Midweek Inflation Survivors Support Group Ep. 271

Episode Transcript

(00:00):
Thank you.

(00:30):
All right. Good morning, everybody. We are live.
Hopefully this space is not glitching out.
Had a little trouble getting some people added, but we'll work with it for now.

(00:50):
If we have to reboot the space, we will.
But I want to thank you each for joining us for Bitcoin Veterans Spaces.
number 271, where we mostly talk about Bitcoin.
My name is Bob Van Kirk.
I will be your host this morning.
Thank you, Producer Eric, for all your work on the music front,

(01:15):
and also Texas Toast for joining us this morning.
We do have some other people coming up here on stage.
We'll get that rearranged here while I do our intro.
It is Wednesday, September 24th, 2025.
Where has the year gone?
And yeah, crazy.
The time chain is showing that we are at Bitcoin block height number 916,192.

(01:41):
The last block approximately seven and a half minutes ago.
And the Bitcoin price is at just under 113,000 US dollars,
which means you can still pick up 886 sats for 100 pennies.
All right, with that, a couple of announcements.
If you'd like to come up, we'd love to have you.

(02:01):
Please do hit that microphone button in the bottom left.
We'll try to be nice.
We usually are, especially for first-timers.
And if you're a lady, it's not ladies' night.
I guess it's ladies' morning, unless you're not in the U.S.
But we'd love to have some female voices up here.
We always enjoy those.

(02:24):
So let's see.
If you also want to leave a comment, a question, snide remark, or meme,
please hit that little purple pill in the bottom right,
and we will try to get to those during the show.
All right.
We also have, coming up very quickly, I think it's six, seven weeks away,
the Bitcoin Veterans Second Annual Summit,

(02:47):
and that's happening November 10th and 11th in beautiful Nashville, Tennessee.
We will have a blast there, guys.
We'd love to have you there.
Please visit bitcoinveterans.org forward slash summit 2025.
We also have sponsorships live.
If you'd like to sponsor the event, we'd love to have you do that.

(03:07):
Plenty of opportunities available, and we can get your business
or maybe just your shiny face on some of the swag that will be going out through the event.
So, again, bitcoinveterans.org forward slash summit 2025.
tickets, information, and sponsorship opportunities.

(03:29):
So please check us out there.
With that, let's go around the horn, say good morning to everybody.
And once again, I want to say a special good morning to everybody who's listening.
Let's see.
We'll start out with my co-host, Texas Toast.
Missed you yesterday, buddy, but thanks for joining today.
How's it going?
Yeah, sorry.
My meeting went longer than I thought, but here now, kind of at work doing some stuff.

(03:54):
So I'll be in and out for like the next 10 minutes, but then I'll be back.
We try to be flexible here.
I've been doing calisthenics, still doing push-ups.
So all good.
Eric, you want to say good morning?
Producer Eric.
Yes, good morning, Bob.
I'm really appreciating these midweek inflation survivor support meetings.

(04:18):
yeah you know uh it's fun coming up with the new names of some of these uh these spaces
some people enjoy it other people probably like pubby absolutely hate it but uh pubby good morning
what what are your thoughts on uh what's going on and also uh my my new titling in the last week or

(04:41):
so yeah i've enjoyed the title there you know i was thinking about this and there was nothing that
you could really just count on more to fail than a Jim Kramer prediction tweet.
And that was until I found out about a Dennis Porter breaking news tweet.
I mean, we are entering equal territory there.

(05:01):
Just letting you guys know.
I had to mute him.
Yeah, some people just outright blocked him.
I don't know.
I've met with Dennis a couple of times.
He is definitely good at hyping the hype that actually never comes to fruition.
So we can talk a little bit about that this morning.

(05:23):
You know, it just reminds me of, I have three boys,
and it just reminds me of that story about the little boy who cried wolf
and eventually get eaten by the wolf or muted or blocked.
So sad days for Dennis, but he'll make a comeback.
I'm sure he's pretty good at diplomacy.

(05:45):
Let's go to BFP.
How's it going this morning?
Hey, good morning, Bob.
Yeah, Dick Whitman calls him penis daughter.
That's not my words.
That's his.
But I'm happy to be here with, you know, these survivors.
That government-issued slave paper, man, that's some rough stuff.

(06:11):
Yeah, we all need to come together and make sure that we are taking care of each other first.
But then anybody new to this inflation that's looking to survive, maybe we can provide some, yeah, I think support for people.

(06:33):
Let's see.
Robert, hey, I want to say good morning to you.
And thank you so much for joining us.
Always love to hear what's going on on the infonomics front.
How's it going today?
Tired, but tired, but good.
Yeah, we do start this space early for you left coasters.

(06:55):
But, again, want to say thank you for joining us.
We'll try to get you amped up and going on some macro.
But I did want to cover a couple of the topics that came across my feed, and maybe you guys will find this interesting.
I'm not sure.
Did you guys, did anybody here on the panel see, or maybe if you're in the audience, go ahead and give us a thumbs up or a fist bump if you saw this.

(07:19):
But did you see that the U.N. unofficially declared war on Trump?
They started messing with him, turned off the escalator, messed with his teleprompter, and he still just beat the snot out of him.
Did anybody see this and anybody have any thoughts?
I know it's not Bitcoin related, but I'm curious to hear if you guys.

(07:40):
Yeah.
Is that petty crap or what?
Well, look, that doesn't sound something like what a liberal would do is one thing.
But here's the last thing you want to do to Donald Trump.
That kind of stuff would work for Biden or anyone else that needs a teleprompter.
But you don't give a guy like that just free reign at an open mic to talk as long as he wants, because he will.
He'll do it.

