Is This the Endgame? with Itay Vinik

Itay Vinik is the Co-Founder & Chief Investment Officer at Equi, an alternative investment platform that brings investment strategies to accredited investors. Is this the endgame? This is the central theme of today's episode. Further, we dive into Itay's outlook on 2023 and beyond. This episode is also very chart heavy. What are the charts telling us? ------ OPOLIS | Sign Up to Get 1000 $WORK and 1000 $BANK https://bankless.cc/Opolis ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/?utm_source=banklessshowsyt ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave NEXO | CRYPTO FINANCIAL HUB https://bankless.cc/Nexo LEDGER | NANO HARDWARE WALLETS https://bankless.cc/Ledger ️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/Fuelpod ----- Timestamps: 0:00 Intro 7:55 How Itay Got Here 8:50 Itay's Crypto Experience 10:20 Inputs on Terra/LUNA 12:42 Itay's Sentiment 14:00 History of the Macro Environment 17:42 Global Central Bank Policy Rate 22:30 U. S. Fed Balance Sheet 26:00 Everything That Broke 30:21 Nasdaq-100 Index & Fed Balance Sheet 33:00 Pandemic Support Programs 34:00 U. S. Personal Savings Rate 35:00 U. S. M2 36:40 Where Are We Now? 39:55 Inflation 42:25 Retail Sales & Non-Farm Payrolls 44:40 Housing 47:30 2023 54:37 The Last Dance? 1:04:00 Possible Outcomes 1:13:30 Demographics 1:18:00 Bull Market Mid-2023 1:19:00 The Dollar 1:22:40 Itay's Advice & Closing 1:25:40 Disclaimers ------ Resources: Itay Vinik https://www.linkedin.com/in/itayvinik/ Equi https://www.equi.com/ Devil Take the Hindmost: A History of Financial Speculation https://www.goodreads.com/en/book/show/91360. Devil_Take_the_Hindmost ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:09Ryan Sean Adams?

  Hey Bankless Nation. The title for today's episode, are we at the endgame now? David and I are talking about macro. Got to pop our heads up from everything that's going on in SBF FTX. And look at the wider world here, because I think there are some looming macro questions that face us as we are ending 2022 and going into 2023. We have the perfect guest to talk about them. But the big questions in my mind that I asked this macro analyst, a guest I think has some fantastic perspectives on this. How did we get here? Right? What's the history of how we got here? Where are we now? Pinpoint us on the map. When do we pivot? When is this Fed pivot going to happen? Was Powell's next move?

• 0:52Ryan Sean Adams?

  And lastly, is this the end? I don't mean the end of all human civilization, David. I'm talking about like

• 0:59David Hoffman?

  Oh, thank God.

• 0:59Ryan Sean Adams?

  The end, the end of this credit debt cycle that we seem to be in. Ray Dalio talks about this, right? You only get so many spins at this wheel before everything falls apart. So who do we have on the episode and why is this important?

• 1:16David Hoffman?

  Yeah, we have a macro commentator, Itay, who has come in with a bunch of charts. So if you are listening to the podcast, you might actually want to go over to the YouTube because this will be a very chart-heavy episode, which we don't get very often here on the show at Bankless. But when we do, everyone loves it, including myself. And so Itay has just a long history of charts, as in like it goes back, the first part of the show is going to go back many decades. But then as we progress throughout the show, we're going to get more and more up to modern times and be able to actually hopefully try to project what happens next and are we at the end of the road? And Ryan, this is the first week in a long time where we have zero SBF-related content

• 1:59David Hoffman?

  and I am just absolutely here for it.

• 2:02Ryan Sean Adams?

  I can't wait till we no longer have to say we don't have SBF content this week. That'll be the next step of the phase. But yes, talking about macro today and it's refreshing to get back to some of these base essentials. David, you know what's also refreshing is talking about 2023 and where your health benefits are going to come from.

• 2:21David Hoffman?

  Yeah.

• 2:22Ryan Sean Adams?

  Yeah, I mean, it's a time for me for like, kind of planning. I always do that at the end of the year. I'm like, okay, what should I get in place for next year? And health benefits, one of those things that are very important for a lot of people who are in Web 3 and crypto, because they're contractors, they're maybe working for DAOs. Tell them a little bit about our friends and sponsors over at Opus.

• 2:43David Hoffman?

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• 3:27David Hoffman?

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• 3:55Ryan Sean Adams?

  Do the fun stuff in Web 3, do the adult stuff with Opus. That I think is what you can unlock here. All right, guys, we are going to be right back with our episode, talking to Eti, Vinik, all about macro. Is this the end? But before we do, we want to thank the sponsors that made this episode possible.

• 4:14David Hoffman?

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• 5:42David Hoffman?

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• 6:49Ryan Sean Adams?

  Bankless Nation, are we at the endgame now? How did we get here? Where are we now? When do we pivot? What's going to happen with the Fed? We have the perfect guests to talk about these subjects. Itay Vinik is the co-founder and chief investment officer at Equi, which is an alternative investment platform. He knows a ton about the questions we are asking. In fact, we had a conversation, it's probably what, six weeks ago or so, Itay? Where I was like, okay, I was like, you know this space very well. You have the charts and data to kind of tell a story. Could you come help the crypto community and the bankless community make sense of what's happening? What got us here and where we are now?

• 7:32Ryan Sean Adams?

  So, Itay, it's great to have you on Bankless and thanks in advance for your help in understanding these complicated subjects.

• 7:41Speaker 02

  Yeah, no, no, no problem. And especially because, you know, you do have to have a pretty good understanding of history and macro history in order to really understand how the current environment is being influenced by some of these events that even took place seven years ago.

• 7:57Ryan Sean Adams?

  Can I ask you before we get into the questions of like, how did you learn this stuff? Like, how do you get up to speed and get educated on understanding macro? It just seems like there are so many different topics. What's your story on how you got here?

• 8:14Speaker 02

  Yeah, it's a great, it's a great question. I mean, I started my career at UBS being an analyst and really passionate about financial markets, reading everything that I could and slowly putting the pieces together. After that, I started a hedge fund to trade at volatility. So it was pretty important to understand how some of these events can influence the volatility regimes in the market. So really, it's 15 years of experience of just putting it together. And it just, you know, it adds up and knowledge gets compounded. And, you know, when you understand these things and you connect the dots correctly, it could be very rewarding.

• 8:51Ryan Sean Adams?

  So, Itay, I know you have kind of a foot in crypto, but also a foot out, like you're not 100% all in crypto, like you're also looking at other alternative investments and macro in general. What's your sense of like crypto? And what's kind of your experience in it? Give the bankless community some idea there.

• 9:09Speaker 02

  Yeah, I mean, I've dabbled in crypto for a few years now.

• 9:15Speaker 02

  Really, for our firm, what we've done prior was crypto lending, but now I guess it has a little bit of a bad, of a bad rep plus DeFi and Delta Neutral DeFi, really. So I figured that the arbitrage opportunities in crypto were quite a bit foretaking, you know, they're rewarding you enough to not take direct price risk. However, we exited crypto lending in May after Terra Luna, even though we had no exposure to Terra Luna. I was just worried about systemic risk generally. And I was thinking, what kind of firm has too much leverage that we don't know about? So even though we had exposure to BlockFi and Gemini, we actually exited both in May.

• 9:53Ryan Sean Adams?

  Wow. By the way, can you like DM me next time you get that spidey sense? That could be good to know.

• 9:59Speaker 02

  Yeah, our exposure wasn't huge, but we were using BlockFi as kind of a cash substitute. But then once Terra Luna happened, you know, the the the C5 type of risk was high. But also the F5 risk was high, as we've seen with Terra Luna and You know, I was just worried that players in the space, even the bigger companies are just not managing risk correctly. And we exited crypto entirely in May as a result.

• 10:22David Hoffman?

  Can you just maybe elaborate on what were the inputs to go into that decision? Was it like just your spidey senses? Was it just experiencing contagion in other markets? Because I feel like, I mean, I don't have intrinsic details into like the whole state of the entire crypto industry and how we reacted to Terra Luna. But I think from my limited scope of what I can see, like most people were turning either with willful blindness, but no one wanted to believe that there was so much contagion. So like, can you talk about like what your experiences were and why you decided to make that move?

• 10:54Ryan Sean Adams?

  And I think the thing too, David, I don't know if this resonates with you, but like is some people saw after Luna like that there would be fallout and contagion. But I feel like the FTX thing caught a lot of people by surprise. Like I thought all the damage had sort of started to work its way through the system. And then there was this other like secondary, it was like a one, two combo punch. And the second punch just hit us right in the gut.

• 11:19Speaker 02

  Yeah. So to me, first off, I would make it clear that even though we did crypto lending, we never did algorithmic stable coins just because we were worried that they're not really backed by anything, but the good faith of whatever VC is backing that particular project. And I was thinking at the time that there's a lot more centralized risk in the crypto space than what a lot of people believe. Because when you're looking at all these different projects that are supposedly decentralized, they're not really decentralized. Because there are backers across and it's really fueled or was fueled by VC dollars. So as a result, when we saw what happened to Terra Luna, the decision was really, this is, this is kind of a new space.

• 12:05Speaker 02

  There is no central bank, which is kind of the point, right? But there is no central bank. So we don't know who has too much leverage. We don't know what kind of asset toxic ratios are out there into different firms. And if there's a true shock event and a real stress test, it's kind of impossible to know who's the good player and who's the bad player. So from an abundance of caution to our investors, we just decided to exit the space entirely, focus on some of the other assets that we trade and wait and see how it kind of plays out.

