Is Donald Trump Unwinding the Global Order?

📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ Donald Trump is attempting something no leader has done before—unwind the global economic order. In this episode, Financial Times columnist and CNN analyst Rana Foroohar joins us to unpack Trump’s economic strategy, the unraveling of Bretton Woods, and whether America is becoming an emerging market. From soaring bond yields to declining dollar strength, we explore what markets are signaling, how business leaders are reacting, and why this may mark the end of the neoliberal era. ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🌐SELF | PROVE YOURSELF https://bankless.cc/Self 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🏦INFINEX | THE CRYPTO-EVERYTHING APP https://bankless.cc/Infinex ------ TIMESTAMPS 0:00 Intro 4:20 Trump Unwinding Global Order? 13:39 Emerging Market Paradigm 21:51 All-In Debate 26:22 Manufacturing Jobs 31:55 Trump Vibe Based President? 35:41 90-Day Tariff Pause Signal 38:41 Centralizing U. S. Supply Chain 40:54 Where Rana Finds Signal & Crypto 45:16 Closing & Disclaimers ------ RESOURCES Rana Foroohar https://x.com/RanaForoohar America the Unstable https://www.ft.com/content/e7a0af16-6ecf-4e04-8fa3-4de5646e8d58 The Great Tariff Debate with David Sacks, Larry Summers, and Ezra Klein https://youtu.be/KcmMOZKnKAk?si=52ZULN6T_xyirh23 Stephen Miran’s A User's Guide to Restructuring the Global Trading System https://x.com/SteveMiran/status/1856745675943207362 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

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

• 0:02David Hoffman?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. And today, we are exploring the continuing saga of the Liberation Day tariffs. On the show today, I have a traditional finance commentator, Rana Faruha. She's an FT columnist, she's a CNN economic analyst, and she has a wealth of knowledge on capital markets and geopolitics. We start the conversation today discussing Donald Trump attempting something that no one has ever attempted before, which is materially, credibly attempting to unwind the global world order by upending the Triffin Dilemma, threatening the US dollar as the global reserve currency, and for the first time in decades, making material pushes to restore manufacturing back to the United States. Is this good or bad? What are the costs of doing this? Do they outweigh the benefits?

• 0:45David Hoffman?

  What are the stock market, the bond market, and the dollar strength index signaling about these strategies? Rana likened the decisions of Donald Trump to treating America's capital markets much more like an emerging economy, and we discussed the consequences of that, both good and bad. Rana is not the usual commentator that we typically have on Bankless, but she nonetheless delivered a particularly educational and insightful interview, and it was an honor to have her on the show. So let's go ahead and get right into the interview with Rana Faruha. But first, a moment to talk about some of these fantastic sponsors that make the show possible. Imagine verifying yourself without handing over personal data. No hacked databases, no unnecessary personal exposure for airdrops, and no AI bots ruining community governance. Meet SELF, the on-chain identity verification protocol built for privacy and control.

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• 2:10David Hoffman?

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• 2:55David Hoffman?

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• 3:40David Hoffman?

  bridging crypto into your daily life. Finally, Mantle X blends AI with DeFi to deliver an intelligent, user-friendly experience for everyone. And the best part is that this is all in addition to their already-launched products like Mantle Network, ME, and FBTC. Ready to step into the future of finance? Follow Mantle on X at mantelofficial and join the on-chain revolution today. Bankless Nation, I'm here with Rana Faruha. She is a journalist, an author, an economic analyst. She serves as the Global Business Columnist and Associate Editor at the Financial Times, and she is also CNN's Global Economic Analyst. Her work focuses on the intersection of business, economics, politics, and technology. Rana, welcome to Bankless.

• 4:18Speaker 01

  Thanks for having me.

• 4:20David Hoffman?

  Okay, Vrana, I wanted to set the stage a little bit because I think all of our listeners are all glued to the screens of the tariff debacle, tariff drama, whatever is going on in the macro markets. This is a subject that we have been following over the years at Bankless, really as we are understanding why and how Donald Trump got elected in the first place in 2016, not this most recent election, but he really just flipped some key blue states in the Rust Belt to red by his appeal to voters that experienced substantial manufacturing job losses. These are the jobs in states Michigan, Pennsylvania, Wisconsin, Ohio, Indiana. It was really this manufacturing story that elected Donald Trump in the first place in 2016.

• 5:01David Hoffman?