(08:01):
And he went there and basically for an hour just punched him in the face, you know, pointing out the hypocrisy of you're in a war with Russia.
Meanwhile, you're buying their gas and their energy.
You guys are stupid.
You're retarded.
This is what he did for an hour was just make fun of them.
He's out there.
Like he says, he's ending wars.
He gets zero help from them.
Yeah, he just basically embarrassed them for a full hour.

(08:23):
If that's what they want, that's what they're going to get.
yeah anybody else have thoughts on this uh i know it's it's petty it's it's not a huge
news topic but i just i don't know i think it's one of those things that's just kind of ridiculous
uh i think yeah previous administrations maybe couldn't have uh made the stairs and would have

(08:47):
had to turn around and take the elevator uh eric thanks for coming up sir a big fan and uh would
love to hear what you have to say this morning.
Thank you. Well, you know,
there's another incident that happened. So
they have the Trump escalator,
then Trump at the teleprompter, and
also the president of Indonesia at the
teleprompter was canceled.
That's something to take

(09:09):
note of. So was it really random or not?
I don't know.
Yeah,
it does get you
questioning things. Who's in control
here? And, man,
you see that all these
world leaders love to come to America and get their
meat that they can't get where they live and their hookers.

(09:32):
So they enjoy the fruits of
America that they can't get in their own countries. We host them
so graciously and then they turn around and do some stuff like this.
Pretty Blue Eyes, thanks so much for coming up and we'd love
to hear from you this morning. Hey, good morning everyone.
Well, coming from the communist country of the UK, it was wonderful to hear Trump saying everything he did,

(09:59):
in particular about illegal migration and net zero, which our current government still furiously chase
and making us all poor all the time.
So it was wonderful to hear him speak some truths.
Of course, we're not allowed to hear because we may be locked up.
So, yeah, I'm just grateful to him for speaking on my behalf.

(10:21):
Yeah, it's pretty wild.
I get to thinking about that, like how those, after the Charlie Kirk assassination,
there was the demonstrations and it looked like lots of people out there.
You'd think that would continue, especially with all of the, yeah,
just being fearful of having the police knock on your door just for something you posted

(10:46):
or said on social media.
Pretty crazy.
Pubby, I see your hand.
Go ahead.
Yeah, you know, it's easy for us to laugh at, you know, something like the escalator stopping and whatnot.
What's interesting is because I was thinking about that is, yeah, because you just brought up Charlie Kirk and the assassination.
And I can just imagine in Secret Service, you know, what the hell happens when this thing stops?

(11:08):
Is this some sort of hit? I guess from that side, it's pretty damn serious when this guy just opened and it stops like that.
Yeah, there could be some repercussions on that one.
But yeah, for us, like we know, Trump, under pressure like that, he's cool and he'll joke it off.
I mean, hell, he already took one shot to the head.
So he's pretty well used to this by now.

(11:30):
But yeah, imagine being on that thing and it stops and you're the head of security trying to figure out what the hell is going on.
Yeah, I agree.
I mean, especially like when it's something so abrupt, like you just expect, right?
There were, you know, hundreds of people already going up the escalator, no problem.
And then all of a sudden it gets to the Trumps, right, Melania and President Trump.

(11:53):
And all of a sudden it just stops.
It's like, what's going on, right?
Like, look around.
Who's responsible?
But they took it in stride.
And he also did take in stride the teleprompter.
Pretty blue, I saw you come off mute.
Go ahead.
No, I was just going to say, and it also just shows how the level of disrespect they seem to have

(12:17):
for him for some reason it's okay to do that to trump it's just mind-blowing really i mean he's
the president of the usa and they just think that somehow you know it's okay to do it it's bizarre
and i've seen some of the press meetings he has where the reporters are literally shouting at him
it just it just feels like it's just a level of disrespect shown towards him

(12:40):
yeah it is pretty wild i mean he does still yield a ton of power and you know he is one of those
people that you probably don't want to tick off and yet they still i think they're just trying to
you know live rent free inside his brain but he's not going to let them do that so
i i do think it's uh it's interesting the games that are being played uh at this point though i

(13:07):
I mean, if you really zoom out, it looks like this is about all they've got.
Shut down the elevator or the escalator and shut down the teleprompter.
Beyond that, there's not much more that they can do.
He's clearly got some momentum behind what he's trying to do.
So, yeah, if that's all they got, then good.

(13:30):
So, yeah, interesting topic.
Anybody else have any other thoughts on this kind of, I don't know,
I think it's a fun topic just because, you know, there's far crazier things going on in the world.
So in the absence of that, let's move on to did want to get an update from Infra
and just hear a little bit about his thoughts on how the markets have digested the rate cut,

(13:59):
gold hitting all-time highs again, and, yeah, just other things that you see going on in the bond market,
Wherever you want to cover, Robert, we'd love to just hear from you a little bit, and maybe we can kick some of these things around.
Yeah, so yields have gone up since the Fed cut last Wednesday, just like they did last year.

(14:23):
September of 2024 was the bottom in, say, the 30-year yield or the 10-year yield.
ever since then yields have gone up since not just that cut, of course, kind of long term,
but this cut as well. We've seen rates across the curve move higher, even the two years. So,

(14:43):
yeah, I think, you know, when it comes to, say, the kind of sovereign debt bubble or issues with
the fiscal and the debt, I don't, you know, I'm coming around to this idea that the best
gauge of that or the best way to express it as a trade if you're trying to trade it
is not necessarily on TLT or the 30-year yield, ZB or something, long-term bond futures,

(15:10):
but more so gold because I think that's really where these issues are being the most pure
expression of what we're seeing in terms of issues with the fiscal, issues with the debt,
issues with the interest, that sort of thing.
Because I point out like in the UK they just had one of the weakest 30 year guilt auctions in three years um tailed by 1 basis points

(15:40):
And, uh, the bid to cover was the lowest going all the way back to 2022.
But what they did is, you know, what we've been doing, which is the amount that was being auctioned was, uh, you know, artificially low, right?
This is what we see in the U.S. too. The Treasury has been, before Trump, before Besson, going back to Yellen, the Treasury has been reducing the amount of bond supply, long-term duration.

