Emergency Episode: Why This Financial Crisis Is Worse Than 2008 | Balaji Srinivasan Pt 1 (Fan Fav)

Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:00Tom Bilyeu?

  Let's talk about the moment your side hustle becomes a real business. Now, I see way too many founders stay stuck running their business like it's a hobby, and then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University, and the first step in the path to building a legit business is registering it. And Taylor Brands will help you do just that in a few clicks. An LLC, a limited liability company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Taylor Brands doesn't stop at the filing.

• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. What's up, guys? Get ready for part one of an incredible three-part episode where we delve into the controversial, thought-provoking, and sometimes almost scandalous viewpoints with the man who burned $1 million to raise awareness about the trillions of dollars being printed, the one and only Balaji Srinivasan.

• 1:29Tom Bilyeu?

  Balaji, who predicted the response to COVID and the civil unrest that followed on Twitter before, basically, anybody else, is joining us now to talk about the precarious state of the economy, possible banking collapse worse than 2008, and the catastrophic consequences you'll need to be prepared for. Get your mental armor ready and brace yourself for part one of this very powerful conversation. First, did you know Impact Theory is now available on Amazon Music? Head over to the Amazon Music app to hear more Impact Theory episodes like this, the hard conversations that really matter. Don't wait, guys. Subscribe to Impact Theory now on Amazon Music and be legendary. I'm Tom Bilyeu, and welcome to Impact Theory.

• 2:13Speaker 01

  The problems go all the way to the bedrock of the financial system in terms of treasuries being the new toxic waste. It's going to be at least as bad as 2008, but probably worse than that.

• 2:23Tom Bilyeu?

  You spent a million dollars of your own money to raise the alarm to the fact that the government is printing trillions of dollars. And what I want to know is, how are you so sure that the US economy is in really bad shape? What does Bitcoin have to do with this? And how on earth could you justify spending a million dollars of your own money to make people aware of this?

• 2:47Speaker 01

  I do believe that we're in the middle of something, or at the beginning of something that is at least as serious as a 2008 crisis. The government is extremely good at kicking the can, and like, that's its primary skill in some ways. So it's hard to know exactly when things will be formally acknowledged as such. You know, I've got a bunch of slides that show that the economic situation is parless, A. B, that, you know, the degree of collapse across a number of different industries and a number of different weaknesses will probably necessitate some form of bailouts or printing, even if it doesn't look exactly like 2008. A lot of what the financial system does is it evolves to evade last time's pattern

• 3:32Speaker 01

  recognition. And so it may not look exactly like it used to. Despite what form it comes in, whether it's like Treasury buybacks, or the people's QE, which are different ways of like injecting money into the system that don't look exactly like the 2008 bailouts, I do believe an enormous amount of money is going to be printed, just like Ray Dalio, just like a number of other people do. And in such case, you want to have, quote, "outside money," whether that is gold, whether that is a foreign fiat currency that you have faith in that's sort of outside the Fed's control, or whether that is Bitcoin or a cryptocurrency. Bitcoin in particular is, you know, built to be difficult to seize. I think that's part of the answer.

• 4:16Speaker 01

  And it's not the only, it's not the only thing. You want allocation, you want to think about other things in life, like where you live, your location. Again, Dalio also thinks of that as an important thing. You know, the early 2010s, Janet Yellen was credibly reported as having known about the housing crisis, having seen it, and not raised the alarm. And now I'm actually sort of finding like, you know, people quote, "Don't want to hear you raise the alarm." Or they'll be like, "Oh, my God, you're a doomer. Why are you saying this?" Right? The financial crisis was maybe officially acknowledged in September 2008. But of course, it had been going on for years before then. It was just something where it became undeniable at that point. But I felt it was my responsibility, having put together what I had seen, to be like, "You know what? There's a lot worse than people are saying.

• 5:00Speaker 01

  It's not just like a single bank crisis. It's not even just a banking crisis. It's a central banking crisis. The problems go all the way to the bedrock of the financial system in terms of treasuries being the new toxic waste. And it's going to be at least as bad as 2008, but probably worse than that.

• 5:17Tom Bilyeu?

  One thing I really want to, I want the audience to understand why I've become so obsessed with this. And I've heard you say that the farther we get from the last deleveraging, the more incautious people become. And what I think people have, the subroutine that runs in the average American's mind for sure, is that this hasn't ever happened. Not realizing what they mean is "hasn't happened in my lifetime." And they don't realize the hard truth, which is that every single empire and every reserve currency all throughout all of recorded history have all collapsed. They have all failed. They have all gone through this massive deleveraging. And deleveraging is a really polite way of saying, "Everybody loses everything." And it is a, it is a bloodbath. It is often, as Ray Dalio talks about,

• 6:02Tom Bilyeu?

  it is often marked by blood, literal blood in the streets. This is when we go to war. Everybody's freaking out. And so because it's been so long since we've had a big war on a global scale, because nobody alive in the Western world, anyway, is aware of a massive deleveraging, they don't understand that, A, they do happen, B, that they, when they happen, they happen fast, and C, when they happen, it is catastrophic. And so I'm like, I don't want to be Chicken Little. I am super optimistic. But man, the more I started getting into financial content, the more I was like, "Whoa, there's something going on here." Ray Dalio says that every society, every empire goes through six stages. Stage six is absolute collapse.

• 6:47Tom Bilyeu?

  For people that don't know Ray... He built the largest hedge fund in the world. So this is somebody that literally puts their own money at stake, much in the way that you have to say, hey, I think I know what's going on. He's been right so many times that he's built the largest hedge fund ever. And so what he's saying is, okay, there's six stages. Stage six is total collapse. PS, the US is stage 5.5. So like, that's, that's not ideal. So as people hear you talk, the one thing, you're a very metered guy, but the one thing I want people to understand about why I'm obsessed with this content is, sky's probably not falling today. At least that's my take. We'll get to the, the sort of how impossible it is to predict the timing a little bit later, but to really understand how these

• 7:31Tom Bilyeu?

  cycles happen and they are cycles, where we're at in the cycle, so that you understand what to do. So if you don't mind, walk us through the, the rapidity with which this stuff happens. Cause I know that you have some slides that walk through like it was three days from when SVB collapses to when they're printing like that, the, the speed at which this stuff happens, I think is really important for people to understand.

• 7:55Speaker 01

  One other thing you might want to just kind of point out to your audience is, um, like, you know, I, I am, I'm younger than Ray, uh, but I've, I've done some okay things in, in life.

• 8:06Tom Bilyeu?

  So you called out, uh, what was going to happen with COVID, that it was going to be serious. Everybody said you were out of your mind and you were like one of the first people to call it.

• 8:14Speaker 01

  Yeah. And, and I think I also gave a pretty detailed projection of what would happen. And if you go and look at the, you know, the QTs on that, um, it's one of those things that feels like somebody tweeted like, uh, I nailed everything to such an extent that it, that it seems less remarkable today because of, you know, it was, um, it's almost like reading back history. There's like one thing I think I got wrong, which was like, you know, that full face masks would be more common for longer, but otherwise I think I played it out relatively well. I'm an angel investor. And so what I do is I look at long-term trends and I'm very early on them. I'm early on genomics and robotics and AI. And most of the time you want to identify

• 8:58Speaker 01

  those things that have a lot of positive upside, right? But after COVID, COVID was the first time I was looking at someone was like, I cannot. I cannot figure out a way that this isn't bad. You know what I mean? Like, it was kind of like that. I just was looking at too many graphs, too many charts. I'm like, you know, this is the first time I've seen something. You have to work back to that time, which is now several years ago. And I was like, this is the first time I've ever had a sinking feeling where it's like down into the right. You know? And that's mainly because I wasn't really looking at such graphs. I wasn't, I wasn't paying that much attention before the financial crisis.

• 9:33Speaker 01

  I was in academia at that time. I was, just wasn't looking at markets or whatever. But I've got that kind of feeling again. Let me, let me actually show the slides and, and maybe jump, go to there, right?

• 9:42Tom Bilyeu?

  That'd be perfect.

• 9:43Speaker 01

  This concept of the fiat crisis, right? One way of thinking about it is, it's like, okay, how fast could, you know, things unwind? How fast could they start printing trillions? Well, it was two days from the collapse of Silicon Valley Bank to the printing of $300 billion, even if they didn't call it printing. It was two weeks for $500 billion to move out of local banks to money market funds and to, you know, big banks and so on and so forth, for them to flee, right? It was two months to go from patient zero, the first patient being infected by COVID in the US, to lockdown as January to March of 2020.

• 10:28Speaker 01

  It was two quarters from Bernanke declaring that it was a quote mild recession in April 2008 to the full-blown financial crisis being acknowledged in September 2008. Okay. Finally, it was two years for the USSR to go from superpower in 1989 to total collapse and non-existence in 1991. Okay. And so, you know, the lesson of that is that too slow is too late, right? That was, you know, two days, two weeks, two months, two quarters, two years. Too slow is too late.

• 10:58Tom Bilyeu?

  And meaning if you don't react quickly, you're going to be too late. You're going to be the one left holding the bag that gets smashed by the freight train.

• 11:06Speaker 01

  Well, yeah. And then what does react mean? And the thing about it is, Paul Graham actually has a good saying, which is when something is exponential, it always feels like you're reacting too early. And the reason is because you don't have the normal social cues around you. It's like,

• 11:21Speaker 01

  It's like flying by instruments as opposed to flying by looking out the window. Looking out the window, you'd see nothing is wrong. But the instruments show, actually beep beep beep, there's a big mountain in front, so you should pull up. Right? And you have to essentially trust your instruments at that point because nobody is saying anything. Everybody's calm. And that's like absolute reckoning as opposed to relative reckoning. And that's an unnatural way for humans to behave, especially when it comes to doing something atypical. You have to have the, you know, that's what being an angel investor is like. That's what being an investor is like. I mean, the whole point, of course, you've heard buy low, sell high, right? You know why that's hard?

