MONDAY MORNING EMERGENCY FLASH ECONOMY LIVESTREAM 5 August 2024
This podcast episode discusses recent financial turbulence globally, including Japan's market declines, the rise in stocks and crypto, and market fears fueled by Japan's interest rate hike, US job data, and geopolitical tensions. We analyze the impact of these events on the economy, focusing on Japan's interest rate hike, the yen carry trade, and Bitcoin investments, offering insights into global market dynamics and the interconnected nature of financial and geopolitical events.
Disclaimer: The content of this podcast should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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This podcast episode discusses recent financial turbulence globally, including Japan's market declines, the rise in stocks and crypto, and market fears fueled by Japan's interest rate hike, US job data, and geopolitical tensions. We analyze the impact of these events on the economy, focusing on Japan's interest rate hike, the yen carry trade, and Bitcoin investments, offering insights into global market dynamics and the interconnected nature of financial and geopolitical events.
Disclaimer: The content of this podcast should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Join the PREMIUM philosophy community on the web for free!
NOW AVAILABLE FOR SUBSCRIBERS: MY NEW BOOK 'PEACEFUL PARENTING' - AND THE INTERACTIVE PEACEFUL PARENTING AI AND AUDIOBOOK!
Also get the Truth About the French Revolution, the interactive multi-lingual philosophy AI trained on thousands of hours of my material, private livestreams, premium call in shows, the 22 Part History of Philosophers series and much more!
See you soon!
https://freedomain.locals.com/support/promo/UPB2022
Category
📚
LearningTranscript
00:00:00Good morning everybody, 5th of August 2024, a bit of an emergency stream today.
00:00:06I'm sure as you're aware the current world economy is going through various levels of
00:00:12hysterical paroxysms.
00:00:14And just a disclaimer up front, I am not an investment advisor or investment expert.
00:00:21This is not investment advice.
00:00:23Your capital is at risk, don't buy or sell anything based upon what a philosopher is
00:00:28saying.
00:00:29So I'm obviously better on the philosophy side than the economic side, but I will do
00:00:33my best.
00:00:34So let's look at the current situation.
00:00:35And it's a fluid and changing situation, so this data will have changed, of course, over
00:00:40the last little while.
00:00:41This is mostly from yesterday to today.
00:00:43Japan's stock market posted its biggest two-day drop in history.
00:00:47The magnificent seven stocks have raised over a trillion dollars in market cap.
00:00:50Crypto markets have raised over 500 billion in market cap in 24 hours.
00:00:56U.S. markets price in a 60% chance of an emergency Fed rate cut.
00:01:00South Korea has halted all sale orders on their stock market and NASDAQ futures for
00:01:05as much as 6.5% in one day.
00:01:11So what's going on?
00:01:13Nobody knows.
00:01:14I don't know, you don't know, nobody knows.
00:01:16I'm going to put out my theories, which may be as much nonsense as fact, but what is going
00:01:23on?
00:01:24I think there's three things.
00:01:25First of all, Japan increased its interest rates for the first time in, what, 15 years?
00:01:33And that's number one.
00:01:35Number two, disappointing U.S. job numbers.
00:01:37Number three, war, war.
00:01:41Always a challenge to the economy, except for the warmongers and war profiteers.
00:01:48So the first philosophical aspect that I want to put out there is to understand that
00:01:57capital is prey.
00:02:00I want you to understand this very foundationally.
00:02:03Capital is savings, resources, all of the deferred gratification that allows your savings
00:02:11account to grow.
00:02:13Capital is prey, and the greedy are the predators.
00:02:17So you've got this capital, it's saved up in businesses, it could be saved up in your
00:02:21bank account and so on, and it is being chased all over the world by these predators of bottomless
00:02:27statist greed.
00:02:29It's really, really important to understand.
00:02:32Wherever you put your money, there are slender, slithery Freddy Krueger fingers trying to
00:02:39get in there and take it.
00:02:41Wherever you put your money, under your mattress, you put it in a bank account, you put it in
00:02:44crypto, you put it in stocks, bonds, doesn't matter.
00:02:47Anywhere your capital is, there are greedy a-holes trying to arbitrage it, leverage it,
00:02:54steal it, inflate it away, borrow it, and destroy it.
00:02:58Consume it to consume it, right?
00:02:59So this is largely the result of statism as a whole.
00:03:02It would be there in the general free market economy, but it's to a near infinite degree.
00:03:06So it's really, really important to understand that whatever you save is being hunted.
00:03:12It's being hunted, and they're trying to take it away.
00:03:16Yeah, FDR stole people's gold.
00:03:18Yeah, it is being hunted.
00:03:21So that's really, really important to understand.
00:03:25So let's get into it.
00:03:30So last week, the Bank of Japan decided to hike rates by 0.15 BPS, 0.25%.
00:03:39Now, that isn't that wild that a quarter of a percentage point increase in a rate causes
00:03:47this domino effect, but we're going to get into something called the yen carry trade.
00:03:52Yen carry trade.
00:03:54It's 20 trillion dollars.
00:03:57It's 20 trillion dollars that the yen carry trade.
00:04:00We'll get into that in a sec.
00:04:02So the yen went higher, wiped out trillions in highly leveraged or levered investments
00:04:07leading to a cascade of selling and forced liquidations.
00:04:11So people were betting on the Japanese yen being essentially free to borrow, and suddenly
00:04:18it's not free to borrow, and we'll get into sort of the details, but this causes a domino
00:04:22effect wherein they have to sell assets in order to cover the increased expense of the
00:04:28Japanese yen, and that requires that you sell off assets.
00:04:34And I would assume that Bitcoin is one of the major assets sold off because you can
00:04:37sell that on the weekend, which is a little bit trickier when the markets are closed.
00:04:44So the Nasdaq dropped into a correction Friday as investors freaked out over elevated valuations
00:04:49on the high cash outlay for investments in artificial intelligence.
00:04:53The Philadelphia Semiconductor Index, really one of the worst names for a punk band in
00:04:58history, is already in a bear market, tumbling 22% from a peak even before Monday's open.
00:05:04While US futures are a bloodbath, nobody had it as bad as Japan, whose benchmark Nikkei
00:05:10225 Index recorded its worst-ever daily sell-off on Monday, losing 4,451.28 points, boy that
00:05:172.8 is really the killer, from the previous day's closing amid panic selling, triggered
00:05:23by fears of a possible US recession and the yen's strength.
00:05:27The sell-off was the largest ever in history and worse than the Black Monday crash of October
00:05:301987, when it lost 3,836.48 points.
00:05:36The average closed down 12.4% to 31,458.42.
00:05:43On a percentage basis, it wasn't much better, with the Nikkei's peer TopEx tumbling minus 12.2%.
00:05:51It's the biggest one-day drop since the 1987 stock market crash and the second worst day
00:05:55since data begins in 1949.
00:05:58The index is poised for its biggest three-day drop on record.
00:06:03So of course Japan's central bank started to raise interest rates as the Fed looked
00:06:06to cut its historic mistake that has already wiped out trillions in value.
00:06:10It's also having ripple effects across global markets of various asset classes.
00:06:14This is due to moves to reverse carry trades.
00:06:17So investors had borrowed at lower rates in Japan to fund purchases of higher-yielding
00:06:22assets elsewhere.
00:06:25So you can borrow in Japan at really low rates, I've heard 0.4% stuff like that, to fund purchases
00:06:31of higher-yielding assets elsewhere.
00:06:33So this reminds me of arbitrage, it's sort of when you exploit one market in order to
00:06:41fund another.