(16:13):
They've been reducing the amount of supply for a long time now, for years.
And so when you do that, remember, yield is inverse to the value of the bond.
So what you're doing is basically artificially boosting the underlying bond's value.
And so you're artificially keeping a cap or decreasing what the yield arguably should have been.

(16:38):
By doing that, you're keeping a cap on kind of long-term rates getting ahead of you.
Now, it's not necessarily working that well in the UK or in France or in Germany.
Their long end is even more, you know, rates are just grinding higher every single day.
Every week or two, they're setting a new 14-year high in terms of yield.

(17:05):
And so, you know, it's even worse over there.
But they can always do this kind of monkey business where they, you know, it's QE without QE, you know, without having to expand the balance sheet, without having to print bank reserves.
If you just decrease the amount of supply that you're auctioning, you know, each month, then you can artificially boost the price.

(17:29):
And you're not going to see, you know, five basis point tail or, you know, a horrendous bid to cover because, you know.
So you have to factor that in with all these auction results as well, which is if we were issuing what we used to issue, the kind of long-run historical average as a share, this $19 billion auction would actually be $30, $35 billion.

(17:58):
And then would the bid to cover be as robust as it looks? Would the tail be only half a basis point, one basis point? Or would it be much worse?
if they were auctioning off the kind of historical average in terms of the way that we used to distribute debt issuance across the curve.

(18:18):
So there's always kind of levers they can pull.
I think gold is probably the best gauge of these things.
And when you look at gold, it's vertical every day, basically setting a new all-time high.
And not just up like, you know, two-tenths of a percent, three-tenths.
Like it's ripping higher.
The other day it was up like almost a full percent.

(18:41):
The day before it was like a one and a half percent.
Gold is just ripping higher.
And I think that that's reflecting really, you know, the fiscal concerns, not just in the U.S., but in the West, kind of broadly speaking.
This is not just a U.S. problem.
It's arguably worse in France, in the U.K.

(19:02):
Germany is not probably as bad.
They run a very robust current account surplus, 6% of GDP as high as 8% over the past decade.
So they are in kind of a much different – the structure of their economy is much different.
They're obviously a current account surplus country.
And they did not deindustrialize like the UK or the US.

(19:28):
And if you look at industrial production, it is picking up.
It has been in contraction for sure for a couple of years.
But it is starting to pick up into expansion territory.
So German yields, I think, are more a reflection of growth, you know, higher nominal growth expectations.
There's obviously the surge in military expenditures in Europe.

(19:52):
We're seeing that in Germany, too.
That's driving government spending up.
And so you'll get higher nominal growth because, again, people talk about the wartime economy.
And, oh, you know, I hear this a lot.
Oh, well, the U.S. will just start a war if we go into a recession.
Well, no, that's not how it works.
Not not here anymore.
Right.
In the 50s.

(20:13):
Yeah, sure.
You know, when when when we were an industrial powerhouse that rebuilt Europe and most of the world after World War Two and a large share of our GDP was from manufacturing.
Absolutely.
Yeah.
You start a war and you're going to boost you're going to boost GDP.
It's going to be a fiscal stimulus. But, you know, when your economy is so what it is today in the U.S., right, which is just this kind of hyper-financialized mess of derivatives traders and real estate transactions and insurance and, right, useless kind of financial engineering and debt-fueled consumer spending.

(20:57):
Well, it's a totally different story.
You know, you don't just start a war.
And so that's the case for the U.S.
But in Germany, given that they did not deindustrialize, they, you know, they would benefit from kind of a war like sort of approach.
Because, again, so much of their GDP comes from manufacturing.
So I think in Germany, the long end rates are a different.

(21:20):
They're set for their highest weekly close in 14 years.
But it's for a different reason.
I don't think the German debt picture is nearly as bad.
So I think you have to kind of look through.
Yeah, long-end rates are grinding higher everywhere.
Arguably, they're doing the best in the U.S.

(21:41):
Still not great, right?
Obviously, I don't think the 30-year yield is going to come down very much.
I think that the Fed is going to continue to cut, if you listen to what they said in their
SEP.
There's two more cuts probably this year.
And so, yeah, I think long-end rates, I don't think the 30-year is going to four or three and a half, certainly, unless you get a significant growth scare.

(22:06):
And so that has implications for mortgage rates, of course, and housing affordability, which I don't think is going to improve.
I think it's going to get worse, actually.
So, yeah, like I think, you know, I think that the pressure or the, you know, the bias for long end rates, not just in the U.S., but all around the world in the West, broadly speaking, the developed West.

(22:28):
I think the bias is higher because you have these insane fiscal deficits, not just in the U.S., but everywhere else.
You have insane debt loads and higher rates, right?
Like that worked. You could take on more debt so long as the cost of the debt was falling like it was when we were in a 50 year bond bull market.

(22:50):
But we are not in a 50 year bond bull market anymore.
In fact, we've broken out into a new 40, 50 year interest rate cycle more than likely.
I mean, that's what the price action is saying. That's what the inflation data is saying.
Right. So, yeah, I think I think long end rates, the bias is higher.
And again, remember, that means that the value of the bond is declining. And eventually, the rate will get so high that it'll need to be sterilized. It'll need to be anesthetized, as Luke Grohman says. And whether that's QE, whether that's further reductions in the supply, the issuance, whether it's outright yield curve control, who knows?

