Bitcoin & Macro Overview Q4 2025 w/ Luke Gromen (BTC254)

(00:00) Bitcoin's just one of your early source. It's just the early source of liquidity, right? And so ultimately, if they're going to try to act to support the bond market by capping,

right? And so ultimately, if they're going to try to act to support the bond market by capping, that's austerity, right? So actually, that's not going to work. That's going

to tighten liquidity and Bitcoin's going to be the first thing that warns you of it.

(00:24) For the person who's not intimately familiar with all the terminology and the nuances of macroeconomics, explain it in very simple language in your opinion. What's taking

place right now? I think we're heading towards what I would call a poly crisis of sorts. There's

a whole bunch of things coming together at once. (00:47) For starters, the fiscal situation, which was for all of the hubbhub about tariff receipts, and they were a record. So, we had record tariff receipts and we had record all-time high receipts overall. The fact is we're still at

when you look at true interest expense, which is gross interest expense plus entitlement payos plus uh veterans affairs benefits, you're still 96%ish as a percent of receipts that are all-time highs. So, we're still right in that hot zone of if anything slows down,

all-time highs. So, we're still right in that hot zone of if anything slows down, you're going to be right back over 100%, (01:20) you're right back into print or default mode. And they they always choose print. They have to. Furthermore, we're now seeing early

default mode. And they they always choose print. They have to. Furthermore, we're now seeing early signs of stress in the overnight funding markets. There's a variety of views on that. Mine is that it is essentially we're now 30 months into the US shifting issuance to the front end because there's not enough demand at the back end. (01:46) And as a result, Bessant has a Red

Queen or Axel Rose problem, if you will. I used to do a little but the little wouldn't do it. So

the little got more and more or the Red Queen I got to run faster and faster to stay in the same spot. There's more and more issuance coming, right? So 2013, we were rolling

same spot. There's more and more issuance coming, right? So 2013, we were rolling about hundred billion dollars of T bills a week per Secretary of the Treasury Jack Lou.

(02:08) Now it's $550 billion per week being rolled per uh my friend Andy Const. And so

that requires having a greater level of money in the treasury general account or TGA which Bessant is doing which is in turn putting overnight funding strains on overnight funding markets akin to a little bit like what we saw in 2019. So you're seeing tightening liquidity there and sort

of spot applications of liquidity in terms of standing repo facility being borrowed against in a bigger way than we have seen ever before. (02:38) It's back to basically nothing. But two

weeks ago on Halloween, it was 50 billion overnight. So that's not a problem. It's

going to go away. And they'll continue to put spot applications liquidity. You're seeing in Japan 10ear yields in Japan are at the highest levels in, you know, a long time. And yeah,

sorry. Long time. And and the yen is weakening marketkedly, which is when your yields are rising and your currency is still weakening. (03:02) That's like emerging market type of action, which is very important because if for the last 5 plus years, if you want to know where the 10-year Treasury yield is going to be in anywhere from a few weeks to a month or two, just look

at the direction of travel of the 10-year JGB. (03:20) And the reason that is is those are the two biggest carry trades, funding currencies in the world going back 30 years. After 89,

the yen became a carry trade. And then after Bernani in 2008, the dollar became a current carry trade. And we saw in summer 2024 that anytime the yen gets too strong,

carry trade. And we saw in summer 2024 that anytime the yen gets too strong, the carry trade blows up. And anytime the yen gets too weak, dollar gets too strong, the dollar trade carry trade blows up. (03:39) So you're sort of between Sila and Caribbdus on that front with Sila starting to get a little mouthy in terms of the Japanese 10-year bond yields. You've got US shale production rolling over and the EIA saying, "Hey,

we need to drill faster just to stay flat." with oil at 5960. We've got the IEA coming out saying, "I know we said two years ago that peak oil demand would be here by 27 or 2030.

(04:02) " Oops. It's actually not peaking at all. Demand's rising faster than we thought. So,

we've got US shale, which has been 90% of world supply growth over the last 10, 12 years. Guring and Rosenwag rolling over while demand that was supposed to be rolling over not

12 years. Guring and Rosenwag rolling over while demand that was supposed to be rolling over not rolling over. So, that is a stress point. (04:22) You've got the geopolitical where

rolling over. So, that is a stress point. (04:22) You've got the geopolitical where it's becoming clearer and clearer. We've talked about this in the past. Russia won in Ukraine.

They beat NATO. That is what it is. That has important implications for macro because, you know, I don't know how many times in my career I've been told, but it's more than one that ultimately the US military backs the dollar. (04:39) If we can't credibly project power conventionally against a major nearpeer power, that has implications for perspective rule

changes to the system. You've got Bitcoin, which to me still is the best or the last functioning smoke alarm, starting to cry shrilly and issue a very shrill warning of illiquidity. For giggles,

let's layer on AI, which has gone from funding out of retained earnings and cash flow to they're now borrowing money and using very creative financing mechanisms. And you know, I had a good friend of mine point out that (05:09) credit spreads on Oracle debt are starting to rise, credit default swaps on Oracle are starting to rise sharply.

and the hyperscaler. The hyperscaler. Yeah. Topping it all off, you have an issue where the market leaders, the semiconductors, and in particular Nvidia, and I don't have an opinion on Nvidia one way or another. (05:28) All I can say is the useful life of these chips are said to be anywhere from 3 to four years. And you can't get an electricity hookup in some of the most attractive places in the United States for

hyperscalers till 2030. I'm hearing I got that. (05:47) So the market, I think, is at some point, probably in the not too distant future, going to ask itself what the value of a chip with a three-year life is if it can't get electricity to that chip in five to seven years. It's a pretty important question, and I don't think they're going to like the answer when they ask it.

And I guess lastly into all of this, you know, the Fed released a white paper 3 weeks ago, four weeks ago, noting that not only is the hedge fund basis trade in treasuries been an important buyer of treasuries, they have been the biggest marginal buyer of middle and

long-term treasuries, midated and long-term (06:18) treasuries since 2022. They have

bought 37% of net issuance of longerterm treasuries. Wow. They own 1.8 8 trillion not out of the Cayman's not 465 billion as the foreign holdings report says for Treasury and as we've talked about many times together these hedge funds are highly levered. (06:40) So if there's volatility anywhere they have to degross and so they will degross treasuries and so there will be a trillion

aid of treasury selling if volatility picks up anywhere and Bitcoin's telling you volatility is coming in soon and maybe we've already seen it starting. Yeah, that's, you know, that's that's what I can think of right there, right? So, like, and oh, by the way, if any of these things goes a little bit wrong, it's sort of like smoking in, you know, in a nitroglycerin plant. You just need

one of them to catch and then they'll all catch. (07:05) Yeah. Just to really in one sentence try to summarize the fiscal issues. The math ain't math anymore. And I mean, it hasn't for a while, but it's becoming obvious to everybody on Wall Street that the math just does not work.