00:06:42And so if you can borrow at low rates in Japan and then you can buy treasuries or bonds somewhere
00:06:50else at higher rates, it reminds me of that old joke about bankers.
00:06:53The bankers is the 3-6-3 rule.
00:06:57You borrow at 3%, you lend at 6% and you go play golf at 3 o'clock in the afternoon because
00:07:02that's your big value add.
00:07:07So this is a quote from asymmetric advisor strategist Amir.
00:07:14With yen carry trades now being unwound quickly, not only has the Japanese currency notably
00:07:18broken its depreciation trend against all major units, but risk assets that those trades
00:07:22are financed with are also being sold off.
00:07:24What does that mean?
00:07:26Depreciation trend against all major units.
00:07:27So if the Japanese currency is at 0% interest, then it's going to be less valuable than other
00:07:36assets or currencies.
00:07:37And so when they raise the currency rate, then it becomes more valuable and that people
00:07:43have been living with that arbitrage for like 15 plus years.
00:07:48So we'll get into that a little bit more detail.
00:07:51Other things.
00:07:52This is from Zero Hedge.
00:07:55The White House has said that the U.S. is trying to prepare for any scenario in the
00:07:57Middle East by warning citizens to leave Lebanon and the U.S. is moving an aircraft carrier
00:08:01to the Middle East purely for defensive reasons.
00:08:04Apparently America extends to the Middle East.
00:08:06Finer, this is a White House guy, said the overall goal is to turn the temperature down
00:08:10in the region.
00:08:11The UK Foreign Office has said Britain temporarily withdrew the families of officials working
00:08:15at the British Embassy in Beirut due to a highly volatile security situation in Lebanon.
00:08:19U.S. Central Command forces said they successfully destroyed an Iranian-backed Houthi missile
00:08:25and launcher in the Houthi-controlled area of Yemen.
00:08:28It was separately reported that Yemen's Houthis, Houthis, said they targeted MV Groton in the
00:08:33Gulf of Aden with ballistic missiles.
00:08:36Israel could reportedly preemptively strike Iran in the scenario that intelligence was
00:08:41to show that an attack was imminent, this is via the Times of Israel.
00:08:44The Times of Israel is also reporting that a bunker that has not been prepared for 20
00:08:49years is now being prepared for Netanyahu, which is not a great sign for massive amounts
00:08:55of peace in the region.
00:08:57The U.S. is reportedly willing to guarantee to Israel that it would be able to renew fighting
00:09:02against Hamas in Gaza after the first phase of a potential ceasefire and hostage deal.
00:09:06This is again via the Times of Israel.
00:09:09So the risk of all-out Middle Eastern war is rising sharply.
00:09:13Strikes in Beirut and Tehran, this is like weapon strikes, not union strikes, could plunge
00:09:20Israel and Iran deeper into a dangerous cycle of escalation.
00:09:25All right, so we'll get to the job stuff in just a second, let me just pop by here and
00:09:31try to figure out this stuff.
00:09:41Just listen to the price of theft call-in, amazing work, thank you, I appreciate that.
00:09:45It's a great day to buy bitcoin, says someone, then again that's every day.
00:09:49That's right, that's right.
00:09:52Stock market always go back up eventually or we will have much bigger problems than
00:09:57portfolios.
00:09:58Yeah, yeah, for sure.
00:09:59I don't see a world where bitcoin is not uber strong after this craziness.
00:10:04Well I think so.
00:10:05I think so and we'll get to all of that over the course of the conversation.
00:10:09Money laundering was big in Japan, hey, that's a song, big in Japan, all right, yeah, 35
00:10:14trillion dollar debt, that's not a big thing.
00:10:17Sounds like arbitrage adds about as much value to the economy as gambling, minimal just shifting
00:10:21currency only round to someone's advantage.
00:10:24Well arbitrage is great in a free market scenario, it's just predatory in a fiat currency
00:10:30scenario.
00:10:31Netanyahu, says someone, has apparently warned US politicians of incoming Lebanon invasion.
00:10:37Certainly could be and we'll get to the gay bar index in Washington and the pizza index
00:10:44in the Pentagon oh so very shortly.
00:10:47Anyway, so last week the Bank of Japan increased interest rates from 0% to 0.25%.
00:10:55This early increase surprised the market.
00:10:57So before this anyone could borrow the yen at no interest, change them to US dollars
00:11:01and buy stocks.
00:11:03Basically it was free money and of course Japan, I remember in the 80s Japan was going
00:11:08to be this powerhouse that was going to eat everyone for lunch and then Japan has basically
00:11:12had this zombie childless economy for like 30 plus years.
00:11:18So here's the problem.
00:11:20Because the Bank of Japan increased interest rates, the US dollar crashed versus the yen.
00:11:25That meant the traders borrowing billions in yen to buy dollars could not cover their
00:11:30debt anymore.
00:11:31What could they do?
00:11:32Well they had to sell the stocks they bought earlier with those dollars.
00:11:36That equals a stock market crash.
00:11:38But wait, but wait, there's more.
00:11:41So this practice which I mentioned earlier, and I haven't had a chance to organize all
00:11:45these notes and I'm reading from some other stuff, I provided my own commentary, so this
00:11:50is going to scatter shot a little bit.
00:11:53So this practice, this is the Japanese carry trades worth 20 trillion dollars.
00:11:59Only the Japanese hold 4 trillion US stocks using this method and they are being margin
00:12:02called right now.
00:12:06So what about crypto?
00:12:07Well crypto is considered a risk asset.
00:12:09In times of panic like now people sell risk and rush to safety.
00:12:13Usually that means cash and gold.
00:12:15Some hope that Bitcoin will also be seen as a hedge for such uncertain times.
00:12:19So we'll see if that plays out or not.
00:12:23And this is from our good friend Peter Schiff.
00:12:26The Bureau of Labor Statistics reported a gain of 114,000 jobs which is well below expectations
00:12:31of 185,000.
00:12:35So this job stuff, I don't believe a bit of it.
00:12:40The amount of political pressure, particularly in an election year that's put on the BLS,
00:12:44again I'm not saying whether they have integrity or don't have integrity, but they keep revising
00:12:48their numbers after the fact, so I don't believe any of it.
00:12:52For reasons I went into the other day, I'll just touch on them briefly here.
00:12:56Jobs numbers are, to me, not credible because, you know, the full or part time if you take
00:13:04one job and split it into two part times, what does that mean?
00:13:08The fact that they count government jobs which often interfere with productive jobs in the
00:13:12economy, that's all counted, so if the government hires a bunch of people that's considered
00:13:16to be good for the economy, I suppose.
00:13:19And so that makes it, to me, mostly nonsense.
00:13:23It also, it's like the unemployment rate.
00:13:26What about all the people who have dropped out of the workforce and are no longer looking
00:13:31for jobs?
00:13:33That's not ideal and of course the birth and death of companies is lagged, right?
00:13:38We'll get into that in a sec, right?
00:13:40So we've got the payroll survey and the household survey.
00:13:44So the payroll survey is designed to measure employment hours and earnings in the non-farm
00:13:48sector.
00:13:50With industry and geographic detail, the survey is best known for providing a highly reliable
00:13:54gauge of monthly change in non-farm payroll employment, of course non-farm because farming
00:13:57is so seasonal.
00:13:59A representative sample of businesses in the US provides the data for the payroll survey.
00:14:03Now of course, which businesses do they sample?
00:14:05Well they can skew the data by choosing which businesses.
00:14:10The household survey is designed to measure the labor force status of the civilian non-institutional
00:14:14population with demographic detail.
00:14:16The national employment rate is the best known statistic produced from the household survey.