• 12:00Tom Bilyeu?

  Harder than it sounds. Oh, yeah.

• 12:02Speaker 01

  It's much harder than it sounds, right? Because, right, if you're buying low, you're going against a crowd. If you're selling high, again, you're going against a crowd. Buying low, you know, you're getting something when everybody else thinks it's a bad idea. You're literally going opposite of the crowd both times. So it's trivial when you look at a graph, oh, I bought here and I sold there. When you actually, if you could have VR that would project the emotions of the moment, and then you're hitting the buy button at that time when, as they say, the time to buy is when there's blood in the streets or whatever, right? Or you, you know, you get greedy when others are fearful, fearful. If you had VR that captured the emotions of the moment and being very contrary to the crowd, it'd feel very different, you know? Anyway, so too slow is too late, and many things are breaking.

• 12:44Speaker 01

  Okay, so there's the recent debt ceiling showdown. That was a near miss, but it boosted uncertainty in US debt. It felt like the conversation was different this year. Did you feel like that as well?

• 12:57Tom Bilyeu?

  Very much so, and I reacted differently and moved my money differently. And, yeah, not only did it feel different, when you look at the chart of how high the debt ceiling is now compared to what it was last year, like, it is a straight vertical line. It's crazy.

• 13:15Speaker 01

  Yes, that's right. And what's happened is basically like, in a sense, you know, you can think of it as

• 13:25Speaker 01

  the more people can deficit spend and borrow without apparent consequence, the more they do so. It's as if you had a seemingly infinite credit card, and there were no consequences for decades, and you were like accelerating into the wall.

• 13:45Speaker 01

  Right? Because it just feels like nothing is happening. Hey, we're such a superpower. We're so invincible. Even as the tide is going out, even as it'll get to like, you know, foreign affairs now agrees it's a multipolar world. China's like the number one car manufacturer out of nowhere. They're becoming a plane manufacturer. Like, all of these graphs, huge amounts of essentially the US's scope around the world is narrowing very quickly. And its domestic scope, there's massive internal conflict. And yet, its ambitions go to the sky even as state capacity is falling through the floor. Does that make sense? Right?

• 14:24Tom Bilyeu?

  It does. One thing I want to anchor people around, and I want to know if you think this is true, that the collapse, the big collapse, begins with debt. And if it, I think that the story that we're going to go through, at least in the beginning part of the interview, is really a story of debt. Do you agree with that?

• 14:44Speaker 01

  It is debt, but it's also, you know, it's several different shocks at the same time. So, you know, Dalio actually talks about the, and I'm just citing him because I think he came to similar conclusions, but I actually have, in some ways, maybe a more hopeful take or somewhat different takes in terms of similar inputs, different outputs. So, yeah, there's the economics where you have essentially a sovereign debt crisis, not just brewing, underway, with lots of smaller countries already defaulting, but, you know, the big ones yet to come potentially. But you also have massive internal political conflict in the US, and you have massive external

• 15:27Speaker 01

  superpower conflict between the US and the dragon bear, you know, Russia plus China. And you also have, you know, a couple other factors, which are a huge consequent decline in the US's soft power globally and domestically. So, you know... Super majorities of Americans don't trust DC. And abroad, you have, you know, France, Brazil, Israel, even, you know, allies, right, that are trading in yuan, or declaring strategic autonomy, or, you know, Brazil is housing Iranian warships. And even Taiwan said it would shoot down, you know, US planes if they tried to bomb

• 16:12Speaker 01

  TSMC, right? And that was like a little tempest in a teapot, but it was clear that a lot of countries are kind of going their own way, okay? And then finally, you've got the technological shocks, where, you know, in a sense, you know, like the ABCs of economic apocalypse, for blue America in particular, are, you know, AI, Bitcoin, and China. In the sense that AI takes their jobs, and Bitcoin takes their power over money, and China takes potentially their military power. Because lots of the jobs, especially of like, you know, the Northeast are lawyer, bureaucrat, doctor, they're like licensed jobs in some way, where an AI might be able to do them better, faster, cheaper.

• 16:56Speaker 01

  And then finally, you have the uncensoring of social media. And that is, you know, what Elon has done with Twitter, but it's also, you know, YouTube is following suit, they have reduced their level of censorship on certain things. And then you also have things like Noster and Farcaster, which are decentralized social media. So that's like a digital Glasnost to accompany Bitcoin's digital perestroika, okay? Meaning, when the Soviet Union collapsed, you had truly free speech, which was, you know, like Glasnost, and you also had free markets, which is perestroika, and we're having that in the West. So you have like a lot of different shocks hitting at the same time. It is not simply the economic shock, it's in the context of everything else. Does that make sense?

• 17:38Tom Bilyeu?

  All right, so we have all these things colliding at the same time, it's what I'll call a rogue wave phenomenon.

• 17:43Speaker 01

  Yeah, and let me kind of just show, yeah, like rogue wave, right? So, but let me show what all these things are, right? So mentioned, debt ceiling was like a near miss that boosted uncertainty in US debt. There's an ongoing banking crisis. Most US banks are, quote, "technically near insolvency." Hundreds are already fully insolvent, okay? That's, you know, a guy who disagrees on many other things, this guy Rubini, you know, is saying that. There's a banking crisis at the time of, you know, in May, June of 2023, we've seen three of the largest, three of the four largest bank failures in the last two months. Somebody, this guy Bianco, Jim Bianco, Bianco Research coined the term, "It's not a bank run, it's a bank walk," right? Deposits are leaving banks regularly.

• 18:27Speaker 01

  They're not, they're not moving all at once digitally overnight. They're moving pretty fast and they're moving to places with higher interest rates. They're moving out of regional banks, right? Hundreds of billions of dollars. And, you know, when you start something off with three of the largest four bank failures in the last few months, is that, is that the end of something? You know, it's funny, you know, somebody observed, the reason the banking crisis is kind of operating in slow motion is we don't have, it's not like on a blockchain where you can see real-time financials for everything in banks. You have to sort of wait for the quarterly reports. So it's a hurry up and wait kind of thing. So every quarterly report, then people look at it and they're like, oh my God, the losses are so big and then, you know, they act on it, right?

• 19:12Speaker 01

  This is kind of a slow motion thing in some ways. I'm not saying there aren't things that happen in between quarterly reports. Sometimes there are, like obviously the bank run, but, but often quarterly reports kick off a whole new burst of activity. Moreover, it's not just, you know, these, these huge banks that have just failed. Stanford study reports there's $2.2 trillion in unrealized losses that many US banks face the same risk that brought down Silicon Valley Bank. And fundamentally, what happened, as we'll get to, is the, the Fed and the Treasury, the Fed basically devalued Treasuries. So the bedrock of the financial system, everybody who bought Treasuries, long-term Treasuries in 2021, got completely destroyed in 2022 and some of those institutions started to collapse in 2023.

• 19:56Speaker 01

  And so the safest asset in the world became the riskiest asset in the world, the quote.

• 20:00Tom Bilyeu?

  How did they undermine it? This is an important idea. How, how does, how did the government end up doing that?

• 20:06Speaker 01

  Let me give a few analogies first and then let me get more kind of technical or specific. So you remember in 2008 when the banks sold AAA mortgage-backed securities to each other, but they really weren't AAA?

• 20:21Tom Bilyeu?

  Mm-hmm.

• 20:22Speaker 01

  Right? And it was something where it was a combination of some of those guys were lying to themselves, some of them were lying to themselves so they could lie to others, the ratings agencies were lying, like, everybody was kind of, you know, a combination of, it's like self-interested delusion, right? Where, you know, "Oh, my God, are you saying that these mortgages aren't real? That would mean a housing crash. That would mean all these people are going to lose their homes. That's anti-American, right?" That was the tone in '06, '07. "What are you saying? The housing market doesn't always go up? You're crazy, right? You're a doomer." And you have to work back to that period of time, but that is one of the reasons why this was allowed to go on for so long, the housing crisis, why it was able to get so

• 21:06Speaker 01

  bad, is because people thought, "Well, real estate's a safe investment. It's always going to go up. When is that ever going to go down? The government is backing it," et cetera, et cetera, right? And the AAA ratings on mortgages, or not mortgages themselves, mortgage-backed securities is part of what allowed the crisis to get so bad, and one of the issues was the rating agencies were not able to downrate those things for a variety of reasons. One is that they're paid by the, you know, the guys who they're rating, okay? So that's a private issue. But the second is later, for example, in 2011, when S&P actually downgraded US debt from AAA. Do you know what happened to them?

• 21:45Tom Bilyeu?

  No. Nothing?

• 21:47Speaker 01

  They got, you know, a case from the US government, and I believe, like, a senior official there, this guy, you know, Sharma, had to step down. The US government did not like S&P downgrading the debt, and I'm pretty sure that, you know, the government would not have liked the ratings agencies downgrading the mortgage-backed securities either in the run-up to 2008, because a bipartisan thing by both Bush and Clinton was to get people into homes, okay? NYT has this article, like, you know, "The Bush Drive for Homeownership Fueled the..." Housing, and then there's another one, which was how the Clinton era roots of the financial crisis. Okay, in the Wall Street Journal. So if you have sometimes binocular vision,

• 22:31Speaker 01

  where you take the New York Times attacking Republicans and the Wall Street Journal attacking Democrats, you put it together and you're like, oh, that was a bipartisan government caused housing crash. Did you know that part?

• 22:45Tom Bilyeu?

  No.

