Myths & Realities surrounding The Federal Reserve

Hi everyone, and welcome back to Stephan Livera podcast, brought to you by GetBolt.io. So for American listeners, you can go and buy Bitcoin over at GetBolt.io with a range of services there. Now today we're gonna be talking about the origins of the Federal Reserve, and joining me today is Julian, and rejoining is Peruvian. And bull, so welcome to the show, guys. Thanks for having us on. Thanks for having me, man. Been a big fan for a while. Well, thank you. Yeah. And, so I saw, the video you guys recently did, I thought it was great, and, we need more people to understand what's going on with the Federal Reserve. So, you know, but let's, let's start with, with, I'd like to start with why. So, why, why, why now? Why was this the right time to

Well, I personally, I read the book and if you've read the book from G. Edward Griffin, it's a fantastic read, but it's, it's very dense. So you have the first couple chapters, which actually explain the story of how, you know, all the different bankers came together, under the guise of the night, and they, they formed, they created the Federal Reserve down in Jekyll Island, but then the other eighty percent of the book talks about all the fallout, why the Federal Reserve is pernicious and all these things, and that information is really strong and it We have basically seen those lessons in a lot of Bitcoin text, a lot of the Bitcoin standard kind of has the same lessons in there about central banking. but the problem that I've had with a lot of, you know, Bitcoin media is I just haven't seen it done concisely. I think a lot of people, you know, they just don't have, you know, the resources or the time to just sit down and, and, and break down the perniciousness of something as, as deep as the Federal Reserve. And so my approach in the filmmaking that I So we were all, around Nashville at the time. We were all planning to go down to Nashville for the Bitcoin twenty twenty four conference, and I thought, "Well, it's a two hour little detour to go over to Georgia, and, we could check out this place and, we could tell the story while we're there. The island sort of has these interesting qualities to it that sort of, drive home the, the point of all the, the shady business that went on with the creation of the Fed." So, yeah, lo and behold, we And, yeah, it's, it's touched a lot of people now. I think it has like one point six million on Twitter, which I wasn't expecting or X. but it's good. A lot of people are waking up to this stuff for the first time, which is really nice.

So I'm curious then, do you think it's- The last, let's say, three or four years, whether it's all the COVID stuff or the, you know, the election stuff, like what, what do you guys think it is that is driving this, let's say, reawakening or I guess more people who are now starting to maybe be open-minded to these ideas?

Well, I think obviously the wealth gap has grown, but I'll just take it down to a basic level. If I'm, if I'm working nine to five, all of a sudden I see what happened during COVID. My wages barely shifted, everything got way more expensive for me. I go on my Instagram app, I see all these millionaires and billionaires, and they're just living life. You have, you know, I don't wanna call out specific people too harshly, but, you know, Andrew Tate with his 20th Bugatti, you have all these other business owners, the Bezos has the world's largest yacht, and you're thinking, "Hold on a second, we went through all this together. Why did these guys come out the other end way, way richer than me? Like, why did their percentage of, of net worth and purchasing power grow so much more than mine?" And, You have people from all sides basically, you know, scapegoating, oh, it was the corporation's fault or, you know, the government gave too many bailouts here. And, and there's a little bit of like inklings of truth to all that stuff, but I think most people just haven't taken the first principles journey back to, where does money actually come from? You know, where does the US dollar, where did that whole system actually begin? And when you take it back, you really realize that this whole thing is, is, it was doomed to fail from the start. And the So much of our, decision making to, we defer responsibility to them. In Canada, you know, our prime minister said, you know, I don't concern myself with monetary policy, you know, like I'll, I'll leave it to the experts or whatever. And I think that's egregious. I think that's something that, it's a conversation that all of us need to have a lot more frequently, to simply defer topics to, you know, people who don't actually have a real stake in the economy is probably the worst thing that you could possibly do. And these, these come from investment banking, but they never actually had to suffer the consequences of the, Cantillon effect, and, I mean, the list goes on, but, yeah, I think people, people are waking up to the fact that, certain classes of people are excelling and actually thriving every time that inflation happens, while a massive amount of people actually suffer. So,

yeah, Peruvian Bull, what's your take? Or you have anything to add

there? No, yeah, totally. I mean, I think that's completely correct, especially that last point, right, about the, the over-academicization of, of monetary policy making. You know, we haven't had a, a Fed governor since Volcker who even worked in the private sector for even a brief stint. All the rest have been academics and purely Keynesian theoreticians. And so when you have these people that just work on these faulty models of what they believe is true, they're- It's easy for them to justify all of their policies. And so in, you know, during COVID, we saw this mass awakening, I think, because of the, the financial pain that was inflicted on people writ large. There was, you know, inflation. That first, at first, we were gaslit about the inflation. They said it's not happening. Then they said it was, you know, supply chain issues, even though this was twenty twenty-one and the supply chains were starting to, to reset. And, and then we saw the tr-- it's only transitory, right? It's only gonna happen a few months, and every month it kept getting worse, and then they said prices are gonna come down after this, we're gonna see deflation, and again, that didn't occur. And so at every stage, the people were gaslit and lied to, and then those things were proven to be lies, and that combined with the, you know, health scare and the vaccine scare of COVID, I think it really awakened people, to the fact that most of what we're taught in, you know, most what we're told from the public sector is a complete farce And so that's, I think, started this what I call, what I've called multiple times, like a mass awakening. So like almost every single sector of public life is now being reexamined, whether it's health policies from RFK or it's monetary policies from the Fed, you know, or politics, for example. And so This, this causes like a, a reawakening of the people, and this causes much more engagement, you know, organic engagement of topics like this, and I think that's why, you know, the, the documentary got one point-- and I think it's actually one point eight million views on Twitter, last I checked. It's, it, it went make a viral, and Julian gained like, you know, seventeen, his channel gained like seventeen thousand, subscribers in like short order. So, it, there's the, there's an appetite for this kind of content, ' My wages not go up with inflation, and is it ever gonna change? Is this gonna get worse? You know, those are real questions that, that everyday people are now asking.

