Gold, Crypto, the Debt Crisis, and How to Survive When the US Needs a Bailout

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But really, we should all remember that the love of money is the root of all evil and money really has a huge effect on outcomes, but nobody says that. And I miss it so often. So you spent your life in the money business, trading debt. Tell us just to start, but like, you worked in Ukraine, you traded Ukrainian debt, what was that like? I never worked in Ukraine. I've been to Ukraine on investor trip. I have traded Ukraine debt. I traded emerging markets debt my whole life until May of this year. I traded and sold it at a bunch of different banks, London and New York. Ukraine was certainly one of the instruments we traded, traded through the Russia crisis. Can you explain just for the truly ignorant me among them, what is emerging markets debt? 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 after the after the 80s crisis, Nicholas Brady, Treasury Secretary of the Time, came up with a plan called the Brady plan to restructure the debt back it with collateral US Treasury strips that would make it more palatable to a broader base of investors. So get it off the balance sheets of the money center banks and to create a more institutional uptake of the debt and retail uptake of the debt. So American debt and American banks are left with loans from other countries that those countries can't repay. Correct. I'm just trying to put it in terms like I can understand. And so then the Treasury Secretary basically says to those banks, will bail you out by guaranteeing these loans with American treasuries? It's one way to put it. It's a way to clean the balance sheet up and to create, I think there are two impacts. 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 a value to issue and clean up the country's balance. 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. 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. And so what does that mean to attach a Treasury to foreign debt? Can you tell us layman's terms what that means to Treasury strips? What is that? Treasury strips is zero coupon bonds effectively. So you have collateral, you have risk-free collateral that's attached to the bonds so that to get investors who would obviously wary of subinvestment grade emerging market, at that time it was called less developed countries, LDC, then it was then it evolved into emerging markets debt, 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. So it's grown over the last 30 years to incorporate sovereign 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. So it's all credit, all credit products went in a number of countries, it's ballooned. But at the infancy it was really a it was a evolving asset class to got to clean up the balance sheets and open access back to lending to these countries 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 putting your 401k but putting your pension funds and then hedge funds traded it. And from there it evolved from dollar debt into the local currency debt became much more fashionable so investors can buy Turkish Sleer Denominated Debt or Kenyan Schilling Denominated Debt and then obviously derivatives. You can buy Kenyan Debt in Kenyan currency? You can, it's not that easy but the harder it is to trade the more the banks make money at trading it. So it's certain countries are harder to access than others. So all of this debt originates from the desire of countries to raise money from the world? Correct. So if I'm Kenya and I want to fund the operations of my government, I issue bonds? Yeah, you issue locally, issue local bills to local banks primarily, treas local bank treasuries. Foreign investors can access that through typically plain vanilla kind of derivatives and they'll issue dollar-denominated euro bonds that are open to the world to trade in dollars. So if you're the treasury secretary that's a huge power that you have, you can bailing out other countries? Certainly. I mean I saw it my first job 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, the Mexico book, it was 1994. And they gave it to me because I was a kid and it was the safest book. You couldn't hurt yourself too much with about six months after that the Mexican peso crisis. So yeah, that was Robert Rubin and friends. I lived through that whole experience of the bailout. What did they do? What did who do? What did Rubin then treasury secretary, what did under Clinton, what did he do with the Mexico crisis? Well, what's interesting is I don't know if it's a function of just how the human brain works and you look back and you're like, oh yeah, we basically bailed Mexico out and cleaned it up and everything went on as it was. But you forget as you're going through that, these things all take a lot longer. Your memory shortens up. It took a lot longer and it took a few go rounds. And what I learned to that whole thing was because I went through a bunch of these crises. There was the 94 Mexican peso, 97 the Asia crisis, Thai bot, or if you remember Thai bot crisis and Korea, Chai balls and all that. And then 98 was Russia, 2000s Argentina peso crisis. And then we had the GFC. So there was a series of rolling crises and all in like the first 10 years of my career. So that definitely kind of wounds your ability to stay permaboulish when you're going through a bunch of rolling crises. But what I learned through these series of crises is that what you have to kind of start with is the bazooka, the go with the Moab of bailout that you have to go with way more than the market things you need. Because what in the Mexican peso crisis, if my memory serves properly, they kept coming with not half measures, but sort of just enough and what they thought would bring back smarket stability or market confidence. And just enough creates a bit of spike in confidence and then starts to start to panic again and then come back again until finally they come back with the mega bazooka swap lines, bailouts, all that sort of stuff. So now that was also early in sort of the Washington consensus era of foreign policy. And there was, 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. It is. And the IMF is funny. I've been, you mentioned Ukraine and the trip I went to Ukraine was an investor trip. And part of the purpose of an investor trip is to go and to meet with their finance ministry, their debt liability people, meet with banks, meet with locals, get an assessment and you always go to the IMF there and ask what the likelihood is of the next trunch being delivered. And perhaps it's a bit cynical, but 30 years of trade and merge markets will make it pretty cynical. But I'd always go into those meetings and walk away from those meetings like, what are we talking about here? Of course they're going to disperse the next trunch. That's what they're in the business of doing. 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. So it's very rare that they won't or they don't unless it's a real sort of turn your thumb turn your nose up or thumb your nose at the IMF and and is the purpose of the IMF to bail out mismanage countries? I think it's simple terms. Yes. 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. But effectively, yes, I'd say backstop or to keep them keep them afloat and to offer them guidance as to how to run austerity programs and get themselves back on the rails so that they can move towards prosperity, democracy, all this sort of thing. Does it work? Typically no. Why? Because one, it's very politically unpopular as a domestic politician to be taking orders from any foreign power but certainly the West and those orders come with strict austerity because how did they get themselves in those problems in the first place? A certain distinct lack of austerity. Living beyond their means. Correct. So that's not particular to emerging markets countries. All sovereigns do that. Everyone in the West is doing that as well now. Living beyond their means. But some of us like the United States are able to run what's called counter-scyclical monetary policy because we have a reserve currency. So we have a special privilege to be able to maybe be somewhat more profligate than others. But the money runs out a lot faster in emerging markets countries when you can't finance your debt and you have a dual crisis of both your currency and your interest rates running out of control. And at that point you've got nowhere to go other than to your friends in DC or Brussels and ask for the backstop. But in return for the backstop, you need to make some promises about how you're going to conduct your business going forward. And as you can imagine, cutting expenses, raising interest rates, slowing the economy doesn't generally get people re-elected. Exactly. Vets who can handle any pet under any circumstance in a 10-minute call. It's pretty amazing, actually. You never have to leave your house. You don't have to throw the dog in the truck. 