Lawrence Lepard

Hi, you're listening to Stephan Livera podcast, show about Bitcoin and Austrian economics, brought to you by swan dot com. Lawrence Lepard of Equity Management Associates rejoins me on the show, and we're talking about the cost of living crisis, going into recession, generational conflict and boom hate, as well as US government debt and how many things are breaking. Now, before we begin, remember Remember, Pacific Bitcoin Festival is coming up. It's in LA, October 5th and 6th, and now is a great time to look up your flights, get your tickets, organize your hotels, and all of this stuff. There's an awesome lineup of speakers, people like Max Keiser and Stacey Herbert, Preston Pish, Alex Gladstein, Lynn Alden, Jimmy Song, and so many more. There's going to be multiple stages. This is a great opportunity to learn about Bitcoin and to meet other Bitcoiners, and this is actually a great opportunity if you have family and friends,

Ways to get them exposed to Bitcoin and see that this isn't just some online internet nerd thing, this is a real technology, this is a real movement, and Pacific Bitcoin is going to help push that forward by spreading the message about Bitcoin. So go to pacificbitcoin dot com, use code Lepard for a discount on your tickets. Mempool dot space is a comprehensive Bitcoin and blockchain explorer. You can see the mempool, you can see the blockchain, you can see second layer networks like the Lightning Network, and you have a Lightning Network explorer There so you can see what are some of the large nodes, where are they hosted, and all kinds of interesting statistics that you can use in terms of how you manage things in your Bitcoin journey. So when it comes to sending Bitcoin transactions, you can go there and search and target your fee based on low, medium or high priority, which is listed on the site, and they have various integrations into other wallets, so you might even be using mempool dot space integration without even knowing it. They also have a new feature coming soon, which is the mempool accelerator integration, so keep an eye out for this It's gonna be a really interesting one, and of course, you can host this yourself. It's free and open source software, so go and check it out over at mempool dot space. And now onto the show with Lawrence Lepard. Larry, welcome back to the show.

Thanks, Stefan. Really great to be with you again.

Always. Lots of things going on, and, yeah, you know, I, I think probably the biggest one that just seems to be in the conversation now is this cost of living crisis, and I'm sure you're seeing some of these similar videos where there are young people and middle-aged people who are just literally making TikTok videos and otherwise videos just explaining they can't even afford the cost of living. So I'm curious if you have any initial reactions On that, and where does, you know, the fiat, money play into this?

Well, I mean, you know, where the fiat money plays in, but I'll, I'll go over it. But yeah, I, I very much have, reactions to that. I mean, it's terribly sad, and you see it kind of everywhere. And, you know, we see the videos, you know, we see this, Oliver gentleman who came out with this great song, and it really struck a chord with kind of middle America. And, you Online, it's, it's incredibly sad. I mean, you know, the central banks have behaved irresponsibly, we all know that, they printed a ton of money, and as a result, we've had widespread inflation, and it hurts the most vulnerable. I mean, you know, it, those who are close, living closest to the edge, if suddenly their cost of everything goes up, the cost of getting to work, the cost of feeding themselves, I mean, the essential cost, their cost of electricity,

it's, it's The fiat money and, and I think we're in the, we're approaching kind of the end game of the fiat money regime, but sadly, it's gonna take some time to play out, and there's gonna be a lot more pain before it, it finishes playing itself out, I think.

Yeah, and of course, I agree with you, but I think there's two sides to this story as well, because it could also be that fiat currency has caused people to try to live beyond their means, right? It, it, it made, it made them believe that, oh, I don't need

Living more atomized lives and not family oriented lives, and I'm wondering whether you think that's also played into this also. That's

a great question. I think that's, I think that's probably true. I mean, I think when the good times are rolling, you know, people are, they're gambling and they feel like they have extra money and they maybe take on too much leverage, they buy more house than they need, they do things they don't need to do. you know, certainly, tough times cause you to focus in on, you know, what, what really And, and that's, you know, those are the things that are important. And, yeah, a lot of the frivolous stuff, I suspect, is gonna have to fall by the wayside. And some of that's good. I mean, you know, I mean, gambling on meme stocks and, you know, all the crypto nonsense, I mean, that stuff ought to go away 'cause it's, it doesn't add any value to the economy whatsoever. So, yeah, some, some of that is good. And, and, and yes, people did make unintelligent

And, you know, maybe that's gonna prove that it wasn't such a wise decision, right?

Yeah. And I mean, to be, to be, to, your point as well, that is still a fiat consequence, right? It's that people were misled by the manipulated interest rates and the manipulated markets for credit that we all live in. Yeah. And so it's, I, I

see that in some friends I know, people who've taken out HELOCs, you know, home equity line of credit, and of course, two thousand and eight taught us, you know, this Rates as low as a hundred basis points, two hundred basis points, and when you can borrow money at one percent a year, well, okay, do it and borrow it and speculate and borrow it and buy stuff, buy it and borrow it and live well, whatever. Well, as, as we all know, with the interest rates going up the way they have, those HELOC rates are now in the six, seven, eight percent range, and suddenly that really starts to bite. so, so yes, people were misled by the bad monetary policies. You know, ZURB was just an amazing And really bad. it's, it completely distorted the economy in every way. So-

Yeah. And it seems to really, genuinely, it seems to be a global thing, right? I'm seeing, we're seeing some of these, videos of TikToks and people like this who are talking about their problems in America or in Canada. I'm hearing about stories even back in Australia, like we're seeing news articles of families who can't afford the mortgage anymore. I'm hearing, now, I'm, born in Sri Lanka and I was, we were recently there for a Yeah. and people unfortunately aren't able to point their finger at the right problem, aren't they?