The liquidity issues is the driving thing. (07:23) When people were asking me, Preston, what's happening with the price of Bitcoin? I said, well, they're having liquidity issues right now. It's very obvious with the repo market. Luke, do you think that the government shutdown,

right now. It's very obvious with the repo market. Luke, do you think that the government shutdown, I saw that the TGA was building, basically the checking account for the government was building during the shutdown and it seemed like that was just an added piece to the liquidity challenges that were already there. (07:48) it just kind of enhanced it a little

bit and maybe threw a little bit of extra fuel on the fire with the government being shut down. Is

that how you're seeing that particular piece? The short answer is it clearly added to it, right? So, we know it added to it, the growth in the TGA. In terms of how much

right? So, we know it added to it, the growth in the TGA. In terms of how much of the growth in the TGA was because of the shutdown, I had thought it was most of it.

(08:12) We put out a report citing work by an analyst named John Kamisky who's a Treasury funding analyst, has a Substack. You can find him online. We had a great interaction two weekends ago where he pointed out to me, surprisingly, oh no, no, no. This wasn't a shutdown. This is not Bessant playing 4D chess trying to basically, you know,

no. This wasn't a shutdown. This is not Bessant playing 4D chess trying to basically, you know, squeeze funding markets into a crisis so that the Fed has to come back and do not QE or whatever.

(08:30) He's like, I was forecasting the TGA was going to go here because there's a formulaic he's got to have enough in the TGA relative to I think it's like 10 days of outlays or or two weeks of outlays, whatever it is, but it's very formulaic. And I said, "So, is that current deficits?" He

goes, "No, no, no. It's not current deficits. (08:48) It's the fact they're rolling so many bills from the past deficits." Wow. And so that to me, that really changed my mind on a couple fronts. Number one, it's just it's not mostly shutdown related. Number one,

couple fronts. Number one, it's just it's not mostly shutdown related. Number one,

it's just 30 months of yelling and then Bessant and going, "Oh crap, we don't have enough buyers for the long end of our market. (09:08) So, we're just going to shift it to the front end and do that enough for 30 months and pretty soon you've got 550 billion a week.

You're rer rolling." And that requires having a big TGA just to make sure you never have a failed auction. So, along with everything else you're spending money on, you got to have the cash cushion. So that in turn is really important because if that's the case, if that's the real driver, like there's a whole bunch of people out there I'm seeing that think,

okay, well the TGA just went to a trillion because of the shutdown and now it's going back to 300 billion or 400 billion or (09:34) whatever. Great. We're going to get this big liquidity flush into the end of the year and what have you. That increasingly to me, I'm not sure that's going to happen. I mean, maybe it'll go from a trillion to 800 billion or

something. Yeah. which is still kind of helpful, but it's not if Kamiski is right and it makes

something. Yeah. which is still kind of helpful, but it's not if Kamiski is right and it makes sense because he's not the only one saying it. (09:53) I've seen a number of others citing this guys that are really good in the plumbing saying the TJ's got to be bigger in a world where you're rolling 550 billion a week. That number is so insane. Oh, it's astonishing. Like I said,

the growth rate from 2013 to 100 billion to 550 billion, that's 15% a week, Kager.

(10:09) And that's deficit plus shifting to the front end because you don't have the demand at the long end after central banks stopped growing holdings, right? And Luke, that is such a huge story that I don't know a lot of people are talking about. The fact that you have 30 months of the government having to issue just short duration paper because they can't go into the

mid to long duration issuance. There's no buyers. (10:30) And to the point that you made in your opening statement about hedge funds basically have been what did you say the number was? 77%

of the buyers. It was 37, right? So to be clear, there's buyers, right? cuz bills are still only 22% of total outstanding, right? But that's probably up from 15 or 18%, right? So,

you've got way bigger deficits and you've got a shift, you know, of call it 15 or 18% or whatever it was to 22% of bills as a percent of total. (10:58) And then yeah, the kicker is is like, okay, well, of the stuff that you have placed long end, 37% of it is with these highly levered

basis trade hedge funds that that can't get more levered. And ironically, that fund that trade to buy the 37%. Yeah. At the same short end that you're crowding out with the TGA because you've placed so much at the front end. (11:22) So, it's literally a snake eating its own tail. And that's why I'm not encouraged that like there's going to be this giant

own tail. And that's why I'm not encouraged that like there's going to be this giant liquidity flush out of the TGA that this was just a shutdown related thing. Like they have to do whatever they can to keep repo down and they got to keep repo rates calm and they got to keep the long end calm and they got to keep equities calm and they can't have V anywhere.

(11:46) They'll have V everywhere and they're using standing repo to keep V down at the front end which is fine. That's what it's designed for. But the more you tap that, the more there's going to be an inflationary impulse that's going to make the long end a little restless.

And so then you've got to worry about that. (12:02) No, by the way, if these hyperscalers do anything like unwar creates a problem or if private credit does, which I didn't even touch on, but which is, you know, there was smoke and now there's more smoke and now there's more smoke there. You get equity vault to spike. You're going to get treasury vault to spike.

smoke there. You get equity vault to spike. You're going to get treasury vault to spike.

They're going to degross on treasury. (12:20) you know, the 10-year yield goes down for 3, four days, 5 days, 7 days, and then it's going to start spiking just like it did in April. And then then comes more liquidity. So, it's tricky, but it's this snake eating its own

April. And then then comes more liquidity. So, it's tricky, but it's this snake eating its own tail dynamic of we had to shift to the front end because we know the demand at the long end, and the demand we do have the long end is actually financed at the short end that we're now crowding out because we have to have a bigger TGA for liquidity cushion because we've

been financing so much at the short end. (12:42) It's like everyone's like, "Oh, look at all these crazy financing schemes that OpenAI and Oracle and Nvidia are doing." That's

stuff compared to that's literally the, you know, Treasury's doing it to the tune of 550 billion a week. A week. That's the big boy leaks. Yeah. (13:01) So, I had an interesting conversation

week. A week. That's the big boy leaks. Yeah. (13:01) So, I had an interesting conversation with a friend who's a real estate agent and I was just asking him, hey, what's it like in the market right now? And I know this is a very localized thing, especially when you get into like retail homes and things like that, but his comment was really fascinating to me. He says,

"Pre, it's really strange right now. (13:17) Like way weirder than it's ever been." He's like, "There's nothing moving. A lot of people are just used to their low interest

ever been." He's like, "There's nothing moving. A lot of people are just used to their low interest rate and they're like sitting here waiting for that environment to come back." And he said, "Honestly, the last Fed meeting that happened when they dropped rates 25 basis points," he's like, "Everybody in my community and in my space was like, okay, here it comes. Here comes

the drop in interest rates and they went up. (13:43) " And he's like, everybody was just like looking around, what in the world is happening? Like what is this? They just the Fed just dropped rates, but yet ours are staying the same or going higher. and he said after that meeting he's like everything has just been dead completely dead. (14:02) So it's it's a very strange environment.