• 22:47Speaker 01

  Okay, that's actually pretty important, right? It's important what follows because there's a bunch of movies that have been made on the housing crisis. And some of them are good movies. There's The Big Short, which talks about the outsiders and they're seeing the problems. There is Too Big to Fail, which talks about the government's vantage point on it. There's Margin Call, which talks about the bank's vantage point on it. There's Inside Job, which is sort of like the activist point on it, which is calling for more regulation. But what there really hasn't been, at least to my knowledge, is one that shows the extent to which government policy pushed banks to, you know, again, in the words of both the Times and the Journal,

• 23:31Speaker 01

  to, because they wanted to get people into houses, because they wanted affordable housing goals, ending redlining and so on and so forth. Both the Journal and the Times were publishing the truth on this around that time, in the early 2010s. So the government was nudging, pushing banks, and if you didn't,

• 23:50Speaker 01

  if you didn't go and extend all these mortgages to people who probably couldn't pay, well, often you got acquired by a bank that did, and that would kind of override your decision making anyway.

• 24:00Tom Bilyeu?

  There's a reason Quince sells cashmere for $60, and it isn't the cashmere. It's real 100% Mongolian cashmere. It's the same stuff luxury labels charge a fortune for. Quince just works directly with ethical factories and cuts out the middleman. So there's no need for a markup and no logo tax. The $60 goes to the actual sweater, not the fancy name on the tag. That's why everything they make runs 50 to 80% less, and it's not just the cashmere.

• 24:32Tom Bilyeu?

  I ordered a few things myself, their fleece joggers, a couple of their tees, which I wear obsessively. First thing I noticed was the quality. Soft, well-made, built to hold up. They make down jackets and wool outerwear now, too. So upgrade your stuff to things you'll actually wear. Find your next fall favorites at Quince. Download the Quince app for app-exclusive offers, or go to quince.com. Get free shipping on your order and 365-day returns, now available in Canada and the UK, too. And when Quince asks where you heard about them, let them know it was Impact Theory. It's the best way to support the show. Let's talk about something that genuinely keeps me awake at night. My team at Impact Theory gets hit with phishing scams from bad actors pretending to be me

• 25:17Tom Bilyeu?

  all the time. And they keep getting more sophisticated attacks with details specific enough to look legit. AI has made a lot of things possible, including scams like this. But AI still needs raw material. It gets it from data brokers who sell your name, address, phone number to anyone willing to pay. Incogni goes after that supply. They handle removal requests across 420-plus harmful broker sites, and they keep checking back as brokers constantly try to relist you. On the Unlimited Plan, the Exposure Scanner hunts down your information. Send a link, and their privacy experts handle the takedown.

• 25:58Tom Bilyeu?

  Track your progress in the app and get a monthly risk assessment showing exactly where you stand. Go to incogni.com/impact and use code IMPACT for 60% off an annual plan. Incogni is I-N-C-O-G-N-I dot com slash impact. Promo code IMPACT. It's completely risk-free with a 30-day money-back guarantee. So that's like- So hold on, I think it's important to understand why, why they're doing that. So are these ESG-style goals where there's like a moral imperative that's driving it?

• 26:32Speaker 01

  That's exactly right. You know, for example, here's a quote, December 21st, 2008. Again, when the New York Times had an incentive to attack Bush over this, they said, "Bush Drive for Homeownership Fueled Housing Bubble." Quote, "We can put light where there's darkness and hope where there's despondency, and part of it is working together as a nation to encourage folks to own their own home." George W. Bush, October 15, 2002, right? So that is the approach which says, "Oh, we deregulate the market and, you know, push people and so on and so forth." There's some truth to the idea that they pushed lending standards to be low, but that's not exactly the same as deregulation. They actually use regulations to push banks to hit certain, whether you call them formal or informal quotas, they were doing that.

• 27:16Speaker 01

  Then the other side of it is the Clinton-era roots of the financial crisis in, you know, a Wall Street Journal article in 2013. And that says, "Affordable housing goals established in the 1990s led to a massive increase in risky subprime mortgages," right? And, you know, there's a strong case, the answer's can be traced to September 12th, 1992. On that day, presidential candidate Bill Clinton proposed using private pension funds to invest in government priorities such as affordable housing, sharing long-term, broad-based economic benefits, right? And so the point is, if you add up these two articles, again, you start getting binocular vision. Have you heard that saying, like, you know, there's the stupid party and the evil party, and sometimes they get together and do something bipartisan, and that's both stupid and evil?

• 28:01Speaker 01

  Have you heard that?

• 28:02Tom Bilyeu?

  Nice. It's lovely. So, one thing, I don't want to get lost in all this. I really want people to understand why this stuff is happening. So, this is, maybe you and I don't agree on this, but I am formulating a hypothesis, the more that I get into this, that the following is what's happening. And this is, this is actually me synthesizing you and Dalio and a few other people like Raul Paul. So, you, what ends up happening, my thesis goes, and please strike this down where you think I'm wrong, is that you become the reserve currency, you now have the ability to print money to cover up problems, that begins to change the way that people perceive money.

• 28:41Tom Bilyeu?

  Even at the governmental level. So now all of a sudden, people start trading what works in a free market sense of working that you spend a dollar you get to in return. It exchanges that for, I, I think morally, we ought to do this thing. We do it. It's not working. Meaning that we're losing money. So you get the 2008 crisis, but they're like, what crisis? We're just gonna paper over it. We're gonna print money. We're gonna, it was bad, but it wasn't fall off a cliff bad. And so they print over that and they, they go, oh, look, see, that wasn't that bad. And we were doing something good. We're trying to be moral actors. Because to be honest, like, this was the big awakening that I went through. I'm like, this sounds awesome. I love that you're ending redlining.

• 29:22Tom Bilyeu?

  You're getting people onto the housing ladder that previously weren't like, it all sounds amazing. But then Thomas Sowell comes along and he gives me this idea that then you start watching play out, which is the last 30 years have been marked by exchanging what worked for what sounds good. Now, when you tie that to debt, because again, my whole thesis is that the collapse begins with debt. Because if you don't have debt, you can get away with some of this. But the problem is you, you end up getting into the moment that we're in now, which is why you talk about all these problems happening at the same time. The reason I think this becomes a, that you're potentially about to walk off a cliff is because you have all this debt. The government has a full GDP in debt. U S households have full GDP in debt.

• 30:08Tom Bilyeu?

  Corporations have full GDP in debt. And so now all of a sudden, the only way out of that debt is to either lower your interest rates, which if you do that, then you're gonna have inflation. To print money to cover some of your debts, which again, inflation. And so if you have to print and you can't lower rates anymore, now you're in trouble. So they start raising rates. The problem is everybody's got all this massive, massive debt. And this is where editors put back up that the debt ceiling picture where we see this huge spike in the last year, where it is just mahusive. The, the amount of extra debt that we have right now is not a little, it is, it is unbelievable. It's like 400.

• 30:51Tom Bilyeu?

  Percent more than normal. It's just absolutely astronomical. So you have this massive amount of debt. You can no longer lower interest rates. In fact, you have to start raising interest rates. The Fed gets everybody, again, this is me quoting you, the Fed gets everybody to buy into the bonds, treasuries, like, hey, rates are going to be low for the foreseeable future. All is good. And then whatever, six months later, they take them to the moon. The fastest rate hike in in history, or certainly recent memory. And so now people are like, whoa, whoa, whoa, all these bonds that I just bought, they're now toxic. I can't get them off. SVB fails. Everybody's blaming them as if they did something crazy. They put all their money in like the supposed safe asset.

• 31:30Tom Bilyeu?

  And so now you're in this game of like, the only solution left is to print because you can't lower interest rates. Because if you you can't lower interest rates because of inflation, you can't raise interest rates because you will break the economy and more people aren't going to be able to pay their debts, including the government itself. And so now you're in a conundrum where all of your tools are gone, except printing money. And so the question that I'll ask you point blank is, we've printed a lot of money and nothing bad has happened. So why, why now? Why? Why is it a problem now?

• 32:03Speaker 01

  In short, like the system is starting to creak and you're starting to see what I'd call consumer failures, like in the sense of in 2008. You know, when you went to your ATM or something, that didn't, that just continued to work.

• 32:20Speaker 01

  The failures then were like enterprise failures in the sense that there were guys who were sweating in skyscrapers with piece of paper back and forth that weren't what they what they thought they were. Now you're having banks blow up on on Main Street. You are having, it is becoming much harder to cover things up. Okay, so we just talked about the fact that all these banks blew up, the fact that there was this near miss in the debt ceiling that got people talking about debt again. The fact that there's 2.2 trillion unrealized losses, according to the Stanford study, and I'll come back to what those are. But we have commercial real estate crisis due to remote work, due to all the crime in blue cities and so on. Commercial real estate.

• 33:01Speaker 01

  Prices could crash forty percent from their peak in a worse disaster than the financial crisis. Morgan Stanley warns, okay? That alone is pretty bad, alright? Um, twenty twenty-two was the worst year for bonds evidently in recorded history. Um, so it's a bond crisis, not just a bank crisis, and everybody buys bonds, as we'll come back to. That's like, that's actually at the core of a lot of this. Um, and, uh, you know, bonds were seen as a safe haven, but now, but they're actually central to, to this, this crisis. It's not like a, um, it's a crisis that's caused by governments, just like two thousand eight, but even more directly. Um, insurance, remember A I G when they went down in two thousand eight, like the guys who are supposed to backs up everybody, you know? So today insurers also bought a lot of bonds.

• 33:44Speaker 01

  Um, and, you know, double-digit percentages of their portfolio, which are supposed to be safe, are held in now essentially these unsafe assets that are being devalued in a big way.

• 33:51Tom Bilyeu?

  Isn't it like seventy percent of their portfolio?

