#853 The Insiders Are Yelling Warning Signs

This episode is a little different than the usual podcast format. There is no guest. Instead, I will share a couple of thoughts I have around a specific topic. Today's episode covers commodity prices related to the Russia/Ukraine Complex and I read a letter from Zoltan Pozsar of Credit Suisse explaining the risks to The U. S. Dollar Reserve Status. ======================= Bitcoin 2022 is the LARGEST Bitcoin event in the world that takes place April 6th - 9th in Miami Beach, Florida. All four days will be jammed-packed with exclusive content, exciting announcements and an incredible lineup of bitcoin speakers, artists and leaders. Day 1 is INDUSTRY DAY for enterprising bitcoiners who are looking to build a business or career within the ecosystem. Days 2 and 3 are general conference days featuring speakers like El Salvador President Nayib Bukele, CEOs like Michael Saylor, Elizabeth Stark, Jack Mallers, Adam Back and hundreds more. The conference caps off on the fourth day with the world's first and largest Bitcoin Music Festival - Sound Money Fest headlined by rapper and fellow bitcoiner Logic, featuring artists K. Flay, MØ, Royal & the Serpent, Apashe, Asadi and more. Stay tuned for the upcoming lineup announcement! Last year’s conference SOLD OUT and this year’s is on pace to be 3x larger so make sure you grab your tickets before it's too late. Visit b.tc/conference to learn more. Ticket prices increase on JAN 14th, use promo code POMP for 10% off and I will see you in Miami!ire ecosystem bringing utility to #NFTs ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Today's episode covers commodity prices, the Russia-Ukraine conflict, the Federal Reserve policy decisions, and a letter that recently came out from Credit Suisse that I think is worth paying attention to. I hope that you enjoy today's episode, but before we get into it, I want to first talk about our sponsors. This episode is brought to you by FTX US. FTX.us is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can trade crypto with up to 85% lower fees than top competitors. There are no fixed minimum fees, no ACH transaction fees,

• 0:42Anthony Pompliano?

  and no withdrawal fees either. FTX.us is also the only leading exchange that supports both Ethereum and Solana NFTs. Download the FTX app today and use referral code Pomp to earn these free crypto on every trade over $10. The more you trade, the more you earn. Go download the FTX app today and use referral code Pomp. Today's episode is sponsored by the Bitcoin 2022 Conference. Bitcoin 2022 is the largest Bitcoin event in the world that takes place April 6th through the 9th in Miami Beach, Florida. All four days will be jam-packed with exclusive content, exciting announcements, and an incredible lineup of Bitcoin speakers, artists, and leaders. Day one is Industry

• 1:24Anthony Pompliano?

  Day for enterprising Bitcoiners who are looking to build a business or career within the ecosystem. Days two and three are general conference days, featuring speakers like El Salvador President Nayib Bukele, CEOs like Michael Saylor, Elizabeth Stark, Jack Mahlers, Adam Back, and hundreds more. The conference caps off on the fourth day with the world's first and largest Bitcoin music festival, Sound Money Fest, headlined by rapper and fellow Bitcoiner Logic, featuring artists K-Fle, Mo, Royal, and The Serpent, Apache, Asadi, and more. Stay tuned for the upcoming lineup announcement. Last year's conference sold out, and this year's is on pace to be three times larger, so make sure you grab your tickets before it's too late. Visit b.tc/conference to learn more. Again, that's b.tc/conference to learn more.

• 2:10Anthony Pompliano?

  Increase on January 14th. Use promo code POMP for 10% off and I will see you in Miami. Today's episode is brought to you by Brave. Brave Wallet is the first secure crypto wallet built natively in a Web3 crypto browser. What's Web3? Web3 is freedom from big tech and Wall Street. More control and better privacy. But there's a weak point in Web3, your crypto wallet. Most wallets are browser extensions, a Web2 technology. That means the same old risks, app spoofing, phishing scams, and theft. Brave Wallet is different. Brave Wallet is the first secure wallet built natively in a Web3 crypto browser. No extension required. With Brave Wallet, you can buy, store, send, and swap assets, manage NFTs, even connect other wallets and dApps,

• 2:52Anthony Pompliano?

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• 3:15Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:38Anthony Pompliano?

  Good morning, everyone. Bang, bang. The geopolitical chess game continues to evolve at an incredible rate. Over the last 24 hours, reports are surfacing that the United States is looking to ban imports of Russian oil, and various options are being evaluated in an attempt to freeze Russia's gold reserves. These punishments are being pursued as Russia continues their military offensive in Ukraine. The implications of the current events are unknown, but we are beginning to see commodity prices spike aggressively. First, wheat has hit an all-time high. Those wheat futures hit an all-time high, surpassing the prior high from 2008. Prices have now increased 75% since the start of the year. Russia is the world's largest exporter of wheat, and Ukraine is the fifth largest exporter. Nickel has also been increasing by hundreds of percent as well.

• 4:23Anthony Pompliano?

  The London Metal Exchange halted trading in nickel after an unprecedented 250% price spike, which left brokers struggling to pay margin calls. And of course, oil prices are going parabolic as well. Oil prices are extending their gains as the United States is reportedly going to ban that Russian oil. It shouldn't be shocking that commodities, especially ones where Russia and Ukraine are major producers, are being driven higher during this conflict. The surprising part is how quickly it is happening and how large the moves in price have become. The joke on Twitter is that commodities are trading like shitcoins, which has a hint of truth to it. But while all of this is going on, I continue to ask myself what it means for the future macro economy. No one has a crystal ball, but can we use history as a guide?