So one question I think that-- Let me put this question from the quote-unquote Bitcoin echo chamber, because a common thing people will say is, you know, and there's a website about this, is "WTF happened in 1971?" But I think there's actually a case to say the more important thing is the creation of the Federal Reserve. So it should be WTF happened in, you know, 1913? What do you guys think?

Well, I think the 1971, it works so well because I don't think we had great statistics before 1913, that were, you know, very, you know, particular to months or are very certain data sets, like one item of food. I think the best chart, and the one that I love, is the price of a can of Campbell's tomato soup. That's the one where we have the record going all the way back to the early 18, or I think there's a chart where it goes back to 1790 And about nineteen seventy one, ranged between, I think, three to twenty cents. It was just bobbing along. And then in nineteen seventy one, you get to see kind of the exponential inflation. But I think you're totally right. I think nineteen thirteen is a pretty good checkpoint. I also think, around the time of the Great Depression, you, you saw a lot of things change because that was the first time that the Federal Reserve really had their metal tested, essentially, where they were, said, "Okay, like, you guys are gonna be in charge of, of figuring this out." And, I guess maybe proving you, you know, the history in this a little bit better, but they were very late to react with, let's just say, their monetary policy in that situation. They were, you know, they were watching things, their data was lagging, sounds very similar to what happened, you know, in the last few years, and they, they took a while to lower interest rates into that, and meanwhile, you know, the entire country suffered. And when history is spoken about at that time, they say, "Oh, you know, thank God that we had Out of the Great Depression, thank God we had the, you know, the Federal Reserve, you know, on their best watch, or we might have suffered another ten, twenty years of this, and it's just, it's just, it's falsifying history, it's falsifying reality. but I think, you know, to, to sum it up, I think the reason people don't go far back enough is, it's just the lack of data, you know, that, that's as clear as 1971's points are.

Yeah, I think that's part of, I mean, obviously the Fed is in large part responsible for the Great Depression. I mean, it's, it's almost, I mean, even Bernanke admitted that in a speech in 2013. He had a famous quote, although he would disagree

on the reason why. He would say that because they didn't print enough, whereas we would say, "No, they were printing too much, you know, so it's the opposite reason."

Exactly, but he, he literally said, he said, "We know the Great Depression happened, we know it's our fault, and we're sorry, it won't happen again." His like literal words, verbatim. you know, they had lowered the call window rate in the nineteen twenties to like two percent in like nineteen twenty-two, and they waited till nineteen twenty-eight to start hiking, and by nineteen twenty-nine came around, the, the rate was still low relative to historical interest rates, and so when they-- when the bubble finally pops, there's just a massive credit collapse, and then doesn't really do anything for the first two years, and of course, we saw the failure of, you know, what, thirty thousand, I think it was, bank and non-bank financial institutions, and that's devastating when the entire fiat system by nature is, you know, fractional, fractional reserve. It's, it's fragile, right? Especially the reserve city banks. Those ones were like almost like mini central banks that acted as money center banks, holding reserves of other smaller rural banks, and if those banks failed, all the what are called correspondent banks, all those smaller banks that were Relying on putting their reserves in that bank now had, had lost a huge chunk of their asset base. And so, yeah, it, it-- I mean, this, this system, there's constant, constant gaslighting that this system keeps failing because it's capitalism failing or that it's the free market failing. No, it's really the centralized money system failing because that's kind of the way it's designed to, to be. It's designed to be fragile, and designed to be, yeah, to be, to be prone to bank runs and, and complete failures.

I, Build off that as well when it, when it comes to statistics and like finding a good starting point and why, you know, nineteen seventy-one connects with so many people. CPI, I believe, was invented, like, like as a concept, invented around the time that the Federal Reserve came into power. They, they wanted to have a metric, right, so that they could accurately, you know, move their, their goalposts for their mandate. When CPI first started, it was measuring forty items. It was this, it was like they would set a standardized basket, and over the years, the government has Metrics completely useless. As soon as an item gets too expensive, they say, "Oh, well, there's just less demand for that item, and we're gonna put, you know, people don't eat steak anymore, so we're not gonna weigh it as hard in the CPI." So it's a totally useless metric because it's not actually-- it's just, it's tracking basically, you know, just how people spend. It's always gonna be artificially low because people are constantly escaping inflation by buying shittier products, and, and Safdie goes over this a lot in, in his,

The free market, at least from my point of view, it doesn't, it doesn't have a massive need for statisticians as much as the government needs it. The government uses statistics to basically sell narratives to make policy decisions. The free market can use that data in different ways, but I don't think it's as beneficial to them as it is to the politicians who can use those statistics and use studies that they pay, you know, a couple million bucks for to usher in billions of dollars of policy decisions. And that's why you gotta be so wary of any- Any of these things coming out of the Federal Reserve, because it's like they're designed to get one thing done, and that is to

enable new spending. On the point of statistics, I'll just quickly mention here, this is kind of a famous example within libertarian circles, but it might not be that well known, there was a governor of Hong Kong, I believe his last name was- Kapathwait, and so there was an interesting example where he was kind of extremely against taking these statistics because he sort of had an inkling that these statistics then they just become what's managed, and that was arguably part of what kept Hong Kong at that time, I think we're talking fifty, sixty years ago, maybe even more, relatively free from an economic perspective. And so that's an example where when there were individuals who chose not to take a lot of government statistics Guess what? There was all this, there was all this economic growth anyway.