  Now he's back and he kind of believes that he just has this mandate to restore manufacturing in the United States. And we understand that there's this thing called the Triffin Dilemma. We have covered this on Bankless a handful of times, that because we have the global reserve currency, that is what we produce, we export dollars, we buy manufactured goods elsewhere, and then we import those goods, and that contributes to the global trade imbalances that Donald Trump seems to have such an incredible problem with. This order has worked for most of America, but not for Donald Trump's base, from what I can tell. And it is clear that Donald Trump seems to be more intent in unwinding this global order

• 5:45David Hoffman?

  than we've ever really seen before. No one's really credibly tried to unwind this global order, and I think that is how I would set the context for the significance of the events of last week, is we are seeing the largest credible attempt at unwinding this global order that we have seen. That is how I see this. I want to pass the conversation to you. Do you see this as that, and how do you also just set the stage for this conversation at hand?

• 6:07Speaker 01

  Yeah, for sure. No, I mean, I think you did a really good job sort of outlining the key macro issues here. You know, I think that this process, in some ways... We began to be a little bit suspicious, I would say, in 2008, some of us did, that, uh huh, maybe we need a new global order here. You know, the entire financial system just collapsed. We have a very financialized economy in America. And by that, I mean that it's based on asset price growth rather than, you know, making things in factories, let's say, and bolstering wages. And, and then you start thinking about, well, why is that? And part of it is down to the fact that the US dollar is the global reserve currency. So everybody wants to pour money into the US,

• 6:51Speaker 01

  sort of regardless of what the real story on the ground is. That's helped along by the fact that you've had 40 years of falling interest rates, which again, just increased the money flow and, you know, kind of lubricate the system, but oftentimes in a bit of an artificial way. And then, you know, as you go on past the financial crisis and you see that the problem of debt isn't being solved, it's actually getting bigger. So there's more debt out there in the world than ever before. There's, there's, there's actually, you know, the, the risk moves from the financial system to, to the private shadow banking system, hedge funds, private equity, et cetera. But the problem doesn't change. Then you get the pandemic and you get the war in Ukraine. And then you begin to see, oh, wow.

• 7:36Speaker 01

  Not only are there these distortions in the financial system, there are distortions in supply chains. You know, we, we've got these supply chains that are set up to work really well if nothing bad is happening in the world. But the minute that, you know, China needs its PPE back, suddenly you have a shortage in, in, in the US. Or if Russia invades Ukraine, you have a global grain crisis overnight. So I think that became this wow felt experience for a lot of Americans that there's fragility in the highly globalized, highly concentrated order where business has essentially been taught and, and the US policymakers have encouraged business to think this way, that all you have to do is move things from point A to point B to point C as cheaply and fast as possible.

• 8:22Speaker 01

  And it doesn't matter if you're outsourcing jobs. It doesn't matter if you're offshoring risk. What matters is asset prices going up. Consumer prices going down. Now, that neoliberal order made people like me, for example, that have a lot of money in the financial markets, extremely wealthy, you know, relative to many Americans. My house price, which has doubled since I bought it 18 years ago in Brooklyn, is down to the fact that we have a highly financialized economy and we allow people to write off jumbo mortgages. But that paradigm also resulted in the outsourcing of much of the manufacturing base to China, which is now the biggest strategic adversary of America, according to the US military.

• 9:07Speaker 01

  This is a problem. This is an imbalanced system. And the way that I sort of pull the lens way back is I think about political pendulums and how they shift. And, you know, basically, every political economy is kind of purpose-built for its time. You can go all the way back to the 18th century and look at mercantilism and say, yeah, that kind of worked until it didn't. And then you get laissez-faire and the hyper-globalization of the 19th century, but then you get too much speculation and you get the financial crisis of '29 and the Great Depression, and then you get more public involvement in the markets, so the pendulum begins to swing. And then eventually, we get to the 70s and there's been, you know, too much public involvement. Maybe markets are a little sclerotic, maybe you need some more animal spirits, and then you get the Reagan-Thatcher revolution.

• 9:50Speaker 01

  So the pendulum shifts again. Well, by the time you get 2008, the financial crisis, the election of Trump, you're beginning to see the pendulum really reaching its tipping point, and I would argue now it's swinging back the other way, as we realize, on both sides of the aisle, that this neoliberal system of globalization was really great for a certain class of people, asset owners, knowledge workers on the coast, but there were a lot of people living in many other places that did far less well. And that creates this fundamental problem, which is the disconnection of the global market system from the interests of the voting public.

• 10:36David Hoffman?

