The Tucker Carlson Show - Gold, Crypto, the Debt Crisis, and How to Survive When the US Needs a Bailout

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00:00:34.580 So one of my midlife realizations is that people in my world, certainly me,

00:00:42.520 ascribe too much to ideology and too little to money.

00:00:47.480 The financial dynamics of the world drive a lot more than we acknowledge that they do.

00:00:52.160 And we look at things where like, oh, these people believe this and these people believe that.

00:00:55.360 And that's why they're fighting or that's why they're allies or whatever.

00:00:59.760 But really, we should all remember that the love of money is the root of all evil.

00:01:03.240 And money really has a huge effect on outcomes.

00:01:06.580 But nobody says that.

00:01:08.440 And I miss it so often.

00:01:10.300 So you spent your life in the money business, trading debt.

00:01:15.700 Tell us just to start.

00:01:19.800 But like, you worked in Ukraine.

00:01:22.820 You traded Ukrainian debt.

00:01:24.200 What was that like?

00:01:25.720 I never worked in Ukraine.

00:01:28.020 I've been to Ukraine on investor trip.

00:01:30.640 I have traded Ukraine debt.

00:01:32.420 I traded emerging markets debt my whole life until May of this year.

00:01:36.960 I traded and sold it at a bunch of different banks, London and New York.

00:01:43.120 Ukraine was certainly one of the instruments we traded, traded through the Russia crisis.

00:01:50.960 Can you explain, just for the truly ignorant me among them, what is emerging markets debt?

00:01:56.580 So emerging markets debt, originally, the asset class grew out of the debt crisis in the 1980s when money center banks were hung with primarily Latin America debt.

00:02:10.440 After the 80s crisis, Nicholas Brady, treasury secretary at the time, came up with a plan called the Brady Plan to restructure the debt, back it with collateral U.S. treasury strips that would make it more palatable to a broader base of investors.

00:02:28.220 To get it off the balance sheets of the money center banks and to create a more of an institutional uptake of the debt and retail uptake of the debt.

00:02:37.100 So American debt, American banks are left with loans from other countries that those countries can't repay.

00:02:44.520 Correct.

00:02:45.580 I'm just trying to put it in terms like I can understand.

00:02:47.740 And so then the treasury secretary basically says to those banks, we'll bail you out by guaranteeing these loans with American treasuries?

00:02:58.120 It's one way to put it.

00:03:00.240 It's a way to clean the balance sheet up and to create, I think there are two impacts.

00:03:05.880 One, you clean up the bank's balance sheets, get it off their sheet and create a marketplace and a dynamic that allows liquidity for this debt and then creates a whole new marketplace and ability to issue and clean up the country's balance.

00:03:24.000 So you're doing good for the banks and you're doing good for the countries and theoretically doing good for a whole new investor base.

00:03:30.640 And that started in the early 90s and I kind of walked into Wall Street in the early 90s out of college and I just fell into this market that was starting and really boomed for a while.

00:03:42.580 And so what does that mean to attach a treasury to foreign debt?

00:03:46.640 Can you tell us in layman's terms what that means to treasury strips?

00:03:51.540 What is that?

00:03:52.040 Treasury strips, zero coupon bonds effectively.

00:03:54.560 So you have collateral, you have risk-free collateral that's attached to the bond.

00:04:01.600 So that to get investors who are obviously wary of sub-investment grade emerging market, at that time it was called less developed countries, LDC, then it evolved into emerging markets debt.

00:04:15.260 Which actually is sort of a misnomer at this point because it characterizes almost everything outside of G7 from single A debt to defaulted debt.

00:04:27.240 So it's grown over the last 30 years to incorporate sovereign debt, debt of countries, primarily issued in hard currency, dollars and euros, down to investment grade corporates, government owned debt, like oil companies, let's say nationalized oil companies that would be called quasi-sovereigns, down to corporate debt, all the way down to defaulted debt.

00:04:52.300 So it's all of credit, all credit products in a number of countries, it's ballooned.

00:04:58.900 But at the infancy, it was really a, it was a evolving asset class to kind of clean up the balance sheets and open access back to lending to these countries.

00:05:10.280 And instead of just being relied on major money center banks for loans that really sat on their balance sheet and weren't that liquid, didn't trade much, let's open it up to a global investor base, trade euro bonds, put in your, not necessarily put in your 401k, but put in your pension funds and then hedge funds traded it.

00:05:30.700 And from there, it evolved from dollar debt into the local currency debt became much more fashionable.

00:05:37.580 So investors can buy Turkish lear denominated debt or Kenyan shilling denominated debt and then obviously derivatives.

00:05:46.400 You can buy Kenyan debt in Kenyan currency?

00:05:48.460 You can, it's not that easy, but the harder it is to trade, the more the banks make money at trading it.

00:05:57.060 So it's, certain countries are harder to access than others.

00:05:59.740 So all, so all of this debt originates from the desire of countries to raise money from the world.

00:06:06.680 Correct.

00:06:08.200 So if I'm Kenya and I want to, you know, fund the operations of my government, I issue bonds?

00:06:17.540 Yep.

00:06:17.900 You issue locally, uh, issue local bills to local banks, primarily, local bank treasuries.

00:06:25.560 Uh, foreign investors can access that through, um, typically plain vanilla kind of derivatives.

00:06:35.120 And they'll issue dollar denominated euro bonds that are open to the world to trade in dollars.

00:06:41.820 So if you're the treasury secretary, that's a huge power that you have.

00:06:47.280 You can bailing out other countries.

00:06:49.320 Certainly.

00:06:50.060 I mean, I saw it, my first job, uh, for about a year, I was an analyst on a trading desk and it's like six months in, they gave me a trading book.

00:07:01.320 Uh, the Mexico book is 1994.

00:07:04.660 And they gave it to me because I was a kid and it was the safest book.

00:07:07.760 You could, you couldn't hurt yourself too much with it.

00:07:10.040 About six months after that, the Mexican peso crisis hit.

00:07:13.600 So yeah, that was Robert Rubin and friends.

00:07:16.440 I lived through that whole experience of the bailout.

00:07:18.700 What did they do?

00:07:19.600 What did who do?

00:07:20.740 What did Rubin, then treasury secretary, what did under Clinton, what did he do with the Mexico crisis?

00:07:26.420 What's interesting is you, I don't know if it's, it's a, it's a function of just how the human brain works.

00:07:35.100 And you, you look back and you're like, oh yeah, the, we basically bailed Mexico out and cleaned it up and everything went on as it was. 0.98

00:07:41.820 But you forget as you're going through that, these things all take a lot longer.

00:07:47.040 Your memory shortens up.

00:07:48.340 Right.

00:07:48.560 Uh, it took a lot longer and it took a few go rounds.

00:07:51.920 And what I learned through that whole thing was, cause I went through a bunch of these crises, there was the 94 Mexican peso, 97, the Asia crisis, Thai bot. 0.73

00:08:01.960 I don't know if you remember Thai bot crisis and Korea chai balls and all that.

00:08:05.260 And then 98 was Russia, 2000 was Argentina peso crisis.

00:08:09.900 And then we had the, you know, GFC.

00:08:11.920 So there's, there's role, there was a series of rolling crises and all in like the first 10 years of my career.

00:08:17.560 So that definitely kind of wounds your ability to stay perma bullish when, uh, you're, you're going through a bunch of rolling crises.

00:08:26.480 But, um, what I learned through these series of crises is that what you have to kind of start with is the bazooka, the, to go with the, the Moab of bailout that you have to go with way more than the market thinks you need.

00:08:41.420 Cause what I, in, in the Mexican peso crisis, if my memory serves properly, they kept coming with not half measures, but sort of just enough of what they thought would, would bring back some market stability or market confidence.

00:08:55.940 And just enough creates a bit of a spike in confidence and then starts to start to panic again and then come back again until finally they come back with the, the mega bazooka swap lines, bailouts, all that sort of stuff.

00:09:11.300 So now that, that was also early in sort of the Washington consensus era of foreign policy.

00:09:17.660 And there was, uh, I guess my, the macro point I would make or the conclusion I'm reaching is this is a huge feature of our foreign policy.

00:09:27.840 It is.

00:09:28.780 And, you know, the IMF, it's funny.

00:09:31.000 I've been, you mentioned Ukraine and the, the trip I went to Ukraine was an investor trip.

00:09:35.820 And part of the purpose of an investor trip is to go and to meet with their finance ministry, um, their debt liability people, um, meet with banks, meet with locals, uh, get an assessment.

00:09:50.120 And, you know, we go to, you always, you always go to the IMF, uh, the IMF there, um, and, and ask what the likelihood is of the next tranche being delivered.

00:10:00.540 And, and, you know, perhaps it's a bit cynical, but 30 years of trade and merge markets will make it pretty cynical.

00:10:07.120 But I'd always go into those meetings and walk away from those meetings.

00:10:09.860 Like, well, what are we talking about here?

00:10:11.100 Of course they're going to, of course they're going to disperse the next tranche.

00:10:13.880 That's what they're in the business of doing.

00:10:15.660 They're in the business of lending money to these countries because that's what they do and that's where they make their money.

00:10:23.160 So it's very rare that they won't, um, or they don't, unless it's a real sort of turn your thumb up, turn your, turn your nose up or thumb your nose at the IMF.

00:10:34.720 And, and, uh, is the purpose of the IMF to bail out mismanaged countries?

00:10:39.940 I think it's simple terms.

00:10:41.060 Yes.

00:10:41.300 I don't think that's the, I don't think that's the most euphemistic way of putting it or how they describe it.

00:10:47.280 But effectively, yes, I'd say backstop or to keep them, keep them afloat and to offer them, uh, guidance as to how to run austerity programs and get themselves back on the rails so that they can move towards prosperity, democracy, all those sorts of things.

00:11:07.620 Does it work?

00:11:09.220 Uh, typically no.

00:11:10.840 Why?

