Episode #213 - Caitlin Long and the Financial Crisis that Wasn't - Gold Goats 'n Guns Podcast

Episode Transcript
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Speaker 1 (00:19):
Hello one, Welcome to the Gold, Goats and Guns podcast
for April seventeen, twenty twenty five.

Speaker 2 (00:24):
My name is Tom Lawonga. We have a lot to
talk about.

Speaker 1 (00:26):
It is episode two thirteen, and I have the great
pleasure of having my good friend Caitlyn along back to discuss.

Speaker 2 (00:32):
Well, I'm not really quite sure what we're.

Speaker 1 (00:33):
Going to need to discuss today because we never quite
know what's going where Caitlyn and I are going to go,
but it's always a stimulating conversation where I usually get
interviewed as much as I interview her, and so I
really appreciate having that kind of pushback on the podcast.
So Kitlyn, good afternoon, Thank you for taking the time
and all of that.

Speaker 2 (00:53):
So how are you.

Speaker 3 (00:54):
Yeah, awesome to see you doing well things. Yeah. No,
I actually when you reach out to me, I said, look,
I want to interview you because I've listened to a
couple of your most recent podcasts, and you know, the
world is changing so fast that you get something out
a day or two later, and the world has changed
by interviewing events, and so what I would really love

(01:16):
to do is ask you, and I warned you about this,
yes to give the elevator speech version of your view
of the world and as if nobody has listened to
you before.

Speaker 2 (01:29):
Oh wow, Yeah, that's going to be a that'll be
a tour. Well, let's start with the beginning. It's actually
a lot clearer than it used to be.

Speaker 1 (01:36):
And I recommend everybody take to listen to the interview
I did last week with Tommy Harrigan on Tommy's podcast
with Ian Berling Game, because I think Iam did a
really nice job of putting in the historical context a
lot of the arguments that I've been making about Davos,
the city of London, and all of that stuff, so
in ways that I had not really fully considered, because
I do not consider myself for his story and in

(01:56):
any way, matter, shape or form.

Speaker 2 (01:57):
And my partner Dexter.

Speaker 1 (01:58):
White reminds me of this on a ni weekly basis
as a matter of fact, being history, being the actual
historian in the group.

Speaker 2 (02:05):
So what I think ultimately.

Speaker 1 (02:08):
Was as things play out right here right now, is
that Donald Trump is attempting the first real decoupling of
the American financial system of someone of broaden that as
wide as you want from the old colonial European system

(02:30):
that if you if you think, if you look over
the history of the of the United States as it
pertains to money since our conception since as I've liked
this said said many times since Cornwall is surrendered at Yorktown,
we have never really had financial independence in the United States.
And if you don't have financial independence, you don't really

(02:51):
have political independence either. So it's in a way it's
a again, it gets into that thing that I've said before.
You know, how do you feel about the American Revolution? Well,
I thought a very Chinese view of it, and say, well,
it's too early to tell, right, We're see here we
are two hundred and forty nine years since the American
Revolution was declared, and we're still fighting the vestiges of

(03:13):
that system.

Speaker 2 (03:13):
So now, but over the colors of the.

Speaker 1 (03:16):
Past few years with the advent of sofa, the secured
overnight financing rate, and the end and the true end
of libor on March thirty first, because while libar ended
on September thirtieth, the six months anthetic libor contracts that
were floating around out there, they didn't mature and end
until March matured until March thirty first.

Speaker 3 (03:37):
And then, interestingly, can I pause you there and explain
the difference between cipher and libor and why that means
the US is taking power back from London.

Speaker 1 (03:47):
Sure, because the one because the librar rate is an
unsecured rate decided upon by eighteen City of London banks,
only one of which represents your American interests. In many
people's parlance, JP Morgan does not represent America's interest at all.
And it's only the JP Morgan's Undon office that there
are a subsidiary that sits on the sat on the
board of libor, the secured overnight financing. And so what

(04:10):
this means's before I move on to so for so,
libar was a way to price offshore dollars without ever
having to really post collateral because you could just like
pass lib or contracts and rehypothegate the macromonks themselves and
everybody and the And we had this massive growth of
the shadow banking system and the euro dollar market over
the last sixty or seventy years.

Speaker 3 (04:30):
Because there for people who are just starting to listen
to this for the first time and underscore that meant
the London banks set the most important interest rate in
US dollar markets.

Speaker 1 (04:44):
And which then would be the most important markets in
the world.

Speaker 3 (04:48):
Correct, Okay, great, now onward Okay.

Speaker 1 (04:51):
So now that we have that established, and that was
and that and that the libar system was codified in
nineteen eighty four when librar was was kind of unaff.

Speaker 2 (05:01):
Established as the US dollar rate around the world.

Speaker 1 (05:05):
Interestingly enough, we had the G five get together in
nineteen eighty five and create the positive core to now
break currency markets.

Speaker 2 (05:12):
And then that system really kept.

Speaker 1 (05:16):
It was in play all the way up until I
think the global financial crisis of two thousand and eight,
and that's when systems started to break.

Speaker 2 (05:23):
That's when the whole system started to break, really broke.

Speaker 1 (05:26):
And then since then I've said for years that after
that that period from around twenty eleven, when the central
banks all got together and created swap lines amongst all
the major G seven banks, the Bank of Japan, the
Bank of England, the Fed DCB, they all got together
and they coordinated monetary policy. And that's actually what broke

(05:46):
the last gold bull market, if you remember, that was
at that moment in time. Was in that period that
gold peaked. Then there was the announcement of the coordination
of central bank policy. Central bank policy, we were dealing
with the potential of gregsit at the time, meaning Germany
leaving the Euro at the time. That stabilized the markets

(06:08):
by the time we got into October November of that year,
and then that in my mindset, created the that was
the end of the quote unquote dollar reserve standard. Now
we weren't the central bank coordinated policy standard. And I
think that that ends with twenty twenty one and Jerome
Powell beginning stealth tightening of the dollar. He didn't start

(06:29):
the process of tightening interest rates until his reconfirmation in
March or twenty twenty after his reconfirmation in March of
twenty twenty.

Speaker 2 (06:36):
Two, but in June twenty twenty one.

Speaker 1 (06:39):
When he raised the payout rate on reverse repo contracts
five points about the test funds rate to stabilize the
dollar funding markets. He was able to do that because
we had moved off of libor in the United States
to the secured overnight financing rate, and the secured overnight
Financing rate SOFR or otherwise known as SOFA, is a

(07:00):
secured rate per its name, which takes its which is
which is settle on a daily basis of and the
rate is determined in a market sense by what's going
on in US rebail markets, in US money markets, and
so and so, since it became the law of the
land for all US new US debt to be denominated

(07:24):
or or index to SOFA starting in January one of
twenty twenty two. The timing here January twenty twenty two.
Powell's reconfirmation in February of twenty twenty two is the
second term starting. And then I'm starting to raise interest
rates in March of twenty twenty two.

Speaker 2 (07:37):
All in a row.

Speaker 1 (07:38):
That began the shift away from Euro dollar futures being
the mechanism by which the tail that could wag the
global dollar market dog to the SOFA futures market, the
three months sofer futures market being the thing that determines
the cost of dollars over the course of you know,

(07:59):
on a daily base.

Speaker 3 (08:01):
And just to put you there, can I underscore for
those who are not financial market people, the libar market
librar touched everything. Libor is the rate at which, or
was the rate at which hedge funds targeted their returns.
It was the floating rate for corporate floating rate debt,

(08:25):
of which there is not much but the vast majority
of corporate bonds were swapped into floating because of the
steepness of the yield curve in normal times, so they swapped.
The interest rate swap market was driven by that. So basically,
and of course there's the mortgage market which was also
very driven by libror. Right, So you basically had at

(08:47):
the core of the huge fixed income markets, which are
far far bigger than the stock market in the United States,
you had the most important interest rate that underpinned all
of the fixed income market being set by a cabal
of London banks. And there was a libor pricing scandal.
Guess what they were fixing the rate and that was

(09:10):
having a huge impact on the US economy. Yes, and
so walk us through from a history perspective and talk
about John Williams the role that certain people had in
trying the control over the US economy out of the
London City of London banks.

Speaker 1 (09:29):
Sure, so when Trump comes in office in twenty seventeen,
he's got the opportunity to create a new FED, to
nominate a new FED chair Wall Street, which at that
point his first term was dominated by Goldman Sachs, Steve
Manuchen and others were so it was really a Goldman
Sachs administration, but they recommended to him Joam Powell. Now Powell,

(09:54):
as we know from Daniel die martinoz Boot's expos on
the FED, her book which everybody should read, we go
to come to find out that Jerome Powell was one
of the few members of the FMC that was actually
a hawk, was one of the few people who was
against Bernanki then Bernaki making the two percent inflation target,
the role of the new FED mandate along with its

(10:16):
standard dual mandate of full sable prices and full employment.
And Powell was extremely angry with all this and never
and never was never down with it. He was always
at odds with the inflation nieces like Jenny Allen and others,
and Bernachi himself. So when Trump comes to power, they
recommend Jerome Powell, Trump takes his, you know, Trump takes

(10:37):
their recommendation. Powell becomes FED chair and then he immediately
starts trying to tighten monetary policy. Janet Allen again when
she was FED chair, left the left us in a
terrible position. She was doing QE, she was doing operations, Yeah,
she was doing well. She was doing yield.

Speaker 2 (10:55):
Cirk control.

Speaker 1 (10:56):
They really the Jenny Allen can be sub can be
sub summed up in yield curve control. She's always trying
to suppress the long end of the curve and support
the short end of the curve, like she's always playing
that game.

Speaker 2 (11:09):
And that's all She.