In many cases, I mean, obviously the, the, the Bitcoiners have figured it out, but, but sadly a lot of other people haven't. That's why we say, "Fix the money, fix the world." I mean, it's, it's very easy for these political tribes to get everybody, you know, all the blue guys saying it's the red guys, and the red guys saying it's the blue guys, and it's really both of 'em, you know, But rather than arguing at the, at the core level, which is if we had sound money, these problems wouldn't exist in the form that they exist.

Yeah, and what we've seen as well is related to that earlier idea that artificially low interest rates cause these, some of these beliefs. A related idea is, this gentleman, I believe his name is Robert Henderson, and I think he coined this term or popularized this term of luxury beliefs, right? This idea that, you know, very rich people and maybe people who've been misled to- People who believe they are rich can believe certain ideas, like a, a common example might be net zero. This idea that we can just have net zero emissions and just live in this kind of fantasy utopia without energy With eighty percent of energy being fossil fuel or hydrocarbon energy. And so I think to some extent, some of these so-called luxury beliefs are going to have to crumble, aren't they?

Yeah, they definitely are. Particularly around, you pointed out a good one with that energy thing. I mean, the, you know, the other one was with the whole, the whole COVID scare. I mean, you know, okay, we've gotta, we've gotta save everybody's life from what's really just a bad case of the flu, at enormous cost to the economy and,

and a lot Dangerous. So, yeah, I mean, luxury beliefs, I mean, bad thinking, you know, fiat thinking is, is prevalent when the money is broken. You know, there's a lot of bad thinking in a lot of areas, and, it's, it's, it's very unfortunate. I mean, we need to, you know, this is a crisis and, and it needs to resolve, and we need to get to the other side of it, because when we do, there won't be any time for this, this stupid thinking. I mean

Yeah. Now, Larry, you've been through, you've been, investing for a long time, and you've seen many cycles. You've seen prior cycles play out. So I'm curious if you see any parallels, right? Dot com bubble, the two thousand and seven, two thousand and eight GFC. Do you see any parallels and any insights that you could share for younger investors and listeners?

Sure. yeah, I mean, I, I have seen a lot of cycles, as you, as you point out, I am old, older. and, and these, you know, it's, it's, these things do just repeat themselves over and over and over again, and I, I mean, this is from the beginning of time, really, if you go back far enough. But, you know, you have, you have boom and bust cycles, you know, it was in the Bible, seven years of, you know, good times and seven years of bad times, and so, so yeah, I mean, w-what we're in right now, I think what, I think right now a lot of people are confused I see, which I mean, if, and as an investor, what you kind of look for is the deviant view of, you know, what is it that the market doesn't see that correct or isn't looking at correctly? And in my opinion, what the market isn't looking at correctly is the fact that we're not going back to the forty years of deflation that we had from the eighties, early eighties into twenty twenty, when, you know, in March of twenty twenty, the ten-year bond hit, you know, fifty or sixty bips. I mean, that's not happening

And, you know, long list, but, but, but, and I think that the, the markets haven't fully accepted that, and still, you know, the five by five treasury, swap says, you know, they think we're going back to two or three percent inflation. People think Jerome Powell is going to be successful. He was recently hailed in some article, you know, I think they said the genius of Jerome Powell. I mean, to me, that was like a flashing red light indicator, okay, this is about to blow up again. and so, you know, to me, the, the, the, the period we're in right now, the raising of rates post, you know, post the problems, it feels a lot like kind of March of twenty-eight, two thousand eight, where, you know, Bear Stearns failed. I mean, Silicon Valley Bank to me reminds me of Bear Stearns, and the big one hasn't hit yet, but it's gonna hit. and so there's a lag effect. They started raising rates in February twenty twenty-two, and there's I think, and it's gonna continue to bite, and we saw it in, in these regional banks, these large regional banks, it's gonna happen in some of the smaller regional banks, and it's gonna happen in other places, commercial real estate, et cetera. And so, in my opinion, things are gonna start to get pretty tough, and of course, the Fed will, will hang on too long to these higher rates, they'll say they really wanna calm inflation, and then eventually something's gonna break, and when it breaks, they're gonna change, they People think that's what they want, maybe they do, but I kind of doubt it. I think at the end of the day, they're political animals, and they respond to what the greatest cry for is for, you know, to solve the pain. And of course, the, the greatest cry recently, and a year ago for sure, and, and even recently, has been stop this inflation. You know, this inflation is eating us alive, stop it. And so, you know, Powell has been extremely aggressive at trying to do so. you know, inflation is starting to come down.