00:11:11.420 uh because one uh it's very politically unpopular as a domestic politician to be taking orders from

00:11:24.480 any foreign power but certainly uh the west and those orders come with strict austerity because

00:11:32.860 how did they get themselves in those problems in the first place right um a certain distinct lack

00:11:38.000 of austerity living beyond their means correct so you know that's not that's not uh that's not

00:11:46.020 particular to emerging markets countries all sovereign all sovereigns do that right everyone

00:11:49.940 in the west is doing that as well now right um living beyond their means um but some of us like

00:11:56.280 the united states are able to run what's called counter cyclical monetary policy because we have

00:12:02.260 a reserve currency so we have a special privilege to be able to maybe be somewhat more profligate

00:12:09.280 than others but the money round runs out a lot faster in emerging markets countries when you

00:12:13.900 can't finance your debt and you have a dual crisis of both your currency uh and your interest rates

00:12:21.000 running out of control and at that point you've got enough you've got nowhere to go other than to

00:12:26.140 uh your friends in dc um or brussels and ask for the backstop but in return for the backstop you need

00:12:36.140 to make some promises about how you're going to conduct your business going forward and as you can

00:12:40.720 imagine cutting expenses raising interest rates slowing the economy uh doesn't generally get people

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00:16:46.280 so you really you've got a a democracy problem these countries overspend because

00:16:53.960 their democracies and they're trying to meet the demands of their voters and then it's impossible

00:16:59.640 to fix because their democracy is trying to meet the demands their voters uh that's probably a little

00:17:06.340 more euphemistic than i would say yes that's one factor but there are other factors at play as well

00:17:11.560 how many countries have been bailed out by the united states over the past 30 years that you're

00:17:16.820 aware of oh i mean there's hard bailouts and soft bailouts right so i couldn't really put a number

00:17:23.260 on it like how many are running an imf program right now how it would have to be in the dozens how many

00:17:30.320 like strict bailouts i really don't know off the top of my head i mean we can go through the

00:17:36.340 we can go through obviously mexico argentine excuse me argentina um in the in the in the

00:17:44.500 asian crisis there were a whole host asian countries that had to post up um so there's

00:17:50.480 there's the hard bailouts and then there's like the softer bailouts of sort of coming back

00:17:54.640 staying on the staying on the the teat so to speak who makes money from this

00:18:01.520 uh who makes money from this so the imf theoretically makes money uh from the interest on the loans but

00:18:13.440 it's typically below market loans so it's it's not a real profit motive um banks make money from this

00:18:21.500 from facilitating the debt so the trading of it the issuing of it the fees issuing of it um

00:18:28.840 investors make money um from higher interest rates obviously um and then there's a subset of

00:18:38.040 investors like distressed debt investors that will um buy a bunch of defaulted uh defaulted paper sit

00:18:47.680 on it and then do workouts like the most the most um probably stark examples recently would be

00:18:54.980 argentina um and uh you know right now ukraine will be pretty significant one as well see what the

00:19:03.520 workout is with that how what would you do with ukraine as a banker at this point like what's likely to

00:19:10.220 happen to ukraine not not on a military level but ukraine ukraine is a different one than say in

00:19:17.880 argentina because it has at the moment more of a geopolitical put so to speak than pick a random

00:19:25.720 country like bolivia or argentina although now under this administration clearly there's more

00:19:31.360 with sort of monroe doctrine part two there's there's more of a geopolitical put to argentina but

00:19:36.740 uh but ukraine's a tricky one because there are you obviously up until recently you had the entire west

00:19:46.120 behind them right and there's this this week alone you've got um you got larry fink whitkoff and

00:19:53.440 kushner over there working on you know stage two what's going to happen the peace process but also

00:19:58.300 the rebuild so that's an it's an odd one i think that's going to be a combination of of public and

00:20:04.880 private uh because there'll be so much rebuild to do and there'll be there'll be a lot of money to be

00:20:11.380 made in the rebuild what does a debt crisis look like what is a debt crisis well a debt crisis

00:20:18.760 typically is not a debt crisis alone it's accompanied by a currency crisis uh the debt

00:20:28.280 crisis the external debt and then a local market interest rate crisis which is also dead in itself

00:20:34.120 so the local local t-bills local interest rates will skyrocket at first to try to raise interest rates

00:20:40.080 to try to attract uh money to the currency to stem the route on the currency and that can work up until

00:20:47.760 a point until you lose control of both um so what a debt crisis looks like is uh currency runaway

00:20:55.680 currency devaluation runaway higher interest rates which clamps down the interest rates clamps down any

00:21:02.060 lending locally clamps down any local growth creates the defaults um on domestic businesses uh the currency

00:21:12.000 running away depending on the country but all countries it causes inflation but uh countries that

00:21:18.660 rely on imports certainly even more right everything you're bringing in um it's going to cost far more

00:21:26.020 in your local currency um so it's really a spiral um and then current typically what happens is bonds

00:21:33.140 will drop to a level that's called recovery value and recovery value is effectively what uh is a term

00:21:39.860 more really more from i say the corporate credit markets where if you were to strip everything down

00:21:45.540 and sell it for parts what could you get you know what could you get uh for the cash value

00:21:52.360 so interest rates spike bond values drop collapse yes what does this have to do with debt why is it

00:22:00.720 described as a debt crisis uh because no one could function without borrowing no one could function

00:22:08.120 without debt so if you can't borrow you can't exist and there's no country that's not true of

00:22:16.940 uh i mean there's there are countries that don't necessarily need to borrow as much as they do but

00:22:23.340 they still do why because one because they can uh cheaply um i would argue the gcc countries um don't

00:22:35.980 necessarily need to borrow as much as they have the gulf yeah and gulf countries but they have

00:22:40.260 recently you know saudi for example because they're going on a massive expansion um to diversify

00:22:47.120 themselves away from their core business which is oil which is actually is actually a very wise thing

00:22:55.640 to do because if you look at um if you look at countries historically venezuela is probably the most

00:23:02.500 extreme example um that had an opportunity there's a single a rated country in the 80s um if you

00:23:10.580 i went there in the 90s i mean gleaming infrastructure like incredible highways beautiful hotels amazing

00:23:17.820 amazing place uh and they never took the oil wealth and diversified away from it in a meaningful way

00:23:25.380 and then when you have an oil shock and you've taken out too much debt against the let's make up a number

00:23:31.640 a hundred dollar oil price and oil drops to 30 you're all upside down um and so that's what

00:23:39.780 you know uh it's what mbs is looking at for a multi-decade plan to build you know build these

00:23:45.700 cities technology innovation centers and so forth which is clearly learning from from the past um

00:23:52.620 but uh but they're borrowing to do that they're borrowing to do that yeah but they're borrowing at

00:23:58.260 fairly cheap rates um there's also a concept that you want to borrow as a sovereign the sovereign

00:24:04.000 level to set a benchmark against which your country your companies can borrow in international

00:24:09.680 markets this would be the broader the investor base theoretically the cheaper the interest rate

00:24:14.180 so they'll set a they'll set a benchmark level and then a corporation can borrow at that rate plus

00:24:20.980 20 basis points or 50 basis points well some americans have become cut off from the things that

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00:27:32.700 we recommend it so if every country's indebted i mean debt decreases your sovereignty your ability to

00:27:43.580 make independent decisions that's correct yeah so if every country's in debt then there are no fully

00:27:51.260 sovereign countries then right can't just it's not no country is free to do exactly what it thinks it

00:27:58.120 should do in its own interest they're all connected no uh and again back to the u.s i mean

00:28:04.480 theoretically we we are or were based on the fact that we have a global reserve currency but

00:28:11.060 there is a limit to everything at some point so what's the limit for the united states

00:28:16.460 it's hard to say um what the limit is the limit is what loses the global reserve currency status

00:28:25.420 right and as i alluded to before these things don't happen quickly they happen over a much longer

00:28:32.700 period of time than anyone would think um so how do you you know in simple terms for me let's look at

00:28:43.600 some global recurrent global reserve currencies uh historically um dutch gilder british pound us

00:28:52.980 dollar probably the most obvious examples in relatively recent history and what did they all

00:28:57.300 have in common uh they ruled the seas military dominance right and you know you'll see memes online

00:29:03.900 what you know the pictures of fleets of aircraft carriers in the gulf and displays of military power

00:29:11.300 that's what backs my currency and then that you know that that is true um but you know at some

00:29:19.060 point you gotta ask yourself a question like where you know also what how did empires from rome

00:29:26.140 uh to the dutch to the brits like imperial overreach to an extent was what undid them right and

00:29:33.880 yeah if we continue to i mean what what concerns me what concerns me longer term of the potential

00:29:41.820 to lose the reserve status is if we lose our military dominance that's not happening obviously

00:29:47.660 tomorrow the next day there's a few things that that could obviously i mean you're more versed than

00:29:53.660 i am in in this whole notion of modern-day drone warfare but that certainly levels the playing field

00:29:59.600 very very quickly um you see what the what the hooties were able to do uh yeah uh with not so

00:30:07.360 sophisticated and not very expensive drone technology so but that's you know that's that's the that's

00:30:14.620 purview for for some military expert not me um the other thing that concerns me but the structure

00:30:19.300 remains the same so the united states can continue being indebted to the degree that it is because it

00:30:26.320 has the world's reserve currency and it possesses that because of its military dominance it does but

00:30:32.820 if yes i think what's a very important was a very important moment however was the seizing of the

00:30:43.280 russian reserves at the beginning of the russia ukraine i felt that um and i think we'll look can you tell

00:30:50.980 us what happened just for people yeah so quite simply uh the western power seized the russian

00:30:57.800 reserves that were sitting in um in the new york fed uh i believe it's 300 billion is the number

00:31:05.500 that they seized and you know the the euro europeans still want to use that for uh for rebuild and so

00:31:13.520 forth in ukraine um now not to get into who's right and who's wrong in the ukraine russia conflict that's

00:31:20.140 not that's not the point of this the point is it sets a precedent um that's a scary precedent that

00:31:26.840 is your money that sits in u.s treasuries or gold in our uh in our federal reserve is not safe if you

00:31:37.500 run afoul of the powers that be so there's an an a very obvious and natural reaction function to that

00:31:45.500 which is powers like india china and russia stop buying treasuries and start buying gold though

00:31:53.360 the gold call was certainly we have inflationary you know inflationary pressures we can talk about