Totally. And what Julian is saying is completely right. I'm actually, I'm doing some research 'cause I'm trying to build out a, a paid course right now, and, and one of the sections of my course is on CPI, so I had to dive in a little deeper into the CPI. And there have been thirty hedonic, like, large scale hedonic adjustments to the basket in the last, or twenty, twenty adjustments in the last thirty years, so about every eighteen months they make a change

Actual rental prices with something called owner's equivalent rent. And so instead of going out and saying, "Okay, let's go to Baltimore and find the rental prices for the median, you know, five hundred square foot and the median thousand square foot, the house or, or apartment," they, they go and ask owners, "What do you think you would charge if you were to rent your house?" And they're-- these are people who aren't currently renting their house, or nor are they paying for rent, so they're not actually, like aware of the market price. And then those give their speculative guess on what they would charge, and then they use that figure. And it, it, it's that kind of ridiculous, you know, statistical games that they play that it con-constantly allows them to change the CPI basket, adjust things, use all these logical justifications, and then bring the CPI down over time, even as real inflation rises.

But I guess let me, let me bring it back to this kind of question of nineteen thirteen versus nineteen seventy-one. I guess just assessing from a fundamental and economic perspective Which year's event to you is more meaningful from a degradation in the quality of our money? Nineteen thirteen,

for sure, for sure, the creation of the Federal Reserve. Like it's not even close, right? No, no, it's not even close. You know, and the Fed was birthed right out of this "Quote unquote necessity to solve future financial panics because of the, you know, the Panic of 1907 where we saw the Knickerbocker Trust implode. There were two, speculators, I think it was Hines and there was one other one, there were two like German speculators who were, who were trying to take margin loans on this copper company, and the copper company failed, their stock went down, they got called on the margin loans, that caused a run on the Knickerbocker Trust, and then once that trust failed, multiple other trusts began to fail, and the trust, again, it was a form of a shadow bank where they were lending money, they had five percent, reserves to liabilities, and so very quickly they were out of, out of reserves, and Other contingent trusts and banks start to fail, and then they just have a widespread run throughout the banking system, and JP Morgan comes in, and he basically organizes a consortium of the banks to bail out not only these trusts, but also mainly the NYSE. They needed to add liquidity to the market makers on the NYSE to actually get trades done, because the market makers were running out of liquidity. And again, the idea was put forth by Paul Warburg and some of these other, I guess you could say, you know, banking industrialists of the time who were Or part, part of the Federal Reserve Act, which was first the National Reserve Association, they all started putting out research saying, "Hey, look, like, we won't have JP Morgan around forever. He's our, our financial savior, he's our Jesus, but once he dies, we need something here permanently to- Essentially give us, you know, infinite bailouts. We need a lender of last resort, and so that's-- that was the primary justification for the start of the Fed. And so after 1907, we saw the creation of the National Monetary Commission, which Warburg was a part of, as well as, I think, Aldrich, Nelson Aldrich was one of the senators involved, was also sitting on that committee. And then as that developed, they put out more and more research, putting out, you know, articles to the newspapers, opinion All this was just this massive propaganda campaign to tell the people, "Hey, we need a central bank, like this isn't, this isn't optional." And this was happening at a time when we were seeing massive antitrust sentiment throughout the country, right? This is like the 1910s, it's the Teddy Roosevelt trust busting, anti-monopoly, Like heyday, and so the people were very resistant to it, and that's why they had to lobby Congress again and again. And they, the initial act, the National Reserve Association Act, failed in, in nineteen twelve. And, you know, we've, we talked about this on the podcast with Walker. There's some spicy, conspiracy theory that what happened, obviously later in nineteen twelve with the Titanic was, had something to do with the Federal Reserve Act, because, you know, there's some prominent bankers who died on the Titanic, but that's neither here nor there. The They failed in the first attempt, and then they had to, to come back and try again, and they were finally able to pass the, the Federal Reserve Act after it was modified for, to make it more palatable to the public by calling it a Federal Reserve, and, that was finally passed in December 1913, and at the time, like, I think a, a quarter of the House and a third of the Senate was absent for, for, vacation, and so it was kind of like passed in under the cloak of night just to get it in there

The other interesting question that a lot of people might have is, look, it's supposed to be a, supposedly a private entity. So how is it that a private bank is being created by the state with legislation? Yeah, well,

that's part of the, that's part of the game is they wanted to-- because again, the fear was, for one, they didn't want to give like express commission to a public entity to print money. And so the, the idea was, is the separation of, you know, money and state. It's the separate-- this, this, at least on the On the surface, separation of the interests, and so by making the Federal Reserve a private entity that has its board appointed by, you know, the Senate and the chairman appointed by the president, like they could at least in theory separate these powers, and then they had this, you know, reserve association system where they have twelve district banks, and each district bank has their governors appointed by local banks in the area, and so it, it seems on its surface very democratic, but when you actually dig into it It's anything but. I mean, for one, all of the, all the governor-- or I think it's two-thirds of the governors on any, Federal Reserve board have to be appointed by, banks in the area, and they also have to have experience working for one of the, one of the, the banks that's part of the Federal Reserve Bank network in that area. And, for two, all those, all those banks that were in those districts, like let's say, you know, St. Louis or New York Fed, they all are forced to buy The Federal Reserve Bank. So it's like not an optional thing of, "Oh, we have an alternative system over here that's democratic, you can join our-- if you need a lender of last resort, come buy some equity and you can put your, park your reserves here and then we can give you a low interest rate loan if you need it." It was, no, at, at basically at gunpoint, you are all forced to buy into this system and become a part of the National Federal Reserve Association. And so, yeah, that completely changed, how the entire thing, how the entire Also gave this veneer of, of, democracy and, and "quote unquote" public, you know, private, separation.