Using all the oil they released from the strategic petroleum reserves, so they manipulated one of the big components of inflation, and you can only do that once. so, you know, my opinion is that we're about to go the other direction here, and, you know, the, the things will start, you know, unemployment will rise, businesses will have a hard time, things will start to collapse, we'll have more Silicon Valley like bank like episodes, and they will stop raising, and then the stock market will probably fall because historically that's the pattern, and, the piece I think most people don't get is that the bond market's gonna wake up to the fact that they just can never stop printing. And so when that occurs, you know, you're gonna see, in my opinion, a much higher interest rates from here. And as we all know, there's just a piece of this math that doesn't work. I outlined it on Twitter yesterday with, with a thread that just shows, you know, I think, tax receipts are down, I believe seven percent, federal government spending is up fourteen percent, you know, and the deficit is And interest rates, the chart on interest rates, which we've all seen, the US government federal interest rate, interest payments, is really kind of gone parabolic, and so they can't continue to raise these rates, and in fact, they're going to have to cut them, or else there's going to be a, a financial explosion here that's gonna make two thousand and eight actually look relatively contained. I think that's very hard for most people to accept, but based on my reading of history and my experience doing this since the early '80s, that's kind of what you know, my partner says, and he could be right, they could hold it together for another couple of years. I kinda doubt that. I think a couple of years is too long. I think they might be able to hold it together another three to six months, maybe a year, I don't know, but it's, it's coming. You can see the problems are coming, they're building. So that's, that's kinda how I view it. Yeah.

One other area, now, obviously, I know you're a fan of Austrian economics, as I am also, and a

thinking, this notion that just because you've raised the interest rates, that somehow that's gonna tamp down inflation. And I think, I mean, traditionally they, you know, the Keynesians and the neoclassicals, they sort of think of it like, "Oh, you can have a trade-off between having high inflation or high unemployment, and, y-you know, the central bank and the wise government should manage, you know, the money supply and the, the interest rates and so on to try to, you know, manage that." But I think then what happened is in the '70s Rates and high unemployment, and that sort of disproved that. But then it seems like, and I, I know you obviously know better, but it seems like the mainstream financial press are just falling back into that same Keynesian frame. Do you have any insight on why they're doing that? Is it just that they've forgotten? Is it that they just haven't read enough? Why is that?

I don't know. I mean, I think, I think the, you know, the Fed and, and the Keynesians have really polluted the entire economics, you know, industry and, and, and commentary If you don't believe their stuff, you get thrown out, you're not invited to any of the conferences, you're not allowed to ask questions at the, at the pressers, press, conferences, et cetera. So, I, I think they just, you know, they, they conveniently ignore it because it doesn't help, you know, their narrative. I mean, that's kind of, that's my way of, of explaining. I think, I think some of them are starting to realize it and, and they, they quote-unquote, know better.

I mean, You know, they, they realize they've got a problem, but I think that what they, what they're good at, what they intend to plan to do, and I'm sure they have a lot of things in their back pocket that they'll pull out as necessary, is kick the can, you know? And, and so, you know, the BTFP was a perfect example of kicking the can, right? I mean, they had said they would absolutely never bail out the banks again, that's what Dodd Frank said. They said the depositors would have to take haircuts. We're not doing You know, Silicon Valley Bank got in trouble, First Republic followed, it looked like a large number of the regional banks were gonna go down, the seventeen billion or trillion dollars of US bank deposits were gonna be at risk. You know, I'm yelling flip flop back and forth a couple of times, "Well, we're gonna guarantee them? No, we're not. Yes, we are. No, we're not." And then they realized that if we don't do something to help these banks out, you know, we're gonna, we're gonna have a bank run on our hands, and so they

do to keep their broken system going, and I think they have other things up their sleeve that they will kind of continue to do. But in my opinion, these, you know, the market is larger than they are, and the market is going to overwhelm them. I mean, a, a good, another good example is if you look at the ten-year US or UK gilt yield, you recall last fall in September that blew out, and the, you know, the, the, the pound was falling fast and the gilt Yield was going up very quickly and UK government had to step in to solve it. And, interestingly, you know, they, they did for a while, but now that gilt yield is back above the time at which that last crisis occurred. And, and so, you know, the rates are gonna continually march higher. I, that's, that's the, the fly in the ointment for their system. And, you know, if the, if they lose the bond market and they have to start buying the bond market to keep rates low, it's They are the biggest borrower. I mean, the US government has, you know, thirty-three trillion dollars roughly of debt, a large portion of which, I mean, you know, I would say over a third, maybe as much as forty percent, rolls in the next couple of years, and, it's short. And so at, at five percent or six percent or seven percent, you know, the interest expense for the US government is just gonna-- it's already approaching a trillion dollar annual run rate. You know, I saw projections that showed it could go to a trillion two, trillion four, Or our federal budget. And so this is a problem, this is a fundamental problem that, that mathematical, that they can't really solve, unless they can get interest rates down, and the only way to get interest rates down is to inject more money into the system to make money more plentiful so that, you know, the supply of money increases and the rate of the money therefore falls. But, but in so doing, the injecting money into the system is QE, it's buying, you know, those bonds and, and it's printing, right? And so, that, that is what the only issue is when, do they, and, and in what way do they do it? The longer they delay, the larger the amount of the print is gonna be. You know, at, at some point they're gonna have to come back in. I mean, I think, I've said on record in the past, I think the Fed balance sheet, which was as high, almost as high as nine trillion, now is in the eights, I think it's likely to go as high as twenty or thirty trillion on the next print. So it's, it's As a genius for the way he's managed this, and so we'll just, we'll see how that, we'll see how people feel about that in a year, certainly in two years, I think they're gonna feel a lot differently about that.