(23:34):
But kind of the story is the same. You have the Fed cutting interest rates when inflation is 3%, no matter how you slice it, it's 3%. You have equities at all-time highs, you have home prices at all-time highs, and you have gold, like, screaming higher to a new all-time high every day, practically.

(23:54):
So, yeah, I think they're making an error by cutting rates here.
And I think the bond market will, I think, again, the bias for, say, the 30-year yield is up.
And you could get a situation where you have a steeper yield curve.
You have this kind of twist steepening where the short end rates are coming down pretty rapidly and the long term rates are either staying flat or even maybe slightly increasing.

(24:19):
and eventually, you know, that steeper yield curve, like the housing market's frozen.
And you look at like the lower leg of the K-shaped economy, right? The median American,
they're doing not well. And so I think, you know, the rates, I don't think it's really a
constraint for say the S&P 500 or the NASDAQ. Now you take the 10-year up to 480 or 5. Yeah,

(24:45):
probably the equity market starts to get unhappy. But generally speaking, I think that, you know,
it's constraining kind of the lower leg of the K. But again, that lower leg of the K doesn't matter.
In the aggregate, it doesn't matter. For real GDP, for all the stuff that they look at,
right, we don't matter. It doesn't matter that I worked my ass off for 15 years and can't afford

(25:11):
to buy a house. Doesn't matter. You know, the wealthy boomer can, the private equity firm can,
the foreigner, right, that is, you know, buying real estate here, you know, foreign direct
investment to balance some sort of a bilateral trade deficit. They don't care, right? So, yeah,

(25:31):
I mean, unfortunately, we are where we are. The upper leg of the K is being boosted from the
wealth effect from asset prices just ripping. And by the way, they're going to rip even higher
with what Trump is talking about doing, cutting the federal funds rate even more.
Assets will continue to rip higher, right?
So the upper leg of the K will have that wealth effect.

(25:53):
They'll be able to continue to spend.
When it comes to home prices, those will continue to be purchased by private equity firms that
now have a lower cost of capital with a lower federal funds rate.
And again, the foreigners, until we balance trade, until we meaningfully reduce the trade deficit, foreigners will continue to buy their price insensitive buyers of U.S. housing.

(26:20):
And of course, commercial real estate, of course, too.
And mortgage backed securities and REITs and, you know, a lot of various things.
So I don't think housing prices are coming down.
If anything, they're probably going to go higher as they have been for the past, you know, three, four or five years.
And so, yeah, I think it's a worsening, you know, over the next year or two years, I think

(26:43):
it's a worsening of the K-shaped economy because, you know, we've constructed this mess of an
economy where, yeah, it doesn't matter that I can't afford to buy a house or that, you
know, some middle-class guy down the street has to use buy now, pay later to afford groceries.
Like, unfortunately, it doesn't matter in the aggregate, you know, that again, we get

(27:04):
one GDP number, that GDP number, if these four companies or five companies continue to spend
gazillions of dollars on data center build out and AI CapEx, who cares that some middle-class
dude can't afford groceries or that I can't afford them? It doesn't matter. This is just

(27:27):
the reality of the economy that we started to construct, by the way. This is not a Trump thing.
This started back under Biden back in 21, 22, 23.
So it's just a continuation of that and I think a worsening of that.
Yeah, so it gets me thinking a couple of different things.
You know, you're talking about the 30-year and how that can impact mortgage rates.

(27:50):
We've seen mortgage rates actually continually go lower just here in the short term.
I think I saw maybe like 6 and 3-8 for a 30-year.
Maybe you can opine on that.
But then the other thing I was thinking is just for the listener,
maybe if you can tease out this impact of the rates going up in Europe especially

(28:18):
and what impact that might have, considering we've seen with Russia
sending fighter jets over countries in Northern Europe.
You have Poland coming out and saying, like, you better stop doing that,

(28:38):
almost threatening war.
And so I just wonder, like, how do these things play out?
Obviously, like, they're all, quote, unquote, united under the euro,
and Germany seems to be withstanding it so far.
But I know those are two completely different questions, right?
You have the domestic mortgage rates, but then you also have on the other side, my other question pertains to more.

(29:03):
Yeah. What for the casual listener who doesn't understand what it means for bond rates to rise very quickly in a short amount of time?
Tease that out for us a little bit, if you don't mind.
Yeah. I mean, the way to think about the mortgage rate is about the floor appears to be about a 210 basis point spread over the 10-year yield. So take the 10-year yield and add 210 basis points to it. That's generally the mortgage rate.

(29:36):
And so, yeah, the interest cost on a house went from the average annual interest expense on the average house, right, for the average person.
The average annual interest went from $8,000 or $9,000 per year to now $27,000, $28,000.

(29:59):
So in three or four years, you had a tripling of the average annual interest.
That is certainly a huge component for me, right?
Like, or someone like me that's trying to buy a house.
That is one of the reasons why, you know, in 2019, my $75,000 per year salary could have
afforded to buy a house, right?

(30:20):
Because rates were so low.
That was a huge driver of it.
Now, you know, the annual interest is about $27,000, $28,000 on the average home.
So the interest component of it tripling over, say, three, four years, that is extraordinary in terms of the impact on affordability.