It almost seems like since COVID, we had the the 2020, what was it, 2023 contraction and then the liquidity came back into the market very heavily. And it seems like this is the second goound where everybody's thinking that that old rates are going to get dropped down to 3% or whatever. I can refy my house. (14:26) I can do all these things that just

persisted for like 40 years straight. And it seems like people are finally coming to this recognition that something's very different. It doesn't seem to be changing. It seems to be getting worse and stranger to all these points that you kind of laid out at the start of the show.

(14:45) I'm just kind of curious if you have any anecdotal stories like that or any comments on that particular real estate interest rate situation. You know, in summer of 2022, if you remember back, and I'm sure we talked then, the consensus on Wall Street was Powell's going to be vulker, right? inflation's out of control, but he's going to be vulkar. He's going to take pain.

(15:03) And we wrote in summer 2022, like he ain't going to be vulker. It's not even a choice for him to be vulker because of the debt and the deficit situation. It's

apples and oranges compared to Vulkar. He has a choice of being Benjamin Strong who led the US into the Great Depression or he can be Arthur Burns who leads the US into the 70s. Those are

his choices. Yeah, those are if he's lucky. (15:23) Those are the good outcomes for him.

And so we assumed it wasn't going to be Benjamin Strong and so you know probably some version of Burns and we're sort of seeing symptoms of that. But the point in saying that comparison was when you're in fiscal dominance when debt to GDP is as high as it is you raise rates you raise deficits

and deficits are stimulative. Oops. (15:50) If you cut rates, well, especially once inflation's a little elevated to lower deficits, to cut interest rates, to lower deficits, which is in theory lower deficits should be non-stimulative or contractionary. You're stimulating by cutting rates. So, like he has a choice of how he wants

or contractionary. You're stimulating by cutting rates. So, like he has a choice of how he wants to inflate, how he wants to be Arthur Burns. (16:10) And that's what he said at the time. And

that's it's starting to play out. And what your anecdote suggests is the real estate community doesn't understand that yet. but they're going to soon, which is how do they want rates to go up?

Do they want rates to go up with inflation going up or do they want rates to go up with inflation going down? Cuz either way, they'll go up if he cuts rates and inflation picks up and they'll go

going down? Cuz either way, they'll go up if he cuts rates and inflation picks up and they'll go up if he raises rates because he's raising rates. And oh, by the way, that makes the debt less sustainable and therefore higher rate on a less (16:39) sustainable debt. So, there are still a lot of people I don't think that appreciate that outcome. I agree with you 100%. You said something

before that people were finally kind of seeing the bigger picture, right? The fact that everyone in their mother in the mainstream media is now talking about the debasement trade, right? I

was like, you and I have been talking about this for what, 5 years, seven years. Yeah. You know,

it's I feel like Bruce Willis like come on in. (17:01) Welcome to the party, pal. But it's

not a debasement trade. It's a debasement trend. Like this ain't going to stop. And oh,

by the way, the only way you stop the rates go up with hikes or rates go up with cuts is you devalue the heck out of the currency. Mhm. And you basically buy down the debt. And provisionally,

we've talked about this before. It's on the books. (17:24) They could do it with gold. It ain't going to happen at gold 4,000. It ain't going to happen with gold 8,000. You know, gold 20,000 is probably the opening bid to have a real effect with that. So point being is like I think people are seeing the symptoms, right? Your friend saying, "Oh, rates went up when they cut rates. I don't get it.

(17:40) " That's the girl washing up on the beach at the beginning of the movie in Jaws, right?

Like, "Oh, it's just a boating accident." And then, you know, next comes the poor little boy, you know, and then they're going to catch a shark, right? And they're, you know, 50-year mortgages or Trump's going to tweet out the Walmart CEO thing. Well, Thanksgiving spending's down.

(17:57) And then they fact check them and they're like, "Well, there's six less items. There were 21 items on the menu last year. 15 this year and they're almost all store brands versus brand names last year. But yeah, other than that, right, that's the that's where they catch the shark

last year. But yeah, other than that, right, that's the that's where they catch the shark and everyone's like, "Hey, we got it. It's over. (18:13) " And they're like, "Um, the bite radius on that animal doesn't match the bite radius on the victims. That's not your shark." Right?

And then finally, we're going to see the shark. And when we finally see the shark, everyone in the real estate business is going to go, "Oh my god, if they cut rates, we're screwed. If they raise rates, we're screwed. (18:33) sell your house now as fast as you can and

we're screwed. If they raise rates, we're screwed. (18:33) sell your house now as fast as you can and you know then what I don't know but people don't appreciate that they are painted in a corner yet they know they need to debase but they don't really get like oh yeah it's funny you mentioned the 50-year mortgage thing because in my conversation with him one of the

things that I said to him I says dude think about this 50-year mortgage thing like just from a first principal standpoint imagine I give you tools where 200 100 years in the past and I give you some tools to go out, cut down some trees, start building your own house, right? Do

(19:06) you really think it would take you 50 years to build yourself a nice house? It's like,

no, it'd take you 2 years or a year or something that's like way more manageable. And I know this isn't like a perfect example, right? But it does help a person just kind of contemplate, sit down and think, why would it take me 50 years to pay off something that I can afford, right? The whole reason they're going to a 50-year mortgage is to mask the reality of

right? The whole reason they're going to a 50-year mortgage is to mask the reality of the monthly payment of what the typical person can afford to pay off 50 years later for a house. And

(19:42) it's totally insane how all of this is just being masked and people aren't asking like the basic questions of like why should it take 50 years to pay and and here's the irony is if you can get a 50-year mortgage at call it 5 a half 6% or whatever the yield would be on something like that it's actually in my opinion probably a screaming deal for the

borrower considering where I think inflation and what the debasement is actually going to be over that same 50-year period in fiat terms. (20:16) But it's clown world. It's totally nuts.

Well, and it's particularly when you look at what the other hand of the government is doing at the same time, right? They're like, "We have an affordability problem with housing. So,

let's take the mortgage out, right? Cut rates, take the mortgage out." Okay.

(20:39) But then at the other hand, our president comes out and says, "Well, you know what? We are going to let these 600,000 other students in because otherwise our college is a collapse." Okay, competition. And we can't, he he literally told Laura Ingram, "We can't build things in America anymore unless we have all these H-1B visa holders in.