Yeah. And as they temporarily look smart right now, I guess I'm thinking about potential ways that they will try to have their cake and eat it too, right? So I'll give you an example. They, in the, you know, if we rewind back to the two thousand and eight, you know, or maybe even a little bit after Serves, right? So this idea that they would sort of help the banks, but pay them also so that they wouldn't loan it out, so that in their view, it would try to let them help bail out the banks, but without causing an inflationary consequence. So do you think they, there's a chance that they can try something similar to that this time around? Oh,

very, very much so, very much so. I mean, and, and, you know, there's, there's some great papers out on that that talk about how they've done that. I mean, You know, they, they, they, you know, they created this reverse repo facility which absorbed a lot of capital. You know, of course, it, it made the Fed, you know, net, net negative in terms of, you know, the Fed's income statement, right? They're paying out huge, you know, huge interest rates to people who put, park their money there, to pre-prevent it from going into the economy. But, yeah, there's no question they have, they have a number of dials that they use to Some new programs. I mean, the BTFP, they invented that out of whole, you know, thin air, and, and, and I suspect they'll do, they'll do similar things. you know, we're also seeing that they're, they're doing everything they can to forgive, forgive as much debt as possible. I noticed last night I tweeted about it that, Biden just announced he's, he's got a new program for forgiving some more student debt on some kind of a technicality, even though the Supreme Court said that he was unable to, you know, Running and functioning, and, and that's the piece that people miss about the Federal Reserve. I mean, they have a dual mandate of full employment and, and, stable, you know, pricing, and of course, they've failed on the stable pricing, and they're, they're somewhat close to failing on the do-- on the full employment. I mean, as Saylor points out, the employment numbers are all cooked, right? I mean, if you've got forty percent of the people not in the workforce, I mean, what does full employment mean? You And, you know, what they're doing right now is going to lead to financial dislocation. And, you know, March of twenty twenty was a perfect example of how when you have financial dislocation, they will come in all guns blazing to print money and keep the system going. March of, of this year, twenty twenty-three, when Silicon Valley Bank was on the edge, was another example, a very good example of, you know, there's a, there's a serious problem in the system. what are we gonna do? We're gonna invent a new, but it was money printing and, and, and so there will be, there will be more of those, but the fact that there will be more of those means that, you know, for us, that there will be more money printing, which is back to our initial premise, you know, as Bitcoiners, which is that fiat is programmed to debase. You know, it, it literally cannot exist without debasement because you, you have to create the new money to pay the interest on the old money that, that, that you've got out there, and that old Because money is loaned into existence. I mean, this is my pinned Twitter feed, which shows, you know, the GDP growth as against the growth in debt. I mean, you just, the two, you know, there's, there's a, there's a fundamental problem here that, that is going to get reconciled, and in my opinion, it's, this is, this is what this fourth turning is all about. You know, the money is breaking. I mean, I'm, I'm reading, I'm almost finished with, Neil Howe's book, you know, on

You know, this isn't-- I don't think this is gonna be a great war fourth turning, it could be, but I, I don't think so. I think, I think mankind has evolved to the point at which, you know, the, the largest powers recognize that to enter into a nuclear exchange would mean the end of all of us. So as a result, I don't think we're gonna have a world war. the proxy wars probably continue, but I think that really what's gonna happen is all these currencies are gonna fail. You know, I, I tweeted it the other Various stages on the curve. Now, that, that could take some time, so it's, it's not like it's gonna happen tomorrow, but, to me, it's, it's clearly happening, and, and I would say, I would submit at an accelerated pace. you know, if you recall, in, in, you know, the '08 crisis, we created three trillion dollars worth of money in over the course of three or four years. Here, we created five trillion dollars worth of money in eighteen months, you know, on the COVID crisis, and number. And at some point, people are gonna wake up and realize, you know, these people really don't know what they're doing, and as a result of the fact that they don't know what they're doing, they're gonna run us into the ditch, and, therefore, I've got to own something that they can't print, and, you know, tangible assets, you know, and, and and Bitcoin, a, a tangible ledger, an immutable ledger, really are the, are the two natural choices. So

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Bailouts, there's the concept of, you know, BTFP and these various financial programs. I think these are probably some of the likely policy, let's call them policy responses. Do you have any others that you can think of that they could do that are, you know, government po-policy responses?

Yeah, I think they're gonna at some point get smart and recognize that, gold and silver and Bitcoin are the exit ramps, and they don't want people using the exit ramps. I mean, this is what, you know, Elizabeth Warren's anti crypto army has gone after, and, I think, you know, having, having been screwed by them constantly throughout my career, watching them, you know, take moves that are adverse to my positions, like banning short selling of financials in September of, of twenty-eight, of two thousand eight, you know, I, I wouldn't surprise me at all if, if a narrative starts to develop that these sound money guys are ruining our good fiat system, and therefore, you know, gee, if you own Bitcoin or gold or silver, you need to and we're doing it for tax reasons because we think you're all tax cheats. And, you know, and furthermore, you need to, you know, tell us how much of it you own and, and maybe give us the addresses. and, and then if they wanna get really aggressive, they could start to say, "And by the way, you know, this week, they could see a monetary reset coming. I mean, I think right now they're not doing these things 'cause they're not smart enough to do them, but I think they might Therefore, you know, capital gains tax on Bitcoin and gold and silver is now ninety percent. you know, so I, I don't put anything beyond their reach of trying to save their own asses. you know, their system is, is going to blow up, and, and they know it, I think, or if they're smart, they know it. and so I, I suspect there will be moves they will take. Now, the, the beautiful thing about both Bitcoin and gold and silver is that they're bearer assets, that, you know, they can ask Residents all the time, and I just, I keep losing shit, you know? and, and I think, you know, there'll be a race, which is, you know, how can they figure out who's got what and how to get control of it and how to mess us up versus how quickly is their system disintegrating? And as their system completely disintegrates, you know, the new system, whoever runs the new system isn't gonna care how many Bitcoin I have or how many, you know, ounces of gold I have because they're, they're likely to be somebody who I mean, when the dollar becomes worthless, and I sincerely believe that within my lifetime, I'm sixty-six, that within my lifetime, the dollar will become worthless, the dollar will fail. I sincerely believe that. I, I think it's probably likely to happen between twenty twenty-eight and twenty thirty-two, which is kind of the end of this fourth turning as projected by, Neil Howe. I mean, he, he says, if, if he adds everything up, he said maybe worst case, longest ever fourth turning, it could be twenty thirty-eight, but that's still within my lifetime