00:14:21The survey also provides a measure of employed people, one that includes agricultural workers
00:14:24and the self-employed.
00:14:26A representative sample of US households provides information for this survey.
00:14:32So the headline report was still well above the household survey of 67,000, which was
00:14:38only 58.8% of the headline number.
00:14:41So what that means is that they say that the Bureau of Labor Statistics reported a gain
00:14:48of 114,000 jobs, but the household survey said there were only 67,000, which is less
00:14:54than 60% of the headline number.
00:14:56So that's not great.
00:14:58This has been the trend for all of 2024.
00:15:00For the year, the headline report has shown 1.4 million new jobs with the household survey
00:15:04showing a mere 83,000 jobs, or 5.8% of the headline report.
00:15:11So that's not good.
00:15:15Business births and deaths in the payroll survey.
00:15:18The payroll survey as businesses sampled and framed cannot include new firms immediately.
00:15:21They are incorporated with a lag.
00:15:24Similarly, the permanent closure of a firm is not always captured immediately.
00:15:28So because the sample cannot fully reflect business births and deaths in real time, the
00:15:31payroll survey estimation methodology includes a statistical procedure to account for the
00:15:36net effect of births and deaths in the final employment estimate.
00:15:38So it's modeling.
00:15:40It's modeling.
00:15:41And so there are a bunch of assumptions which I assume are going to skew political.
00:15:48So the methodology used for births and deaths prior to 2003, bias adjustment, has been evaluated
00:15:53as a possible source of divergence in household and payroll survey employment, along with
00:15:57some known limitations in payroll survey sample design in use at the time.
00:16:02So in 2003, BLS completed a comprehensive redesign of the payroll survey sample and
00:16:06introduced a new methodology to estimate the net employment effects of business births
00:16:10and deaths.
00:16:11They claim to have greatly improved the accuracy.
00:16:17Not sure.
00:16:18Not sure.
00:16:19So that's important.
00:16:22The number of multiple job holders has surged to new all-time highs this month.
00:16:27That is not a sign of a good economy.
00:16:28That is a sign that people are getting... they either need second jobs to cover their
00:16:33basics because their inflation has pushed them past their payroll value, or they can't
00:16:40get any one decent job, so they have to get two crappy jobs.
00:16:44So that's not good.
00:16:46There have been significant downward revisions of the data since January of this year, right?
00:16:53So they release the data, and then they come back and they say, oh, actually, actually,
00:16:59it's not true.
00:17:00Now, of course, in the business world, I'm no lawyer, but in the business world, I'm
00:17:04pretty sure this would be considered outright freaking fraud, that if you say, well, we
00:17:10have a projection that we're going to do $250 million in business this year, and then a
00:17:14couple of months later, you're like, no, actually, sorry, it's only $160, wait, wait, $80, wait,
00:17:20you owe us money.
00:17:21That's not good.
00:17:22You're supposed to stick by your estimates.
00:17:23The fact that they get revised later is important.
00:17:28Over the last three months, the data has been revised down by an average of 29.7 thousand
00:17:33per month, and 17 thousand over 12 months.
00:17:36These revisions go unnoticed by the mainstream.
00:17:38Yes, well, they wouldn't if it was Republicans in power.
00:17:42The labor force participation rate is still well below the highest levels, which was before
00:17:46the global financial crisis in 07-08.
00:17:50Labor force participation rate, well below, well below.
00:17:53We never recovered from the 07-08 global financial crisis.
00:17:56This month, it rose slightly to 62.7%.
00:17:59So, yes, shadowstats.com is absolutely worth checking, right?
00:18:08Alphaville was big in Japan.
00:18:10Tom Waits, big in Japan.
00:18:12No, no, absolutely not.
00:18:14That was Alphaville.
00:18:15They had some good songs.
00:18:18Big in Japan and forever young.
00:18:20Guy's got a high voice, man, I'll tell you.
00:18:24Okay, so Bitcoin dropped 15% against the Japanese yen, outpacing declines versus the US dollars
00:18:33as yen-carried trades unwind.
00:18:35So the yen, this is amazing to me, but when the Bank of Japan raised interest rates by
00:18:430.25%, the yen rose almost 10% against the US dollars in just three weeks, leading to
00:18:49the unwinding of these carry trades.
00:18:50This is a sell-off in risk assets and causing significant market volatility.
00:18:55With the significant strengthening of the yen, many traders have been forced to unwind
00:18:58these positions, leading to a cascading effect across various asset classes.
00:19:02So if you're borrowing in yen and buying stuff in dollars, not only is that depressing the
00:19:08value, sorry, not only is, well, the value of the yen is depressed artificially by the
00:19:13Bank of Japan strategy, but you're artificially raising the value of the US dollar.
00:19:17So why would a 0.25 have a 40x change and rise the yen 10% against the US dollars?
00:19:25I would assume, I don't know, but I would assume it's because when you can't borrow
00:19:30yen and buy dollars or assets denominated in US dollars, when that strategy is toast,
00:19:36and it's not just toast for now, you understand, it's toast for a long time, so that's going
00:19:41to lower the demand for the US dollars, because if the yen carry strategy, which is borrowing
00:19:49in yen and buying stuff in other, what is the, the yen is the third reserve currency
00:19:54after the, I assume, US dollars, was it euros the second?
00:19:58Or maybe it's, no, it's euro, I assume.
00:20:00So what happens is when you're not borrowing yen to buy dollars, then the value of the
00:20:08dollars is going to go down because the demand being fueled by the 0% interest on the yen
00:20:12is no longer around.
00:20:13And that isn't just a now thing, right, if you've got a $20 trillion industry that gets
00:20:18toasted by a 0.25% rate hike, that is no longer a valid industry for X amount of time.
00:20:27So now you have to price in the possibility that after 15 years of basically 0% interest
00:20:32rates that the Bank of Japan has now gone to 0.25, you have to carry that forward, and
00:20:37that has to be put into all of the models, and that's going to crush the industry, which
00:20:40is going to lower the demand for US dollar denominated assets, and US dollars as a whole.
00:20:44So hopefully that makes sense to you.
00:20:50So Bitcoin's yen-denominated price in the Tokyo-based Bitflyer exchange dropped nearly
00:20:5615%, and what is Bitcoin down?
00:20:59It's 25% now.
00:21:00I think it bounced back a little bit from 69 and change.
00:21:04Canadian dollars, where are we at now?
00:21:06Everyone's refreshing.
00:21:07Oh, so it's bounced back a little bit to 275.
00:21:11I mean, basically I'm going to make a case, which again is just pure nonsense and all
00:21:15made-up stuff, but I'm going to make a case that there are two kinds of, quote, market
00:21:22corrections, fundamental and technical.
00:21:25And in my view, this is a technical one.
00:21:27Again, don't buy or sell anything based upon my views, but in my views, this is a technical
00:21:32one, not a foundational one.
00:21:35So I think that's...
00:21:37Let me make the case, and obviously make your own decisions, but that's my particular perspective.
00:21:41All right.
00:21:42Let's get back to this data.
00:21:46All right.
00:21:49So there's a bunch of unproductive arbitrage, borrowing from this artificially deflated
00:21:54currency to this artificially enhanced currency, arbitraging the difference, and it only needs
00:22:00a tiny bit.
00:22:01If the volume is high enough, obviously 0.25% is enough to change a $20 trillion market,
00:22:07but there's just a whole bunch of people sniffing and seeking out tiny variations in the market.
00:22:12Now, in the free market, those variations would then be closed, and you'd get a tiny
00:22:16window and it would be closed very quickly.