(30:41):
But then you also have the home price itself going up and to the right.
And again, this is a reflection of the underlying unit of account losing value.
You know, and yeah, you'll get a regional decline.
You'll get a, you know, OK, the Dallas metropolitan area is down 15 percent year to day.
Okay like yeah you will always get those cases But you know again we talking nationally the aggregate the average the overall picture those average sales prices are climbing and climbing and climbing and just

(31:14):
going higher. So yeah, I think all the things that we've seen just kind of get worse because
higher rates will constrain not only mortgage demand, but they'll also constrain. Now, if you
if you just got a mortgage at, say, the mortgage rates at 6.2, if you had a mortgage at 6.8,
6.9, then yeah, sure, you're going to refinance. But I don't think that there's really

(31:42):
much more downside on the 30-year yield. So if the low in the mortgage rate, call it six and a
quarter, that's probably around the low for the average mortgage rate. And we're probably going
to see higher, certainly a higher 30-year yield, higher 10-year yield, maybe not as pronounced

(32:03):
with the 10-year, but certainly the 30-year. And then Europe, yeah, I mean, higher rates,
same general ideas here in the US, higher rates or higher cost of capital has a tightening effect
on the economy. So think of the opposite, right? If interest is zero, if the cost of money is 0%,

(32:27):
you're free money basically, right? Or even take it to another extreme, take it to the
Japanese everything bubble sort of era, right? During that era, say I was a Japanese going to
buy a house. I would go to the bank. I'd say, hey, there's this million yen house that I want to buy.

(32:48):
They go, okay, we'll give you a mortgage. Not only will we give you a mortgage with 0% down, but we'll actually give you 1.2 million in yen.
Well, but the house is only 1 million. They actually had a negative real cost of a real yield or negative yield, even in nominal terms sometimes.

(33:12):
So money, everyone was incentivized to take on debt because, again, you had a negative interest rate.
And so that's what everyone did.
They took on debt because it was either, you know, you could think 0% like it was in the law of the West or negative in the case of, say, Japan and parts of Europe, too.

(33:32):
It was negative, right?
So that encourages people to take on debt and then spend the money, right, whether it
be on cars, whether it be on housing, doesn't really matter, or vacation trips, right?
Everything is encouraging the debt to expand and therefore a boost in consumer spending

(33:53):
because the cost of money is basically 0%.
So take it to the other extreme, which is the cost of money is now 10% or 20%, and it
has the exact opposite effect, which is, well, I'm not going to go get a new car if I have to pay 20%
annual interest on that, right? I'm not going to go buy a house if I have to pay 20% this radically

(34:17):
higher interest. So it has the exact opposite, which is a constraint on consumer spending,
a constraint on new business formation and all those sorts of things.
did want to go to the hands too um i don't know who was first was it pubby or eric uh you guys
sorted out go ahead yeah i just had a quick one an observation and i was talking to a guy a friend

(34:40):
of mine is i'm down here in florida and robbie you're talking about the construction um or real
estate what's interesting is as we've noticed that this generation right now a lot more priced
out just the price and the rates um outside of town here you know of course you have a lot of
the orange groves and everything.
And there's a lot of horse country.
But about two hours outside of where I am.

(35:00):
I'm in Tampa, but two hours outside, I guess they're putting in a new Amazon distribution type center.
Now, what he was talking about, he goes, yeah, there's so much construction going on here for new homes.
But what's crazy is they're all for rent.
Nothing's for sale.
and possibly, you know, I guess when you're having people that are working there,

(35:24):
maybe the incomes aren't going to be enough to buy.
But this goes into what we, you know, we talked about with BlackRock
and everyone else getting into real estate business.
You will own nothing and be happy.
Is this trend towards new construction just being rental only?
I don't know what your thoughts were on that
or if there's a way to track what new construction is for actually first-time buyers
versus, yeah, just straight rental units.

(35:46):
Yeah, unfortunately, BlackRock or WEF was not kidding. It is not a joke. They really meant it. That trend is clearly accelerating.
accelerating. So yeah, I haven't seen a hard data point on it. If you look at the average age or the

(36:11):
median age of the first-time home buyer, that has increased by 20, 25 years over the past couple
decades. So I think you might see it in something like that. But in terms of, I don't dive very deep
into the housing market.
I'll look kind of on a surface level,

(36:33):
I'll look at it in a cursory way,
but I'm not diving super deep
because to be honest,
it's just so depressing
as someone who works so hard for so long
to basically be impoverished
and unable to afford to buy a house
and have a middle-class home,
middle-class lifestyle.

(36:53):
I'm so tired.
But yeah, it just depresses me too much.
And so I'm sure there is a report, though.
I'm sure if you go to Grok, I'm sure that Grok would probably be able to.
Everyone and their mother seems to be a housing analyst these days.
So I'm sure you could find something.
Yeah, let's go to Eric.

(37:15):
Go ahead, sir.
Yeah, so that whole conversation Infra was talking about is essentially Elon tried to save the day because you have to cut the expenses and balance the budget.
otherwise the cost of debt will constantly increase and increase and that's the trap that
Trump fell into therefore the K-shaped economy will just continue there's just no solution right

(37:36):
now if they continue that way not under Trump I don't so he's going to continue the rich will get
richer and the rest of society will suffer more and more sadly one other comment I wanted to make
is right now for the stock market I am seeing strong selling a lot of firms are starting to
take profit. I'm watching live as we speak. And the way I see the volumes, we can see that,

(38:02):
you know, latecomers are still buying the dip, but the institutions are starting to offload
because they have a big volume to offload. They're starting to offload. We are at very
high multiples and I can see it now on the market. Back to you. I don't want to take more time.
Yeah, good stuff. Hey, I wanted to circle back. Robert, did you want to,

(38:23):
Do you have the ability or the time to address the bond rates in Europe and just how, you know, a big increase can have quite an impact?
Yeah, I mean, you know, high debt load, right, so therefore higher interest is not just a story here in the U.S.