I think it has to, because of, of the math. I mean, the only way it doesn't, the only way they're able to extend it, Stefan, is if they, if they preempt that failure by getting really smart and tough. and I'm not sure without a c-crisis they could do it, but what do I mean by smart and tough? they, means test Social Security and, and, Medicare. They stop-- they shut down half of our bases all around the world. they cut the military budget in half. Heavily into nuclear to reduce our electrical power costs. they, you know, they basically balance the federal budget. which to me, the odds of all of these things happening are, are quite small, absent a crisis forcing them to do it. but it's possible. I mean, it, it's not outside the realm of possibility. and if, if they do those things, then I think the dollar won't, won't fail. but again, I look at our political constellation, I don't think the odds of those things happening are very

So essentially, it would take massive, massive spending cuts, and that is going to be politically infeasible. Exactly. And also think about what those

spending cuts would do to the economy. I mean, you know, massive spend-- I mean, it would, I mean, any way you look at it, I mean, sadly, and it really is sadly, because the whole world is gonna suffer, but sadly, there's, there's nothing but pain ahead here for a while until we get through this thing. you know, the, the bright side of that, sadly,

In the world today, it's gonna just fall away, and everybody's gonna go back to kind of, you know, core values and, you know, grifters and bullshit artists and politicians and a lot of the people who've done extraordinarily well under a crazy fiat system, you know, they're gonna be wiped out and poor, and the people who've, you know, been careful and, and husbanded their money in sound, in the form of sound money, they're gonna be relatively speaking better off and, and able to, I think, return the country, at least the country I wanna Founding principles, you know, I mean, maybe we'll have term limits, maybe we'll have a second constitutional convention, I don't know what'll happen, but, but, you know, things, a massive change will need to take place. And I think, you know, the only way, sadly, I think the only way to get to that massive change is everything is so effed up that everything's on the table, you know? And

so that's, that's how, kind of how I see it unfolding, you know? Yeah. Yeah, it's a sad, but, But I think maybe there's also an element at a social and a cultural level that maybe that will also be part of the shifts too. Like, so as an example, instead of this idea that everybody has to move out at eighteen, maybe it's more like, no, you actually live with your parents for a bit longer, and you, you know, instead of paying for multiple homes and apartments or whatever, you, you know, w- there's a focus on that, and maybe that is part of the social response to this also.

Absolutely. And I, and I, and also I think, you Much more. I mean, I, in the millennial generation, I have three millennial kids, and I see them as being much more concerned about the overall wellbeing of, of, of the world and the economy and their fellow beings than my generation of boomers who were all just about, let's, let's see how much we can get and let's see how fast we can get it. I mean, really, to be quite frank, I mean, in the Reagan 80s, that was what it was all about. And, and, and that'll be because, you know, so much pain will have been doled out that it'll be like, hey, you know, can't we figure out a way here to make the world a better place for everybody, not just for the one percent? so I, and, and I, I, I really sincerely believe that, that that could happen and will happen, is likely to happen, you know, the hero

And world with, with a better set of values. And that, that's my belief.

Yeah, that's interesting, because we are also seeing, along with that cost of living crisis, I'm also seeing a little bit of a generational war, and you might, you might be seeing this also, where there's a bit of boomer hate or boomer, people, sort of saying, "Look at these boomers, how, look how easy they had it. They could have just bought stocks and bonds and gone to the beach for forty years, and now they wake up and

Paid enough to raise a family, this kind of, concern. So, I'm curious to any reactions you have on some of the generational conflict.

I mean, no doubt, no doubt. I mean, there, there are a lot of, you know, greedy boomers who, you know, have, have done extraordinarily well. I mean, you know, look, it wasn't as easy as it looked. I mean, there were lots of ups and downs, and a lot of people who've done well, you know, worked very hard for what they've got. But, You know, what's a, as a practical matter, what's happening is a lot of boomers are helping their kids out because they have to. I mean, the average, you know, twenty-year-old today, how they ever gonna, on, on, on a twenty-year-old salary, how are they ever gonna be able to afford a house? I mean, they just, they can't. I mean, it's, it's just the economics are just so tipped upside down. And so, so this will, this will get resolved. And, and I, you know, I completely understand the

Looking, you know, and I mean, back to the student loan thing for just a moment, I mean, you know, in general, I believe that when a debt is taken, it should be repaid. However, having said that, you know, there's, there's something to be said. I mean, in, in the GFC, we loaned money to the, to the banks for free, basically, zerk, you know, and yet, you know, I think we charged six percent on student loans. I mean, what's that all about? Why do