00:22:18But because fiat currency is government force currency, it's political, not economic, which
00:22:25means that these arbitrages exist for a reason.
00:22:28And trying to close these arbitrages, I mean, obviously, interest rates should be free market,
00:22:32right?
00:22:33Interest rates are the price of money because we're mortal.
00:22:35We want things sooner rather than later.
00:22:37Interest rates should be free market, but in general, they're not so much, right?
00:22:42Okay.
00:22:43So I just want to talk a little bit more about this yen carry trade.
00:22:45The trade is based on borrowing yen to buy assets denominated in currencies where interest
00:22:50rates are higher.
00:22:51It's like T-bills and stocks.
00:22:53So for rock bottom interest rates, again, for like 15 years, the yen was practically
00:22:57free to borrow.
00:22:59Interest rates in Japan finally being hiked just a little bit while other countries are
00:23:02itching to lower them or already have, the viability of the trade could be coming to
00:23:07an end after being established as one of the most popular players on foreign exchange markets.
00:23:12So this puts a lot of money into the American dollar and into the Japanese economy and that
00:23:23seems to be drawing to a... it's certainly going to go down.
00:23:26It's certainly going to go down.
00:23:27So the investor's opportunity for nearly free borrowing is done, so they're dumping their
00:23:30yen.
00:23:32And further selling portends more volatility on top of the already whipsaw-like actions
00:23:37for the currency since the Bank of Japan ended decades of ZERP, zero interest rate policy
00:23:43I think, intervening several times to prop it up.
00:23:47So the carry trade may continue to some extent for as long as interest rates in the US remain
00:23:51higher than in Japan, but with the rate cut from the Fed looking more and more likely
00:23:55this year and the hawkish Bank of Japan itching to hike further, the risks of the yen carry
00:23:59trade increase and it becomes less and less appealing.
00:24:02So they're selling assets to cover losses because the Bank of Japan raises interest
00:24:10rates.
00:24:11So that's a technical sell.
00:24:13It's not a, oh my gosh, somebody's cracked Bitcoin's code and it's all... it's not foundational.
00:24:19It's a technical sale.
00:24:23And when you have options like borrow virtually free money from Japan and then buy stuff that
00:24:32has higher interest rates elsewhere, that's keeping money out of Bitcoin.
00:24:36That's keeping money out of crypto.
00:24:38When those loopholes in a sense, those avenues get closed off, where do the assets go?
00:24:44Well, I mean, some will go to cash, but cash is being bled through inflation.
00:24:47Some will go to gold, but gold has its pluses and minuses and some, I believe, will go back
00:24:55into crypto.
00:24:58So Japan remains the outlier in the global rate cut game.
00:25:02Despite higher inflation across much of the world, central banks have cut rates to some
00:25:05degree or another in Canada, Switzerland, Sweden, China, Mexico, Brazil, and most recently
00:25:10the UK.
00:25:13After billions of interventions from the Bank of Japan, the yen strengthened 8% against
00:25:16the dollar in recent weeks after hitting the lowest exchange rate in 38 years.
00:25:20So the lowest exchange rate was driving this yen carry trade, but that seems to have been
00:25:25closed off.
00:25:26Higher investment rates are making yen-denominated investments more attractive, but as the carry
00:25:30trade unwinds, it could be replaced by a reverse carry trade.
00:25:34This is where traders borrow the yen to buy assets denominated in a lower-yielding currency
00:25:38or asset, expecting the yen to weaken later on.
00:25:42Once the yen falls again, they can exchange the lower-yielding assets back into yen at
00:25:45a lower unit cost than the initial borrowing amount.
00:25:48They can profit from both the interest rate differential and the yen's decline.
00:25:51It's kind of a shorting strategy, I guess.
00:25:54This is the biggest two-day drop since the 2011 tsunami that leveled the Fukushima nuclear
00:26:01plant signaling domestic uncertainty in the bed of higher interest rates in Japan.
00:26:09So the yen carry trade has helped fuel bull markets in other countries by providing an
00:26:13opportunity to borrow in this low-interest currency to buy assets elsewhere.
00:26:17So stock market volatility, of course, is creeping beyond Japan.
00:26:22It's a subsidy, right?
00:26:23It's crushing the value of the yen as a subsidy to other assets in non-yen-denominated currencies.
00:26:31So the Fed and other banks are trapped as well, right?
00:26:39So let's go back to the Bank of Japan is tough, right?
00:26:44What's the old, was it FDR said, I want a one-armed economist, so I finally don't get
00:26:49an economist that says, on the other hand, so does it save the yen, save its stock market
00:26:54or save its government bonds, roughly half of which it already owns, right?
00:26:59Tough call.
00:27:00No good options.
00:27:01The Fed, well, it's all trade-offs, right?
00:27:03The Fed and other banks are trapped as well, trying to prevent banking and real estate
00:27:06crises by lowering rates despite inflation still running hot.
00:27:09The powder keg is primed.
00:27:11So the only question is, who will light the first match?
00:27:13All right, let's go back to your questions.
00:27:18Yeah, if they have no consequences for lying, they lie.
00:27:21Well, not only do they have no consequences, they can often profit enormously.
00:27:27So yeah, it is a huge ripple effect, a huge ripple effect.
00:27:30And this is one of the problems with fiat currencies.
00:27:34I mean, other than the moral problems of fiat currencies, which are not small.
00:27:38All right.
00:27:40Are you saying we're not in a bubble?
00:27:41Well, no, we are in a bubble.
00:27:42The question is, is this correction foundational or technical?
00:27:51Government jobs means someone else is paying more taxes to fund their regulation.
00:27:55Yes, that's right.
00:27:56That's right.
00:27:57That's right.
00:27:58It's a scene, you know, the big question in economics.
00:28:01It's the scene versus the unseen, right?
00:28:02So if the government spends five million dollars creating a bunch of jobs, everyone says, yay,
00:28:08new jobs.
00:28:09Nobody looks at and says, well, the money that was taken from everyone else to create
00:28:12these jobs is a net economic loss and usually worse and more sustainable.
00:28:16Plus, the government jobs are usually interfering with other productive activities in the economy.
00:28:21So it's a massive negative.
00:28:23Okay, so let's talk Bitcoin, itty bitty ditty coins.
00:28:27The sharp decline has resulted in massive liquidations across the market.
00:28:30Data from Coinglass revealed that over 1.05 billion in leveraged positions was wiped out
00:28:36in the last 24 hours.
00:28:37Long positions accounting for 901.42 million of that total.
00:28:43So this is all automated and, you know, the one minor bit of expertise that I bring to
00:28:50this is that I coded a lot of this stuff in my very first programming job way back in
00:28:55the day.
00:28:56I was a big stock trading company and wrote this kind of code in COBOL 74 and then we
00:29:01upgraded to COBOL 85, though this wasn't in 1974 because I would have been eight years
00:29:05old and quite the prodigy at the time and it was still two years until I got my first
00:29:09job.
00:29:11But I know a little bit about this stuff.
00:29:12Stuff is just triggered.
00:29:13If this goes down, the automatic sale kicks in because other people's automatic sales
00:29:17are going to kick in.
00:29:18And it's so insane that some stock market companies will move closer to a data center
00:29:24because it might give them a millisecond faster sale.
00:29:29It's truly mad how short an amount of time.
00:29:33We upgraded a tandem system back in the day because it would give us a slight advantage
00:29:37in selling.
00:29:39So it's funny because I always look for this language of panic, destroyed, wiped out, erased,
00:29:47you know, and it's all just numbers.
00:29:50I mean, obviously it translates into goods in the moment, but it's all just numbers.