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Stop by and pick up a couple of bags before somebody else does. So you really, you've got a democracy problem. These countries overspend because they're democracies and they're trying to meet the demands of their voters. And then it's impossible to fix because their democracy is trying to meet the demands of their voters. That's probably a little more euphemistic than I would say. Yes, that's one factor, but there are other factors that play as well. How many countries have been bailed out by the United States over the past 30 years that you're aware of? I mean, there's hard bailouts and soft bailouts. So I couldn't really put a number on it. How many are running an IMF program right now? How would have to be in the dozens? How many like strict bailouts? I really don't know at the top of my head. I mean, we can go through the, we can go through obviously Mexico, Argentina, excuse me, Argentina. In the Asian crisis, there were a whole host Asian countries that had to post up. So there's the hard bailouts and then there's like the softer bailouts are sort of coming back, staying on the, staying on the teat so to speak. Who makes money from this? Who makes money from this? So the IMF theoretically makes money from the interest on the loans, but it's typically below market loans. So it's not a real profit motive. Banks make money from this facilitating the debt, so the trading of it, the issuing of it, the fees issuing of it. Investors make money from higher interest rates, obviously. And then there's a subset of investors, like distressed debt investors that will buy a bunch of defaulted paper, sit on it and then do workouts. Like the most, probably stark examples recently would be Argentina. And right now, Ukraine will be a pretty significant one as well. See what the workout is with that. What would you do with Ukraine as a banker at this point? Like what's likely to happen to Ukraine? Not on a military level, but... Ukraine is a different one than, say, in Argentina because it has at the moment more of a geopolitical put, so to speak, than pick a random country like Bolivia or Argentina. Although now under this administration, clearly there's more, we're sort of enroute doctrine part two. There's more of a geopolitical put to Argentina. But Ukraine's a tricky one because there are, obviously, up until recently, you had the entire West behind that. And this week alone, you've got Larry Fink, Wittkopf, and Kushner over there working on stage two of what's going to happen, the peace process, but also the rebuild. So it's an odd one. I think that's going to be a combination of public and private because there'll be so much rebuild to do and there'll be a lot of money to be made in the rebuild. What does a debt crisis look like? What is a debt crisis? Well, a debt crisis typically is not a debt crisis alone. It's accompanied by a currency crisis. The debt crisis, the external debt, and then a local market interest rate crisis, which is also dead in itself. So the local local T-bills, local interest rates will skyrocket at first to try to raise interest rates to try to attract money to the currency to stem the route on the currency. And that can work up until a point until you lose control of both. So what a debt crisis looks like is currency, runaway currency, devaluation, runaway higher interest rates, which clamps down the interest rates, clamps down any lending locally, clamps down any local growth, creates defaults on domestic businesses, the currency running away depending on the country, but all countries it causes inflation, but countries that rely on imports certainly even more, right? Everything you're bringing in is going to cost far more in your local currency. So it's really a spiral. And then, typically, what happens is bonds will drop to a level that's called recovery value, and recovery value is effectively what is a term, really more from, I say, the corporate credit markets where if you were to strip everything down and sell it for parts, what could you get? For the cash value. So interest rates spike, bond values drop? Collapse, yes. What does this have to do with debt? Why is it described as a debt crisis? Because no one can function without borrowing, no one can function without debt. So if you can't borrow, you can't exist. And there's no country that's not true of? I mean, there are countries that don't necessarily need to borrow as much as they do, but they still do. Why? Because, one, because they can cheaply, I would argue the GCC countries don't necessarily need to borrow as much as they have. The Gulf, Persian Gulf countries. But they have recently, you know, Saudi, for example, because they're going on a massive expansion to diversify themselves away from their core business, which is oil, which is actually a very wise thing to do. Because if you look at countries historically, Venezuela is probably the most extreme example that had an, there was a single-a-rated country in the 80s. If you, I went there in the 90s, gleaming infrastructure, like incredible highways, beautiful hotels, amazing, amazing place. And they never took the oil wealth and diversified away from it in a meaningful way. And then when you have an oil shock, and you've taken out too much debt against the, let's make up a number, $100 oil price, an oil drop is at 30, you're all upside down. And so that's what, you know, that's what MBS is looking at for a multi-decade plan to build, you know, build these cities, technology, innovation centers and so forth, which is clearly learning from the past. But they're borrowing to do that. They're borrowing to do that. Yeah, but they're borrowing at fairly cheap rates. There's also a concept that you want to borrow as a sovereign level to set a benchmark against which your companies can borrow in international markets. It'll be the broader, the investor base, theoretically, the cheaper the interest rate. So they'll set a benchmark level, and then a corporation can borrow at that rate plus 20 basis points or 50 basis points. Well, some Americans have become cut off from the things that once kept us grounded, our land, the skills that tied our families to nature. And for mine, as we made a new six-part series, American Game, Tales from the Wild, we follow the sportsmen who are keeping these ancient traditions alive. We follow a form in the Navy Seal into the mountains of Texas, Donald Trump Jr. across the ridges of Lenai. That's what we call from going from zero to hero. And wander with me through the quiet woods of Maine. I have just three dog commands, and then as I direct the dogs, find the bird. Find the bird. And then dead bird, obviously. I don't use as much as I'd like to. We cast for steelhead on the Deschutes River in Oregon. That's the first one I've caught in a while. Track mule deer in the Utah High Country. Spear fish in the waters of Montauk chasing striped bass and bluefin tuna. See you on the other side. American Game, Tales from the Wild, Outdoor Series. Watch it at Tucker Carlson.com. So, if every country's indebted, I mean, debt decreases your sovereignty, your ability to make independent decisions. That's correct. Yeah. So, if every country's in debt, then there are no fully sovereign countries, then, right? Can't just, it's not, no country's free to do exactly what it thinks it should do in its own interest. They're all connected. No. No. And again, back to the U.S. I mean, theoretically, we are or were based on the fact that we have the global reserve currency, but there is a limit to everything at some point. So, what's the limit for the United States? It's hard to say what the limit is. The limit is what loses the global reserve currency status, right? And as I alluded to before, these things don't happen quickly. They happen over a much longer period of time than anyone would think. So, how do you, in simple terms to me, let's look at some global reserve currencies historically. Dutch Gilder, British Pound, US Dollar, probably the most obvious examples in relatively recent history and what did they all have in common? They ruled the seas, military dominance, right? And you'll see memes online where people are like, pictures of fleets of aircraft carriers and the Gulf and displays the military power and that's what backs my currency. And then that is true. But at some point, you got to ask yourself a question like, also, how did empires from Rome to the Dutch to the Brits like imperial overreach to an extent was what undid them, right? And if we continue to, I mean, what concerns me longer term of the potential loser, the reserve status is if we lose our military dominance, that's not happening, obviously, tomorrow or the next day. There's a few things that could, obviously. I mean, you're more versed in the IM and in this whole notion of modern day drone warfare, but that's certainly levels of playing field very, very quickly. You see what the hoodies were able to do with not so sophisticated and not very expensive drone technology. But that's, you know, that's the pervy for some military expert on me. The other thing that concerns me- But the structure remains the same. So the United States can continue being indebted to the degree that it is because it has the world's reserve currency and it possesses that because of its military dominance. It does, but if- Yes. I think what's a very important, what was a very important moment, however, was the seizing of the Russian reserves at the beginning of the Russia-Ukrainian conflict. I felt that. And I think- Can you tell us what happened just for people who- Yes. So quite simply, the Western power seized the Russian reserves that were sitting in the New York Fed. I believe it's 300 billion is the number that they seized. And, you know, the Europeans still want to use that for rebuild and so forth in Ukraine. Now, not to get into who's right and who's wrong in the Ukraine-Russia conflict, that's not the point in this. The point is, it sets a precedent that's a scary precedent, that is, your money that sits in U.S. Treasuries or gold in our Federal Reserve is not safe if you run a fowl of the powers that be. So there's a very obvious and natural reaction function to that, which is powers like India, China, and Russia stop buying Treasuries and start buying gold. The gold call was certainly we have inflationary, inflationary pressures we can talk about, but even more to the point, it seemed obvious at that point that that's the trade. Yes, it's an inflationary hedge. I bought gold that month. I remember. Yeah. And I've done better than the stock market's done. Well, it's funny, if the move in gold this year, I won't get it right off the top of my head, but it's over the last 20 years, I think now, as the gold's now beat S&P now when you compare the two. Yep. It's really effectively just the debasement trade when you look at it. What's the debasement trade? The debasement trade is that the currency that we, the currency that we all use and think about every day has been debased against gold, right? The value of the dollar. I think oftentimes people look at the dollar as the dollar strong, the dollar weak. And what people are looking at is effectively the DXY, the dollar index, and that's a basket of major currencies, or it's heavily weighted to the