And, as you mentioned, that there are some big, let's say big bankers, big industrialists, just kind of wealthy people and influential people who were really pushing to make it happen, and I think there is this Perception, it's an incorrect perception, but there's this perception that, oh, anyone who's a large, a big capitalist is themselves a fan of the free market. But it's actually, in many cases, the other way around. It's those people are using their influence Inside the state to give themselves special privileges, and I think that is a really funny kind of irony when people talk about things, they sort of assume, "Oh, well, you're a big, you know, big capitalist, you must be in fa-- you must be, you must be a libertarian free market guy, right?" Well,

this is the big fallacy among so many people, and, and, and, you know, if I have like one goal over the next year, it's, it's to try and explain to people that just because there's no cap to someone's wealth doesn't

It is just the freedom to earn as much as possible. A free market is freedom of co-- freedom from coercion and freedom from manipulation. If you look everywhere, the countries with the most stringent financial regulations almost always have the biggest and most undisturbed monopolies. Canada is a perfect example of this. We have, you know, basically two telecom companies that run everything. We have four banks that have protections from the state. we have our all- Our hydro services are basically under one company, and we're told, "Oh, we have all these things to, you know, to prevent monopolies from forming, but we have statistically way more monopolies than the United States." And, and, and that's, you know, that's, that's the gauge of a free market. A free market doesn't allow massive players to stay on top forever. The only way that you gain that power is you have to be able to buy politicians and affect monetary policy or, you know, jurisdictional policy. Wherever you are, and basically have a, you know, a mouth open to guzzle what comes out of the money spigot. And like, it's just, it's just hard to unwind in, in sixty seconds in people's brains, and, you know, I, I try that for a living, but, Yeah, I, I, I think that, that's the perniciousness of, of the idea of monopolies, is that this is something that the free market creates, when it's, it's very much the opposite. And you can see it in nature. I mean, let's just say you have an alpha in a, in a group of animals, right? That alpha eventually goes a little too far, right? And he gets taken down. You know, other people's, other people in a pack will take them down. But if you have something that is a little bit more akin to

And, yeah, I don't know where I'm going with all this, but it's, it's just-- it's not a free market if, if a company can reign on top for, you know, dynasties, and that's just what happens under, central banking all the time. It's not a free market if

it's mandated by law that

they have

to buy into this system. And, and,

and that also, like the public-private partnership thing, I mean, if you think about it, that's sort of what the Federal Reserve is in some way, like they, they tried to shoehorn in the, the private part of it. but, I mean, those are the most pernicious companies that never adapt. Like, you look at the Boeings of the world, where their number one customer is the government, sixty percent of their revenue comes from the travel or cheap consumer travel or, or building jets can come into the market. The economies of scale don't allow them, the regulations don't allow them. Meanwhile, you got a behemoth like Boeing, which just has a product that just deteriorates over time, but it doesn't matter because the other half of the revenue of that company comes from making missiles that just explode. It just has to get from point A to point B and pop, right? Or it just has to be a jet that, you know, doesn't fall out of the sky. They can leave the other segment of their business

Indicator of a free market. One of the things, and, and this is an interesting conversation 'cause I know, you know, there's some conversations about whether or not Javier Milei is, is really like a free market guy, but one of the first things that he did in Argentina was to free up the airlines to let any other corporation come into it. And, one of the things that revealed is that it's basically impossible to start a new airline in most countries that we say have free markets, like Canada or the United States or Mexico. It's basically impossible. The two or three Three airlines that operate domestically have a chokehold on the system and it is almost entirely impossible to have a startup come in and be a disruptor.

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Exactly. It's like if we don't bail out the airlines, everyone's gonna be stay To fear, that's the easiest one. The manufacturing sector, look at all the jobs lost. People aren't gonna be able to leave their houses and go to other countries, like it's, it's crazy. They act

as if, you know, a single company failing would be the end of the world, when in reality, that would be a, a positive reset to the system, right? Like if we saw Alaska Airlines go bankrupt or American Airlines, which I think American was under the most stress during COVID, if they went under, what's gonna happen? Okay, so they sell all their planes at Get taken to the woodshed, but that's a lesson for them to not be, you know, over loaning to a company that's barely profitable. And someone's gonna come in, they're gonna form a consortium, they're gonna buy up all the planes, they're gonna, you know, hire all the old people who are working in the old, American Airlines, and then they're gonna restart a new company, you know, maybe call it, you know, North American or something, I don't know. And then the, the process will restart and we'll have a, a full It's a positive thing, like people don't understand that a recession is actually a good thing. We want it to happen, we want the, the bad debt to be destroyed, and we want the bad CEOs to be fired and for their equity to go to zero so that we'll learn to not do the bad practices, practices that they were doing before.