(20:56) " So, on one hand, you're saying, "Here, take a 50-year mortgage. We'll make

it more affordable. We'll cut rates." And then with the other hand, you're like, I'm going to bring in all this labor competition to ensure like, think about the message he just told, don't go into skilled trades. (21:14) We're going to let people in to undercut you so you never make you're never able to afford those houses. Don't go into engineering because

we're going to let all these H-1Bs is so that the companies don't have to pay a real wage. So,

you're literally undercutting. And oh by the way, in the grand scheme of what we're trying to do here is we need to reshore industry so that we can compete with China so that we're not relying on the Chinese to build our weapons. So we're going to make our houses more expensive. We're

going to make our labor still cheaper so that we (21:39) have nobody going into these things. We're

going to remain short these things and then take it back to Nvidia and this AI thing where we can't build the grid. You've got chips that are going to expire in 3 to four years and you can't get an electricity hookup for five, six years. (21:54) You should be like literally, hey, let's subsidize electricians to be making, you know, what short-term interest rate

traders make on Wall Street. And then you know what? That hookup will happen in 2027. But

that's not what we're doing. We're extending 50-year mortgages. We're trying to cut rates.

(22:14) And then we're bringing in H-1Bs and we're bringing more college stuff in to cap wages in this country as, oh, by the way, AI is going to deflationary crush. Oh

my god. Introductory wages. has been like we're not even talking that. Right. So like

literally the point is like from a first principle standpoint. Yeah. People like we're finally taking action. Don't mistake action for progress. (22:37) This is like you know the action

action. Don't mistake action for progress. (22:37) This is like you know the action we're taking is we're punching ourselves in the nuts repeatedly and mistaking that for progress. You're like what are you doing? And what they're missing is that inflation is the

progress. You're like what are you doing? And what they're missing is that inflation is the fundamental market signal. Everyone's like, "We need to get back to free markets." Great. You

know what a free market is? Close the border. (22:54) Let inflation for skilled trades and engineers explode so that we can have an explosion of supply to those areas so we can do all of this. But that's not what they're doing. They're like, "We're going to manipulate the market the fifth year. (23:11) We're going to cut rates at the short end and we're going to bring in all this labor to crush labor in the US." Well,

AI is going to do the same thing, by the way. And think that's going to work. It is. Here's

what I'm thinking. Here's what I think is really hard for the listener. So, they're hearing all of this and they're saying, "Everything you're saying is making sense, but why is when I look at Bitcoin, it's down so hard right now. (23:35) " And I I know what your answer is, but I think for the listener, they might hear all of this stuff and get really frustrated and say,

"I don't understand why Bitcoin's not performing well in this environment with all of these things that are going wrong." So, how do you respond to that person who's thinking that right now? Bitcoin's just one of your early source. (23:53) It's just the early source of liquidity,

now? Bitcoin's just one of your early source. (23:53) It's just the early source of liquidity, right? And so, all of these things when you hear your friends say the market is

right? And so, all of these things when you hear your friends say the market is locked up. When you hear what I just described, which is the market's going to lock up more,

locked up. When you hear what I just described, which is the market's going to lock up more, like you can't extend the term and cut rates and then you are promising labor, you're going to kill them over the next 5 to 10 years. (24:16) You're promising essentially what I just said is the Trump administration acting to maintain the real value of the

bond market. Mhm. And not inflating, which is what the country needs,

bond market. Mhm. And not inflating, which is what the country needs, which is if we want strategically. So ultimately,

if they're going to try to act to support the bond market by capping, that's austerity, right? So actually, that's not going to work. (24:46) That's going to tighten liquidity and

right? So actually, that's not going to work. (24:46) That's going to tighten liquidity and Bitcoin's going to be the first thing that warns you of it and it's warning us by going down when that liquidity is tightening which we're seeing right now. Yep. You call it the canary in the coal mine. Why aren't you seeing it with gold? I think you're not seeing it with

gold in part because I think ultimately gold is being bid on the other side of this as the sovereigns are going, "Holy cow." Mhm. (25:10) That's what it is, isn't it, Luke? It's I think it's a timing thing, right? Like I know how this is going to end, right?

Luke? It's I think it's a timing thing, right? Like I know how this is going to end, right?

If I'm managing a sovereign fund, A, I don't try to trade monthtomonth, quarter to quarter, but B, I run a surplus. I have a choice. I can buy dollars or I can buy gold. That's it. Those are my choices. I think that choice is easy. I buy gold. (25:28) I think the sovereigns understand gold.

choices. I think that choice is easy. I buy gold. (25:28) I think the sovereigns understand gold.

They always have understood gold as the debasement trade. And I think prior to 2020, nobody believed we could get into all of this detail and all this nuance and how all these incentives are broke and how it's a disaster. (25:49) But until you started to see inflation

actually manifest itself in everyday prices and see the long end of the bond yield curve start to sell off in a trend reversal kind of way, which we had never seen prior to 2020. Then since 2020, we saw it we saw the first spike 2022 2023 and then it didn't go away and now it the

yields are still going higher or kind of holding their own and it looks like a trend reversal.

(26:20) And I think because the sovereigns understand gold, they see the trend. They

see the math and you ask anybody on Wall Street if the governments are going to be able advanced governments are going to be able to get this under control and I think every one of them would say hell no. Right? And so where are they going? I think they're going into gold because they understand it. (26:38) I think my conversations with a lot

of people on Bitcoin, there's a lot that get it on Wall Street today, but I don't know that they trust it like they trust gold because it's really easy to understand. But I think when you get into Bitcoin, I think that to trust it requires a lot of technical competence to dig very deep.

(27:00) And I think that a lot of them that are controlling massive flow of funds are just pointing it at gold instead of the risk that's involved, the technical risk for them to wrap their head around Bitcoin. And I mean, that's my two cents.

(27:19) I'm curious, do you see it the same way or is there some other factors that you think are playing into this? I think it's most of the sort of private sector particularly in the west they don't have the luxury of taking a 40 50% draw down the implied vol of bitcoin and gold simply really hasn't shown that kind of volatility I think that's part of it and part of it it's been

you know bitcoin in the short run has traded like a tech stock right and so its technicals look like a tech stock and you know think about we're talking about tech like like if AI breaks Bitcoin's probably going to break and I don't nec I don't agree that Bitcoin should break with AI.

I had been arguing that point up until very (27:55) recently that no they won't. There'll

be a recognition and recently I'm like no like if AI and Nvidia get shot, you know, taken out back and shot Bitcoin's going to get taken out back and shot too. And it's

not the right thing to do and it'll be an opportunity. I don't make the rules, right?

So I think that's I think that's part of it. (28:13) You're saying that the correlation in the typical investor's mind is is that and I would agree with you, Luke. I think you're right. Yeah,

I think it's ultimately Yeah. guys who get paid on they have to put up numbers every month or else they get taken out of their seat every quarter or they get taken out of their seat.