(38:46):
in Western Europe, they have, you know, they have high debt there too,
and high government spending and collapsing demographics.
You know, they have all the same issues that we have.
And so, yeah, what can eventually happen, like say in the UK,
this is happening currently.
I would argue it's already, we're already like in the first inning

(39:09):
or second inning maybe of a debt doom loop,
which is because of the rising rates, you have to issue debt. The interest is going higher,
and the reason interest is going higher is because those yields are climbing higher. So
as you go to issue new debt or refinance old debt, it must be done at dramatically higher

(39:32):
interest rates. Therefore, your interest expense goes up. Well, remember, these countries like the
UK are twin deficit country. They run a current account deficit and a fiscal deficit. So the
way that they pay for that higher interest expense is by a bigger deficit. And a bigger deficit,
what that means is you must issue even more bonds to finance your government, you know,

(39:57):
finance operations of the government. So higher interest rates equal higher deficit. Well,
higher deficit equals higher bond supply, right? More bonds must be issued, assuming demand stays
constant and doesn't decline or an increase, right? Just assuming demand for government debt
stays constant, well, an increase in supply obviously means a lower price, a lower value

(40:22):
for each bond. Well, that means higher rates. So you get into the cycle that is kind of
self-reinforcing where you have higher rates that causes a higher interest expense. Higher interest
expense causes a higher deficit, which means more bond supply must be issued every year
to cover that deficit.
More bond supply equals lower bond price or higher yield.

(40:46):
Higher yield equals higher interest expense.
Higher interest expense equals higher deficit, right, and on and on and on.
That is kind of the debt doom loop.
And I would argue the UK is in it.
They have tried to, you know, a lot of kind of average people go, well, you could just
raise taxes, just raise taxes. And that is what the UK has been trying to do. They have been trying

(41:09):
to stabilize the deficit and kind of stabilize this kind of doom loop. They've been trying to
raise taxes. Well, the problem is that when you raise taxes, by definition, not only do you have
capital start to flee, and we know the wealthy actually pay the majority of tax, whether it's

(41:31):
In the U.S. or the U.K., this is a story of kind of, you know, across the board generally, the higher incomes, the wealthier folks generally pay the majority of a country's tax revenue.
And so I think it's like the top 10 percent pays 60 something percent of tax revenue.

(41:52):
Not 100 percent sure on that stat.
Someone can fact check it, but something like that.
So what you get is capital flight.
You get wealth fleeing the country, which, of course, decreases the amount of revenue, right?
If you raise the tax on a billionaire from 50% to 70% and that billionaire goes, well, I was happy to pay 50%, but now 70%, that's a bridge too far.

(42:19):
I'm going to Andorra.
Well, they go to Andorra where there's no income tax.
And boom, now the UK lost out.
They might have been making, I don't know, $500 million off that old rate, but because they raised it and that guy left, the UK just had a decrease in their tax revenue.

(42:39):
So you get that effect.
But then you also get, of course, the effect that taxes constrain growth by definition, whether it's income tax, sales tax, right?
It is a disincentive for the demand side.
So you also get a hit to your GDP. And really what matters is not the overall nominal tax revenue, but the tax revenue as a share of GDP.

(43:06):
And once you look at the UK's tax revenue as a share of GDP, that actually peaked in 2022 and has been declining as they've been raising taxes, right, hoping to arrest this kind of debt doom loop.
They've been trying to do that by raising taxes. And what we've seen is tax revenue as a share of GDP has actually been declining. So it's actually been making the situation worse. By trying to raise taxes, you not only hurt growth, but you also cause capital flight. And so you just make the situation even worse than it already was.

(43:44):
So really, the way out of it is, you know, look, there are talks by serious politicians within each country.
I'm not a political expert on France or UK, but the headlines I've seen, there are serious talks within the UK and France of an IMF bailout for a Western European country government, right?

(44:06):
Sovereign bailouts for the UK, which used to be just 50 years ago, the reserve currency, or maybe 60, 70 years ago, they were the US.
They were one of the predominant empires of the world.
And just a short 50, 60, 70 years later, they're talking about another IMF bailout, right?

(44:28):
They already had one in the 70s.
This would be a second IMF bailout because, you know, really what it would take to arrest this is fiscal responsibility.
You have to you have to cut spending dramatically.
And no politician's ever going to do that because politically in a democracy, you start reducing the gimme's that everyone relies on their entitlements.

(44:51):
Right. Quote unquote. And and they don't vote for you. Right. You lose power.
So what they need to do is cut spending dramatically, like dramatically.
And they're not willing to do that, whether it be in the US, whether it be in Europe.
So these higher rates just kind of cause a reflexive self-reinforcing cycle.

(45:12):
And that is the debt doom loop.
And it doesn't really stop until there is a signal to the bond market like, hey, we're not going to run a 5% fiscal deficit anymore.
I think in the UK, their fiscal deficit is like five, five and a half percent of GDP. Insane. They're not in an official recession. They're not in a world war. They're running a five and a half percent budget deficit. And they're not the reserve currency issuer like the US, right? We get away with a little bit more.

(45:41):
So, yeah, until that sort of signal is sent, like, hey, we're serious about fiscal responsibility. If they got a Malay kind of situation, then look, maybe you can arrest that.
I'll point out we are going to be bailing out Argentina in a very, very significant way with $20 billion U.S. swap line with Argentina, U.S. dollar swap line.

(46:08):
We might be even purchasing the dollar denominated bonds that they are issuing.
And, of course, there's also talk of purchases via the ESF for their currency, for the Argentinian peso.
So normally the ESF does that with, you know, we hold foreign currencies, but mainly it's just the yen and the euro and maybe the Swiss franc to some degree.