Oh, and I think speaking of bondholders getting rinsed, I think there needs to be more of a conversation around government Debt holders, you know, and saying, "Well, you should learn to not lend to the state, right?" Because there's a lot of people who just-- And some, there's, there's a few aspects to this, right? There's the kind of the propaganda aspect of it. There's the aspect of many people are forced because of retirement savings accounts, pension, whatever, they're forced to save into government bonds, but that, that's probably a conversation that a lot of people are, let's say, not-- they're not ready for that one yet.

Yeah. Do you think, do you think Elon Musk is holding forty percent of his portfolio in Treasuries? Do you think-- I mean, even Warren Buffett, I don't think it's like, it's mostly equities with that guy, right? Like, none of the richest people and the most successful people in investing have a forty percent bond allocation, right? And then none of the people on the other sigma that are the poorest are, are, are doing the same thing. So why do we think it's okay for everyone in the middle to be given this like crap, you know, thing of

Somehow been, I guess, decentralized, pushed down the pipeline by financial advisors that you gotta own these things, it protects you somehow, and it doesn't. It's insane. The worst of it is the pension funds, honestly, because that's, that's the dream that so many people in unions and these government jobs are sold, is that, you know, the pension is that holy grail, you get to retire with dignity at sixty, seventy, and then you get this solid stream of income, and people line up and they make career choices around these- Jobs because of the pensions, and in the meantime, their-- these pensions are, are taking the worst possible long-term financial adv-- advice they ever could by buying bonds. it, it, it pains me to see People line up for these jobs and take these careers with pension being one of the top reasons that they take it, when the math is so simple that if you don't invest in government bonds and you just make even like a tiny, tiny, tiny allocation of Bitcoin instead, you would vastly outperform a life of misery of holding a four percent treasury that gets devalued when the money supply goes up eight to ten percent a year.

Peruvian, I know you're, you're jump, you're aching to jump in here.

Yeah, no, I was about to say, like, that's completely accurate. I mean, bonds, in twenty twenty, I remember talking to my parents and they were asking me for some investment advice, and I was like, you know, hey, I, at, at the very least, you need to get out, out of all these bond portfolios. And their advisors, of course, which were Vanguard and Fidelity guys, were all pushing back on me, and they were like saying,

Thirty years. And luckily, me being the autistic, you know, finance reader, I was like, "You're right, it has worked since nineteen eighty, since, you know, we started lowering rates after the Volcker shock." But actually, if you backtest the inverse correlation between bonds and stocks, it doesn't hold up over a seventy-year timeframe. So you're wrong. And it also, it definitely doesn't hold up during inflationary, macro-inflationary cycles. And then I said, "We're about to enter one because the Fed's starting to ease, we're gonna have deficit spending

2021, next year, we're gonna see a massive spike in inflation. And these financial advisors thought I was crazy. Luckily, I finally got my parents on my side, and I-- 'cause I showed them these papers. One of them was from Artemis Research, one of the best, Val Quant paper like writers out there. But I showed them these papers, and they were like, "Okay, wow, this..." That's a good argument, and so I, I got them out of government bonds, got them out of TLT, and lo and behold, three years later, TLT is down fifty percent, the long bond ETF. And so thank God I got them out of that and into safer stocks, and I even got my dad buying some Bitcoin, and he's been asking me, even this week, he was asking me to buy some more. He's like, "I saw it hit a hundred thousand, I need to, to buy some more." So I'm, I'm glad I've been able to

And it's become a, almost like a, a, a talking point, right? Like a heuristic of, "Oh, if you're in sixty percent stocks and forty percent bonds, your portfolio is safe and you have the golden ratio, right? It's like this amazing perfect mix of, of, of assets." When- The truth is that, that, that's not the case. And so, yeah, it, it just shows that, that this industry has been, I think, completely parasitized and kind of like taken control over by, by state run functions, because it, it behooves the state to have people buying their bonds, obviously.

And it, it, it's just such a weird kind of coming back to what we were saying about what is really a free market and what isn't, right? Because on the outside, like just at the surface level, oh, well, I mean, this financial advisor and this financial planner, they're paid by this firm, and, you know, it's, they're paid a wage and a salary, and they compete in a supposed market, it looks like a free market, people choose which one to go to and they recommend them sixty forty or whatever, and, why isn't Actually, no, wait, there's all this regulation, there's all this propaganda, it's all underwritten by the Federal Reserve, by this central bank, this lender of last resort. Like, there's just so many of these elements where, like, once you actually start peeling back a few layers, you start to realize, wait, this isn't even close to a free market.