(28:32) These aren't guys who have luxuries to say, "Well, the market's wrong and Bitcoin's ultimately going to be a neutral reserve asset because they're going to have lost 12 jobs before that's ever true." I think it will ultimately be true based on what I know today.

But it's it's not true now and it probably won't be true for the next six months.

(28:50) And in the meantime, you know, what's going on in AI and private credit and the fiscal situation, all that is like, you know, real rates are moving up and you sell tech when real rates move up. What else do you sell? Well, sell the thing trading just like tech, Bitcoin. Yeah.

move up. What else do you sell? Well, sell the thing trading just like tech, Bitcoin. Yeah.

In your recent report, you talked about this stable coin contradiction between versus Trump, the Pentagon, uh the reality of all this. (29:11) Explain to the listener what you're talking about here. Yeah. So my Stephen Myron, Fed Governor, came out with a white paper discussing

what he called the opportunity to use stable coins. Basically created global stable coin glut, which is something we've talked about before, not in those terms, but that basically, hey, Bessant has said there could be up to three trillion in stable coins.

(29:43) And the thought is, you know what, foreigners would rather hold a dollar than their own currency. And so they can own it in stable coins on their phone and that'll be backed by T bills and this will create trillions of dollars of T bill demand. It's

essentially a repressible balance sheet. And what Myron's white paper talked about was this global stable coin glut is what he phrased it saying it could be like what Ben Bernani called the global savings glut from 1996 to 2004. (30:17) So by way of background Bernani did a

white paper in05 talking about the global savings glut. He was trying to explain why interest rates in the US in particular the west more broadly remained persistently low despite growth etc. and he reasoned out that there was this global savings glut. And so Myron's paper comes out and says, "Well, if we do this stable coin thing, we could get 1 to3 trillion in stable

coins and that would uh lower interest rates. (30:45) It would pull flows out of foreign currencies into the dollar and strengthen the dollar. And it would widen our current account deficit in the same way that the savings glut, right? So the current account deficit is basically we import more stuff and foreigners put more money in our markets, right? So the current

account deficit, the stuff we bring in gets bigger and then the capital account surplus, what the foreigners invest in our markets get bigger. (31:11) What confused the heck out of me about this report is that number one, Myron wrote a white paper very widely quoted last year called restructuring the global trading system in which he called for essentially

the exact opposite on all those things. (31:29) weaker dollar, lower current account deficit, right? We make more stuff and send it to the world and then reducing foreign capital flows in here to weaken the dollar. And now, so he's he puts out this white paper and highlights that that left me very confused. Number one,

the second thing was that the stable coin market cap for this $3 trillion number, like I don't know where they're going to get them. (31:53) Maybe they're going to do bank reserves all at once, but like it's 300 billion and it was 260 billion when they passed the Genius Act four almost 5 months ago. So that's like a 10 billion month growth rate, right? So if Bessa wants to get

to 3 trillion by 2028, like he better get going. (32:12) And then if you look at it back even further to the past peak in stable coin market cap and let's call it crypto peak, it was like uh 190 billion in early 2022. That's like a $5 billion per month growth rate in stable coins compounded annually. So like at that rate, it would take us like 60 years to get

to 3 trillion. So there's got to be some sort of like elephant in the room. Forced demand by US banks. Is that maybe it's forced demand by banks. (32:36) Maybe like to me it's unclear to me how

banks. Is that maybe it's forced demand by banks. (32:36) Maybe like to me it's unclear to me how they can get to those numbers about Bitcoin being a much bigger number unless they come out and say look there's three trillion in bank reserves and we're going to convert them all into stable coins like now that could work and that opens up some inflationary implications and

may maybe that's what happens. I don't know. (32:55) Do you think that this three trillion number that he was throwing around was just marketing for the Genius Act? It might have been.

It might have been. And it's also it's like what we were just talking about with the mortgages, right? which is like we're doing what we can to help the American consumer.

right? which is like we're doing what we can to help the American consumer.

We're giving them a 50-year mortgage. (33:09) We're dropping rates while we're literally kneecapping their ability for positive wage growth by bringing in H1B and bringing in foreigners to study here. It's kind of the same thing where like the administration has like chapter and verse we want to reverse trade flows. The you know get Chinese capital out of here.

They want people investing in factories here. (33:32) Well, how are they going to do that if they're going to increase the current account deficit? It they literally can't. It's an

accounting identity. It's not my opinion. It's a freaking double entry accounting opinion uh bookkeeping. So, it runs completely contradiction. You know, it's strengthen the dollar.

bookkeeping. So, it runs completely contradiction. You know, it's strengthen the dollar.

(33:48) We want a weaker dollar. They've been very clear on that. So, I just don't I look at this white paper as it relates to stable coins and the goals expressed for the stable coins and they're running diametrically opposite of the goals of the administration and of out of my himself literally 12 months ago. (34:09) And I just I come to two possible

conclusions, neither of which I hold a strong opinion of either way. They're either throwing stuff against a wall and hoping it sticks or they're saying one thing and they're just kind of doing what they need to do to keep the bond market happy, to keep Wall Street happy. And that,

oh, by the way, is 180 degrees of what they promised they would do.

(34:28) They are acting in Wall Street's interest, not Main Street. But it's one of these things where like I don't know what it means, but I know I know it doesn't fit. And I, you know, we'll know soon enough, right? Because there might be this sort of I guess my other point is there might be something really important they're leaving out, right? Like, oh, we're going to convert

3 trillion of bank reserves immediately into stable coins. Be like, oh, now that makes sense.

(34:55) And the dollar is going to get way laid and inflation's going to pick up and you know, because you're basically be mobilizing sterilized reserves. Yeah, that would make sense. Growth

would pick up. But again then you go right back to the discussion we started with which is if inflation picks up and monetary supply growth picks up like and it's not the monetary supply would change it's that the velocity of those reserves would rise marketkedly so the effective supply would increase who wants to own 10ear treasuries at 4.15 who

wants to own JGBs 10ear JGBs at 1.71 they're (35:29) going to like and so I don't know it's destabilizing it doesn't make sense to me it's contradictory to what they said they were going to do unless there's a piece that they're kind of leaving out, you know, and meanwhile it's just being spun, right? It's like Affordable Care Act or Operation Iraqi Freedom, right?

It's we're going to bring back dollar dominance. (35:54) Like really, and it's almost like they just say stuff to like if you repeat the lie enough, people will believe it, right? Which

is a proven it's a proven tactic, but that's not my job. My job is to find the truth. So,

I don't know. I'm rambling. I'll stop there. It's a little confusing and frustrating to me.