major currencies, Euro, yen, Canadian dollar, Aussie dollar. And it's really at this point kind of a ridiculous comparison because all of those countries are sort of in a basket case with their debt issue and their growth. But if you look at the dollar versus Bitcoin, or if you look at it versus gold over the last 10 years, it's pretty clear that the currency's been debased in those terms. So if you look at it in that terms, the stock market returns don't really actually look quite as great, as wonderful if you're looking at it and what a dollar would, how many dollars it took to buy an ounce of gold 10 or 15 years ago versus today. And all of that, or some of it is downstream from the decision by the Biden administration to freeze Russian assets because that scared the crap out of the rest of the world. I think the gold move is for sure. The dollar weakness against gold, yes. But there's also, I mean, I think the big move in, I mean, if you look at, if you look at what we did after the GFC in terms of interest rates and global financial crisis, where what we did bail out, extraordinary measures, fiscal and monetary, keeping interest rates at zero, emergency measures, keeping rates at zero that remain in place for a good 10 years. Like I don't know how you stayed, emergency measures at zero interest rates when the stock market, when I quadruples over, triple quadruples over 10 years. So what I think, why is that bad? All those investors got rich, everyone's happy with their 401Ks. Like why is that bad? Well, it's bad for a number of reasons. One is, if you believe in a free market capitalist system, the pricing mechanism, the free market pricing is everything. The price of meat at the farmer's market is set by the free market. Who's willing? Willing buyers willing sellers at a fair price. Once you start to put in price controls, the Soviet Union, definitely we don't have free market capitalism. At the core of free market caps is the price of money. So we artificially put price controls on the price of money. So we look at it. We artificially kept interest rates way too low at zero when the market didn't necessarily demand the conditions. Maybe at the time, certainly five years hence, 2015, I don't really see why we needed to keep interest rates at zero for that long. So yes, I think the reason why, in my opinion, the reason why the people at the Fed, the dozens and dozens of PhDs at the Fed making these decisions, probably to a man, to a woman wrote their PhD on the Great Depression and what the Fed did wrong and the horrors of deflation. So really the depression was really a result of deflation. So that's the greatest boogeyman of all. So anything you can do to fight deflation, deflation is the real killer, especially when you have an excessive debt load. What? I'm going to stick to the dumbest possible questions. I hope I don't offend you. What is deflation? Deflation is prices going down. What you kind of want is a gentle inflation to help inflate away the debt to show gradual the benchmark, the target Fed target for a long, long time has been 2% inflation. They soft up that to three recently. And as you know, just cut rates this week, even with core PC at 2.8. So they've kind of abandoned that 2% target. But what I think in that time, why wouldn't I want deflation because that makes the value of my paycheck higher? It depends on who I is, who the I asking that question is. So if you're you and your wages are constant and you've paid off your house, certainly deflation would be great. Go to the store every day and things are cheaper. I mean, there's deflation certain part certain sectors, right? They for years, there's been deflation and all technological goods, right? You get a flat screen TV for 400 bucks. Yeah. So for you, Tucker Carlson, it would be wonderful for the economy as a whole that's really run on hyperfinancial, hyperfinancialization and debt. If you have a deflationary spiral, you are going to be left with a bunch of defaulted debt. So where we are right now, you know, to pivot, I guess, to where we are here with the U.S. is I think when this administration came in, they they messaged pretty clearly that the move was going to be away from the Biden administration and more towards some austerity. There would be some tax cuts, but it would be offset with spending cuts, Doge, Elon, et cetera. People got very excited about potential cuts. And then I don't know what happened shortly into the administration, but there was clearly a pivot that I didn't see coming. And it was around the time of the tariff, the tariff tantrum and the big sell-off in the stock market. But out of that seemed to come that there was a shift towards what people are now calling run at hot, which is forget about tamping down, spending, little tax cut. Maybe we'll take some slower growth, but we'll reduce the deficit, that'll be good for the long term. And instead, let's just run it both ways, fiscal and monetary. So let's cut rates and let's cut taxes and let's spend more. And I don't know what happened or if that was always the plan, but or someone saw under the hood and said, look, the only way, typically there's two ways to get out of a debt problem. You grow your way out or you inflate your way out. And it seems to me we're going all gas, no brakes on both. We're going to grow and we're going to let some inflation go. And that's the way we're going to get out of this debt issue. And I think Trump this week was saying I could see 20, 25% GDP growth. I mean, that's a nice number, but that would certainly help our deficit issues. Well, what's not long ago that many Americans thought they were inherently safe from the kinds of disasters you hear about all the time in third world countries, a total power loss, for example, or people freezing to death in their own homes. That could never happen here. Obviously it's America. People are recalculating, unfortunately, because they have no choice. 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Sure, sure. I mean, Erdogan's probably the most famous in Turkey. Did it work? No. What happened? He tried to keep cutting rates into an inflationary environment and it put pressure on the central bank to cap rates, but the free market always, I think I always say you can suspend the laws of science, of physics, of gravity, of market economy for a time, but ultimately the gravity always works. So in the free market, it always works. So no, it didn't work. They have runaway inflation and extraordinarily high interest rates and he's been under a lot of pressure domestically for reelection, obviously. So what's the right way to approach it? Well, as I think it was at Thomas Sowell says, there are no solutions, only trade-offs. There are no solutions when you're in this situation of $37 trillion. Deficit. Is that a lot? Sounds like a big number to me. I'm not even sure how many commas are in there. It's a big number. It's hard. It's really hard to grasp, but I think if you go back, you started with ideology. The answer is always going to depend to an extent on what your ideology is and what you're willing to sustain in terms of paying short-term to long-term. For me, I was more proponent of what I thought the plan was going to be, which is some deficit cutting through spending cuts. And from what was coming out of Doge early, it seemed like there was plenty of fat to cut that would have been politically rather popular, I think, especially with the right PR guys behind it. Guys were getting out there every week on Twitter and going on podcasts and talking about the absurdities they were finding. Maybe it's a drop in the bucket overall, but I think it was a worthwhile exercise to go with. I don't know. Again, I'm not on the inside, so I don't see what you're going to see. Could it be that there are... I mean, so the idea always was that federal bureaucrats, public servants, as we call them, were serving and they were making less in their private sector counterparts and there was suffering involved, but patriotism impelled them to do it. So they did. And now you look at the numbers and it's like, no, no, no, no, no, your federal employee on average makes way more than your private sector. 2X. So they're the most privileged people in the middle class. And by far... That doesn't count their gilded pension plan. Is it really 2X? I think the number is average, medium, private sector, family, it comes 70K. I think it's 110 or 115 for federal employees. Not including the benefits, which are ridiculous. Work from home for five years. But then, of course, the population of federal workers are federal contractors, which are probably as many federal contractors. No one ever says that, but there are. Deloitte is a federal contractor, right? So there are so many of them now that we maybe have reached that tipping point where no administration can pivot against its own employees because they're voters. Maybe, maybe, but I'm sure you've alluded to many times. You can't have what is it, seven out of 10 top zip codes in the United States or all, and sort of in and around Washington, D.C. I mean, I went to... You grew up there. I went to school there in the early 90s, and I hadn't been back for 15 years. It's night and day. It's gleaming, gleaming office towers. I remember having an internship two blocks from the White House, and you had to pass, sort of, bombed out derelict buildings, and now it's as far as... From the 1968 riots, they never were rebuilt. 