Speaker 3 (11:09):
Spend money like a drunken sailor, and incredible spending on
the fiscal side. Correct.

Speaker 1 (11:16):
Agreed, Absolutely agreed, and so Powell. The first most of
Powell's first term is him trying to begin the process
of extricating us from that. But here's the problem. The
problem is Libel. We're still in control. So really, the
European the offshore European banks, the London banks, were really
in control of our monetary policy. And on this point,
for years, Jeff Snyder, when he worked for Alamba Partners

(11:38):
before he started Year Dollar University, had made that point
extreme again. He did it, really, he did it. He
did Yeoman's work on this. I happened to disagree with
Jeff now because he thinks that Libor is still somehow
in control. I don't agree with him at all on that.
But in twenty seventeen, the first thing that happens when
Powell is confirmed is they they pulled this idea off

(12:01):
the shelf that's been at the FED as a white
paper since the librar scandal of two thousand and eight,
which is we need to move away from lib or
to the securit overnight Financier's just some version thereof. So
the FED had already done a decade's worth of work
on how this would be implemented. John Williams, who is
the head over at the New York FED, was the

(12:23):
guy who was the champion of this. So Williams has
moved immediately from the Atlanta FED to the New York
to the all important and all powerful New York FED.
And then SOFA is implemented immediately as a pilot project
with a five year rollout plan from twenty seventeen to
full implementation SOF by January twenty first of January vers

(12:43):
of twenty twenty two.

Speaker 2 (12:45):
That's the history.

Speaker 1 (12:46):
And then SOFUR is en rolled out in stages as
various aspects of the American The domestic American markets are
shifted away from lib Ork towards SOFUR. But it's really
when all American at all new debt. It doesn't matter
what it is. A credit revolver, a car loan, a
credit card, anything. It's all now index to SOFA and
it's not indexed to libor. So now we have a

(13:09):
full Now we have the ability to decouple. We have
the beginnings of the d coupling.

Speaker 2 (13:13):
Of course, the.

Speaker 3 (13:14):
World, well, the New York gets control, right, Bread gets
control markets as opposed to London banks.

Speaker 2 (13:21):
Sure fair enough.

Speaker 1 (13:22):
And and look, you know, you know my libertarian slash
Austrian roots. I'm not crazy about that. We're dealing with that.
But that's still better than it being City of London
because there we have fundamentally different rules for how capital
has handled the United States than they do in London.
We can't infinitely re hypothecate correct, Okay, we can't do

(13:44):
infinitely hypothication of securities.

Speaker 3 (13:46):
Is basically in New York. For those who are not
familiar with the word rehaproflication, which is a big scary
sounding word to put that in in Layman's terms, There
you can create an infinite amount of money without any
backing for it. That's what unlimited rehap application is. This

(14:07):
is the reason why Lehman Brothers had most of its
two thousand and eight derivatives exposures in London, not in
the United States. Because they could create an infinite they
had a literally a perpetual money machine. The problem is
that when they dancing stops and I'm mixing all kinds
of metaphors here, Warren Buffett says, when the water goes out,

(14:30):
you see who's swimming naked, And they were swimming naked
and they failed. But that's because they were enabled by
the rules in the City of London to put infinite
amounts of leverage.

Speaker 1 (14:40):
In London, right And in fact, what they were allowed
to do is they were allowed to take a security
pledge it as collateral, and they take one hundred percent
of that pult and then the person who has that
contract as collateral could pledge one hundred percent of the
value of that contract against a different contract.

Speaker 2 (14:54):
So you could write a euro or end swap.

Speaker 1 (14:56):
Then you could write again dollar swap, then you could
write it, then you could write an insurance contract.

Speaker 2 (15:00):
Then you could write this. And it's all.

Speaker 1 (15:01):
Built on the same little pile of money that was
originally there, but there's all these derivatives and then they
sell it to us as well.

Speaker 2 (15:08):
The net value of all.

Speaker 1 (15:09):
These derivative contracts is you know, forty billion dollars, forty
million dollars and it's not really that much money, yeah,
as long as everybody can pay.

Speaker 3 (15:18):
And then when when somebody doesn't, the daisy chain of
defaults begins and you get a financial crisis.

Speaker 1 (15:24):
Well, and then what what I always like to say
is that, you know, there's the notional value of all
of these derivatives. And then people talk about the notional
value value of these derivatives all day long.

Speaker 2 (15:32):
They say six quadrillion dollars like yeah.

Speaker 1 (15:36):
And and the bankers will tell you that, well, it
all norms out to like forty billion dollars, yes, as
long as everyone can pay. But notional becomes net when
the other guy can't pay. Correct, That's the important problem.
All of a sudden, it's you know, will you owe
me about don't have the money? Well, you know, go
get it from that guy, and you got to go
get it, and you can't, and so the whole thing

(15:57):
then just collapses. And then what happen and then the
central bank has got as being is effectively being blackmailed
into bailing everybody out. So the fundamental shift for the
layman in the audience is that we moved from an
infinite rehypothecation system where there's no underlying collateral to all
of these contracts, to a secured system where someone has

(16:19):
to post some amount of collateral and that's it. And
so there's a limit to how much leverage you can
build into that system. And that limit is determined now
not by London, but by New York.

Speaker 3 (16:31):
And is it fundamentally more stable? Have we more have
we stabilized the financial system compared to what it was
pre libor, I mean pre sofer.

Speaker 1 (16:41):
Let's let's fast forward to last week. Okay, I was
just got off the phone with a patron who is very,
very sophisticated, and because he's worked in these markets, he
was trying to explain to me actually what was going on.

Speaker 2 (16:53):
So in all the.

Speaker 1 (16:53):
Podcasts that I did last week, I identified what was
what I thought was happening in the sovereign det and
currency marks. When we heard, well, it was China selling
treasuries and because they were angry with Trump over the terrors.
And then we heard that the basis trade, the new
the treasury market basis trade was blowing up. And then
we heard that it was Japan that was selling because
one of their pension funds was blowing up.

Speaker 2 (17:14):
And then we heard and then we heard them. We heard.

Speaker 1 (17:16):
But I'm like, I'm looking at the market on Wednesday
morning of last week, which is like April ninth, I'm
looking at it and I'm like, the US bond market
is off twenty basis points, the German market is flat,
and the euro is up five percent, the Canadian dollars
up five percent, the British pound is up five percent.
I'm like, oh, well, was clearly what's happening here is

(17:37):
that the selling is not coming out of China. It's
coming out in Europe. It's coming out of one Brussels
and Ottawa, and they're dumping treasuries onto the market. They're
forcing the long end of our yield curve up because
they all have they've all gorged themselves on trillions of
dollars since since the tightening, since Powels began tightening, they

(17:57):
bought collectively over one point one trillion dollars. With the
US treasuries all long dated stuff. We're not talking about
T bills here, We're talking about via the US International
Treasury International Capital Report. It's all long dated stuff. So
it's all fives and sevens and tens and thirties. It's
not six month t bills. Okay, it's not one year,
it's not one year notes. So what they did was

(18:20):
they were selling the long end of the curve to
push that up, and then when they sell that, the
yield goes up, the price on the bond goes down,
and then they can wander.

Speaker 2 (18:30):
Now they have to.

Speaker 1 (18:31):
Deal with that trade. So you sell a treasury, you
buy dollars. You then sell the dollars and buy your
local currency in order to convert your local currency into
your local debt if you want to try and keep
cap the price on the on your debt. Because if
the US market is selling off and everybody's worried about
a recession, and everybody's worried about this, the general market

(18:51):
response is going to be sell all debt, sell all treasuries,
and everybody get the cash. Get sell equities, sell bonds,
sell everything, because we're now were you out a global
recession slash depression, Go to cash. So the tell was
two things. The German butdn't market not moving at all yep,

(19:11):
and which is the safe have in trade of which
is the safe haven asset of Europe? And the Euro
rising sharply, which would be the biggest and deepest currency
market in your other than maybe the British pound. The
British pound moved with the British guilt market moved with
the US treasury market because it was already at a
it was already at a at a limit, a premium

(19:32):
like guilt are already trading. It's such a spread to
the United States market that it couldn't go any higher.

Speaker 3 (19:38):
Okay, So why were those tells and what what does
the significant Okay?

Speaker 1 (19:42):
So if you break it down like I said, you
sell treasuries, you buy dollars, you sell dollars, you buy euros.
You then pow money into the German bunt right, yep,
So who's selling? Who's got enough treasuries to sell?

Speaker 2 (19:57):
China?

Speaker 1 (19:57):
The Chinese yuan didn't move at all. Chinese bond markets
didn't move at all. The Japanese end didn't really move.
There was some buying of Japanese government of Japanese government bonds,
so they were able to absorb any flows any any
aftershocks in Japan. It would always show up in the currencies.
The currencies were to tell. Because the German market is

(20:23):
big for Europe, but it's not big compared to the
US treasury market. So you sell, for example, say you
sell fifty billion dollars worth of US treasuries in order
to bomb the market. And then you start cascading effects
of unwinding basis trades and sofer spot trades and all
this other weird stuff, all this other esoteric stuff that
even the guys who trade it don't understand.

Speaker 2 (20:43):
Yeah right, yeah, literally.

Speaker 1 (20:47):
And then you you're going to take that money and
then you're going to wander through that that machine that
I said, from treasuries to dollars, from dollars to euros
and duros to German bunds. But if you don't want
to move the German bund too far without moving price,
you can only there's a limit that you can do
to that. So there will be two tells. The two
tells would be in the central bank world, the currency

(21:11):
rises on the central bank are on the sovereign world, ye,
so euro currency rises. And in the private markets that
are trading in sympathy with this, gold goes ballistic.

Speaker 3 (21:24):
Yeah, gold with ballistic and gold.