Yeah. I wrote a piece back in-- and, sorry, I'll, I'll, I'll, I'll go quick and then Julian, you can hop in. I wrote a piece in like, I think it was April of twenty twenty-four, called "The Quiet Pivot," and then I wrote a subsequent follow-up called "Stealth QE," where I was talking about the ways that the Fed has essentially engineered QE without actually going out and de facto doing QE. And, you know, first it started off with post two thousand and eight, we had, changes to the bank regu what were called HQLA assets, and HQLA was designated as basically government bonds and agency MBS and a couple other like smaller, securities designations. And so all the banks in the US had to start buying Treasuries in mass. And then in twenty fourteen, the SEC made, regulatory changes to money market funds because, again, the concern was back in two thousand eight, we saw the Reserve Primary Fund blow up, and several other money market funds had severe strain and, and, you know, almost had to be bailed out. rolled out, and so they were like, "Well, we can't allow these money market funds to be essentially loaning into the corporate debt markets. So now we're gonna mandate that a certain percentage of MMFs become government MMFs, and those, those money market funds have to have ninety-nine point five percent of their securities in, government bonds, and mostly, obviously, on the short end, in like thirty-year or thirty-day or like ninety-day, bills. And so what that meant is that now we had another huge buyer, several trillion, started off with like two trillion. It's grown up to now it's, I think it's five or five and a half trillion of, of, money parked there. And so through, you know, through the last decade, they've done all these things behind the scenes, kind of sneaking in ways to make the, stuff the banks with more treasuries, stuff, stuff the money market funds, stuff the pension funds with more treasuries without ever actually doing, quote unquote, QE. And so that's allowed them to kind of perpetuate the system, and everyone still thinks everything's fine when it's like, It's like that's insane. These banks, you know, what I said in the piece is that they've tied this financial noose around the banks and the Treasury. So now they're all like in the same boat. So if the Treasury fails, all the banks fail because now they're just loaded to the gills with this stuff.

Yeah, and I, and I think, you know, this might be an interesting pivot. I, I, I don't know how the size of this market will, will, will scale up, but there seems to be a concerted effort now to, to bring stablecoins in under that window, in some sort, because they've been really, you know, dedicated buyers of those short-term treasuries. And, you know, Tether now, what is it, Lutnick, I think, he was like the banker, Cantor Fitzgerald for Tether, now he's the I'm, I'm hearing personally that, like, you know, if America gets behind this, and, and Sailor talks about this too, that this could be, you know, there is demand realistically out there if you give people access of one to three trillion dollars of USD stablecoins to be used in, you know, a hundred and ninety-seven other countries, and so that's just more demand for treasuries that can get passed on to, you know- People of the smallest, you know, smallest minorities out there.

Yeah, I think that that's-- Sorry, I, I, I think that's part of the psyop of crypto, right? Like they want people wholesale to be buying these stable coins, 'cause the entry point is, okay, use your fiat, buy the stable coins, then go gamble on, you know, diaper coin or whatever, and then you can, quote-unquote, try to make money. But in reality, they've been storing all your money in this stable coin, which is backed by all these treasury into this cycle of exponential debt issuance, they're like, "Hey, we need buyers. Let's just kind of psy up the general public with crypto to become our next, backholders."

Well, it's a way to cannibalize, you know, like underneath the anything below a top ten fiat currency as well, right? Like if you have a super transmissible US dollar and they make it really easy to have in, in, in small countries, and they design it in such a way that, you know, service providers in Iran can't stop them. This thing, then that can cannibalize the central banks of so many of these fragile countries that haven't dollarized, and there's lots of them out there. Like if you look in, in South America, you know, you have the Guyanese dollar. I think a lot of these fiat currencies, like the Peruvian sol, I think is also the reserves are ninety percent US dollar, but there's a couple out there, you know, that represent economies that have, you know, fifty to a hundred billion dollars of GDP that still have a, they still have their own currency that isn really to US Treasuries or the US dollar. And so you make a stablecoin, you spread it like a little virus in those countries, and those central banks are gonna go overnight. And I actually think that in the short term, I think stablecoins are gonna have a much bigger effect on dismantling central banks than Bitcoin will. Bitcoin will take care of the top ten, top twenty, but I think stablecoins are gonna just eat the rest in, in

very

short order.

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As well. do you wanna comment a little bit on that idea that, you know, it's almost like the Federal Reserve is becoming the central bank for the world?

Yeah, sure. And actually, so this-- I wanna take this back to the documentary 'cause some really interesting stuff happened when we were filming, right? because we actually went to Jekyll Island and, you know, walked through the halls of where they actually held the meetings in November 1910. We, we went to the Rockefeller House, we saw Indian Mound, we saw like all the old buildings that Kind of situated around there. And it was really interesting because in the, in the library of the building where, which was the JPMorgan building where they had had the, the meeting, there's this, like bookshelf of, you know, old books, and one of the books there was, you know, Dr. Dr. Jekyll and Mr. Hyde, and that's an old kind of, you know, 1800s, Lovecraftian story about this, this man who's a doctor who becomes a monster. He takes this potion and becomes a Monster, and then it starts to become uncontrollable where at first he's only a monster at night, and then he starts to become a monster during the day, and starts killing people, and then he can't even control when he turns into this monster. And I was telling Julian and Ian at the time, I was like, "Man, dude, this is such a good ref-- like, and the fact that the island is named Jekyll, this is such a good reference for the Federal Reserve, right? This-- the Fed is like that doctor who comes in, who seems like a good influence and appears