• 12:41David Hoffman?

  Well, well played, sir. What are the other questions I have before we get into the charts? One of the charts that you have is about consumer sentiment, which is related to a number of things that we'll talk about. But as we go through this charts and as we kind of place ourselves in the macro context, Itay, what's your sentiment? Are you scared? Are you optimistic? Like overall, what's your vibe?

• 13:03Speaker 02

  Yeah, I try not to, I try not to mix emotions with investing too much, generally speaking. So when I look at the environment as a whole, our goal is to protect capital during periods of volatility, which we've done fairly well. I think we've outperformed S and P by 16 or so percent with maybe a fraction of the volatility. But really, it's, what is the market going to do? Is the market going to move in one specific way? Is diversification going to work? Because what we've seen correlation has picked up with all asset classes, right? So, you know, bonds, crypto, gold, S and P have all been one trade. So diversification has not worked.

• 13:46Speaker 02

  So we add to hedging when that happens. So it's really not so much about sentiment, but more about understanding the moves and reacting to them in a way that our goal is to make money regardless, right?

• 14:01David Hoffman?

  Well, I think without further ado, let's go ahead and get into some of the charts because we all love charts here on Bankless. Itay, you want to guide us through some of the charts? What do you have up first?

• 14:10Speaker 02

  Yeah, so first off, I thought we would start with a little bit of a history introduction to the general macro environment. And the first question was, how did we get here? And I divided it into a few sections, really going back to World War II and ending in the current era, and it is all related. So, you know, the broader idea is that we had the Brentwood system that many of you probably know what it was. In 1944, the winners of World War II really got together and decided to create a new monetary system for the world in which the US dollar was king, and it was the central currency.

• 14:55Speaker 02

  All the other currencies were pegged to the US dollar, and then the US dollar had the ability to convert into gold.

• 15:02Speaker 02

  However, in the 1960s and 70s, early 70s, the US was abusing the system by running a large deficit for the Vietnam War and other social programs. And other nations started asking for their gold back. And under those terms of that prior arrangement, the US had to deliver the gold. They didn't want to do so because they're running out of it. So in 1971, Nixon just dropped us out of the gold standard, and the modern era began. So the era we all know, the fiat era, era of higher inflation, that really all starts at that time in 1971.

• 15:36Speaker 02

  The 1970s were a period of stagflation. So we've heard that term this year as well, and I think it's very relevant. Up until that point, it was pretty much the conventional wisdom that high inflation can exist at the same time of a recession, right? Because a recession has declining consumer demand and things of that sort. So it tempers inflation. But we've seen both inflation and a recession hitting us simultaneously in the 70s. And the main reason for that is most likely supply-side shocks, in which even though demand is dropping, supply is contracting even further, and that's causing inflation at the same time. So 1970s had a lot of oil price shocks.

• 16:18Speaker 02

  And we've seen some similar things this last couple of years post-COVID. We've had a pretty big supply squeeze, causing a lot of inflation. So some, you know, some people have brought back the stagflation era.

• 16:32Speaker 02

  So, once that was over, we really got the Volcker era. Early 1980s, Paul Volcker decided he's going to do whatever it takes to stop inflation. That was really the first time the Fed stepped in to really combat inflation in a very aggressive manner. He raised the federal fund rates to the double digits, which we can't even imagine today what that would look like, right?

• 16:55Speaker 02

  So, he really was able to crush inflation, but it did cost a pretty heavy recession in the early 1980s. Following that, we had a pretty, pretty good decade up until 1987. The famous Black Monday crash takes place and Alan Greenspan really introduces the idea of the Fed. But the Fed reduces rates for the first time in response to the stock market and not the real economy. Which is really interesting. The real economy didn't even go through a recession in 1987, and we've had the biggest drop since 1929. So, the Fed didn't even wait for the real economy to be hit. It reacted to the market. That was really the defining moment that started the modern era, in my opinion, for this type of Fed interventions.

• 17:42Speaker 02

  We can look at this chart, actually, as we, as we continue to talk about the history. Because what's interesting is that every single time that the Fed reacts to one of these events, the trough is lower and then the high is lower as well.

• 17:57Ryan Sean Adams?

  And, and Itay, I want to, could you describe what we're looking at from a chart perspective? For those who don't see it on YouTube. So, this is Global Central Bank Policy Rates. So, that thing you were just talking about, that Volcker raised and Greenspan kind of dropped the Fed Fund Rates, which is basically the central bank policy rate. It's kind of the interest rate undergirding all other interest rates. And I think what we see on the chart is from maybe 1970 all the way till now. This the various central bank policy rates, they all kind of follow this blue line, which is the US. So everybody is following kind of the US monetary policy. But then we also have the ECB, that's Europe. We have England, Bank of England.

• 18:43Ryan Sean Adams?

  We have Canada, the Bank of Canada, Bank of Japan. So we have all of the major Western, I guess, central bank policy rates here in the chart. Is there anything else you'd point out in this chart?

• 18:54Speaker 02

  Uh, no, that's a, that's a very good description. So what I would say is that the interesting part, since those, that, that period of the early 1980s, every time that the Fed reacts with lower interest rates, it's from a lower and lower place. So in the 90s were interesting because we add one more thing to this mix. In 1997, a very famous hedge fund that was started by Nobel Prize winners, actually the ones that discovered the Black and Scholes Options Model blew up. It was called LTCM, Long Term Capital Management. And that was the first time when the Fed literally bailed out a company in order to save the market.

• 19:34Ryan Sean Adams?

  Oh, really? So when, when was this? So this was earlier than 2008.

• 19:37Speaker 02

  This is 1997. This is 1997. Yeah.

• 19:40Ryan Sean Adams?

  So what was the rationale then? Too big to fail still?

• 19:43Speaker 02

  Yeah. So they, they basically put bets that exceeded $1 trillion because there were 100 to one leverage. And they, they thought that they know how to hedge all the risk because they literally invented the options model.

• 19:55Ryan Sean Adams?

  God, that sounds so familiar. We've seen some of that in crypto.

• 20:01Speaker 02

  So, you know, that, that, that has happened many times before, right? There were, they were, it was called the Midas formula, like we were able to cancel out risk. We can't lose. So that happened in 1997. The systemic risk was so great that they, they bailed them out in 1997. And there was a big criticism of that, saying that, you know, it creates a lot of moral hazard. What prevents the bigger Wall Street banks from doing the same thing? Knowing that the Fed had bailed out a much smaller hedge fund?

• 20:29Speaker 02

  And of course, we all know that 11 years later, that's exactly what happened.

• 20:35Ryan Sean Adams?

  So this is what we're seeing on the chart here is just a kind of each each cycle. I guess the highs of the interest rate are

• 20:44Speaker 02

  Lower.

• 20:45Ryan Sean Adams?

  Are lower and the lows are also lower. And it kind of looks like it drops down to like this bottom line, which is which is the floor zero. And I don't even know, didn't some of these banks go into kind of the negative territory? I don't even know if we could see that on the

• 21:00Speaker 02

  Yeah, the ECB in Japan did, you see it right there. You know, Japan still has somewhat of a, you know, now maybe not, but they're they're still very close to zero. So they're not at zero for some things, and they also have other very extreme policies.

• 21:13Ryan Sean Adams?

  We're in the basement here, like the graph is kind of breaking.

• 21:16Speaker 02

  Yeah, the big takeaway here is that after the global financial crisis, we've we've hit the zero bound for the first time. And what do you do when you hit the zero bound and nothing works? You have to go to something very unorthodox, which was QE, quantitative easing, which is a very fancy way of saying printing out a bunch of money. So not only were at the zero bound, you started printing out a lot of money.

• 21:39David Hoffman?

  Which which printing out a lot of money, that's as that's effectively going negative, right? Like if you can't go negative on the interest rates, you go negative by printing money. It's kind of how we did go below that floor, right?

• 21:51Speaker 02

  In a way, yeah, in a way. And and that was a really interesting and also very controversial experience experiment. Ben Bernanke, I think in 2012 was saying that he believed it was justified in order to trigger the wealth effect. The idea that if people feel wealthier because the stock market is rising, then they're gonna, there's gonna be more consumer spending. And then the real economy will go into a virtuous cycle. Now, that's never been proven to actually work, by the way. That was the theory.

• 22:19David Hoffman?

  Yeah, that seems kind of crazy, just having you explain to me like that was the theory? That seems nuts.

• 22:25Speaker 02

  That was the theory.

• 22:28Ryan Sean Adams?

  Yeah, show us some other charts here. So what's the effect of all of this?

• 22:32Speaker 02

  So this is really the this is really the Fed's balance sheet going back to nineteen eighty five. You can see it was pretty not not a big deal, just slowly grinding up, but up until two thousand eight, then the biggest experiment starts. And what was interesting is every time they stopped, the economy went into a crisis. The economy became addicted to liquidity. When QE one was halted, we got the um flash crash in two twenty ten, Q two two was halted, we got the European debt crisis. Um, and then et cetera, et cetera, to the point that when COVID happened, they went just crazy. They were like, okay, we're just going to double the balance sheet in a year.

• 23:07Ryan Sean Adams?

  And Okay, so a a couple of questions about this. So on the chart, for those that can't see, we're starting around like nineteen ninety five. And we're starting at what? Does this look like um half a uh you know, five hundred billion dollars or something like that?

• 23:23Speaker 02

  These are trillions, actually.

