76 - Inflation in 2021 | Lyn Alden

Lyn Alden returns to the podcast, this time to discuss Inflation. Founder of Lyn Alden Investments, we keep coming back to Lyn because of her sharp analysis and compelling macro takes. We explore the three types of inflation, how they intersect and affect one another, and what this means for the global outlook of crypto and society. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ Topics Covered: 0:00 Intro 6:00 Lyn Alden & Overview 10:08 Fiscal Policies & COVID 19:02 3 Types of Inflation 27:22 Ordering & Measuring 32:50 The Long Arc of History 40:57 Transitory or Permanent? 49:22 Wages vs Assets 56:08 The Effects of Inflation 1:00:00 Winners and Losers 1:09:40 A Global Perspective 1:16:40 The Death of Dollar Dominance 1:23:03 Multi-Polar Reserve Currency 1:27:50 COVID Delta Variant 1:32:57 Where Crypto Comes In 1:39:12 Ethereum & The Bull Market 1:45:34 Advice for Listeners 1:48:34 Closing & Disclaimers ------ Resources: Lyn on Twitter: https://twitter.com/LynAldenContact?s=20 Lyn's Website & Newsletter: https://www.lynalden.com/ ----- 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.

• 0:08Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, inflation episode. We booked Lynn Alden on this episode because we wanted to learn more about inflation. It's in the headlines. It's everywhere. I feel like for the first time, maybe I'm experiencing it in everyday life. What a fantastic conversation with Lynn, huh?

• 0:39David Hoffman?

  Inflation in 2021, I think, is a massive subject that we're all trying to wrap our heads around. And I'm actually really excited that the, I think, the number one person to help answer this question is a crypto person. I mean, Lynn Alden, she isn't exclusively a crypto person, but she really understands crypto to a very deep degree. And, you know, talks about crypto when we talk about inflation. Interestingly enough, however, Ryan, we obviously actually didn't get to the crypto conversation until the very, very end of the podcast. It was inflation for like, the first two thirds of it. But this is a subject that I really wanted to answer for my own benefit. And we had to just go out to the leading expert on inflation and federal, Federal Reserve policy, monetary policy, macro markets, to

• 1:24David Hoffman?

  help us understand like, what the heck is going on with inflation in 2021?

• 1:28Ryan Sean Adams?

  Yeah, it's funny, because I feel like I'm seeing it in everyday life, like at the grocery store, right? You know, like gas pump, like restaurant prices, supply shortages. Ever since we had Jim Bianco on, and he talked about, hey, when inflation comes, you'll feel it in the form of all of these things you can't get that you want. All of these like disparities in supply and demand. And I'm starting to see that everywhere. So I think it was really important. We've never had a episode that just dives right into the topic of inflation and its three forms. And that's what this episode is. So if you don't know any- Anything about inflation, this is a fantastic episode.

• 2:13Ryan Sean Adams?

  If you know a decent amount, like intermediate level, this is still a fantastic episode. Because Lynn gives these really deep and nuanced explanations of just about every facet of this thing. Whether it's like the geopolitical implications or wage earners versus kind of capital asset holders. Or like all of the related subjects of, of, you know, what the Fed can do about this. Super nuanced, super detailed. This is kind of a canonical episode for me at least on inflation. I plan to listen to this a few more times.

• 2:47David Hoffman?

  I find it really interesting, at the very least, partly also concerning that the most, the person that can explain inflation with the level of precision that Lynn Alden can, that's not, it's not coming from the Federal Reserve. Like the word salad coming out of the Federal Reserve is not helping me understand what inflation is. Who's helping me understand what inflation is? It's somebody like Lynn Alden, who, you know, private sector, does her own research, pays attention to crypto.

• 3:17Ryan Sean Adams?

  Not someone you're gonna see on CNBC, right?

• 3:19David Hoffman?

  Right, yeah, yeah. And so like the person that I go to to understand inflation the most is a, somebody who like is really bullish on crypto. And that makes me feel good in the sense that like, oh, I'm glad that I feel like I'm in the right place. But also bad in the sense that the policymakers and the leaders can't explain inflation the way that Lynn Alden can.

• 3:42Ryan Sean Adams?

  Absolutely. I, I, I think very few people actually know what inflation actually is and why it's caused. And whether it will be transient or whether it will be persistent, how to even think about the topic. And that's what this episode goes into. So guys, we are going to get to the episode, but before we do, we want to thank the sponsors that made this possible.

• 4:00David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries. Just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap.

• 4:44David Hoffman?

  Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. Balancer is a powerful platform for flexible automated market makers. Typical AMMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs in DeFi. With Balancer, you can access the full power of multiple tokens inside of one single AMM,

• 5:28David Hoffman?

  which unlocks an entirely new playing field of possibility. This makes Balancer an awesome building block for so many different use cases. Balancer pools can make asset indices, but instead of paying fees to portfolio managers, Balancer lets you collect the fees from traders who use your portfolio for liquidity. Additionally, Balancer smart pools can be programmed to have properties that change according to predetermined rules, such as changing the swap fee based on market conditions, or even liquidity bootstrapping pools, which can help you launch and distribute your token with day one liquidity. At Bankless, we use a liquidity bootstrapping pool to sell our BAP t-shirts to much success. Balancer V2 brings powerful new features that makes your money work even harder for you.

• 6:09David Hoffman?

  In V2, idle tokens are capable of generating yield in DeFi without sacrificing liquidity in the pool using Balancer's asset managers. Balancer's vault architecture lets you trade between Balancer pools at a fraction of the cost versus trading on other platforms. Balancer's mission is to become the primary source of liquidity in DeFi by providing the most flexible and powerful platform for asset management and decentralized exchange. Dive into the Balancer pools at app-balancer.fi.

• 6:40Ryan Sean Adams?

  Bankless Nation, I am super excited about our next guest. We have the founder of Lynn Alden Investment Strategy, Lynn Alden herself. She's a leading expert in macro markets. She's no stranger to crypto, and she's absolutely no stranger to the Bankless Podcast. We had her on the show about six weeks ago, where we talked about the dollar dominance, six months ago, excuse me, that we talked about the dollar dominance and the death of the dollar dominance. She focuses on long-term debt cycles, how it's impacting virtually every market out there, so crypto, fiat, bonds, equities, everything. And when we asked crypto, because Dave and I wanted to have an inflation podcast, when we asked crypto, who the best person to bring on

• 7:19Ryan Sean Adams?

  to explain inflation to us, there was a resounding message from crypto, and that was, bring on Lynn Alden once again. So here we are, Lynn Alden. It is fantastic to have you back on Bankless.

• 7:31Speaker 02

  Thanks for having me back. And I'm always happy to talk about inflation. It's been a big topic that I've been covering for the past couple of years.

• 7:37Ryan Sean Adams?

  Yeah, absolutely. And this feels like a topic that is increasing into mainstream headlines, where I'm starting to see it, starting to get like people on the street asking about inflation, starting to think about inflation. This is something that they haven't thought about for a while. You've been thinking about it. Dave and I think about it from time to time, but inflation is here. 5.4% in June, that is from a previous, the previous year's June, so it's kind of a 12-month trailing. 5.4%, should we be alarmed, Lynn?

• 8:07Speaker 02

  You know, certainly, obviously, it impacts people differently. And so probably people like us are less impacted than than people that say have a much tighter, you know, difference between their income and their expenses, right? So people that are more sensitive to grocery prices and more sensitive to that sort of thing are getting pretty hit by this. And so, you know, we are in a period where inflation's going up pretty heavily. And the key thing I think to keep in mind is that it's not, it's not like the same things are going up. We're kind of getting this cycle going out. So one of the big drivers of inflation over the past, say, you know, four months, was used car prices skyrocketing. There's actually ended being a pretty big part of that component. We've also seen food prices go up, a bunch of other things go up.

• 8:49Speaker 02

  Well, we still had disinflation or deflation in some other categories like, for example, you know, men's business clothes, for example, are actually deflationary while you have things like used car prices are going up. And so it's kind of like things that are experiencing supply bottlenecks while their demand is still pretty persistent. They're the things we're seeing inflation in. And I think the thing to kind of worry about, maybe, you know, going into the later half this year, the second half this year, is rent inflation, right? Because this actually, this 5% inflation spike happened while rent inflation was actually decreasing. So it was still positive. It wasn't deflating, but there but the, you know, basically went down from, say, 3% inflation down to like 2% inflation, because you had, you know, rent moratoriums and things

• 9:30Speaker 02

  like that. But we've got this big surge in house prices. And as rent moratoriums and basically all these different things kind of expire, we're starting to see a bottoming in that rent inflation. And, you know, if they if they follow real estate prices as they historically have, say, like an 18 month lag, we should see some pretty significant rent and owner's equivalent rent inflation in the back half this year. So I do think that this is going to be stickier than some of the economists expect, and that there is still parts of the market to worry about. I'd be especially worried if I was in in bonds, right? For example, investors that are overweight bonds and cash.

• 10:08David Hoffman?

  Lynn, that really weaves together a story that I'm particularly trying to just to find out what what this story is for for my own purposes. And this story got weaved together, I remember when we had Jim Bianco on the podcast, and he talked about how there were just breakdowns in supply chains. And there were certain sectors of consumer goods that had just incredible shortages, just because of the supply chains couldn't handle it. There's also labor shortages everywhere. And then there's weird market dynamics going on in the commodities. Like, we saw lumber just go absolutely crazy. And then now it's retraced. But there's a lot of just different things happening. And then coming in with this extremely high inflation in May,

• 10:51David Hoffman?

  is what's the common denominator to all these things that are have been happening, happening in the last like few months or so? Is it all a story of inflation? Or is there something else that's also going on that's worth discussing?

• 11:04Speaker 02

  I would say the two common denominators are fiscal policy, so the fiscal stimulus on one hand, that impacts demand levels. And then, of course, you know, the virus, the lockdowns, the logistics there have kind of been backed up over the past year and a half. And so if you look at the supply side, obviously, when you have, you know, basically, supply constraints, shipping constraints, right, there's so many, so only so many ships built, right, that can transport things from China to elsewhere. And so when you have a highly global supply chain, you know, you basically, you increase efficiency, but you decrease resiliency. And so we've spent the last 25 years making our supply chains as global and efficient as possible, but less

• 11:46Speaker 02

  resilient than they would be if they were, you know, more kind of in-house, so to speak. And so, you know, on one hand, you have that problem. And there, you know, you have specific bottlenecks like ships, semiconductor foundries, and some of those key things trickled everything else, right? So, for example, the car, the limitation on new cars and now even used cars is part because of that semiconductor shortage, right? So obviously, the auto industry is a big consumer of semiconductors. And so if you have supply bottlenecks there, it trickles up through the whole supply chain. Pretty much everything we use has semiconductors now. It's like the new oil. On the other hand, you know, you have the demand surge, partially from fiscal stimulus. And so, for example, if you, if you just kind of went through this, say, you know,

• 12:27Speaker 02

  recession we've been in, and you didn't do stimulus, you'd have a reduction of both supply and demand. And so instead of inflationary conditions, you probably would have depressionary conditions, right? So fewer people would be able to afford things. And so that would keep a lid on demand, right? So used car prices wouldn't be able to skyrocket because there'd be fewer people buying cars. You know, but of course, you'd have other problems. And so policymakers were kind of in a rock and a hard place, and they went the, you know, the stimulus route. And so what that does is, you know, you know, most people got more money in their pocket. That could, you know, that took the form of stimulus checks, it took the form of extra unemployment benefits, it took the form of PPP loans to small businesses that turn to grants, there's, there's child tax credits, all sorts of things. And so that increased

• 13:10Speaker 02

  the demand that people have for various goods and services while supplies were still constrained. And so historically, whenever you have a significant rise in money supply, while you have some sort of supply constraints and key things, that's when you get inflation. So in the 1940s, we had obviously inflation and all sorts of commodities and shortages like that. In the 70s, it was very much tied to oil, right? So we had a rapid increase in money supply, while we had constraints about how much foreign oil we could get. And then here in 2021, it's semiconductors and shipping and certain other things.

• 13:43David Hoffman?

  One pattern that I've noticed is that the United States was definitely the most aggressive with its stimulus. And now it's also experiencing the most amount of inflation. How correlated would you say those two things are?