  And so I want to get your opinion on the relationship between the nature and the decisions of Donald Trump versus the correction of that pendulum. I think largely we are understanding that this pendulum is in a suboptimal place and we should find a more optimum place for that pendulum to lie. Like maybe the globalization has done, has brought its good to the world and now we are seeing that start to invert and maybe now the costs of globalization are starting to rear its head. And so we should fix things. And that's what Donald Trump understands what he wants to do. Also, Donald Trump's strategy is also something to consider here.

• 11:17David Hoffman?

  And so I want to get your take on, it sounds like you are generally aligned with, yeah, we need to, we need to fix the equilibrium, we need to fix the milieu of the globe. And then there's also, you know, the actual strategy for doing that. So how would you just reflect on his choices versus what could have been?

• 11:36Speaker 01

  Right. So I would differentiate between Trump one and Trump two there. So Trump one, you know, you got Bob Lighthizer, who was the USTR, coming in and saying, we need a reset of the global trading system. You know, it was, it was a little bit outre at the time, but a lot of people now agree with that. Tariffs on China, again, a lot of people agree with that. You then get Biden coming in, continuing the tariffs on China, but layering an industrial strategy on top of it and saying, we need more resilience for the reasons I just talked about. You want to make masks, you want to make pharmaceuticals, you want to make semiconductors, you know, not just in Taiwan, but all around the world. Then you get Trump coming in for the second term. And what's interesting is, he just throws the entire

• 12:21Speaker 01

  chessboard up in the air. And even his advisors, I think, were shocked at how chaotic the tariff rollout was. There were people in the administration, you know, Marin, who's the head of the Council of Economic Advisers. Scott Besson, who I think we're like, yeah, we need a reset of global trade, but let's do this with allies. Let's do this a little bit more slowly. We want to weaken the dollar, but we don't want to just, you know, crash the markets. Well, Trump was basically listening to Peter Navarro, who's the most extreme China hawk and is for tariffs on everybody, adversaries, allies. And so suddenly, the entire Bretton Woods system is up for grabs and the markets just did not know what to make of it. And by the

• 13:06Speaker 01

  time the dust had settled, you begin to see that a lot of damage has been done. So that even as Trump turns back now and says, oh, you know, nothing to see here. We're not at war with the entire world. This really is about China. You know, stocks recover a little bit, but the bond market is still saying, we're very, very worried. We don't trust anything this man has to say. And so my worry is that even if this plan were incredibly well orchestrated and executed upon, which that in of itself is difficult, that the markets just simply have lost trust.

• 13:39David Hoffman?

  Yeah, you, I think the million dollar question, the billion dollar question that everyone is asking is, are these tariffs real? When we net, net, when we fast forward three, six months, what tariffs are still in place, if any? Because I remember Donald Trump doing this in 2016. We started the presidency off with a wave of tariffs and then that just became irrelevant and the markets moved on. This is being a little bit different. Like I said, this is the most credible and legitimate move towards unwinding this order. And the tariffs have just been 10 times larger, 100 times larger than the last presidency. And it's really, like I said, the billion, billion dollar question is like, what, how serious is this man about how much follow through he has with the tariffs?

• 14:22David Hoffman?

  Now, I think I could ask you that question, like, how, how, how real do you think Donald Trump's tariffs are? But I think your guess is anyone's guess. And that's really the punchline here is there's, there's just confusion about what we don't really know. And you wrote, you recently wrote a column in the FT titled, "America, the unstable." And you opened it with, "America under Donald Trump is an emerging market." Can you talk about the pattern that you're seeing in this current administration, why you liken it to an emerging market?

• 14:52Speaker 01

  Yeah, so emerging markets, and I should caveat this by saying, I'm kind of talking about emerging markets as we remember them from the 70s and 80s and even the 90s. I mean, the truth of the matter is emerging markets have cleaned up their act a lot in the last few years, whereas rich countries like the US and many parts of Europe have kind of gone downhill. But but let's just take the emerging market paradigm as one that describes a market that doesn't have its sea legs yet. You know, you probably have a lot of concentration in certain industries. You may have a certain level of corruption. You tend to have more unstable politics. You often have politics by cult of personality, which leads to oligopoly, and it leads to a sense that even the judicial system can't be trusted.