• 5:08Anthony Pompliano?

  Social capitalist Chamath Palapatiya recently explained on the All In Podcast that every time energy prices have spiked by 50% or more in the last 30 to 40 years, it was followed by a recession. Sven Henrich highlighted this morning that the last time wheat prices reached these levels, a recession followed. History doesn't repeat perfectly, but the warning signs of a potential recession are growing louder and louder. Now, the biggest curve ball in the situation is that the Federal Reserve is still sitting with interest rates at 0%. Given that inflation is likely to come in at 8% or more during the next report, the normal reaction would be for the Fed to raise rates to bring that inflation more in line with their goals and expectations. Chamath had a tweet that stated, "History repeats itself. In 2018, the Fed was concerned about inflation.

• 5:51Anthony Pompliano?

  They were wrong, and within a quarter or so, the risk shifted to recession." The chart that he included in the tweet shows how the equity markets reacted, and it looks eerily similar. We've now entered into a dicey situation where hiking of interest rates could actually accelerate us into a recession. This means that the Federal Reserve has a nearly impossible job: allow inflation to continue to ravage the financial well-being of hundreds of millions of people, or risk pushing the global financial system into a downward spiral across financial assets. This is a lose-lose scenario with no clear off-ramp. So how does this play out for the United States, our allies, our adversaries, and the various fiat currencies that they control? Zoltan Pulsar of Credit Suisse published a note yesterday that will blow your mind.

• 6:36Anthony Pompliano?

  Before I highlight what he said, it is important to understand who Pulsar is. Zoltan Pozsar is a managing director and is the Global Head of Short-Term Interest Rate Strategy based in New York. Prior to joining Credit Suisse in February 2015, Zoltan had a distinguished career in the public sector. During the Great Financial Crisis, Zoltan served at the Federal Reserve Bank of New York in charge of market intelligence for securitized credit markets and was the point person on market developments for senior Federal Reserve Board, US Treasury, and White House officials throughout the crisis. From 2011 to 2012, Zoltan was a visiting scholar at the IMF, where he authored a number of papers, framed the fund's official position on shadow banking, and consulted G20 working groups

• 7:21Anthony Pompliano?

  on global macro financial developments. From 2012 until his arrival at Credit Suisse, he served as a senior advisor to the US Department of the Treasury. Essentially, Zoltan Pozsar is the epitome of the insider or establishment, especially when it comes to his views on currencies, financial assets, and markets. In the note that he published, which is titled Bretton Woods III, Pozsar starts off with the following excerpt: "We are witnessing the birth of Bretton Woods III, a new world monetary order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West. A crisis is unfolding, a crisis of commodities. Commodities are collateral,

• 8:04Anthony Pompliano?

  and collateral is money. And this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia's FX reserves." Pozsar then went on to explain why people should be concerned about recent commodity price moves. He said, "The aggressor in the geopolitical arena is being punished by sanctions, and sanctions-driven commodity price moves threaten financial stability in the West. Is there enough collateral for margin? Is there enough credit for margin? What happens to commodities' futures exchanges if players fail? Are CCPs bulletproof? I haven't seen these topics in the wide offering of

• 8:45Anthony Pompliano?

  financial stability reports, have you? Is the OTC commodity derivatives market the gorilla in the room? The commodities market is much more financialized and leveraged today than it was during the 1973 OPEC supply crisis, and today's Russian supply crisis is much bigger, much more broad-based, and much more correlated. It's scarier." end quote.

• 9:05Anthony Pompliano?

  And finally, Pozsar finished his piece with the following conclusion, quote, "In this instance, price instability, surging and collapsing commodity prices feeds financial instability. Margin calls may trigger the failure of some smaller commodity traders, and maybe even some commodity exchanges. Again, commodity correlations are at one, which is never a good thing. The Fed and other central banks will be able to provide liquidity backstops, but those will be Band-Aid solutions. The true problem here is not liquidity per se. Liquidity is just a manifestation of a larger problem, which is the Russian, non-Russian commodity basis, which only China will be able to close. Do you see what I see?

• 9:47Anthony Pompliano?

  Do you see inflation in the West written all over this like I do? This crisis is not like anything we have seen since President Nixon took the US dollar off gold in 1971, the end of the era of commodity-based money. When this crisis and war is over, the US dollar should be much weaker, and on the flip side, the renminbi much stronger, backed by a basket of commodities. From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money, treasuries with unhedgable confiscation risks, to Bretton Woods III backed by outside money, gold bullion and other commodities. After this war is over, money will never be the same again. And Bitcoin, if it still exists then, will probably benefit from all of this," end quote.

• 10:32Anthony Pompliano?

  Reading this type of thought process from someone who understands the intricacies of the financial system, while also having a grasp of how policymakers are thinking right now, has to make you start thinking about how much bigger this situation could become. I don't know how the future plays out, but my guess is that most people will start looking for a safe place to store their wealth, regardless of what happens. Somehow, all roads lead back to Bitcoin. I hope you have a great day, and I'll talk to everyone tomorrow. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top

• 11:16Anthony Pompliano?

  teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more, and I'll meet you guys for the next episode.