• 13:56Speaker 02

  I would say highly correlated. And that's something I've been pointing out to this 2020, saying that I was expecting the US to have more inflation outcome. Because if you look at, say, you know, I think a lot of people make this mistake of looking at just central bank balance sheets going up. But that's not, you know, that's not tightly correlated with inflation. Instead, it's about broad money supply. So that the money that's actually in people's checking in bank accounts in broad circulation, rather than, say, the wholesale money that banks have with each other. And so, you know, over the past, you know, 18 months, we've seen a much larger increase in US broad money supply than we saw in Europe, than we saw in Japan, than we saw in China, most other countries, other than the, you know, the a handful of emerging markets that are experiencing, you know, borderline hyperinflation. But besides those, the US has been, you know,

• 14:41Speaker 02

  pretty much the largest increase in broad money supply, at least out of the developed and most emerging world. And so that's, it's, it's, it has good and bad things. So on one hand, you know, the GDP recovered quicker, right? So people bounced back quicker, our, our consumer expectations and positive sentiment rebounded faster. But on the other hand, you know, increased demand faster than the supply constraints could handle. And so, you know, basically, our imports increased, while our exports didn't really increase as much, right? Because we're the ones inflating more, stimulating more. And so our demand recovered faster than our supply. And so, yeah, I think that's a very tightly correlated thing. So if you look at a chart of money supply and

• 15:22Speaker 02

  inflation for most of these kind of, you know, large markets, you'll see that there's pretty much a one to one correlation between how much their money supply went up and how much inflation they're currently experiencing with a lag.

• 15:34David Hoffman?

  Lynn, you talked about how the decision makers were in a rock and a hard place and they eventually had to choose one path and we'll get into why the policymakers are in the rough spot that they were in and we talked about that in our first podcast with you as well. I'm sure it's going to be a reoccurring theme, but with regards to either choosing to add stimulus or not and then eventually policymakers chose to add more and more stimulus, would you say that that was the correct move or just an overall good move? How would you rate the goodness of that choice?

• 16:11Speaker 02

  I think there's parts of it that are good and bad. So I would say somewhere in the middle of that score range. And I would say that the mistakes, a lot of the mistakes that basically we're paying for now were set back decades ago. So I would say the policy from, say, the past 25 years has been a very low score. I think that's what planted the seeds for this. And so I would place the problems mostly in that sense. So when we look at what's happening in this kind of whole fiscal round and monetary round, I would say policymakers basically, because there's so much debt in the system and because they've so relied on using increasing prices of financial assets to prop up the market

• 16:53Speaker 02

  and because of the structure of the global dollar system. The US is very financialized, more so than even most other developed countries, and we're very reliant on our asset prices being elevated. And the average consumer only has, say, a month before they run out of money. They don't have a lot of savings. And so when we encounter this problem, in any kind of fiat regime, when they're faced with nominal collapse, they always choose to print. And so we saw that this time. That was kind of my base case going into this. And there are certain things that are worse than others. So back in 2008, the biggest problem with how they did that was that they bailed out the banks and things like that, but they didn't bail out the homeowners. So it was kind of the worst of all worlds.

• 17:38Speaker 02

  It was like socialism for the rich and capitalism for the poor. And so that's why you had on different types of... Populism from different sides of the political spectrum. So you had the Tea Party on the right, you had Occupy Wall Street on the left, and you got a lot of pushback for that. And this time, you know, they kind of said, okay, socialism for everyone. We're gonna, we're gonna bail out companies, we're gonna send stimulus checks, we're gonna send, you know, all sorts of things. And so on one hand, that's, it's less bad than what the 2008 thing was, right? But it's, you know, so you have, for example, personal income for the median person went up rather than down, because if you include all the stimulus they got, it kind of offset a lot of their issues, not for every single person, but on a kind of a large aggregate. But that does come with consequences.

• 18:20Speaker 02

  And then there's kind of subsets of their policy response that I think were terrible, like the Fed buying corporate bonds, for example. I think that set a really, really bad precedent and, and certain policy actions like that. I also think that the Fed's kind of, you know, like verbal navigation of what's going on was, was in large part inaccurate and misleading and kind of, you know, it's like they can't say certain things out loud, so they have to kind of say things in ways that end up sounding like political speech. So we just kind of, you know, make fun of them. And so I would say it's a very mixed outcome, but they just didn't have that many options. So pretty much they're, all of their options were bad, more or less. And they, you know, they kind of could navigate that in different ways. And I think they, somewhere in the middle, I would say.

• 19:03Ryan Sean Adams?

  So, so Lynn, I want to zone in on a few things that you're saying. You said that the seeds for the inflation that we're experiencing now were planted like, like decades ago, right? And I, I think people are sort of wondering what the connection is between, say, 2008 and now. Like, are, at some level, are we sort of reaping what we sowed then? And I'm wondering if you sort of get into the, the different types of inflation? Because for, let me throw out sort of kind of the, the way I see inflation. You, you tell, you'll, you tell me if this is correct. There's kind of money supply inflation, which is sort of Fed balance sheet level inflation. Then you have asset price inflation, which is the price of stocks and, you know,

• 19:48Ryan Sean Adams?

  homes and assets that investors buy. Then you have CPI inflation, which is what we were just talking about. When I asked you the question of like 5.4% June year of the year, that that's large. And it seems like mainstream only focuses on that third component, right? That that's CPI inflation. But I'm wondering if all of these are somewhat tied together. You also mentioned like fiscal policy. It seems like once fiscal policy, once we start printing checks and actually giving it to individuals, that's when you start to get that CPI inflation to go up. Before that, when we were printing money and giving those to to bank bailouts, it seemed like that inflation went into asset price inflation. Am I thinking about this correct?

• 20:31Ryan Sean Adams?

  Is that like generally in the ballpark or what edits would you have to that?

• 20:35Speaker 02

  I think that's a pretty accurate way to describe it. Tim and I referred to decades ago. It's not only that 2008 crisis, but it goes back to say the the late 90s. And so basically, I mean, you could actually go back all the way to 1987 under Greenspan, where we started to do this concept where the Fed begins caring about asset prices. So before then, they cared, you know, they cared less about asset prices. But starting with that 1987 crash under under Greenspan as a Federal Reserve Chair, they started to, you know, have it a kind of an unofficial mandate to bail out the stock market when it crashes. And so that that started in 1987. And then we started to see it in the late 90s when you saw long term capital management for people that are aware of, you know, that that big, you know, kind of

• 21:21Speaker 02

  implosion that happened in markets. It's not really well versed among, say, retail investors, but most people are, you know, involved in, say, macro level trading or familiar with that. The Fed and the banking system basically had to bail that out. They could have chosen not to, or they could have done it in a different way. But so they kind of, you know, we started to get this concept of the Greenspan put, the idea that if markets go down, Greenspan will be there to do things. And so even when you had a dip in, say, the late 90s, right? After a massive economic boom, massive stock price boom, when you had a pretty small dip, Greenspan came in there, cut interest rates. It was always very accommodative, always always erring in the side of lower interest rates, very accommodative, try to get those asset prices back up. And so that really Kind of set the stage for the dot com bubble.

• 22:06Speaker 02

  And then when that, you know, fell apart, then they said, basically, we need to inflate the housing bubble. Right. We needed, we need to get this all back up again. So they cut interest rates. And that kind of led to a housing bubble boom. And then when that fell apart, you had to reflate the banking system and then kind of prop up the stock market again. And so really, ever since the late eighties and especially in the late nineties, they've been in this thing where they, they just keep pushing up asset prices. And keeping interest rates as low as possible. And that really set the stage for a lot of things we're experiencing now that, that, those low interest rates. Basically incentivize, you know, companies, households and all sorts of, you know, different entities to take out a lot of debt. Especially because they're trying to buy, say, high priced homes and things like that, let alone what corporations are doing with their balance sheet.

• 22:49Speaker 02

  And so that, you know, we've had this kind of multi decade structure of encouraging debt accumulation. And so, and when you get down to where we are now, where industry rates, you know, eventually hit zero and debt's extremely high. They've boxed themselves into a corner. And so that goes back to, I, I learned a lot from Ray Dalio and his, and his concept of the long term debt cycle. Which is basically that in a normal economic cycle, like a five to 10 year business cycle. You know, during the expansion phase, you get more credit in the system. Some of it's constructive, but then towards the end of it, you start to get, you know, kind of malinvestment. People get over, over excited about the market. They start making, they start, you know, kind of losing their discipline.

• 23:31Speaker 02

  And then some sort of external catalyst comes along or some sort of policy error or something and you get a recession, a deleveraging. And so you reduce that debt. The problem is the policymakers come in and they try to prop that back up rather than letting it run its course. And so when you kind of, you know, basically you, you short circuit that deleveraging. And so debt doesn't go down to where it started. Interest rates end up at a lower low. And so debt starts going back up for the next cycle without having fully deleveraged. And so when you string multiple of those business cycles together, you get higher and higher debt as a percentage of GDP. You get lower and lower interest rates until you find out what we had, you know, in two thousand eight. And then especially here in, in, you know, back in 2020 was interest rates are zero. And there's all that debt in the system.

• 24:13Speaker 02

  And everyone's so highly leveraged that their next mechanism is to go down that fiscal policy route, which is actually where you get kind of that consumer price inflation. So lowering interest rates and doing quantitative easing is very good for asset prices. Uh, so you get asset price inflation. Uh, and then when you actually do that fiscal spending combined with that, with that, say monetization of those, of those fiscal deficits, that's when you get an actual increase in the broad money supply very quickly. Uh, and you get outright consumer price inflation because that's when you get more money in people's pockets. Uh, and so you get a big kind of shift from that, from that environment you've been in for the past 10, 20 years.

• 24:50Ryan Sean Adams?

  This is the thing, Lynn, which kind of drives me crazy about the mainstream conversation around inflation. Like, like, first of all, they almost paint it like it's kind of somewhat inevitable, right? Just like once in a while, the pernicious inflation kind of raises its head. But the, but the other thing, when, when people start talking about, you know, now we have high inflation, you know, 5% high inflation. Part of me wants to go to them and be like, no, we've had high inflation. Like, let's, let's talk about the last 15 years. You guys aren't talking about asset price inflation. And that's where we've seen a massive amount of inflation that has contributed to what we're seeing today, but also the massive inequality that like the population is so upset about now.

• 25:33Ryan Sean Adams?

  Why does mainstream ignore asset price inflation when they talk about, when they have conversations about inflation? Is this sort of a, just a narrow definition painted by, I guess, like mainstream economists and, and central bankers, that sort of thing? Like, what's the, what's the reason why they don't include asset price inflation as part of this broader conversation?

• 25:54Speaker 02

  Yeah, partially comes down from what economic school they come from. Uh, and then it comes down from what the government figures define as inflation. So when you look at, say, CPI, right, that, that's what people think of as inflation. That purpose excludes asset prices. It actually used to include home prices, but then excluded that. They, they exchange it for owner's equivalent rent, which is kind of an indirect proxy for, uh, housing prices. Uh, but basically understates it. Uh, and so, uh, you know, because, because all of our major indicators of inflation. At least the ones that are often used by the government, the Fed, CPI, PCEs, all those different acronyms. Those are measuring just the consumer part of that inflation.

• 26:36Speaker 02

  And they're doing it in a way that is, of course, controversial because they have all sorts of quality adjustments in there that people can disagree with. But basically, that's what they define as inflation. Whereas you rarely hear about, say, the money supply until, of course, 2020, when it went up like 25% year over year. That's when everybody on Twitter was talking about the money supply. But in most circumstances, you don't hear about that type of inflation. You don't hear about asset price inflation. You just hear about the ones that they're officially measured by those government statistics, which focuses narrowly on that consumer component. And so I think that is a mistake. And so we've had more awareness of it, I think, over the past year and a half.

• 27:12Speaker 02

  Because you started to see this money supply growth and there are some people out there, including me, that are trying to make people aware of the money supply more than just the CPI.

• 27:23David Hoffman?

  Lynn, would you say that seeing inflation in consumer prices, seeing CPI inflation? That that is like the last place that you finally see inflation? It's like the last place for inflation to finally emerge and instantiate itself in? Like you get asset price inflation first, like you get monetary base growth first. And if we do things right and play the economic game right, like we can have those for a while without asset price inflation. Or excuse me, without CPI inflation. But ultimately, like when, at the end of the day, when it's too much money gets printed too quickly. It finally ultimately shows up at the last, like most difficult level, which is like the CPI inflation.