Speaker 1 (21:27):
Going ballistic makes perfect sense as well, because the guys
are getting out of all these other trades, and they're like, well,
where am I going to go in this market?

Speaker 2 (21:32):
I don't know what the hell's going on. I'm going
to gold.

Speaker 3 (21:35):
Well, let's come back. Why is it significant that the
euro rose and the German boon yields it didn't move much.

Speaker 1 (21:41):
It's it's it's that's indicative of who was doing the selling,
because okay, who else who else would buy German buns
under this under this arrangement other than the European Central
Bank or the Bank of England or or or I mean,
no one else wants that deck because on a daily basis,
they're those markets themals are constantly being manipulated. Christine Leguard

(22:04):
has yield curve control programs in place that she's been
using for years. It's it's the German market has not
been allowed the German ten ure has not been allowed
to go above two point five percent for any length
of time for four years now.

Speaker 3 (22:18):
So link is back to Trump. What's the significance to
the US?

Speaker 1 (22:22):
Oh sure, the significance to the US is that what
you're now trying to do is you're trying to signal
some markets that Trump is breaking the world. The world
doesn't want the chaos that Trump is engendering by selling
the long end of the yield curve. It's feeding the
narrative that Trump has breaking the world. And meanwhile the

(22:43):
German buten stays flat and everybody's like see. And then
literally Bloomberg writes an article and publishes an article that morning,
same time this is all going on, says hey, if
the if the German, if the US treasuries are no
longer a safe haven asset, I shall I shall present
to you the German Bund as an alternator. Is literally,

(23:04):
they were literally telling you what they were doing.

Speaker 3 (23:07):
Yes, but here, now let's come back to that's the
story that Bloomberg wrote. The real story, and you pointed
this out in your in the podcast you refer to
is that the US had no problem with the ten
year bond auction, which tells you there really wasn't underlying
chaos in the market. Sure, you had some some some

(23:28):
correction in the stock market which obviously was overvalued in
and run up too far. But they tried to create chaos.
They tried to create a financial crisis, and they couldn't.
Am I understanding your thesis correctly?

Speaker 2 (23:40):
Yes? Because look what did they do? They moved the US.
They moved the US.

Speaker 1 (23:43):
Thirty year from like four point five percent to four
point nine percent, and everybody went. Everybody else went, oh
Tasur sales bye, and they went the lot. And then
we had a stellar ten year auction that day. We
had a stellar thirty year auction the next day, and
by the way, we had a stellar twenty year auction
on Monday.

Speaker 3 (24:00):
So Scott, best one is that your yes?

Speaker 2 (24:04):
That would be ye? What's that? Yeah? Absolutely?

Speaker 1 (24:09):
I think he I think he won ultimately. And then
in my discussion with my with the with my patron
this afternoon, in preparation, by the way, for this conversation,
you know, he was telling me he's picking me. A
couple of days ago, he said, the real inciting incident
for all this you're He's like, Tom, I think you're
correct about all of this, but that's not the inciting
incident of the story.

Speaker 2 (24:29):
That's kind of like a movie speak. That's plot point
number one.

Speaker 1 (24:32):
That's act that's the middle of act one through act
you know, through act three. The inciting incident was that
because there was He's like, there was no real movement
in the basis trades. It was all in the sofa.
It was all in the sofa swap trades. And zero
Hedge even noted that in the article Yes down this
road that so what was happening is that these guys

(24:53):
were all along US treasuries and they were short in
the sofa and they were they were short the sofa
futures curve all the way out from like six months
out to three years out.

Speaker 2 (25:05):
Say they were.

Speaker 1 (25:05):
Long US treasuries on a three year market, and then
they were and then they were they were short. How
he put it, the strip from the cross the entire
sofa futures curve.

Speaker 2 (25:16):
And if you go back in.

Speaker 1 (25:17):
And you can do this, you can go to the
cmme's website and you can go look at so for
futures curves.

Speaker 2 (25:22):
I have that thing bookmark.

Speaker 1 (25:23):
As a matter of fact, I have a tab of
the Sofa Futures Curve open in opera twenty four to
seven on every computer in.

Speaker 2 (25:30):
My house and my iPad. It's there because I look
at it all the time.

Speaker 1 (25:34):
And you can go in and you can go look
at the and you can look at the trading data
and you can see it on those days, the size
and volume of the trading bars. I was looking like
a two year a two hour chart, so or one
in a two hour chart. And I was looking at
the intra day market action and it was it was crazy.

(25:54):
What was happening. It was, you know, the sofa market.
If it moves to five basis points in a day,
that's a lot.

Speaker 3 (25:59):
Huge, right, Yeah, because of the trillions tied to it.

Speaker 1 (26:02):
Yeah, three basis points is a good two to three
basis points is a normal day. Five basis points would
then be a two sigma day, and forty basis points
is a twelve sigma day.

Speaker 2 (26:12):
Yeah, you know mathematics.

Speaker 3 (26:13):
Well, and what did we have last week?

Speaker 2 (26:15):
And we had something like that.

Speaker 1 (26:17):
We had we had one hour bars that were literally
to twenty and thirty basis points. And they were all
timed with either of the New York Open, the European Clothes,
the the They were attacking at different times. They were
attacking on the Sydney Open at five pm New York time,
vers at six pm New York time. They were attacking
at three am, which is the opening in London. They

(26:37):
were attacking at eleven o'clock, which is a close in Europe.
They were attacking it and in different days and it
and you can watch a crescendo over the course of
a week. It started a couple of days before that,
and then it reached its peak on April ninth, and
then it's fallen off since then and over the last
couple of days. So for futures market has been stabilized quiet,
and so it was the US treasury market.

Speaker 3 (26:59):
So okay. So the aha of all this is that
this is a culmination and an actual break of the
US financial system being controlled by London banks and by
the European Central Bank and the Bank of England, and
the US has now rested control of its fixed income

(27:19):
market back definitively. Is that your conclusion?

Speaker 1 (27:22):
No, it is not what it is, okay. What it
is is telling you that we have now defined the
who the real enemies are. Now I'm going to take
you back to September twenty nineteen when we had the
Sofa crisis of twenty nineteen, when so was in a
liquid market and so blew out to like twelve eleven
percent or something on other day, and that forced the

(27:45):
FED to come in reopen the standing reboul facility for US.

Speaker 3 (27:48):
Banks, standing reader and men, and they.

Speaker 1 (27:49):
Did, and we had our reboult crisis at twenty nineteen,
and that is also very similar, by the way, to
the rebolt crisis of two thousand and seven. And at
the time, I don't know you and I were speaking
back then, but no, I when when we were, when
I was, when I was watching that play out in
September twenty nineteen, I said, well, if it, if it

(28:09):
echoes what happened in two thousand and seven, six months
from now, we're going to have a real financial crisis
in the United States, because that's what happened in two
thousand and seven.

Speaker 2 (28:19):
We had a rebook crisis.

Speaker 1 (28:20):
By March of two thousand and eight, bear Stearns vaporized,
failed as the commodity markets moved moved against their bets,
and bear Stearns was gone. Six months after that, we
had Lehman Brothers. So now in September twenty nineteen, the
FED comes in stabilized as the market, we had a
we had a sofa crisis, and then March of twenty.

Speaker 3 (28:39):
Twenty, twenty twenty crash and the.

Speaker 1 (28:43):
Treasury market goes bidless and the FED is forced back
to the zero bound.

Speaker 3 (28:47):
And now I blamed on COVID, but you're saying that
there were deeper financial plumbing implications. Are you predicting that
six months from now we're going to have a repeat
or because it was more stable this time, this was
not actually a s I am a battle.

Speaker 1 (29:02):
What I'm saying now is we have have If this
is if history repeats and rhymes, then is this the
inciting incident? And are we going to have a bigger
one three to six months from now? Remember in this
In this one though, in two thousand and seven we
lost Bear Serns and the Lehman Brothers had the worst
financial crisis since the Great Depression. In March of twenty twenty,

(29:25):
they had to like bump Covid on us.

Speaker 2 (29:27):
They had to have the price of oil.

Speaker 1 (29:29):
Over a weekend from Friday's close to Mondays Open, where
oil went from eighty dollars a barrel and then opened
to forty and blew the markets open, right okay, and
took down the world. This time, the Fed didn't even
have to come in and do anything right.

Speaker 3 (29:46):
But to the earlier point, yes, okay, equity markets have
had a correction, they were overdone. Sure, the rest of
the market hasn't actually had that big of a correction.
There are pockets of it, of course. But the perception
if you read the headline is that the world's falling apart, correct,

(30:07):
But that's not the reality when you look at the
market internals.

Speaker 2 (30:10):
I So that's what I would That's that's the way
I would put it.

Speaker 1 (30:13):
And then if you're if you're Europe, if you're let's
just let's just call space space, if you're the Rothschilds,
and you still want to control the world from behind
the scenes.

Speaker 2 (30:23):
Not that I'm a big fan of the whole roth Child.

Speaker 1 (30:25):
Yeah, yeah, I'm not a big fan of that, but
I think they're part I think they're players.

Speaker 2 (30:30):
And that's a.

Speaker 3 (30:31):
Proxy for that. That that tinfoil hat theory is a
proxy for.

Speaker 2 (30:34):
Europe, of course. It's a proxy for the old colonial
banks of Europe that have been, you know, moving markets
for five hundred years since.

Speaker 3 (30:42):
And have control of US interest rates literally until March exactly.

Speaker 1 (30:46):
Now here's the big question, you know, if you're them right,
and you're staring at Trump remaking the entire global financial
system based on going back to lower leverage, tariffs, lower
income taxes and everything else, and literally starting the process

(31:08):
of breaking the world up into currency blocks and potentially
even Oh my god, having an actual, you know, hard
asset back currency system of one one form or another,
not today, not tomorrow, but let's say five or ten.