• 15:36Speaker 01

  Those are all risk factors for business. So while you might have high growth levels on occasion in some of those markets, you also have very high risk levels, which is why borrowing costs tend to be higher for emerging markets. Because people know that, you know, if you go into Indonesia or Mexico or South Africa, you know, you're risking more than presumably when you go into a established market where there is a rule of law and a very liquid global currency. Unfortunately, under Donald Trump, we seem to be squandering some of that benefit. And the fact that decisions are being made seemingly by a single man, I mean, literally, when the tariffs were being pulled back a few days ago,

• 16:20Speaker 01

  Jameson Greer, who is the president's USTR, the trade representative, was in Congress arguing for tariffs. And so in real time, you're getting two different messages. And the rest of the world is looking at us and just thinking, okay, what do we do during the next trade negotiation? Is what the USTR is actually saying going to hold? Or is it going to be something different the next day? That starts to get you into a kind of an unpredictability, which is typically what you get in emerging markets. And what's interesting is it's now being reflected in the numbers. So if you look at correlations between political risk and, say, the dollar, or political risk and the price of the S and P, they're now much more tightly correlated, whereas in the past, even during things like, say, debt crisis debacles or...

• 17:04Speaker 01

  You know, political polarization, the hanging Chad episode, if you remember, you know, way back when with Gore v. Bush. You wouldn't see asset prices declining because people had faith in the rule of law and in the solvency of institutions in the US, and I think that faith has been damaged.

• 17:22David Hoffman?

  There are just a number of three, four-letter agencies out there whose mandate it is to preserve fair and orderly markets, because we've understood that orderly markets is good for capital formation, it's good for investment, it's good for businesses. And as you noted, on April 10th specifically, although it's been happening over the last 10 days or so, really marked an interesting set of changes in some of the prices of global markets, mainly the US stock market going down, S&P 500, Dow Jones going down, 10-year bond yields going up, and then also the value of the dollar, the Dixie, the Dollar Index, going down. So when you put all these things together, it's a different interpretation of the United

• 18:05David Hoffman?

  States' role in the world as the capital center of the world. When you see all these pieces, the dollar going down, bond yields going up, stock market going down, putting all these pieces together, what do you see here?

• 18:17Speaker 01

  I see that we're moving towards a post-neoliberal world, potentially a tri-polar world in which you've got the US and whichever other countries might eventually be in its orbit, Europe and Asia, a sort of, you know, Southeast Asia led by China kind of paradigm. There are certain other big Asian countries, India being primarily one I'm thinking about, and Japan, that may or may not go in with that Asian orbit. But I think we're really headed towards a much more fragmented, regionalized world in which the dollar as the global reserve certainly won't disappear overnight. That never happens.

• 18:58Speaker 01

  You know, if you look back to other similar paradigm shifts, like when sterling, the British sterling, lost its place as the global reserve, it wasn't like an overnight thing, but there was a lot of ziz, ziz, ziz, up and down market volatility that kind of let you know, ooh, there's a change of foot here. And then eventually, the dollar replaces sterling and you're in the post-Bretton Woods period. So I think that's where we're going. I think that there will be more trade done in RMB. I think if Europe were to get its act together and pull together as a political union and issue... Shared bonds that the world would snap them up as a hedge against the dollar. Now, it's possible if we were to see a real huge turnout in the midterms for Democrats,

• 19:43Speaker 01

  that markets would like that and they would say, okay, well, you know, let's slow down this this process towards a new world, but I'm not so sure we're going to get there.

• 19:54David Hoffman?

  I want to ask about whether this phase change of the global order is a one way street.

• 20:01Speaker 01

  That's a good word. That's a good word, but no phase change.

• 20:03David Hoffman?

  Yeah. Is it? Is this a one way street? Like, say, say, the Democrats come in when, like, sweep the midterms, have a very strong presence, and it's it's an indictment of Donald Trump's leadership. And it's like, okay, we the United States actually don't agree with anything Donald Trump's been doing for the last two years. Let's try and unwind this. Can we actually go back? Or is there no going back? Is the damage done? Or is there? Is there possibility an undoing of what has been done?

• 20:28Speaker 01

  I don't think we're ever going back to like, the early 90s sense of this is the end of history. This is the, you know, the the US led Washington consensus is is it. This is the the global order from now until forever. We're not going there. I think depending on what kind of Democratic victory you saw, we could go one of two ways. If you saw, as I expect that you would, a Democratic, a sort of economic populism emerged from the left in which the left says, yeah, this this point, the average working, voting populations in rich countries have have been penalized to a certain extent

• 21:12Speaker 01

  by globalization, and we need to tweak that. We need to soften it. We need to come up with a trading system that, say, accounts for the fact that there are higher wages and and environmental standards in rich countries. I think you could slow the process somewhat, and it might be smoother. But I don't think you could turn it back. On the other hand, if you saw a Democratic victory and then policymakers saying, we just want to pretend like none of this last eight years happened. I actually think you would see more of a resurgence towards a new order because I really think that the neoliberal economic message simply does not resonate anymore with working people.

• 21:51David Hoffman?