• 28:08David Hoffman?

  Would you agree with that characterization?

• 28:10Speaker 02

  So that's certainly the order we're experiencing at this time. It's every cycle is a little bit different. And so, for example, back in the 1930s, you had a pretty disinflationary environment. So low asset prices and disinflation. And when you moved into the 40s, you got that outright consumer price inflation without really getting asset price inflation before it. And so you can have periods where you go straight to consumer price inflation. Largely, it comes down to which segments of society are getting that extra money supply. Right? So if it's primarily the rich that are getting the money supply, uh, it goes into assets. Right? So they don't, a billionaire that makes another billion doesn't really consume that much more. Right? He or she already has all of their needs met, so they go buy more financial assets.

• 28:53Speaker 02

  Right? They buy more, more real estate, they buy more equities, they buy more businesses. Uh, they don't go out and buy, you know, if they do buy another car, it's a drop in the bucket compared to the, you know, the consumer they already have. Whereas if you give more money to someone who spends most of their money on consumption. Right? Someone who makes a middle class salary, uh, that translates right into, you know, food prices and gasoline prices and housing prices much more rapidly. Uh, and so really it kind of comes down to where that injection of money i- is going. Uh, how quickly it kind of goes from asset price inflation to consumer price inflation. So asset price inflation is more influenced by interest rates, uh, and basically the wealthy getting the money. And, you know, if we, if we, you know, kind of take a step back, uh, you know, the,

• 29:37Speaker 02

  part of what's kind of pressured the middle class is that we've had this asset price inflation. And so, for example, we've monetized things like our homes, right? So, so for, you know, our parents or grandparents, when they bought a home, it was a much lower ratio of their income, right? So a much lower multiple of their income. Whereas today, when people want to buy a home, it's a much higher ratio of their income. And their only offsetting factor is that mortgage rates are so low that it keeps their monthly, uh, uh, you know, payment kind of, uh, moderate, uh, but then they're of course very reliant on low interest rates. And so you've kind of built that up. And so that's kind of what we're going through now. So it, you know, it really kind of comes down to who's getting the money, where that money supply is growing,

• 30:19Speaker 02

  that triggers what type of inflation you get. There's also, you know, technology over the long run has generally been disinflationary, right? So obviously if we, if we make technology better, we should make certain things cheaper. Right? So tractors made food cheaper than paying someone to do it by hand. Uh, whereas, uh, you know, basically flagship type of assets like coastal property or the best stocks or gold or, or, or Bitcoin, whatever the case may be. When you have something that people want that's inherently scarce, uh, that's not really, you know, technology is not really taking away from that. So the money supply, kind of, those things tend to track a money supply growth. Uh, whereas say food and technology items, those things tend to undershoot the broad money supply growth because they're also being made more abundant by technology.

• 31:04Ryan Sean Adams?

  That's so fascinating and it's such a more nuanced view than you hear in mainstream about inflation. I'm just curious because it seems to be the case that when we just take CPI into account, we're measuring inflation wrong at the base of it. If Lynn Alden was in charge of things for a minute, how would you measure inflation? Is there a better economic indicator out there?

• 31:28Speaker 02

  So I think it's one of those things, there's no perfect metric. So I would present it as a number of metrics, which is how I do it. And so when I have articles or newsletters about inflation, I often break it into the different components. So I would say, okay, here's what's happening with monetary inflation. Here's what's happening with, say, the broad money supply. So I would focus on that. And that kind of presents mostly the upper range for what other types of inflation can be, the broad money supply. And then from there, we can say, okay, what is a basket of goods doing? Right? And then, of course, you can have disagreements about what should be included in that basket of goods. But at least, I think when you have that combination of watching the broad money supply and then watching a basket of goods, that can tell you quite a bit about inflation. Then if you want to get into asset price inflation, you can do things like, okay, how's the median home

• 32:13Speaker 02

  price comparing to that basket of goods? How's it comparing to wages? How's it comparing to broad money supply? And then you can kind of do the same thing with equities. You can say, what is the percentages of the market capitalization to GDP? And you can offset it by a couple of different factors that could influence that outside of inflation. You can also look at equity valuations, things like that. So price to earnings ratios, including some of the more smoothed out ones, like cyclically adjusted price to earnings ratios. And so whenever I'm talking about inflation, I would try to include multiple different metrics, say a basket of five different ways to measure it, rather than trying to encapsulate everything with one indicator.

• 32:51Ryan Sean Adams?

  The central bank, it appears to me, does not do that level of analysis, Lynn. Maybe that's part of the reason we're in the trouble that we're in. At least, it sounds like there's going to be trouble ahead, but we're going to talk about that more. One of the main questions, I think, in this mainstream discourse, though, is this, people will acknowledge that inflation is here now, finally, right? They may have ignored asset price inflation. Inflation, but when you see, you know, 5.4% inflation is here. But they'll say, oh, it's just, it's just transitory, right? We're getting over this COVID thing, of course. You, you know, you, a price of used cars that goes up. Of course, that's going to fall back down. Once we're over the, this transitory period, we're not going to have a long-term inflation problem.

• 33:34Ryan Sean Adams?

  And I think some of that message is coming out of the Fed, some of that message is coming out of mainstream media outlets. Some of that message is coming out of mainstream economists. I'm wondering, because I feel like you are best positioned maybe to give both sides of the argument. Could you give us both sides? So first, what is like the steel man argument that inflation is transitory? And then what's the argument that it's, that's a bit more persistent, a bit more long-term? So let's start with the argument for why it might be transitory. What do people say about this?

• 34:05Speaker 02

  Sure. And when, and when they're talking about transfer inflation, they're talking about the CPI and those kind of consumer indicators. So we'll focus on that. And so, you know, when to steel man that argument, basically you say, okay, we have these very deflationary backdrops. So demographics are more deflationary, right? Because we have an aging population, we have slower population growth. We have a lot of debt in the system that's very disinflationary. And of course, we have technology disinflation. And so all those kind of structural forces, if you look, if you look over, say, a multi-century view, kind of the law, the law, the long arc of history is, is tends towards disinflation. In the sense that, you know, you know, our ability to access resources generally gets easier, right?

• 34:47Speaker 02

  So, so the average middle-class person can live in a way that a king or queen from 500 years ago would find remarkable. Right? So basically we have this long arc of disinflation, but it's punctuated by periods of inflation. And so that part I would say is true. But then when you zoom in on it and you say, okay, so what is transitory? And so on one hand, I will say certain things I do think will be transitory, right? So the, the biggest argument for being transitory is that it's due to specific bottlenecks related to the virus, related to shutdowns, related to, you know, kind of abrupt changes in consumer demand. Right? So everybody wants suburban real. Instead of urban real estate and you know this kind of a bottleneck for that that'll resolve.

• 35:27Speaker 02

  And so you know we're seeing price increases now, but that'll subside in say, you know, the next year. Right. So that that'd be the more transitory argument for inflation. And another part of it is that you can look at base effects. So when we, when we talk about, say, the 5% inflation that we saw since, since last June, we can say, okay, well, May and June of last year were, you know, that was kind of a particularly low point for inflation, right? Because that was kind of the heart of the lockdowns. That was when everyone, you know, was, was not really spending. And so if you say compare it to 18 months ago, you know, that say, or two years ago, that two rate at average inflation has not been quite as high as say, the 5.4%

• 36:10Speaker 02

  that we see when we specifically measure from that dip last year. And so those are the, those are the more transitory arguments. And, and there is a lot of truth to that. And so if we take the lumber example, because lumber went up remarkable. It was like, you know, went from a few hundred dollars per whatever quantity they use as their futures contract. I think it's a thousand feet and that soared all up like 1700. It was like a parabolic increase. And if we look at why that happened, obviously, a lot of people wanted suburban homes, rural homes. So you had a big increase in, in lumber demand. And then the question is, where is that supply constraint? And so if you look at, say, timber, which is, you know, earlier in the supply chain, there was no spike in timber. There was no shortage of timber. There's no shortage of wood.

• 36:54Speaker 02

  The problem was that there was, there was a limitation in sawmill capacity. So turning timber into lumber. And, and those sawmill capacity, you know, they were at capacity and they could have, you know, built more sawmills. But they said, no, we think this is not going to be super persistent. So we're just going to, you know, have higher prices, enjoy that. Rather than go out and build a lot more sawmills just in time for this demand to go away. And so you had that, I would describe that as a shallow bottleneck. So it wasn't a deep bottleneck. It's, it's a more easily resolved bottleneck. And so when, when eventually that demand subsided, partly because lumber prices got so high that everyone kind of put their plans on hold to build new houses and things like that. So it kind of took care of it. And started to get that demand and shrinking demand in lumber and that that bottleneck got resolved.

• 37:39Speaker 02

  And so that's an example of truly transfer inflation. Prices went up and then they came back down. Now, when we talk about transfer inflation, I think a big thing that the Fed and the corporate media leave out is that there's a difference between transfer inflation in rate of change terms and absolute terms. An example I like to use for there is the 1940s. So if you look at the 1940s, you had three really big spikes in inflation. The biggest spike was actually almost 20% year over year. And so you'd have this massive spike inflation and then the next year it would go away. And partially that was from wage and price controls, but it was also partially just from that actual inflation was subsiding. And because it was kind of a very specific type of inflation. Because it was kind of driven by fiscal spending rather than bank lending. And so it was more kind of bumpy.

• 38:23Speaker 02

  And so you did that, that big inflation spike would end. But there was no period of deflation to offset the fact that inflation just occurred. So if you look at what actual CPI did is the prices went up and then they just leveled off. And then we had another spike inflation. They went up again and then they leveled off. And so it was, it was not transitory in absolute terms, right? So prices went up and then they stayed at that new level. Whereas the, the rate of change of that inflation was transitory. And so of course, when they talk about transitory in the media or the Fed, they're talking about that first one. They're saying, okay, it went up. And they're not saying it's going to come back down. The prices, they're saying that it's not going to keep going up at that rate. And so that's important when you're holding cash or bonds, right? Because you say, okay, you're losing purchasing power.

• 39:06Speaker 02

  And we're just saying you're not going to lose purchasing power at the same rate for the next, you know, three years. We think that that rate's going to cool down and you're going to have a one-time loss of purchasing power, for example. And so, and then, you know, but when you look at that, you still have to look at the broad basket. So individual things like lumber might very well come all the way back down. They could be truly transitory in absolute terms. Whereas for example, when Chipotle says, okay, we're going to pay our workers $15. We're going to raise our prices by 4% to compensate for that. You know, we're never seeing those lower prices again. That's the new floor for Chipotle prices. Same thing for Coca-Cola, Procter and Gamble. When they raised prices, I mean, that is 99% not coming back down. Whereas some of these more specific bottlenecks, they can come back down. So my overall base case is that.

• 39:50Speaker 02

  You know, some of this, I think, will be transitory in rate of change terms. But it's, you know, in a broad way, it's unlikely to be transitory in absolute terms. And I think that the media does not do a very good job of separating these, those two concepts. And so that's how I phrase it. And if you say, okay, you know, if I was, again, putting on the transitory hat, I would say that a lot of this inflation is, is, you know, driven by the fiscal spending we saw. And we're unlikely to get another large burst of that fiscal spending of the next year and the, and then the year after that, right? Because now we have a Senate that's more kind of divided on that subject. And, you know, there's all sorts of, and now that you're actually experiencing inflation, that might also might kind of pull them back from wanting to do more fiscal.

• 40:33Speaker 02

  And so without that fiscal spending, you know, we kind of will revert to that more disinflationary trend over time. And again, I would, I would agree with that. If, if you don't do any more fiscal spending at a very large level, I think that, you know, prices will kind of level out and they might not keep going up at the same rate that they have been. And so I do think that there are merits to the transfer inflation view, but that they're often not described in a very detailed way.

• 40:58Ryan Sean Adams?

  But I think so. The message coming from the Fed, and I think mainstream, is that this won't be a problem in the future, that this is a, like a transitory, one-time problem, and then inflation's going to subside and it'll go back to normal. You don't think that's the case. You think that this is going to be a bit more persistent into the future and that that narrative that, you know, the Fed is saying, mainstream is saying, is somewhat downplaying inflation. Is that the case?