00:32:00.720 but even more to the point it seemed obvious at that point that that's the trade it's it's yes it's an

00:32:05.880 inflationary i bought gold that month remember yeah and i've done better than the stock market's done

00:32:12.360 well it's funny if i the move in gold this year i won't get it right off the top of my head but it's

00:32:19.060 over the last 20 years i think now is the gold's now beat the s&p now when you compare the two yep

00:32:24.920 it's really effectively just the debasement trade when you look at it what's the debasement trade

00:32:29.840 basic trade is that the currency that we the currency that we all use and think about every day

00:32:36.840 has been debased against gold right the value of the dollar i think oftentimes people look at the

00:32:43.840 the dollar is the dollar strong or the dollar weak and what people are looking at is effectively the

00:32:48.500 dxy the dollar index and that's a basket of major currencies or it's heavily weighted to the major

00:32:54.260 currencies euro yen canadian dollar aussie dollar and it's really at this point kind of a ridiculous

00:33:02.320 comparison because all of those countries are sort of in a basket case with their debt issue and their

00:33:08.640 growth um but if you look at the dollar versus bitcoin or if you look at it versus gold over the

00:33:14.480 last 10 years it's pretty clear that the currency has been debased in those terms so if you look at in

00:33:21.080 that terms the stock market returns don't really actually look quite as uh as great as wonderful if

00:33:29.460 you're looking at and what a dollar uh would how many how many dollars it took to buy an ounce of

00:33:34.900 gold 10 or 15 years ago versus today and all of that you think or some of it is downstream from the

00:33:42.640 decision by the bide administration to freeze russian assets because that scared the crap out of the rest of

00:33:48.120 the world i think the gold move is for sure the dollar weak the dollar weakness against gold yes uh but

00:33:55.080 there's also i mean i i think the big move in i mean if you look at

00:34:02.380 if you look at what we did after the gfc in terms of interest rates and global financial crisis where

00:34:10.960 what we did bail out uh extraordinary measures fiscal and monetary keeping interest rates at zero

00:34:20.260 uh emergency measures keeping rates at zero that remained in place for a good 10 years like i don't

00:34:28.080 know how you stayed emergency measures at zero interest rates when the stock market quadruples over

00:34:36.820 triples quadruples over 10 years um so what i think why is that bad all all those investors got rich

00:34:47.480 everyone's happy with their 401ks like why is that bad well it's bad for a number of reasons one is

00:34:56.620 if you believe in a free market capitalist system you believe in the the pricing mechanisms and the

00:35:04.560 free market pricing is everything uh the price of meat at the farmer's market is set by the free market

00:35:12.020 who's willing willing buyers willing sellers at a fair price uh once you start to put in price

00:35:17.860 controls of the soviet union it's definitionally we don't have free market capitalism at the core of

00:35:24.420 uh you know free market caps is the price of money so we artificially put price controls on the price of

00:35:31.660 money it's the way i look at it we artificially kept interest rates way too low at zero when the

00:35:37.840 market didn't necessarily demand the conditions maybe at the time certainly five years hence

00:35:42.580 2015 i don't i don't really see why we needed to keep interest rates at zero for that long so yes

00:35:48.760 uh i think the reason why in my opinion the reason why the people at the fed

00:35:54.000 the dozens and dozens of phds at the fed making these decisions probably to a man to a woman wrote their

00:36:03.620 phd on uh the great depression and what the fed did wrong and that would the horrors of deflation

00:36:11.560 so really the depression was really a result of deflation right so that's the greatest boogeyman of

00:36:17.020 all so anything you can do to fight deflation deflation is the real killer uh especially when you have

00:36:25.140 an excessive debt load what i'm i'm going to stick to the dumbest possible questions i hope i don't

00:36:30.800 offend you what is deflation deflation is prices going down uh what you kind of want is a gentle

00:36:38.680 inflation to help inflate away the debt uh to show a gradual the the benchmark the target fed target

00:36:48.980 for a long long time has been two percent inflation they soft up that to three recently and as you know

00:36:55.500 just cut rates this week even with core pc at 2.8 so they've kind of abandoned that two two percent

00:37:01.820 target but what i think in that time why wouldn't i want deflation because that makes the value of my

00:37:08.320 paycheck higher it depends on who i is who's who the i asking that question is right so if you're you

00:37:18.380 and your wages are constant and you've paid off your house uh certainly deflation would be great go to

00:37:29.280 the store every day and things are cheaper um i mean there's deflation certain parts certain sectors

00:37:34.100 right they for years there's been deflation in all technological goods right you get a flat screen tv

00:37:39.380 for 400 bucks yeah um so for you tucker carlson it would be wonderful uh for the economy as a whole

00:37:49.280 that's really run on hyper financially hyper financialization and debt uh if you have a

00:37:57.420 deflationary spiral you are going to be left with a bunch of defaulted debt so where we are right now

00:38:05.520 you know to pivot i guess to where we are here with the u.s is i think when this administration came in

00:38:15.760 they they messaged pretty clearly that the move was going to be away from the biden administration and

00:38:22.480 more towards some austerity there would be some tax cuts but it would be offset with spending cuts

00:38:30.120 uh doge elon etc people got very excited about potential potential cuts um and then i don't

00:38:40.940 know what happened shortly into the administration but there was clearly a pivot that i didn't see

00:38:46.160 coming um and it was around the time of the tariff the tariff uh tantrum and the big sell-off in the

00:38:52.800 stock market but out of that seemed to come that there was a shift towards what people are now calling

00:38:57.340 run it hot which is forget about tamping down spending little tax cut maybe we'll take some

00:39:05.200 slower growth but we'll reduce the deficit for that'll be good for the long term and instead let's

00:39:10.540 let's just run it both ways fiscal and monetary so let's let's cut rates and let's uh let's cut taxes

00:39:18.800 and let's spend more and i don't know what what happened or if that was always the plan but or someone

00:39:24.620 under the hood and said look the only way typically there's two ways to get out of a debt problem you

00:39:29.960 grow your way out or you inflate your way out right and it seems to me we're going all gas no brakes on

00:39:35.180 both like we'll just we're gonna we're gonna grow and we're gonna we're gonna let some inflation go and

00:39:42.800 that's the way we're gonna get out of this debt issue and yeah i think trump this week was saying i

00:39:47.280 could see 20 25 percent gdp growth i mean that's it's a nice number but that would certainly help

00:39:52.500 our certainly help our uh deficit issues well it wasn't that long ago that many americans thought

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00:40:01.440 world countries a total power loss for example or people freezing to death in their own homes that

00:40:06.480 could never happen here obviously it's america people are recalculating unfortunately because they

00:40:13.260 have no choice the last few years have taught us that remember when the power grid in texas failed

00:40:18.260 in the dead of winter yeah it happened and it could happen again so the government is not actually as

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00:43:03.400 dot com have you ever seen any country try that uh no

00:43:11.360 really well in 35 years of watching oh oh 20 25 gdp no uh no have you ever seen any country

00:43:20.380 approach a debt crisis with that sure sure i mean erdogan's probably the most famous

00:43:26.120 um in turkey did it work no what happened um he tried to keep cutting rates into an inflationary

00:43:36.840 environment and it and put pressure on the central bank to cap rates but the free market

00:43:43.180 always you know i think i always say you can suspend the laws of of science of physics of gravity

00:43:50.440 of market economy for a time but ultimately the gravity always always works so and the free market

00:43:59.080 always always works um so no it didn't work they have runaway inflation and um extraordinarily high

00:44:05.580 interest rates and he's under been under a lot of pressure domestically um for re-election obviously

00:44:11.240 so what's the right way to approach it uh well

00:44:17.580 as uh i think was it thomas solo says there are no solutions only trade-offs

00:44:24.240 yeah there are no solutions when you're in

00:44:27.320 this situation when you're in this situation of 37 trillion dollar deficit um is that a lot

00:44:35.500 sounds like a big number to me i'm not even sure how many commas are in there it's big number uh

00:44:43.460 it's hard it's really hard to grasp but um i think you go back you started with you know ideology

00:44:50.780 the answer is always going to depend to an extent on what your ideology is and what you're willing to

00:44:56.780 sustain in terms of pain short term to long term and for me i was more uh i was more a proponent of

00:45:05.500 what i thought the plan was going to be which is um some deficit cutting through spending cuts um and

00:45:12.940 from what was coming out of doge early it seemed like there was plenty of fat to cut that would have

00:45:18.720 been politically rather popular i think especially with the right pr uh guys behind it you know guys

00:45:26.540 were getting out there every week and on twitter and going on podcasts and talking about sort of

00:45:30.980 the absurdities they were finding now maybe maybe it's a drop in the bucket overall but i think um

00:45:37.660 it was a it was a worthwhile exercise to go with um i don't know i you know again i don't know

00:45:46.960 i'm not on the inside so i don't see what it's there i mean so the idea always was that federal

00:45:53.040 bureaucrats public servants as we call them were serving were serving and they were making less than

00:46:00.460 their private sector counterparts and there was suffering involved but patriotism impelled them

00:46:05.920 to do it so they did and now you look at the numbers and it's like no no no your your federal

00:46:10.680 employee on average makes way more than your private sector 2x 2x so they're the most privileged

00:46:17.540 people okay in the in the middle class and by far that doesn't count their gilded pension plans is it

00:46:26.040 really 2x i think it's i think the number is average medium private sector family income is 70k i think

00:46:34.740 it's 110 or 115 for for uh federal not including the benefits which are ridiculous work from home for

00:46:42.120 five years um but then you know of course the population of federal workers or federal contractors

00:46:50.200 which are i mean there probably is many federal contractors no one ever says that but there are

00:46:54.660 deloitte is a federal contractor right so there's so many of them now that we maybe have reached that

00:47:01.060 tipping point where no administration can pivot against its own employees because they're voters

00:47:08.200 maybe uh maybe but you know i'm sure you've alluded to many times like you can't have what is it seven

00:47:15.340 of the ten top zip codes in the united states are all in sort of in and around washington dc i mean i

00:47:22.260 went to you low you grew up there i went to school there in the early 90s and i hadn't been back for

00:47:28.140 15 years i it's night and day it's gleaming gleaming office towers rose and rose i remember having an