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know how to react in the future if it plays out. (39:06) So, one of the most demonstrative things for me participating in markets was during the COVID 2020 liquidity insertion and just watching the markets when literally nobody was at work. Everything was shut down, but because

they inserted so many trillions of monetary units into the system, we watched stock indices just rip within 30 days to new all-time highs. (39:32) when if you were an alien and you came here and landed and said, "Hell, look, nobody on the entire planet is working. They're all

at their houses not buying anything, you would suspect that you'd be seeing market lows." And we saw the exact opposite. (39:50) And for me, when I saw that, it was like,

market lows." And we saw the exact opposite. (39:50) And for me, when I saw that, it was like, okay, when they add this much liquidity, this is the reaction that you get. And that doesn't mean that they're ever going to step in at the magnitude that they did during COVID because that was a very unique scenario. But when I'm looking at the current setup, I'm saying, "Okay,

it looks like we're having liquidity issues. (40:10) The dollar is getting bid relative to everything else because it's tightening. What are we going to have to see for that trend to reverse and to say, okay, I think we're about to step into the correction of this and we're going to start to see everything risk on start to get bid again. (40:30) " What does that look like? Is it tricky

for us to do it if they don't really do anything in size? Like the COVID example, it was so obvious the amount of trillions of units that they added into it that it's like, okay, game on, right? But in this setup or this scenario, they could be just kind of slowly trickling the liquidity in. It kind of plateaus. is it runs sideways for call it 6 months because

they're not taking any type of decisive liquidity action which is my biggest I think that's the hardest thing to navigate is whenever that's the response that you're getting is they've just kind (41:01) of like slowly eased into the expansion of the liquidity in the system and there was nothing

really that broke or that was decisively changed in the trend. So what are you on the outlook for as far as something that would maybe define a change in this tightening of the liquidity in the current setup? Yeah, for me it's one of two things cuz right now to your point they're trying to ride two horses with one rear end, right? Which is we want to maintain the real value

of the bond market and we don't want a lot of inflation and we you know they're fine with that, right? They're trying to maintain both the bond (41:38) market and the currency, right? You got

right? They're trying to maintain both the bond (41:38) market and the currency, right? You got

to choose one eventually. Fortunately, I thought we could do it without a bigger crisis. I think

ultimately we're going to need a huge whoosh down probably in the first half of next year and then they'll do it and especially because they'll do it because of midterms because we just got a little tiny glimpse two weeks ago. Yeah, right. (42:02) into how the midterms are going to go and

it is going to be a butt kicking. They are going to go blue blue if nothing changes. If

we just stay in this status quo right now, it's going to be like a blue wave like you've never seen. They don't want that because then he's a lame duck for the next two years.

seen. They don't want that because then he's a lame duck for the next two years.

(42:21) Point being, I think we either got to get a huge whoosh down or we got to get something political, which is that it's made very apparent to the administration that they have to do something. Now, the problem is is Paul's not out till May, right? So,

yeah. Right. You know what? If I'm Powell, and I've heard he can stay around on the board, too, after he's done. Oh, is that right? Yeah. (42:40) And oh no, by the way, most of the Fed, we've seen their donation records, right? There ain't a lot of them that are hoping that things go really well for the current administration, put it that way, based on their donation records. So,

what are the odds they're going to do it to be nice, right? Do they need the Fed or does Besset at the Treasury have the capacity to juice the markets from a liquidity standpoint by himself?

Well, and I think that's part of the reason why we're seeing the illquidity now. He has

been remember in 24 he was very vocally (43:12) critical of Yellen for shifting to the front end. And what did he do? Nothing's changed. Yeah. Nothing. He comes in, not only does he keep up what she was doing, but he literally doubles the run rate of Treasury buybacks that she was doing post May of 24 in the first half of this year. And it's very focused on

replacing long-end paper with short paper. (43:36) and $3 trillion stable coin which is all on the short end as well. Which is all on the short end which by the way I was told was a quote unquote hail Mary to quote prevent the collapse of the treasury market end quote. Wow. Yeah. Oh yeah.

About from a pretty reliable source or Yes. (43:55) Extremely like literally their words not mine. And the context of the call was like they reached out and they're like look you've

not mine. And the context of the call was like they reached out and they're like look you've been writing about this. They're trying to find a source of repressible balance sheet, which is for the audience, they need to find someone that will buy debt at zero when inflation is above zero.

They need to find a sucker at the card table. (44:14) And I've been saying they need to find a source of repressible balance sheet. And yeah, what this person said to me is, yeah, it's you've been saying that you think stable coins are the source of repressible balance sheet. And you are right. And this is why they're doing that. Yeah. Yeah.

sheet. And you are right. And this is why they're doing that. Yeah. Yeah.

(44:31) The challenge for Bessant is like I get how you can kind of do it with the Euro dollar market in theory, right? Like hey, anything in the Euro dollar market is fully backed by the US government if it's in a stable coin and not if it's not. And that sounds like a really good plan if you have the attention span of a squirrel because what's going to

happen is like you're going to flood capital to Europe. Dollar's going to skyrocket. Dollar

skyrockets. That's going to trigger a crisis. (44:57) Number one, by the way, the Europeans own a ton of dollar assets. Guess what? They're going to sell to raise dollars because they're now short dollars. They're going to dump dollar stocks, dump treasury bonds, yields are going to go,

dollars. They're going to dump dollar stocks, dump treasury bonds, yields are going to go, you're going to get a replay of what we saw in March and April where stocks down, bond yields up. You might get the dollar up, right? So, you're literally going to have a crisis like a week later

up. You might get the dollar up, right? So, you're literally going to have a crisis like a week later if you do it to the Europeans with stable coins. (45:16) Mhm. You know, Bessant cited, hey, somebody in Nigeria would rather hold. Yeah. But like really how much is of the free capital in Africa right now and in sort of developing rest of the world are we really

going to how much of that is you know eh it's not that much money relative to what we need.

So you're kind of implying that he's already kind of done what he's done what he can do.

(45:40) I mean look he could do the the bank reserve thing and I'm not the best guy to talk about that but my understanding is is that bank reserves can be used to back stable coins. That

I do know for the Genius Act. Then you can get into the question of a would they and some of the plumbing guys say eh they don't really want to do that and I don't remember the technical reason why but in theory he could do that or encourage that that's still a banking choice in theory he could

distribute dollar stable coins right once those rails are up to people direct without the Fed (46:13) without the banks he could do that but boy that's that's a political issue right? Like

why do we even have the Fed at that point? So I don't know all the things he could or could not do legally. I think the reserves thing is one where yeah you could start to mobilize those reserves into stable coins. (46:31) But then again I'm not sure how motivated the banks would do that relative to some of their capital requirements etc. But yes other than that

absolutely a lot of what he has done has already like he's played a lot of cards already. This is

not like oh well now he's going to start to do it. (46:49) What is the weakest link? So you said maybe first half of of next year 2026 that something maybe breaks and then they have their excuse to step in with a lot of liquidity. But what are you seeing right now that is one of those weakest links in the economy that would be something that could break?