• 41:24Speaker 02

  Yeah, I think so. I think a lot of these prices that went up will not, not go back down. And so people holding cash or bonds got devalued. We're also seeing that bond yields are well below the inflation rate. And so I think that the bond market's very complacent, partially because it's being, you know, indirectly kind of held down by the Fed. And so, you know, I think that that, those are actually pretty big problems for certain types of investors in those assets. And I think, you know, say, we've gotten past like the lumber spike, for example. But as you go farther into this year, now we're looking at rent inflation. And then the big question, the long-term question, what happens with wage inflation? Right, because it's it's hard to get really persistent inflation without wages going up because eventually that kind of limits demand for goods and services.

• 42:06Speaker 02

  But if you start to see a a kind of feedback loop of of wages going up, that's how you get kind of that stickier type of inflation. Uh, and so you saw that in the seventies, for example, uh, whereas you know, we're kind of in the early stage of that now. So so partially from. You know, we we've had twenty five years or so of globalization, right? Ever since the mid night mid nineties, we've had this big structural trend of globalization. And that's put a lot of downward pressure on wages. Uh, and there's there's other factors like unionization, things like that. But really, the biggest factor overall was globalization combined with technology automation. We we found all sorts of different ways to hire cheaper labor or automate something. Whereas, you know, in in the previous decades, we would have had to, you know, actually increase wages for workers.

• 42:51Speaker 02

  Uh, and so if we start to see signs of that trend reversing, which I think we have, you know, globalization hasn't really reversed. But it has kind of stopped growing. So if you if you look at, say, global trade as a percentage of global GDP, that was in a multi-decade structural increase. Uh, but then it kind of topped out and we've been and we've been kind of holding whatever percentage that is uh for several years now, right? So, uh, and and I think uh this whole kind of, you know, uh, pandemic situation kind of highlighted some of the risks of of. Uh, you know, uh, extreme globalization where in the early phase of that pandemic, the United States says, wait, we can't make ventilators. We can barely make masks. We have to ask China for masks. And we find out that most of our pharmaceutical components are made in China.

• 43:34Speaker 02

  And we say, well, that's not that's not kind of a good thing from national security, right? And so I think we've kind of topped out in terms of globalization. And if indeed we start to see more of a political will to reshore some of those supply chains. You know, that we go back to early thing, we we spent twenty five years increasing efficiency at the cost of resiliency. And if we start kind of going the other direction, we want to increase resiliency and increase domestic, uh, you know, opportunities. Uh, that that will probably come at the cost of efficiency, uh, and therefore come at the cost of of higher inflation. And and and, you know, in a good way, you have your wage growth, but then you also get, you know. Inflation that kind of comes along with that. And so I think that's the the big risk to watch from, you know, I think the the media is focused on these lumber spikes or these, say, specific semiconductor shortages.

• 44:19Speaker 02

  Whereas I think because the broad money supply has has increased and that's permanently increased, I do think that we'll we'll start to increasingly see that trickling into wages, trickling into rents. Because those people that that had, you know, the the housing costs went up, rents are going up. They're going to demand higher wages in order to make ends meet. And I do think that that's going to be persistent for longer than the Fed is suggesting and that the corporate media is suggesting.

• 44:44David Hoffman?

  I really want to actually dive into that specifically because the this labor shortage phenomenon is is something that I'm seeing left and right. And Lynn, when you were talking about the the lumber versus timber example where there was a bottleneck in turning timber into lumber. We had no shortage of timber. We had a plenty of shortages of lumber. I want to know if that was also a shortage of labor supply as well, if that also got involved with that. Because we were we were seeing, you know, a bunch of stimulus, a bunch of money get injected into the economy. We're also seeing a bunch of demand for people to move and therefore to, you know, purchase or build new houses, which is where that demand for lumber comes from. All the available supply of lumber gets sucked up.

• 45:27David Hoffman?

  And then also the the labor required to turn timber into lumber. Well, all those people just got a bunch of money put into their cash pockets. And another interesting like statistic I heard, I can't remember the the number, but there was a massive small business boom during COVID. And that's because people had the cash in their pockets to actually start off a business. And so maybe people are, you know, looking at their jobs that they previously had or the jobs that they're out on that are out on the market and they are aren't just, they aren't compelled by them anymore. And therefore they're turning elsewhere. How does, how does, and A, is that the way that you see it as well? And then also, B, how does this factor into the whole transitory inflation conversation?

• 46:10Speaker 02

  Yeah, so that definitely impacts certain industries more than others. And so I would say that the lumber industry was less impacted by that because they were still, you know, for most of the time, they were running at full capacity and they just didn't have enough facilities to kind of keep up with that. Whereas what you described is greatly impacting, say, restaurants and other things like that, very service-heavy type of environments that are often low-paid as well. And people, I mean, you know, if you're working in as a waiter or waitress right now, I mean, a lot of them are still, you know, having to wear masks all day. And obviously, it's a hard job to begin with. You're on your feet for eight hours and now they're, you know, they're wearing masks the whole time. And, you know, they're, say, their wages have not gone up enough to keep up the fact

• 46:55Speaker 02

  that their grocery bill went up, their gasoline, you know, that they paid to drive to work went up. They have all sorts of constraints. And so they say, you know what, it's not even worth working anymore until you pay me like 50% more than you were. And so we've seen a big shortage in labor for Uber drivers, restaurants, things like that, some of these lower-paid types of either gig work or structural work. And so that is along with the fact that, you know, we've had this kind of push towards reshoring some of our things. We are kind of have this pretty big gap between jobs open and jobs filled. And that's in large part because those wages that businesses have been, you know, willing to offer

• 47:36Speaker 02

  have not kept up with the cost of, say, running a basic life, of having rent, of having food, of having, you know, saving for college, saving, having healthcare covered, some of those really big expenses. And so basically, until wages kind of push back up, it's really hard to kind of move forward. And I think, you know, it's kind of been like a chess game between employers and workers because employers are saying, okay, you know, they're kind of, say, looking at that transitory inflation argument. And they're saying, well, I mean, it's hard to get workers right now because they're getting all these stimulus checks and things like that, but those have expiration dates. And so if we can kind of wait until some of that expires, then those workers will become more desperate and they'll come back to us and being willing to offer.

• 48:20Speaker 02

  Say slightly higher salaries rather than way higher salaries. And so they've been doing things like saying, okay, we're not going to offer higher wages, but we're all for a signup bonus, right? So we want to get people in the door. We want to get people working, but we don't want to commit to permanently higher wages just yet. And so employers are trying to wait this out and employees, you know, potential employees, they have a good amount of money in the bank from some of the stimulus that they got or from other areas. And so they're saying, well, I'm not going to rush back into such a low wage type of environment just yet. And so I think we're, I think we're going to have to get into, say, late this year or next year to see how persistent that labor gap is. We have to see kind of how people respond when some of these fiscal taps are closed.

• 49:04Speaker 02

  You know, so I think that could alleviate a little bit, but I think that, you know, because this money supply was permanently increased and I think a lot of these home prices, things like that are permanently higher. You know, they're, they're going to have to get paid higher wages in order to basically be able to make ends meet. And so I do think that wages will follow and it just, they tend to do so with a lag.

• 49:23David Hoffman?

  Hey guys, I hope you're enjoying the conversation with Lynn Alden thus far. In the second half of the show, we talk about how this current environment with regards to inflation might actually lead to changes in wages that might actually be beneficial for the wage burning population of the United States, which leads us into a question of who might the winners and losers be in this new economic environment, which I thought Lynn Alden's answer there was particularly interesting. At the end of the show, we finish up with a lightning round of a bunch of different questions, such as has crypto and Bitcoin stolen the wind out of gold's sails? And also how she includes the Delta variant of COVID into her future mental model of how the world might play out in the next few short months or so. And then also, of course, has her mind changed about Ethereum at all?

• 50:07David Hoffman?

  So don't go anywhere. We have such a fantastic conversation left in the second half of the show. But before we get there, we have to take a moment to talk about some of these fantastic sponsors that make the show possible.

• 50:18Speaker 02

  Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017 and it's been my main exchange of choice to make my crypto buys and sells. Gemini is available

• 50:30David Hoffman?

  in all 50 states and in over 50 countries worldwide and on Gemini there are markets for over 30 various different crypto assets including many of the hot DeFi tokens and it's one of the few exchanges that has liquid die markets. Gemini just launched their earn program where you can earn up to 7.4% interest on 26 various crypto assets. If you're tired of paying fees in DeFi or you don't want to worry about DeFi exploits, but you still want to earn interest on your crypto assets, Gemini Earn is the product for you. Another product I'm stoked to get my hands on is the Gemini Crypto Back Credit Card, which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset. When I get my Gemini credit card, I'm going to make sure that I get my cash back in ETH.

• 51:14David Hoffman?

  So whenever I buy something, I get a little bit of ETH bonus back to me at the same time. You can open up a free account in under three minutes at Gemini.com/goBanklist. And if you trade more than $100 within the first 30 days after signup, you'll be gifted a free $15 Bitcoin bonus. Check them out at Gemini.com/goBanklist. The AVE protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply and borrow certain crypto assets. AVE version 2 has a ton of cool features that makes using the AVE protocol even more powerful. With AVE, you can leverage the full power of DeFi money Legos, yield and composability all in one application.

• 51:56David Hoffman?

  On AVE, there are a ton of assets that you can supply to the protocol in order to gain yield. And all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here you can see me borrowing 200 USDC against my portfolio of a number of different DeFi tokens in ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option. But I could choose the stable interest rate option if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on Uniswap and then deposit them back into Aave. With Aave, users can do this in one seamless transaction, saving you time and gas costs.

• 52:38David Hoffman?

  Check out the power of Aave at Aave.com. That's A-A-V-E dot com.

• 52:43Ryan Sean Adams?

  So in this kind of condition where you've got employers paying wage earners more, right, they're paying them more in nominal units, but it doesn't necessarily mean they're paying them more in like real units, right? I saw a meme the other day, like somebody said, like 3% raise, awesome. And then looks at inflation and inflation's like 5%, you know? And so like net earning potential is negative 2% from a real earnings increase. Is this what's sort of bound to happen in this sort of environment? Wage earners might eke out some small wins and get nominal wages increased, but under the backdrop and specter of inflation, these aren't real wage increases.

• 53:28Ryan Sean Adams?

  These are just like nominal value wage increases. How does this play out?

• 53:33Speaker 02

  I agree. Yeah, it's not, yeah, I agree with the nominal approach. And so, you know, if you, again, if you go back and compare the asset price inflation, for example, to the, you know, the say wage inflation over the past 20 years, if you look and say, you know, how, you know, how many hours of work does it take to buy a gold coin? Or how many hours of work does it take to buy a share of the S and P 500? You know, those, those have gone up dramatically, right? So basically wage, wage growth has, you know, it's kind of tread water with official CPI measures, but then it's vastly underperformed asset price inflation. So you can buy fewer kind of financial assets with your wages. And so then especially in this year, because inflation's pretty hot and, and, you know,

• 54:16Speaker 02

  companies been less prone to want to wage rages, some of them are getting these kind of invisible, you know, that they're actually getting say in real terms, either they're treading water or going down slightly. You also see this happen with say savings accounts and bond and, you know, investors, they say, well, I got. A 1% yield, but it's like when you when you factor out inflation, you're at like a negative 4% yield. And so we're seeing that with wages, we're seeing that with with paper assets. And so I do think that that's an ongoing concern. And that's why until, you know, wages go up even faster, that's going to continue to be a problem. And then you have things like, you know,

• 54:54Speaker 02

  when you look at, say, what is overall kind of personal income? It's that it's that wage component combined with any sort of government transfer payments that happen. And so during this whole past, say, 18 months, you know, you know, kind of partially filling that gap with wages not increasing as fast as inflation have been these kind of transfer payments, these stimulus payments and things like that. And so that's kind of make then meet, but it's also been inflationary. And so there we are kind of treading water over time. And I think, you know, we're as we're kind of getting past the last round of fiscal stimulus, we're starting to see signs of consumer sentiment is dropping and things like that because they're saying, okay, well, I got all these kind of, you know, one time payments.