Speaker 2 (31:21):
Yeah, heading in that direction.

Speaker 1 (31:24):
If this is that infunction point, would you not set
off every financial nuclear weapon to try and stop that?
If you're Europe, yeah, if you're your motive means an opportunity.
All I'm doing is acting like Colombo here. I even
have the cigar like even have the chief Cigars, and.

Speaker 3 (31:43):
They've got the financial press right, because the financial press
in particular is very anti Trump. But what is interesting
about the existing market backdrop is just how steady a
hand Scott Bessett has proven under pressure. And there are
two things that I wanted to ask you about and

(32:04):
shift the discussion a little bit, because you haven't talked
yet about the change that we now know is coming
in the supplemental leverage ratio and the impact that that's
going to have on the US Treasury market. And then
I also wanted to talk about the fact that the
stable coin bill is creating a dichotomy between offshore US

(32:25):
dollar stable coins and on shore US dollar stable coins.
And I believe this is the first time that the
US will officially sanction a difference between the offshore dollar
and the onshore dollar. Let's start with the supplemental lever.

Speaker 1 (32:39):
Okay, so this is really fascinating because this is actually
I would rather hear. I would actually really rather hear
what you have to say about this, because I've only
just started to dive into this. Those two things. The
stable coin bill is incredibly important. I just read a
standard charged report on it this morning. As a matter
of fact, I had a friend of mine send it
to me, and the supplemental leverage ratio, which I don't

(32:59):
quite under stand, was actually noted by my patron that
I discussed all the sofa basis, the sofa or swap
trade this morning.

Speaker 2 (33:07):
So I'm happy, I'm smart.

Speaker 1 (33:09):
I'm happy to throw it back to you on this
ok have you talk about it, and then we'll go
from there. One other thing I want to add to
this discussion when we get there, which is isn't the
US moving towards clear central clearing of all US treasury trades.

Speaker 3 (33:24):
It is it is which is taking some of the
dealer balance sheet constraints out of the treasury market as
an attempt to increase the liquidity and functioning, daily functioning
of the treasury market and take the fed's balance sheet
out of having such a significant role in it. But
here's the ahha. Just in the past two days, even

(33:48):
since I listened to your podcasts, it has been confirmed.
Even I think yesterday Powell confirmed it during the speech
team made that they are going to be relieving the supplement.
Leaboratory show that you know, I started a bank. You
know I come from investment banking and capital markets background

(34:08):
and also Austrian background, Austrian School of economics background. Okay,
to me, it has never made sense that the banks
had to hold capital against what is deemed to be
in this current financial system, the risk free asset. You
and I both agree it's not a risk free asset.
The US of course has default risk, but we call

(34:29):
it a risk free asset in air quotes and those. Actually,
the risk free asset is really the different side of
the same coin, which is a deposit. A bank deposit,
a bank reserve held at the Federal Reserve is risk
free because it's dollars held at the core of the
financial system, where the FED can just print more in

(34:53):
order to make sure it never defaults. And the US Treasury.
Martin Armstrong was the one who who got me to
see this, maybe fifteen years ago, that the US Treasury
is just a dollar that pays interest. It's the same thing,
and except it's an interest bearing dollar, that's all. So
it's really again different, different side of the same coin.

(35:15):
It doesn't have credit risk. So the notion that the
banks had to hold capital against this at all always
to me was an enathma. If the FED and the
capital set setters of the banks wanted to reduce the
leverage on the bank's balance sheet for the things like
infinite rehabpapication we just talked about a few minutes ago

(35:37):
that they can do in London if they really wanted
to fix that, putting a capital requirement on a risk
free asset made no sense to me ever at all,
And so it was that supplement a leverage ratio. During
the repo market hiccup and the March twenty twenty correction
the crash were the FED stepped in with its balance sheet,

(36:02):
but also they temporarily removed the supplemental leverage ray show,
which was a capital requirement that banks had to have.
And then there's the e enhanced supplemental leverage ratio for
the largest banks in the world. Okay, so here's what's
going to happen. Powell and Governor Bowman and multiple FED
governors have said in very recent days this is going

(36:25):
to change. So now you get these giant bank balance
sheets in the United States that have so far had
to hold capital against treasuries. And what do people have
in market runs of treasuries? Right? We saw huge rallies
and treasuries. Banks owned a lot of those because they
pretty much have had to own a lot of those,

(36:47):
and especially the regional banks went and loaded up on
them during COVID, when the FED flooded the field with
all this new money and told everyone that inflation was transitory.
What did all these community and regional banks do. They
went and bought long term treasuries so they didn't have
to hold capital against them. They weren't subject to the

(37:08):
supplementary leverage ratio as a constraint on their balance sheets.
So their attitude was, hey, let's just clip the coupons,
take a little interest rate risk, but the FED will
always backstop us on that. And then lo and behold,
the Fed raised rates and they got whips'd, and now
it's something like three hundred billion of unrealized losses in
the small and medium sized banks in their treasury portfolios,

(37:30):
but the FED has not really cracked down on those.
We obviously saw some of the banks that got them,
that had rolled that dice and played the immaturity transformation
mismatch game fail in the spring of twenty twenty three.
But the bigger aha is that the banks are loaded
to the gills with these treasuries and they don't have capital,

(37:51):
especially the large banks. The dealers don't have balance sheet
capacity to increase their intermediation in the treasury market. And
there's an obvious way to bring a new buyer into
the treasury market, and it is to relieve a supplemental
labora trade show. And I believe that a lot of
the fixed income market rally has been front running that trade.
And you will see more front running that trade as

(38:14):
you start to now that I'm putting you on this,
as you start to hear fed Governor's talking about it,
you will see even more front running that trade. But Tom,
this is a big deal because your dollar market and
foreign buyers that are reported through the TICK report that
you've referred to, where you're tracking the offshore buyers of treasuries,
and you realize China's not as big as as everyone thinks,

(38:37):
but the banks are and they they're about to have
a lot of treasury buying capacity unleashed. This is one
of the tools that gott Besent has to support the
US treasury market, and it's an important one. Now, how
he sequences this, it is huge. How he thinks sequences
this and how you know at what's the time period?

(38:58):
Is did all it once? He can't do it all
at once because then there's just be this rush to treasuries, right,
So I think the details are really going to matter
on that. But my point is, of course the US
treasury market isn't going to come on glued because you
have this huge guaranteed buyer that is right now constrained,
that's about to have its capital requirement relieved. And the

(39:20):
FED has control over the timing of that.

Speaker 1 (39:24):
That's fascinating and that's awesome, and I'm so glad you
went through it because I had no idea about any
of that.

Speaker 2 (39:31):
So it's another I really appreciate them.

Speaker 3 (39:33):
So now else shot too soon?

Speaker 1 (39:39):
But you know what a shock two days started two
days after synthetic Liboor ended and Trump, I think Trump
decided that a liberation day would be April second for
a reason.

Speaker 3 (39:52):
It's interesting I had not made that connection.

Speaker 2 (39:56):
Because remember now that because remember now.

Speaker 3 (39:59):
That because is over.

Speaker 2 (40:01):
Now they have to go and they got to go
get collateral.

Speaker 3 (40:04):
Yeah, yeah, they got to go.

Speaker 1 (40:05):
They got to use bank reserves to pledge. They got
to use treasuries as bank reserves to go pledges collateral
to get access to the US repol market. And they got
to pay our rates for it. And they got to
come to the FED or they got to come to
US banks. We're going to charge them sofa for it.

Speaker 3 (40:18):
So and they got to post the actual collateral and.

Speaker 2 (40:21):
They have to post the actual collateral. Yes, yeah, So
now it's which is a.

Speaker 3 (40:24):
T bill or a treasury bonds?

Speaker 2 (40:27):
Sure, something along those lines.

Speaker 1 (40:29):
And that's and these are and these are assets that
they were using as reserves to offset their savings. Now
now you know why the European Union is talking about
how do we mobilize the savings or more appropriately, how
do we confiscate the savings so we can prey our
banks from having to keep all this keep all these
these assets is reserves this is I think part of

(40:51):
the other part of the story.

Speaker 2 (40:53):
And again a.

Speaker 3 (40:54):
Little bit about offshore dollars. Sorry, go ahead, but.

Speaker 1 (40:56):
Then no, no, no, no, because I want to bring
something else in here, which is Basle three. Yes, Jamie
Diamond has complained bitterly about BOSLE three. I have heard
from a number of different people that BOSL three in
the United States is dead. And the reason why BOSLE
three is evil from an American bank perspective is that
it's asking American banks to hold something like thirty percent
more capital than European banks, as as as excess reserves

(41:24):
in order to make sure that we don't have a
systemic problem. And Diamonds like, absolutely, no, you're disadvantaging us.
And does that tie I don't Maybe.

Speaker 2 (41:33):
I don't know. Is that tie right into the the
SLR the.

Speaker 3 (41:37):
Well, because it was, it would have been in addition
to the SLR. Yeah, exactly. It was a big increase
in capital. Again, my point though, is it was it
was fighting the last war. It was fighting the wrong war.
If you want to reduce leverage in the GESIPS, which

(41:57):
I think is a valid goal, I've always the financial
system is too leveraged. It's fundamentally unstable, and especially now
with technology increasing the speed of capital turnover. Right, we're
reducing settlement cycles. You don't have as much fault tolerance
from an operational systems point of view because your settlement

(42:18):
cycles are speeding up and your return on capital as
a result of speeding up your settlement cycles should increase,
but your risk of problems also goes up because you
just don't have that fault tolerance of hey, I can
solve this tomorrow in the system, okay, And so everybody's
going to have to deleverage anyway, But how do you

(42:38):
do it? Do you do these crazy things like putting
the e supplemental leverage ratio requirement capital requirement on a
risk free asset, or do you actually get to the
real sources of risk in the system, which is all
the leverage and credit risk and interest rate risk. I
would much prefer to see it done with the latter.