(46:32):
I can remember about that one but mainly you know the euro and the yen We don normally start go buying emerging market currencies because they collapsing So you know I think that we I think that Trump is kind of from a
geopolitical standpoint making the point. I think it's pretty clear to see, like,
we're going to bail out Argentina. We're not talking, there's no talk at all about helping

(46:58):
the UK, about helping France, right? So where's the bailout going to? It's going to Argentina,
not the UK, not France. You know, we know Trump's hostility with NATO, deservedly, by the way,
and the UN. So I think it's clear that, like, the US is not exactly jumping to go bail out

(47:18):
these, you know, profligate spenders in the UK or France.
Yeah, and you wonder, you know, does it have anything to do with the proximity to Brazil
and just Brazil being part of BRICS,
this continued move towards kind of like a bipolar world.
Eric, see your hands, sir. Go ahead.

(47:40):
Yes, it does have to do not only with Brazil,
but he's trying to control his hemisphere.
He's got to try and do that.
And yes, logically, he would have been closer to Canada and France and UK,
but he has a lot of beef with them, so he's not doing that at this moment.
He knows he can get back to them after anyway,
So I think that's the strategy he's using.
What I wanted to say also is regarding what Infra said about taxation.

(48:03):
It is true, and that's why I was surprised that Biden really wanted the world war.
I expected him to go to war.
If you look at what I posted, it was in 2021, when all the wars were calm, that it was going
to explode in the Middle East, in Ukraine, and possibly in Taiwan.
And that's exactly what happened.
Because if you want to be able to have taxation that your billionaire doesn't escape, you
You need United States, Europe, Russia, China, India to sit together and say, okay, we agree

(48:29):
on the taxation scheme.
So our billionaires don't go left and right.
And all the weaker countries, we impose it to them.
Then you can do it.
It is the only condition in which you can avoid taxation escape.
Only by getting the superpowers to agree.
But Joe Biden did the exact opposite.
He wanted the war.
He got it.

(48:49):
And so now you cannot, how can you escape somebody from going to Dubai for his taxation or going to, like our friend, in the Isle of Mount or Jersey or Jersey, US Virgin Islands, even Singapore or Hong Kong.
You have so many jurisdictions that it's impossible to prevent it unless you literally go authoritarian and tell your citizen like North Korea, you're not allowed to leave.

(49:15):
but if you do not do that and it's highly unlikely that we do that then by not having an agreement
with the superpowers you're going to have the exact problem that infra is laying out and i'm
very worried about that because it means more inflation more inflation and more suffering back
to you yeah i appreciate those comments and it does get you thinking like you know for billionaires

(49:37):
especially like if they already have the people to help them avoid taxation,
they will,
they will do it.
But for a lot of people,
it's the hassle factor.
So it depends on where their money is,
is best.
Bitpatro wanted to go to you.
I see your hands are good.

(49:59):
Yeah,
no,
I,
I just had a couple of thoughts regarding what's going on in the mic check
for Bitpatro.
How about now?
You hear me?
Anybody got me?
I'm sorry.
I can't, so I'll let you go.
All right, I'll let him go, but he might want to drop and come back

(50:19):
because otherwise it's going to get awkward.
He going.
All right, hopefully I can hear him.
Yeah, I don't know.
The spaces have been a little buggy,
but hopefully you guys have been enjoying the conversation.
I do think it's good for us to know all these things or to be thinking about them because obviously we know that there's some solutions.

(50:45):
We can see central banks have been adding to their gold positions.
I do wonder at what point it comes out that they are adding to their Bitcoin positions.
I'm trying to get BitPetro.
Okay, there he is.
Let's try this again, BitPetro.
All right. You got me now?

(51:05):
Loud and clear. Thank you, sir.
All right. So I was on the morning podcast and I guess Infra just dropped. I was wanting to ask him a couple of questions.
I'm here.
Oh, you're there. OK, I didn't see you.
So as far as the Venezuelan and South American situation is concerned, I have a feeling that all of this, Malay, South America, all of this has to do with a return to the Monroe Doctrine.

(51:40):
Since we are going into this multipolar world
We, I think, very clearly are going to say whatever we need to say
To control the Western Hemisphere as a whole
I think some of the initial statements about
Greenland and Canada were
Kind of, you know, maybe just, but not

(52:04):
And then to say Greenland for the reasons that they said
Greenland clearly puts the administration on a hunt for resources.
And we know that the administration is in a new hunt for the new oil.
And I think you mentioned that in the previous space where the new oil isn't oil, it's rare earth, right?

(52:27):
It's the stuff that we need to put together all of these military and highly technical components that require these very scarce resources.
And so when you have Brazil, Argentina, Chile, Venezuela literally sitting on the geological jackpot, I mean the jackpot.

(52:49):
See, what happens is when two continents rip apart, you get a lot of interesting geology.
And so interesting geology happens to be what you need to get the interesting materials.
And that's where we are.
Now, a lot of that, I would imagine, is going to be done the route of drugs because that's the target that the Maduro regime painted on their back.

(53:14):
But I think this has a lot more implications about refining.
Refining has been a big topic as of late.
And if anybody knows anything about the U.S. refining's capability, is that we have some of the only refining capability in the world for heavy sour crude, particularly in Texas and Louisiana.

(53:38):
Those refineries are basically made for that oil.
And refineries, if you guys don't know, are specifically made for very specific products.
You're not going to get light sweet running through some of the facilities that are shell-owned.
They're just not going to run that crude through there.
And so all of this to me kind of feels like a very hard repositioning of the world order where we are going to go back to multipolarity, where we're going to go.