1992, they were still there, like literally two or three blocks from the White House. I remember. And it's crazy. I mean, it's... And Flash is a Roman empire, right? It's like you go to Rome to collect your tribute. And so, I don't know. I don't know. I'm not as privy to that world as you are. I don't know what people see when they get into office and realize that there's potentially no way. There's no way around it. All our intentions are, we're great, but this is the way it's going to be. I don't know. Okay, but you're also suggesting that this is not a solution, that you can't spend your way out of a debt crisis? I haven't seen it done before. Right. How much magic would that take? This is a very talented individual. He's a lot of experience in markets, very successful. The right guy to have at the helm, if he thinks this can be done, I guess, I'm going to have any choice but to see how it plays out. But maybe that's the play. The play is this is our only way out. People on both sides, people I speak to, people I knew in the markets, friends of mine, people whose opinion I respect on both sides of the aisle. The one thing we all agree on is that this is not a tenable situation. This is not some MMT, Elizabeth Warren people we're talking to. This is like normal people that say, okay, at this point, we're kind of boxed at $37, $38 trillion. So maybe that's the issue. Maybe we're so boxed that we got to run this experiment because it's our only way out. And hopefully growth kicks in. But it doesn't, the growth scenario, the current growth scenario in the US is really hard to get your hands around. In one part, because it's such a polarized economy, people are calling it a K-shaped economy, which I think is a pretty accurate term, K-shaped, meaning the lower end is hurting and continues to hurt more and the upper end gains and continues to gain more. And we've seen throughout history that's not a tenable situation. No, it's what actually would happen in Venezuela. It's how they got Hugo Chavez. Yeah, it's a powder keg ultimately. And it's also extraordinarily difficult to get a real handle on where the numbers are because we're not releasing any numbers right now because the government shutdown. So the Fed's flying blind to an extent. You can rely on certain private sector indicators that are kind of shockingly bad, frankly. When you look at consumer loan defaults, credit card balances, credit card, the late credit card payments, auto loan defaults. I think October was 185,000 an ounce private sector layoffs. I think the worst one's 08. So you have a situation where you've got to, the US economy is 69% to 70% consumer led. So if we're going to rely on the top 10% to continue to spend on Gucci bags and trips at St. Bart's, I just don't know how sustainable that is when the lower end is swapping out the New York strip for pork loin and Walmart numbers are great because middle and upper middle classes shifting from the publics to Walmart shopping. Everyone's getting squeezed. So I don't know that the growth is there. The growth can come. Maybe the growth can come with these tax cuts, with interest rate cuts, with certainly with deregulation will help and all this promised foreign investment. But there's a lack to all that. So we'll see. It does seem from an ignorant outsider standpoint, which is mine, that there's an awful lot of emphasis on the public equities markets and like the stock markets, the measure of how we're doing, whether or not that's a good measure, you know, I don't know, maybe not a perfect measure feels like to me. But how safe is the stock market in the United States as a place to put your money? I can tell this is an uncomfortable question. Be as diplomatic as you can be. Well, it is the largest, most liquid stock market in the world. It does attract not just domestic savings, but huge foreign investment for, you know, there's an expression that says money goes, capital goes where it's treated best. And we still do treat capital the best in this country. Extraordinary dynamic markets from, you know, venture cap to private equity to public markets. And that's something we should all be very proud of. And it helps, you know, grease the skids of global commerce. And that's great. There are some concerns, clearly concerns about the value, current valuation of the equity market and the structure of the economic structure of the flows. So one is massive concentration risk. It was the FAANGs, now it's the MAG7, the top 10 companies in S&P 500, I think have accounted for something like 42% of the gains year to date. The big get bigger. You had new Nvidia at one point, tipped over $5 trillion market cap, which is, again, a hard number to really get your head around. At that point, I think it was larger in market cap than every market in the world, except for US and Japan, entire market cap of any other trade, any index in the world. So you get bigger than the entire index of any country in the world? Yes. Bigger than the cumulative total, the value of all the companies traded on those indexes. On a random exchange, yeah. Except for, I believe, US for sure, and I think Japan, again, I could be wrong, but something in that, you get the idea. So just one company dwarfed all these economies? That's right. We don't need to go into all the price to book and price to sales and expectations of future revenue and all that sort of thing. You get into a market psychology event where stocks that go up continue to go up because people chase momentum. I read something yesterday that the explosion in options trading, the volume of options trades now $3.5 trillion a day, which is larger than the entire market cap of the Russell 2000. So the small mid-sized companies, $300 million to $2 billion market cap companies in the United States. And that doubled, I think, from 2022 and then doubled again. So you've got an insane amount of leverage. You've got margin debt at all time high. May I ask why is it significant that the options market is huge? Because it's not just the options market, it's huge. It's also the structure of the options. They've moved to zero-day to expiry options. So it used to be weekly or monthly options, and now it's one same-day option. So the retail, the gamification sort of... So an option, my understanding of an option is an option is a bet in what direction. In the direction and you get an immense amount of leverage. How does that work? How do I... So let's say that you want to buy a call betting that Nvidia is going to go up between now and the close. And at the money Nvidia call, meaning let's say it's trading at $177 right now, and you think it's going to go up. And the price of the at the money, the $177 call is till now to the end of day is $0.75. Let's just say. So you're betting that it's going to go up more than $0.75. If it goes up $1.50, you've doubled your money. You're not just making $0.75 on $177, which would be whatever, 31%, you're making 100% of your money. So you're getting... All you can lose is the premium, the $0.75 you pay for that option. But everything over $0.75 starts to run exponentially in terms of profitability. So people are making an insane amount of money in this run up on options, zero day options, and they're doing it from their phone. It's pretty easy with the... That's not really investing though. That's betting. Yeah, that's gambling. But that's just one component of the structure of the market. But it sounds like it's now a huge component. It is a huge component. But again, with the gamification of crypto trading and options trading and Robinhood and with gambling, you know, DraftKings and all that stuff, it's sort of part of the culture. And I'll start in COVID with people at home with extra stimmy money and not much to do. And the market was ripping and people got hooked on it and people keep doing it. And generally people are doing it quite well. I think retail has done better than institutional, largely speaking this year. But the other part of the structure, the market that's somewhat concerning is just this passive flow. So then there's a guy named Mike Green, who you should probably speak to who's done the best work on this. And passive flow, basically 401k, if you put your money in every two weeks, your money's automatically going to your 401k and you click to that, it's auto invest. If you go and you look at most companies, 401k options, their options and what to invest. And then you break down each one of them. Basically every single equity option fund you have has the same high concentration and the same five stocks. So, you know, Apple, Microsoft, Nvidia, whatever. So you don't know that necessarily. You don't really know what you're buying or what percentage of the fund is in those. It's very highly weighted because the higher the market cap go, the higher the weighting goes and on and on and on. So it's just an automatic machine like underlying bid to the market that continues to the big, the big get bigger and bigger and bigger. And you can say, okay, what's wrong with that? These are great companies, they're multinational. They have great business models that were low capital intensive and high margin and they're basically a lot of them are monopolies in their space. Okay, well, two things can happen. If unemployment rises, if you lose your job, you're not putting your money in your 401k. If you lose your job and inflation keeps ripping, you might have to withdraw from your 401k, which creates a vicious cycle the other way. There's too much concentration and too few. Too much concentration and the structure of it is perpetuates it. And then you add on the leverage of the option trading with the momentum that keeps this trade going and going and going to where you get to $5 trillion market caps. Now, there'll be a whole coterie of Wall Street analysts that will justify why $5 trillion makes sense because of this, that and the other thing, but I'm not sure. What if they're of the five, eight, 10 companies that have the bulk of the value, the plurality of the value of the entire S&P, if one or a couple of those companies dramatically reset in its value and its share price, what would happen? Well, you're seeing it, I kind of right now as we speak is the AI trade is starting to lose a little bit of favor. There's starting to be some questioning on the AI trade. And the market can't continue to trade up if one or two of the major components are falling out of bed. I mean, this week it's been Oracle and last night Broadcom took the market down and Vidi is starting to weigh a little bit. So we're very tech sector heavy. And the other thing that concerns me to an extent about not just for public markets, but for private credit markets is that with this AI build out and this data center build out, obviously an extraordinarily capital