As, as, as I think you've alluded to, between, you know, between the generations, and the boomers are gonna have to have their, their benefits cut severely, and they will, and my sense is they'll be able to live with it, because, you know, they've had a good run, and, you know, I mean, the, one, one thing that, that also could get solved throughout all this is just the whole healthcare piece of it. I mean, healthcare in the United States is just such a disaster. I mean, it, it, you know And exercising, and because, you know, that's a, that's a long time preference activity, right? So, you know, yeah, it's- It's- But, but yes, there will be generational strife, and, and, and probably there should be, and, you know, it's time for a lot of these boomers to go, and it's time for reform. And, you know, all I would say, because I am a boomer, right in the heart of it, probably almost in the peak year, I was born And then there are boomers who don't. And, you know, some of us like myself are, you know, that's, that's kind of what I've dedicated myself to, is trying to fix this system, because it, you know, it's, it's a broken system, it's an unfair system, and I care about what my kids and my grandkids are gonna, you know, be living in. and, you know, I figure at this stage of my life, the appropriate thing to do is to try and work towards a better

system.

Yeah, and, yeah, fast, of course. And so it's interesting that we're seeing some of these demographic battles in a way, because as an example, in Australia, there's a big-- there's, you know, fighting going on about the superannuation system, because it, basically, it's kind of similar to the 401k system for Americans, but the gist of it is that they had a preferential tax arrangement, and now what's happening is they're sort of saying, "Well, actually, now we need to tap into that." And so there are all these Savings in a way, but it's put in this pool that they can't access until they're sixty-five or seventy or until the technical term is preservation age, and so then it, it sort of creates this new football that it's a government, you know, controlled or it can become a government-controlled pot of funds. Oh yeah. and, yeah. So it's just like a really- Yeah.

That's certainly, when you mentioned earlier, you asked, "What, what are the things the government could do?" I mean, one thing they could easily do

is say I've been expecting that as a possible, you know, they're, they're certainly, I mean, they look, they can do anything they want, and, and they've got a problem, which is they're, they're deeply, deeply indebted and getting more and more in debt, and the math suggests that that's gonna come to a conclusion here at some point.

Yeah, so it's more just a question of timing then, and, you know, how long can they kick the can? is it gonna be one or one or, you know, a few years

or And I just, I'm just looking at the slope of the curve, and things are happening more quickly and they're happening at larger scale, and I, so, and I think, I think, you know, how I think is, is pretty good in his generational cycles. I think he's got this one right. If you assume this fourth turning kicked off in '08, and these things typically last twenty years, you know, it, it feels to me like, like at the end of this decade, you know, the system will be going through substantial change, and which

For the human race, we'll get a, we'll enter a new, a new season with a better currency system and, you know, all this debt will have been resolved, and, and frankly, a lot of it will have been written off, you know? So-

Yeah. And that's gonna be challenging for some people too, because for them, that other person's debt is their asset, right? They may be bondholders, and so they're gonna have to take a loss, and that's gonna be rough for them, because they're gonna feel like, "Oh,

Look, there's, you know, there are winners and losers here in this whole thing, sadly, and, and, and the losers, I mean, the biggest loser without any doubt is gonna be anybody who holds any sovereign debt, because these sovereigns have proven themselves to be irresponsible, and th-this crisis is unfolding at the sovereign level, and that's why it's called the everything bubble. It's unfolding at the level of the money itself, and so, you know, the odds are high, in my opinion, that the money becomes worthless. I mean, the, you know, people think

But if you look at what's going on here, the pattern that we have, you know, basically this has happened over and over again in third world and emerging countries. You know, and Reinhard and Rego have in their studies and all have shown that, you know, out of a hundred examples of countries that have gotten this much debt to GDP, you know, I mean, like ninety-nine percent of them, you know, either default or massively inflate, you know, to get out of it. And so even though we are the world's reserve currency, I don't think that lets us

Yeah. And so that's the other big talk of town is this de-dollarization narrative. Yeah. And are we moving into a multipolar world? Now, I think there's a few things on this, like our friend Safety, and he, his idea, his view is more like, look, a lot of countries want to try and set up their own alternative, maybe BRICS is tr-- is going to try, but at the end of the day, they still need to have a credible enough bond market for other investors to want to buy their-- to buy that thing, and, you know, it It's kind of like the Ronnie Coleman quote, everybody wants to be a bodybuilder, but ain't nobody wants to lift this heavy ass weight. And it's kind of like that, but with government bonds. And so even though the US is the worst, not the worst, it's, it's, it's bad, the US dollar is kind of, you know, devaluing, it's still less bad than the alternatives. So I'm curious how you're seeing that when you kind of blend all of that together, this idea of a multipolar world.