• 55:36Speaker 02

  But now that I'm actually reliant on wages, you know, it's actually getting harder to make ends meet now because, you know, I might have money saved up from some of those checks, but not a lot. And so unless I can get real wage growth, I'm going to have trouble, say, you know, paying these higher rent prices or paying these higher food prices. And so, you know, I think there's going to be another increased round of pressure to do another round of that that fiscal stimulus to kind of fill that gap. And we'll see if if a totally divided Senate will get something like that through or not. And that's the kind of thing that can create the flywheel of more structural inflation.

• 56:08Ryan Sean Adams?

  Yeah, and so I'm curious here about maybe you can weigh in on what the effects of inflation are. We've talked a lot about the effect, the effects of inflation on the consumer. Maybe we could talk a little bit more about that. But a lot of people listening to this podcast, they don't remember the 1940s. Obviously, they weren't there, not neither the 1970s for that matter, right? So like most of my lifespan, anyway, has been sort of a normal inflationary environment. I don't know, the 1 to 3% or so. Like, how how do things change when you get? Into higher inflation levels. And I don't think you're definitely not saying, I don't think

• 56:48Ryan Sean Adams?

  anyone is really saying seriously that the US is going into a hyperinflationary type scenario. But like even five, six, seven percent, maybe low double digit percent inflation, it's got to lead to behavior change. How do people start changing and modifying their behavior of where they like, how they spend, how they store wealth, how they use debt, how they think about the future in eras like the 1940s and 1970s? And what can we learn about today's present state?

• 57:17Speaker 02

  Well, in some of those environments, you can, you know, see speculation in markets, right? Because you saw that, I mean, I agree, I don't think we're, I don't think the US can experience hyperinflation, for example. But if you go to say, you know, the classic hyperinflation example of Weimar, Germany, especially during the early phases of that, people were speculating on financial assets because they could see that the currency was debasing. That was before they realized it was hyperinflationary. But kind of that early sign to that money supply going up and that, you know, that that cash not keeping up with the inflation rate, the interest rates they were getting. And so you'd see more speculation. So one of the signs of inflation is that you see these periods of retail investor speculation in different types of assets. Another challenge that you have is that, you know, it's partially a mindset thing.

• 58:02Speaker 02

  And so when you start to expect prices to be structurally higher in the future, you tend to want to pull forward your consumption. You want to buy more now because you're not sure if you're going to be able to get it in the future or if you're going to be able to get it at the same price. And so that that can then actually perpetuate inflation because then everybody wants things even earlier and that kind of, there's only so much supply of those things and that pushes up the prices even further. And so you start to get that hoarding type of mentality. And then for businesses, the big challenge is that it makes long-term planning difficult, right? Because, you know, a lot of businesses, you know, that you put in capital and then a year later, you start to actually reap the benefits of that capital. But if inflation has gone up 6% during that time, that really changes the types of calculations that you want to do.

• 58:47Speaker 02

  And so when you have any sort of business with a long lead time, it's kind of, you know, has that more inflation. Risk. And so if you take an example of a of a short lead time, like say a toll road where they could just kind of increase tolls like a private toll road, you can increase tolls. You kind of get that cash input whenever people drive through it. That's a pretty fast turnaround. Whereas if you were, if you're a supplier or some sort of say manufactured component, you might make six month deals, 12 month deals, 36 month deals, even five year deals or more with your, with your, with your customers. And it's really hard to kind of make long term capital investment plans. When the unit of account is, is you're not sure what it's going to be. Is it going to be disinflationary? Is it going to be inflationary?

• 59:31Speaker 02

  Is it going to go up to 10%? Is it going to go back down to 2% inflation? It makes it really hard to make long term plans. And then that can ironically then restrict the amount of supplies in the system, which can then still perpetuate inflation. And so that's why you can, you risk getting these, these kind of one off inflationary spikes can potentially turn into something more. Because you know, as you go downstream, you start to get these feedback loops that make it harder to get inflation back down to the level that it was.

• 1:00:01David Hoffman?

  Lynn, I want to ask you your perspective as to who are the winners and losers in this inflationary environment? Or just over the next 10 years or so, as we, you know, as the, you know, consumer price index changes because of inflation. And as the things that we've been talking about tend to play out into the future. Who, who's the winners and who are the losers? And we can talk about this across a variety of different variables, right? Like intergenerational, are, are the boomers better off than the, the younger millennials and zoomers? And then also what about geopolitically? Is this going to favor the United States over, over other countries? And then also the classes of people like the wage earners versus the asset holders. Are, is there a clear delineation between winners and losers in this environment?

• 1:00:48Speaker 02

  Yeah, it depends on which subset of the environment you're referred to. And so, for example, in this period over the past 25 years of asset price inflation without wage inflation, that's, that's obviously been really good for, for the wealthy, right? So if you hold assets, you've done very well. Whereas if you're a wage earner and you want to buy your first home, that's, that's a headwind against you. And so we've been in this environment of, of rising wealth concentration, in part because of the monetary policy, the fiscal policy that, that, that we've had, especially in the United States, but also to some extent elsewhere. And so if you compare, say, the United States wealth concentration to most of Europe or Japan, we have, we have among the highest wealth concentration in the, in the, in the developed

• 1:01:29Speaker 02

  world. And that's partially because of the policies we've, we've done and partially because we've relied on our trade deficits. We've hollowed out our, our manufacturing base more so than some of our developed peers. And so we've had this kind of pressure on, on the middle class and the working class even more significantly than many other developed countries. And so that's, that's really kind of been the detriment to that segment. While it's been pretty good for, for China, for example, they've, they've been able to rise from, from abject poverty up to a more sustainable level. But that's kind of come out of the, you know, kind of the, the US middle class to a certain extent, whereas say the top 1%, the top 5% of the United States have benefited, you know, tremendously from that. They've said, okay, we got a cheaper pool of labor and our asset prices went up a lot. And so you've had the,

• 1:02:14Speaker 02

  you know, kind of these pockets of winners and losers from that. When you get kind of a broader type of inflation, you know, some of the winners tend to be, for example, if you have, say, if in the seventies, for example, if you had a house with a, with a fixed rate mortgage, you generally did pretty good, right? Because your house, uh, over time kept up and exceeded inflation, whereas your mortgage partially got inflated away. So if you had a stable income and you could pay, you could sustain that mortgage, you actually did pretty well. Whereas, uh, large holders of cash and bonds generally got devalued. And so, you know, we've been in this environment that is, has really kind of been good for the asset holders, good for, uh, people that are, that are older in terms of age because

• 1:02:57Speaker 02

  Generally ones that have more assets. So it's not even just a, say, a top 1% versus poor things. It's not just class, it's also age, right? So because even among classes, generally when you, when you age, you get more assets if you've been somewhat financially successful. And so it's been very good for that demographic. And so going forward, if we, if the pendulum starts to start to change, you can get a shift away from that, right? And so, you know, we've been in this, this kind of multi-decade trend and we're starting to see early signs of that kind of shifting back, right? We've, we've had, say, all this globalization and automation has been very, you know, kind of detrimental to say the working class. And if you start to get kind of a political reversal of that, it could be good for them.

• 1:03:39Speaker 02

  But then it also could be more inflationary. And so you have these kind of pockets of, of, of, you know, winners and losers in terms of geography and then losers, winners and losers in terms of age, and then also in terms of, of wealth levels.

• 1:03:51Ryan Sean Adams?

  I'm curious about this. So you, you mentioned sort of the, at least the effect on CPI recently has been

• 1:04:00Ryan Sean Adams?

  often precipitated by the amount of fiscal stimulus that's gone out. This is like helicopter money, so we call it, like writing checks to people. Get your government stimulus check. It seems like many in maybe cross political parties, I'm not sure it's concentrated in one or the other, but they're in favor of things like universal basic income, pushing more money out to labors. I'm curious if you think that this is a solution to the wealth inequality, unequal distribution of wealth problems, or does it come with some baggage that could actually exacerbate that? So I'm, I'm kind of wondering if maybe some upside in this higher inflation,

• 1:04:41Ryan Sean Adams?

  high fiscal stimulus environment that, that we find ourselves in might be some increasing or, or some lessening of the wealth concentration problems that the US faces. What's your, what's your take on that?

• 1:04:56Speaker 02

  Yeah, so it's one of those really nuanced topics. And so, for example, one thing I highlighted in my big inflation article is that if you look at the 40s and the 70s, you actually had a reduction in wealth concentration in both of those decades. You actually had a reduction in wealth concentration, you know, because in many of those years, wages actually did go up substantially. And you had a, you know, a large pools of capital were invested in cash and bonds that got devalued. In the 40s also, for example, you had much higher taxes on the wealthy than you have now. And so you basically, you know, from inflation and taxation, you extracted out of that wealthy class, and then you injected it into basically, you know, you know, GI, like the GI Bill, when all the soldiers came back, they got,

• 1:05:38Speaker 02

  you know, tons of money for education, they got mortgages, things like that. There was a lot of money put into building up the industrial base. And so partially, it comes down to how productively that's spent. And so the 40s were actually a pretty good example of, of you had kind of this MMT type of policy. We were running absolutely massive fiscal deficits. You're monetizing a lot of those deficits, but the money that they did was actually pretty productive. And so it actually increased the overall productive base of the country. We were able to kind of convert a lot of those war factories into like domestic factories at the end of the war. You basically educated a whole class of people. And so it's actually kind of this, this, this, you know, kind of this, this, this pretty good

• 1:06:21Speaker 02

  environment for workers and for the middle class. And so when done well, that that can be one of the effects. Obviously, it comes down to different political philosophies, how much government they want, you know, how much government, how much they trust the government. Sorry, that was a kind of a higher period of trust in the government. And it was rewarded because the government actually was reasonably effective at those policies. Then when you got into the 50s, say, under Eisenhower, you started to get the, say, the interstate highway system. That was another good example of productive government spending. A lot of the space stuff eventually kind of resulted in new technologies that then trickled out into the private sector. And so that was actually in a kind of a, kind of the best case scenario for an MMT type of environment. And so that's, if you're trying to imagine why, where some

• 1:07:05Speaker 02

  The MMT economists get their views from uh that that's the type of environment where they're they're kind of imagining uh things going. We're hoping things go, we're trying to construct things to go in that direction. Of course, the problem is that if you don't have a lot of those, you know, kind of, I I'd say a combination of really good forces. So say certain good leaders, uh certain political environment that makes that kind of thing possible. Uh if you don't have that and you you kind of have the government try to do things, uh they could do things a lot less productively probably than they could back then. And so you risk having this this kind of big injection of capital that doesn't really uh result in a greater ability to produce the things you want. And therefore you kind of risk getting stagnation or stagflation.

• 1:07:48Speaker 02

  Uh and so that's kind of the biggest risk here. So I think that there is, if you thread the needle well enough. Uh basically, it's it's kind of one of those things like if you're gonna have a dictator, you want it to be like a philosopher king, you want a good dictator, right? So you can actually have an environment, we have a dictatorship that goes well. Almost like an example would kind of be Singapore. It's been kind of a semi authoritarian regime, but they've managed it very well. And it's just kind of been ineffective uh in that approach, whereas if you, you know, if you roll the dice, you're unlikely to get that too frequently, right? So so more often than not, when you kind of have that top down approach, you're more likely to get the the the the other end of the stick. Uh and so I say, yeah, I mean, putting on kind of the steel man hat and kind of, you know, steel manning their view.

• 1:08:29Speaker 02

  You say if you have a nineteen forty's fifty's environment, uh then yes, that that that kind of uh, you know, kind of that big fiscal heavy environment could be very productive. Uh and just the question is, what is the probability of that happening? Uh UBI, I mean, that's that's one of those things. If you look far enough into the future, right? When humans, say, say, robots get so good and AI gets so good that the vast majority of of people just can't out compete humans. And that even like, you know, the history of technologies that we, whenever we make automation, it takes away some type of job, but then opens up new opportunities. So, you know, humans were able to leave the farms and go to the manufacturing. Uh then when we started automating some of the manufacturing, they're able to go more into service.

• 1:09:08Speaker 02

  Uh but if you get to an environment where, say, eighty percent of jobs can be replaced by robots and AI, and, you know, most people don't have to work. Then you then you get to all sorts of societal questions like how is that going to function? Because only so many people can be in creative professions. And so that opens up some of those very long term kind of political questions. But I mean, that's that's still, I think, a quite a while away. And so, you know, if you do UBI without making sure that there's enough products and services to support that type of income. Then that's when you run into stagflationary risks.