(42:58):
It was a blunt and trument. It was designed, ironically
to try to reduce the size of the big banks.
But what happened during the big during the Biden administration
to the big banks they got bigger or yeah, so
it actually so, as with so many government policies. The
the intention is good, but the actual outcome is the

(43:19):
opposite of what was intended. And uh and and you know,
they handed First Republic to Jamie Diamond by giving him
an exception to the ten percent limit on deposits. I P.
Margan Chase has now more than ten percent of the
US deposit market, and they gave him an exemption to
be able to buy First Republic. They are there's there are,

(43:40):
there are. There's a lot of smoke around those four
bank failures from the spring of twenty twenty three that
there were. There were shenanigans in every one of them.
And one of the one of the eyebrow raising things
was how First Republic was was handled and why Jamie
Diamond was able to get the exception to the ten

(44:02):
percent deposit limits. I digress, but look at the look
at the outcome. The big banks got bigger and and
and the medium sized banks got squeezed. And that was
not what the intention of the bank regulators was. I digressed,
but what they were.

Speaker 1 (44:17):
Trying actually, I want to I want to stop you
there for a second, because I live in a world
that's far more cynical than that.

Speaker 2 (44:24):
I'm sorry. I just like I just look at that.
I say to myself that that that sound. That looks
like a bug. But it may have been a feature.

Speaker 3 (44:31):
Well, are you saying Elizabeth Warren and the Warrenites are
actually big bank defenders?

Speaker 2 (44:36):
No, I'm not. Yeah, yeah, I'm not.

Speaker 3 (44:41):
Especially had total control of the Bible financial regulators right
of It's now not even a secret. It was an
open secret for a while, but it's not even a
secret anymore that it's even the financial historians are coming
out and acknowledging she was the de facto president of
the United States on these matters. Yeah, we had to
total control over financial and economic policy. Biden seeded that

(45:04):
to her. It was a deal the two of them
made when she dropped out of the twenty twenty presidential
race and endoorse Fiden. So okay, So, but the funny
thing is they say they don't want the big banks
to get bigger, And your point is that was that
may have been actually what they wanted.

Speaker 2 (45:20):
Or or that.

Speaker 1 (45:22):
I don't even believe in any way, matter, shape or form,
that was with Warren works for the United States. I
don't think she even works for the big banks on
Wall Street. I think she works for so I think
she I think she works for Europe. I think she
worked at the City of London. I think she works
for Brussels and Davos and all the rest of those people.
Everything about her, her, everything about what she does that

(45:42):
screams that and that any way that you can create
a so I look at like First Republic, for example,
I know we're digressing away from where we wanted to go,
But I mean there comes a point. I'm not saying
that I believe this. I'm just like, we're going to
throw it out there, which is that maybe we had
to deal with those four banks in the way that
they did, and they had to break some rules in

(46:05):
order to break some of the other funding cycles that
were happening that were we don't even know about. I
I I you know, you and I talked during that.
We did a podcast during the blow up of Silicon
Valley and the Signature Bank and all that. We talked
about all of this, and I thought that those were

(46:25):
public executions by the Federal Reserve in order to break
the San Francisco Fed's a challenge to the New Yorks Dominance.
And I think and I still I still stand by that,
But I'm happy to be wrong about it, and if.

Speaker 2 (46:40):
We go back and look at it.

Speaker 1 (46:42):
But because I don't trust Mary Daily at all, I
don't I don't trust any Allen. I don't trust any
of these freaking people because clearly, clearly there's something going
on there. And then there's probably a China angle that
nobody even the freaking knows about.

Speaker 3 (46:54):
But let me throw your curb. I don't know if
you saw Nick Carter's Pirate Wires article. I'm told by
DC insiders there wasn't anything new in it, but there
was a lot new to me. And Nick was able
to get people to talk and he said, listen, yes,
there was a lot of desire to kill crypto, which
is why they wanted to kill the crypto banks. But

(47:16):
what was really going on was Silicon Valley Bank had
the bank run. It was triggered by the FED forcing
silver Gate to quote unquote voluntarily liquidate, and the next
day everybody was like, oh my god, look at the
balance sheets of these banks. They had huge unrealized losses
in these treasury portfolios that we just talked about that
they were because of all the money that was flooded

(47:38):
into the banking system during COVID. It had to go somewhere,
and there were the short term treasuries paid zero yield
and so the bonds. So the banks went and bought
long bonds. They invested in tenure bonds because they had
no capital charge. Again, they weren't subject to the supplemental
leverage ratio. That was not their constraint and as a result,

(48:01):
they didn't have to hold capital against it, and they
could clip the coupons and take the yield the problem.
And they were looking at the Fed wink wink, nod, nodding,
saying this is where the money should go. And then
they got rugg pulled by the Fed raising rates, and
all of a sudden they had huge unrealized losses. And
that's not a problem if the bank stays liquid, but

(48:21):
if there's a bank run. Oops, And that's what happened, okay,
and that happened at Silicon Valley. But here's what Nick's
report said. That was enlightening and I think plausible that
Silicon Valley was failing. You had all these Silicon Valley
startups that had all of their corporate cash on deposit

(48:41):
at Silicon Valley Bank and they were going to go
under Nancy Pelosi made a phone call on that Friday
of that of Silicon Valley Bank runs bank run, and
she made a phone call to the White House begging
the White House to guarantee all uninsured deposits. In other words,

(49:05):
there was not going to be a cap of two
hundred fifty thousand dollars that most of us operate under,
where the FDIC insures up to two hundred and fifty thousand.
She wanted every uninsured deposit to be capped. The problem was,
this was a San Francisco power play over New York.
And what happened in order to justify invoking the systemic

(49:29):
risk exception, the FED needed a New York body to
counter the San Francisco body, and they took down Signature
Bank on that Sunday. For those who are in the
banking world, that is extraordinarily rare, because banks go down
on Fridays and the FDIC comes in and sells them,

(49:50):
and then they open first thing on Monday morning with
a new owner and all the deposits guarantee, the two
hundred fifty thousand dollars deposits guaranteed, and then everybody else
is to take a haircut. Well, that's not what they
did with Silicon Valley Bank. But in order to justify
paying off one hundred per cents on the dollar to
uninsured depositors, they needed a scalp in New York and

(50:11):
that was what enabled them to invoke the systemic risk exception.
And Barney Frank was screaming at the time, and screaming
even louder now that that bank was solvent, that bank
was liquid, that bank was shot. Signature Bank was shot
on purpose by the Fed, he alleges, and he even
talks about how he called J. Powell. Barney Frank, as

(50:34):
a director of Signature Bank, called J Powell. Jay Powell said,
you got to talk to Michael Barr, the Vice Sheriff
for supervision. Barney Frank said, I talked to Barr, said
I'm on it. I'll call you back. And then bar
never called Barney Frank back that night, and that was
Friday night. Signature had collateral parked at the Federal Homeland Bank.

(50:56):
They just needed, he said. Barney Frank said, they just
needed a trip already agreement to be able to move
their collateral from the Federal Homeown Bank to the FED
discount Window, and the Fed wouldn't call him back, and
so they just started moving collateral and the FED kept
rejecting it. Wow, these banks were shot on purpose, is
the allegation. And there's an awful lot of smoke. I

(51:19):
said there was. There've been allegations for a while that
the whole thing started with the desire to take Crypto down.
And it came out in lawsuit filings that the FED
pressured Silvergate after it had survived a bank run. Everyone
thought Silvergate went down because of a bank run. No,
it survived the bank run, and then the FED came

(51:40):
in and pressured it and they voluntarily, in air quotes,
shut down. And the next day, with all that jitteriness,
the Silicon Valley Bank run began, and in order to
justify invoking the systemic risk exception to bail out not
just Nancy Pelosi, but her husband's business because he had
mezzanine lending business, Nick goes through all of this right

(52:04):
and and it would have it would have gone bust,
he alleges had Silicon Valley Bank not been bailed out,
And he points out that Silicon Valley Bank and Silicon
Valley itself is Rocanna's congressional district not Nancy Pelosi's, but
she was the one allegedly who made the call to
the White House. So yes, there is an awful And

(52:25):
by the way, now let's move forward to where we
are today. Last week Governor Bowman, who is Trump's nominee
to replace Michael Barr, who was obviously playing ball with
the Warren crowd. Again. Remember, you know, in order to
get a job, a political appointment job in the Biden administration,
Warren controlled it, all right, So who was she who

(52:45):
were all these folks reporting to?

Speaker 1 (52:47):
It?