00:47:36.180 internship two blocks from the white house and you were passing you you had to pass sort of bombed

00:47:41.160 out oh derelict buildings and now it's from the 1968 riots they never were rebuilt 1992 they were

00:47:47.960 still there like literally two or three blocks from the white house i remember and uh it's crazy i mean

00:47:53.260 it's um and flashes of roman empire right you just like you you go to you go to rome to collect your

00:48:01.700 tribute and uh so i i don't know i don't know i i'm not as privy to that world as you are i don't

00:48:08.980 know what people see when they get into office and realize that there's potentially no way there's no

00:48:15.580 way around it um all our intentions are we're great but this is the way it's going to be i don't know

00:48:21.500 what okay but you're also suggesting that this is not a solution that you can't spend your way out of a

00:48:29.600 debt crisis i don't i haven't seen it done before uh right how much magic would that sense a very

00:48:38.680 talented individual uh he's a lot of experience in markets very successful uh the right guy to have

00:48:48.640 at the helm if he thinks this can be done i guess we don't have any choice but to see what how it plays

00:48:55.180 out but um maybe that's the play the play is this is our only way out at 30 you know people on both

00:49:02.080 sides people i speak to people i knew in the markets friends of mine people whose opinion i

00:49:07.220 respect on both sides of the aisle um the one thing we all agree on is that this is not a tenable

00:49:13.980 situation um it's not some mmt elizabeth warren people we're talking to this is like normal people

00:49:22.260 that say like okay at this point we're kind of boxed at 37 38 trillion um so maybe that's the

00:49:29.880 issue maybe we're so boxed that we got to run this experiment experiment because it's our only way out

00:49:34.380 uh and hopefully growth kicks in but it doesn't you know it the growth the growth scenario the current

00:49:46.140 growth scenario in the u.s is really hard to get your hands around um in one part because it's such a

00:49:53.280 polarized economy people are calling it a k-shaped economy which i think is a pretty accurate term 0.99

00:49:59.280 k-shaped meaning the the lower end is hurting and continues to hurt more and the upper end

00:50:06.660 gains and continues to gain more and you know we've seen through throughout history that's not

00:50:12.520 a tenable situation no it's actually what happened in venezuela it's how they got hugo chavez yeah it's

00:50:16.800 a powder keg ultimately um so and it's also extraordinarily difficult to get a real handle on where

00:50:24.400 the numbers are because we're not releasing any numbers right now because the government shutdown so

00:50:28.980 um you know the fed's flying blind to an extent you can rely on certain private sector

00:50:34.040 indicators um that are kind of shockingly bad frankly when you look at uh consumer loan defaults

00:50:42.880 credit card balances credit card the late credit card payments auto loan defaults

00:50:47.780 um i think october was 185 000 announced private sector layoffs i think the worst since 08 so

00:50:56.480 you have a situation where you've got a you know the u.s the u.s economy is 70 percent 69 70

00:51:04.500 percent consumer led so if we're going to rely on the top 10 percent to continue to spend on

00:51:11.920 you know gucci bags and trips to saint bart's i i just don't know how sustainable that is when

00:51:20.920 the lower end is you know swapping out uh new york strip for for pork loin and walmart numbers are

00:51:30.680 great because middle and upper middle class is shifting from the publics to walmart shopping like 0.99

00:51:37.580 everyone everyone's getting squeezed um so i don't know i don't know that the growth is there the growth

00:51:43.840 can come maybe the growth can come with uh these tax cuts with industry cuts with uh certainly with

00:51:51.820 deregulation will help um and all this promised uh foreign investment but uh there's a lack to all

00:51:59.240 that so we'll see it does seem from a an ignorant outsider standpoint which is mine that there's an

00:52:06.900 awful lot of emphasis on the public equities markets and like stock markets the measure of

00:52:12.220 how we're doing whether or not that's a good measure you know i don't know maybe not a perfect

00:52:17.820 measure feels like to me but um how safe is the stock market in the united states as a place to put

00:52:26.060 your money um i can tell this is an uncomfortable question be as diplomatic as you can be well it is

00:52:37.440 the largest most liquid stock market in the world uh it does attract not just domestic savings but

00:52:44.880 huge foreign investment uh for you know there's expression that says money goes capital goes where

00:52:52.540 it's treated best and we still do treat capital the best in this country um extraordinarily dynamic

00:52:58.900 markets from you know venture cap to private equity to public markets and that's something we should all

00:53:05.280 be very proud of and it helps you know grease the skids of global commerce and that's great

00:53:10.520 uh there are some concerns clearly concerns about the value current valuation of the equity market

00:53:19.540 and the structure of the economic structure of the flows um so one there's a massive concentration risk

00:53:28.280 um it was the fangs now it's the mag 7 like the the top 10 uh companies in s&p 500 i think have

00:53:39.240 accounted for something like 42 percent of the gains year to date um the big get bigger you had new

00:53:47.460 nvidia at one point tipped over five trillion dollar market cap which is again a hard number to really

00:53:55.240 get your head around um at that point i think it was larger in market cap than every market in the

00:54:02.460 world except for u.s and japan entire market cap of any other uh trade any index in the world um so

00:54:12.880 wait bigger than the entire index of any country in the world yes bigger than the cumulative total

00:54:18.440 of the value of all the companies traded on those indexes on a random exchange yeah except for i believe

00:54:25.500 u.s for sure and i think japan again i could be wrong but something in the in in that saying that

00:54:32.020 you get the idea what i'm so just it one company dwarfed all these economies that's right and

00:54:38.480 that you know we we don't need to go into all sort of the price to book and price to sales and

00:54:46.980 expectations of future revenue all that sort of thing uh you get into a market psychology event where

00:54:52.580 stocks that go up continue to go up because people chase momentum i read something yesterday that the

00:54:59.020 explosion in in options trading uh the volume option is now three and a half trillion a day

00:55:07.940 which is larger than the entire market cap of the russell 2000 so 2000 like the 2000 mid small

00:55:16.740 mid-sized companies 300 million to 2 billion market cap companies in the united states and that

00:55:21.820 doubled i think from 2000 from 2022 and then doubled again so you've got an insane amount of leverage you've

00:55:29.840 got margin debt at all time high may i ask what why is this significant in the options market is huge

00:55:35.100 uh because it's not just the options mark's huge it's also the structure the options they've moved

00:55:39.460 to zero data expiry options so you could used to be weekly or monthly options and now it's one like

00:55:45.980 same day options so the retail uh with the gamification sort of of yeah of so an option my understanding of

00:55:55.140 an option is an option is a bet on in what direction the direction with and you get an immense amount of

00:56:00.480 leverage a immense amount of leverage so how does that work how do i so let's say that you want to

00:56:08.440 buy a call betting that nvidia is going to go up between now and the close uh and at the money nvidia

00:56:17.720 call meaning let's say it's trading at uh 177 right now and you think it's going to go up and the price

00:56:25.240 of the at the money the 177 call is till now to the end of day is 75 cents let's just say so you're

00:56:33.420 betting that it's going to go up more than 75 cents if it goes up a dollar 50 you've doubled your money

00:56:39.100 you're not just making 75 cents on 177 which would be whatever 31 you're making 100 of your money so

00:56:49.000 you're getting all you can lose is the premium the 75 cents you pay for that option but everything

00:56:57.020 over 75 cents starts to run exponentially in terms of profitability so people are making an insane

00:57:03.540 amount of money on uh in this run-up on uh on options zero day options and they're doing it from

00:57:12.020 their phone it's pretty easy with the that's not really investing though that's betting yeah that's

00:57:16.720 gambling um but that's just one component of the structure of the but it sounds like it's now a

00:57:22.080 huge component it is a huge component but again with the gamification of you know uh crypto trading

00:57:29.000 and and uh options trading and robin hood and with gambling you know uh draft kings and all that

00:57:36.300 stuff it's sort of part of the culture and it all started in covert people at home with extra

00:57:40.220 stimmy money and not much to do and the market was ripping and people got hooked on it and people

00:57:45.080 keep doing it and generally people are doing quite well i think you know retail has done better than

00:57:48.960 institutional largely speaking this year but the other part of the structure the market that's

00:57:54.500 somewhat concerning is just this passive flow um so then there's a guy named mike green he should

00:58:02.600 probably speak to who's done the best work on this um and passive flow basically 401k if you put your

00:58:10.260 money in every two weeks your money's automatically going to your 401k and it's you click to that it's

00:58:16.440 auto invest if you go and you look at most companies 401k options uh their options and what to invest

00:58:23.420 and then you break down each one of them

00:58:26.460 basically every single equity option fund you have has the same high concentration in the same five stocks

00:58:35.380 so you know apple microsoft nvidia whatever so you don't know that necessarily you don't really know

00:58:43.640 what you're buying or what percentage of the fund is in those but it's very highly weighted because the

00:58:48.940 higher the market cap go higher waiting the higher the waiting goes and on and on and on so it's an

00:58:53.360 auto it's just an automatic machine like underlying bid to the market that continues to the big the big

00:59:01.800 get bigger and bigger and bigger and you could say okay what's wrong with that these are great

00:59:05.140 companies they're multinational they have great business models that were low capital intensive

00:59:11.520 and high margin and they're basically a lot of them are monopolies in their space

00:59:15.860 okay well two things can happen if unemployment rises

00:59:21.200 if you lose your job you're not putting your money in 401k

00:59:25.840 if you lose your job and inflation keeps ripping you might have to withdraw from your 401k

00:59:33.160 which creates a vicious cycle the other way then it's too much concentration and too much concentration

00:59:41.600 and the structure of it is perpetuates it and then you add on the leverage of the option trading with

00:59:47.880 the momentum that keeps this trade going and going and going to where you get to five trillion dollar

00:59:53.940 market caps now there'll be a whole coterie of wall street analysts that'll justify why five trillion

01:00:00.220 makes sense because of this that and the other thing but um i'm not sure what if they're of the

01:00:09.140 five eight ten companies that have the bulk of the value the plurality of the value of the entire s&p

01:00:17.040 if one or a couple of those companies dramatically reset in its value and its share price what would