intensive. And when I was speaking about before about how a lot of these maximum countries have companies had a great model of being capital light, they're now becoming quite capital intensive. It's not writing software, it's building physical things. Exactly. You're building physical things and you're spending, you're borrowing a ton of money. And this is what the problem with Oracle is right now is that borrow a lot of money. And they're borrowing a lot of money to build things and build things that did appreciate in value over time. Like a chip that you buy, a lot of the financing that's been going on too has been people have been using collateral, these chips is collateral to borrow against. So there's borrowing and borrowing and borrowing, but you're borrowing against a chip that naturally is going to be replaced by the next evolution. Of course. So that's a bit of concern about the value of the collateral. And when that daisy chain on winds, it could be ugly. The other thing is that there's so much, there's so much borrowing in the private credit markets for these hyperscalers and these data centers that it crowds out. There's a finite amount of borrowing available. So it's crowding out, borrowing and investing in other areas of the economy. And that concentration risk concerns me to an extent as well. And the different, a lot of people have made the analogy to the 99, 2000 tech bubble. And the good news coming out of that down the line is that, okay, we all got hyped up on the internet and we got carried away with pets.com, things like that. E-toys. But the truth was in retrospect, we weren't hyped up enough about the internet and what it would do and how it would change the world. But there's still a cycle that comes along where there's the forex cycle and then the crash cycle. And then on the back end of that, you have the winners that survive like the Amazons, right? That you could have bought for practically nothing in 2002. And then there are companies like, similar to me to the hyperscale data center, were the fiber companies like Global Crossing, WorldCom, right? And those were bubbles that crashed. But what were they doing? They were laying fiber cable for the internet, which, okay, we had a malinvestment boom, the companies crashed. But the cables still exist and the cables are in use today and the cables were very valuable and the cables didn't depreciate because the cables have a useful purpose. So the people are making the same argument now is like, okay, we may go through that cycle as well. It's maybe get a little euphoric. There'll be winners and losers 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. But there's a slightly different component where you're building these things that aren't, that could, you know, you're buying all these chips that could depreciate down. It's not exactly the same trade. No, and the nature of technology is hard to forecast, very hard to forecast. Yeah. I mean, so they were telling us six months ago that AGI was right around the corner. Nobody thinks that anymore. So just for example, and so all of these infrastructure bets are predicated on predictions about what the technology will require in 10 years. The thing that we're really running up against, we know that we don't, you're exactly right. And I think there's the worms turning a little bit on the efficiency of a lot of these. Yes. And what they can and can't do and people say, you know, I saved a half an hour or I saved an hour coding something, but then it took me three hours to check to debug the work that the actual, you know, clod or whatever did. But the real thing that we're going to run into is we don't have enough power, we don't have an electric and we don't have enough water to heat and cool all these things. That's just point blank. And even Jensen and Altman and those guys will tell you that. And that's why they're going out in the end of DC and trying to make the case that this is a critically important industry that may need some government backing. But even if you get that, the fact of matter is the only way you can really power these things without spiking electricity bills, another 300% and then creating a whole another political problem domestically is you need nuclear power. And you know, we have plenty of natural gas that can work as a stop gap, but you need nuclear power. And it's a 10 year build out minimum to get the nuclear power that you need. So when do we hit the somewhere between there here in that 10 years, we hit the wall in terms of our ability to get the electricity for these at this growth rate. Now, will these this growth rate accurate projection? Maybe it's not. And if it's not, then we need to see a lot of these companies come off and buy. So also there are a lot of concerns about climate change. Yes. Oh, just kidding. That kind of ended quickly, didn't it? Yeah, I haven't heard that phrase in months. Have you? Climate change. No, I did see I saw something about I saw something that Nature had Nature magazine had to revoke a paper they did a few years ago that said that climate catastrophe was going to create a economic catastrophe and that was all based on false premises. I think they did. Yeah, I think the new idea is we're going to have an economic catastrophe if we think about the climate catastrophe in any way. Okay, notice Larry thinks not lecturing as much about the climate anymore. Climate in ESG is not as fashionable as it was a couple of years ago. That's for sure. So how did that like as a guy who has dealt in markets like emerging debt, it's like a debt trading is like a pretty pure market, right? Pure is an interesting choice of words. No, I'm not saying unsullied. It's pretty plain vanilla, if that's what you mean? I mean, like there's a willing seller, willing buyer. Yeah. And but what I really mean is the price is an organic price. It's like what people will pay. Correct. So that is the definition of a market, right? But how do you get to the price? Correct. So as someone who's spent his life in that world and who clearly you're clearly like committed to the idea of markets, like you believe people should be able to decide what they're going to pay for something and what they're going to sell something for. How do you explain ESG? I don't know that funnily enough, I don't know that even the experts can actually define it. And I'm not joking when I say that. When I, in my last job, we would do a conference every summer in Europe for investors and we'd have a series of round table topics. And the one topic that was standing room only sold out every summer in Europe was the ESG, without question. It seems the US has definitely faded quickly from that, but Europe still seems very hooked in. It's not faded there at all. It's definitely a part of the investment process. But what's fascinating is if you go to 20 clients in London and you talk about ESG, you will get a different answer from each ESG specialist as to, especially in emerging markets, it's a very difficult thing to work your way around the ESG constraints when most of what emerging markets are based on are hard commodities. And there's also obviously the governance component, the G component. It's not always maybe up to Western standards with the G. So there with the G, little light on the G. The G is not great. The S, no one really knows what that means. And the G is highly questionable. So it's funny. It's just, it's there, it's still, I guess, what I call work in progress. But just like conceptually, the idea that factors that are not really relevant to your fiduciary responsibility, which is to maximize returns for shareholders or something related to that, like, I don't know, that's just it's just an interesting concept. Like how did that happen? It's that my personal guilt as like an educated Westerner supersedes your right to have me handle your money responsibly. Well, it's straight government intervention is what it is. It's government, it's government, it's ideology. If you are of that mindset, where you believe in control economy, it is the dream of all dreams to incorporate your ideological bent into the last thing that should be left alone, which is the free market. You now inculcate all of this ideology into every decision making process all the way down to the setting the price of money, which to me, I know I've run afoul of plenty of people on this, but to me that that's a bridge too far. That's not the place for it. But it's, it's one in once in it's impossible to get out, you know, once once you call go into that's involved in all the investment processes, it's really hard to take it back out again. So back to the AI infrastructure boom in the United States. If that slowed down or if people lost confidence in it, or you're concerned about a cascade effect on public markets? In the short term, yes. The question is how quickly does the market rotate? How do the rotation trade? So we're starting to see that actually the last week or two, you're starting to see the small caps really rally, Dow components really right, old economy stuff really rally as tech is being soft. So there's theoretically a way you can thread the needle there. But with the concentration risk and with the size of just actual size of these companies, it's going to, it's going to, it's going to be a drag on the overall market as a whole best case scenario. One of the reasons the stock market is my theory is so big is because it's the easiest and you said most liquid way to park your money with some hope of return. And I don't really think Americans are encouraged to think of other ways. I just have always noticed that. Absolutely. And as an emerging markets guy who's been able to look into other countries, frontier markets, et cetera, and how they look at it, there's always from, if you're in Argentina or Brazilian or Turk, you're always looking outside of your domestic economy, domestic market for opportunities. And we really don't too much. No. And it's so easy to participate in the public markets in the United States. As you said, you can do it on your phone. You can make bets on market movements from your phone, which