• 23:25Ryan Sean Adams?

  These are trillions. Okay, so is this one trillion at the beginning nineteen ninety nine, something like that?

• 23:30Speaker 02

  Even even less, that probably three, four hundred billion, yeah.

• 23:33Ryan Sean Adams?

  Uh, okay, so um and then now we are like twenty twenty two, we are, I don't know what, eight eight trillion or so?

• 23:42Speaker 02

  Eight and a half, nine trillion, something something of that sort.

• 23:45Ryan Sean Adams?

  And you could see this is this is ascending in a very kind of like policy driven way where you get like these a thing happens and then you're going to spike up. And then another thing happens. It's not it's not doesn't look very organic, like the charts I see in kind of crypto, you know, trading charts are like up, down. This is like a thing happens and then boom, money spikes up. But for people who are like confused about terms like balance sheet, right? This is effectively how much the Central Bank of the United States owes. I guess, right? This is their liabilities, they owe people. And like, like, when we say oh, like, what does that mean? Who do they who do they owe? Who does the US Central Bank owe eight uh trillion dollars to?

• 24:25Speaker 02

  So it's actually not that they owe, it's actually kind of the other way around. It's the US Treasury that owes the Fed money. So what what happens is the Fed creates money out of thin air. And then they use that to buy US treasuries and literally giving money to the US government. So those treasuries that the Fed holds on their balance sheet are assets. It's the US Treasury that has that as a liability, but it was assets that were literally created out of thin air because they have the ability to press a button, create money, use that money to just buy treasuries.

• 24:56David Hoffman?

  So it was the treasury, it was the bond market, the bond, the price of bonds that were being propped up by all of this QE.

• 25:03Speaker 02

  That is correct. The interest, it actually works in two different ways. One way is the US government gets a bunch more money that they can spend in all their social programs and social security and all the other things they have a deficit at because they obviously tax revenue is not enough to cover that. And then the second thing is while buying long-term treasuries, they're able to suppress long-term interest rates because bond interest rates and price are inversely correlated.

• 25:31Ryan Sean Adams?

  Okay, so we got a massively expanding balance sheet and this is all owed.

• 25:37David Hoffman?

  It's important to know that any time that the, I think the important point that we want to draw out of this slide that Eta brought up is that any time that they don't do QE, something in the world breaks. And so the politicians, their hands just feel forced because, you know, no one wants to be in charge of things that break. And so they try and not break it and so they do more QE. Okay, Eta, can you walk us through like, just really quickly, like all the things that broke? Because you talked about like the European markets broke. So the parts of the economy that broke weren't, it wasn't even the United States economy. It was like parts, small pockets of the global economy that would throw a fit, right?

• 26:15Speaker 02

  Yes, and usually that happens because the dollar appreciates quite a bit when, when we go into one of these dollar drain periods. And the dollar index increasing also correlates with, with, with problems around the world. But just generally speaking, yeah, we had the 2010 flash crash, the first hold of QE. We had the European debt crisis, 2011, the second time that happened. When QE3 was halted, that was in 2018, was a very volatile year. I know into December, I remember Mnuchin was calling the heads of all the banks, trying what's going on. And then the Fed resumed QE. It actually did some repo activity before COVID even happened to put liquidity back.

• 26:55Speaker 02

  And then when COVID started, they had the perfect excuse to flood a ton of liquidity again into the system. And this is exactly what makes 2022 so challenging is that now for the first time since the 1980s, the Fed has to deal with actual inflation. So their hands are kind of tied. They don't have the ability to flood liquidity again the way they were able to do so since the global financial crisis. And that's really the core of the problem.

• 27:18David Hoffman?

  You said that when COVID hit, they had the perfect excuse to do more QE. The way that you phrase it makes it seem like the Fed is like, dude, when can, how can we do more QE? Like, how can we get this done? Like, why did you say it like that?

• 27:34Speaker 02

  Because it's been the easy solution, right? Up until, up until 2020 and 2021, really.

• 27:42Speaker 02

  There was, I'll go back a little bit. In 2008, 2009, when this was first happening, crypto wasn't really a thing and everybody was buying gold. And then gold had this huge bubble into 2011 and then kind of a crash. And the reasoning behind that was all this money printing is going to cause a ton of inflation. Now guess what? It didn't happen. There was no inflation. A whole decade was done with QE continuously happening. Asset prices were booming. We're in this Goldilocks environment. No inflation. Then we get COVID, something changes and we get inflation. So the Fed didn't even realize that QE was a problem because there were no, you know, there were no real world impact to it, really. Inflation was just fine.

• 28:27Ryan Sean Adams?

  Can we talk about that, though? No real world impact that they could measure in the dials that they were measuring. I mean, if you could talk about like some of the recipients of this, maybe, I know you have a slide in here that talks about, like, shows stock market returns, right? And this is interesting because all of this money printing, all of this QE was good for a number of people. People in the US, people worldwide, particularly if you held assets, this could be stocks, this could be, you know, risk on assets, it could be property, it could be houses. And maybe we'll get you to describe, you know, the chart here, but you kind of said this word of like, it seemed to have no bad effects.

• 29:10Ryan Sean Adams?

  I mean, it seemed to have some good effects, which is asset price increase. And maybe talk about that, but like, also, there were some bad effects, right? Is this a story about wealth inequality as well? And some of the kind of societal fray, fraying and rippling that that happens when you're just like printing money?

• 29:27Speaker 02

  It definitely, it definitely is. But however, there was no bad effect that the Fed could measure. So I will rephrase that as, as, as far as that goes. As far as they were concerned, banks were getting recapitalized, asset prices were doing well. And there was no real CPI inflation. Having said that, I think that it's a sort of hidden tax because the QE period during the Goldilocks, when CPI inflation was not high, really benefited asset prices in a way that if you, if you're a wage earner, you're not, your wage is not increasing nearly enough as the value of assets. And most wealthy own assets, which means that the wealthy just got wealthier.

• 30:10Speaker 02

  And the wealth gap did increase during QE, just as you mentioned, Ryan.

• 30:15Speaker 02

  But having said that, we still didn't have real CPI inflation. It was asset price inflation. And that's really what QE did initially.

• 30:22Ryan Sean Adams?

  So what chart are we looking at here? I mean, this looks like an absolute run up on this, on this blue line here. It goes all the way to 1995, all the way to kind of present times. And I think this is tracking like growth stocks. This would be in the NASDAQ 100. And that's the blue line. And then there's a red line that kind of like, it looks like it's pretty correlated, tightly correlated with it. Maybe you could describe the relationship and that is the Fed balance sheet. What are we looking at here?

• 30:48Speaker 02

  Yeah, so that's back to that, you know, eight, eight some trillion dollar number of US treasuries. So it's really a measure of how much liquidity is beginning to push into the market in a way of. Money creation with quantitative easing. And what you can see, the response to COVID was so massive because the world was locked up. And they thought that they needed to offset all that organic transactions that take place with just money printing. So the initial reaction to COVID was risk assets just went on a tear. And you guys would know it too, because crypto was one of the ones that was most impacted by 2020 money printing. And then really you can see that periods where money printing is contracting, doesn't really have great returns for stock price.

• 31:33Speaker 02

  For asset prices like risk assets like the NASDAQ. And in 2022, even such a small decline in the balance sheets has created a lot of pain. So, you know, would I say that markets are markets are somewhat addicted to this liquidity? I am definitely in the opinion that they are because something very dramatic changed post the global financial crisis. When we got to that zero bound, markets became a lot more dependent on Fed liquidity. And a lot less dependent on actual fundamentals.

• 32:03David Hoffman?

  All right, so the market is like. Using the words addicted and dependent. And I'm just got this visual of like the economy in some sort of hospital bed on some IV drip. And every time the IV drip gets yoinked, the patient just dies.

• 32:18Speaker 02

  Yeah, I mean.

• 32:20Speaker 02

  Unfortunately, when you get more and more debt in the system, that that's kind of how it is. Because servicing that debt at some, up until some point, debt is very positive, right? You want to start a business, you're going to borrow some money and then you're going to do some sales. And then your business is going to grow because of the debt you took. But at some point, you get so much debt that it's becoming problematic. You have to, yeah, it starts, starts binding you back. You need to, you know, it's really hurting your growth potential. So the economy, in my opinion, has passed that stage, which is creating a lot of drag on growth, right? And really, the moment was the global financial crisis.

• 32:59Ryan Sean Adams?

  So let's just finish out this how did we get here story and let's zip through the next three charts and let that kind of sum it up. So the next one is this is the COVID stimulus programs. And so this is basically just showing the massive fiscal stimulus that was injected into the economies. Anything you want to say on this?

• 33:21Speaker 02

  That was, yeah. So, you know, people ask, so how come in COVID we got real inflation? Why did that happen? We've been doing money printing since oh eight oh nine. It's true. The difference is that 2020 was really the first global experiment, in my opinion, with helicopter money. Call it as you want, but people just had money dropped into them, on them, whether it was through stimulus checks, whether it was through unemployment benefits. And the economy was closed, so they didn't have the ability to really spend it. And that was different because we had money printing and we have fiscal stimulus at the same time, monetary and fiscal combined, and that created real world inflation for the first time.

• 33:58Ryan Sean Adams?

  Got it. And then this other piece, the personal savings rate, you see kind of the same effect of, I guess, stimulus and the post stimulus. And this looks like, you know?

• 34:07Speaker 02

  You can literally see it.

• 34:08Ryan Sean Adams?

  Yeah. So what is this?