  Right now, we're having, both sides of the aisle are debating about the strategy of Donald Trump and the effectiveness of the decisions being made. Like recently, the podcast that everyone is listening to is the All In Podcast debate between Larry Summers and Ezra Klein on the, on the right side of the spectrum, or excuse me, on the left side of the spectrum versus David Sacks and Chamath on the right. And David Sacks and Chamath are all saying, this is all part of the strategy. This is the master plan, beautifully executed. Larry Summers and Ezra Klein are saying, seriously, this is a huge foolish error. There's this, we are losing trust. Do you have an opinion about where we land between those two ends of the spectrum?

• 22:30Speaker 01

  Well, definitely between them. I'll start with the kind of low hanging fruit, which is Larry Summers and Ezra Klein. I mean, you know, Larry, I think, I actually think he was sort of disingenuous with his criticisms of inflation. I think inflation has come from a lot of different places, not just the Biden fiscal spending, which by the way, led to the most robust post-COVID recovery in the rich world. Ezra's new book, you know, with Derek Thomas, Abundance, tries to set a new agenda for Democrats, but it's frankly, it's slight. And I say it's slight because it's focused on the low hanging fruit of regulation. And don't get me wrong, I think there's plenty of room for government to

• 23:14Speaker 01

  become more efficient. And certainly, it's important for Democrats to think about that. It's not usually their sweet spot. But even if you were to make every single tweak in the housing market that you could make, every single tweak to transportation policy, you're not going to get in this, quote, abundance agenda, down to the real problem in the economy, not just in the US but globally, which is concentration of power. This is what the neoliberal system wrought. And this gets back to The only goal was get from point A to point C as fast and cheaply as possible. That sorted for high concentration in China. It sorted for high concentration in a handful of large global multinationals.

• 23:54Speaker 01

  It has led to a gilded era level of concentration in core industries. Technology being primary, but but finance, which has only become more concentrated since the great financial crisis, pharmaceuticals, you know, all the important stuff has just gotten more concentrated. And that math doesn't work because in a 70% consumer spending economy, if you can't create some more jobs and put, you know, spread the wealth a little more evenly, you're in trouble.

• 24:21David Hoffman?

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• 26:32David Hoffman?

  around are just like AI-generated videos of people that look like they're Donald Trump's base in factories like building iPhones. And I think the punchline that these memes are really trying to land are kind of the farcical idea that United States citizens are actually interested in some of the jobs that Donald Trump wants to bring home. Now, this is also a debate on crypto Twitter where some people say, like, when I, when I give this take out on Twitter, that the United States citizens don't actually want these jobs. I am critiqued with, well, I'm a podcaster. I'm a service, I'm in the service industry, right? And so maybe actually I'm out of touch.

• 27:14David Hoffman?

  And many of American citizens actually are very happy working in factory jobs, doing manufacturing, and that's what they are primarily interested in. What do you think about this conversation? About bringing manufacturing jobs back home? Does the form factor even fit inside of the country that we have?

• 27:31Speaker 01

  Yeah, I'll answer that question. And I realize I didn't answer the second part of your previous question about the plan. Is there a plan that's being executed on perfectly? But let me just answer the manufacturing question. For starters, I mean, I know a lot about manufacturing. My dad ran factories in the Midwest, in the Detroit Orbit auto components and supply chains. And-

• 27:53Speaker 01

  Today's manufacturing is not your grandfather's manufacturing. And so that's both challenging, but it's also really exciting. It's challenging because these jobs actually, they create, factories and industries that are doing manufacturing now create fewer jobs, individual numbers of jobs than they used to, in part because so much more technology is used. But the fact that there's so much more technology being used actually sort of transforms the entire idea of what is manufacturing and what is services. So let me give you an example.

• 28:27Speaker 01

  3D printing, which used to be something that was considered kind of a hobbyist's pastime, is when you use large pieces of equipment to literally spray paint materials to build up products rather than cutting them out of steel or aluminum.

• 28:43Speaker 01

  This can now be done at scale. It's being used increasingly to do just-in-time manufacturing in ways that are incredibly high-tech and actually link up to services because, you know, you can have a factory today that is spray painting an entire run of all the parts that are in a jet engine in real time. Meanwhile, the additive manufacturing company that's doing that might be working with, say, the airline, which has sensors in each of those parts that are relaying real-time information down to a factory where engineers are tweaking the algorithms that shift the design of the product in real time to account for problems.

• 29:25David Hoffman?

  Incredibly cool.