• 33:54Speaker 01

  Yeah, exactly. There's a graph here. Life insurers have like seventy percent. And you can go to other kinds of insurers. And the thing is, life insurers, you might say, oh, well, that's different than real estate insurers. There's actually been a collapse in life expectancy in the US, like this overnight huge collapse. So life insurers are paying out way more than they expected. And, um, so lots of insurers are just getting, um, they have to pay when they didn't think they were gonna have to pay. Okay, there's insurance crisis, there is a fiscal crisis, one point four trillion in unfunded pensions. There's auto loans spiking defaults in that trillion-dollar-plus sector. There are student loans, payments, uh, may resume on one point eight trillion in debt after this multi-year holiday due to COVID. And it's almost like the worst, right? If you, if you just kept it, or you'd forgiven it, right?

• 34:38Speaker 01

  Both those, you know, would have been better than suspending it for three years and then resuming it. Because now what's happened is, um, people didn't sock away the cash for a rainy day, right? They didn't, um, they didn't use it to pay down the debt, they just expanded their spending. And now suddenly, and many of them probably gambled that, uh, you know, the, the, um, student loans would go away forever, right? And, uh, because it got suspended, now they're coming back, and they're like, oh no. And now they've got it on top of their rent payment or something like that, so that's gonna be a-

• 35:08Tom Bilyeu?

  Well, let's use this as an example, so why then don't we just forgive that debt?

• 35:15Speaker 01

  Oh, you, I mean, well, first, that's a, that's a huge tug of war between two groups. You're, when you, you know, if one man's assets and our man's liability, you are marking down a trillion dollars in someone else's books and they will fight tooth and nail to stop that from happening, right? And so it's a zero sum game. It's like, if you have the debt, you want it to be marked down. If you, if you're the, if you're the lender, you don't because that's your revenue stream, right? That's how, you know, maybe if you're in college, that's how you pay your administrators or whatever, right?

• 35:50Tom Bilyeu?

  But then why doesn't the US government just pay that debt?

• 35:54Speaker 01

  Well, it could. And if it does do that, then it's just printed a giant amount of money. And then people will say, why don't you print the, you know, my, my mortgage as well? Not just my student loan debt. Why don't you print my car loan away, right? And once you've kind of broken the seal on that, that's like the people's QE, the people's quantitative easing, where the money is printed not just to bail out banks, but to bail out everybody. And you know what? Like at first, people will, some people will love that. But that much introduction of money into the system starts actually devaluing the currency itself. So you talk about student loans, there's credit card debt, almost a trillion dollars in credit card debt, record high, okay? There is, and there's yet more, right?

• 36:34Speaker 01

  Globally, there's Ukraine, the Ukraine crisis, that's like at least 100 billion in, it's like 100 billion in direct costs for just the arms, but that understands it. It's, it's easily a trillion indirect. Europe alone paid like 800 billion in energy costs. It's like a multi-trillion dollar war. You know, people say wars cost blood and treasure. They, I mean, just think about it like, you've seen obviously these bombs blowing up things in Ukraine or what have you. Think about how expensive a building is, right? It's like somebody's entire life to pay for like a, like a house, you know, 30 year mortgage or whatever. So now you have a bomb that blows up like a thousand person apartment building. That's like a thousand economic lives wrecked, right?

• 37:19Speaker 01

  Even if the people didn't get blown up, it's like a thousand healthy, working, you know, people's 10 years of their life or whatever is consumed if, at, at current very high housing prices. So when whole cities are leveled and stuff like that, that's a lot of damage, right? And that's just within the, the country, obviously. Outside, the energy crisis is tremendous and of course, the humanitarian crisis is tremendous. You also have, so it's the Ukraine crisis, you have the energy crisis in Europe. And some people are like, oh, well, prices are down, so the energy crisis is over. And it's like, well, what was the cost of that, right? You had demand destruction. You had businesses that shut down because they couldn't afford the energy costs, and then they stopped consuming energy.

• 38:00Speaker 01

  And maybe, you know, that's why the energy prices are down, because they're not consuming. You know, the level of demand destruction that probably happened in Q4 of last year, you need to see stats on it. In Q4 of 2022. Then, de-dollarization. This guy, Steven Jen, who's not like, he's not like a zero hedge guy. He says, "De-dollarization is happening at a stunning pace, and people did not account for exchange rates and so on." He's like, by his calculations, you know, the dollar was down like, you know, in terms of its share of assets held by other countries, like 19% last year, and everything else is up. You know, Southeast Asia, all those countries, the 10 countries are using their own currency for trade.

• 38:45Speaker 01

  Indonesia president has said that. Central Asia, the ACU, they said they want to de-dollarize. You have, you know, South America, Latin America, Brazil saying they're using the yuan. You have even France saying they want to use yuan. You have Iraq in the Middle East trading oil for yuan. You have Russia trading oil for yuan. And you have Israel even holding yuan. And, you know, that's a lot of countries. That's a lot of the world right there, you know? And so, de-dollarization, if the dollar is no longer have to be used in an obligate way, right? If it's no longer, you know, it's only a thing that you have to use, if you have options, then that means you've got another rail to go on.

• 39:29Speaker 01

  And one thing I should make clear, by the way, is I don't think, this is where I differ from Dalio, actually, on this. He thinks the dollar just gets replaced by China. That's a clean kind of US-China replacement. I actually think that de-dollarization is decentralization. So the kind of clean statement is, money is a store of value, medium of exchange, unit of account. And sometimes in cryptocurrency, you might also include like, a system of control and like a financial system, okay? So, but store of value, that, you know, from treasuries, or you're just holding the dollar itself, you may go to gold. Central banks are buying record amounts of gold. Or you may go to Bitcoin. Or you may go to other cryptocurrencies, or you may go to foreign fiat. So medium exchange, you may use foreign fiat currencies,

• 40:14Speaker 01

  the yuan, you may use the rupee, you may use local currencies, you may use cryptocurrencies, in roughly that order, I think. So, you know, in terms of unit of count, that may remain the dollar for a while, but that's like the last thing to flip. You know, basically, you can just look up an exchange rate, you know, and flip that, that's the easiest one. System of control is the most important in some ways. It's not normally listed. This is due to Andreas Antonopoulos. He came up with this concept. But system of control is who has root access over the currency you're using. You know, this was not necessarily quite an explicit concept in the past, but today, it's very explicit is the Fed can literally hit a button and freeze accounts, just like they did to the Canadian truckers, just like they did to Russian assets. You know, Canada's bank, you know, banking system did that.

• 41:00Speaker 01

  And so, system of control, you know, the Chinese yuan, the Indian rupee, Bitcoin, Ethereum, those are outside the ability of the US financial system to shut down with one click. Okay. Then there is the financial system, and I think that's the yuan and the rupee for the domestic economies. That's maybe, you know, in the Middle East, AED, Dubai's currency is still pegged to the dollar. Maybe it gets unpegged. There's the Singapore dollar. And then, of course, there's Ethereum in the global financial system that's built on crypto. So you have essentially both what I call land and cloud competitors to the dollar. Land being, you know, the sort of BRICS,

• 41:44Speaker 01

  and especially China, you know, currency, and then cloud being cryptocurrencies, right? And so, once you start enumerating all of those, then you add on top of that, there's a huge development since 2008, which is there's lots and lots of fintech and crypto people around the world. Okay, and if you go to other countries, often their payment systems are more advanced than in the US. For example, like WeChat in China, or UPI in India, or even like Grab Pay in Southeast Asia, or PagSeguro in Brazil. It's not that hard nowadays to stand up a fintech or crypto

• 42:23Speaker 01

  company, right? And by contrast, you have ACH and so on within the US where it's like slow wire times and what have you. You know what I'm talking about, right? Like how payment technology is relatively lagging in the US?

• 42:38Tom Bilyeu?

  Yeah, as soon as you get into crypto, you realize real fast how slow the legacy system is.

• 42:44Speaker 01

  So the point is that the only thing the US financial system is going for it is its legacy traction. It's not technologically superior. It is not something which you would choose from scratch because the US is no longer a major exporter of physical goods relative to China. China is the world's number one trade partner. It's not something that either your engineer in the US would pick, or your conservative in the US would pick, or much of the world would pick, right? So it's an incumbent that has incumbent advantages, but if it had to be adopted from scratch today, it's not clear that it would be adopted in

• 43:26Speaker 01

  that way. Does that make sense, right? So that's important, that the rest of the world, it's much easier to launch currencies than to scale factories. I've done both, okay? It's not trivial to launch currency, but it's digital. Basically, China is the number one trade partner for most of the world, right?

• 43:43Tom Bilyeu?

  Yep, I think that's shocking to the average listener. They have no idea that's true.

• 43:47Speaker 01

  See, here's a graph, right? Like essentially, here's the US in the year 2000, here is China's trade.

• 43:55Tom Bilyeu?

  You're probably paying two salespeople to do one salesperson's job. That's where today's sponsor, Pipe Drive, comes in. An intelligent AI-powered sales CRM loved by growing sales teams. Pipe Drive just launched meeting intelligence built right into the CRM. Before every call, it pulls deal history and past conversations into one brief. During the call, it records and takes notes. After it, it drafts your CRM updates to review and approve. So there's less admin and more selling. Switch to a CRM built by salespeople for salespeople and join the over 100,000 companies already using Pipe Drive.

• 44:37Tom Bilyeu?

  My link gets you an exclusive 30 days free instead of the usual 14-day trial. There's no credit card payment needed. Just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in minutes.

• 44:57Speaker 01

  It's amazing, right? And so the thing is, that's only accelerated the last three years, right? In a sense, of course.

• 45:02Tom Bilyeu?

  Dude, that's really terrifying. This is where I feel like people aren't seeing how all these things are adding up. In fact, I wrote down what I think your thesis is because again, I don't quite know if we fully agree. So it's like you've got, okay, there's all the problems that we just went through, all the debt, all that stuff. Plus, the lack of financial innovation on behalf of the US is leading to this moment where we are now weak to contenders. And the most obvious contender is China. How close am I getting to the stack of problems or the stack of issues that you think are creating,

• 45:43Tom Bilyeu?

  what I referred to earlier as the rogue wave that seems prone to be the mark of the end of the US empire?