• 34:09Speaker 02

  This is the first stimulus check. This is the second. And then in red, you can see the credit card debt outstanding for the average consumer in the United States. So what we see now is that the savings rate is already lower than what it was pre COVID, and credit card debt is in the new all time high. So if we do fall into a recession, the consumer is not in good shape right now. It's actually, you can make the argument that they're actually worse off now than they were prior to getting all that stimulus.

• 34:36David Hoffman?

  Do you think that the creation of the stimulus and the creation of the money created that outcome?

• 34:43Speaker 02

  I think it's a mix of that, plus some COVID closures and other things like that where the economy was was closed up. But you can make the argument that all this was sort of for nothing, because now the consumer is in a worse off place, and we are dealing with a big inflationary problem, and we're also dealing with a huge debt problem.

• 35:00Ryan Sean Adams?

  Okay, all right. So how did we get here? We saw how we got here, right? A whole bunch of money printing, you kind of guided us. It's really kind of that simple, like we printed a whole lot of money for a whole lot of reasons. This is M2 supply that we're looking at. Is there anything you want to say about this? And by the way, what is M2? That is a measure of money. Is that savings accounts as well as base money?

• 35:23Speaker 02

  Yeah, it's a broader, it's a broader definition of money supply. M1 is the, just the Just the actual fiat money in circulation. This is a broader definition, including accounts. And it's just staggering, right? There was a 40% increase in 2020 and 2021 in just money in circulation.

• 35:40Ryan Sean Adams?

  The total supply of money. It'd be like, I mean, for people in crypto, right? It's like, let's say Bitcoin next year. You remember that 21 million hard cap thing? Well, for one year, we're just going to increase the total supply of Bitcoin by, say, another eight million, you know? How about we round it up? 30 million Bitcoin. We'll just do it one time, 40% increase one year. What does that do? To like the Bitcoin, like, well, probably it's a lot more drastic because it's a much more honest market than kind of this market is because people would just get out of Bitcoin. Prices would drop, like all sorts of chaos would ensue. Well, that's effectively what we did here is just a token issuance of USD coin by 40%. Boom, hit you with that.

• 36:24Ryan Sean Adams?

  And now we're seeing all of the after effects of this. And so what are the after effects of? How did we get here? It feels like, you know, where is here is kind of the next question. But what we have is we have is inflation, both CPI inflation, asset price inflation, rampant wealth inequality that spilled over into our politics. And it's starting to fray the structure of society. And I think the big question now from a macro perspective is, all right, where are we now on this map? Right? So take us there. Yeah, give us the punchline of like December 2022 going into 2023.

• 37:06Speaker 02

  So the punchline is this, in my opinion, the Fed has realized that they've made a giant mistake. They've realized that probably late 2021. And they are trying to reverse that mistake. So they are doing a few things to do so. They're doing the most aggressive interest rate increases since the 1980s, right? We've raised interest rates 75 basis points now. I don't know how many meetings in a row. We're approaching very restrictive monetary policy. Financial conditions have deteriorated. But more so, one of the things that Slus talked about, they're doing money printing in reverse. So. They are destroying, actively destroying around $100 billion of USD every single month

• 37:48Speaker 02

  in order to literally reduce the amount of USD circulation. So they're doing the exact opposite.

• 37:53Ryan Sean Adams?

  For crypto people, they're burning. This is a burn mechanism like EIP 1559 for the Fed, though.

• 37:59David Hoffman?

  Where are they getting that money?

• 38:02Speaker 02

  So what they're doing is, as they've printed the money, if they purchased treasuries, now they're doing the opposite. As these treasuries mature, the US Treasury is sending them back their principal and the interest. And then they just click the delete button and they just take that money out of circulation.

• 38:15Ryan Sean Adams?

  Token burn, maybe?

• 38:17David Hoffman?

  Okay, so who, wait, so who, the government has less money now? Who has less money?

• 38:23Ryan Sean Adams?

  It's total supply, right?

• 38:24Speaker 02

  Yeah, it's just the total supply. So the total supply of USD is dropping.

• 38:29David Hoffman?

  Okay, alright.

• 38:30Ryan Sean Adams?

  Okay, and what you said, they're trying to undo their mistake. You mean like, sort of the mistaken Powell's regime, right? You're not talking about like, all the way back to kind of Nixon era, like, that mistake that happened in the 1970s and going on fiat in the first place? That's like, that ship has already sailed.

• 38:45Speaker 02

  That's, I don't, I don't think anybody in the Fed is in, is of that opinion.

• 38:49Ryan Sean Adams?

  Okay.

• 38:52Speaker 02

  You know, I do, I do think that they are worried. So, you know, it's, it's a very difficult place to be. They're really between a rock and a hard place because we're sitting on a huge debt burden. I think it's around 130% debt to GDP and that's only with, you know, without counting for other types of liabilities than it could, or, or the total of that. This is just government debt. And the problem is, is that you cannot have this massive increase in interest rates while you have this much debt because you could hypothetically crush, crush growth. And we're already seeing real GDP estimates slowing down quite a bit into next year. So that basically says that next year is going to be very challenging. And the biggest mystery is, so I'm going to skip this,

• 39:37Speaker 02

  is how, how inflation is going to end up? Because inflation right now is just tying the Fed's hands in a way that they can't respond to the events the way they did before. They can't just go in and turn money printer again. They just can't do it because inflation is too high. So what happens with inflation is really what's going to determine how 2023 is going to look like.

• 39:56Ryan Sean Adams?

  Are, isn't inflation taming now? That's kind of like what we're seeing.

• 40:02David Hoffman?

  Well, tell us, what do you think?

• 40:05Speaker 02

  Yeah, so next week, we're gonna get another CPI print. November's print was a little bit lower than estimate, but it was still in the sevens, right? The, you know, one print doesn't mean that inflation is tamed. And yeah, the market is highly driven by this. The S and P 500.

• 40:21David Hoffman?

  When we say it's in the sevens, that's if you take like the last 12 months, right?

• 40:26Speaker 02

  That's right.

• 40:26David Hoffman?

  If you take the current month and then you like project it forward and you annualize it forward, it's actually at a much lower rate. Aren't we talking like, you know, two to 4% range, something like this?

• 40:38Speaker 02

  But that has a very high base effect to it because you're taking the current level of inflation, which still really hinders consumer spending, especially if we go into a recession, we get some layoffs and things like that. To me, it's not, it's not about the headline number that's as important. It's about the general interest rate environment that is still here because inflation is relatively elevated.

• 41:03Speaker 02

  And there's two main reasons for this, right? First, services are relatively sticky. So, energy has come down, right? Other commodities are coming down, even shelters coming down a little bit. But services is much more difficult for it to come down, especially quickly. So, if you think about it, when wages go up or when the price of certain services go up, how, how, how often have you seen those prices come back down once they're adjusted upward?

• 41:32David Hoffman?

  Yeah. I feel like that, that's probably something important to hang on. We're not gonna go back to the era of like a $3 Starbucks. I don't know how much a Starbucks is. I make my coffee at home. I'm sorry, probably five or $6. But we're not going backwards to $3, right? So you're, the point that you're making is like, whatever the prices of our service industry products are, are probably going to stay the same. Is that right?

• 41:58Speaker 02

  With one exception, right? The one thing that could change is if we get mass layoffs. If we start getting mass layoffs, that's gonna change the inflationary picture because that, that's gonna be, then inflation is probably really gonna start going down.

• 42:10David Hoffman?

  Okay. Yeah, but that's bad because then we're in a recession. That's what we don't want.

• 42:15Speaker 02

  Yeah, but it's yeah, yeah, but we were most likely gonna get it. The question is how severe it's gonna be. That's really the the base case is we're gonna get some sort of recession. Whether or not it's gonna be shallow or it's gonna be deep is really the question.

• 42:27David Hoffman?

  Can I rephrase that and see if you like how I rephrase it? So we're definitely on the path towards recession. We're definitely having slower economic growth. I think a bigger question, a big question is like, does that slower economic growth self refer to itself? And become worse as a result as in like, do we have slower growth because we have slower growth? Because we have slower growth as in like, do we lay people off? Because they other people got laid off and does this recession start to feed on it? How recursive is it? Yeah, uh huh, like I think is that a fair question to ask?

• 42:59Speaker 02

  That's a very fair question to ask. And, um, you know, we're, we're, we're talking about this. Yeah, retail sales are still above trend from, from last year, but they're slowing down as well. And many other factors, um, non farm payroll to that point. The jobs number is still holding up and that's really the key.

• 43:18Speaker 02

  Driver of this, of this, of this economy, in my opinion, because what you've seen right now is we've gone into a good news, bad news cycle. So on Friday, when we got a positive non farm payroll, uh, hit, uh, market sold off on it. Why? Because they're worried that if the economy stays strong, the Fed is not gonna slow down its interest rate increases. So it's become a backwards world where every time we get any type of good economic news, the market sells off immediately.

• 43:43David Hoffman?

  Yeah, that's insane. I remember, I remember growing up, I was definitely far much more left than I am today, growing up. And I was, and I was always just like pissed off that like, there's this disconnect between the economy and the stock market. Like the star, but the economy is not the start, the economy is not the stock market, stock market is not the economy. These things are supposed to reflect each other. Now it's actually the opposite, as in these things are going against each other. How insane is this?

• 44:10Speaker 02

  It's, it's, it's absolutely insane. But you know, you understand this psychology is everybody is. It's Boblovian, right? It's the, it's, it's, it's the, the bell and, and the salivation and the dog.