• 1:09:41David Hoffman?

  Lynn, a large part of what we've been talking about so far in the show has been US centric. And we talked about how we are, one of the reasons why we are, we think that we are seeing so much inflation in the US is because the US put out so much economic stimulus in the last year or so. How does this conversation change as soon as we include, you know, the rest of the world? Is this the same story that the rest of the world is also going through? Or is it different if we start to include like Europe and Asia and, you know, all non-US countries?

• 1:10:11Speaker 02

  Yeah, there are different environments for different countries. And so the the specific like globalization problem has impacted the US more than other countries. Because as a country with the global reserve currency, we've kind of, in order to maintain that currency, we've kind of had to sacrifice our manufacturing base because you can't really have, as currently structured, the whole dollar reserve system is kind of based on the US running these persistent trade deficits. And so we've had that specific type of wealth concentration and that and that deindustrialization at a faster rate than our developed peers. And so Europe, for example, runs a trade surplus. Japan runs a pretty balanced trade situation. Whereas the United States is kind of this big developed country that's running a massive trade deficit. So it's not just the developed country versus emerging market thing.

• 1:10:56Speaker 02

  It's really, that's more about the US specifically. Europe faces their own set of problems because as as conflicted as US politics are in Europe, in some ways it's even harder because you have a bunch of different sovereign countries that have then linked their currency together, right? So it's like if the United States and Canada had a shared currency and neither of them could could just print money. Well, then the United States and Canada are always going to be like debating with each other about what to do, let alone different states in the US and different provinces in Canada. And so Europe's done that with over a dozen countries. And so you have this, you know, Germany wants one thing, Italy wants another thing. And you have sovereign countries that that really kind of can't control the volume of their own currency. They're reliant on the on the European Central Bank. And so.

• 1:11:40Speaker 02

  They've had, they've had less kind of political capability to do that fiscal stimulus. And so in, in some ways that's, you know, the euro has held up against the dollar over the past eighteen months. Because they increased their money supply at a slower rate. But they've also recovered at a slower rate. In Japan, you're kind of, you're kind of in the middle there where, you know, they're not doing this, the same kind of massive fiscal spending that they're doing in the United States. But they did a little bit more than Europe. And so they, they've been one of the more kind of societies that is less prone to popularization, like populist politics. Because they generally have less, less wealth concentration. They have kind of less, somewhat less political conflicts. But you've also had, you know, obviously a pretty significant degree of stagnation there.

• 1:12:25Speaker 02

  When you go on to China, they're in a pretty different environment. They didn't do very much stimulus. You know, they did a little bit in the beginning, but then they kind of cooled that off. And now they, they, they kind of entered this cooling off period before the United States. And so they've, they've been kind of, you know, trying to deleverage some of their debt bubbles. They've been trying to go after, say, the, kind of the monopolization of big tech. And so they've been going through that cycle at, at an earlier pace in the United States. Some of the places we see inflation impacting the worst are in emerging markets. And especially the emerging markets that have kind of structural issues. So some of the ones that say produce commodities, right? They've actually held up somewhat better because they're benefiting from commodity inflation.

• 1:13:10Speaker 02

  Whereas if you're an emerging market that also generally is a net commodity importer, that's where you run into, into issues. Or, or ones that have had kind of, you know, poorly managed fiscal or monetary regimes like Argentina and Turkey and Lebanon. And so that's actually where you're seeing kind of the most acute suffering from this inflationary environment. Because that's where you have environments where people literally have trouble getting enough to eat in some cases. Or just trouble kind of, you know, managing a business or managing a company. And obviously it varies between, say, Argentina and Lebanon. But you have these environments that are, it's much harder to do basic things when your inflation is, is well into the double digits.

• 1:13:49Ryan Sean Adams?

  Is it the case that all central banks are pretty much reading from the same handbook on this though, Lynn? So like to one degree or another, they're sort of handling things the way the Fed is. Or are there some countries that are doing something that's, that's completely different?

• 1:14:06Speaker 02

  So Russia is some of an outlier in that they're doing something different. They've historically been more hawkish in terms of their, you know, they're trying to keep interest rates higher. And so in Russia, for example, a pretty low debt as a percentage of GDP and the central bank is pretty conservative. They're buying gold pretty regularly, right? So they're kind of this more.

• 1:14:27Ryan Sean Adams?

  Got some Austrians over there.

• 1:14:29Speaker 02

  Austrian. Yeah, they, I mean, they still, you know, it's funny because even despite all of that, the ruble actually, as you, you know, went down versus the dollar. In part because, you know, for a while there, they were impacted by oil prices going down now that the uptick has kind of benefited from them. And so they, they still have structural issues with their economy, but from a central bank standpoint, they've been pretty hawkish. They've been kind of Austrian in that sense. And so with most other central banks, especially developed central banks have kind of gone down in the same playbook. And they're just on different timetables there because they have different demographic realities. So Japan's kind of been ahead of the curve. Cause they've got the oldest society and so they, you know, they've been more aggressive in the monetary policy sense.

• 1:15:09Speaker 02

  Whereas then Europe and the Fed are kind of behind them. And then we saw, you know, Canada and Australia were a little bit behind them. And so we've had this, this kind of all, all kind of going in the same direction. And emerging markets, you know, the ones that are not kind of almost hyperinflating. But the ones that are kind of trying to manage things more, more realistically, they have issues where, you know, they know that they can't do as much quantitative easing. Because their currency is weaker to begin with. And so they, they risk inflation at a, at a lower threshold. So some of them have also, you know, been more conservative than say the United States in terms of how much fiscal stimulus they can offer their people. Because they know that they, they risk inflation at a much lower threshold.

• 1:15:51Speaker 02

  And so you haven't really seen that kind of same, you know, massive fiscal deficits and then deficit monetization. Out of a lot of those countries that you have from say the United States or Europe.

• 1:16:02Ryan Sean Adams?

  China playing this game too, Lynn?

• 1:16:04Speaker 02

  Less so, I mean China's money supply grew at a slower pace than the United States since the beginning of the pandemic. So they've been doing a lot less fiscal spending. They haven't really been doing QE like the United States has and instead they've kind of been been actually kind of trying to deleverage a little bit. And so they're actually on somewhat of a different path. And so, you know, central bankers do talk to each other, especially throughout the Western world and with Japan, whereas, you know, some of the some of the emerging markets are on their own kind of approach. But generally, you do see a lot of coordination, but it's kind of then adjusted for different realities in different countries.

• 1:16:40David Hoffman?

  Lynn, last time we had you on, six months ago, we titled the episode of the podcast, "The Death of the Dollar Dominance." And it talked a little bit about some of the same things that we were talking about today on this episode. You alluded to the Triffin Dilemma and the the reducing position that the dollar has as the dominant currency of the world. Now that we have actually seen inflation show up across, you know, all metrics, how would you say that this story has evolved over the last six months since we last checked in on it?

• 1:17:13Speaker 02

  It's pretty much continued. I mean, that's a long-term thing. So that doesn't generally have a lot of news changing in six months. That's not going to tell you the dollar index is going to go up or down 3% based on these global shifts. But we have, I think the things to watch are, you know, especially Russia and China, you know, what are they doing with their dollar reserves? What are they doing with with how they, you know, they pay internationally? And so, for example, since that last conversation, we've seen even more aggressive moves out of Russia to de-dollarize, you know, their reserves and their sovereign wealth fund and to focus on the euro, to focus on gold, to focus on Chinese currency. And so we've seen, you know, between Russia and China, for example, you know, China's obviously an energy importer, Russia's an energy exporter. Used to see

• 1:17:58Speaker 02

  that that trade is mostly dollar-based. And, you know, we've seen ever since, especially since 2018, that start to break down where they started to rely more on the euro and more on some of their local currencies. And we've seen that accelerate since then. So the dollar continues to be a lower and lower share of trade between Russia and China, as well as Russia and Europe. And so we do see that long-term structural shift away from the dollar being used to price all global energy and all, you know, most global trade. And we're starting to see kind of a regional currency system where the euro is being used more so in Eurasia and a little bit less so the dollar. And so I think that that's likely to continue for a lot, like a lot longer.

• 1:18:42Speaker 02

  But it's not going to be like a straight line. It doesn't necessarily mean you have an impact on the dollar in say a six month period. We've also obviously seen acceleration in China for their central bank digital currency. And so I think that's, you know, that's in addition to providing them all sorts of authoritarian surveillance state type of stuff that they love over there. That also potentially will, you know, increase their currency's usage in some of their trading partners, maybe in Africa and some of the other markets around Asia that they do business with, but we'll see in time.

• 1:19:15David Hoffman?

  Lynn, you recently tweeted out something I thought was pretty, pretty interesting. It was a comparison of 2018 versus 2000 trade relationships between the United States and China. And oh yeah, there it is. Ryan's got it on the screen right now. And the transition, the massive transition from the world being a US dominated trade environment to a Chinese dominated trade environment is absolutely stark. It just flips from being blue, which is the US to red being, being China. That happening simultaneously with the very strong push by the Chinese central bank digital currency is an interesting story. What story do you hear being written when you see a lot of global trade starting to become Chinese dominated while China's also

• 1:20:01David Hoffman?

  pushing this new form of, of medium of exchange with their digital yuan?

• 1:20:05Speaker 02

  Well, I think that, that those charts kind of show Triffin's dilemma in one of the clearest ways possible, especially the, the version of Triffin's dilemma that focuses on the current account rather than the capital account. So the initial Triffin's dilemma was more about the capital account, but kind of the restructured Triffin's dilemma trade ever since the 1970s with the petrodollar has really been about the fact that, yeah, that you have the chart up there. So basically ever since we've shifted from the Bretton Woods system to the petrodollar system, we, you know, basically the release valve for that has been that the United States had to run these massive trade deficits to sustain that because You know, if we if we purpose tell the world you can only buy oil in dollars, which is the the the the deal that the United States made with OPEC. Uh, and say, okay, you can only buy oil in dollars.

• 1:20:50Speaker 02

  Well, they can only do that if they have a lot of dollars. And so the way that they get dollars is that the United States runs big trade deficits with them. Uh, and so there's a there's all this international demand for the dollar. That kind of props up the strength of the dollar. Uh, and so it increases our import power, decreases our export power. And so it naturally hollows out our industrial base. Uh, and and so, you know, depending on if you work and say, technology, you don't mind that, right? You get a lot of the benefits of globalization without the downsides. Whereas if you work in manufacturing, there's a good chance that over the past 25 years, you got your job replaced by someone in China or someone in some of these other countries. Uh, and so, uh, that's, I think that that map shows, uh, you know, basically the downside of the system we've been in, uh, ever since the the 70s.

• 1:21:35Speaker 02

  And then it really kind of accelerated in the 90s. That's when that's when that system really started working against the United States. And China's China's played this pretty smart because in addition to benefiting from all those trade surpluses, you know, they they also started to say, okay, you know, over the past several decades, all these countries that that ran these trade surpluses with the United States, they would then take those dollars and go ahead and buy treasures with it. So they would fund US deficits. And so Europe did that, Japan did that, China did that. But then about something like seven years ago, China said, it's really no longer an interest to buy treasures anymore, especially with rates, you know, so low. Uh, so we're going to go ahead and use those dollars to buy hard assets around the world.

• 1:22:16Speaker 02

  So they started making loans to emerging markets that are often collateralized by real assets like ports and infrastructure. If those loans are defaulted on, they go to China. Uh, you know, the ownership of those goes to China. And so China's been using that dollar system against the United States. They're basically expanding their reach, you know, the Belt and Road Initiative and all those sorts of, uh, funding that they're doing around the world. Uh, that's basically using the dollar-based system against the United States by plowing paper assets into hard assets. So that they're increasing their their hard asset reach, whereas the United States is kind of hollowing out its manufacturing base. And it's kind of the, you know, the the the percentage of people that are benefiting in the United States from that that plan is mostly limited to the top, say, 10% of the population,

• 1:23:00Speaker 02

  uh, rather than the country as a whole.

• 1:23:03Ryan Sean Adams?