Yeah. Well,

I subscribe to his milkshake theory that, that, you know, the dollar is the best of all the shitty currencies. They're all fiat currencies, they're all shitty, but, you know, for historical reasons, the dollar is the leading one. but what I think, what I think is happening that's very important is that, you know, the dollar used to be, you know, ninety-five percent of all trade, you know, was, was denominated in dollars, and that's changing, that's logistically change, literally and logistically changing, and you're starting to The other issue here is you really are talking about two different things. You're talking about what do you-- what currency do you trade in so that you need to buy it briefly in order to buy something else, and then you're talking about what currency do you want to store your value in. And I think what's going on is that- More and more people, more and more countries are coming to realize that the dollar isn't a reliable place to store value. And so, you know, the BRICS in particular have said, "We're tired, you know, we're gonna make the rules now. We've got all the commodities, you don't, you need our commodities. You've underinvested in commodities for twenty years. we're gonna change the rules, you know, and, and we're gonna make you either pay in terms of, you know, using our new BRICS currency, which I think they're you know, we're gonna, we're gonna go to something that's more, you know, and, and I believe what it'll be is it'll be gold backed or, or gold linked. And so, you know, what they're saying in, in my opinion is, you know, we know your fiat is losing seven to eight percent every year compound over time, and we're not gonna hold it. And so, you know, it's just one more jenga block being taken out of the debt structure of the United States. I mean, you know, as Luke Groh dollars of US Treasuries. I mean, we used to be able to run these deficits, and, you know, we had buyers all over the world for our debt as a result of the, the creditworthiness of the United States. That's no longer true. China is now a net seller of US Treasuries, and, and yet, all these central banks are also net buyers of gold. Sadly, they're not net buyers of Bitcoin yet. They haven't moved to that step. They're, they're, they're on their way to getting there, but they just don't understand Something that governments can't print because they're very much aware of the issue as well. I mean, it's, it's one of these issues that's just becoming more and more clear to everybody. And like so many things in life, I mean, you know, the, the first people through the door are gonna do the best, right? I mean, the people who bought Bitcoin at two dollars or twenty dollars or hundred dollars or even three thousand dollars, you know, are gonna do better than the people who are buying it at three hundred thousand dollars, which, you know, there will be plenty of buyers People get out, they're, they're the best escapees, and you don't wanna be at the end of the line, you know, as the smoke kinda, you know, billows up. And so, you know, it's becoming more and more clear that these currencies don't store value, period. And so, you know, and it doesn't matter which one you're in. And it, it's interesting to me what's going on in Japan, you know, that, I mean, Japan could actually be one of the first ones to fail. I mean, you see the yen now What they're willing to accept as a yield on their ten year go up, in order to try and prevent that slide. And of course, the yen has been-- Somebody on Twitter handed out this, the yen is the ATM at the, at the world financial casino. It's the ATM in the, in the lobby because people borrow in yen because it's so cheap in order to speculate in everything else. And so if the yen starts to fail and the yen interest rates start to go up, you know, there's another source of, of liquidity drying up. So, you know, things are, And, you know, eventually they're, they're gonna cumulatively break enough that I believe we're gonna have something that looks, again, like the two thousand and eight crisis, that, you know, and, you know, the, the signs, I mean, people say, what do you look for? Well, there, there are really three prices I check when I get up in the morning, okay? I check the ten year yield, I, on the US ten year yield, I check the price of gold, and I check the price of Bitcoin. And, you know, I campaign since '06 or '05 or '06 or even since, you know, back in, Greenspan's days or Volcker's days, well, almost as tough as Volcker's days, you know, I mean, real interest rates having fallen by five hundred, six hundred basis points, that gold is within five percent of its all time high and Bitcoin is up seventy five percent this year, year to date. And so what, what's going on here is these two sound money assets Smell what's coming. You know, they're not buying it. They're not, you know, I mean, in the past, if you'd had this kind of an interest raising, rate raising campaign, gold would have gotten slaughtered. It just would have gotten completely hammered. And some of that Bitcoin rise is, is, is coming out of the FTX bounce or the FTX low. I mean, we all know fifteen thousand occurred because FTX blew up. But, but the point is that the markets are saying, "We see what's-- We're looking around the corner and we know what We know what he's going to be forced to do, and his words are just words. I mean, that's the thing I encourage everybody to understand. I mean, remember when he was saying inflation is transitory, and we're not even thinking about thinking about raising rates? I mean, that was, that wasn't that long ago. It was twenty twenty-one, fall of twenty twenty-one. I mean, the dot plot had, you know, interest rates going to, I don't know, seventy-five bips or something, maybe a hundred bips, you know, up from thirty bips, Will do whatever is expedient for them at the time, and then they will claim that they, quote unquote, had to do it. You know, that they, they stopped the ATMs from not working. I mean, you know, that's-- that, that was the claim in two thousand and eight, when, you know, Paulson was on his knees begging to Nancy Pelosi, you know, "If you don't give us this TARP bailout, you know, the ATMs are gonna stop working and the entire country is gonna shut down." And of course, they-- she fell for it

is coming, we just don't know exactly when, but we do know that it's coming, and we do know that the policy response, in my opinion, and there are those people who think they'll let us go into a great depression, I don't think so. I think they will respond the way Burns, Arthur Burns did, and they will, they will turn around and they will, you know, drop rates and start printing again. They have to. So

Yeah, well said. And so when it comes to this question of, you know, we've seen the yield curve invert, which There's normally a time lag to these things also, that, you know, people are talking about how the housing markets around the world are, are dropping or in parts of the world, and that cycle can take a few years, right? It might, we might be only one year into that, and maybe it takes two or three years for the property down cycle to happen, and then at that point, that's when they, the, the so-called policy response comes. I'm

actually talking about this, and I'll put it up on my Twitter feed when it comes out. I just

got it He's writing a book on, on the history of money, and has done just really in depth research and, and he goes back into the eighteen hundreds and he looks at these and it tends to be the lag effect, if you kind of average it out, tends to be about two years from the time at which the tightening begins. That's, it really bites hard in about the two year time window. And so, you know, Powell started raising rates in February of twenty twenty-two, so two years would be February of twenty twenty-four. and my opinion is it might happen this Silicon Valley Bank felt like Bear Stearns failing. I mean, Bear Stearns failed in March of two thousand eight, and the GFC hit in September, October. Bear Stearns, I thought, "Oh, this is big. This is-- I mean, I'm, I'm sorry, Silicon Valley Bank, this is big." And, you know, six month lag, so we could see fireworks this fall, but maybe not. Maybe we make it into next year. Maybe we make it into late next year. I don't think we make it two years.