• 29:27Speaker 01

  It's incredibly cool and it's just the beginning. We are going to, I think in the next five to 10 years, this is going to be the big tech revolution. We're going to see major, major advances in that whole industry. It actually got a big boost during COVID because the fact that normal supply chains were broken meant that these proto prototypes and sort of, you know, proto efforts around additive manufacturing were really utilized and just took off. People were spray painting respirator parts and, you know, and PPE. So. So that's, that's part of what's important here. Manufacturing is also about resiliency. So it's not just about jobs. It's about resiliency.

• 30:09Speaker 01

  It's about the fact that, you know, if there is going to be a more fraught, more fragmented, potentially more volatile world, you want to be able to make things quickly locally and regionally. You want to be able to hub consumption and production a little bit more tightly together, which also has the advantage of decreasing carbon load. So if you look at supply chains as a whole, the entire global logistics business, that's shipping by air, sea, truck. That industry is the second largest global emitter of carbon after China. So if you want to cut emissions, make supply chains shorter. If you want to make supply chains shorter, use high-tech manufacturing. These are lots of good reasons to do that.

• 30:54Speaker 01

  Let me now quickly answer the second part of the question you asked earlier, which is, is there some plan that Trump's trying to execute on? I mean, again, Steve Mirren at the Council of Economic Advisers wrote this really quite interesting paper called "A User's Guide to Restructuring the Global Trading System." And it was a pretty good outline of what the high-level plan is and frankly, the risks involved in it. And the plan involves weakening the US dollar to a certain extent so that you can make US exports more competitive. US exports become more competitive. Investors want to put money into manufacturing in the US again. That allows the US to build not just chips, but ships, more control over commercial logistics,

• 31:38Speaker 01

  over security. Trump, I would say, is less interested, although he professes to be interested, I think he's less interested in the jobs piece of this than Biden was. And I also think that it's a complicated plan at the best of times, and he is not executing it by the playbook, even of his own people.

• 31:55David Hoffman?

  Okay, I think Donald Trump, for better, for worse, sometimes praiseworthy, sometimes critiqued as a vibes-based president.

• 32:04Speaker 01

  Yeah, totally vibes.

• 32:06David Hoffman?

  Totally vibes, yeah. So there was an interview where people were asking about there were damages done to United States companies based off of this positioning of the tariffs. And he was asked if there would be like refunds, refunds not the right word, but just like because of the damage done by the policy to United States companies, there would be some sort of compensation paid back from the government to United States companies just to like, hey, sorry, sorry for the pain, here's a check. And a reporter asked him, what would be the policy? Or how would you go about determining who deserves some compensation versus who doesn't?

• 32:48David Hoffman?

  And he just responds, instinctively, just vibes, just straight vibes. How do you just like think about that as a leader of the United States, as the leader of the quote unquote free world, the capital markets of the United States, having this like instinctive vibes-based president?

• 33:05Speaker 01

  Oh, boy, where to begin? I mean, there's so much that we could say about Donald Trump's psychology, you know? And part of this is about wanting power, wanting attention, wanting to keep everybody on tender hooks. I mean, there's a kind of a, you know, without breaking those rules against, you know, diagnosing people you've never met, not that I'm a shrink, but you know, I think there's some narcissism at work here. That said, the thing that really worries me about the vibe stuff is that this is how Russia, Turkey, you know, autocratic states tend to be run. They tend to be run by individual leaders that say things, yea, nay, and then you watch the fortunes of entire industries and societies kind of rise and fall. I heard remember once, I put this in my most recent column.

• 33:51Speaker 01

  Several years ago, Putin was speaking on television about a particular coal oligarch, who I guess had displeased him. And he said five lines about the guy. And I was watching CNBC, and they were showing the poor man's stock declining in real time, like $5 trillion was wiped off of it by five sentences that Putin uttered. And that's where we are. I mean, this is why I didn't think it was great that when Donald Trump posted on Truth Social, "It's a good time to buy," that that was a good thing. This isn't stabilizing the markets. This is just showing us that he has the power to push them up and down. That's not what investors want to hear.

• 34:30David Hoffman?

  And I think we're still getting clarity about the impacts of the decisions made by the Donald Trump administration over the last seven to 10 days. But you can just look at the markets, both the bond markets, stock markets. There are hedge funds being liquidated, people getting carted out. There are real impacts on businesses based on this like top-down influence over the markets, of which Donald Trump knows he has. Like, he keeps on saying, "I'm not looking at the stock market. I'm not looking at the bond market." And I don't think anyone is really believing him.