it's just like seems like it might have unintended consequences maybe. There's yeah, crosses the line from, as you said, from investing to straight gambling. But okay, so ease of use says like the key to any scale, I think. Sure. That was Amazon. That was yeah. There's a lot of applications to that. Well, yes. Yeah. Yeah. That's true. Yes. Yeah. Well, that's by the way, why tobacco use went absolutely crazy as soon as someone figured out an automatic rolling machine for cigarettes. People used to have to smoke pipes, cigars, take snuff up their nose. The second you made it super easy to burn tobacco, the whole world became addicted to it. Makes a lot of sense. Right. And that's what the stock market is in the United States from my perspective. So, but if you're trying to be a little more creative or hedge a little bit, your future, your family's security, where else do you put your money? Again, it depends on who you are, net worth, etc. Let's see, you have an extra 100 grant. What would you, what would be a good call? Well, the problem is the great obvious trades run a lot already, right? Gold and silver's already run a ton. So, long term investing, try to look at stuff, the ideal cross of, you know, what sort of fairly valued or cheap or distressed or out of favor that people haven't really cottoned on to because you see a trend that's about to emerge. Right. Right now, we're in full throated recognition of the debasement trade and silver's breaking out for not, for that reason, but also there's a notion that there may not be as much physical silver out there as derivatives have been written against. So, there's been a bit of a, bit of a squeeze going on two weeks ago that the Chicago Mercantile Exchange shut down for a cooling issue overnight, just as silver was spiking, which was kind of convenient. So, there's some, some technicals in that market. Wait, so you think it's possible there's more paper against silver than there is silver? Yes. So, yes, there definitely more derivatives written against all commodities than exist, but no one ever asked, not no one, but typically if you're an investor, you don't ask for physical delivery of the commodity. I do. I know you do. I do. I know you do. And I'm going to find out where that stuff's buried too. So, you don't typically ask for the physical delivery of it when you're trading in tens and hundreds of millions of dollars of derivatives against. You cash settle, your derivative against mine, cash settle, the loser pays the winner and you move on. So, where do you go? At this point, given where valuations are, I think you go abroad. You look at multiples on the US stock market where we were trading historically, extremely high P-E ratios for the index on a historical basis and very high against the foreign markets. I think what this administration is doing in Latin America particularly, as I mentioned earlier, sort of when row doctrine two, there's clearly a movement of foot to stabilize the region and to partner with those that are critical to us. I would imagine that will open up a ton of investment in growth there. There are plenty of Latin American countries that offer pretty cheap historical P-E ratios. So, I think it's probably time to diversify a little bit out of the US and diversify out of tech heavy stuff. That's where I would go simply. I think you still have to own some gold and silver. You just have to own some, but just not as much as you wanted three years ago given how far it's run. So, but you're basically making a pitch for the Venezuelan stock market? Not specifically, but there may be a catalyst coming there that could create a big move on where the other, it seems, in the next couple of weeks. What about real estate, land? Real estate, land for sure. That's why I ask, it depends on who you are. I think productive agricultural real estate anywhere is always a good investment, sort of disaster hedge. But yes, land is a whole yes. I don't think I'd want to be rushing into blue cities and paying high interest rates and taking out a bunch of debt on overpriced co-ops in New York City necessarily. What about buying a 70-series office building on Sixth Avenue in Midtown New York? If you can convert it to residential, perhaps, get a lot of tax breaks. May want to see what our friend, Mamdani, says the first couple of weeks. So, you made the point that for a bunch of different reasons, Ukraine war, but other structural reasons, we are on the path to losing our privilege as the holders of the global reserve currency at some point. Because all empires are. So, we know that. The question is, when does that happen? And what replaces it? And my read is, as of now, there's no obvious national replay. We're not going to adopt the British pound or the Euro or the Yen or the Ruble. But instead, gold is the stopgap, as it has so often been. But crypto seems like the next global reserve currency. Is that fair to say? Yes. Yes. I mean, I would say this. There's kind of, I think people bundle together the notion of blockchain and cryptocurrencies. And what I'd say, I can't necessarily make a pure prognostication on any one particular crypto. I mean, it's been a phenomenal exercise and wonderful to see, it's sort of like adhering to Austrian economics to see the experiment work. I don't think we want to get into the dynamics of individual cryptos. I think, at some point, probably Bitcoin as a crypto will be usurped just by sort of a better technology. But put that aside, what to me unequivocally, and the next venture I'm going into, is related to blockchain is, blockchain is here and is not going away, whatsoever. And blockchain is going to transform the financial services industry pretty much everything we do financially transaction-wise. And fortunately, we have the wind in our backs with the administration and Dave Sacks and Genius Act, et cetera. And nobody who maybe was somewhat skeptical three, four years ago is at all. I mean, Larry Fink, and as an example, I think he continues to say, all assets are going to be tokenized. Just this week, DTCC said all assets are going to be tokenized and put on the chain. And that's going to remove a lot of little frictions in the system, extra costs that don't need and extra time lags that don't need to exist. So the cryptocurrencies exist with the layer of the blockchain. You can't have crypto without the blockchain, but the two are somewhat distinct. So a couple of questions. One, is it safe? I mean, it's reliant on electricity. Yes. But so is every, and I got to mention the CME went dark, right? And the other day. Chicago, right. So the NASDAQ shut down, right? Everything we do is reliant on, except for you coming over in your golf cart with a bag of gold coins for me is reliant on energy to that extent. Is it safe? Is it hackable? The theory, one of the theories being proposed, Bitcoin, I'm not really sure if this is, Bitcoin's had a pretty decent drop from high 120s to around 90. Part of the thing being floated is that with quantum computing, making the leap, so it's making that Bitcoin might be able to be hacked at some point, perhaps. But again, I'll put that separate to the blockchain. The blockchain deeply encrypted, safe. These are the rails on which everything's going to run. Okay. Will it eliminate corruption? Or curtail it? I think, I mean, because it's kind of, I think the question coming from you is, is a funny question because you know that nothing will ever eradicate corruption. Of course. Unless it changes the human art, right? No, of course. Yes. It should eliminate corruption because what the blockchain is going to do, what it does is it creates a permanent electronic unhackable ledger. So, think about something as basic as title insurance. I don't know if you've ever had to deal with that, but first of all, why do we need to pay? Have I ever had to deal with that? Yeah, I pay constantly for title insurance. So, why? It's an absurd notion, right? There's a title, you own the title, you put it on the blockchain, it's there forever. And when I buy my house from you, the title gets transferred to me, it's registered on the blockchain, the transaction's there, now it's mine, it's there forever. We don't need to pay a couple grand or whatever. Sorry, one of my best friends runs a title company in Maryland. But you know, he's my age, so he's probably almost done anyway. But that's just an example. Like, why do we need to pay five grand for title insurance? I just sold a house in Westchester and I found out that there was, from two owners ago, according to paperwork, there was a $650,000 mortgage still on the property and that never got expunged. But the brokers just kind of waived it back and forth and everyone just kind of stamped it. Like, that stuff, that's just an example that everyone can kind of relate to. But also, why we'll be able to send money immediately, with no, if I send money to you, you'll immediately get the money, get the care, get the interest on it. Why should I be paying $30 to send a wire from JPMorgan? That's pure $30 of margin, all that kind of little stuff. And so the company that I'm starting, is going to be starting with Gen 1, is called liquidity.io. And we have one of only six fully registered license alternative trading systems, which is a trading system that's going to be able to trade all these tokenized and financial assets. And what we want to do is help democratize the financial markets and tokenize all kinds of assets. But we're working with our backer, just made some acquisitions with a couple of consumer loan businesses, auto loans and manufactured homes, mobile homes, for example. Like, this is a great story. These two young guys in Dallas, they're working at JPMorgan and with their fourth bonus, they said, we're not going to blow it this time. Let's buy some rental property. And they couldn't find any rental property, they're in Dallas. So they just cold called like 250 mobile home parks and they found one, put in 50 grand, turned around, it was a $6 million trade. They were going to do a bigger one. And what they realized they were better off doing was revolutionizing the