Speaker 3 (52:47):
Was her? Warren? So now Trump has nominated Bowman. Bowman
dissented from the FED self assessment of its performance during
the spring twenty twenty three bank run crisis. They within
ninety days put out a self assessment and it was
voted on by the Board of Governors. Bowman put out

(53:11):
she took the gloves off. Steve Kelly from Yale tweeted
about this at the time that Bowman really took the
gloves off because she said this was a self serving
self assessment by the people who made the very mistakes
that they were supposed to self assess, and that the
other FED governors did not have access to the information

(53:31):
and we're not able to comment on the report and
were asked to vote it through, and she dissented because
of that. Sure, now that speaks volumes about what really
happened inside the FED, how siloed information was. Keep in mind,
you know, my company was dealing with some of these
very same people who were trying to kill us literally

(53:53):
during that time. Right. So, anyways, she announced that she
will be reopening that she said will be examining whether
the skill set matches the needs of the current market,
and that she will be re examining the whole supervision
and regulation apparatus at the FED. Now breadcrumbs, Scott Besson

(54:14):
at Treasury has been saying, we need to restructure supervision
and regulation rights. Right, banks are bristling under this supplemental
leverage ratio, the big banks especially, but not just the
jesips of the regionals too, bristling under that balance sheet constraint.
You can see where the deal's coming here. It's obvious

(54:35):
where it's coming, and the banks are going to get
capital relief. That's going to be good for the Treasury markets.
That's gonna help Scott vessn't in what he very clearly
wants to do. And he keeps talking about is getting
the tenure down because that puts money in people's tenure
treasure yield. That puts money in people's pockets, in main
Street's pockets, not Wall Street. So yes, big, big, you

(54:58):
should read Nick Carter's Pirate Wire article, and I just
gave you the bulk of it. But it was all
about justifying invoking the systemic risk exception to be able
to bail out the Silicon Valley depositors.

Speaker 2 (55:12):
Excellent.

Speaker 1 (55:13):
Do me a favor and send me a link to
the articles. I'll put in the show notes to the podcast. Yeah,
I will do, so, I'll read it everybody else. Yeah,
just throw it in the in the chat and we'll
take care of it.

Speaker 3 (55:23):
Let's go to stable Coin Bill next. Yeah.

Speaker 1 (55:25):
No, so the stable coin Bill is that's fascinating as well.
So now again, I mean this is so episode two thirteen,
Caitlin Long takes over the podcast.

Speaker 2 (55:33):
That's what I which I adore. I think it's been
I'm so happy. Are you kidding me? Like? This has
been phenomenal.

Speaker 3 (55:43):
I'm so very of each other and teaching each other.

Speaker 2 (55:46):
It's all good. It's all good. I do not I
say that with the most amount of respect. It's been great.

Speaker 1 (55:52):
So with that, with that said, yeah, let's talk about
the stable coin because I've been I've been saying for
a long time now, like I just just read the
article or the research note from Standard Charter, and they're
talking about a probable ten x expansion of the stable
coin market now at least. Yeah, Now, let's talk about

(56:14):
what I've been saying about tether for a long time.
And and I don't think it's a hard argument to make,
which is that and certainly USD coins works the same way,
which is that they have to hold you know, there
they affect the kind of like hot money sink or
the heat sink for short term treasuries, like they are
short term drudgery demand, especially against bitcoins, so trading against bitcoin.

(56:35):
So if they're talking now about a massive expansion thereof
of the stable coin market, because that's then we again
you're starting to see even more if I'm if, I'm
if I'm picking up what you're laying down an even
bigger argument for why we have now fully decoupled effectively

(56:57):
the way the financial the way the financial system in
the United States operates relative to the way dollars are
priced around the world versus who's actually in control of that, So.

Speaker 2 (57:08):
Why don't you take it from there? And then we'll
go and we'll go with that.

Speaker 3 (57:11):
Well, and what I introduced is that the stablecoint bill
is going to create for the first time, a endorsed
differential between an offshore dollar and an on shore dollar.
The FED particularly because of the control of the European
banks on the euro dollar market. What is a euro dollar?
Let's go back. It goes back to the nineteen fifties
when Russia didn't want to hold during the Cold War

(57:32):
it's dollars in a US bank because it was afraid
they'd be confiscated. So it got the European banks to
agree to take US dollar deposits. So there was this
huge offshore market which is actually as big, if not bigger,
than the onshore US dollar market. It is big, and
to your point, it hasn't been in control of the FED. Well,
the FED it's now rested control over interest rates. The

(57:56):
most important interest rate was until recently libar. It's now
so for and it used to be unsecured priced in London,
it's now secured price in New York. Okay, now here
comes Tether. Tether is a company that, for all the
allegations around it related to money, luinering, et cetera, et cetera,

(58:16):
the Biden administration did not shut it down. Let's stipulate
that is a fact it could have in theory, especially
when it found when it was disclosed that it wasn't
just a broker dealer in the United States that was
holding its US dollar reserves. It's a primary dealer. It's
Canter Fitzgerald. Okay, one of the twenty four primary dealers
of the US treasury market is holding Tether's treasuries. So

(58:36):
obviously there's a US nexus. The Biden administration could have
shut it down if it wanted to, and it did not. Okay,
And frankly, I think it's not difficult to make the
logical leap as to why it didn't because the CEO
has now been talking about openly how much they're working
with US law enforcement, and three letter agencies are all

(58:58):
on board it. So the long story short is there's
a foreign policy reason why Tether exists offshore. Now what's
fascinating to me is that the is that Congress is
about to ensconce this by saying okay, we are, you
can have you can be an offshore issuer and you
don't have to do all the same know your customer

(59:19):
and anti money laundering rules that particularly that a bank
has to do. Bank has to do what's something called
c IP upfront. You have to before you onboard a
customer to a bank, you have to do all the
Know your Customer and Enhanced Customer Information program upfront. FinTechs
don't have to do that, and lord knows an offshore

(59:42):
company does not. Okay, so let's also stipulate that banks
have the highest level of compliance on that fintech's less.
So although especially there they're subject to the same rules,
but we know in practice they're not. And then offshore
again they say they're subject to all the same rules,
but again we don't in practice they're not. Okay, so

(01:00:02):
there's three layers. What what is Congress doing. They're saying, yeah,
those offshore guys, we don't want to shut them down.
We're going to keep it just as is. So what
is Congress doing? They're creating an incentive for stable coin
issuers to leave the United States and to go offshore.
Right now, is this something I don't know what Besson
thinks about this, and obviously there's that there's the best

(01:00:24):
in Lutnik friction, shall we say, that's been reported multiple
times within the administration, best in controls Finsen, which would
be the regulatory arm in the I R s, which
would be the regulatory arm of a crackdown if it
were to come on those offshore stable coin issuers. And
then and and Lutinink obviously had the connection no longer

(01:00:45):
officially connected to his firm Howard to Canter Fitzgerald. So
you see that that that access right there. I don't
know how this is going to play out, but right now,
the way the stable coin bill is drafted, and it's
pretty close done, is that there is a the offshore
stable cooint issuers do not have the same requirements as

(01:01:06):
on shore. Now, let's stop and think about what that
means for the US dollar because we've created a two
tier system, and a two tier system on all these
financial crimes compliance requirements, or I would argue there's a
three tier system banks, FinTechs offshore, lowest requirements offshore. Is

(01:01:28):
that going to stay in place? The whole idea is
tether when Powell or do we know talks on podcasts
about how that has created incredible resilience for the US
dollar because Tether is pushing the US dollar out into
emerging markets down to the communities that nobody has banked

(01:01:49):
before because nobody could figure out how to bank them,
and those communities bank them profitably, and those communities Tether did.
Hats off to them for doing that. They those communities
have access to the US dollar for the first time,
and in most of those emergency markets, they would much
rather have a US dollar than their own local currency.
And Tether has built this distribution channel and there is

(01:02:10):
nobody competing with them, and they're pushing the US dollar
out into the distribution channel, and they're recycling those tiny
amounts of money from working class in emerging markets. And
I think they have four hundred million users. It's a
stunning number of users. They're the biggest financial company in
the world right now and just keep getting bigger. And

(01:02:32):
they are recycling all of those flows back into the
US treasury market. What is that doing because those are
not going to be panic sellers. What is that doing?
That is increasing the resilience of the US treasury market.
So this is he's right when he says that this
is actually there's a strategic value to the United States

(01:02:52):
for this. But now let's step back. We've got these
on chart issuers who are trying to be regulated and
break their way into the banking in stree and Custodia
is one of those. And then we've got these offshore issuers,
and there is a difference in regulation between the two.
But let's talk about it. For Visa VID the US dollar.
The way that the said kept a different it kept par.

(01:03:15):
Saltan polls in our talks about this all the time
that par is the most important price of money. That
is ultimately the value of having a clearing account at
a central bank is that you get a PAR guarantee
on the currency. Par is what the central banks enforce.
Why did the FED put swap lines with other foreign

(01:03:38):
central banks to be able to enforce par in the
euro dollar market. Now we've just created a new euro
dollar market called stable coins, and there's not going to
be an enforcement of par because the state because there
isn't going to be a swapline infrastructure up to enforce par.

(01:04:03):
What is the significance of that.

Speaker 1 (01:04:08):
I have stile just I'm just I've been absorbing everything
you've been saying. I will be I will, I will.
I'm going to plead the fifth on this one, Caitlin,
I am because I'm not sure what this, what this,
what this implies. I cannot I'm not gonna I'm not
gonna be able to. I'm not going to try and
fake it to make it here.

Speaker 2 (01:04:26):
I don't know.

Speaker 3 (01:04:28):
I'm not sure that anybody knows. And I will That's
what that's okay. I'm okay because I don't know the answer.
That's why I kicked it over to you. But what
I will say is there are entire green fields for
stable coins. A lot of people think crypto doesn't have
any use I'll tell you the biggest reason. And by
the way, Taylor created the killer use case, which is
for the US dollar, and a lot of people look

(01:04:49):
at it and say, why do you need a blockchain
for that? That's an inefficient database. Yes, of course it's
an inefficient database. But what were they able to do
create incredible network effects by having four ndred million users
globally that's bigger than the United States. Yes it is, right, okay,
in population, right, Okay, So now, incredible network effects, that's

(01:05:10):
what we're tapping into what are the green fields. The
biggest one is putting that into the regulated banking industry.
Everybody right now is forced into fed wire ACH and
a little bit of fed now, but that was such
a controlled, closed system that it hasn't really taken off
fed wire in ach. Hell, stable coins are faster, cheaper,

(01:05:34):
more auditable, more programmable, safer from an IT security perspective,
I would argue for a whole host of reasons, this
is a game changer to push that into the green
field of the traditional banking system, which is what Custodia
just did. But it's more than just that. Paulo or

(01:05:54):
do we know, also talks about machine to machine payments.
We are going to have our optimist robots pay our
test lis going and filling up our teslas right right
without human intervention. Somebody's got to figure out how to pay.
That is not going to be fed wire in Ah.
That is going to be these these these digitally native
forms of the US dollar, and that is also a

(01:06:17):
green field. Tom These are huge market opportunities. It's going
to change.