Morphs more and more into this eight tentacled monster that starts to spread its tendrils first all through the US and then throughout the rest of the world. And so in the documentary, we touch on this like, you know, the Fed started off with a very, very simple charter And in the 1930s, their charter changes, they get, you know, they centralized control to the Washington, you know, the Board of Governors, which is located in Washington, DC, and then they centralized all the, power of setting interest rates to one bank, which before 1933, that, that was all decentralized, every single reserve bank could put their own interest rate. and then the 1970s, they adopt the dual mandate, that gives them more justification to raise and lower interest rates as they need because of either, quote, And the euro dollar market, which I've touched on in some of my research pieces, has also led to them, you know, essentially expanding their control globally because the euro dollar market essentially includes dollars that are floating around offshore in offshore banks and, and shadow banks and are being lent into existence to facilitate trade and commerce. And so what that means is that all these banks are now dependent on the US dollar system, and a lot of them will recycle their holdings into US treasuries and US bonds and US equities. And when the Eurodollar system starts to fail, when there's a run on these Eurodollar banks, they need to go and get liquidity from the actual US banking system. So what we saw in two thousand and eight was not only a, a run on the banks in the US, it was a run on the global banks, you know, the Eurodollar banks. There was a run on HSBC and Barclays. And I, I point out in that, in one of that research pieces that, you know, if you tally up the numbers, the Fed spent around three point three trillion Which is actually bigger than what they spent on the first wave of QE for domestic banks. So it shows you that, like, this, this monster, right? This, this, you know, Dr. Jekyll, Mr. Hyde that the, the Fed was, that was on Jekyll Island, so appropriately named, has been morphed and morphed and it's grown more and more powerful and its influence has just kept spreading and spreading. And the liabilities in the system have kept spreading and spreading to the point where now, you know, the eurodollar market dwarfs the domestic dollar market, and if Financial crisis that's in the ilk of the dollar milkshake, like Brent Johnson points out, where there's a dollar crisis, there's a shortage of dollars. The Fed has to be the, the lender of not, of last resort, not only for the US, but for the world, because they can't let all the banks in the UK fail or all the banks in Europe fail, because all those banks own US treasuries and all those banks own US equities and all those banks have contingent liabilities with American banks, and so they've kind of like universalized Their, their view, and that's why if you look, for example, if you break down the Fed's balance sheet and you actually look at their programs, you look at the central bank swaps, ever since 2008, every single crisis, they're funneling billions or hundreds of billions into, into central bank swaps. They're loaning money to Japan, they're, loaning money to the ECB, to the BOE, to the Bank of Canada. It's like everyone They're, they're having to bail out everyone, and so as the system continues, I mean, I think unfortunately they're just gonna grow more and more powerful until we finally are able to replace them.

So do you think, it's, it's even possible to get enough people to, you know, to have a populist movement to end the Fed? You know, we have seen, I guess it's probably fair to say the Overton window has shifted a lot in the last few years, and now there are people explicitly saying just as Ron Paul did, "End the Fed." but Do you think it's more likely that the Fed sort of dies under its own steam, or do you think it's actually gonna get, actually, you know, ended by the people?

You know, this whole issue reminds me a lot of voter reform or, or changing the way that elections are held. It's something that people always want and they wanna change it, and then they'll get behind a candidate, and the candidate will say, "Yeah, we probably should change this." As soon as they exact power, they're like, "No, we can't change this." Like, I won under this Why would I change the rules for the system? What's gonna happen to me and my family and all the people around me if I change this system? and it's the same thing with central banking. I mean, there's been some really good criticism of Javier Milei, you know, his whole thing was ending the central bank. What has Argentina done? They've printed more pesos under him, they've expanded the money supply at a faster clip, and that doesn't really make much sense if you think about their deficits and are actually way down. They've, they've cut inflation, and they've Actually, like their, their deficits, I think they had a surplus for the first time. So why are they printing so much money, right? Wasn't that the whole point of, of throwing that guy in there? And it's the same, you look at the, on the voting end, it's the same thing with Justin Trudeau in Canada. We were supposed to change our voting system to, I think it's first past the post, we're gonna change it to ranked choice voting. And he said, "Yes, I'm gonna do this." He gets in office, he's like, " Let's just see where we're, we're at right now with, with Trump. I think Trump likes the idea of, of himself being in charge of interest rates. you know, I mean, he wants them low, he said that. He wants them, he wants them low, he wants them as low as possible, but that requires, you know, a Federal Reserve to artificially pin them lower. The free market wouldn't say the cost of capital is zero percent, right? Or, or one or two even. and so I don't think we're, I don't think we It is, it is now, you're right, the Overton window has shifted, people are aware of these entities, and I think the next step is just bringing more sunlight into them. that's something that only we can do. It's nice to have some people in our corner like, you know, Thomas Massie and Ron Paul and all that stuff, but there's only so much that those guys can do. And ultimately, if you wanna repeal the Federal Reserve Act, I think it's not even like a simple majority, I think it's like a vast majority to get rid of it in

Pretty much have to have bipartisan consensus to get rid of this entity. And, if those people can't even wrap their head around, digital gold or Bitcoin, how are they gonna wrap their head around ending the Fed? So again, it's a long process to get rid of that entity, and, you know, they can print money to make sure it doesn't happen as well. They can, they can pay whoever they need to pay and- And there'll be interests

who are very much against it, so they will work against that.

I think the only way to do it is you gotta start with just bringing it into pop culture, you know? I, I honestly, I honestly think sometimes Bitcoiners are, are very autistic and, and, and funny and weird, but actually memeing Jerome Powell into things probably gets us closer to ending the Fed than, you know, tabling a bill in some ways.