00:29:58And the numbers are transitory and so wiped out and it's like, no, it's just people's
00:30:03valuation has changed, right?
00:30:06I mean, when you're a kid, you're into, I don't know, I like model trains.
00:30:10When you get older, you're not so much into model trains.
00:30:12So my interest has changed and the model trains don't have as much value and girls have more
00:30:17value.
00:30:18And money on a date than buying a model train.
00:30:23Model trains have been wiped out.
00:30:25It's like, nope, just the interest has declined.
00:30:27That's all.
00:30:28It's the interest has declined.
00:30:29So I find this sort of hysterical warlike language about capital to be kind of, kind
00:30:35of funny.
00:30:36All right.
00:30:38So the jobs report has fueled speculation about future Federal Reserve policies.
00:30:42While some believe that a weakening economy might prompt the Fed to cut interest rates,
00:30:45potentially benefiting fixed supply assets like Bitcoin, in the long term, the immediate
00:30:51market reaction has been one of risk aversion.
00:30:53Well, people just have to sell stuff to cover their losses.
00:30:56And Bitcoin is one of the easier things to sell, particularly on a weekend.
00:31:03So we're going to talk a little bit of spot prices and future prices.
00:31:08So here's the technical definition and it is pretty much what you think.
00:31:13Spot price and future price are quotes for a purchase contract.
00:31:17The agreed upon cost of a commodity by the two parties, the buyer and the seller.
00:31:20What makes them different is the timing of the transaction and the delivery date of the
00:31:23commodity.
00:31:25One applies to a deal that's going to be executed immediately.
00:31:28The other to a deal that's going to happen down the road, usually a few months hence.
00:31:32So the spot price is now and the futures price is down the road.
00:31:36And the futures price is an indication of where people think the price is going to go
00:31:40up.
00:31:41Sorry, where the price is going to go up.
00:31:43If it goes up, they long.
00:31:45If it goes down, they short.
00:31:47So Bitcoin's futures trade at par or meager premium to spot prices.
00:31:51The decline in premium dents the appeal of cash and carry arbitrage strategies.
00:31:57So Bitcoin's latest price crash has narrowed the gap between futures and spot prices, denting
00:32:01the appeal of these carry trades that seek to profit from discrepancies between the current
00:32:07and future price.
00:32:09So people were expecting Bitcoin to go up and now they're not, at least in the short
00:32:13run.
00:32:16And the question with regards to those pro-Bitcoin and those skeptical of Bitcoin is, is Bitcoin
00:32:26a safe haven?
00:32:28Is Bitcoin a safe haven?
00:32:32And so the store of value thesis is, this is where you put your money in emergencies.
00:32:39But if people are selling Bitcoin because of an emergency provoked by this Bank of Japan
00:32:44rate hike, then you say, well, it's not a store of value because it's too variable.
00:32:48Look, it's just crashed 25% and so on, right?
00:32:54And the challenge, of course, is that this is the problem with the Bitcoin ETFs, which
00:33:01I talked about last year quite a bit.
00:33:04The problem is that you have a bunch of people in the financial industry who are into Bitcoin
00:33:08and other stuff, right?
00:33:10So they're not like Michael Saylor, all in one boner for the BTC.
00:33:15They are in Bitcoin and a whole bunch of other stuff.
00:33:18And what that means is that when the price of the whole other stuff changes, the Bitcoin
00:33:22price is affected because they have to sell Bitcoin to cover losses.
00:33:25And if they have profits, maybe they'll buy Bitcoin.
00:33:28So in this case, Bitcoin is tethered to the main economy, the fiat currency economy.
00:33:38And if Bitcoin is tethered to the main economy, the fiat economy, I want you to think of a
00:33:44skier analogy.
00:33:45This is not proof of anything.
00:33:46This is just a way of understanding it and looking at it.
00:33:48I'll get your questions in a second here.
00:33:50Donations, of course, if you find this helpful, donations are very, very much appreciated.
00:33:55You can donate on these apps, also freedom.com slash donate to help out the show because
00:34:00I think this is quite helpful stuff for you to have a hold of.
00:34:02I want you to think of this.
00:34:04I want you to think of a skier, an expert skier that is just going down a hill, expert
00:34:10skier going down a hill.
00:34:11He's got to dodge a couple of rocks, maybe a couple of pine trees and so on, but he knows
00:34:15what he's doing and it's his choice and there's no external, there's no giant storm, there's
00:34:20no polar bear chasing him, no avalanches.
00:34:22He's just expertly navigating his way down.
00:34:24Well, his odds would be pretty good of getting down to the bottom in one piece.
00:34:31Now, I want you to think of a water skier in a storm being pulled by a drunken speedboat
00:34:40captain.
00:34:41Right?
00:34:42So, there's waves, there's wind, the fish are flying into his face and the drunk speedboat
00:34:50captain is going all over the place like he's dodging James Bond in some cheesy movie, right?
00:34:55So, that is the difference.
00:34:57Bitcoin has its own expertise, but when Bitcoin is being pulled behind fiat-denominated assets,
00:35:05it's going to get yanked around by the wild shifts in the fiat currency assets.
00:35:09They speed up, they slow down, they go left, they go right.
00:35:12There's all this storm and activity and so, would we say, wow, that's a really bad water
00:35:17skier.
00:35:18He's constantly on the verge of falling.
00:35:20He must be really bad.
00:35:21Well, no.
00:35:22I would say that any water skier who can stay up in that circumstance and situation is actually
00:35:27a completely expert water skier who's navigating things as well as he possibly can.
00:35:32So, the guy who dances well when drunk is one of the best dancers around and Bitcoin
00:35:42is constantly getting roofied by central banking.
00:35:45Just so you understand it, it's constantly getting yanked and jerked around and dragged
00:35:49up and thrown down and drugged and roofied and all of that, disoriented, smacked around
00:35:55the head, spun around three times with a Guantanamo Bay black bag over its head, so it's constantly
00:36:00getting yanked and jerked around by fiat currency situations because the same people who are
00:36:07trading in fiat currency-denominated assets are also trading in Bitcoin and Bitcoin has
00:36:12to cover the volatility of those other assets.
00:36:17So, I mean, if you cherry-pick any particular window, you can make any asset look terrible.
00:36:24So there's a lot of leverage in the Bitcoin trade.
00:36:26This is from someone on Twitter.
00:36:28There was a lot of leverage in Bitcoin trade and it gets unwound with everything else.
00:36:36So let's do a couple of other summaries and we'll get to some more details about the geopolitical
00:36:42stuff.
00:36:43So this is from Clint Russell on Twitter.
00:36:45Japan held its rates at or near 0% for 15 years as such investors began borrowing trillions
00:36:50of yen and investing them in stronger currencies and assets.
00:36:53Essentially it was a bet that the yen would continue to fall in comparative value.
00:36:57It worked well until last Wednesday.
00:37:00Japan's central bank finally hiked rates a bit, just to 0.25%, which is still insanely
00:37:04low, but it spiked the value of the yen by 7.5% compared to the US and forced investors
00:37:10to cover their short positions to the tune of billions, creating enormous losses.
00:37:16This was called the yen carry trade.
00:37:18It appears to have ended this week.
00:37:19To cover those losses it requires liquidity and liquidity is achieved by selling off other
00:37:23performing assets, hence the global sell-off.
00:37:26I think Berkshire Hathaway and Warren Buffett sold about half their Apple stock and so on.
00:37:34So one of the bearish force, which I think helped to set this off, Japan imports most
00:37:40of the oil it needs to function.