• 44:22David Hoffman?

  We're addicted to liquidity. Right. Okay.

• 44:25Speaker 02

  For 12 years plus, I mean, every time there was a dip, you buy it, you make money and it's very hard to change that behavior in a short period of time.

• 44:33Ryan Sean Adams?

  The, uh, the one other graph, I'm wondering if you'll pull up for us on the, uh, where are we now? Kind of piece is, uh, housing.

• 44:41Speaker 02

  Yeah.

• 44:42Ryan Sean Adams?

  I think that's interesting. That, that affects a lot of people and what I am stuck kind of, I'm scratching my head about is like, how are people, millennial generation, Gen Z even, how are they going to afford a home? Like, how does this even happen? Because we saw the last 10 years of asset price inflation. We saw the charts. It's like number go up on the house price and that was at least compensated because you could get like a pretty low mortgage.

• 45:12Speaker 02

  That's right.

• 45:12Ryan Sean Adams?

  Yeah. At least you could afford your, your, your mortgage payment. But now we have like rapidly increasing fixed price mortgages and asset prices for the houses really haven't gone that down very much.

• 45:25Speaker 02

  They have not.

• 45:25Ryan Sean Adams?

  Tell us, what, what are we looking at here?

• 45:28Speaker 02

  Yeah. So on the right, you can see the, the mortgage rates, which to your point, mortgage rates are now at about seven percent, which is just very high, right? We haven't seen that since before the global financial crisis. But at the same time, housing prices have gone up a lot or have gone up a lot in, in the, in the free money era. And they haven't really come down that much and buyers can't afford, they, they basically stepped out of the market. And you can see that here, there's no sales. Sales are virtually at zero.

• 45:57David Hoffman?

  I've heard, I've heard buyers can't sell because of, or buyers can't buy because of obvious reasons. Prices are still too high and, and mortgage rates are too high. Sellers also can't sell because they're locked into their super low.

• 46:08Speaker 02

  Low rates.

• 46:08David Hoffman?

  Yeah. Wow. So they're, they're fixed. So the housing market is just frozen.

• 46:13Speaker 02

  Just stalemate. It's a stalemate. That's exactly, that's exactly right. So, you know, why would I, why would I trade my 3% mortgage house? To, to go in for almost the same price, 7% rate. I'm just not going to do it.

• 46:25David Hoffman?

  Right. Yeah.

• 46:26Speaker 02

  And.

• 46:28Speaker 02

  I think the stalemate is going to continue until we start getting the unemployment numbers pick up. So it all depends on the jobs market. If the jobs market starts deteriorating, right now, the only sellers that you have is just organic. Let's say there's a divorce or there's a death or something like that, then then you get people selling. But if you want to really see prices falling en masse, you need the labor market to deteriorate. If and when that happens, people won't be able to pay their mortgages and then prices will start plunging.

• 46:54Ryan Sean Adams?

  So I feel like we're in this in between phase of things, right? And maybe you could kind of sum sum up the section of like, like, where are we now? It feels like we're not quite in recession, but we're headed towards there.

• 47:10Ryan Sean Adams?

  We've got some more work to do on inflation. That's an untold story.

• 47:15Ryan Sean Adams?

  We have all of the last, like, it's, you know, 10 to 15 years, asset price inflation and, you know, money and money printing to deal with as well. What's kind of like the, what's kind of the outlook going into 2023? And I know a lot depends on kind of the next section we're going to get to, which is, what's Powell going to do, the Fed pivot? But like, as we're looking down the barrel of 2023, is like recession completely imminent? Like, what do you think is going to happen? What trajectory are we on right now?

• 47:50Speaker 02

  I actually think so, and I will tell you, one of the main reasons is that monetary policy acts with a lag. People tend to not get that as much. You know, we are having all these interest rate increases and are like, okay, we continue with all our lives and it's all normal. But one of the things for you to consider, for example, is just like we have our housing situation and people don't want to switch into a higher mortgage, higher rate mortgage. We have a lot of corporations that borrowed a ton of money during the easy money era at very low rates as well. So S and P 500 companies is an example, or just publicly traded companies, to the tune of about six and a half trillion dollars, which is a massive number that's coming due next year.

• 48:33Speaker 02

  And we'll need to get refinanced into the higher rates. So they don't have the option of just not selling because they don't have a fixed thirty year mortgage during the bond market. When those bonds mature at the low coupon, they have to recycle it to a higher coupon. And I think that's going to be one of the most difficult things. And that's when I think the jobs are going to start getting lost. Because the increase in debt services for all these corporations will force them to lay off some people. And that's why I think monetary policy works in a lag. And that's why it takes time until you really see all the effects of these things.

• 49:07Ryan Sean Adams?

  Okay, so you think you think of recession, right? It's going to happen next year. I'm I'm curious how deep you think this will go. And I'm also curious, because as David was saying, economy, stock market are different. What do asset prices do during this time? So how deep is this recession? How bad is it going to be?

• 49:25Speaker 02

  Yeah.

• 49:25Ryan Sean Adams?

  And then what do asset prices do?

• 49:28Speaker 02

  So first off, the Fed pivot again.

• 49:33Speaker 02

  The market doesn't believe we're going to get that much help from the Fed right now, even though markets have rallied over the last month or two in hopes of this markets meeting, stock market. What you're seeing here is the dot plot. Each dot represents what a member of the FOMC thinks interest rates are going to be in different time intervals. And then the white is what the market thinks. So the market is looking for four percent rates to last at least until twenty twenty four, which is pretty restrictive. So the market does not believe at this time that the Fed can go back to easy monetary policy. And I think that's going to definitely impact what kind of recession we're going to get. The market does believe right now that we're going to get a pivot around June.

• 50:16Speaker 02

  So either a slowdown or starting to cut rates. This is what called the Fed funds futures. Market is expecting some some sort of pivot around middle of next year. And then to your point, what will markets do?

• 50:30Ryan Sean Adams?

  And what is the answer to that question?

• 50:32Speaker 02

  So here you can actually see the two different scenarios. There's been a few cases, 1995, 98, and 2019, when the Fed cut rates and it actually saved the economy from going into a recession. It was actually able to stop the recession. Markets were very positive a year later. In the 1989, 2001, 2007, the rate cuts did not stop the recession. It was too late and a year later, markets were substantially lower. So the answer is, is the Fed pivot going to help? Well, it depends.

• 51:07Ryan Sean Adams?

  Fifty fifty, it looks like. We got three instances where yes and three no.

• 51:12Speaker 02

  We got three, three, three instances that the rate cuts saved us from a recession and three instances that they didn't.

• 51:20David Hoffman?

  Wow, well, flip a coin, I guess.

• 51:25Speaker 02

  Then you have to look, then you have to look and make the assumption, well, are we going to get a recession or not? And that's going to answer kind of your, your question. It's the end game and, and the scenarios that we have.

• 51:36Ryan Sean Adams?

  Before we get there, Eti, we got a break. We're going to talk to our sponsors, but we are queuing up the last part of this, which is, I think, the big question in my mind, which is, are you sure we get another round of this? Like, at some point, the merry-go-round has to stop. And there's the question of like, is this the last loop around? Is this the end game scenario? We're going to ask you after the break. Before we do, we want to thank the sponsors that made this episode possible.

• 52:06David Hoffman?

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• 52:48David Hoffman?

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• 53:31David Hoffman?

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• 54:37David Hoffman?

  And we are back with Itay, who's going to answer some very big questions for us, at least propose his answers. And Itay, I want to ask you this next, because we're going to go into the last part of your slides, of your charts here.

• 54:51David Hoffman?

  So this is hap- this question has come up to me in a number of macro podcasts about similar subject matters like, oh, the feds, you know, we're at the end of the line and we're at the end of the sidewalk, the game's up. But then some people always propose like, well, maybe the game's not up. Like, maybe we get to go and do this one more time. And to me, like, I'm relatively young in the, in the markets world. This is, this is all still like relatively new to me on the grand scheme of things. But for me to say, like, learn about, like, okay, the entire thing had, hangs on the feds policies, like the entire stock market, the S and P is just tracking the balance sheet. If everyone knows that, can we really get one more go out of it? Because then we're all just playing the same game. Like, oh, we're all just gonna

• 55:33David Hoffman?

  make money and lose money together, but we're all playing the same trade. Is that, that seems insane?

• 55:39Speaker 02

  We're all playing the liquidity trade. And even more so, you know, when, when asset prices rise, you see a decorrelation, right? Then it appears that everything is doing its own thing. However, when risk asset fall, correlations tend to pick up to one. I would tell you, you can put, put a, plot a chart of Bitcoin, US Treasuries, gold, Euro USD, right? S and P 500, Germany's Dax, Japanese Nikkei for 2022. You can add multiple more asset classes to this chart, to this list. They're all going to be doing exactly the same thing with different varying degrees of volatility based on what asset price of

• 56:23Speaker 02

  it, what asset class it is. Everything has been one trade.

• 56:26David Hoffman?

  Okay, so, so what you're saying is that, does it matter what you put as the numerator? Bitcoin, pick your asset, housing, like, whatever. It's the denominator that matters. And everyone is like, oh, I'm so bullish on my particular numerator of choice. But like, the real trade is like, no, you trade the denominator, you trade the value of the US dollar.

• 56:49Speaker 02

  That's right. You trade liquidity. And you can see that the best performing asset in the world this year was actually US dollars.

• 56:55David Hoffman?