01:00:24.480 happen well you're seeing it i kind of right right now as we speak is the ai trade is starting to lose

01:00:30.280 a little bit of favor there's starting to be some questioning uh on the ai trade um and the market can't

01:00:40.640 continue to to trade up when it's trade up if one or two of the major components are are falling out of

01:00:46.520 that i mean this week it's it's been oracle and you know last night's broadcom like took the market

01:00:52.660 down nvidia is starting to uh to weigh a little bit so it's we're very tech sector heavy and the other

01:00:59.960 the other thing that concerns me to an extent about not just for public markets but for private credit

01:01:06.320 markets is that with this ai build out and this data center build out um obviously an extraordinarily

01:01:13.840 capital intensive and what i was speaking about before uh about how a lot of these mag seven

01:01:18.260 countries had companies had a great model of being capital light they're now becoming quite capital

01:01:24.800 intensive right it's not writing software it's building physical things exactly you're building

01:01:29.520 physical things and you're spending you're borrowing a ton of money this is what the problem

01:01:34.160 with oracle is right now is they borrow a lot of money and now they're borrowing a lot of money to

01:01:39.960 build things and build things that depreciate in value over time right like a chip that you buy a

01:01:49.080 lot of this a lot of the financing that's been going on too has been people have been using collateral

01:01:53.820 these chips as collateral to borrow against so there's borrowing and borrowing and borrowing but

01:01:58.020 you're borrowing against a chip that naturally is going to be replaced by the next evolution of

01:02:03.580 of course so that's a bit of concern about the value of the collateral and when that daisy chain

01:02:09.720 unwinds it could be ugly the other thing is that there's so much there's so much borrowing in the

01:02:16.780 private credit markets for these hyperscalers and these data centers that it crowds out there's a

01:02:23.320 finite amount of borrowing available right so it's crowding out borrowing and investing in other areas

01:02:29.100 of the economy and that concentration risk concerns me to an extent as well and the different a lot of

01:02:36.780 people have made the analogy to you know the 99-2000 tech bubble and you know the good news coming out

01:02:45.480 of that down the line is that okay we all got hyped up on the internet and we got carried away with

01:02:53.140 pets.com things like e-toys but the truth was in retrospect we weren't hyped up enough about the internet

01:03:01.400 and what it would do and how it would change the world but there's still a cycle that comes along where

01:03:06.360 there's the euphoric cycle and then the crash cycle uh and then on the back end of that you have the

01:03:15.120 winners that survive like the amazons right that that you could have bought for practically nothing in 2002

01:03:20.760 um and then there are you know companies like the similar to me to this the hyperscale data center

01:03:27.880 were the um were the fiber comp the fiber companies like um global crossing uh worldcom right and those

01:03:37.600 were bubbles that crashed uh but what were they doing they were laying fiber uh fiber cable for the

01:03:46.280 internet which okay we had a malinvestment boom the companies crashed but the cables still exist and

01:03:54.420 the cables are in use today and the cables were very valuable and the cables didn't depreciate because

01:03:58.120 the cables have a useful purpose so that people are making the same argument now is like okay we may

01:04:04.800 go through that cycle as well it's maybe get a little fork there'll be there'll be winners and losers

01:04:09.040 out of this and it'll be fine down the road and ai's not going away i'm not here to disagree with that

01:04:14.560 but there's a slightly different component where you you're building these things that aren't that

01:04:23.340 could you know you're buying all these chips that could depreciate down it's not exactly the same

01:04:28.200 tray no and the nature of technology is hard to forecast very hard to forecast yeah i mean so they

01:04:36.260 were telling us six months ago that agi was right around the corner nobody thinks that anymore so for

01:04:42.040 just for example and so all of these infrastructure bets are predicated on predictions about what the

01:04:48.400 technology will require in 10 years the thing that we're really running up against we know that we

01:04:54.280 don't you're exactly right and i think there's the worms turning a little bit on the efficiency a lot

01:05:00.440 of these yes um and what they can and can't do and people say you know i i saved uh a half an hour

01:05:08.900 or i saved an hour uh coding something but then it took me three hours to check to debug the work

01:05:15.140 that the the actual uh you know clot or whatever did um but the real thing that we're going to run into

01:05:22.180 is we don't have enough power we don't have an electric and we don't have enough water to to heat and

01:05:29.000 cool all these things that's just point blank and even uh you know jensen and altman and those guys

01:05:34.360 they'll tell you that and that's why they're going hand in dc and trying to make um you know

01:05:40.440 trying to make trying to make the case that this is a critically important um industry that may need

01:05:45.940 some government backing but even if you get that the fact of the matter is the only way you can

01:05:50.880 really power these things uh without spiking electricity bills another 300 percent and then

01:05:58.100 creating a whole another political problem domestically is you need nuclear power and

01:06:03.740 you know we can we have plenty of natural gas that can work as a stopgap but you need nuclear power and

01:06:08.280 it's a 10-year build-out minimum to get the nuclear power that you need so when do we hit the

01:06:13.680 somewhere between there here in that 10 years we hit the wall in terms of our ability to

01:06:21.260 to uh to get the electricity for these at this growth rate now will is this growth rate

01:06:27.900 uh accurate projection maybe it's not and if it's not then we need to see a lot of these companies

01:06:35.620 come off in value so also there are a lot of concerns about climate change yes oh just kidding

01:06:41.440 that kind of ended quickly didn't it um yeah i'd seen i haven't heard that phrase in months have you

01:06:48.840 climate change no i did see i saw something about i saw something that nature had nature magazine had

01:06:56.000 to revoke a paper they did a few years ago that said that uh climate catastrophe was going to create

01:07:07.180 a economic catastrophe and that was all based on false premises i think they did yeah i think the new

01:07:13.300 idea is we're going to have an economic catastrophe if we think about the climate catastrophe in any way

01:07:18.260 i noticed larry fink's not lecturing as much about the climate anymore climate climate in esg is not

01:07:25.420 as fashionable as it as it was a couple years ago that's for sure so how did that like as a guy who

01:07:30.700 has dealt in markets like emerging debt it's pretty pure it's like a debt trading is like a pretty pure

01:07:38.220 market right well pure is an interesting choice of words no i'm not saying unsullied it's pretty

01:07:50.020 plain vanilla is that what you mean i mean like there's a willing seller willing buyer and but what

01:07:56.240 i really mean is the price is uh an organic price it's like what people will pay correct so that is the

01:08:02.760 definition of a market right how do you get to the price correct so as someone who's spent his life

01:08:09.560 in that world and who clearly you're clearly like committed to the idea of markets like you believe

01:08:16.620 people should be able to decide what they're going to pay for something and what they're going to sell

01:08:19.360 something for how do you explain esg uh i don't know that funnily enough i don't know that even the

01:08:30.260 experts can actually define it and i'm i'm not um i'm not joking when i say that when i in my last job

01:08:40.440 uh we would do a conference every summer in europe um for investors and we'd have a series of round

01:08:48.120 table um topics and the one topic that was standing room only sold out every summer in europe was the

01:08:55.640 esg without question um it seems the u.s has definitely faded faded quickly from that but europe

01:09:03.280 still seems very uh very hooked in very hooked in it's not faded there at all it's definitely a part of

01:09:11.240 the investment process uh but what's fascinating is if you go to 20 clients in london and you talk

01:09:19.000 about esg you will get a different answer from each esg specialist as to and especially in emerging

01:09:26.140 markets it's a very difficult thing to to work your way around the esg constraints when most of what

01:09:36.900 emerging markets are based on are hard commodities uh and there's also obviously the governance

01:09:44.220 component the g component it's not always maybe up to western standards with the g so they're with

01:09:51.760 the g there a little light on the g the g the e's not great the s no one really knows what that means

01:09:57.980 and the g is highly questionable so uh it's funny it's just it's there it's still i guess what i call

01:10:07.160 a work in progress but just like conceptually the idea that factors that are not really relevant to

01:10:16.840 your fiduciary responsibility which is to maximize returns for shareholders or something related to that

01:10:23.360 like i don't know that's just it's just an interesting concept like how did that happen

01:10:30.780 it's that my personal guilt as like an educated westerner supersedes your right to have me handle

01:10:41.520 your money responsibly well it's straight government intervention is what it is um it's government it's

01:10:50.540 it's it's government it's ideology if you are of that mindset where you believe in control economy

01:10:58.680 uh it is the dream of all dreams to incorporate your ideological bent into the last thing that should

01:11:11.060 be left alone which is the free market you now inculcate all of this ideology into every decision

01:11:19.120 making process all the way down to setting the price of money which to me i know i'll run afoul of

01:11:26.440 plenty of people on this but to me that that's a bridge too far um that's not the place for it

01:11:31.920 but it's it's one in once in it's impossible to get out you know once once you call go into

01:11:41.260 that's that's involved in all the investment processes it's really hard to take it back out again

01:11:48.520 so back to the ai infrastructure boom in the united states um if that slowed down or if people

01:11:58.840 lost confidence in it are you concerned about a cascade effect on public markets uh in the short

01:12:07.860 term yes the question is how quickly does the market rotate uh how do the rotation trade so we're

01:12:16.240 starting to see that actually the last week or two you're starting to see like small caps really

01:12:21.980 rally dow components really right old economy stuff really rally as tech is being soft so there's

01:12:28.900 theoretically the way you can thread the needle there uh but with the concentration risk and with

01:12:36.720 the size of just actual size of these companies it's gonna it's gonna uh it's gonna be a drag on the

01:12:45.020 overall market as a whole best case scenario one of the reasons the stock market is my theory is

01:12:50.060 so big is because it's the easiest and as you said most liquid way to park your money with some hope

01:12:57.380 of return and i don't really think americans are encouraged to think of other ways i just have

01:13:03.740 always noticed that absolutely and uh as as an emerging markets guy who's been able to look into

01:13:11.580 other other other countries frontier markets etc and how they look at it there there's always from

01:13:18.660 if you're an argentine or a brazilian or turk you're you're always looking outside of your domestic

01:13:25.340 economy domestic market for opportunities um and we really don't too much no and it's so easy to

01:13:34.500 participate in the public markets in the united states as you said you can do it on your phone you can