We've got what we've already seen with repo rates overnight rates straining of it. That's

not an accident. That's going to keep happening. (47:17) No, standing repost exists to sort of calm that down. Where before in 2019 it where before it didn't. No. Exactly. Exactly. So that one has some

that down. Where before in 2019 it where before it didn't. No. Exactly. Exactly. So that one has some runway on it. Mhm. So then that leads you to the conclusion in terms of the other things that could break. Number one, something in AI breaks, right? Where and that just talk on that. Yeah. Right.

break. Number one, something in AI breaks, right? Where and that just talk on that. Yeah. Right.

Where just literally somebody has a problem. (47:43) Sam Alman does come out and go, "Oops, I am asking for a federal backs stop. We can't make this debt payment." Whatever.

And I'm not saying I don't want to like that's hypothetical. I bring

that up because they had their whole his CFO said maybe we'd like a backs stop.

Then he said we wouldn't like a backs stop. (48:00) Then he said, "Well, we actually want to access funds as it relates to whatever money that the Trump administration was handing out, whatever to rebuild America." That's there. By the way, I I was listening to a show and they were throwing around some of the numbers with just OpenAI alone and I mean it was so out of

touch with reality what they were going to need from a capex spend in the coming 5 years. The

number was in the trillions, low trillions. (48:26) And then you're looking at the top line of the company, which and I might be off on these numbers, but if I remember right, it was like today is like 20 billion. And so when you're looking at the delta between these two numbers, you're in literally different universe. And this is just one of the AI. I mean, it is the biggest

AI company, but I think this is crazy, Luke. (48:43) These numbers are crazy. They're crazy.

And I think it answers why Bitcoin's going down, right? Cuz think about what you just said. So

if AI needs trillions of dollars, you know who else needs trillions of dollars? Scott Bessant,

the US Treasury. So you got two different entities competing for trillions of dollars. Mhm.

(49:03) That really aren't there. Mhm. But certainly that puts upward pressure on real rates. And oh by the way, the trillions of dollars that AI is trying to fund is actively undermining

rates. And oh by the way, the trillions of dollars that AI is trying to fund is actively undermining the tax base of Scott Bessant at an exponential rate. So to the extent that AI is successful, the trillions that Bessant needs to raise was competing against AI, those trillions

are going to go up exponentially as AI takes out white collar jobs. and tax receipts.

(49:34) So, here too, we have like a snake eating its tail. Those are the types of situations like it's hard to predict what's the straw that's going to break the camel's back, but the camel's back's going to break. It's already bowed pretty badly. (49:51) But barring something like that in the funding markets, to me, I don't see something that's going to snap right away other than sort

of the inflationary stuff, right? like basically a political you know the political reaction as tense as we are I don't see anything that explosive now you can get something where you know maybe the markets freak out and that triggers it who knows but it would have to be a reaction to inflation or it's going to have to be something in the funding markets related to

two giant entities trying to access trillions of dollars with one entity undercutting the other's funding by accessing those funds. Oh, by the way, (50:25) all you know, biggest marginal supplier funds being a bunch of hedge funds based in the Cayman's who are funding at the overnight rate, both of them are squeezing higher. This is the hardest question I got for you,

Luke. So, let's say markets continue to tighten liquidity wise in the coming 3 to 6 months.

Luke. So, let's say markets continue to tighten liquidity wise in the coming 3 to 6 months.

(50:42) It gets pretty aggressive. In that environment, typically nothing will outperform the dollar itself. You go back to 2008, 2009 during what was a really tight liquidity crunch that occurred and you watched even gold itself sold off quite a bit against the dollar. The

dollar just bid and beat everything. (51:05) Is this the moment in this current next and I'm just assuming that tightening continues to happen. It may not, but let's just assume that it continues to get pretty tight in the next 3 to 6 months. Does

gold outperform the dollar in that environment for what I would say is like the first time in many decades? I think it does. Interesting. (51:29) Yeah, I think it does because the

many decades? I think it does. Interesting. (51:29) Yeah, I think it does because the part that a lot of people on Wall Street are leaving out about gold and the rally, I can say it. I'm Cleveland. I'm, you know, I'm not the establishment guy and whatever. They can't say it yet. They'll say it in another two or three

and whatever. They can't say it yet. They'll say it in another two or three years. But here's what they're going to say. (51:48) 2022 US government by sanctioning Russian

years. But here's what they're going to say. (51:48) 2022 US government by sanctioning Russian FX reserves told the whole world take your money elsewhere. The treasuries are no longer a safe

haven. Then 22 to 2024 the Russians told the world that US military and in 2025 the Houthies little

haven. Then 22 to 2024 the Russians told the world that US military and in 2025 the Houthies little bit of the same. Mhm. in terms of technological change, right? And I would encourage everybody to

read Eric Prince, former head of Blackwater, his speech from February. It's on YouTube about what the Houthies and the Russians were doing then. (52:21) The technology change, the exponential changes that our friend Jeff Booth talks about came to the military and now you got Houthies in the Red Sea, you know, making making aircraft carriers have to evade so hard

that F-18s are falling off the damn ship. Yeah. That wasn't an accident. And then you have the Chinese make it very clear that the United States can't go to war. Full stop. Yeah.

(52:46) Without Chinese rarits. Full stop. And the last people to admit this is true, these three things are true are Wall Street. They're the last ones to get it. This is

blasphemy. Mhm. A. Treasuries are no longer as safe as gold after 2022 sanctions. B. The Russians

outproduced NATO and the Russians beat NATO. (53:11) See, technology shift has ended 400 years of Mayan doctrine, right? You control naval checkpoints, you control the world.

Naval checkpoints now are death traps. Like you had the Houthies making making aircraft carriers of the United States dance so hard that F-18s are falling off the deck.

(53:32) What do you think the Russians are going to do? What do you think they're underwater unmanned whatever the heck those things are? Do you want to be on a ship that's going through a narrow area like the Red Sea with those things out swimming? I wouldn't want to.

And so checkpoints like that that reverses the relative power dynamic which again I'm not anti-American. I am simply telling people how it is and what that implies for the macro

not anti-American. I am simply telling people how it is and what that implies for the macro situation which is the military backs the dollar. (53:52) You're pro reality. I am pro reality.