  So when I was getting into investing, when was this, 2016, 2017, like, put my, you know, $5,000 in Robin Hood, I was like, learning about, like, the markets, like, oh, like, I'm going to be bullish on this company because of like, it's got this arbitrage opportunity, like, they're, like, these fundamentals are better. Like you're telling me like everyone who's playing that game of like picking stocks or like, you know, managing their portfolio, or I feel like we're all just a bunch of chumps. And this is like.

• 57:24Speaker 02

  Well, picking stocks could, could work, right? And actually, it works a lot better in a period like this. Because right now, fundamentals of individual companies matter a whole lot more than during a period where the Fed is just lifting the index. I would even argue, you can look at passive versus active investing, and you would see that active investing that has been getting a lot of, you know, bad rap recently because, oh, indexing beats everything and whatever. Indexing beats everything when the Fed prints money, right? It's obvious. It just floats all, you know, floats all boats. Prior to the GFC, active investing and even hedge fund performance was better than the indexing. And then this year as well, you're seeing hedge funds for the first time in a while

• 58:09Speaker 02

  really beating the market.

• 58:10David Hoffman?

  Sorry, prior to the GFC, great financial collapse?

• 58:14Speaker 02

  Great financial crisis, yeah.

• 58:15David Hoffman?

  Crisis, okay, cool, cool. Okay, so just to reiterate that, you're saying when it's, when it's easy money times, low interest rates, QE, you're saying that like indexing doesn't really matter. But then, when we flip that around and we make hard money, more restrictive policy, higher interest rates, that's when being a fundamentals-driven investor who's savvy, who's actually playing markets the way that I was told that markets are supposed to be played, that's when that actually matters. And which actually kind of makes sense, because like interest rates, like what's that line? Like, when the tide goes out, we'll see who's not wearing any swim trunks? And so like, what is the Fed when, when there's 0% interest rates?

• 58:56David Hoffman?

  They're just pushing water up the beach, but now, but until no, it doesn't really matter what fundamentals are. But now, now the water's actually coming out, so now it actually really does matter what fundamentals are.

• 59:08Speaker 02

  It matters, it matters how you control your leverage, right? Because everybody underwrote this 1% interest rate type of, type of assumption, and now it's 5, 6, 7, right? They have a much bigger debt load to pay, whether it's in real estate, whether it's in corporate financing. So if you are, if you were prudent, if you didn't over-lever yourself, if you knew how to manage risk.

• 59:31Speaker 02

  You know, you, this is a great opportunity for these companies because all their competitors that don't know how to do that are just gonna collapse.

• 59:37Ryan Sean Adams?

  Getting wrecked, and that's what we're seeing in crypto. What's interesting is the root of all of this, when, when the Fed started to change policy, well, that's when we saw Terra Luna collapse. And that's where we saw the contagion of, like, in crypto, guess who's falling? It's all of the risk seekers who were celebrated. I mean, E-Tide, these people were treated like gods. Gods. For the last, like, Could not fail. Could not fail gods for the last two years. And it's been so infuriating for people who have focused on fundamentals, my co-host being one of them, all right? He was doing the right thing. And like, risk-seeking was all the rage.

• 1:00:19Ryan Sean Adams?

  And now, these, these groups are being completely wiped out of this market. They're being completely wrecked right now. And the people who did have good risk processes in place, it did not go margin long on crypto, did not go down kind of the stream of all of these assets that don't have any fundamentals, didn't go into NFT crazy JPEG world, all in, and buy the board ape at the top. These people are doing well, and everybody else is kind of getting wrecked. And this is all the same trade. It's all one trade. It's all Jerome Powell. At the end of the day, what do you decide to do with the money printer? Yes?

• 1:00:59Speaker 02

  Yeah, I mean, you know, it even goes much further back. I wrote my thesis long, long ago about financial bubbles. And the behavior, human behavior is always the same. You know, in the, you've probably heard of Isaac Newton, right? What people don't know about Isaac Newton is that during his time, there was a very famous bubble that was called the South Sea Bubble, where this company was claiming to bring the wealth of the American continent back to England. And everybody was going crazy because the new world was the thing. Everybody knew that there's all these riches in the new world, and it's gonna be worth all this money. So he bought into the South Sea Company stock, saw the price just explode, and it kept going up and up and up.

• 1:01:42Speaker 02

  And he was like, well, I'm just gonna take my profits and get out, which he did. And then it kept going up and he saw all his friends getting richer and he couldn't, he couldn't deal with the FOMO and he bought again at the top just to see the whole thing collapse and lose literally 90% of its value. And later he says, you know, I can understand the works of heavenly bodies, but I don't understand the action of men.

• 1:02:04Ryan Sean Adams?

  Look at this. I want to emphasize this. Probably top five, top 10 list, anyone would make of the smartest human beings ever. Isaac Newton is on that list. Smartest human being ever. And he gets messed up by these types of emotional roller coaster markets. He loses. If the smartest human being in history gets wrecked by these markets, who are you? Why, why are you trading against the Fed?

• 1:02:31David Hoffman?

  Eti, have you read the book Devil Take the Hindmost?

• 1:02:34Speaker 02

  Yes.

• 1:02:35David Hoffman?

  Great book. This, that, that part was a chapter in this book. And what the Devil Take the Hindmost book is, it's like a history of financial bubbles. And like, if you just, if you're not going to read that, highly recommend that book, by the way, to all Bankless listeners. There's not very many books that I recommend, but there's like a list of 10 of them in the Bankless Discord for, it was a question that somebody in the Discord asked, what are your books? That, that book is in my top 10 books. And the thing that I learned in this history of financial bubbles, which goes back hundreds of years, hundreds of years, is that humans make financial bubbles. It's not some like thing that we discovered. We didn't discover this shiny rock in the ground and create a financial bubble around it. We didn't do this financial engineering. It's human FOMO that always triggers these financial bubbles. And the best thing about that book is that like, it's this crazy cast

• 1:03:20David Hoffman?

  of characters of people you already know throughout history, like, like smart people like Isaac Newton and other like very famous people that you totally know, who all get caught up in financial bubbles. No matter who they are, or what their background was, or how smart they are, they all get caught up in financial bubbles. No, people can't help it.

• 1:03:39Ryan Sean Adams?

  So if you feel bad about your mistakes this cycle, go read that book.

• 1:03:42David Hoffman?

  Yes, exactly. Yeah.

• 1:03:44Speaker 02

  Fear and greed never change, right?

• 1:03:47Ryan Sean Adams?

  Maybe, maybe, uh, human beings are the true denominator. The layer zero. That's the, that's the denominator. The layer zero. Beneath the denominator.

• 1:03:56Speaker 02

  We all, we all want to get rich by doing the minimal amount of work possible, right?

• 1:04:00Ryan Sean Adams?

  So, so, uh, Eta, can you help us answer this question as we kind of, um, uh, like summarize this and I'll, you know, conclude of, is this the end game is the big question, right? Cause there's this macro story about how many shots do we get at this? And you're, you presented that, um, interest rate slide at the very beginning. We're floating at the bottom. We're at zero percent. Can we go any lower? Talk about, oh, I love that. By the way, talk about these possible outcomes that we could see. And then let us know, do we have another ride around the, the merry go round or just the sidewalk end here? As they were saying, and can we anticipate something even worse happening?

• 1:04:37Ryan Sean Adams?

  That is like much more, uh, severe than kind of a, you know, sort of the typical standard recession that people are saying might happen.

• 1:04:47Speaker 02

  Yeah, so let's cover this, um, with a little bit of probability chart to it. So, yeah, we've gone to the zero bound. However, the good news is we've just shot up way back above the zero line. We're actually at the highest interest rate environment since back into, uh, 2000s. And we're probably going to top out around 5%. That actually gives the Fed firepower to cut back down if rates go lower. Um, but this is really the old debate between Keynesian school thought and this Austrian school thought, which is more, uh, on the restrictive side. The Austrian says, well, this is how the money printing game comes to an end. We hit this inflationary period and we have to restructure debt. So what is really the end game?

• 1:05:32Speaker 02

  Is the end game going to be some kind of debt forgiveness, restructuring of the US dollar, restructuring of, you know, another Brent Woods in which we, we, we create a commodities backer and see there's a lot of different possibilities. But I don't think we're there quite yet.

• 1:05:47Speaker 02

  The good news is that.

• 1:05:50Speaker 02

  The banking system is a lot healthier than it was in two thousand eight, two thousand and nine, because all these years of QE really recapitalized a lot of the banks. And we don't really have these wild lending practices, especially housing and things that are really high ticket, that could crash the economy. Another good thing is that home equity is high. So most people's debt to equity ratio in homes that could really collapse the economy is healthy. So those are all the good, the good factors. Now, we know the bad factors. We discussed them quite a bit. So that's why there's these three types of scenarios. Scenario number one is it's really a softish landing. We, we don't really have a real recession. It's more like slow economic growth. The jobs market doesn't really fall apart. Companies are able to hold on, hold on.

• 1:06:35Speaker 02

  We go through a period of flattish growth. Inflation calms down. Fed is able to cut rates back to two, three percent, not really zero. We go back to Goldilocks. We go back to a healthy period. Fed doesn't come back to money printing. And things will kind of heal out organically because things will grow. That's sort of the optimistic scenario.

• 1:06:53David Hoffman?

  This is the scenario in which the Fed wins.

• 1:06:56Speaker 02

  That's a scenario which the Fed wins. That's the scenario that a lot of people in the market believe. And every time that we hear talks about a Fed pivot or things like that, the stock market celebrates that because people want to believe in that. They tend to be naturally optimistic.