01:13:38.340 make bets on market movements from your phone which is just like seems like it might have

01:13:43.220 unintended consequences maybe there's yeah crosses the line from as you said from investing to straight

01:13:48.760 gambling but okay so it's ease of use is like the key to any scale i think sure that was amazon

01:13:57.380 that was that was yeah there's a lot of there's a lot of there's a lot of applications to that uh well

01:14:03.020 yes yeah yeah that's true yes yeah well that's by the way why tobacco use went absolutely crazy

01:14:12.180 as soon as someone figured out an automatic rolling machine for cigarettes people used to have

01:14:15.840 to smoke pipes cigars take snuff up their nose the second you made it super easy to burn tobacco

01:14:20.720 the whole world became addicted to it makes a lot of sense right and that's what the stock market is in

01:14:26.180 the united states from my perspective so but if you're trying to be a little more creative or hedge

01:14:31.120 a little bit your future your family's security where else do you put your money

01:14:36.200 uh again it depends on you know who you are net worth etc let's say you have an extra 100 grand

01:14:44.200 what would you what would be a good call well the problem is the the great obvious trades run a lot

01:14:50.800 already right gold and silver's already a run a ton so long-term investing is try to look at stuff

01:14:58.000 the ideal cross of um you know what sort of fairly valued or cheap or distressed or out of favor that

01:15:06.440 people haven't really cottoned on to because you see a trend that's about to emerge right right now

01:15:11.200 we're in full-throated recognition of the debasement trade and silver's breaking out for not for that reason

01:15:19.240 but also there's a notion that there may not be uh as much physical silver out there as torrid has been

01:15:28.520 written against so there's been a bit of a bit of a squeeze going on two weeks ago that the chicago

01:15:36.520 mercantile exchange shut down for a cooling issue overnight uh just as silver was spiking um which was

01:15:45.640 was kind of convenient um so there's some some technicals in that market uh wait so you think

01:15:51.800 it's possible there's more paper against silver than there is silver yeah so yes they're definitely

01:15:59.640 more derivatives written against all commodities than exist but no one ever asked not no one but

01:16:05.480 typically if you're an investor you don't ask for physical delivery of the commodity i do i know you

01:16:11.560 do i know you do and i'm gonna find out where that stuff's buried too um so you don't typically

01:16:18.360 ask for the physical delivery of it when you're trading in in tens and hundreds of millions of

01:16:22.520 derivatives against you cash settle your derivative against mine cash settle the loser pays the winner

01:16:29.240 and you move on um so where do you go uh at this point given where valuations are i think um

01:16:36.040 um i think you go abroad uh you look at multiples on u.s stock market where we are trading historically

01:16:44.520 um extremely high p ratios for the index on historical basis and very high against uh foreign markets i

01:16:52.920 think what this administration's doing in latin america particularly as i mentioned earlier sort of monroe

01:16:59.800 doctrine two there's clearly a movement afoot to uh to stabilize region and to partner with those that

01:17:07.240 are critical to us i would imagine that open up a ton of investment and growth there um there are

01:17:13.560 plenty of latin american countries that offer uh pretty cheap historical p ratios so i think it's

01:17:19.560 probably time to diversify a little bit out of the u.s and diversify out of tech heavy stuff

01:17:23.480 um that's where i would go simply um i think you still have to own some some gold and silver just

01:17:32.760 have to own some but just not as much as you you wanted three years ago given how far it's run

01:17:38.040 so but you're basically making a pitch for the venezuelan stock market uh not specifically but there

01:17:43.400 may be a there may be a catalyst coming there that could create create a big move one way or the other

01:17:48.680 it seems in the next in the next couple weeks what about real estate land real estate land for sure

01:17:54.360 that's why i asked like it depends on who you are um i think productive agricultural real estate

01:18:00.600 anywhere is always a good investment sort of disaster hedge um but yes land as a whole yes

01:18:07.240 um i don't think i'd want to be rushing into blue cities uh and paying high interest rates and taking

01:18:16.520 out a bunch of debt on uh on overpriced uh co-ops in new york city necessarily what about buying a 70s era

01:18:26.280 office building on sixth avenue in midtown new york uh if you can convert it to residential perhaps

01:18:32.920 and get a lot of tax breaks i want i may want to see uh may want to see what our friend mom donny says

01:18:39.560 the first couple weeks so you made the point that for a bunch of different reasons

01:18:45.880 ukraine war but other structural reasons we are on the path to losing our privilege as the holders of

01:18:54.520 the global reserve currency at some point right well because all empires are yes right so we know that

01:19:01.080 the question is when does that happen and what replaces it and my read is as of now there's no

01:19:08.280 obvious like national replay we're not going to like adopt the british pound or the euro or the yen or

01:19:13.560 the ruble uh but instead gold is the stop gap as it has so often been but crypto seems like the next

01:19:25.240 global reserve currency is that fair to say um

01:19:33.400 yes yes i mean i would say this there's they're kind of

01:19:38.200 i think people bundle together the notion of like blockchain and cryptocurrencies and what i'd say

01:19:48.200 i can't necessarily make a pure prognostication on any one particular crypto

01:19:54.120 um i mean it's been a phenomenal exercise and wonderful to see it's sort of like a adhering to

01:20:01.960 austrian economics yeah to see to see the experiment work um i don't think we want to get into like the

01:20:09.000 the dynamics of individual cryptos i think you know at some point probably bitcoin as a crypto will be

01:20:18.040 usurped just by sort of a better technology um but put that aside uh what to me unequivocally

01:20:29.880 and the next venture i'm going into um is related to blockchain is blockchain is uh is here and is

01:20:38.360 not going to going away whatsoever and blockchain is going to transform um the financial services

01:20:46.040 industry pretty much every everything we do financially transaction wise um and fortunately we

01:20:54.840 have the wind at our backs with this administration and dave sacks and genius act etc uh and nobody

01:21:03.800 nobody who maybe was somewhat skeptical three four years ago is at all i mean uh larry fink and as an

01:21:12.360 example is i think he continues to say all assets are going to be tokenized uh just this week dtcc said all

01:21:19.800 all assets are going to be be tokenized and put on the chain and that's going to remove a lot of

01:21:26.600 little frictions in the system um extra costs that don't need and extra time lags

01:21:31.560 that don't need to exist um so the cryptocurrencies like cryptocurrencies exist with the layer of the

01:21:38.200 blockchain you can't have crypto without the blockchain but the two are somewhat distinct

01:21:43.320 so a couple questions one uh is it

01:21:51.480 safe i mean it's reliant on electricity yes but so is uh so is every and i guess mentioned the cme

01:22:02.280 went dark right and the other day um chicago right so um the nasdaq shut down right um everything we do is

01:22:11.560 reliant on except for you coming over in your golf cart with a bag of gold coins for me is

01:22:19.720 is uh is relying on energy to that extent is it safe is it hackable uh

01:22:28.600 the theory you know one of the theories being proposed

01:22:32.920 of bitcoin i'm not really sure if this is you know bitcoin's had a pretty decent drop from high 120s to

01:22:40.440 around 90. um you know part of the part of the thing being floated is that with quantum computing

01:22:47.880 making the leaps that it's making that bitcoin might be able to be hacked at some point um perhaps um

01:22:55.960 but again i'll put that separate to the blockchain i the blockchain uh deeply encrypted

01:23:02.440 safe uh these are the rails on which everything's going to run okay will it eliminate corruption

01:23:13.800 um

01:23:14.200 or curtail it i think i mean because it's kind of i think the question coming from you is

01:23:22.760 is a funny question because you know that nothing will ever eradicate corruption

01:23:26.040 of course unless it changes the human art right no of course uh yes it should eliminate corruption

01:23:31.720 because what it's what what the blockchain is going to do what it does is it creates a permanent

01:23:36.360 electronic unhackable ledger so right think about something as basic as like title insurance i don't

01:23:45.400 know if you've ever had to deal with that but first of all like why do we need to pay have i ever

01:23:49.560 to deal with that yeah i pay constantly okay so why like it's an absurd notion right there's a title

01:23:57.640 you own the title you put it on the blockchain it's there forever and i buy my house from you

01:24:04.120 the title gets transferred to me it's registered on the box the transaction's there now it's mine

01:24:09.240 it's there forever we don't need to pay a couple grand or whatever sorry one of my best friends runs 0.77

01:24:14.360 a title company in maryland uh but you know he's my age so he's probably almost done anyway um

01:24:21.800 but uh that's just an example like why do we need to pay five grand for title insurance i i just sold

01:24:26.520 a house in westchester and i found out that there was from two owners ago there was a

01:24:34.120 according to the paperwork there was a 650 000 mortgage still on the property and that never

01:24:39.000 got expunged but the the tie the brokers just kind of waved it back and forth and everyone just kind

01:24:44.120 of stamped it like that stuff that's just an example that everyone can kind of uh relate to

01:24:51.240 but also like why we'll be able to send money uh immediately you know with no you know if i send money

01:24:59.080 to you you'll immediately get the money get the get the care get the interest on it why should i be

01:25:04.360 paying thirty dollars to send a wire from jp morgan like that's pure thirty dollars of margin like all

01:25:11.800 that kind of little stuff and um so the company that that i'm start is going to be starting with

01:25:17.800 jan jan one is called liquidity.io and we um we have one of only six fully registered licensed

01:25:26.920 alternative trading systems which is a trading system that's going to be able to trade all

01:25:30.920 these tokenized and financial assets and what we want to do is help democratize the financial markets and

01:25:37.880 tokenize uh all kinds of assets but we're working with our with our backer just made some acquisitions

01:25:45.720 with a couple of uh consumer loan businesses auto loans and uh manufactured homes mobile homes for

01:25:51.880 example like there's a great story these two young guys in dallas uh they're working at jp morgan

01:25:58.520 and with their fourth bonus they said we're not we're gonna we're not gonna blow it this time let's buy

01:26:03.560 some rental property and they couldn't find any rental property they're in dallas so they just cold

01:26:08.200 called like 250 mobile home uh parks and they found one put in 50 grand turned around it was a six

01:26:15.320 million dollar trade uh they were going to do a bigger one and what they realized they were better