Rated pace, you know, now, you know, they'll counter them and, and that may drag it out longer, so we, we have to be prepared for that. But, but at the end of the day, what, what I rest on is the mathematics of the situation. And so as a result of that, you know, I, I'm, I'm a very long term investor, my time preference is extremely long. When I am investing, I don't need it, in fact, it's probably for my kids or my grandkids. And so as a result, and my

I'm just very comfortable to sit here and watch the, watch the circus, you know, watch the circus come to town, because the circus is coming. We, we know that, and it could be a hell of a show, right? We know that, and I, and I, I find it kind of, you know, amusing to, you know, to watch what the Fed heads say and do and this, that, and the other. And I, and I, and there's like, there's certain signposts. Like to me, you know, as I said, I, there was an article recently said, "You know, the genius of Jay Powell," I thought, "Oh boy, that, that's a signpost." You know what I mean? "Alright, Jay, we've, we've hit, we've 1980s, the largest, you know, run in the bull market in equities we've had in a long, long, long time. And so, you know, to me, this is a very good negative indicator that the genius of Jay Powell is about to start fading very, very quickly in my opinion.

And you know what, and I'm sure you've seen this as well historically, that, that's part of the cycle. We've seen Alan Greenspan lauded as this amazing figure, we've seen Ben Bernanke given awards and, you know, lauded as a hero. you know, he wrote his, his book called The Courage to Act, that's Ben Bernanke's, you know, right. And everyone,

he got a Nobel Prize, right? For, right? For ruining the financial system, he gets a Nobel Prize,

right? How do you do that? Yeah. Yeah And the, the talking heads, the typical talking heads are just talking in that way where they're very much praising the central bank, praising the government for being such great stewards and managers, whereas obviously those of us who are skeptical are looking at that as, hey, that's a, that's a warning sign, and we are, let's, let's say, playing a waiting game.

Yeah, there's, there's a lot of irony in those kinds of things, and as, as my father always used to say, you know, God has a sense of humor, right? I mean, it Genius he is. Oh, we'll see. Let's see how that looks in about a year or two. I think it's gonna look su-substantially different, yeah?

Well, there you go. Alright, well, I think that's probably a good spot to finish up. I think, you know, we've, we've covered a lot of things, but, fundamentally, I think it's fair to say things are breaking, so

they're breaking. They're taking a little longer than I thought, but they are breaking. And, you know, I think the, the, The good news is we have these great exit paths, and, you know, i-i-the, and I think our job, and I know you do it, and I know Swan does it, and I know, you know, everybody I know does it, and it's what I do on Twitter, our job is just to spread the word as, as much as possible, because the, you, you won't get a do-over on this. I mean, it, you know, if it, if it happens the way I think it happens, you know, Bitcoin will be through, you know

The fact that you could be a whole coiner still, I mean, that, that an average person, you know, obviously thirty thousand is a lot of money, but that, that real people, real normal people could, you know, buy one whole coin, and that's an anor-- that's an amazing gift. because I, you know, I don't think that'll happen. You know, that, that, that's not likely to happen again, you know, after this next run. And, you know, I think, I think on the next run, gold will take off

You know, game on. And, and as, as, as we all know, it, it, you know, it's, you know, it's suddenly and then all at once, right? I mean, on another podcast, I gave an example of how quickly a, a, you know, a stadium fills up with water. I mean, exponential functions are hard for people to understand, but when confidence is fully lost, I mean, these-- there's no limit to how far these things can go in terms of their value as measured in dollars, because there's really

The dollar will be worthless. And, I know that's hard for most people to fathom, but I, I don't think it's entirely outside the realm of possible outcomes. In fact, I think it's one of the more likely outcomes. So, but that's, that's just me, and I've been wrong a lot. So.

Well, no, I think, I think that's right. I think it's more just about having the right time, preference and the time period on that, right? Because I'm sure people are gonna

say, "Oh, Tenure, we are pretty comfortable with the projection. yeah, like I said, I could still be very wrong, we'll see. But I, I think, I, I think people who save in terms, in Bitcoin terms or silver and gold terms are gonna be, they're gonna appreciate the fact that they've done that versus some of the other choices they have for where to put their money.

Fantastic. Well, that's a great spot to finish, Larry, where can people find you online?

Yeah, so, I have a website, ema2 dot com My name at lawrence lepard, and most of it's just anti-central bank, anti-fiat money.

That's what we love to see. All right, well, thank you, Larry, and hope to, see you soon. I hope you enjoyed the show. If you did, please make sure to leave a like and share the show with your family and friends. Get the show notes at stephanlivera dot com. Thank you, and I'll see you in the citadels.