Speaker 1 (01:06:21):
No, No, you're you're absolutely right. I'm beginning to catch
up to you. You have fired at me like an
unbelievable amount of stuff, and I'm and.

Speaker 2 (01:06:29):
I'm eternally grateful for it.

Speaker 1 (01:06:31):
Don't go get me wrong, but I'm beginning to find
I'm because in all of that, I'm trying to absorb
all of this.

Speaker 2 (01:06:36):
Now.

Speaker 1 (01:06:36):
Now, let's now, let's go back and let's ask what
I have to like, go back to first principles for me, ready,
which is what current currency settles thirty percent of the.

Speaker 3 (01:06:45):
World for x, it's more than the best dollar.

Speaker 2 (01:06:50):
It's the British pound.

Speaker 3 (01:06:52):
Uh huh okay, right, and nobody wants pound. Stable coins
can go by the way they break in England. Made
a stupid decision too, to say that stable coin issuers
pound stable coin issuers had to charge fees and couldn't
earn interest. What does that guarantee? It violates that that.

Speaker 2 (01:07:11):
Christ Park rightly the dumbest thing imaginable. So you know,
so I from the beginning, like all of this stuff.

Speaker 1 (01:07:20):
I've been saying, I didn't really believe that Donald Trump
when he was coming into office, had any real understanding
And I still don't think Trump understands a lot of
any ninety percent of it.

Speaker 3 (01:07:32):
We just he's got people around him he has people
around espectually Scott, Yes.

Speaker 1 (01:07:37):
Right, exactly that, but he understands the real at the
thirty thousand foot level, who the real enemy is, and
he's poked that snake over and over and over and
over over again. Europe and City of London and the
City of London's Achilles heel.

Speaker 2 (01:07:51):
Is that they want to protect that.

Speaker 1 (01:07:56):
Egregious advantage of having the ability to settle and and
call and collect fees for the world's four x because
those are the biggest those are truly the biggest markets
in the world. We talk about the treasury market being big,
we talk about the U sequity market being Oh no, no,
it's all four X baby on a day, on a
daily basis, it's an insanely large thing. So watching Bessent

(01:08:19):
and Company and Trump come out and bless things like
Ripple and and what he's saying is, we're going to
have control over these stable coins. They're gonna be in
the US, and we're gonna give we're gonna give preferential
treatment to the to the ones that we deemed made
in the USA for lack of a better term, and
we're going to use that as a means by which

(01:08:40):
to we can.

Speaker 2 (01:08:41):
We can we can now program them to.

Speaker 1 (01:08:43):
Say yes, as you just said, we can now take
that business away from London, who's also, by the way,
shot themselves in the foot, from their other major business,
which is ensuring the shipping around the world make most
of their briging money. What do you think like they've
already destroyed that. The and the Iranians, I mean, the
Russians are going to have their own you.

Speaker 3 (01:09:03):
Know, they shot themselves in the foot on this stable
coin piece.

Speaker 2 (01:09:06):
Too, agreed because and Tether left Europe.

Speaker 3 (01:09:09):
Why bother? It's ninety nine dollars.

Speaker 1 (01:09:12):
Anyway, exactly so you and moreover, on top of all
of this, if you read, if you go back to
what you touched on earlier, which we didn't really get
a chance to talk about, and because you fire hosed
a whole bunch of really good, really good.

Speaker 2 (01:09:28):
Stuff at us.

Speaker 1 (01:09:29):
Bessant and Powell have lunch every Monday, right, they're having lunch.

Speaker 2 (01:09:37):
The best came about the other day is that.

Speaker 1 (01:09:38):
Do you talk to to the pet chairman. He's like, yeah,
we have lunch every Monday. This week it was an
away game. I went to visit him. I went to
visit him and he you know, I didn't hear that.
And every other week they trade back and forth. They
so they're clearly talking and co good.

Speaker 3 (01:09:51):
That's good. I did not know that. That's great because
Powell had said he hadn't talked to Trump.

Speaker 1 (01:09:56):
Right, he doesn't talk to Trump, but he talks to
best all that that's necessary. So there's a fundamental difference
between Powell and Yellen where they didn't talk at all.

Speaker 3 (01:10:06):
Well, they were at they were at each other's throat
exactly right. Yellen was trying to do qui through the
Treasury General account and on behalf making Powell's job a lot.

Speaker 1 (01:10:16):
Harder harder and left him and left all of them
with eight point nine trillion dollars which need to be
rolled over. And yeah, yeah, we don't even want to
get into that so clearly, well, but.

Speaker 3 (01:10:25):
We just laid out some places though, Tom, we're not
going to be difficult for to create some of that
bind man.

Speaker 2 (01:10:34):
I agreed, and the right time, I agreed.

Speaker 1 (01:10:37):
But the thing that's important here is that what I've
been positing for a while is it in order to
finish there, they have a plan to recapitalize the United States,
and I think they want to create a domestic dollar
that is backed differently than the offshore dollar.

Speaker 3 (01:10:53):
And I think that that's what the stable point bills is.

Speaker 2 (01:10:57):
That's where I'm going with this.

Speaker 1 (01:10:58):
And at the same time, or the business, the for
X business off from from City of London control it.
If City of London wants to move stuff around, you
know in British pounds, you go right ahead. But you know,
or what they know, what the Bank of England is
doing is they're being subsumed into the DCD.

Speaker 2 (01:11:14):
Clearly, that's what's.

Speaker 1 (01:11:15):
Happening here, is that there's a move now to consolidate
power in Brussels and finish liquidating what's left of England.
And you know, in a forty thousand one of the
things we didn't discuss in the forty thousand foot overview
of where I think the world is because you as
we opened the podcast, which is that I firmly do

(01:11:36):
believe that Trump is making geopolitical moves to say, okay,
it's time to fully decouple us and to save not
just the United States, but all the members of the
Commonwealth that includes Canada, that includes the little Britain what's
been left behind. And by extension, if you break the

(01:11:58):
European Union in the process, then you also free against
maybe even against their will, you free most of Europe.
We're doing this podcast on April seventeenth. Who is in
Washington right now discussion biateral trade deal?

Speaker 3 (01:12:15):
Right, and you made this point last week. Yeah, that
Trump is trying to break the EU stranglehold over tariff
policy and trade by cutting bilateral deals with each of
the European countries and literally and the longest plan ball.

Speaker 1 (01:12:29):
Yeah, and I'm literally saying I'm not negotiating with the
European Union because I don't consider them a government.

Speaker 2 (01:12:36):
I love this guy. I mean, we don't you know,
Trump is many things.

Speaker 1 (01:12:39):
We don't deserve him when it comes to that, because
that's like the most important thing imaginable.

Speaker 2 (01:12:43):
It's so very important.

Speaker 3 (01:12:45):
It really let's go back to the foreign exchange market,
because I think it's a good way maybe to wrap
it up. Is historically, to your point, London was the
financial center. Yes, of course New York was as well,
but if you look at the most liquid foreign exchange
acrosses until recent years, they were dollar yen and sterling,

(01:13:06):
not dollar yen. In Europe. Euro has obviously been making
a big inroads into the sterling cross liquidity, right, And
what I mean by cross is, let's say this is
a real world example. One of my clients that we're
in the Stanley, that Seagate Technology, which has a big
manufacturing unit in Thailand. Time they needed to move their

(01:13:28):
corporate funds from their Thai subsidiary to the mothership in
Silicon Valley that would typically go through the Japanese yen
on its way to the US. Why, because there's no
liquidity between the US and the Thaie dollar and the
Thai bot That liquidity is all in the region between

(01:13:48):
the dominant currency in the region, which was the Japanese
yen okay. And by the way, it took them six
days to move their own money around the world. Right,
So actually this is in this is on my website
from ten years ago. Why did Steagate make an investment
in Ripple because they were trying to solve this very
real problem, how do I move my own money around

(01:14:08):
the world much faster? Right? And there's all this float
just trapped in what the treasurer called comfort deposits. The
comfort deposits are the money that you can't move because
it's just waiting to be settled and when it takes
six days to move their own money from one subsidiary
to another around the world. Now, granted, Timeland is an

(01:14:30):
unusual example because it has capital controls, but it's not
that far off from the real world problem the corporate
treasurers face. Okay, so this is why stable coins are
going to be a killer app. The biggest challenge is
they haven't had legal, regulatory, accounting and tax clarity. That

(01:14:50):
is all about to be solved. Frankly, Custodia with what
we've done with Vantage Bank, stay tuned. We'll be doing more.
We announced the first tokenized US dollar bank deposit is
shooed on a permissionless blockchain two weeks ago. Nice and
that the incoming from that was huge, and we'll be
doing more. So the banking industry itself is the market

(01:15:13):
opportunity here and it's great and a lot of the banks,
believe it or not, are really interested in this because
they see the problem and their clients see the problem,
and they see this as a solution to solving that
very problem that Seagate was talking about. So now back
to the three dominant currencies in the world, dollar, yen, sterling,
we see what's going on in Europe. It's retrenching the East.

