK, what, you know, what do you want to do about it? But it's exactly what you said by the time the the CEO's of the big banks, by the time the the supposedly important people, the supposedly knowledgeable people were talking about it. It was too late. It was too late to do anything about it. You'd already missed the opportunity to load up a money making trade in the other direction. So they're always late. And you're right. By the time you're hearing it on the mainstream media, it's it's just too late to deal with it. Yeah, but they've probably already made their moves, right? But like when Jamie Dimon's talking, he probably made some moves six months before, but without making it public or. Yeah, I I don't know what's going on in that in the taxpayer, taxpayer backed hedge fund they've got going on there. This is, this has been an incredible conversation to be respectful of everybody's time. I think we do have to wrap up here in a few minutes. But I guess, Gary, to throw it back to you, just any closing thoughts on this overall discussion, Bitcoin, anything we may not have touched on that you think the listeners should be aware of? Yeah, I'm so glad you asked me that. This is the key point. We've spent a lot of time today talking about the problems in the US economy, the global economy, the Fiat currency system. And I'm going to tell you, a lot of these problems have reached the point where they're not solvable. And that can get people upset and dejected and disappointed and say, wait, this is this is horrible. Like, it's it's all bad news. And the view at deep knowledge Investing is we want to identify the issues but not complain about it. And our view is there's always a way to make money from a situation. There's always a way to be adaptable and set up your exposure so that you can do well. Even in a situation where people are saying there's a bad market, right? I don't. I don't. We don't have a category of good markets and bad markets. And if you could only make money. In a rising market caused by ridiculously low Fed rates, if everyone's saying we need the the Fed to reduce rates in order to make money in order to have it be a good market, well then these aren't money managers who are demonstrating a lot of skill, right? You have to be able to do it in good and bad markets. In my view is it's better to not even label it as good or bad. And so rather than getting upset about it or trying to stop it, because there's nothing that anybody can do at this point. You're much better off being in a position where you can set up your exposure, your portfolio, your hedges, in a way to take advantage of an uncertain employment environment, a market that's expensive and not recognizing a lot of risk and an inflationary environment and an environment where there's geopolitical risk. There are things that you can do. To position yourself so you will actually make money from these things rather than be upset and say, oh God, it's a terrible market, let's just find ways to make money. And that's what we do all day, every day. And anybody that's listening to this episode right after it's dropped or in the future, Gary has a special promo code to get access to his insights at Deep Knowledge Investing. What is the code I don't think. Yeah, thanks. So we we help people get better returns in the equity portion of their portfolios were also pretty good on the strategic asset allocation side. This is all the stuff we're talking about. If any of your watchers or listeners are interested, you can use the coupon code The LAST TRADE 25, so the LAST trade 2/5. At deepknowledgeinvesting.com for 25% off of a subscription, we'd be glad to have anyone come join us and we'll do all we can to help you do well in a market. Whether we want to label it good or bad, Whatever it is, we'll do the best we can for you. Well, again, Gary, I want to thank you for coming on and giving us your insights. Like I said, I think I I don't know if I said after we hit record or before, but I think it is worth repeating. I think your energy, the breadth of knowledge that you have on the global macro landscape and the way you're able to break everything down in layman's term is extremely valuable. So again, thank you for joining us and sharing your insights with our audience. Hey, thank you so much. Really appreciate you having me. Sorry, I didn't mean to interrupt. No, to say I was going to echo that sentiment and and I appreciate the note you left off on regards to the optimism and and it's all about how you figure out how to play this because it's something that you know one of the goals we want to do here is that we're we talk about the state of the world but it's it's more of to impact decision making and kind of urgency versus complacency that we talked about. So appreciate that you have that same lens of. Hey, we can figure this out. It's been figured out before. You just have to actually be intentional about it versus sit on your hands. Yeah, that's right. Always be adaptable. Look for ways to make money in any environment. And it's possible. We've seen so much global upheaval in our personal lives and our health lives in the financial markets over the last few years. We've positioned people to do well. In that environment, so you know, our view on it is just roll with the changes. Don't get upset about it. Just find ways to make money every day. Well, again, Gary, thank you. We'll let you go explore the rest of your Thursday. That's that's all we got this week. We'll be back. Marty, we'll be at Bidlock Boom next week. So, yes, yes, we'll be in. Person in person, RIP. And then if anybody's around, please say hello and look forward to catching up. Yeah, we'll see everybody in Austin next week. Enjoy your weekend. Yes. Thanks so much, Gary. Thank you, Gary.