• 45:51Speaker 01

  I think the lack of financial innovation is certainly a factor. But it's really, I mean, the physical world is made abroad, right? Like, if you have to choose, as I showed that graph, countries don't want to choose. But they have to choose. China makes your chairs and your screws, right? People think the competition with China is like a high-tech military competition. In large part, it's a low-tech economic competition. China will screw you on the screws, right? They will literally just withhold the nuts, bolts, screws, and so on. You can't make things, right?

• 46:23Tom Bilyeu?

  Or more terrifyingly, during COVID, the medication and PPE.

• 46:28Speaker 01

  Masks and so on.

• 46:29Tom Bilyeu?

  Yep.

• 46:30Speaker 01

  That's right. In fact, actually, there was aid airlifted. It wasn't made public, or it was made public but wasn't emphasized. Aid came from China to the US. So, August 6, 2020, Rolling Stone, "The Unraveling of America." And essentially, here's this thing he said. He's like, basically, "For more than two... For the first time, the international community felt compelled to send disaster relief to Washington." "For more than two centuries," reported the Irish Times, "the United States has stirred a very wide range of feelings in the rest of the world: love and hatred, fear and hope, envy and contempt, awe and anger.

• 47:11Speaker 01

  But there's one emotion that has never been directed towards the US until now, which is pity. As American doctors and nurses eagerly awaited emergency airlifts of basic supplies from China, the hinge of history opened to the Asian century." Okay? That's oof, right? Now, the thing about it is, I actually somewhat disagree with the quote in the sense of... This is actually, I'd say, not for more than two centuries. It's really about, like, US world dominance is actually relatively recent. You know, it is not, it's not like an eternal fact. There's this book by Stephen Wertheim, which is good, which is, it's like, called "Tomorrow, the World: The Birth of US Global Supremacy."

• 47:53Tom Bilyeu?

  Do you call that, do you mark that after World War II?

• 47:57Speaker 01

  Well, it's actually in the lead-up, run-up to World War II. And the thing is, I mean, this is sort of obvious, but you don't become number one by accident.

• 48:07Speaker 01

  Right? It's like, it's like, it's kind of like deciding to do a startup, right? You don't become Google by accident. It's really hard to become Google. You have to set out to become Google. It's a, it's a very difficult process, and even those who set out to it don't, don't become it. The reason I say that is, a lot of people just sort of think, oh, you know, the US kind of just fell into this role and, you know, it, it didn't, it didn't, you know, I never wanted to be, you know, totally world dominant with embassies in every country and, and military bases everywhere and a financial system everywhere and regulations adopted everywhere. No, there were people in Washington DC who had a quote "plan" for world domination, just like the Soviets did.

• 48:46Speaker 01

  And, you know, the difference is that I think that from 1945 to 91, the American version was better than the Soviet version. And why is that? It's because, you know, if you look at West Germany versus East Germany, West Germany is better off. South Korea versus North Korea, South Korea is better off. You look at, you know, the Taiwan and, and Hong Kong, which were, you know, capitalist, and the PRC that was communist for, for most of the Cold War. And, and the, the Western-aligned countries were better off. And so, just looked at it in terms of that neutral ground, the American system with its flaws, from 1945 to 1991, was better than the Soviet system.

• 49:28Speaker 01

  So even if it was quote "world domination," it was relatively benevolent world domination. What I think happened after 1991 is, without the Soviet check, you know, as bad as the Soviets were, and it's good that, you know, that is on the ash heap of history, and Eastern Europe is free, and, you know, India's gone capitalist, and all, all of that is generally good, even though it was tough for a lot of the, the former Soviets. What happened is, the, you know, over time, at first the US just helped Eastern Europe get back on its feet, and it was occupied in making sure that the Soviet Union didn't totally blow up. Do you know, for example, that, or the post-Soviets didn't blow up? Do you know that the, they shelled the, the Russian White House in 1993? Do you know about that?

• 50:11Tom Bilyeu?

  No.

• 50:12Speaker 01

  Yeah, the like you heard a lot about Tiananmen in eighty nine, but you didn't hear about nineteen ninety three and Yeltsin ordering like the Russian White House to be shelled with tanks, even though that's more of a like, um, you know, Russia was at least within the Western camp ish at that time ostensibly. It's like a it's a new democracy and so on and so forth. You've never heard about that. Most people have not heard about that. But basically, the the post Soviet era was a huge mess. And the US to its credit, like essentially supervised that mess. And it's revealed later that, you know, the US was backing Yeltsin. It wasn't like a completely organic thing that Yeltsin, you know, became prima center Paris. Of

• 50:55Speaker 01

  course, you know, CIA, all these guys have an interest in loose nukes, not making their way around. So the US was all over that situation. It's almost like you're seeing a waiter, they catch a bunch of balls that have fallen, you know, down from the air like it's like a bunch of plates going there to go to look like this and catch them, you know?

• 51:11Tom Bilyeu?

  Yep.

• 51:12Speaker 01

  So in the early nineties, I think the US overall was doing a decent job, a great job in some ways on foreign policy. Eastern Europe is way better off than it was. Estonia is way better off than it was. I'm not somebody who's just like, oh, the US is always evil and so and so forth. Not at all. In fact, I think the US has actually done a lot of amazing things. What started to happen, in my view, towards the end of the nineties, and then especially in the two thousands, is you start to get that messianic crusading neocon slash Samantha Power slash responsibility to protect kind of thing, arguably starting with, you know, Kosovo and then going into, you know, like Iraq and all the Middle Eastern forever wars and then unto the present day where

• 51:54Tom Bilyeu?

  But why is this bad?

• 51:56Speaker 01

  Why is this bad? Good question. Um, the reason it's bad is that wars are never clean, you know, they're always sold to the public on this clean line of like, here's the bad guy, here's the good guy. And they're very, very rarely clean. Um, like even even in World War Two, you're talking about like the firebombing of Dresden, you're talking about the nuking of Hiroshima, you're talking about lots of civilians and innocents killed, right? And many other wars are much more great than that. A. B is

• 52:28Speaker 01

  Like, in general, war should be a last resort. Absolute, absolute last resort. And usually, you want to solve things with economics, or some kind of political solution, or something like that. And the reason it was bad in the late 90s is, it's just unchecked power. You know, actually, this is one way of thinking about it. If power corrupts, absolute power corrupts, absolutely. Have you heard that before? Of course. So, right, so basically, you know, especially, like, Iraq is something I think we can have consensus on. A country was just totally blown up, on totally false premises. Eight trillion dollars was wasted on these Middle Eastern wars. Huge part of the debt, by the way. Okay? Iraq, Afghanistan, and so on.

• 53:12Speaker 01

  ISIS formed in the aftermath of that. All these countries in the Middle East were destabilized. And for what? Like, there's no accountability. A lot of the same people are still in power. A lot of those neocons are still, you know, advising, they're saying, "Now, war with Ukraine." It's totally memoryless. It's like a sociopathic serial killer at this point, right? And at best, you'll get, "Well, we meant well," and then move on. Why are you bringing that up? You know? And, why are you dwelling on the past? Okay. Well, I mean, we're going back to 1619, but we can't go back to 2003, right? Like, you know, people will selectively excavate aspects of history and use them as a weapon in, you know, like, the current events.

• 53:57Speaker 01

  But they, they won't do the things that, you know, New York Times was responsible for printing this false intelligence. And, but they want to go back 400 years and not to their own, their own faults, right? So, like, if you notice, like, from 1945 to 1991, again, while you can't defend everything that US foreign policy did during that period, people will say, "Oh, there are right-wing death squads," and so on. Probably they were, but you know what? There were left-wing death squads, the communists, who killed 100 million people. And... They didn't play nice, you know, like the Venona decrypts have shown that, uh, do you know what that is? V E N O N A? Have you heard that?

• 54:32Tom Bilyeu?

  No, not once.

• 54:33Speaker 01

  Venona, Venona showed that, um, basically the Soviet Union had riddled the United States with Soviet spies. Uh, in fact, you read Sean McMeekin's book Stalin's War, and it makes a point that, like, you know, this is not very well known about, like, World War II. You know, when the number one, first of all, he makes a point that World War II was actually not Hitler's war, but Stalin's war, because Stalin was actually on two fronts. He had both an Asian front and a European front. And the second thing is, you know, the least, just to digress on this for a second, you know, the least covered, but perhaps most important theater in World War II?

• 55:10Tom Bilyeu?

  No.

• 55:12Speaker 01

  It's the Japanese-Soviet.

• 55:15Tom Bilyeu?

  I don't know. I literally know nothing about that collision.

• 55:19Speaker 01

  All right. So isn't that interesting? Obviously, you know about the Pacific War between the US and the Japanese. You know a lot about probably the European conflict between, you know, Germany and Russia and Germany and the US, UK, France. But, but isn't that interesting? You do, and you know about, like, Germany, you know, versus Russia in terms of Stalingrad and whatever. But why, why didn't Japan and Russia fight? Because Vladivostok is there. Russia has a huge, you know, Asian front. Why didn't Japan invade from the east when, uh, Germany's invading from the west? Why did they not pincer attack? Right? Why, why did it happen in reverse? And it turns out that actually getting Japan to fight the USA was, um, in Sean McMeekin's report and in a lot of documents that got

• 56:01Speaker 01

  declassified, getting Japan to fight the USA was like one of the number one goals of Soviet foreign policy.

• 56:06Tom Bilyeu?

  Hmm. I did not.