(54:09):
We're not back to we're going to multipolarity.
And that to me signal the concern there is twofold.
Number one, we're going to start playing nation making again, which did not go well the first time or the second time or the third time.
And the second big concern is that we're just not paying really close attention to some of these things where China is far, far ahead of us in the way we make allies with these countries.

(54:45):
So, Eric, I'm sorry, Infra, you were talking about the $5 million swap that China already had established with Argentina.
I mean, to me, it's wild that that's not the obvious war we're fighting.
It's that finance has been replaced the bullets.

(55:05):
And I hope that what this administration is going to do is at least allow for a peg to Bitcoin and gold and the dollars that we're about to export, because it's pretty clear we're about to export a shit ton of dollars.
So I want your thoughts on that, Robert.
Yeah, I mean, when it comes to Greenland, I think that there's a currency component to that as well.

(55:29):
When you look at what has been happening with the weakening of the dollar and over the past, say, year and the direction that you mentioned, which is correct, which is this multipolar sort of direction.
Well, part of what we're seeing kind of in that same vein is a shift away from the dollar as reserve asset store value.

(55:50):
And this has been going on more than a decade. Right. This is not conspiracy or or a theory.
It is hard fact that if you look at foreign held debt as a share of total debt, that peaked 13 years ago.
So this has already started. It's only accelerating kind of the decline in the U.S. Treasury's role.
So what is taking the place? Well, historically, when the dollar was growing, it was gold that was losing ground to the dollar, to the Treasury.

(56:18):
Well, what we've started to see is the U.S. Treasury has been starting to lose share and it's losing it to gold.
Well, eventually, and this could take many years, a decade, maybe even two or three, but eventually, depending on the adoption rate of gold as the new reserve asset, the new net settlement layer, that's going to put pressure on various currencies in a balance of payments sort of valuation framework.

(56:45):
And on a balance of payments basis, the U.S. dollar should be like 30.
The Dixie that everyone talks about should be like 30 or 35 or 40, not 96, which is already, again, one of the worst years for the dollar on record.
A fair value is so much lower.

(57:06):
Well, one way to kind of soften that balance of payment shock in terms of a negative valuation for the dollar is to find and, you know, maybe create a economic block that, you know, has countries that are not twin deficit nations, right, that have a lot of resources.

(57:28):
This is why I think, you know, the stuff with Canada, the stuff with Greenland, I think that there's like a currency side to it as well.
And Besant talked about the monetary reordering being inevitable and that he wanted to be a part of it.
He's an ex-macro guy, an ex-currency trader, you know, like him and Myron, the two of them, I think really understand the issues that I just kind of laid out.

(57:55):
And so I think that they are I think that I agree with you that we're seeing kind of an expression of foreign policy and geopolitical strength.
It will increasingly be in the financial sector. I pointed it out in the morning space.
But like, you know, Besant knows how markets work. Like he knows when a trade is crowded.

(58:15):
Right. He knows when a bunch of hedge funds are piling into the to short the Argentinian peso.
He knows, oh, all I got to do is say, hey, we're going to buy 10 billion per week of the peso and he will squeeze the ever living shit out of those shorts and get kind of more bang for your buck.

(58:36):
Right. So like we see this like market technician that that that is, you know, the Treasury Secretary.
We see Stephen Myron, who is kind of in his own way, engineering or at least wrote the guidebook on how to engineer kind of a new world order.
You know, we have these people now in power for the first time in our lives.

(58:58):
So I think that, yeah, I think it's kind of a totally brand new world.
Now, there's still going to be the traditional geographic, right, sort of consequences or sort of inputs in terms of decision making.
You know, those things didn't just suddenly stop mattering.

(59:18):
I just think that we'll continue to see that sort of thing, but I think that we'll also see an increase on the financial economic sort of warfare side.
Because remember, trade wars, by definition, are capital wars.
And so, yeah, I think that that sort of environment is going to present a ton of opportunities and gold and Bitcoin just being kind of the major ones, I guess.

(59:47):
Yeah, really good stuff today, guys.
And I do think, man, it is busy.
There's a lot of stuff going on, but it always is good to know, you know, this stuff changes all the time.
So it's good to get a refresh on the macro picture.
Hopefully you guys learned a lot today and always want to encourage people to follow each person that comes up here on stage.

(01:00:14):
and if you guys haven't checked it out, please do check out Robert's Infernomics on YouTube.
Good stuff out there, especially if you have particular areas of interest as it relates to macro.
And Eric, I do appreciate you coming up as well.

(01:00:34):
But we are right at the top of the hour and wanted to make sure I can get to my meeting
and give you guys some time back in your diet.
We do this each weekday, 10 a.m. Eastern.
Would love it if you'd join us again tomorrow.
We'll do it all over again and hopefully come up with another fun space name to get new people initiated.

(01:00:55):
But hopefully you guys enjoyed this.
And if you do have any suggestions for topics or space names, I'm happy to entertain those.
So we're trying to have fun, but we're also trying to help people avoid and protect themselves from inflation and all the other macro things, all the other pressures that we've heard about today.

(01:01:20):
So, Robert, once again, thanks so much.
Eric, again, thank you.
Producer Eric, thank you as well.
BitPetro, BFP at Texas Toast, who's dropped down as a speaker but is usually our co-host.
Again, guys, I want to wish you a wonderful Wednesday, and hopefully see you tomorrow.

(01:01:41):
Just remember, whatever you do, please do not shitcoin.
It's like taking cough medicine to cure your hemorrhoid problem.
People that use fiat currency as a store of value,

(01:02:03):
We call them, we core.
Core, core.
We call them, we core.