lending business for mobile homes. Because guess who the biggest player in that is? It was Warren Buffett. So great business, obviously, high margin business. But what I didn't learn until recently is that there is no refi on a mobile home. And there is no lending available on a secondary purchase. So if I take out a loan from my mobile home and then want to sell it to you, you can't get a loan, you have to buy it for cash. And if rates go down from eight to four, I can't refinance it. So they're going to, with their business and tokenization, they're going to eradicate all kinds of costs, which and create these two separate markets, which is a solution to, is a partial solution to the home affordability crisis. Like that's something everyone can get by. How does this new technology figure into like monetary policy? Like, well, that's a great question. So, you familiar with the stable coins? Yeah, I am. But will you describe what they are? Sure. So stable coins, think about it this way. In simple terms, say a crypto like a Bitcoin, it's sort of a free floating currency, the market dictates. The stable coin is more like a pegged currency. So pegged to fiat, in this case, like tether, circle, they're pegged to the US dollar and try to keep it stable at parity one to one. So what they are is a- And there are national currencies like this. There are countries like Bahamas or whatever, they just pegged one to one. Exactly. Yeah, Panama's dollarized. Stephen Hankey was a big dollarization component. They tried to do it in Argentina, didn't work. Hong Kong's got a dollar peg. So the stable coins, they try to keep parity with the dollar and they are theoretically backed by treasury bills. So money comes in, the money gets invested in treasury bills, one for one, you're backed by AAA rated, short dated, no risk. But these become a conduit for all these transactions on the chain, automatic through these. So it could go through the stable coin and into other things from there as a conduit. Now, that's all good and well, as long as we're sure that those stable coins are taking dollar for dollar investing in what they say they are without a lag or without moving too far away from that. Tether at the moment, it seems to be diversifying away from strict e-bills and they've been moving into gold, which is working for now, but you have to be determined how that works out. So does all of this make the US dollar stronger or weaker? Sorry. Yeah. So that creates a natural bid for our treasury bills, which is a great thing for percent friends because that creates a whole new demand vehicle for our treasury debt on the stable coins. And what the stable coins do allow for, again, a lot of emerging markets, participants allows them to quickly access dollars and avoid depreciation risk in their own country. So you're getting a lot of foreign money into stable coins that will be bid for T-bills, which should hopefully help with our funding. Is there any way for the US government to use stable coins as a weapon in the way the Biden administration used Russian assets at the New York Fed as a weapon? I don't know. I don't know. I imagine there is. I don't know what that mechanism would be. I don't think, I mean, in the Russia Reserve instance, it was a bilateral seizure. This would be a seizure of untold amounts of investors. You're seizing that. I'm not sure what the purpose would be other than just stealing the money. Well, we've seen that before. True. What do we know about global gold reserves since it's such a huge component now? What we know, we don't know everything that we know because it's not fully transparent, but what we do know is the direction of travel, which is massive increases, particularly from India, China, Russia, that doesn't seem to be abating at any time. That means they're importing gold? That means they're buying gold, and there has been a lot of movement of physical gold, particularly over the summer, but the movement appeared to be more from the London vaults back to the United States rather than elsewhere. But we don't know. We don't have complete clarity on any of that stuff. How and why? So if you're going to have an ancient commodity that's like a huge part of the global system, economic system, how can you not have transparency? Maybe I'm answering my own question. You look at me like I'm an idiot. I saw you answer it before you finished the sentence. In other words, if it's so important, why are people being honest about it? Because it's so important, that's why. It's weird that the Chinese wouldn't tell us exactly how much bullion they have in the vaults. There's no reason they should or would or have to. I guess my question. You don't want to actually show your hand on how much you're accumulating as you're trying to accumulate an asset. Is that true? Well, yeah, typically. I'm learning a lot about markets from you. That's great. So I told you, I promised you stupid questions. I know, I said there are no stupid questions, but I was wrong. Okay, then let me reframe the question this way. If we got somehow full transparency on global gold reserves, where they are, who has gold, how much? Would we be shocked? Is there a big spread between perception and reality? We still don't have the audit of Fort Knox that we were supposed to get a few months ago. Really? Yeah, you might be shocked about that too. I don't know. You think Fort Knox just has a lot more gold than they're telling us? They may have 10 times more. I don't know. I really don't. I don't want to speculate. I mean, I like to speculate, but I don't want to speculate on that. I'm guessing if there is a spread between perception and reality, it's to the negative, but what do I know? Not sure. There's talk about revaluing the gold as well. What does that mean? That means if you automatically revalue our gold reserves to market, we automatically have a higher effective capital base that should make us more credit worthy for lack of a better term. Gold now, the US reserves are valued at under $100 an ounce, something like that. Something crazy, right? I'm not sure exactly what it is. But I mean, that's like 1933 levels or something. And of course, gold is over $4 grand an ounce. So why would we continue to value our own gold reserves? Thousands of dollars blow what they're actually worth. I have no idea. That's weird though, right? It is. Yeah, especially when every other metric and we've cost the living adjustments based on the CPI basket. I don't know. So how much, just to go back to your career trajectory in emerging markets debt. Yes, sir. How much chicanery is there in that business? So if you're dealing with emerging markets, so some of those are solid, transparent, well-governed countries and some of them are Nigeria. What's that like? Well, I would say there's two components in the emerging markets trading business. There's the trading thereof in sort of the big money centers like Hong Kong, London, New York, and then there's the domestic stuff that happens. Now, I could say in terms of chicanery, there's a clear ADBC line at the global financial crisis on how we conducted business across the street and all products, pre-GFC, post-GFC. And all I could say is a lot more fun, 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. Really? Job. What was so fun about it? Every day was different. You're on a trading floor, everyone, every day is different. You have a front seat, you have a front seat, and you're participating in global events every day. Mark's moving up, moving down. You're working with a truly diverse bunch of people from all walks of life that are as close probably to meritocracy on trading floors as you could get. And it was very clear what the motivator was. It was making as much money as it could every single day. And there was nowhere to hide from that. So as a young person, it couldn't be a better learning experience because every day at the end of the day, there was a number next to your name and whether it was through your good luck, bad luck, hard work, whatever, the number doesn't lie. And that's the number. It's just a great way to learn and to have to face yourself and improve upon yourself. And trading floors, guys, like PhDs from Princeton to guys that dropped out of college. And we were all kind of in it as a team. It was really fun. And what were the personality traits that allowed people to be successful? Like what's the perfect profile of the trader? You know, it's funny. I found that the best traders, there's investors and there's traders, right? Different. It's a different mindset. The best traders I find were guys I like to think we thought more in two dimensions. So if you thought in three dimensions, you could outsmart yourself way too much. The what ifs and oh, but, and if you're in one dimension, you're just not at the IQ level to function. So the two dimension that kind of took the factors of play, saw what the trend was, took it at face value, didn't overthink it, went with it and wasn't too much, had enough risk appetite, but wasn't too much of a cowboy, I guess would be the perfect trader they saw. The worst... You're describing my dogs. Yes. The worst traders I saw were oftentimes the smartest people. Really? Yeah. Because they just overthink it. You just overthink your way, you overtrade it, you overthink it. You're always looking at the... You're always looking at the oh, but, this and that, and I have all this information, you're either now paralysis and or talking yourself out of a good trade. How did it change after the financial crisis? We were egregiously over-regulated from all sides. Did that make markets safer for retail investors? I don't think so. Yeah. Because the picture you painted over the last hour and a half is not one of impregnable safety. No. Let me just say that. I mean, there's obviously a lot of unintended consequences from the excess regulation, but it just... It's funny, on Wall Street, I think we were actually at the vanguard of hyper-regulation, hyper-monitoring. I mean, they were monitoring every Bloomberg chat, every email, every phone call. Everything was taped. Then they ran algos against