• 56:08Speaker 01

  Yeah. So, so the reason is, it goes all the way back, you know, 1905, you can push back even further, but like, 1905, the Japanese, just to digress on this, the Japanese, um, beat the Russians in the Russo-Japanese War, 1904, 1905. This was the first time a non-white power had beaten a quote, "European, you know, ancestry country in a war." This had huge influence in terms of anti-colonialist movements around the world, and in fact,

• 56:35Speaker 01

  At the time, the Japanese positioned themselves, you know, as friends of W. B. Dubois and the African American movement in the U. S., like what would later be called the Civil Rights Movement. That's an overlap most people don't know about. There were Indians who were sympathetic to the Japanese because, you know, it's like, oh, wow, non-white people can be free or whatever, right? Of course, you know, Japanese were, you know, like they committed terrible war crimes later. But that's an aspect of history that people don't know about. Point is that after that, after 1905, that was a huge, you know, like, black eye for the Russian Empire. And they took the Japanese seriously culturally after that.

• 57:13Speaker 01

  And even after the Communist Revolution, even if the ideology changed dramatically from SARS to Communism, you know what didn't change?

• 57:25Speaker 01

  The geography, right? The territory is still abutting Japan, right? And so they still had geopolitical rivalry with Japan. They couldn't swap that part out, right? And they couldn't, you know, there were attempts to make Japan communist, but, you know, it didn't succeed. And so essentially, for years and years and years, Soviet foreign policy was focused on, how do we get these other capitalist countries? That's how they thought of it, like, how do we get these capitalist countries to fight amongst each other? And so, you know, there's guys like Harry Dexter White, there were Soviet spies in the U. S. And they helped turn Japan against the U. S. and vice versa. Not saying that anybody here was like a good guy, okay?

• 58:08Tom Bilyeu?

  This goes to an idea of there are second, third, fourth, fifth order consequences to things. And when you have a lot of things happening at once, especially on a geopolitical stage, this all plays into why, in this unique moment, we are standing so close to the precipice and why people aren't hearing you that we're standing this close. So I want to re-anchor everybody around. This interview is born out of, you spent a million dollars to get people to understand why we're printing so much money. That's so crazy, like, there's no way that people understand that. You're the only person I can conceive of that would ever do this. I mean, it just, it struck me as so bizarre when you first brought everybody's attention to this, that you were going to pay the million dollars to get attention.

• 58:51Tom Bilyeu?

  I'm obsessed with getting people to say, like, what their thing is in a single sentence.

• 58:55Speaker 01

  Here's in a single sentence.

• 58:57Tom Bilyeu?

  Yeah.

• 58:58Speaker 01

  The...

• 59:01Speaker 01

  If in 2008, it was a banking crisis and a mortgage crisis, in 2023, it's a central banking crisis and a currency crisis.

• 59:13Tom Bilyeu?

  Now, the question becomes, why? Why do these, one, why is it a central banking crisis? And why then does it potentially mushroom into something bigger?

• 59:23Speaker 01

  We are now in an inflationary environment. That had been denied that inflation was going to happen for a decade.

• 59:32Tom Bilyeu?

  Due to what?

• 59:32Speaker 01

  Inflation, because people had, quote, printed money from 2008 to 2020. And the only effect seemed to be on asset prices and home prices and all the things in financial markets. But in the physical world, you had deflation, partly due to tech bringing down prices, you know, like electronics became cheaper and so on. And so people thought, if you go back to early 2021, that inflation's a, quote, right wing conspiracy theory, or it's not going to happen, it hasn't happened for 12 years. You're so stupid for bringing it up. And there's all these articles about that. And so over the course of 2021,

• 1:00:16Speaker 01

  they're first saying inflation isn't going to happen, so more stimulus is good. We've proved inflation can't happen. Then they're saying, oh, maybe it's transitory inflation. But they're still selling hundreds of billions of dollars in bonds during this period. And then suddenly, in, you know, as late as November 2021, they're still saying transitory inflation. Then December 2021, after Powell is renominated in November 22, 2021, they hike, start hiking interest rates very rapidly. And everybody who bought bonds...

• 1:00:45Tom Bilyeu?

  Was that deceit?

• 1:00:47Speaker 01

  I think it was deceit. I've got actually an article on this called Too Fake to Tell. Okay. Which basically makes the case that Powell was aware, at least at one point, that... So let me give an analogy here because it's a very technical sounding space and... When you explain all of this, you know that meme where the guy is like pointing at the corkboard and you know.

• 1:01:12Tom Bilyeu?

  There's all the lines connected to everything else and you look like the crazy guy?

• 1:01:16Speaker 01

  Yeah, exactly. See, the thing is, the financial system is set up to be intentionally opaque.

• 1:01:22Tom Bilyeu?

  If you are the Fed and you're saying, hey, guys, buy long-duration bonds, which will lock you into an interest rate. Rates are going to be low forever, so just take what you can get now, take it out 10 years, whatever. All is going to be well. We don't have any intention of raising the interest rates, but you actually do plan to raise interest rates. So then the problem is people put all their money into an asset that you are about to tank by raising the interest rates. So they effectively get you to buy. Now, I don't know. I don't understand this well enough to say whether they did it on purpose or if this is just one of those things that's too hard to predict. I don't know. But that was the effect. Hey, guys, buy these bonds, buy them long, not going to increase the interest rates anytime soon.

• 1:02:07Tom Bilyeu?

  And then people go buy them, billions of dollars worth of them, and then they raise the interest rates. And so now the value of those bonds tank, now your money is locked, because when you bought them, just so people understand how this works. When they bought the bonds, they thought they'd be able to sell them. So they didn't think, oh, I'm going to be stuck with this for 10 years. That's the time to maturity, but they thought that they would be able to sell them, that the market would still be good because interest rates were going to stay low. So it all hinges on this question. Did he know? Did the Fed know they were going to raise rates? Because if they knew they were going to raise rates and they got the banks to buy in, now you've got a problem. And I've heard you say the phrase, the Fed lied and banks died. Now, that's sinister. If they knew they were going to raise the rates, that's really gnarly.

• 1:02:52Speaker 01

  Can you see the screen there? On page 193 of these minutes, okay? The Federal Reserve minutes here. Second, I think we are at a point of encouraging risk-taking.

• 1:03:05Speaker 01

  Meanwhile, we look like we are blowing a fixed income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that is our strategy. Okay. So at least 10 years ago, he was aware that, how could you not be aware in his position? But that if you sold a ton of bonds and then hiked rates very, very, very rapidly, that you would devalue everything you just sold. Like, the bond market is complicated, so I came up with an analogy to kind of explain this. Imagine Apple told Best Buy and Target and Walmart that it was only going to be selling iPhone 10s for the foreseeable future. Okay?

• 1:03:47Speaker 01

  And so it sold them billions and billions and billions of dollars worth of iPhone 10s, and, you know, it said, "We're not going to be selling better iPhones for a long time. Buy these, buy them in bulk," and so on and so forth. Okay? Then after Apple sells all those billions of dollars in inventory, suddenly it turns around and launches the iPhone 11, a better phone, and thereby devalues everything it just sold by at least 10 or 20%. And even though it's maybe a small depreciation, it's across such a huge amount of inventory that Best Buy, Target, Walmart take massive losses. And some of these are low-margin businesses, so it's like a huge, huge hit to them.

• 1:04:30Speaker 01

  And the thing is that, you know, whether Apple knew that it was going to launch the iPhone 11, which it probably did, or even if it didn't know, either way, at the time it sold those old iPhones, it was telling the buyers it's not going to launch a better model for a long time. Makes sense? Right? So had Apple done that, had it committed to not launching a new phone and dumped a bunch of older phone inventory on buyers...

• 1:05:03Speaker 01

  And then suddenly devalued all of that, you know, the buyers would have a case, they'd call that fraud, right? Apple would have sold those assets on false representations, regardless of whether they knew at the time that they were going to launch the iPhone 11. And frankly, how could they have not? Okay. But you know, if they just changed their minds, the commitment they gave to the guys who bought it at the time that they were selling it was, we're not going to launch a new phone for a long time, so feel free to buy tons of these, they're our best model. Okay. Does that make sense?

• 1:05:31Tom Bilyeu?

  Oh, yes.

• 1:05:32Speaker 01

  As a bond buyer, you have the same thing. You think, okay, do I want to buy at today's interest rate? Or do I want to wait and maybe the interest rate will be higher and I'd buy tomorrow? Especially because if I buy a bond today, it gets depreciated if the interest rate is high tomorrow. The Treasury and the Fed are different entities. Treasury is selling the bonds and then Fed is effectively setting the price of the bonds by setting interest rate. If you think of them as a unitary entity, the US government, because they do act together in most cases, then it's like the US government sold all of these banks, hundreds of billions of dollars in assets that it then devalued.

• 1:06:07Tom Bilyeu?

  One of the things that I find interesting is that value investing is really broken down for what, like at least the last five years, which leads to the question, what the hell is going on? And that's what, you know, that's what we're really dancing with here is the complexity of this problem. But there are so many signals that something's going on from all the things we listed. And I just want to recap some of the things we listed in the beginning here. So you've got debt ceiling is way up, market's estimating a record high probability of US sovereign default, most US banks are near insolvency or already technically insolvent. Three of the four largest bank failures in US history have happened in the last two months. 2.2 trillion dollars in losses at banks have yet to be reconciled.

• 1:06:50Tom Bilyeu?

  Morgan Stanley believes that the commercial real estate sector is poised to be a worse disaster than the 2008 financial crisis. 2022 was the worst year for bonds in a long time. De-dollarization, which you went through in detail, is happening. Sovereign defaults are at an all time high. We had 14 in the last three years versus 19 in the previous 20 years. That's 4.7 per year now versus less than one per year previously.

• 1:07:20Tom Bilyeu?

  It's an increase of almost 5X. We have millionaire migration to the US has dropped by 86% in the last three years. And central banks are buying a ton of gold, a ton of gold. The chart is ridiculous, presumably because they see that something is coming. So it's like, okay, you are the only one I know.

• 1:07:41Speaker 01

  You got a lot.