00:37:42They produce about 2 million barrels of oil per day, but consume twice that or more.
00:37:47This means Japan imports a ton of oil.
00:37:50Actually one of the reasons why Pearl Harbor happened was the US naval blockade against
00:37:54Japan which can't survive without oil because it's a resource-poor island.
00:37:58So Iran is promising a major strike against Israel in response to the surprise Tehran
00:38:02strike last week.
00:38:03It is expected to happen this week, possibly today.
00:38:06When they do, all bets are off.
00:38:08Israel and the US could move on Iran and if they do I would expect Iran to immediately
00:38:11shut down the Strait of Hormuz while 20 million barrels of oil per day get funneled through
00:38:16that waterway.
00:38:18The global price of oil skyrockets, Japan gets cooked.
00:38:23So he says, in short, let's hope cooler heads prevail and a wider war with Iran can be avoided.
00:38:28The global economy likely depends on it.
00:38:31So I had talked about geopolitical stuff.
00:38:35The Times of Israel reports an underground bunker in Jerusalem where senior leaders can
00:38:40remain for an extended period during a war has been prepared by the Shin Bet security
00:38:43service and is fully operational, the Wallenews site reported on Sunday amid fear of attacks
00:38:49on Israel from Hezbollah and Iran.
00:38:52The bunker, reportedly built almost 20 years ago, can sustain hits from a range of existing
00:38:56weaponry, has command and control capabilities and is connected to the Defense Ministry headquarters
00:39:00in Tel Aviv, the report said.
00:39:03The bunker, which is also known as the National Management Center, has not been used in the
00:39:07past 10 months of Israel's war in Gaza.
00:39:10So that seems quite important.
00:39:15Now let's look at the pizza meter and the gay bar meter and war stocks.
00:39:20So there's this theory that major world events can be predicted from how busy pizza places
00:39:24are in Washington DC on any given night.
00:39:28The theory was put forward by Frank Meeks, owner of numerous Domino's franchises in DC
00:39:33in January 1991.
00:39:35At the time, Meeks said his busiest delivery night was August 1st, 1990.
00:39:39This was a day, of course, before Iraq invaded Kuwait.
00:39:42He said the orders usually come in late, after 8 or 9 p.m., the assumption being that because
00:39:46something is going down, people at the Pentagon and White House, etc., are working late.
00:39:52Now of course, there's always an adaptation, right?
00:39:54So when Meeks first proposed this theory, he was able to tell by the number of pizzas
00:39:58being delivered.
00:40:00So because people don't want to give out warning of this stuff, the government changed their
00:40:05protocol.
00:40:06Now the pizzas have to be picked up in person, they've got to diversify the pizza parlors
00:40:09they get them from, and so on.
00:40:12With Google being able to show when a restaurant is busier than normal, people have turned
00:40:15to monitoring pizza places near the Pentagon on there for signs something may be going
00:40:19down.
00:40:23So I don't know if anybody's done a real data research on this stuff.
00:40:28There was a spike in late night pizza orders a few months ago when Iran launched a drone
00:40:32strike on Israel.
00:40:34So there's a gay bar index, apparently gay bars in D.C. noticed a drop in the business
00:40:38before major events.
00:40:41So somebody says the pizza places in D.C. saw a spike in activity the other day while
00:40:47gay bars are practically empty, so who knows, right?
00:40:49Who knows?
00:40:51So other indications of war, although the majority of assets in the stock market are
00:40:59crashing, certain defense stocks are doing the exact opposite, rallying amid the rising
00:41:02geopolitical tensions that have seen new war fronts arise or threaten to appear in
00:41:08multiple regions as the now already, quote, old wars continue raging.
00:41:15As it happens, these defense stocks, which are among the favorites of many United States
00:41:18politicians, some of whom sit on committees overseeing the defense budgets or creating
00:41:22geopolitical policies, are increasing in price, demonstrating curious behavior amid the widespread
00:41:27stock market decline.
00:41:28We're talking Raytheon, Lockheed Martin, Northrop Grumman, and so on.
00:41:36So it would seem to me that that's where things are cooking as a whole.
00:41:44So is it foundational?
00:41:47I mean, the stock market as a whole and the economy as a whole is, in my view, it's largely
00:41:53a debt-propped up inflationary Ponzi scheme that exists to transfer resources to the elites
00:42:02at the expense of the middle class.
00:42:04And the elites are both the very wealthy and the irresponsible poor who get free stuff
00:42:09from here to eternity.
00:42:11Well, not quite eternity, I'm sure of that.
00:42:16As far as this goes, I personally don't think it is a major foundational imminent end of
00:42:23the economy crash.
00:42:24I think it is a technical adaptation where they say, okay, so the yen carry forward strategy,
00:42:29which is 20 trillion dollars or so, that is no longer how we hunt capital.
00:42:36So what happens when a particular area of the ocean is dry on fish?
00:42:42You just go to some other area.
00:42:45You got to think of capitalists, the bison, and most financial people as the hunters,
00:42:50right?
00:42:51The natives, the indigenous population.
00:42:52Wherever the buffalo go, that's where they go because they want to hunt the buffalo.
00:42:58So one avenue may have closed off.
00:43:01And now, of course, as I said before, you have to price in possibility in the Bank of
00:43:07Japan changing the interest rates.
00:43:09You have to bake that in now.
00:43:11That's a factor that makes a lot of the trades far less profitable.
00:43:15So the hunting grounds are no longer in virtually free loans in Japanese yen, right?
00:43:24The hunting ground has closed off.
00:43:26So it'll take a little while for people to figure out where the best new hunting ground
00:43:31is.
00:43:32And someone will figure it out, and then everybody else will charge after, and then that will
00:43:35drive up profits there, and then they'll try to close down those profits by changing some
00:43:39factor because other people want money going there.
00:43:44And so it is a shift in the hunting patterns.
00:43:50It is not a foundational break in the economy.
00:43:53Again, in my humble opinion, which means virtually nothing, but I'm just telling you my own personal
00:44:01opinion.
00:44:02Oh, Bitcoin back up to 76.1.
00:44:03I'm sure it's entirely the result of this broadcast.
00:44:05No, it's not.
00:44:06Just kidding.
00:44:07Just kidding.
00:44:08All right.
00:44:09What have we got here?
00:44:11Somebody has August 5th.
00:44:17I'm just looking.
00:44:18Somebody sent this.
00:44:20Yeah, a 4.3 unemployment rate.
00:44:24I don't believe any of that stuff.
00:44:29Now what I also think is the case, thank you for the tip.
00:44:34I appreciate that.
00:44:35What I think is also the case is the U.S. is leaderless.
00:44:43Now from within the U.S., you know, this just seems like bizarro land politics as usual,
00:44:49but outside the U.S., this is really something.
00:44:54That the U.S., it's really interesting because the U.S. is leaderless functionally and has
00:45:02been for quite some time.
00:45:06It has been for quite some time.
00:45:08The effects, and I'm not doing politics, I'm just doing people's thoughts about this, I
00:45:14assume.
00:45:15So a country is more often killed by cynicism than invasion because, you know, people voted
00:45:25for Biden and Biden has been cognitively compromised for Lord knows how long, and so do people
00:45:33think that their participation and their vote means much, right?
00:45:35So the Democrats have swapped out Kamala for Joe Biden and there's been no votes, they're
00:45:43just swapping him out.
00:45:45And they did this kind of tinkering with Bernie Sanders and Hillary Clinton back in the day
00:45:49as well.
00:45:51So do people feel represented?
00:45:53Do they feel that their voice means anything?