• 1:07:10Ryan Sean Adams?

  The softest landing is the hopium take.

• 1:07:13Speaker 02

  Yeah, yeah. So then there is the hard landing, which is a tough recession, but not necessarily a catastrophic one. We think that's the base case. Primarily because we don't know how much leverage is really out there in shadow lending. We have an idea. We know that monetary policy works in a lag, and we do believe that job losses are going to come. And they're very likely to come because corporations, once the wave of refinancing happens, they will lay off people in order to offset the decrease in their earnings. Once that happens, it will probably cause lower housing prices. Housing is a very strong fundamental factor of the economy, less purchasing of, you know, furniture and all this kind of stuff.

• 1:07:58Speaker 02

  Similarly, consumer spending seventy percent of the US economy. Once people lose jobs, they can't spend as much. That creates actually a down cycle. So there's a lot of negative feedback loops that can trigger in this scenario, which is why we call it the most likely scenario. Now, why is it not a catastrophic scenario? It's really the banking system and systemic risk.

• 1:08:22Speaker 02

  If systemic risk doesn't trigger and we don't get Lehman and we don't get things of that nature. Because banks are supposedly healthier. We don't know what we don't know, right? But if there is no debt crisis. It's eventually probably going to work itself out and after a period of recession inflation will come down. And we'll start growing again, potentially from a better place.

• 1:08:45Ryan Sean Adams?

  That's if there's no systemic risk, if there's no like FTX hanging out there.

• 1:08:49Speaker 02

  That's right.

• 1:08:49Ryan Sean Adams?

  But if there is an FTX hanging out there, then we veer more towards catastrophic?

• 1:08:54Speaker 02

  Yes, so the catastrophic landing is potentially the end game that will require real restructuring of things. And this scenario, imagine a Bank of America, or I'm just giving an example, obviously, I'm not saying Bank of America is going to go down under, but like a Wells Fargo, a Bank of America, JP Morgan Chase.

• 1:09:11Ryan Sean Adams?

  It's probably Wells Fargo, right, David? We like to pick on.

• 1:09:13Speaker 02

  Deutsche Bank, Deutsche Bank, a Numeria, like it could very well start internationally. Actually, more likely it's going to start internationally if it does, particularly Deutsche Bank Credit, Swiss, all that kind of stuff.

• 1:09:25Speaker 02

  Systemic risk, bank runs. You know, no money in the ATM, like bail-ins, this kind of stuff. If that spreads across the West. And at the same time, inflation stays elevated, maybe because of supply side shocks. So imagine, you know, commodity prices, the war in Ukraine expands, like different things that can cause supply side shock. Tie the Fed hands from being able to ease too much into this type of condition. That is the catastrophic scenario, but we assign a lower probability to that.

• 1:09:54Ryan Sean Adams?

  Have people in their lifetime living like right now, in general, have we experienced anything that you would label as catastrophic? Was 2008 catastrophic? Or do we have to go all the way back to like the 19, you know, 20s, late 1920s and early 30s to to label something catastrophic? What's the difference between hard landing catastrophic? If you could bring us back to kind of life experience?

• 1:10:15Speaker 02

  I think 2008 was hard landing because at the end of the day, the catastrophic was avoided. Lehman did collapse, but inflation was not a problem. The Fed was able to bail out the banks, prevent the systemic risk. There was systemic risk. It did have the potential of deteriorating to the point of catastrophic, but it did not. I think you have to go back to, I mean, we do have it in other countries. We can see Greece in 2010 or other places, you know, in more modern history, but I think for the West, you really have to go back to 1929 in order to to envision what catastrophic means.

• 1:10:49David Hoffman?

  A 25% chance of something worse than 08.

• 1:10:53David Hoffman?

  Not liking those odds. Maybe this is hopium, copium, but we were talking earlier about how the economy and the stock market is inverse. And so is it, is it hopium to think that like, if we get something catastrophic like an 08 moment, we'll just turn on the money printer and be good again?

• 1:11:13Speaker 02

  Yeah, in a way, that's one of the arguments that says that if we do get that, it will end up being bullish net net. Because regardless of the inflationary environment, the Fed will have no choice but to step in.

• 1:11:23David Hoffman?

  This is so dumb. What is this?

• 1:11:25Ryan Sean Adams?

  Bullish for asset prices though, right? Not necessarily like, cause like, how much more?

• 1:11:30David Hoffman?

  Do we just get even more wealth inequality?

• 1:11:32Ryan Sean Adams?

  And that's a question I have, like, that's the thing that the Fed's not measuring, right? But we see it, we see the ripples in our society and the fraying of our politics. And like, how much more wealth inequality can a society really sustain before it breaks? And starts to elect populist leaders that, you know, turn Weimar Republic into the, into kind of the next thing after it.

• 1:11:55Speaker 02

  That's the risk. Yeah, that's, that's definitely a political risk. I know Ray Dalio touches a lot on this as well. And then you world order, this is definitely, this is definitely reminiscent of some of those, some of those periods, kind of late empire type of debates. But I don't disagree, but it's beyond my, my ability to predict the future political and geopolitics implications for this.

• 1:12:19David Hoffman?

  Okay, so.

• 1:12:22Ryan Sean Adams?

  I was just gonna say 75% probability that we get another round at this.

• 1:12:27Speaker 02

  I think so.

• 1:12:28David Hoffman?

  With a 50% probability of a hard landing that's not catastrophic. How, and you said like, okay, it'll just play itself out over time. We'll have a recessionary period. We'll just deal with it. It'll be hard. We'll have to cut down our spending, but fine. How long? Like one, two, five years? How, what's, what's in a recessionary period like?

• 1:12:49Speaker 02

  It's typically shorter. I mean, honestly, it's less than 18 months, but the implication of it is, is, you know, that's the trough, but then the recovery, it depends what kind of recovery you get. Right? That's going to be hard to predict. Recovery could be V-shaped. It could be slow. And obviously there's the scenario no one wants to talk about, which is Japan, which is just anemic growth for decades following a top. I think a lot of it has to do with demographics as well. So one of the reasons that I don't subscribe into permanently high inflation is because I just don't think we have the population to support it. It's not the 60s and 70s. We don't have an insane amount of boomers coming out and starting to buy houses and all that.

• 1:13:31Speaker 02

  We skip this slide. We can talk about the yield curve if we have time at the end because that's a very, that's a very good tool to predict future recession, which is very much inverted, which is implying we're going to get a recession very soon. But if we go into this chart, what you can see here is the age wave and age wave is the percentage of the labor force ages 16 to 34. It's a very good predictor of inflation because that's the age in which you're getting your first real job with a real paycheck. You're getting married. You may have the first kid or so, and you may buy your first home. All the things that I just described are massively inflationary.

• 1:14:10David Hoffman?

  Right.

• 1:14:11Speaker 02

  When they happen en masse.

• 1:14:13David Hoffman?

  Kids are inflationary.

• 1:14:15Speaker 02

  Kids are inflationary, buying homes. Yeah. Imagine, imagine what goes into starting a family.

• 1:14:20David Hoffman?

  Right.

• 1:14:21Speaker 02

  Buying a car and buying a home like.

• 1:14:23Ryan Sean Adams?

  I don't think I've ever seen a chart like this. So this red line is the age wave you're saying, and we sort of, it definitely peaked in the kind of the, the 70s, the late 70s, I guess.

• 1:14:32Speaker 02

  Early 80s when US inflation peaked. So we've seen a very tight correlation between the percentage of population in that age group. And the inflationary trend. And as you well know, the US birth rate is around 1.8, which is below replacement at 2.1. Even with immigration, it's barely 2.1.

• 1:14:50Ryan Sean Adams?

  This what we're looking at is the the baby boomers basically coming of age, becoming 16 to 34 in the early 80s.

• 1:14:56Speaker 02

  That's right.

• 1:14:57Ryan Sean Adams?

  That's and then and then it falls off from there all the way like to kind of like almost like lows.

• 1:15:02Speaker 02

  And you can see that also with the age wave and the 10 year, 10 year yield. So this is why I believe this inflation is really just a monetary phenomenon. It's not an organic phenomenon. If it was the the 80s and 70s, it wasn't really because of printing. It was an organic phenomenon of a lot of people coming to age at the same time and all grasping for resources at the exact same time, which causes organic inflation. We don't have that now. We have monetary inflation.

• 1:15:25David Hoffman?

  Well, we we what about the meme of the COVID baby? My sister had a COVID baby. I've seen a bunch of COVID babies in my life. A lot of people had COVID babies. What about that?

• 1:15:34Speaker 02

  It's it's not. If you look at it statistically, the birth rate is still low. It's not. It's not that. It's not that massive. I mean, on a on a relative basis, though, the US is substantially better than the EU and Japan. The EU birth rate is really low. I don't remember exactly that. I think it's around 1.4, maybe 1.5. So it's far below replacement rate. In Japan, it's far below replacement rate. And net net, I think, long term, you need people in order to drive inflation. Because if you literally have less people than replacement rate over time, you're going to have less demand for the same housing inventory and cars and all those things.

• 1:16:06Ryan Sean Adams?

  I've always wanted to do an entire episode, David, on demographics, actually, because China is actually in a in worst place in the US, too, which is there's some countervailing, you know, points there if their demographics are kind of kind of weak yet, you know, anyway, it's it's very interesting.

• 1:16:21David Hoffman?