• 1:07:42Tom Bilyeu?

  Oh dude, I cut out like 10.

• 1:07:45Speaker 01

  Yeah, so there's an insurance crisis, there's the fiscal crisis. Blue states are bankrupt, like California, Illinois, places like that. They're losing a lot of money. There's auto loans, there's the student loans, there's credit cards. Each of these are like trillion dollar problems that could crash the economy. And they're all happening essentially at the same time.

• 1:08:01Tom Bilyeu?

  It is insane. So I feel like we're standing on this really rickety thing. You said that the, you know, the economy is beginning to creak. But I've heard you use an example before that I worry is more accurate. Now, remember, all I care about, I want people to look at this. Neither of us have a crystal ball. The one thing we are guaranteed to get wrong is timing. I just want everyone to be very clear. Now, the wins and losses all come around timing. So of course, like if I had a crystal ball, I'd just shut the show down and just go make a lot of money. So I have no idea when this is going to happen. So to be very clear, but you've used an example before that I think is absolutely brilliant. And that is, this is a wily coyote moment. What do you mean by that?

• 1:08:44Speaker 01

  So, you know, wily coyote, if people haven't seen, you can probably put up an image of it. This character from Looney Tunes and they walk off a cliff and they're just, you know, merrily going in midair. The one day they look down, they're like, oh my goodness. And the markdown is digital in a sense, right? They just fall all the way straight down, right? And if you look at the graphs of some of these bank stocks, they're kind of like that. Where they're analog and they're just kind of floating through the air. And then suddenly somebody actually looks at the financials, they look down and they're just digital, they die overnight.

• 1:09:15Tom Bilyeu?

  That analogy is so apt because, and this is why I never know how to handle these moments, because by talking about it, you are getting people to look down. And so in some ways, you run the risk of speeding it up. So you talked earlier about Janet Yellen. She knew there was a problem, but she didn't speak up. Now, for people just listening, he just made a face. So we're going to get to the face in a second. But like, you've got Janet Yellen, who knows there's a problem, but doesn't broadcast the problem. But I don't know if I'm mad at her for not broadcasting the problem. But at the same time, I can't help myself out of a moral sense of obligation from telling people, hey, you might want to look down.

• 1:09:54Speaker 01

  Why to make the face? Well, the reason is that line of argument that talking about it is causing it is actually, people throw that around. I think it's false, but it's false in an important and interesting way, which is when, you know, one of the things I've found that's, I think, a stupid kind of meme is, you talk about this type of stuff, people will be like, oh, you're such a doomer. You're such a downer. Just look on the bright side, man, you know, blah, blah, blah, that kind of thing, right? And, you know, the goal is to be neither a pessimist nor an optimist, but to be just a realist. And if you're a realist, then you're not a Pollyanna, right?

• 1:10:36Speaker 01

  Like, it's on a doomer to say, oh, there's a wall in front of you. You might as, you might want to turn the car. You know, that's like, that's just, that's being smart, right? There's being realistic. And the thing is that what happens when you talk about this stuff in the absence of another human being there, the negative emotions that people have out of visualizing what a deleveraging actually is, are projected on you. Oh, you're causing it. Oh, my God, you're causing a bank run, etc. You know, who caused it is Jerome Powell and the Federal Reserve. And Janet Yellen and the US financial system, but especially Powell, because he's the Chair of the Federal Reserve. Why does Powell hate America so much? You know, like, that's actually

• 1:11:19Speaker 01

  the question. Why did he, you know, devalue the treasuries that the government had sold in 2021? Why did he tell people that interest rates were going to be kept at zero before totally, you know, jacking them to the moon? Why did he say that inflation was transitory when it wasn't, right?

• 1:11:36Tom Bilyeu?

  I have a slightly different hypothesis, which is all the things you just said are true, that the mistake, the actions that are being taken are being taken by those people, and those actions are creating the problem. But my whole thing about it's the debt that causes this collapse. I don't think any human, any group of people is a better way to think about it. I don't think any group of people can stay emotionally sober for long, once they've lost sight of the people who built the thing. So, once you've had enough people that have inherited the country working well, you now just, it is guaranteed to devolve into these choices that happen around debt, because again, we talked about this earlier.

• 1:12:19Tom Bilyeu?

  This is a, it's coming from a beautiful place. They want it, they want more people in housing. They want to make things better for people. They want to elevate people, lift people out of poverty, make sure that, you know, nobody goes without. Like, it really does. Like, I understand the, what you call the wokening, I think, the wokening of America, like,

• 1:12:37Speaker 01

  The great awakening. It's not my coinage.

• 1:12:39Tom Bilyeu?

  The great awakening. Whoever came up with it, I like, get it. I get the impulse to it. But, the problem is that you end up, you get in this debt cycle of, oh, let's just, let's inflate the currency, let's print money. So, we're printing money, we're inflating the currency. And like, yeah, kind of cheeky, it does devalue everybody's money, but nobody feels it too badly. Like, honestly, in 2008, I was like, word, like, print money, man, if that's going to help people, that's amazing. I got devalued, obviously. And then, again, SVB, I didn't have any money in SVB, but I was still like, word, yeah, print. So, I'm just like, wait, is this much ado about nothing? Or is this the cycle that humans cannot get themselves out of?

• 1:13:23Tom Bilyeu?

  And I'm as much of the problem as anybody else because I'm like, yeah, I don't want to see people suffer, man. If you can print, like print, I guess we all like take a hit. But it's like, when does it become a problem?

• 1:13:32Speaker 01

  Okay, well, so first is, um, there's something called the Cantillon effect. Okay, which is to say, and, you know, I think some people have an intuitive grasp of this, but I'll explain it anyway. Um, printing money is in a sense like official counterfeiting. And the guy who is got the counterfeit dollar first can spend that and get more of the purchasing power. And then eventually it makes its way through the system and the entire money supply gets marked down. And it's got less of its purchasing power with the 15th guy who's, who's, um, got it. Okay. And so printing is not costless. What printing just does is it's like, basically inflation is taxation. It's like, um, let's say you had, I don't know, a hundred billion dollars. Okay. In the economy as a whole.

• 1:14:17Speaker 01

  And then the government prints another hundred billion dollars. That's as if the government seized 50% of the wealth in the country. Does that make sense? Or at least 50% of the savings?

• 1:14:28Tom Bilyeu?

  Yes, and I, I don't know how intuitively this comes to people, but yes, once you get it, once the penny drops, it's brutal.

• 1:14:36Speaker 01

  Yeah. So in, so inflation is taxation. That is to say, and printing, when, especially when you're printing a large percentage of money supply, it is essentially centralized seizure of wealth. The difference is, it is, um, if you think about the difference between like a, like a in-your-face predator, that's like communism, you know, or like a, like a lion, you can see it coming versus a stealth predator. It's camouflage, like a snake, that's like Keynesianism. Communism, they would just go to your house with a gun and they would just shoot you and take your farm and, you know, throw, you know, your, your, your children in a Gulag or whatever, right?

• 1:15:16Tom Bilyeu?

  Very direct.

• 1:15:18Speaker 01

  And that was a lived experience, that was a lived experience of many people in Russia, China, Vietnam, like all kinds of people. That's what collectivization was, okay? But Keynesianism is, it steals the money in a much more- Subtle way where a button is hit and it's like a mosquito. You don't even feel it. Right. The blood is sucked or it's like a camouflage snake or something like that. You're you're dead or bankrupt or devalued at the end of the day. But it's you might even feel it's helping you. So for example, let me show you in particular, a very important graph. Did Republicans pay for 2008? So let's revisit first. Take a look at this graph. Okay. Have you seen this graph before?

• 1:15:53Tom Bilyeu?

  Oh, yes, my friend. I told you every graph you've ever put out. I think I've seen it's probably not literally true, but it's very close.

• 1:16:01Speaker 01

  Okay. All right. Well, that's cool. So there is a Wall Street Journal article that this comes from. Okay. And there's it's actually like an animated version. So you can play the animated version that goes back and forth. So you should do that. Point is, what is this graph showing?

• 1:16:16Speaker 01

  Basically, it is showing congressional districts in the US by their real GDP. Okay. Inflation adjusted GDP. And what you can see is the the kind of solid line, blue line and red line. In 2008, Democrat and Republican congressional districts were were mostly evenly matched. That's to say, both them had rich districts, both them had poor districts. And the median wealth, median real GDP in both those districts was comparable. Okay. 10 years later, by 2018, the the distribution of Democrat, you know, districts had pulled away from the Republicans. Like the median GDP of Republicans was like $30 billion in their congressional districts.

• 1:17:00Speaker 01

  For Democrats, it was like 50 billion or thereabouts. And moreover, all of the wealthiest congressional districts were suddenly Democrat. So essentially, in 10 years, this massive gap was opened up between the two parties. And this is how you went from the like suit and tie wearing Republicans of the early 2000s to the trucker hat pearls of the late 2010s. And that transformation happened over the life of most of the people who are watching this. But I believe it happened in part because the printing went disproportionately to the coasts.

• 1:17:38Speaker 01

  That's to say, if you track the Cantillon effect, if you track the flow of printed money, well, it's the Fed, it buys these overpriced mortgages from banks. The banks now have extra assets on their books and they can spend it on financial assets. And then those people have money in their bank accounts and then they can go and spend it on houses or goods or whatever. But that's disproportionately in the coast. The money went to Washington DC, it went to New York, and then some of it made its way to Silicon Valley. Venture capital is actually a tiny fraction of the overall investment landscape. It's like a few billion versus hundreds of billions of dollars. But like a small rivulette of that printed money made its way out to Silicon Valley Venture Capital.