  Yeah, it's pretty crazy. So it's like, I mean, I'm sure people in China read Dalio, you know, so sometimes I feel like economically China is playing chess and the US is playing checkers here within, in particular with its reserve currency status. David and I are actually going to have a gentleman on the podcast next week by the name of Richard Turin, who's written a book called Cash List. He's lived in Beijing for the last 10 years. And this is all about the Chinese central bank digital currency and the leapfrogging that they've done on the US banking system in terms of just raw usability for Chinese citizens. Very easy to pay for things to transact on the

• 1:23:42Ryan Sean Adams?

  network to, you know, fulfill, get your everyday banking needs done on WePay and Alipay and WeChat in China. And the US does not have this infrastructure. We were talking earlier, Lynn, about sort of the winners and the losers from inflation. Do you think that if the US reserve currency status erodes, that a lot of this winning is going to go into the RMB, the digital one? Do you think that's the trajectory? Or do you see a world that is a bit more, and like, maybe that will start to assert its dominance? Or do you see a world that's a bit

• 1:24:22Ryan Sean Adams?

  more, I guess, multi, multi, multipolar, multi-reserve currencies and sort of a basket SDR type of thing? How does this play out in your minds?

• 1:24:34Speaker 02

  Yeah, so I think my base case that we're shifting towards a more multipolar world. And so a lot of people ask if the dollar loses its status, what could possibly replace it? Could it be the euro? Could it be China's currency? And the answer is no, really. If you look at, say, the United States after World War II and into the decades that followed, it was kind of a unique position because most of the world was devastated. The United States was like 40% of global GDP, the biggest commodity importer by far. And so it was more feasible to have kind of that one currency be kind of the king of all currencies. Whereas, you know, in previous global reserve currency eras, you know, even though there was often one kind of major currency, it was really gold that was the underlying kind of Real reserve currency and it just so happened that one country had the biggest trading network and it was used more heavily than the others.

• 1:25:18Speaker 02

  It wasn't kind of that complete lock that the United States has had really since the nineteen forties. But you know, as the rest of the world recovered from World War Two and then also developed from emerging market standpoint. We've had the United States go down and down and down as a percentage of global GDP. So even though we're still significant, we're a much lower percentage than we used to be. And it's not really feasible to maintain the global reserve status when you're that increasingly small percentage of global GDP. But then if you look at Europe, if you look at China, they're not really a big enough percentage of global GDP either. In order to have, say, the one currency to rule them all. And you know, I think also China kind of saw the US playbook over the past fifty years. And they don't want, they don't want to repeat that. They don't want to hollow out their manufacturing base.

• 1:26:01Speaker 02

  And so China's main goal is not necessarily that they want the same structure that the dollar had over the past, say, you know. Better part of last century. Instead, they mainly want part of it. They want to buy commodities and things in their own currency. Whereas they don't necessarily want everybody in the world to have to buy oil with yuan. In the same way that the, the whole petrodollar system since the seventies is based on the premise that every country buys oil with dollars. And so I think we're shifting more over time to a regional reserve currency status. And you know, if that, if that does continue to occur. You know, that could be painful for the US in many ways to, to kind of lose that reserve currency status, or at least. Change its relationship with the current, with the, with the reserve status by basically sharing it with a couple of other currencies.

• 1:26:47Speaker 02

  But it can also potentially end the structural trade deficit situation that the United States finds itself in. And basically, you know, we go through a period of pain. But then if we have, say, a weaker currency, it makes our exports more competitive again, right? So instead we don't run these kind of structural trade deficits. It becomes more economic to build things in the United States. Whereas it really hasn't been for the, for the better part of the last fifty years and especially the past twenty five years. And so obviously depending on what kind of, you know, if you. Say, work in healthcare or technology in the United States, you've benefited from the, from the global reserve. Status without really paying any of the downsides, right? So your job wasn't replaced, but then you got the benefits of your global dollar. Whereas if you worked in manufacturing,

• 1:27:31Speaker 02

  you got some of the benefits too, but you also potentially lost your job or had your wages suppressed by that system more so than Europeans, more so than Japanese, and obviously more so than China. And so if that pendulum shifts back the other way, you know, you could have somewhat of a realignment of what parties are benefiting from the system.

• 1:27:51David Hoffman?

  Lynn, as we come down to the close of this podcast, and thank you so much for your time. This has already been extremely educational for me. I want to get your opinion on the COVID Delta variant, which has really kind of come around in the news lately. And I'm actually in Europe right now, and Europe is about to go, or at least France is about to go into actually more restrictive lockdowns because this Delta variant has kind of just gotten out of control. And meanwhile, I'm also hearing just conversations and murmurings about people coming to the terms that like a double dose of vaccine might not be enough. And as COVID iterates and, you know, has more and more of its own variants, that our vaccines that we thought were going to be our silver bullet are actually going to become pretty obsolete. And so there's worry on the

• 1:28:36David Hoffman?

  horizon that we actually might be in for like a round two of more restricted COVID environment. Is this something that you're paying attention to? And if that does unfold, how do you think that that might impact the economy as this related to the subjects matters we've been talking about?

• 1:28:53Speaker 02

  Yeah, my newsletter this past weekend focused on that topic because we are starting to see that happening. And I've been covering a little bit in my research service that, you know, that we had the big spike in India, for example. And then now that that's on the downtrend. But then if you look at the surrounding countries in Southeast Asia, Indonesia, Malaysia, Thailand, you know, those countries like that, they had the same kind of spike that India had two months ago. And, you know, with a pretty high death count, things like that. And then what's interesting is there, you know, you see countries like Australia, that, you know, they've had a very, they've had like two deaths in the past month, but they're already seeing this, you know, they see a small uptick. So they say we got to lock everything down again. And so

• 1:29:32Speaker 02

  I'm kind of watching a couple of things. I mean, obviously, I'm not a medical expert, so I have to, I have to kind of see what, what the consensus medical opinion is, kind of look at different sources to see what, what's actually happening. And then because I'm numbers oriented, I look at some of the numbers based things that we're seeing. And you know, it's, it's, we have to watch this on three layers. So we have to watch what the virus does then, and, and what vaccines do, things like that. So the medical question. Then you have to watch what governments do, right? Are they going to have a quick trigger finger for wanting to lock everything down as soon as you get some deaths? Uh, and then, uh, then you have the people's reaction to those government lockdowns. Like, are people losing tolerance? Uh, for this, because obviously if this, if this cycle continues, you know, over and over, it's not like we lock down every year for the flu. Right? We don't, we don't lock things down for the flu.

• 1:30:16Speaker 02

  And so, you know, in the beginning, when we had, say, the, the virus, the pandemic just come out of China. Uh, we saw, you know, a big, huge death count out of Italy, right? So they were building like emergency hospitals to support everyone. It, you know, you could, you could justify certain types of lockdowns and saying, you know, we don't know anything about this virus. You want to slow the spread. We don't know what's going on. And so we're going to do a three week thing. We're going to do stimulus to kind of offset that. You know, that's one thing. But then when you're kind of a year and a half into this, uh, then it, you know, over time, you're two years into this, three years into this. You know, there's only so many times you can say, we're going to lock the entire economy down to deal with the fact that there's a virus that, that's killing a rather small percentage of the population. And so I think we're gonna, we're gonna have politics around booster shots, right? So ongoing vaccinations.

• 1:30:59Speaker 02

  Uh, some countries are, are kind of, you know, playing with the idea of making back vaccines mandatory, which opens up all sorts of, uh, pushback against that. Uh, and so I think that, you know, this is not an easy environment and it's, it's, it's part, there's so many layers there, watching the medical consensus, watching the government reaction, watching the people's reaction. And so I do think that that is a big risk, uh, for some of these more reflectionary trades. And where governments find themselves in is that either, if they do lockdowns, they either have to compensate people with printed money, right? So they don't have a big reserve of money that they're, that they're pulling out from, and, and they have to just print it, right? So they print the money, they give it to people that can be stagflationary, right? Because if you're, if you're halting how many supplies and services can be produced, but then you're still giving people money.

• 1:31:42Speaker 02

  Uh, then you do you perpetuate that stagflation environment? On the other hand, if you don't pay them, you just tell them they have to lock down. Well, then you're destroying businesses and you're destroying livelihoods. While Amazon is getting all the benefits and and so uh it's it's gonna be a really challenging environment. And over time, you know, people are gonna have to learn to to live with this and and basically, you know, make the best they can out of it. And it's it's gonna be interesting to see how different countries navigate that timeline, right? Because obviously, if some countries that are more kind of like, well, we can only do so much. We have to keep the economy opening. And other other economies are saying, no, no, we have to shut everything down uh one more time. And it kind of comes down to what, you know, when we have election cycles, we'll get these kind of glimpses into what the people think about that.

• 1:32:24Speaker 02

  If they reelect the leaders that have been doing those lockdowns, then obviously there's significant political will to continue it. And if they start to vote those people out of office, then you might start to get a different uh like reaction function. And obviously, you have different politics in different countries. So for example, the United States lockdowns are more on the local and state level. Uh, whereas the federal government can really only kind of issue guidance uh and only control certain areas. Uh, whereas other countries, you can have like the top level that government locked down parts of the country. So it really kind of comes down to how individual politics affect this. But I I do think it's a huge risk.

• 1:32:57Ryan Sean Adams?

  Fascinating answer, you know, uh, I think maybe for the first time in in a bankless podcast. Uh, we've gotten this far without actually mentioning the word crypto. So that's the first, but now I'm gonna mention it. Um, so in in this backdrop where we have potentially lend in the future, a multipolar polar world as far as reserve currency status. We've got inflation, we've got sort of COVID, we've got um China's fintech scene like absolutely exploding with Alipay and and WeChat, this sort of thing. The crypto people have an argument, don't they? And their argument is that the world needs a non sovereign money system. And that's kind of the base argument that that Bitcoiners have made.

• 1:33:39Ryan Sean Adams?

  And then the DeFi argument is, and then we can create a non sovereign banking system on top of this.

• 1:33:46Ryan Sean Adams?

  What's your take on how that argument holds up uh over the next decade or so in this uh in this new landscape? We we find ourselves in, are are these crypto solutions workable? Do the crypto people know what they they're talking about? Is there a real solution here potentially?

• 1:34:03Speaker 02

  I think so, and obviously we'll see how different regulators push back against that, right? Because you're gonna have people trying to save the system from the new entrance. But overall, I'm all in favor of, you know, basically private money, basically innovations being able to do what they're gonna do. And if other people accept it as money, then it becomes money. And so that's kind of been the history of money throughout the ages. And so I'm certainly in favor of that. And it's sort of kind of like contracts that people want to make between themselves. You know, I think I support that in almost any context. And so I'm hoping that we're gonna see basically a large and larger, you know, digital asset space over the coming decade, and that, you know, more of this

• 1:34:45Speaker 02

  will be transferred. Because a lot of our conversation is going back to what are policymakers gonna do? You know, is money supply gonna go up? Is fiscal spending gonna happen? We don't know. Whereas if you have more algorithmic monetary policy, then that at least gives people, even if they're, say, they're still using a currency, a fiat currency for other purposes, at least they have a digital asset that they can store value in, or that they can they can transact with anyone they want, you know, without having to get permission, right? So I think that basically scarcity and permissionless payments, and all sorts of permissionless, say lending environments or trading environments, those are obviously, I think, really good things for people to have access to. And in many, you know, in many cases, I find that the most pushback against that is in developed markets, where

• 1:35:29Speaker 02

  they're saying, well, why do you care about permissionless payments? Or why do you care about store of value? Isn't the dollar a good enough store of value? And it's like, well, sure, in developed countries, we've had less extreme tastes of this. Whereas if you're living in Argentina or Lebanon, you have to sell the idea less there. Because it's like, well, not gonna say, what do you mean store of value? Why would we need a store of value? Well, they obviously need a store of value. And so you have that argument. And then even in developed countries, because we're getting this more inflationary outcome, especially not just inflation, but also like negative real yields. So inflation that's happening while bank accounts are still yielding roughly 0%. You know, it's easier to make the case to say, hold Bitcoin. And you say, okay, it might be volatile, but with fiat currency, it might be less volatile.