And then the final part is is like we can't make missiles fast enough if the Chinese send us the rare earths. And the Chinese are not sending us the rare earth. And there's like it's a fascinating study in cognitive dissonance. (54:10) You can see with our Treasury Secretary, he was this week. We think the deal is going to be done with magnets by Thanksgiving. Wait,

wait. You said the deal was done a month ago and then it was done two months before that and done 3 months before that. And there's like I like to try to keep things simple. I know I talk a lot, but I try to keep things simple. Look at it this way. Bessent and Trump, etc. (54:29) are making the case that the Chinese are going to willingly sell us rare earths that

we are telling them we are going to use to make weapons to point at them. If your neighbor said he wanted to kill you and then also said, "Hey, can I borrow your shotgun?" would you give it to him? And if you did, you deserve to get shot. (54:47) You're an idiot. Mhm. And the Chinese

him? And if you did, you deserve to get shot. (54:47) You're an idiot. Mhm. And the Chinese are the neighbor. So like the rare earths aren't coming. They're not coming. Yeah.

And so we're in this window of opportunity of like to tie it back to your question, I think I think gold will beat the dollar. I think the dollar will go up, but I think gold's going to go up in dollar terms in liquidity. (55:05) Yeah, I agree with that. I

think you're right. And you know, people I'm a hardcore Bitcoiner. I think in the long tail, like if you pull out five years, 10 years, I think Bitcoin just outperforms all of it.

But I'm I'm talking specifically if the dollar liquidity really dries up in the market in the coming three to six months because for all intents and purposes I think Bitcoin is already demonstrating that it's selling off. (55:30) It's the if people need liquidity they're pulling it from the Bitcoin network uh right now at least that's what the price is showing us in

dollar terms where gold is not doing that and it's been pretty obvious. So, and to your point that we talked about earlier in the show, it seems to be in the minds of the market participants is somewhat correlated to risk on still tied to tech. (55:53) And I think that the large billion-dollar tranches on Wall Street that are understanding this debasement trade are going to the thing that

they understand and it's pretty simple and so far it appears like it's gold. So, yeah, it's going to be that's going to be a fun one to track and to continue to watch for the next time we talk, but I love that you have an opinion on it. (56:20) So, I will tell you when I don't have an opinion on something, when I do have an opinion on something, it tends to be fairly

strongly held until facts change. If you're right, that's going to be one hell of a signal. Oh,

absolutely. And it's to me, it's just so clear, right? You know, look, I'm excited we're finally moving towards industrialization again. I'm excited that we realize we have a grid problem.

(56:37) We've been talking about this for years and years. People finally understand and I'm excited to see new technologies like small modular reactors and discussions that, you know, there might be one up and running in Ontario in 2027 or 2029. And in the last 10 years, the Chinese have put up electrical capacity equal to the entire United States grid in 10

years. So insane. And they're not standing still. (57:05) And so when you look at things like that

years. So insane. And they're not standing still. (57:05) And so when you look at things like that and you go, could gold go up above the dollar in the next crisis? Yeah,

absolutely it could. And this is Jensen's point from Nvidia that why he thinks China is going to win the AI race is just because they actually have the energy infrastructure to support all of the hyperscalers to train the models over there. (57:26) Where in the US, we're going to be limited in our energy capacity and by the time we get it online, it's going to be too late.

is the article and you know the talking point that's been kind of going through the news in the last two weeks. So yeah, and it's we're moving in the right direction, but it's there's still far too much hopeium and not enough reality. (57:44) And what do I mean by that? Right?

How many times have you heard well we just need to go to a wartime footing like 1940, right? We

just need to we need to do operation warp speed, right? Even Scott Besson said we're going to do operation warp speed. And I think in rare earth we might be able to do some stuff maybe. I'm hearing

like in the next 2 years, 3 years maybe. (58:03) But like Operation Warp Speed for the shots, they started developing that stuff in the '60s and 70s. Like they

started really testing it in the '9s. They put the first one in place in 2013. Like,

and then if you want to go to wartime footing, okay, but again, America needs to decide, does it want to rebuild and compete or does it want to preserve the real value of its bond market? Because when we went to wartime footing in 1940, Fed's balance sheet went up 10x in three years. (58:27) We kept interest rates. We put marginal

tax rates on the highest earners at 95%. We rationed goods. You also didn't have the ability for people to tap into the knowledge like you do today back then. So, like as they're capping rates and they're putting commercials on TV to buy war bonds and people are like, "Hey, I'm going to do

my patriotic duty to go buy the war bonds. (58:56) " You didn't have talking heads out there explaining how in real terms they were losing x% on an annualized basis, which is so readily available to anybody today that has an internet connection and, you know, a Twitter account or whatever. The information is so easily found nowadays.

very well it's so easily found and I would add to that like in 1933 the commission that Joseph Kennedy led to investigate 1929 basically they ran a big review of the great crash and the bankers came out of that as the bad guys and there was real reform done to the system and we had eight 10

years of depression eight years depression after that of people coming together as a society and (59:37) we had 11 to 15% unemployment so there were ready workers ready to We do not have a society that is together. We're like, "Oh, you know what? We're going to, you know, so that you can rebuild so we can make Elon Musk a trillionaire. We're going to buy bonds. (59:55) Then these tech guys can become

a trillionaire. We're going to buy bonds. (59:55) Then these tech guys can become 100 billionaires while send a billionaire. Send whatever." What? I don't even know. Say whatever.

It's that big. It's that big. Like let them buy the bonds. Like 95% of the country is going to be like let them buy the bonds. Like where were you in08? We don't have the unity in this country that we had then where people would say, you know what, I know I'm probably gonna lose, but a they can investigate how much they're going to lose, but b they'll be like,

these people haven't helped me for 20 years. Like, yeah, you know, I'm not going to help them. Yeah. Well, Luke, you and I could chat (1:00:27) literally all day long. We could,

them. Yeah. Well, Luke, you and I could chat (1:00:27) literally all day long. We could,

right? Thank you so much for always making time, always coming on the show and just sharing your deep knowledge. I do not miss a week of your newsletter. I am an avid avid reader of your Forest from the Trees newsletter. (1:00:48) Um, give people a handoff if they want to learn more about you or anything else that you want to highlight. Oh, I appreciate that. Yeah,

if they're interested in learning more about our different uh mass market and institutional research products, you can check out fft-lc.com. And obviously, I've got a fairly active X feed at Luke Groman Lu K-N. Luke, as always, thank you, sir. Thanks for having me on, my friend. It's always great catching up with you. (1:01:15) I still think everything I look

my friend. It's always great catching up with you. (1:01:15) I still think everything I look at says we are going higher in the next 9 to 12 months. And so,

if we start to see a takeoff in the manufacturing sector and in the US economy as a whole and global liquidity continues to kind of move up and to the right, I still think our best days are ahead of us. And I definitely think the four-year cycle is dead. And

lots of people are going to get fooled by that. (1:01:32) I think a lot of people are going to bail in December and think it's over and then it's going to get fun after that and they're going to miss it and they're going to be piling back in several hundred,000 higher.