00:45:54Do they feel that they are heard members, H-E-A-R-D, I guess H-E-A-R-D may be a little
00:46:02that they are members who can be heard in the Republican democracy that they believe
00:46:09in.
00:46:11And the fact that, you know, the media covered this stuff up and the fact that somebody's
00:46:15been making decisions and nobody knows exactly who, I think is a kind of a blow to American
00:46:21patriotism and that is a big challenge for a lot of people.
00:46:29So it's hard to imagine, to me, it's hard to imagine that Trump would have been out
00:46:39of the loop with regards to Japan, because he's been very, very concerned with arbitrage
00:46:43and foreign investment and interest rates for his whole life, because it's been a very,
00:46:49very big part of his life, and he was talking about China and predatory trade policies back
00:46:55in the 80s.
00:46:56So it's hard to imagine that he would be completely out of the loop with all of this kind of stuff.
00:47:00It's also hard to imagine that he would not be more proactive and positive when it came
00:47:04to trying to resolve tensions, obviously, in the Russia-Ukraine conflict and also in
00:47:09the Middle East.
00:47:10You know, the Russia-Ukraine conflict was on the verge of being settled, and then Tony
00:47:15Blair, I think it was, somebody flew out to sort of scotch all of that, and so it's hard
00:47:20to imagine that people would not have, that Trump or someone like him, it doesn't have
00:47:27to be Trump, it could be someone like him, wouldn't have at least worked pretty hard
00:47:34to solve these issues.
00:47:38Whether they could be solved or not, I don't know, but even in the absence of solving them,
00:47:42it raises public awareness.
00:47:44So I think that the various predatory forces throughout the world are moving fairly rapidly
00:47:50based upon, well, I mean, the turmoil in the UK has rendered them a little paralyzed, and
00:47:58the absolutely unprecedented turmoil in American politics, I think, is emboldening people around
00:48:05the world.
00:48:09And I think that's going to have, I mean, that's having a very, very big effect.
00:48:16So you know, once more, when Bitcoin gets tied into fiat currencies, Bitcoin is going
00:48:20to have crazy swings, and then people are going to say, oh, it's not a safe haven.
00:48:26And it's like, yeah, but the fact that it's bouncing back, I assume here it's bouncing
00:48:31back, what did it go to, a low of 69, now it's back up to almost 76.
00:48:38So it's not, you know, whether you get knocked down that matters in life, and it's whether
00:48:44you get back up again.
00:48:47And so Bitcoin keeps seeking its bottom.
00:48:51And for those of us who've been up and down in the Bitcoin world for a while, the fact
00:48:55that Bitcoin is going from, what was it, from 81 and went down to 68, 68, did it go to 68?
00:49:04No, 69, no, it went to 68, 9.
00:49:08So the fact that it's bouncing back up now, so it was 82, and then it kind of went, oh,
00:49:14it was 80, and 80 went down, now it's back to 76, so it's 4k Canadian down from its top.
00:49:20So the bounce is what matters.
00:49:22It's not whether it goes down, it's whether it bounces.
00:49:26It's not whether you get knocked down in life, it's whether you get the heck back up that
00:49:31matters and counts.
00:49:33I say this from great personal experience.
00:49:37So you remember when Bitcoin was $60, yeah, yeah, that's right, that's right.
00:49:43So people saying, well, it's not a store of value because the price went down, nope, nope,
00:49:51not at all.
00:49:52It doesn't matter.
00:49:53I mean, in terms of your longevity, what matters most is not whether your heart stops, but
00:49:57whether it can be restarted, right?
00:50:01So I did warn back in the day, and sorry to pat my own back and all of that, but I need
00:50:06to get my flexercises in at some point.
00:50:09But I did warn back in the day that when the ETFs came in, there was going to be an inflow,
00:50:13and then Bitcoin was going to get yanked around by the drunken speedboat captain of fiat currency.
00:50:22I know some people hate that song, Tubthumping, but hey, it's a bit of a brain virus.
00:50:28It's a bit of a brain virus.
00:50:30So I think that's most of what I wanted to get across.
00:50:35We've got jobs reports.
00:50:37And if you believe the official job reports versus the household income, that's a whole
00:50:41different matter.
00:50:42The job report is lower than expected and probably will be revised downwards.
00:50:45And in an election year, a lot of times numbers, in my view, I can't prove any of this, but
00:50:51in my view, a lot of times numbers are skewed in an election year.
00:50:54So what people are doing is they're looking at the jobs report that is low, considerably
00:50:58lower, than what was hoped for.
00:51:01They're looking at that and they're saying, gee, the expectation is 185k, they got 114,000.
00:51:10That's down a lot.
00:51:11The household survey is 67,000.
00:51:15So that's like a third, give or take.
00:51:23So the official expectation 185, household survey 67, which is a third.
00:51:31And people are saying that, what are the numbers I should believe, right?
00:51:37And of course they're discounting them because they've been lowered.
00:51:39What was it, an average of 17k?
00:51:41Was it Boris Johnson who messed up the Ukraine deal?
00:51:45My apologies for getting anything wrong, but yeah, I think it was some British politician
00:51:50that went out and an ex-politician that scotched up the deal.
00:51:56So because I'm not particularly doing, well, I'm not doing politics anymore, so I don't
00:52:00really keep track of this kind of stuff.
00:52:02This is a dredged up memory from many moons ago, but absolutely tragic of course and horrifying
00:52:07and horrible.
00:52:08All right.
00:52:09So yeah, so people are looking at the jobs numbers and they're discounting them.
00:52:12And if you go down to jobs numbers that the household survey, if you go down to those
00:52:18job numbers, which are a third of the expected numbers, I think a lot of people are wondering
00:52:24whether this is recession territory.
00:52:30The R word, is this recession territory?
00:52:33Always an interesting question.
00:52:38You're right.
00:52:39It's better to see history of an investment recovering lots of things when they get hit,
00:52:43they don't get back up.
00:52:44Same with people too, I noticed.
00:52:45Oh yeah.
00:52:46I mean, honestly, in life, resilience is everything.
00:52:50Resilience is everything.
00:52:52Because if you're not getting knocked down, you ain't in the ring and you're never going
00:52:56to win.
00:52:58Nobody gets in the ring without getting knocked down.
00:53:01And it really only matters whether you get back up.
00:53:03I try to bet in life, oh, is that rocky?
00:53:09Yeah.
00:53:10It ain't about how hard you hit, it's about how hard you can get hit and keep moving forward.
00:53:14It's how much you can take and keep moving forward.
00:53:16That's how winning is done.
00:53:18Yeah.
00:53:19I mean, in the long run, there's going to be a massive change in the economy as there
00:53:24always is when this level of debt occurs, right?
00:53:28But when debt goes very high, the impulse to war becomes almost irresistible.
00:53:39And that is one of the most appalling things about debt.
00:53:42But it's of course a long way down the road from when the debt first starts, right?
00:53:48So the urge to war is almost irresistible when it comes to debt for a number of reasons.
00:53:59But one of the most important reasons is that you can get people to accept austerity in
00:54:04a time of war, which you can't get them to do in a time of peace.
00:54:09And that's really important.
00:54:11People are going to have to take reduced standards of living in order for the economy to have
00:54:17any chance of surviving.
00:54:18People are going to have to accept reduced circumstances, and not in this sort of soft
00:54:22way of inflation, but really, really, things are going to be cut enormously.
00:54:28And so the way that you deal with debt, because people don't love the next generation enough
00:54:33to make these sacrifices on their own, right?
00:54:35They don't care about their kids enough to say, well, we have to stop doing all this
00:54:38debt.