01:26:20.840 off doing was revolutionizing the lending business for mobile homes uh because guess who the biggest

01:26:29.960 player in that is was warren buffett so uh great business obviously high margin business but what

01:26:36.520 i didn't learn until recently is that there is no refi on a mobile home and there is no lending

01:26:44.200 available on a secondary purchase so if i take out a loan for my mobile home and then want to sell it to

01:26:50.120 you you can't get a loan you have to buy for cash and if rates go down from eight to four i can't

01:26:56.600 refinance it so they're going to with their business and tokenization they're going to eradicate all

01:27:03.640 kinds of costs which and create these two separate markets which is a solution to is a partial solution

01:27:10.760 to the home affordability crisis like that's something everyone can get upon how does this

01:27:15.640 new technology figure into like monetary policy like wow that's a great question so um you familiar with

01:27:25.880 stable coins yeah i am but will you describe what they are sure so stable coins let's think about

01:27:32.760 it this way in simple terms say crypto like a like a bitcoin is sort of a flee free floating

01:27:40.040 currency right the market dictates the stable coin is more like a pegged currency so pegged to fiat

01:27:47.240 in this case uh like tether circle they're pegged to the us dollar and try to keep it stable at parity

01:27:55.720 one-to-one uh so what they are is and there are national currencies like this there are countries

01:28:02.680 like the bahamas or whatever just pegged one-to-one exactly um yeah panama's dollarized steven hankey was a

01:28:10.600 big dollarization component um they tried to do it in argentina it didn't work um hong kong's got a

01:28:17.720 dollar peg um so so the stable coins they um they try to keep parity with the dollar and they're back

01:28:29.160 theoretically backed by um treasury bills so money comes in the money gets invested in treasury bills

01:28:37.560 one for one you're backed by triple a rated short dated no risk uh but it become these become a

01:28:46.360 conduit for all these transactions uh on the chain automatic through these so it could go through

01:28:53.640 go through the uh the stable coin and into other things from there as a sort of a conduit now

01:28:59.000 that's all good and well as long as they we're sure that those stable coins are taking dollar for

01:29:06.600 dollar investing in what they say they are without a lag or without moving too far away from that um

01:29:13.880 tether at the moment it seems to be diversifying away from strict t-bills and they've been moving

01:29:18.680 into gold which is working for now but you know you have to be determined how that works out

01:29:22.680 so does that make does all this make the u.s dollar stronger or weaker oh i'm sorry yeah so the

01:29:30.520 good that creates a uh natural bid for our treasury bills which is a great thing for

01:29:41.000 percent friends because that creates a whole new uh demand vehicle for our treasury debt on the stable coins

01:29:49.480 um and what these stable coins do allow for again a lot of emerging markets uh participants is

01:29:55.320 allows them to quickly access dollars and um and avoid depreciation risk in their own country

01:30:03.320 so you're getting a lot of foreign foreign money into stable coins that will be bid for t-bills which

01:30:09.320 should hopefully help with our our funding hmm is there any way for the u.s government to use

01:30:17.400 stable coins as a weapon in the way the bide administration used russian assets at the new

01:30:22.760 york fed as a weapon i don't know i don't know um i imagine there is uh i don't know what that mechanism

01:30:33.480 would be and i don't think i mean in the russia reserve instance it was a bilateral seizure this would be a

01:30:43.080 uh seizure of untold amounts of investors at your season that i'm not sure what the what the purpose

01:30:52.280 would be other than just right stealing the money well we've seen that before true what do we know

01:30:59.960 about global gold reserves since it's such a huge component now what we know we don't know everything

01:31:08.200 that we know because it's not fully transparent but what we do know is the direction of travel

01:31:12.920 which is massive increases particularly uh from india china russia that doesn't seem to be abating

01:31:22.840 at any time that means they're importing gold uh that means they're buying gold and there has been

01:31:28.840 a lot of movement of physical gold uh particularly over the summer but the movement appeared to be more

01:31:34.840 from the london vaults back to the united states rather than elsewhere uh but we don't know we

01:31:41.800 don't have complete clarity on any of that stuff how and why how so if you're gonna have an ancient

01:31:50.280 commodity that's like a huge part of the global system economic system how can you not have transparency

01:31:58.760 maybe i'm answering my own question i saw you look at me like i'm an idiot i saw you answer i saw you 0.52

01:32:04.600 answer it before you finish the sentence in other words if it's so important why are people being honest

01:32:09.080 about it because it's so important that's why weird that the chinese wouldn't tell us exactly how much

01:32:15.320 they have in the vaults yeah um yeah there's no reason they should or would or have to

01:32:21.720 i guess my question also you don't actually show your hand on how much you're accumulating as you're

01:32:28.040 trying to accumulate an asset oh is that true well yeah typically i'm learning a lot about markets 0.97

01:32:35.000 from you that's great that's great so i told you i promised you stupid questions i know i said there 0.96

01:32:41.640 are no stupid questions but i was wrong so um okay then let me reframe the question this way 0.97

01:32:50.120 if we got somehow full transparency on gold global gold reserves where they are who has 0.90

01:32:59.560 gold how much would we be shocked is there a big spread between i think so i mean reality we

01:33:08.120 we still don't have the audit of fort knox that we were supposed to get a few months ago so really

01:33:14.920 yeah you might be shocked about that too i don't know but you think fort mox

01:33:19.080 knox just has a lot more gold than they're telling us they may have 10 times more i don't

01:33:24.200 know i really don't i don't i don't want to speculate i mean i like to speculate but i don't

01:33:29.800 want to speculate on that uh-huh i'm guessing if there is a spread between perception and reality it's

01:33:35.720 it's to the negative but what do i know not sure there's talk about revaluing the gold as well

01:33:40.280 uh what does that mean that means if you automatically re revalue our gold reserves

01:33:48.120 to market we automatically have a higher effective capital base that should make us more

01:33:56.040 uh credit worthy for lack of a better term

01:34:00.200 so gold now um the u.s reserves are valued at like under 100 bucks an ounce something like that

01:34:06.200 something crazy right i'm not sure exactly but but i mean that's like 1933 levels or something

01:34:11.720 right and and of course gold is over four grand an ounce so like why would we continue to value our

01:34:18.040 own gold reserves thousands of dollars below what they're actually worth i have no idea that's weird

01:34:24.120 though right it is yeah especially when every other metric in the county we've cost the living

01:34:29.320 adjustments based on the cpi basket i don't i don't know that's so so how much um just to go back to

01:34:37.720 your uh career trajectory in emerging markets debt yes sir how much uh chicanery is there in that

01:34:45.000 business like so if you know you're dealing with emerging markets so some of those are like you know

01:34:52.680 solid transparent well-governed countries and some of them are nigeria right what's that like

01:34:57.640 well i would say there's two components in the emerging markets trading business there's the

01:35:08.360 the trading thereof in sort of the big money centers like hong kong london in new york and then there's

01:35:15.480 the domestic stuff that happens now i could say in terms of chicanery there's a clear

01:35:22.760 80 bc line at the global financial crisis on how we conducted business across

01:35:27.960 the street and all products pre-glo pre-gfc post-gfc and all i could say is a lot more fun

01:35:35.160 pre-gfc was it fun it was a lot of fun it was as much it was as fun as you could have having a job

01:35:42.680 really job what was so fun about it um every day was different uh you're on trading floor everyone

01:35:50.600 every every day is different you had a front seat uh you have a front seat and you're participating in

01:35:58.280 global events every day uh mark's moving up moving down you're working with like a truly diverse bunch

01:36:06.760 of people from all walks of life that are as close probably to merit meritocracy on trading floors you

01:36:13.240 could get and it was very clear what the motivator was uh it was making as much money as you could

01:36:20.440 every single day and uh there was nowhere to hide from that so as a young person

01:36:29.560 uh it couldn't be a better learning experience because every day at the end of the day there's

01:36:34.280 a number next to your name and whether it was through your good luck bad luck hard work whatever

01:36:42.520 the number doesn't lie and that's the number and it's just a great way to learn and to have to face

01:36:48.920 yourself and improve upon yourself and uh you know the trading floor was guys you know like

01:36:54.040 phds from princeton to guys that dropped out of college and we were all kind of in it as a team it

01:37:00.120 was really fun and uh what were the personality traits that allowed people to be successful like

01:37:07.000 what's the perfect profile of a trader you know it's funny i found that the best traders and there's

01:37:14.920 there's investors and there's traders right uh different it's a different mindset the best

01:37:20.840 traders i find were guys like to think we thought more in two dimensions so if you thought in three

01:37:27.160 dimensions you could out think you're you could outsmart yourself way too much the what ifs and oh but

01:37:33.640 uh and if you're in one dimension you're just not at the iq level to function so the two dimension that

01:37:39.720 kind of took the factors to play uh saw what the trend was took it at face value didn't overthink it

01:37:48.760 went with it and wasn't too much had enough risk appetite but wasn't too much of a uh cowboy i guess

01:37:58.680 would be the perfect trader that i saw the the worst describing my dogs yes the worst traders i saw

01:38:05.240 uh uh were oftentimes the smartest people really yeah because they just overthink your way you

01:38:14.040 overtrade it you overthink it uh you're always looking at the you're always looking out but this

01:38:20.840 and that and i have all this for me you're either now paralysis and or talking yourself out of a good

01:38:27.160 trade how did it change after the financial crisis um

01:38:30.360 um we were egregiously uh overregulated uh from all from all sides um did that make markets safer for

01:38:43.800 retail investors i don't think so yeah because the picture you painted over the last hour and a half

01:38:51.800 is not one of like impregnable safety no let me just say that i mean there's obviously a lot of

01:38:57.640 unintended consequences consequences from the excess regulation but um it just you know it's funny

01:39:06.680 on wall street i think we were actually at the vanguard of hyper regulation hyper monitoring i mean they were

01:39:17.720 monitoring every bloomberg chat every email every phone call uh everything was taped then they ran algos

01:39:26.040 against it for keywords um you just like way more scrutiny and everything lived in the panopticon before

01:39:34.760 everyone else yeah i did and i and i think

01:39:40.280 there's also you know a lot of going back to the global financial crisis is such a seminal moment in