Yeah, I would agree with that. I think, you know, something we talked about, you know, when we were making the documentary was the prior times that the, a central bank has been proposed in the US and the prior times that it's been shot down, right? Post, post the Revolutionary War, we had the first national bank of the US, which was restricted by charter, to not buy national ba-- to not buy government bonds, and it was supposed to be just like a central bank for other local banks, but it was pushed in, right, by the, Centralized control. And then when we, you know, when, Jefferson came around, there was a whole fight between him and Hamilton about the second nat-- renewing the bank charter. They were initially able to, to slap it down, but then later on, they got the second, the second national bank, started and they got it, they got it a charter, and it lasted for twenty years until eighteen thirty-six, and President Andrew Jackson was able to annul the bank's charter and allow it to fail. And so there was broad, you know, broad public support for ending the, the existence of that central bank both times, and e-both times it was even stuck in, it was very limited in scope and was not able to do the pow- it didn't have the powers or the abilities that the Fed does have today. And so that was all the That was all a result of the social pressures to resist central banking, and I think the problem is today we've been psyops so hard, especially in the financial sector, like if you go to, you go to a normal university in the West From day one, it's Canadian propaganda pounded into your head, basically until the, the day you graduate, and most of these people aren't even exposed to alternative thinkers, to Austrians, or even to like Milton Friedman. When I was in college, I remember reading- I was reading Hayek and I was reading some Mises and I just was bringing it with, with my professor and he's like, "Well, we don't need to worry about that. He's like, all of that is, is, is before Keynes. So he's like, "That's, that's unnecessary." I was like, "That's ridiculous. I mean, are, are you kidding me? That's like telling me that, you know, oh, well, reading Darwin is, is unnecessary because, you know, Mandelbrot or some other, some other,

Came, came before. It's like, okay, well, so I guess Darwin is unnecessary now. It's like, what the-- That makes no sense to me. And that was his logic. And so those people have this kind of propagandized view of, of economics, and they just have this one, one size fits all approach, and they can't even acknowledge other, other, schools of thought. And so that's been pounded into our financial institutions so hard that I think it's gonna take a long time to, you know, de-propagandize those, those institutions.

I, I think one of the things to look at too is like we've, I mean, if you really look at through history, like the people collectively have never been successful at getting rid of a central bank, right? I mean, you can look at the entire scope of history as, you know, people fighting the central banks, Napole, the Napoleonic Wars, you know, he was trying to get the central bank, under the grip, and, and Jackson, you know, did his bit, but we've never been able to do it successfully, and I think it basically just No alternative, and again, that's the, that's the beauty of Bitcoin. And if you really think about, if you really think about it in that lens, you realize how early we are to Bitcoin, because even right now, like, we have this great monetary tool of Bitcoin. We could technically, you know, build a little island in the middle of the ocean and have a fully working economy with its own money that can't be dominated by a central bank. Just need a little Starlink or something, we're, we're good to go. even right now, we don't have the Economy, I think lending will still have to happen, right? There's this belief sometimes that, oh, under a Bitcoin standard, like we won't have to have loans. It's just like, well, farmers have dry periods where they have to plant the seeds, and that's, you know, where loans originated from is agriculture. Farmers have these dry periods where the harvest doesn't come till, you know, nine months later, and they need a ton of capital to, to pay for it. And so if you're an upstart farmer, you gotta, you're gonna have to borrow money from

tools through escrow and, and all these things and working with collateralization. We're just starting to get things like Fedamint so that we can build other layers of currency on top of Bitcoin and just use it as a collateral device. And so, you know, you think sixteen years of Bitcoin, it's nothing, like we have so many more tools to develop, and once those are fully fleshed out, people will take those bold steps. They're doing it with the circular economies, however, those circular economies are still underneath nation states that, you know, can impose their laws. Very soon Soon you're gonna see circular economies that really try and work outside of the nation states. You, you have the zeddes in, in Honduras, where they're, you know, they're trying to do that, but they're looking to repeal the zeddy law in, in Honduras. But you have these little countries that are super small, and I, you know, one of my predictions I made is that I think in the next ten to fifteen years, bitcoiners will take over a sovereign nation, or there will be a group of very like anti-central bank wealthy bitcoiners who will look to basically

Create essentially the most free libertarian society possible. There's about, you know, the bottom sixty countries, a lot of them are like very small island nations, all have GDPs of anywhere between fifty to four hundred million dollars. I don't, I don't like coming in and, and, you know, gentrifying places, but there's a very real possibility that freedom-minded individuals could go and set up the first true free market economy, and the rest of the world's just gonna have to swallow it and deal with it. and I think that's, that's where we start really seeing the power of, of a world that's free from central bank tyranny. But that, again, it's like we're so early in that mission.

Yeah, I think it's gonna be a while off, but certainly, I

You know, there, there are these ideas out there, and even just kind of some states breaking away, kind of secession movements and things like this. these are all possibilities, but, you know, can't expect it to happen, you know, today or tomorrow. That it's gonna, it's gonna take some time. We don't have the tools yet, but that's coming, yeah. Right. And I think it, it just, there just needs to be more adoption as well. Like there just has to be more adoption of Bitcoin. So I think it just comes back to that

Show notes, so listeners, you can go and check that out. and yeah, just lastly, before we let you guys go, where can people find you online? you can find

me and

the crew,

sorry, I'll go, I'll go first. at at getbase TV, Instagram, YouTube, X, Rumble. We have a bunch of documentaries, we have sixty-second shorts on all things Austrian economics and, libertarianism and, and freedom maximization. And, yeah, my personal tag is at kinetic finance as well. Yeah, you can

find me at Peruvian underscore Bull on X. I also have a Nostr account, and my xPub is linked in my extended bio on Twitter. So if you just go to the extended bio, my xPub will be there, and I'm active on, on Nostr as well. I also have a Substack, it's called Dollar Endgame. Just look up Dollar Endgame Substack, you'll find it. I have a free and a paid version, and then I also have a YouTube channel, which is Peruvian underscore Bull.

Fantastic. Well, thanks guys Awesome, thanks so much, Stephan. Thanks so much for having us.