(01:15:35):
The euro has been taking some of Sterling's market share.
But the honest truth is they're going to continue to retrench.
And the fact that nobody wants euro stable coins and
and there's literally virtually no demand, and it was a
free market. People were issuing them and asking for forgiveness

(01:15:57):
later and the market didn't want them. And so much
so the teather actually got out of Europe and isn't
even bothering to get regulated under the MECA requirements right now.

Speaker 2 (01:16:07):
Well, what's really interesting.

Speaker 1 (01:16:09):
Let me stop you there, just just to put a
final point on what you're talking about. Europe shot themselves
in the foot two ways. First, Martin Armstrong pointed out
the eight years worth the negative interest rates. But I'll
take it one step further, looking at the at the
Swift RMB tracker that comes out on a monthly basis
where they track the percentage trade and settlement of you know,

(01:16:31):
how trade is settled and whatnot in various currencies from
the from the moment Europe put the sanctions on Russia
and said we're not buying Russian oil and gas anymore.
Through the percentage the euro was climbing, the petro heuro
was happening with the Russian European energy trade. They were

(01:16:52):
settling up until like thirty percent of non Eurozone trade
around the world because they were buying so much in
Russian oil, and that collapsed in the first year of
the war twenty twenty two from thirty five percent to
thirteen percent, and the US dollar took the entire freaking
market share, and they so they shot themselves completely in

(01:17:12):
the foot doing that, and all of a sudden, and
I'm like, guys, were you were building the petri euro,
you were building the they were building the thing that
you could then force the Euro onto people, and you
didn't said no, they didn't see it.

Speaker 3 (01:17:29):
They didn't understand it, and they didn't understand it with
stable quins either. It was a not invented here thing,
and they did. Although ironically, the guys that run tether
are Italians living, you know, Italian citizens, like people who
were educated, grew up in Italy. This is no secret, right,
so it was in their own backyard. I didn't even

(01:17:50):
I didn't.

Speaker 2 (01:17:51):
Know that it was that Italian. I'm like, oh yeah, yeah, yeah, yeah, yeah, oh.

Speaker 3 (01:17:55):
Yeah, oh yeah, absolutely yeah. In fact, actually yeah, Paula
or do we know it was the currency? You know,
he was the CTO came to the United States, visited
the United States for the first time a couple weeks ago,
and everybody was thinking, oh, he couldn't come on shore
in the United States because you know, law enforcement would
grab him and low and behold. He's now made two
trips to the United States and that has not happened.

(01:18:18):
So again I come back to that is a company
the US powers that be have decided is going to succeed,
stay alive, continue to push the US dollar out into
the hands of the billions of people in the world
that are unbanked, and literally the traditional financial system can't
figure out because the compliance costs are too high how

(01:18:39):
to bank them. And tether is they're building kiosks in
Africa where people don't have places to power their phones,
where you can swap out batteries. It's brilliant what they're doing.
There's building this huge distribution network with no competitor, and
the US has clearly decided, by simply not shutting it down,

(01:19:00):
that this is going to be a channel to increase
not just dollar demand, but the resilience of the US
dollar system and moving away from London, which is why
I wanted to bring in that supplement, a laboratory show
discussion and the stable coin discussion, because these are all
huge pieces of the puzzle.

Speaker 2 (01:19:18):
They really are.

Speaker 1 (01:19:19):
And I'm really glad that you clarified that for me,
because this is something that literally came into my head
like three hours ago, and now I'm like, I almost
feel like I could actually talk about it like an
intelligent human being. And that's so again, this makes perfect
sense on this I'm really glad we did this because
you can see why there's such panic now in Europe

(01:19:41):
and why they're freaking out, and it tells me that
their next move is going to be catastrophic.

Speaker 2 (01:19:48):
They have to now literally go to war with the
entire with what with what they have left of the of.

Speaker 1 (01:19:56):
Their their hooks into the American financial system and what
banks they have on Wall Street that are in their corner.
Remember we go back to my original piesis okay, so
who's who's on the who's on the American side of
the ledger, who's on the sovereign's side, and who's on
the Davos side, Like so we'd have JP Morgan, We've
got gold We've got Golden Sacks, We've got Morgan Stanley,

(01:20:17):
and then we have both from Bank of New York,
Mellon and a couple of others that we're not really
sure about. And it's very We're gonna it's gonna be
very interesting to watch over the course the next two years.
Who gets bought, who gets destroyed, who gets decapitated in
this in this war?

Speaker 3 (01:20:32):
Very interesting. And but remember I don't know where city,
I don't know where city prove it. Yeah, a good
question for bank em and the FED has to approve it, right,
and we know where the feed is.

Speaker 1 (01:20:43):
Exactly, So it's gonna be it is gonna be interesting
from here. And so what this is all coming down
to is that the whole Trump I want to get
ridy to roam Powell thing is complete.

Speaker 2 (01:20:53):
W W E k FA.

Speaker 1 (01:20:55):
Like he's just he's actually pushing Powell to not cut
interest rates, to prove that the FED is independent. If
you if you read what's happened in the last forty
eight hours with Trump like screaming up Powell should.

Speaker 2 (01:21:10):
Be I gotta get rid of this guy. He's awful.
I'm like oh my god, can you be more obvious?
Twenty four hours after you got.

Speaker 1 (01:21:16):
Bess says, no, I have five to one. I have
breakfast with Rome every Monday. You know, like we're working
this out, like it's so funny. I'm like, and everybody's like, dude, Like,
I'm like, no, there is clearly what he wants.

Speaker 3 (01:21:30):
Your thesis is really funny because it means because the
FED is controlled by Democrats, it's four three democrats. And
your thesis is really funny because you're you're laying out
that the Democrats are actually helping Trump.

Speaker 1 (01:21:45):
Or you know, has the definition of democrats? I mean,
when at this level I think about this, everybody in
New York. You know again, let's back up for a second.
Jamie Diamond's a Democrat. Yes, okay, but Jamie Diamond in
the primary season back Nikki Haley now, and everybody went,
oh my god, he's backing the Neoconnie's back in the Terrible.

Speaker 2 (01:22:08):
He's backing in the terrible.

Speaker 1 (01:22:09):
Waffle house waitress was out from Greendale. No, what he
actually did was tell everybody on Wall Street it's okay
to vote for a Republican in this Yeah, okay, okay.
And then he and then he came around and slowly
but surely he started saying nice things about Trump, and
then he kept saying, oh, yeah, we have to do this,
and we got to open up. And then he goes
to Davos and says, we're gonna drill, baby, drill. And
then he goes to DABA and he does. Then he

(01:22:30):
goes on CNBC and he says, I watched Diamond carefully,
and it's clear that he's like been so at this
level at this point in time, I don't think party matters.

Speaker 2 (01:22:40):
I think everybody was nobody.

Speaker 3 (01:22:41):
Well, well, I'll let me lay out something. I mean
that we said earlier, nobody will benefit more from a
relaxation of a supplemental leverage ratio requirement than JP Morgan.

Speaker 2 (01:22:53):
Then JP Morgan.

Speaker 3 (01:22:54):
So it's the biggest bank, it's the biggest bank.

Speaker 1 (01:22:57):
And I just think that there are are you know,
with the with the ground shifting as quickly as it is,
and with the game, with the game board shifting as
quickly as it is. At the end of the day,
I what used to be these alliances and these and
these definitions, none of those things matter anymore. All of
a sudden, like I'm looking at my copy of Done

(01:23:18):
right over my shoulder, and I go yes, and and
every and everybody's like, okay, it's time to make new alliances.

Speaker 2 (01:23:22):
All right, let's learn what are we doing? Like you me,
let's go in the background.

Speaker 1 (01:23:26):
Let's talk about this, like that's the game, Like and
I and and on Wall Street, it's going to be about,
you know, who makes the most money and how they're
going to how they're going to protect their business. And
you know, when it was in their fiduciary interests to
go along, to get along with whatever the globalist wanted
to do, That's what they did. And I and I
just caution everybody when you say all the banksters are
evil and this, I'm like, well, yeah, when evils ascendant,

(01:23:49):
it's what they have to do, you know, when the
world changes and we now have other opportunities to make money.
Like I've always said, like I don't think any of
these guys care whether they build a pipeline across America
or they build a pipeline across Russia.

Speaker 2 (01:24:07):
They don't care.

Speaker 1 (01:24:07):
They just want they just want to run the book
on you know. That's that they don't care. They're not
they're not ideologically driven other than run their run their system,
run they run their bank. So if you give a
guy like Jamie Diamond, you give John Solomon and the
rest of them the opportunity to run the book on
recapitalizing America, and that's where the best is.

Speaker 2 (01:24:30):
They're going to go there. It's not hard, you know,
and you don't have and you know you're not going
to get.

Speaker 1 (01:24:34):
You're not going to get an apology out of these
guys like they're sharp, you know, shark for an apology,
are you kidding?

Speaker 2 (01:24:42):
No, of course not. We shouldn't ask for one. So
this has been fascinating.

Speaker 3 (01:24:46):
Yeah, we definitely went went along, but this was fun,
and we do this every I don't know six months
or so, so I think the world's going to be
very very different than six months. Let's put a pin
in it. Whether they the precipitating event for a major
market disruption is coming in six months. I'm I'm gonna

(01:25:08):
put the pin down to say, they'll watch what happens
with the supplemental leverage ratio.

Speaker 2 (01:25:13):
I think you're I think you're absolutely right, Kaitlyn Long.
It's been lovely to speak to you. As always. We'll
do this again soon.

Speaker 3 (01:25:18):
You. Sounds great, Tom Good to see you as always,
As always make me think. Cheers, M.

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Episode #213 - Caitlin Long and the Financial Crisis that Wasn't

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Episode #213 - Caitlin Long and the Financial Crisis that Wasn't