01:39:47.080 this country in a lot of ways because it actually we made this deal with the devil and i you know i i

01:39:53.320 i'm a beneficiary of bailout i worked at a big bank that got bailed out and and uh i will make no i i

01:40:02.680 won't uh i'll never deny that but in doing so we we let the trojan horse in and we married the government

01:40:11.400 effectively and we they came in and they basically wrote our policies they wrote our policies for us and

01:40:18.520 uh from hr policies to recruiting policies to uh you know all the regulation um and the stuff that i saw

01:40:29.400 from a distance in terms of sort of arbitrary uh fining uh for violations was

01:40:39.960 kind of gangster-like and i saw a lot of good people sort of thrown on the funeral pyre sacrificed um

01:40:46.360 um just just tossed out like let's you know this guy this guy was in violation these guys weren't

01:40:53.320 but they were on the same bloomberg chat so let's let's give like 10 bodies everyone's fired everyone's

01:40:58.680 career's over it was it was a that was a bad that was a bad time it's a bad time and so everyone

01:41:04.600 started trading scared people started trading scared and it lost the the joy and it lost the but

01:41:09.560 famously none of the you know the ceo the executive levels seem pretty insulated from punishment yes

01:41:18.600 um you know if i were gonna give if i were gonna give a more sort of generous take on it

01:41:28.360 you know the ceos really didn't have much of a choice in some regards like look here's the deal

01:41:35.160 you could keep your job and keep making 25 million dollars a year uh or if you agree to this

01:41:45.720 fine for mortgage-backed securities or whatever libor rigging or whatever it is this this arbitrary

01:41:52.120 number you could keep your job and you can keep your salary or you can get fired and the next guy will

01:42:01.240 agree to it so like and they kept it afloat and they had to be they had to be in good stead with

01:42:08.520 the government or the fines and the regulation will just come and come and come come but once you get

01:42:15.480 bailed out once you ask for the bailout they own you and that's what happened it always is what happened

01:42:20.920 they made the deal yeah and it was like the tobacco companies right like they kept the tobacco companies

01:42:25.640 alive just long enough to keep bleeding them for fees like then they figured out there was just

01:42:30.440 there was money there to to take and uh they just kept coming back about yeah and the country did not

01:42:38.120 get healthier life expectancy went down and if i can just be honest i don't think the quality of the

01:42:42.920 cigarettes improved at all no i'm serious if you smoke a sort of pre-settlement marlboro red not

01:42:49.240 that they exist anymore or a current one it's like it's not even the same product

01:42:53.000 i was a pre-settlement guy i quit yeah oh me too i'm just i'm just saying i've heard that so

01:43:00.040 no i don't really think anyone won except for politicians right i don't think a lot of lung

01:43:04.600 cancer patients well a lot of nice new regulatory buildings were built and i think also one of the

01:43:10.600 great stories that hasn't really been maybe this was for you one of the great stories that should be

01:43:15.320 investigated is where did the proceeds from all those post-gfc fines go because i saw some stuff

01:43:25.880 in around the time that was kind of staggering as to where it went now obviously it went back into

01:43:32.280 building more of the regulatory bodies like more uh sec regular whatever um but i i think some of the

01:43:41.160 the money uh flowed to some very uh specific political organizations there's no question about

01:43:51.400 it um it went to the swamp meanwhile the whole pretext for this the justification for doing this

01:43:58.120 was i i lived here then i just saw my house that year so i i was a victim of all this too even though

01:44:03.400 i never participated in it but um i lost my job along with a lot of other people

01:44:07.160 and just because the economy contracted so people lost their jobs right including those with four

01:44:13.880 children um but the justification was which i wasn't against it was like these people are totally

01:44:20.200 reckless like they're completely reckless like what is a mortgage mortgage-backed security what's

01:44:24.200 a derivative and like no one outside your world has ever heard of any of that it's like i thought when

01:44:28.360 i you know signed up for a mortgage like the bank i signed with held the mortgage like we we had no

01:44:33.320 idea they sold the mortgage like most people didn't know again there's a lot of ignorance including

01:44:39.000 in my house about this stuff and so the idea was like this is crazy and we need to reign it in you've

01:44:44.760 just described the quote gamification gamification of yeah of markets and it's like that doesn't seem

01:44:52.440 like a decrease in recklessness it actually reminds me something the for the part of the previous

01:44:57.560 conversation which is you know people say you never know when you're when you're in a bubble until

01:45:02.040 it's over yeah and that's entirely incorrect i mean i've been through a bunch and we all know like

01:45:08.440 we all really oh yeah we just didn't know when it was going to end i mean like you mean example

01:45:13.480 people were talking about the bubble in 05 no if you fought it in 05 you were out of a job pretty

01:45:20.360 quickly like it went on for a long time i could tell you the the reason i want to bring it up is

01:45:26.680 again the the parallels to today is you know so in 07 i had been on trading bonds for whatever 13 14

01:45:34.200 years so not the smartest guy not the most quantitative guy but been around enough to

01:45:38.680 trade enough stuff to understand kind of how stuff works and all this stuff they're coming through with

01:45:43.800 like cdo squared and celo and like synthetic this and that and like i didn't really understand it i

01:45:50.680 didn't have to trade it but like i didn't really understand it i don't really want to get into it

01:45:55.240 because i didn't need to but it's just it's thinking if if i'm already in the whatever percent of

01:46:01.480 financial experts just by nature of where i sit every day and it doesn't smell right to me yeah

01:46:09.160 something's not right um and you trade nigerian debt right right right right so yeah i'm taking

01:46:16.480 credit derivatives on bulgaria and stuff so like yeah yes but yeah you're taking derivatives of bulgaria

01:46:24.600 but you're like this is too much for me it's just like how many acronyms also i'm just i'm i'm

01:46:32.040 substantially averse to any acronym and then when you when you take the acronym and square it you know

01:46:36.280 you're in trouble but but then this this latest go around the last couple months with all this circular

01:46:43.400 financing and hype with all the ai companies and every day you know somebody's buying chips from

01:46:52.200 somebody who's going to lend the money to buy the chips to invest in the scaler who's going to do

01:46:56.760 this like for every day four companies or you're like dude i suppose i could figure that out if i sat

01:47:03.400 down and really tried to but it gives me a headache just even thinking about it and clearly it smacks of

01:47:11.480 some kind of it smacks of desperation or something that's just my my gut is just having you know the

01:47:17.800 sniff haven't been around a long time it's like dude if it doesn't smell right it's just it doesn't

01:47:22.680 don't put it in your mouth right right so you remember thinking like what about the tech bubble

01:47:29.960 in 99 2000 did you think oh i got blown out per in personal training trying to short that like the

01:47:37.480 fall of 99 a lot of other people yeah i mean everybody yeah oh i've hilarious hilarious and that's

01:47:43.800 so i was with my wife uh in march of 2000 at a dinner at a lunch with a guy who was chairman of a major

01:47:57.720 uh major broker dealer famous famous broker dealer and where she's 30 at the time never invested in 0.99

01:48:08.040 anything and we're sitting next to him he's like so what do you she's like oh i've been day trading

01:48:14.440 stocks he's like explain that what do you mean you've been day trading she's like oh yeah i just

01:48:20.520 buy whatever ipos i just if it comes out i buy it do you remember that in 2000 all the idea and

01:48:25.800 everything just went up like she's like yeah i just i just buy it and then i sell it it's awesome

01:48:31.800 and i saw i saw his eyes just go like this and then that was like that was like the that was like

01:48:36.840 the joe kennedy shoeshine moment i mean it was literally like february or something i think it

01:48:42.280 was probably within probably two no it's when your housekeeper is investing in condos in clark 1.00

01:48:46.440 county nevada that you were like i think maybe this is overheated just a little bit no for real

01:48:53.880 or you get your uber die uber divers like trade crypto on with one completely yeah whenever people

01:49:00.120 are going hard on like cape coral florida real estate who don't know anything about real

01:49:04.520 it's not against cape coral but you know what i mean yes and those were the hardest hit zip codes

01:49:10.040 yeah so you think it's pretty obvious is what you're saying i just it's it feel they there are

01:49:20.600 sort of like the uh russian just sort of like the letter that they wrote uh about the hunter

01:49:28.840 biden laptop it has all the hallmarks of russian disinformation it has all the hallmarks of uh

01:49:37.960 yeah late stage rally let's say that yeah well you're very diplomatic i have to say though just

01:49:43.720 like with the baseline fact that you spent your life trading emerging markets debt i think if you're

01:49:49.080 uncomfortable with something it's fair for the rest of us to be uncomfortable with it appreciate that

01:49:53.000 yeah last question you've uh been through all these bubbles and bursts and debt crises and bailouts

01:50:02.920 and at the at the end of every story is the united states or u.s aligned institutions like the imf

01:50:09.160 coming in and kind of saving the day is that if that's that's a thread that runs through all these

01:50:14.040 yeah i've been simple terms sure i only deal in simple terms coleman um but what happens if that

01:50:22.600 happens in the united states right who bails the bailer uh nobody

01:50:31.480 okay so then what happens i don't i don't think i hope you bought that uh that agricultural land

01:50:41.320 in brazil at that point uh so then what happens i don't think i don't think we get to that point

01:50:46.760 anytime soon um but just theoretically as we've mentioned before you know there is no

01:50:56.520 there's no alternative right now right um

01:51:01.240 people still as bad as it could get in the states like we're still the cleanest dirty shirt in the pile

01:51:07.240 for the time being right we still have this free and open markets where capital flows and gets treated

01:51:13.160 well there's time there's still time to course correct um i'm not willing to go to who bails out

01:51:21.240 who bails out the bailer i just i i'm not willing to go there i'm not willing to go there we'll be

01:51:28.440 all right we're still still the united states of america and we've got a lot i mean this administration's

01:51:33.640 got a lot of mental firepower and a lot of experience we still got time coleman church 0.56

01:51:39.400 ladies and gentlemen thank you thank you so much

The Tucker Carlson Show - December 26, 2025

Gold, Crypto, the Debt Crisis, and How to Survive When the US Needs a Bailout

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