• 35:00Speaker 01

  No, absolutely not. It's funny, I was just on a program with his former press secretary the other day on CNN, and she was saying that, you know, he's playing a somewhat different game this time around, but eventually, he will always pay attention to the markets. He will always revert. And I think the difference this time around is, it's not even so much the equity market he's paying attention to, it's the bond market. Because the bond market is essentially what says the US still has preeminent financial power. Once that starts to fall apart, the US doesn't have a lot of leverage. And so, I hope for all of our sakes, he's watching it carefully.

• 35:39David Hoffman?

  What signal did you get from the fact that Donald Trump did the 90-day tariff pause? He made that announcement, something like 12 to 18 hours after the bond market, pretty credibly showed that it was not going down anymore. I think the yields on the 10-year bond cratered at something like 3.8%. You know, going down pretty far. Everyone was, you know, applauding Bessein's strategy here to get those bond yields down because of all the debt that we have to turn over over the next six, nine months. That's the whole story there. But then, but then, bonds did the surprising thing that no one was really expecting, and they just went back up. And they went all the way back up to like 4.7%. And that difference between like 3.8% and 4.7% is-

• 36:20David Hoffman?

  Something in the hundreds of billions of dollars of future costs to the United States because of the debt that we have to pay. And then a like, like 12, half a day later, Donald Trump announces the 90 day tariff pause. What signal did you get from that order of events?

• 36:37Speaker 01

  Well, you know, I mean, everybody keeps talking about the old James Carville quip about, you know, I want to come back in my next life as the bond market. I think he looked at the bond market and said, uh oh, this isn't going down as well as I would have thought. And, you know, also you saw all the advisors flying to Mar-a-Lago and you heard the billionaires on television and on radio saying, oh, we don't love this. This is going to make it harder. This is, you know, they were using the recession word. They were saying, talking about stagflation. And, you know, I think he was able, as we all kind of knew he would, to find a way to spin this as some kind of largesse on his part, but I think it was entirely a reaction to the market.

• 37:17David Hoffman?

  One effect that I think we are seeing when we net this all together, kind of going back up to those three market indicators that I pulled up earlier, stock market going down, 10 year yields going up, the value of the dollar, the Dixie, the index going down. My interpretation of this is a decline of the significance of the United States as the financial center, the gravitational center of the world for finance. Now it still is, it still likely will be dominant, but you are seeing it lose its strength, at least to some fraction, to some degree. And we, we continue to see these metrics where they go as how far that goes, whether United States will completely lose control over that.

• 38:00David Hoffman?

  I don't think anyone will ever think it's completely losing, but you're seeing a decrease of strength here. And that's again, my interpretation largely because of the chaoticness of Donald Trump. Markets love stability. They love assuredness and that's not what Donald Trump is supplying into the market. So as a result, the chaoticness is creating insecurity in the markets and that's what we're seeing. One benefit, maybe if you just want to comment on that, I have a question for you, but go for it.

• 38:26Speaker 01

  I completely agree. And I think the fact that you've seen, you know, gold prices largely going up with the exception, and this is worrisome, you did see a couple of times gold going down as people sold it off to pay losses in other areas, which is like, whoa, that tells you there's blood on the street somewhere.

• 38:43David Hoffman?

  Now, the, I want to talk about one potential benefit of this.

• 38:48David Hoffman?

  United States centralized supply chains is a concept out there. And I think of anyone, the person who's really mastered the idea of a controlled, verticalized, domiciled supply chain is Elon Musk. Tesla, Tesla is assembled from parts all over the world, but even SpaceX has a lot of, a lot of United States self-built materials. And I think as a result of that, a potential future out there is because of the chaoticness in the market and because of general chaoticness in the, in leadership and because of the shifting phase change that we were talking about earlier, United States companies are going to be interested in centralizing their supply chain in the United States. And that is going to be a reaction to the leadership and to the, the market that we are seeing.

• 39:33David Hoffman?

  And that might be a long-term outcome here of companies are just going to find ways to de-risk and they're going to choose to de-risk by figuring out how to put as much of their supply chain in the United States as possible. That is just my uninformed take. How would you react to that?

• 39:49Speaker 01

  No, I think that's fair. Um, you know, it's going to depend on the industry. It's going to depend. Um, I mean, you think about someone like Elon Musk, I totally agree with you. Tesla, I was always interested and impressed that he had developed a, a pretty vertical supply chain there. On the other hand, if people are rejecting Teslas, as they are in many parts, in many of the top markets in the world, California, Germany, et cetera, because of his politics, well, it's not really going to matter. Nobody wants to buy your product. That said, I think for sure, um, the semiconductor industry, I mean, I'm, I'm glad to finally hear Trump stop talking about dismantling chips and start kind of going back to, yeah,

• 40:34Speaker 01

  we do, I mean, you heard Besen say the other day, we need to make our pharmaceuticals and our semiconductors in the U.S. And that was like, okay, yes, this makes sense. And by the way, I think that Europe should make some too. I think the Chinese should make some too. Taiwanese, great, but you don't want something that is the lifeblood of the global economy and being made in one place. That doesn't make sense for anybody.