• 1:36:12Speaker 02

  You're guaranteed to lose money. And so, you know, say, say Bitcoin is volatile, but at least it's volatile in the up direction just as often or more than it is in the down direction. Uh, and so I think over time, you know, there's more global adoption of these types of of assets rather than relying strictly on their on their fiat currency. And especially in emerging markets where they just have fewer options. They have fewer, they have less access to equities. And it's really about, you know, they have the fiat currency, they have their home. And besides that, they haven't had a lot of other ways to try to store value. And offset those inflationary risks.

• 1:36:45David Hoffman?

  In the last year or so, as a result of COVID, we've seen gold not do what we, at least I think, what we would have expected gold to have done in a highly, uh, you know, inflationary environment with a lot of monetary base expansion. Would you say that the crypto world and the growth of the crypto markets and Bitcoin specifically sucked the wind out of gold sales during the last like 18 months or so?

• 1:37:10Speaker 02

  I, I think partially. So I, I think the other factor, the probably the bigger factor is the fact that the bond market doesn't fully believe the inflation narrative yet. And so they're still kind of banking on it being transitory. And of course, that the bond market is partially influenced by the Fed buying bonds, right? So that that's kind of a complicating factor. But so if you look at gold, for example, gold historically follows, uh, you know, uh, real yields, which is basically the 10-year treasury minus the break even rate. And the break even rate is basically the treasury markets forward inflation expectations over a 10-year period. Right? And so they, that's measured by the difference in yields between, say, the 10-year yield and the TIPS yield, the treasury inflation protected security yield.

• 1:37:49Speaker 02

  Uh, and so the, the bond market is basically saying, okay, inflation's 5% now, but we think it's, it's going to be more like two and a half percent of averaging over the next 10 years. And so by that metric, it's less worried about inflation, uh, than the, the near-term indicators are signaling. And so gold is kind of, you know, because of rather financialized asset, it's kind of following those break evens more closely than it's following the real-time inflation numbers. And so obviously that's the biggest factor for, for, you know, if you, if you just look at gold compared to those, it's actually doing almost exactly what you'd expect it to. Where, you know, those break evens kind of. And gold peaked and then they ever since you you've kind of had the real yields kind of you know come off of their bottom you've had you've had gold kind of also come off of its top and so

• 1:38:32Speaker 02

  that that's kind of one story but then I do think in terms of magnitude you know I think that gold could have had a bigger spike they might have corrected less if there weren't these these cryptos competing with it right so obviously you know among younger investors in particular you know when they say I want to protect my money against fee at the basement they go out and buy Bitcoin and then they might buy Ethereum and then unfortunately they might buy Doge and you kind of go down the the rabbit hole of things they might buy but a lot of them are not gold and so you know you silver is still somewhat popular among younger investors but but you know a lot of them had a lot of that interest has translated into the digital asset space more than just you know gold and silver.

• 1:39:13Ryan Sean Adams?

  Since you mentioned Ethereum Lynn I got to ask you so it's been about six months I think since we last talked and in those six months ETH staking has risen to about five to six percent of its supply locked in the proof of stake staking contract we are less than a month out as David like to say less than one paycheck out from the potential release of something called EIP 1559 which actually ties the network usage of Ethereum to ETH asset in the form of a burning ETH asset every time a transaction is committed to Ethereum I'm just curious over the last six months or so has your mental model for Ethereum or ETH asset changed at all or is it is it pretty

• 1:39:56Ryan Sean Adams?

  much the same how do you describe how you think about ether and Ethereum at this point?

• 1:40:01Speaker 02

  So it's still pretty much the same as I described it in January and for people that you know follow my work closely I have a research service where I I update on say Bitcoin more regularly and I also include some Ethereum updates in that service and so for example you know even though I have you know concerns about Ethereum in the long run I say you know for example in January I'm like if this breaks over 1400 that's a really bullish sign and then I kind of watch that Ethereum to Bitcoin ratio and I kind of monitor that over time so my overall viewpoint for this this run has been that I'm somewhat tactically bullish on Ethereum while still having kind of questions and concerns about the longer term technical details and implementations there. And so even in my January Ethereum piece, it was it was otherwise pretty critical.

• 1:40:44Speaker 02

  One of the things that I was was pretty favorable on was EIP 1559. That was kind of the one thing I singled out, the thing I actually think that's pretty elegant for Ethereum to do. And so I do think that staking and EIP 1559 had been pretty good for the Ethereum protocol, you know, over this past year. And I actually had a conversation with Rao Powell a couple, I think it was probably a month ago now. And basically my view was that when you have ETH 2 on the horizon and you're locking up, you know, ETH into that staking. And then you also you get EIP 1559. I think that, you know, that can be pretty bullish for the price. In a similar way that a Bitcoin having, you know, can be can be pretty bullish for the price. And so we've seen Bitcoin come off of exchanges until this recent correction. You had a brief period of Bitcoin going to exchanges.

• 1:41:28Speaker 02

  Now they're now they're kind of back to coming back off exchanges. You see similar dynamics with Ethereum leaving exchanges and going into these more illiquid formats. And so overall, that is pretty good for the price action while it happens. And so whereas, you know, my concerns with Ethereum are more longer term rather than say six to 12 month price action. So I kind of separate my how I analyze price action of Bitcoin and Ethereum versus how I analyze, you know, the fundamentals. And it's, you know, even going back to Bitcoin, for example, when Bitcoin broke below like, say, 46,000 back in May. I kind of issued an update to my subscribers saying, okay, I'm still long term bullish on Bitcoin. But we're clearly seeing a risk off environment in terms of price.

• 1:42:09Speaker 02

  And so just like when I analyze an equity, you know, there's, there's, there's one story about what the fundamentals are doing good or bad. And then there's another story about what the what the price is doing good or bad. And so I kind of monitor that kind of relationship over time. And sometimes my my opinion on the fundamentals of price are roughly in line. Whereas other times I might have a difference of opinion between price and fundamentals. And so I think one way I'm looking at Ethereum and some of the altcoins is that I'm kind of treating them in a similar way that I would treat equity. And it's somewhat somewhat different than how I treat Bitcoin, which is as a money. So I think that's probably the, you know, if I if I mental model has clarified it all over the past six months. It's really about treating a lot of those those platforms as equities in a similar way that I would treat, say, you know, equities in the stock market.

• 1:42:55Ryan Sean Adams?

  Interesting. And what's your take on the crypto bull run? So is this a brief downturn? Or is this going to be a more sustained bear market? Or are we just like, you know, is this going to turn out okay for crypto? And in the short to medium term, Lynn is kind of my question.

• 1:43:12Speaker 02

  So in the near term, I don't know. And so I've been in my research service pretty much ever since it broke down. I've been kind of unclear about the near term price action, while still favorable long term about the fundamentals. And so, you know, with Bitcoin, for example, I was like, until this breaks over like 41, 42,000, there's not a lot of, you know, bullish tactical indicators to kind of go by. And Ethereum, I forget exactly what price target I gave, but it was like, until it breaks over this price target, you know, I'm also just not super favorable on it. Whereas, you know, I wouldn't, that's different than say, selling my cold storage stuff. But I'm not selling my cold storage stuff. I'm also saying like, you know, from a, from a three to six month perspective, until I see kind of price confirmation, I can't really be bullish. And so that is kind of separating those different time horizons.

• 1:43:58Speaker 02

  Whereas long term is really going to be about what's happening with the fundamentals, what's happening with regulatory clarity to allow pools of capital to go into those assets at a bigger way. And so I do think that, you know, especially in 2021, we've had an inverse relationship between quality and price among tokens. Right? So you've had things like Doge skyrocket. Whereas, you know, say Bitcoin and Ethereum have actually gone up less than say, you know, Dogecoin or Ethereum Classic and things like that. And so basically, I think you still have to have some of that froth kind of taken out from some of those periphery projects before you can see kind of sustained rises. And so, and another thing to keep in mind is that now that Bitcoin and Ethereum is some of these other protocols, you know, the whole space is like, you know, big enough to be a macro asset.

• 1:44:44Speaker 02

  It's more influenced by these macro headwinds. And so, you know, over 2020, people were getting stimulus checks that they could pile into stocks or cryptos. Whereas if those stimulus checks dry up, that's less retail money that can pour into the space. And so I think, you know, you have the kind of this period of consolidation. We separate the good projects from the bad projects until you can build a base and have the next bull run. And so. You know, unfortunately, it kind of comes down to the political question of are we going to see more stimulus checks? Are we going to see more fiscal stimulus? What's going to happen with the Delta virus? I think all those sorts of things can trickle into the crypto industry now that the crypto industry is big enough to be a macro asset. So I'm kind of uncertain in the near term, while my long-term case is still is still

• 1:45:27Speaker 02

  really bullish, you know, specifically for, you know, watching the fundamentals over time and the network effects.

• 1:45:35Ryan Sean Adams?

  It seems very clear from this conversation, and we started the bulk of this context, this podcast has been about inflation. It seems very clear from this conversation that inflation is going to impact all of our lives in in very meaningful ways, potentially very, very large ways in this future. And this is going to be an interesting decade to to live through. I guess maybe, you know, closing with this question, Lynn, given everything that we've talked about through the course of this conversation, what is your best advice for listeners? Maybe just individual wage earners and also investors listening to this podcast? What would you tell them to do?

• 1:46:13Speaker 02

  Well, I think, I mean, you have to hold things that you understand, first of all. You have to understand what you own. You have to understand how to value it. And then, you know, generally, preference things that are real assets. And that can include, you know, digital assets, right? Basically, things that have a degree of scarcity to them that, say, fiat currencies don't. So then there's going to be a story of the 2020s is, you know, things that are scarce are going to, you know, maintain their purchasing power, whereas fiat currencies and bonds and things like that will be debased. But from there, you know, obviously, some, some people are real estate experts, some people are equity experts, some people are crypto experts. And so they have to kind of, you know, make sure that they're invested in things that they understand to a reasonable degree. The

• 1:46:55Speaker 02

  other thing I would, I would suggest is always kind of playing the steel man approach. So I think you guys did a good job of asking the question, if you were to steel man the transfer inflation argument, how would you do so? So until you're investing something, you know, you shouldn't do it until you can steel man the reason why you should invest it, right? So for any asset that you're buying, there's someone selling it. And so you have to make sure you understand why someone is selling it. And if you can answer why they're selling it, basically take the smartest seller of that asset, understand his or her view, and then say, you know, what is your counterargument to that? Why would I buy it despite the fact that there are intelligent reasons to sell it? And if you can answer all those questions, that's when I think you should go ahead and buy that asset. And then, you know, and then from there, separate the fundamentals from

• 1:47:40Speaker 02

  the price. So, you know, the price action is not necessarily saying what the fundamentals are doing, because the fundamentals can be doing their own thing, or price goes around. And you know, anyone from the equity world knows that over the long run, especially value investors or long-term fundamental investors, you know, kind of the Buffett approach type of things, that you can have, say, an asset that is, you know, hasn't changed year to year, but it went up 30% in price, it went down 30% in price, and it's still the same asset doing basically the same thing, but sentiment around that has changed. And obviously, in digital assets, because you were earlier on in the adoption curve, because we don't know the full size, the total adjustable market yet, there's a lot more volatility there. We also didn't even know their regulatory clarity yet in many

• 1:48:22Speaker 02

  countries. And so you have obviously increased volatility, but that still can give you more opportunities to separate price and fundamentals, and keep a closer eye on fundamentals than on price.

• 1:48:34Ryan Sean Adams?

  Fantastic advice, Lynn. Scarcely assets for this decade. Build expertise in a specific asset area and niche. Steel man the arguments, and then invest in those fundamentals. And double down on those fundamentals when the market doubts them. Fantastic advice to end with Lynn. It has been such a pleasure to have you on Bankless for the second time. We hope you come back again soon.

• 1:48:59Speaker 02

  Happy to. Thanks for having me.

• 1:49:01Ryan Sean Adams?

  Absolutely, guys. Another action item that I think will help your investment career is subscribing to Lynn's newsletter. That is at lynalden.com. You can check that out. We will include a link in the show notes. That's action item number one. You can also follow Lynn on Twitter, at LynnAldenContact. That is her Twitter handle. Guys, as always, of course, none of this was financial advice. Crypto is risky, although we didn't talk Talk about it till the end. ETH is risky, so is Bitcoin. DeFi is risky. You could lose what you put in. 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.

• 1:49:40David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content, and even the Bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders,

• 1:50:21David Hoffman?

  Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless nation.