  Ete, you touch on this, but since somebody in the YouTube chat asked the question, I'd like you to go back to it. Question from Dan. Fun fact, I do actually watch the chat. Can immigration compensate the lack of boomers?

• 1:16:34Speaker 02

  I mean, it it can to a point, but immigration also has slowed down and it's also a political issue. Right? So if you look at the EU, for example, that's exactly what they try to do. They try to open their borders to a lot of immigration because of their population decline. And it caused a lot of social rift within their societies and it caused, for example, in Italy, we just had populist right get voted in. In Sweden, we had the same thing. So even though it can in theory, it's very different than can, will the society actually accept it?

• 1:17:04Ryan Sean Adams?

  Particularly when times are tough and everyone is like talking about ways to split the pie.

• 1:17:09David Hoffman?

  Right. So this this sounds like good news.

• 1:17:14Speaker 02

  Yeah, yeah. So, yeah. So so net net, this is why I believe that inflation will eventually subside. If the Fed really start stops all the money intervention we're right now that they are. So that's why I believe that this is one of the reasons I don't think we're going to reach the endgame just yet because this really helps.

• 1:17:34David Hoffman?

  We're we're going around again?

• 1:17:36Ryan Sean Adams?

  Yeah.

• 1:17:37David Hoffman?

  Bull market around two?

• 1:17:40David Hoffman?

  I'm thinking like 2024, 2025 is when I'm planning my bull market. I don't know about you guys.

• 1:17:45Speaker 02

  I think it's going to be sooner than that because the second the market sniffs it out, the market usually prices these things out six to 12 months before the reality actually even happens. So.

• 1:17:56Ryan Sean Adams?

  So what are you doing? How are you thinking about this? So market continues to go down for a while, but then starts to turn in 2023?

• 1:18:04Speaker 02

  I think the turn happens in 23. Yeah, if you ask me, I think around mid 23. Um, potentially is when when things happen. Uh, we've been in a bear market now since for a year. Um, usually bear markets don't last more than 18 months. It all kind of lines up. Uh, but it really depends how severe things get. The base case is they don't get that severe. Um, even even if even even in a tough recessionary environment, I mean, you know, stocks could go 20% lower from here. Um, but nonetheless, you know, that that will put it in within an average, you know, 40% decline type is not is not crazy for a recessionary bear market.

• 1:18:44Ryan Sean Adams?

  Mid 2023 and David, if crypto has front run that by six months, then we already bottomed.

• 1:18:50David Hoffman?

  I just want to say, Ryan, you're running out of time to get your three digit ether, brother.

• 1:18:56Ryan Sean Adams?

  It may happen. I'll give my 30% proba- no, 25% probability that we see a triple digit.

• 1:19:01Speaker 02

  That number's going down.

• 1:19:04Ryan Sean Adams?

  Well, okay, one last question for you, Eita, to kind of, because you brought up Ray Dalio, and you've got some charts on here about the dollar, which is always like, when we talk about, is it the end? Do we get one last cycle, one last shot at this or no? Dalio talks about when empires kind of fall, the last thing they sort of lose is reserve currency status. And how's the dollar looking from a reserve currency status perspective right now? Is it weaker? Is it stronger? And like, how do you forecast that moving into, you know, the next couple of years or like, you know, 10 years?

• 1:19:42Speaker 02

  We can probably spend two hours talking just about this.

• 1:19:47Speaker 02

  I'll try to make it brief. You know, dollar is still strong as far as global reserve currency, because a lot of the lending that takes place is in US dollars, and it's a self fulfilling kind of loop. So imagine even a company drilling off the coast of Norway, potentially doing business with the UK is going to do it in dollars and borrow money in dollars. So it's a self fulfilling loop. 60% of foreign exchange reserves are still US dollars, but those numbers have declined slowly over time. And I think one of the risks to the dollar as a reserve currency is literally what we're seeing right now with Russia and Ukraine. It's an example, right? Russia doesn't like it at all. China doesn't like it. The more sanctions the West puts on countries like this, the more incentivized they are to find

• 1:20:30Speaker 02

  workarounds around the US dollars, the global reserve currency.

• 1:20:36Speaker 02

  And typically, when these reserve currency status is lost, it's very rare that it's like, you know, it's Monday, the dollar is the reserve currency, Tuesday, okay, it's not. It's a very gradual process that might take decades. So you won't even realize that it's happening while it's happening. That's the most likely outcome. There will be more and more use of other things over time. Until at some point, the dollar is always going to be important, but is it going to be the only currency we're transacting with? Probably not.

• 1:21:04David Hoffman?

  All I'm hearing, maybe I want to be hearing this, is that we have enough runway to do this all one more time.

• 1:21:13Ryan Sean Adams?

  Why do you only want one more, David? What happens after that one?

• 1:21:16David Hoffman?

  At least so I can sell the top next time.

• 1:21:22Speaker 02

  It's, um, and the US is in a relatively very good place relatively to the rest of the world. You know, we're talking about all these potential negative implications, but the rest of the world is much worse, right? China is worse, Japan is worse, worse, the EU is worse. So it's kind of the, the, the cleanest dirty shirt syndrome.

• 1:21:40David Hoffman?

  Yeah.

• 1:21:41Speaker 02

  Where, where do you go? And it's still, the US is still the most stable. The political system is still considered very stable. Um, property rights, very well respected. The probability of bail-ins is virtually very, you know, with the exception of, uh, I don't know if you know about the, uh, 1933 order to take all the gold away.

• 1:22:01Ryan Sean Adams?

  Oh, we've heard about that one. We've talked about that a few times.

• 1:22:05Speaker 02

  So with the exception of that, which I think would probably not happen again.

• 1:22:10Ryan Sean Adams?

  There's not going to be a 2023, take your, take your crypto.

• 1:22:13David Hoffman?

  Take your Bitcoin.

• 1:22:15Speaker 02

  Yeah, I mean, there is, there is precedent for that, right? But it's, um, it's unlikely and that, you know, if that happens, the, the US government risks its status as the safe haven where when things, things get tough, money from the rest of the world literally flows to the US typically.

• 1:22:30David Hoffman?

  Because, because we've got good property rights. Yeah.

• 1:22:33Speaker 02

  Yeah, very stable.

• 1:22:35Ryan Sean Adams?

  This has been great. I mean, I feel like you just did a bang up job answering these four questions. How did we get here? Where are we now? When do we pivot? And is this the end? Um, thank you for this. And, um, you know, is there any, anything you'd sort of leave folks with? Like, should we? Yeah. What's your kind of advice? How would you, how would you summarize this if somebody's like, okay, Itay? Itay, what, what should I do as a result of all of this? Um, how, how can they prepare?

• 1:23:04Speaker 02

  Yeah, it's a, it's a, it's a, it's a great question. I would say that the go-to advice is always increase your productivity. Make sure that especially during a recession, you save more. You invest more so you have the dry powder in order to do it when things really go on sale. You don't over-leverage yourself, you don't go into debts that you can't afford. And during a high, during a period of high interest rates, you don't want to be exposed to these type of debts that you have to pay massive amounts for. So first take control of your own personal finances, especially during these periods, that you see them as an opportunity rather than a challenge.

• 1:23:46Ryan Sean Adams?

  Increasing your productivity sure sounds a lot like building to me. That's what I hear, Ryan.

• 1:23:51Speaker 02

  This is time to put heads down building, heads down building. You know, a lot of times recessions are a good time to go back to school and things like that. If it's more difficult to find a job, make yourself more competitive, make yourself more appealing. When coming out of it, there's going to be a lot of opportunities typically out of, you know, the recovery out of recessions is usually one of the best periods to take advantage of opportunities.

• 1:24:15Ryan Sean Adams?

  Itay, this has been absolutely fantastic. You're a wealth of information, my friend. We're so glad we had you on this episode. I guess last question for you before, before I thank you. But are these slides publicly available anywhere? Is there a link that we can include in the show notes?

• 1:24:32Speaker 02

  They're actually our internal, they're internal company.

• 1:24:35Ryan Sean Adams?

  Secret slides, okay.

• 1:24:37Speaker 02

  So it's our, it's our asset management team slides. We typically don't share it. It's just for our internal research.

• 1:24:43Ryan Sean Adams?

  Okay.

• 1:24:44Speaker 02

  Thank you so much for putting them together.

• 1:24:45Ryan Sean Adams?

  Yeah, we appreciate it. Where can folks find out more about you and about what you're doing at Equi?

• 1:24:52Speaker 02

  Yeah, equi.com is a good place to start. We do have a pretty substantial waitlist right now. I think it's over 2,000 people trying to get access to the platform. However, we are going to have it.

• 1:25:05Speaker 02

  Reduce the minimum and open it to a much wider amount of people in 2023. And the whole idea is how do we, how are we able to invest in a way that's not correlated to all this craziness? And how can we maintain the value of our money? Money and we've been able to do just that this year despite all the, all the volatility. So.

• 1:25:24Ryan Sean Adams?

  Well, that sounds real nice right about now. So thank you for sharing that. We'll include a link in the show notes where you can sign up the waitlist and find out more about that. Eita, thank you so much for joining us. We appreciate you.

• 1:25:37Speaker 02

  No problem. It was my pleasure.

• 1:25:40Ryan Sean Adams?

  Bankless Nation, as always, got to let you know at the end of the show, none of this was financial advice. We really don't know exactly what's going to happen next year or in the future. And of course, got to remind you that crypto is risky, ETH is risky, Bitcoin is, so are the macro markets. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.