• 1:18:22Speaker 01

  And that was probably like the most productive use of the money because you're talking about investing in businesses that are being built from scratch. And that's a whole separate story as to what happened there. But essentially, the money made its way to the coast and the guy in Oklahoma, who's some cashier in Oklahoma, got the printed dollar last and didn't even realize that they had been devalued and that they had been essentially had a good chunk of their assets seized. And their whole town had had their assets seized. And the thing about this is, the whole time, as you just said, people are like, we're helping people, the Fed saved the world, right? Well, what it actually was, I mean, you know, 2009, 2016 is a Democrat administration.

• 1:19:07Speaker 01

  Perhaps it was just a coincidence that the Democrats became far richer than the Republicans in 10 years, okay? But it does seem like the cost of the print was imposed on the political opposition in a deniable and invisible way, unconscious even to those doing the imposing, who'd actually say, we save the world, we help people, stimulus, blah, blah, blah, right? And that's like a camouflage predator, where it's like anesthetizing its target that doesn't even know the blood is being drained. Okay, that's being attacked. It's like, it's, you know, it's, you know, it's strikes like this, right? And that's actually better because, you know, a lion gets your fight and flight response. If you know it's a predator, mosquito doesn't. It's done and you don't even maybe detect that

• 1:19:50Speaker 01

  it's happened, right? And so it's like, we see that evolution has selected for the camouflage predator. And that's a lot of what the financial system is. And, and if you think about this, by the way, and you start relating, I mean, think about how many times banks try to get one over on you with fine print, right? Fine print is not a tactic, it's a strategy. The whole point is to get somebody to sign a contract that they didn't fully read, or they didn't, they didn't understand in parcel legalese and lock them into some adjustable rate mortgage, or some student loan where they're too naive to understand, you know, like how bad it is for the rest of their life when they're 18 and they don't, they're not taught interest rates,

• 1:20:33Speaker 01

  they're not taught taxes and stuff in high school. They're taught just a bunch of gibberish, and then they sign a student loan for the rest of their lives. The system is sort of set up to get people into debt. And to be clear, I'm as capitalist as they come, but I do believe there's asymmetric information, information arbitrage there. And that which you've seen at an individual level that the financial system does is all something it does in my view at a collective level. By the way, there's somebody else who paid for 2008, you know who that was?

• 1:20:58Tom Bilyeu?

  Hmm, no.

• 1:20:59Speaker 01

  Potentially the, the Arab world. And the reason is, basically, food price spikes helped trigger the Arab Spring, right? The US exported its inflation. Remember the whole Arab Spring in the early 2010s?

• 1:21:11Tom Bilyeu?

  I do very much. And this, this is going back to your earlier thesis for everybody listening along. As, as you, Balaji, as you fractal into these ideas, I want people to understand that there isn't anger, there's something that triggers this for you. But like, the, the second, third, fourth, fifth order consequences, in hindsight, can be seen. And so a big part of why I find your thinking so interesting is you're like, hey, look backwards, understand what you're going to see going forwards.

• 1:21:39Speaker 01

  Basically, once you understand that inflation is taxation and that Republicans paid for 2008 and with their money and unfortunately, a number of people in the Middle East paid for 2008 in part with their lives because, you know, people are like, "Oh, 2008, fighting Christ, it wasn't the end of the world." Well, you know what? For the Arab Spring, it was the end of a lot of people's world, right? Libya was plunged into chaos. That inflation did destabilize countries. And even if you say it's only 20% the cause, because it's multiple causes, and I'd agree with that, that's 20% of a lot of chaos.

• 1:22:12Tom Bilyeu?

  Paul, do you walk me through? How did that happen? I actually don't understand how the inflation, we didn't really feel it, not in like a way that broke us, but it caused actual instability in other countries. What happened? What's the mechanism?

• 1:22:27Speaker 01

  So, food prices are the often discussed mechanism, that there was like a fruit vendor who set themselves on fire that helped, you know, Mohamed Bouazizi, right? Fruit vendor set themselves on fire and that is thought of as what triggered the Arab Spring, right? Like essentially, you know, his prices, December, 17 December 2010 would have been a normal day if the local, you know, prices, if the prices hadn't changed, right? And so, the thing about this is, like, it's multifactorial. There's a reason that the government, you know, and media covered it at that time and whatnot.

• 1:23:12Speaker 01

  It was useful in the sense of, have you seen that clip from Wesley Clark where he talks about how even in the early 2000s, like, there's folks in the military industrial complex that had decided to invade like seven Arab countries? Have you seen that one?

• 1:23:26Tom Bilyeu?

  No.

• 1:23:27Speaker 01

  Wesley Clark's former four-star general, right? And, you know, pretty, pretty senior guy. Before the Iraq invasion, that, that the US planned to attack seven countries in, in a few years, and actually, a lot of that came true.

• 1:23:45Tom Bilyeu?

  Oh, my God, I did hear this. And they asked him why, and he said, "I have no idea."

• 1:23:49Speaker 01

  There, there were a bunch of these folks in like the Project for a New American Century, who essentially thought that...

• 1:23:58Speaker 01

  Islamic fundamentalism was a huge problem and they need to democratize the entire Arab world with like what they did to Germany and Japan, right? That's like the good motives version of it, but of course, I mean, good motives, you know what I'm saying? It's like, let's, let's call it, that is probably what their internal mental model was like, yes, it's terrible that war exists, but you know, it was terrible that World War II happened and Japan and Germany are better off for it. So we need to conquer the entire Middle East and democratize them so that their women are free and whatnot. That was the narrative of the early 2000s. Okay. What happened, of course, was just absolute mayhem and chaos with ISIS and many of these countries destabilized in Libya in civil war.

• 1:24:41Tom Bilyeu?

  But is that what destabilized people? That, that, that feels more direct. I'm still trying to understand how 2008, we inflate the currency. Why does that impact their food prices?

• 1:24:52Speaker 01

  We don't have a blockchain where I can show A, purchase B from C and so on. I mean, markets are, you know, are complicated, but the US exports its inflation in part because it is the consumer of all these products around the world and, you know, the dollar is its major export. And what is a small or tolerable rise in prices in the US is intolerable abroad if somebody's like kind of living hand to mouth. To give the, you know, what I could diagram out for you, by the way, is like the exact sequence where it goes from the Fed buying an asset from a bank, which then has a cash and can buy a stock, which

• 1:25:35Speaker 01

  then puts money in the hands of an investor who can buy a house. That's actually something where you can probably track it through the financial system to track exactly how the printed money is bidding up, you know, the, you ever heard the saying, the price of tea in China, right? Like, what does that have to do with the price of tea in China? What does that have to do with the price of grain in Libya? Okay. To track it exactly, you would need access to several different databases that are not public, you know? So you have to kind of look at the aggregate stats and say, okay, here's how the US exports inflation.

• 1:26:08Speaker 01

  And then people will argue about that. Part of the point is that it's meant to be deniable, right? But the concept of the US exporting inflation is certainly not my like innovation or anything like that. That's something a lot of folks have talked about. So if you want to get mechanistic about it, you probably have to go and pull data sets from I don't know, several different grain vendors and so on. You see, okay, this guy suddenly got a printed money and so he bid up X, which bid up Y, which bid up Z, which bid up the prices of this guy in the Middle East, right? But that X, Y, Z, A and B are hidden because they're not on chain. Does that make sense?

• 1:26:41Tom Bilyeu?

  Yeah.

• 1:26:43Speaker 01

  Right? And that's actually, that's actually part of the point. The part of the point is the, again, the mosquito, right? The camouflage predator. The point is that you can't see it, right? The point is that that's not public. I mean, think about how much more coverage we, um, we got of Kim Kardashian or whatever in the 2010s, then where did all that printed money go? Hundreds of billions of dollars, trillions of dollars. Where did all that go? How many, how many articles have you seen? Is it, is it a daily thing on that? A breakdown of where the printed money went? If you know that inflation is taxation, then, um, you know, one option is you can just stay in the system, like those Republicans, like those people in the Middle East, and those folks who are near the money spigot, who can benefit

• 1:27:28Speaker 01

  from the Cantillon effect, do another print, and they benefit again first, right? But if you see it coming, and you get out first, now you're not part of the base that is diluted. If you get out to outside money, you get out to gold, you get out to Bitcoin, you get out to maybe a foreign fiat, um, now you have an asset where, so go back to that example. Let's say there's a hundred billion dollars and the US government prints another hundred billion. It seized 50% of, of dollars essentially, right? But if there's 21 million Bitcoin, the US government cannot print even one Bitcoin, so can't seize the Bitcoin. Does that make sense?

• 1:28:11Tom Bilyeu?

  By stealth means, yeah. I'm, I'm not in the camp that Bitcoin is unseizable. I think that you, you lock somebody up, they're gonna real quick be like, all right, here it is.

• 1:28:22Speaker 01

  Yes, but, but basically, it's not, it's not easily centrally seizeable. You have to go back to communism, how, and this is actually very important. Um, Bitcoin and cryptocurrencies more generally increase the cost of seizure.

• 1:28:39Speaker 01

  Okay, because like a SWAT team costs money. You know, it's like, what are $40, $50,000 or whatever, right? So now you have to actually look at the P and L of going and kicking in somebody's door and beating them up and taking their private keys, right? And you have to have, first you have to find them, you have to find, you have to have, you know, like some legal authority to go in and beat them up, take the, and then you have to replicate that. And that'll arouse resistance because now it's no longer the camouflage predator, it's the lion, right? It's something that you can actually see.

• 1:29:12Tom Bilyeu?

  Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done. You're getting 75 plus ingredients, vitamins and minerals, pre and probiotics, nutrient dense superfoods, everything that used to require six, seven different supplements, and perfect planning now happens in one drink that takes about 30 seconds to make.

• 1:29:57Tom Bilyeu?

  Right now, AG1 is giving you $87 worth of free gifts with your first subscription. You get a welcome kit, travel packs, vitamin D3 plus K2, and flavor samples. Click the link in the show notes or visit drinkag1.com/impact to claim this offer.