00:54:41So they won't do it for their kids, but what they will do it is for war, right?
00:54:49So it's always the same playbook, right?
00:54:52You talk about some external danger, you tell people they have to reduce their expectations,
00:54:57and anyone who doesn't do that is an enemy of society who should be attacked and ostracized.
00:55:04That you're siding with the enemy, that you're a traitor, and so on.
00:55:07And it's the same playbook with COVID, right?
00:55:10It was the same playbook with COVID.
00:55:13So yeah, it was fairly predictable to say that they were going to move on from COVID
00:55:20to war, and it is quite sad.
00:55:23Oh, look at that, now we're back over, we're 76,584.
00:55:28So I'm just going to look at, when did it start really begin to drop, 83,264, right?
00:55:38So 83,264, all right, I should do it the other way, right, yeah, 76,584 divided by, let's
00:55:52do 81, I can type, whoops.
00:56:07So yeah, we're down like less than 10%.
00:56:13So Bitcoin crashed and recovered in, what, a day, and now it's back up within 9.4% of
00:56:22its height.
00:56:25That's pretty resilient.
00:56:27Now when people notice that, they notice that resilience, that's going to be very interesting,
00:56:33because one of the things I think that the current crisis is doing is having people really
00:56:37see just how unstable and politically motivated the fiat currency market is.
00:56:44So some guy in Japan says, let's raise interest rates 0.25%, which is nothing.
00:56:52Let's raise interest rates 0.25% and $2 trillion gets wiped down.
00:56:58But you can't do that with crypto, well, I wouldn't say all crypto, you can't do that
00:57:03with Bitcoin.
00:57:04That is not possible in Bitcoin.
00:57:09So at some point people will say, okay, so let's look at that which bounced back quicker
00:57:17and let's look at that which is least susceptible to political influence.
00:57:22And Bitcoin, of all the currencies in human history, Bitcoin is the least susceptible
00:57:28to political manipulation.
00:57:31All right, so that's all I wanted to say, really appreciate you guys' time.
00:57:34I'm happy if you have any last questions, hammer them in, I'm here to help.
00:57:37I'm here to do what I can to try and give you at least a philosophical perspective on
00:57:42the current stuff.
00:57:43Give me a 1 to 10 if you don't mind, how did I do, because I'm always looking to improve
00:57:47and be more clear and concise and helpful and valuable, so give me a 1 to 10 if you
00:57:53don't mind.
00:57:54Well, I guess you can give me a minus 10 if I sucked intergalactic chunks out of the stratosphere,
00:57:59but let me know how I did.
00:58:02This was a fairly quick information gather and expostulation, so we got a bunch of people
00:58:08typing there, so I'll let them finish off that.
00:58:11Really do appreciate everyone who's dropped by.
00:58:13Great pleasure to see and chat with you all.
00:58:15Don't forget, if you donate this month, if you donate at freedomain.com slash donate,
00:58:20you get my almost 12-hour presentation, The Truth About The French Revolution.
00:58:25Gonna have to rewatch from the start since I joined so late.
00:58:29Ah, yes, but you joined early for being the latest.
00:58:33Ten out of ten evaluating that it's a technical correction was good stuff.
00:58:36Yeah, in my view, in my view, foundationals are largely unchanged.
00:58:42It's a butterfly effect, a Japanese butterfly effect.
00:58:47You da man, Steph.
00:58:48Well, thank you, I appreciate that.
00:58:52Always a 10.
00:58:53You know when Steph says, I don't know what I'm talking about, that you're gonna get the
00:58:55most real information possible.
00:58:59I'm very much aware of my limitations in these areas, but I do try and bring as much clarity
00:59:05as possible.
00:59:06So I really, really do appreciate that.
00:59:11And yeah, the fear stuff is there's a lot of drama in the finance world.
00:59:19And the drama is there's a lot of people who get pretty hysterical in the world of finance.
00:59:24And I completely understand that.
00:59:25I mean, people's savings are on the line and so on.
00:59:28But people panic.
00:59:30What was it?
00:59:31Sorry, it says, people says, Bitcoin is neither money nor currency.
00:59:36So what is it?
00:59:37Peter Schiff was right.
00:59:40But that's like saying that email is neither smoke signals nor a paper letter.
00:59:45So what is it?
00:59:46Well, it is the thing itself.
00:59:48Bitcoin is a universally validated store of value.
00:59:549.67.
00:59:55Oh, I appreciate that.
00:59:57Very tempered, appreciate level-headed analysis amidst the fear.
01:00:02And so, I mean, miner, obviously, who knows what this means.
01:00:05But I started the presentation, and I said that it was a technical correction, not a
01:00:12foundational collapse.
01:00:14And again, this doesn't mean anything, of course.
01:00:18But since I started the presentation, Bitcoin has gone up a couple of points, right?
01:00:22So now it's 76.5.
01:00:23Again, it's not related to my presentation, but it may indicate.
01:00:28How are you able to be so well-informed so quickly?
01:00:30Well, I appreciate that.
01:00:32Thank you for the tens there as well.
01:00:34Danke schön, Stefan.
01:00:36Let's do the German pronunciation.
01:00:39Well, I have a lot of history of this kind of analysis.
01:00:43I used to do shows with Peter Schiff, and I've done a lot of econ.
01:00:47I studied econ at the graduate level, and I also did work at a stock trading company
01:00:54doing coding, so I had to understand a lot about these kinds of things.
01:00:57I've been covering Bitcoin since 2011, so I do have a little bit of experience.
01:01:03And of course, the value that I'm bringing, I think, is the philosophical analysis, not
01:01:08any kind of technical analysis.
01:01:10So the philosophy I've been doing for over 40, 42 years now, 42 years, because I'll be
01:01:1758 next month.
01:01:19So thank you for the tips.
01:01:20I appreciate that.
01:01:21If you're listening to this later and you find this helpful, freedomain.com, and if
01:01:27you're listening to this later, I guess it's kind of late to say now, this is not time
01:01:30sensitive.
01:01:31This is a way, to me, of looking at the economy as a whole and trying to figure out what's
01:01:36going on.
01:01:37Because if it's a foundational thing, you really want to be aware of that.
01:01:41If it is, as I'm guessing, a technical blip, you want to be aware of that and not panic.
01:01:48So I haven't even really looked at my stuff, because I just consider this a Japan few.
01:01:56And you know, the Japanese should have some interest rates.
01:01:59They should have some interest rates.
01:02:01Because if they can't fix the value of their currency, it's going to be tough for them
01:02:04to fix their birth rate.
01:02:05And they're going to be gone in 200 years, some, or less.
01:02:09All right.
01:02:11I appreciate your feedback.
01:02:15Thank you so much.
01:02:16I'm glad that we had a chance to chat.
01:02:18And lots of love from up here.
01:02:19I really appreciate your help and support.
01:02:23Again, freedomain.com slash donate.
01:02:24You get my almost 12-hour truth about the French Revolution, which is absolutely foundational
01:02:28to understanding how the modern world came to be and what direction it's heading in.
01:02:32All right.
01:02:34Thank you, everyone, so much.
01:02:35Lots of love.
01:02:36Take care.
01:02:37I will talk to you soon.
01:02:38And we're going to talk Wednesday night, 7 p.m. Eastern Standard.
01:02:40We'll maybe do a live call-in, so you can call in with any additional questions.
01:02:45I guess I leave you from the glowing furnace room of my red background.
01:02:49And I will talk to you soon.
01:02:50PeacefulParenting.com.
01:02:51Don't forget, PeacefulParenting.com.
01:02:52Take care.
01:02:53Bye.