• 40:54David Hoffman?

  Hmm. So, uh, Rana, when we, when we wrap this episode up and we go back to, uh, well, me, I'm going to go back to looking at Twitter. I'm going to go back to like seeing who and where Scott Besen is making words. What are you looking for as signal? Who are you paying attention to? Uh, are you looking at the bond market? You're looking at the stock market? Where are you trying to get signal for how this plays out in the future?

• 41:17Speaker 01

  So I'm always looking at the bond market. I'm looking at the price of gold. I'm looking at the oil dollar peg. Is it weakening? I'm looking at the percentage of trade being done in RMB and how that's shifting. And I'm looking just generally at people who are about political risk as opposed to economists. I mean, economists have gotten it wrong so much in the last 20 years in particular, but often in the last 40 years because they've acted as though the world could be modeled in these very kind of mathematical ways. There's a lot of physics envy, you know, they want to kind of believe in perfect formulas. And the world just isn't like that and it's becoming less and less so.

• 42:00David Hoffman?

  I know crypto isn't really a main player in this story here. And I'm not sure how informed or how much you pay attention to the crypto markets. But if you have any opinions about how crypto is relevant here, I'd love to hear them.

• 42:15Speaker 01

  Yeah, you know, if we talk about crypto as non-sovereign backed, you know, commercial crypto, Bitcoin, things like that. I think that for some people, particularly younger people, it is kind of like a digital gold. They're looking at it as a hedge against a post-dollar world, something that is finite in some way and thus can't, you know, the value of it can't be inflated away. I personally would never buy crypto because I think unlike gold, it doesn't have, you know, thousands of years of solid value behind it. So I just don't see the point, but I'm not a crypto billionaire, so.

• 42:54David Hoffman?

  Let me share with you some of the conversations that has been going on in the crypto industry downstream of the tariffs and I'll get you to reflect on them and see how well they land. One of them is that, well, tariffs don't impact crypto. And so you see the Apple stock falling because of tariffs on Chinese products. You see the stock market falling just because like these tariffs have material impacts on these like United States companies. Now you see crypto falling too because it's just correlated risk assets, but. There is no crypto asset out there that actually is impacted by tariffs. And that's like an interesting feature when you zoom in, but you can also zoom out and understand that, well, crypto exists on the internet.

• 43:35David Hoffman?

  And while we are having this global order unwind where we are shifting away from globalism, we are going back to some sort of isolationism, every country is going to look after themselves first. Well, crypto exists on the internet. It is inherently a cross-border, transnational phenomenon. It exists at a layer above the nation state. And so while there has been this pushback against globalism, you are still finding this transnational globalism energy on the internet, which is where crypto exists. And so it's a little bit, we get, these are not the same things, you know, you're like, crypto will never produce an iPhone, it will never produce a car, it will never produce many pharmaceuticals. But nonetheless, there is this inherently global phenomenon happening in the cloud,

• 44:19David Hoffman?

  in the internet, in the crypto industry. Any thoughts or reflections on that kind of concept?

• 44:25Speaker 01

  Yeah, I hear what you're saying. I mean, and you know, I know, I know people that believe that crypto has a place in, in the way that you're describing. I guess when I hear this, I reflect more on the kind of techno optimism slash techno fascism that, you know, fuels people like Elon Musk that kind of want a world that exists above the nation state, that kind of floats at 35,000 feet. And, you know, there's been a lot of scary regimes. Mussolini's Italy was very techno optimistic. apartheid South Africa was very techno optimistic. And this idea that you can somehow hover above the nation state when central banks,

• 45:09Speaker 01

  by and large, still are not interested in this stuff and the average person has no idea what it is, not sold yet.

• 45:17David Hoffman?

  Rhonda, thank you so much for joining us on Bankless today. I really appreciate your insights.

• 45:21Speaker 01

  Thank you.

• 45:22David Hoffman?

  Banklessation, we didn't talk about crypto too much today, other than these takes at the end, so maybe the disclaimers don't make sense. But nonetheless, crypto is risky. You can lose what you put in, but nonetheless, this is the frontier. We're glad that you're with us on the Bankless journey. Thanks a lot.