it for keywords. You just like way more scrutiny and everything. So you lived in the panopticon before everyone else? Yeah, I did. I think there's also a lot of going back to the global financial crisis, such a semimum in this country in a lot of ways, because it actually... We made this deal with the devil and I'm a beneficiary of the bailout. I worked at a big bank that got bailed out and I'll never deny that, but in doing so, we let the Trojan horse in and we married the government effectively and they came in and they basically wrote our policies. They wrote our policies for us and from HR policies to recruiting policies to all the regulation and the stuff that I saw from a distance in terms of arbitrary finding for violations was kind of gangster-like and I saw a lot of good people sort of thrown on the funeral pyre, sacrificed, just tossed out. This guy was in violation. These guys weren't, but they were on the same Bloomberg chat, so let's give like 10 bodies. Everyone's fired, everyone's careers over. That was a bad time. It was a bad time. And so everyone started trading scared. People tried trading scared and it lost the joy and it lost the... But famously, none of the CEO, the executive level seemed pretty insulated from punishment. Yes. If I were going to give a more sort of generous take on it, the CEOs really didn't have much of a choice in some regard. It was like, look, here's the deal. You could keep your job and keep making $25 million a year or if you agree to this fine for mortgage-backed securities or whatever, live war rigging or whatever it is, this arbitrary number, you could keep your job and you can keep your salary or you can get fired and the next guy will agree to it. So like, and they kept it afloat and they had to be in good stead with the government or the fines and the regulation would just come and come and come. But once you get bailed out, once you ask for the bailout, they own you and that's what happened. It always says what happened. They made the deal. Yeah. And it was like the tobacco companies, right? Like they kept the tobacco companies alive just long enough to keep bleeding them for fees. Like then they figured out there was just, there was money there to take and they just kept coming back. Yeah. And the country did not get healthier. Life expectancy went down and if I can just be honest, I don't think the quality of the cigarettes improved at all. Now I'm serious. If you smoke a sort of pre-settlement Marlboro Red, not that they exist anymore or a current one, it's like it's not even the same product. I was a pre-settlement guy, I quit. Yeah, me too. I'm just saying I've heard that. So no, I don't really think anyone won except for politicians. Right. I don't think there were a lot of lung cancer patients. Yeah. Well, a lot of nice new regulatory buildings were built and I think also one of the great stories that hasn't really been, maybe this was for you, one of the great stories that should be investigated is where did the proceeds from all those post-GSC fines go? Because I saw some stuff in around the time that was kind of staggering as to where it went. Now, obviously it went back into building more of the regulatory bodies, like more SEC regulatory, whatever. But I think some of the money flowed to some very specific political organizations. There's no question about it. It went to the swamp. Meanwhile, the whole pretext for this, the justification for doing this was, I lived here then. I just saw my house that year, so I was a victim of all this too, even though I never participated in it. But I lost my job along with a lot of other people and just because the economy contracted, so people lost their jobs, including those with four children. But the justification was, which I wasn't against, it was like these people are totally reckless. They're completely reckless. What is a mortgage-backed security? What's a derivative? No one outside your world has ever heard of any of that. I thought when I signed up for a mortgage, the bank I signed with held the mortgage. We had no idea they sold the mortgage. Most people didn't know. Again, there's a lot of ignorance, including in my house about this stuff. And so the idea was, this is crazy and we need to rein it in. You've just described the quote, gamification of markets. That doesn't seem like a decrease in recklessness. What actually reminds me something for the part of the previous conversation, which is, people say you never know when you're in a bubble until it's over. And that's entirely incorrect. I mean, I've been through a bunch and we all know. We all say, oh yeah, we just didn't know when it was going to end. Like you mean example? People were talking about the bubble in 05. No, if you fought it in 05, you were out of a job pretty quickly. It went on for a long time. I could tell you the reason I want to bring it up is again, the parallels to today is, you know, so in 07, I'd been on trading bonds for whatever, 13, 14 years. So not the smartest guy, not the most quantitative guy, but been around enough to trade enough stuff to understand how stuff works. And all this stuff they're coming through with like CDO, squared, it's CLO, and like synthetic this and that. And like, I didn't really understand it. I didn't have to trade it, but like, I didn't really understand it. I don't really want to get into it because I didn't need to, but it's just thinking if I'm already in the whatever percent of financial experts just by nature of where I sit every day and it doesn't smell right to me, something's not right. And you trade Nigerian debt. Right. So yeah, I'm taking credit derivatives on Bulgarian stuff. So like, yeah, yes, but if you're taking derivatives on Bulgaria, but you're like, this is too much for me. It's just like how many acronyms? Also, I'm just, I'm substantially averse to any acronym. And then when you take the acronym and square it, you know, you're in trouble. But then this latest go around the last couple of months with all this circular financing and hype with all the AI companies. And every day, somebody's buying chips from somebody who's going to lend the money to buy the chips to invest in the scaler who's going to do this like for every day, for companies, or you're like, I suppose I could figure that out if I sat down and really tried to, but it gives me a headache just even thinking about it. And clearly it smacks of some kind of, it smacks of desperation or something. That's just my gut is just having, you know, the sniff haven't been around a long time. It's like, dude, if it doesn't smell right, it's just, it doesn't smell. Don't put it in your mouth. Right. Right. So you remember thinking like, what about the tech bubble in 99, 2000? Did you think? Oh, I got blown out personal training trying to short that like the fall of 99 on the bottom of other people. Yeah. I mean, everybody, yeah, I've hilarious. I was with my wife in March of 2000 at a dinner, at a lunch with a guy who was chairman of a major, major broker dealer, famous, famous broker dealer. And where she's 30 at the time, never invested in anything. And we're sitting next to him. He's like, so what do you, she's got, oh, I've been day trading stocks. He's like, explain that. What do you mean you've been day trading? She's like, oh yeah, I just buy whatever IPOs. I just, if it comes out, I buy it. Do you remember that in 2000, all the IPOs, everything just went up. Like she's like, yeah, I just, I just buy it and then I sell it. It's awesome. And I saw, I saw his eyes just go like this. And then that was like, that was like the, that was like the Joe Kennedy shoe shine moment. I mean, it was literally like February or something. I think it was probably within, probably two days. No, it's when your housekeeper is investing in condos in Clark County, Nevada, that you were like, I think maybe this is overheated. Just a little bit. No, for real. Or you get your Uber, Uber divers like trade crypto on one. Completely. Yeah. Whenever people are going hard on like Cape Coral, Florida real estate, who don't know anything about real estate, not against Cape Coral, but you know what I mean. And those were the hardest hit zip codes. Yeah. So you think it's pretty obvious is what you're saying. I just, it's, it feel, there are sort of like the Russian, just sort of like the letter that they wrote about the Hunter Biden laptop. It has all the hallmarks of Russian disinformation. And it's all hallmarks of a late stage rally. Let's say that. Yeah. Well, you're very diplomatic. I have to say though, just like with the baseline fact that you spent your life trading emerging markets debt, I think if you're uncomfortable with something, it's fair for the rest of us to be uncomfortable with it. Yeah. Last question. You've been through all these bubbles and bursts and debt crises and bailouts and at the, at the end of every story is the United States or US aligned institutions like the IMF coming in and kind of saving the day. That's a thread that runs through all these. Yeah. I've been simple term, sure. I only deal in simple terms Coleman. But what happens if that happens in the United States? Who bails the bailer? Nobody. Okay. So then what happens? I don't, I don't think, I hope you bought that, that agricultural land in Brazil at that point. So then what happens? I don't think we, I don't think we get to that point anytime soon. But just theoretically. As we've mentioned before, there is no, there's no alternative right now. People still, as bad as it could get in the States, we're still the cleanest dirty shirt in the pile for the time being. We still have this free and open markets where capital flows and gets treated well. There's time, there's still time to course correct. I'm not willing to go to who bails out, who bails out the bailer. I just, I'm not willing to go there. I'm not willing to go there. We'll be all right. We're still, still the United States of America and we've got a lot. I mean, this administration's got a lot of mental firepower and a lot of experience and we still got time. Coleman Church ladies and gentlemen, thank you so much.