Episode #225 - Caitlin Long and Mapping Out the Post-Powell Fed - Gold Goats 'n Guns Podcast

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:19):
Hello, and welcome to the Gold, Goats and Guns Podcast
again for July thirty first, twenty twenty five. My name
is Don Lulonga. We have a lot to talk about.
This is episode two twenty five. I just recorded to
twenty four with Martin Armstrong a couple of hours ago.
I have with me as promised many times now this
week that I have Caitlyn along with me. Caitlyn, how
are you hey?

Speaker 2 (00:37):
Great to see you again. Yeah.

Speaker 1 (00:39):
Wow.

Speaker 2 (00:39):
The world's changed since we were last on a few
weeks ago. Kind of worked out the way we predicted though.

Speaker 1 (00:46):
And it's interesting the way things have moved have moved
in the last and I want to remind everybody that
Caitlin was last on in episode two thirteen, which I have.
Of all the podcasts that I've done, that one has
been refer and given. I've gotten more positive feedback from
as people are like, no, you have to listen to
this one, and I'm like, I told people all the time,

(01:07):
yeah you should, because it's rare that I feel like
a guest on my own podcast, which was fun and
lovely and uh, and then there's rarely do I ever,
you know, get caught where I can't actually say anything.
That's a rare thing as well, and us, as everybody
will knows, is certainly my poor long suffering wife knows

(01:29):
is funny to ask, Like when we were up in Calgary,
just we'll get started in the second. We were up
in Calgary and we're meeting everybody at the Cornerstone Form
up in Calgary, and we got together with a bunch
of patrons and they all asked, hums, do you ever
you know, want to listen to or watch this podcast.
It's like, oh god, no, I have to listen crap
all the time. He's not any different at home than

(01:51):
he is in front of the camera.

Speaker 2 (01:52):
That's cute.

Speaker 1 (01:53):
Oh yeah, guilty.

Speaker 2 (01:55):
So love it, love it, love it.

Speaker 1 (01:59):
But so we're in this weird moment right where Trump
has been going after Powell now for a couple of
months over interest rates and a variety of other things.
I don't know, I think this is one. I know
that you and I have a different, slightly different views
on Powell, and you with good reasons. So why don't

(02:20):
we start where you think this is all coming from them?
We'll uh, you know, we'll hash it out.

Speaker 2 (02:26):
Yeah, then I'll then I'll turn the table back to you,
because I think a lot of your listeners know why
you've had a positive view on Powell. I think he's
I think that FEDS at fed's a political entity, and
this whole notion that it's independent has never been true,
but it's especially not been true since they really going

(02:47):
back to the Obama years, and it got a lot
worse under Biden and under overtly political Michael Barr and Powell,
who's a never Trumper. So pretty clear that the interest
rate decisions were driven by politics and even some even
the dissents that just happened yesterday, we picked today so

(03:10):
that it was deliberately after the FOMC meeting so we
could see whether Trump fired Powell after the FOMC meeting,
which I didn't think he would do, but I still think.
I mean, he went after him again today very hard.
I don't think he lasts until May. I think the
poly market assessment, which is last I looked at eighteen
percent probability that Powell's gone by the end of this

(03:32):
calendar year. I think it's higher than that.

Speaker 1 (03:34):
Over to you.

Speaker 2 (03:35):
Let me ask you the same question, why why have
you defended Powell?

Speaker 1 (03:40):
Because I still think that the the that high interest
rates are necessary in order to drive what Trump wants
to get done trade reel wise, like the he and
bessent are ran a clear on obvious operation to lower
the dollar. Yes, and succeeded, and succeeded brilliantly.

Speaker 2 (04:01):
Yes.

Speaker 1 (04:02):
Now on top of that, you have Powell holding interest
rates of four and a half percent, because what's that
going to do. It's only going to exacerbate the situation
in the offshore dollar markets because you're still raining liquidity
out of the out of the officer system. So you
wind up with the double whammy of Oh, you're going

(04:23):
to wind up with tariffs and the higher eurogan you want, YadA, YadA, YadA,
and those two things together. To me, Powell holding rates
high just supported Trump's whole policy and actually could easily
be argued helped create the situation where THEU had to roll.

Speaker 2 (04:43):
Over on Sunday, and they did. And I was thinking
of you when I saw that press conference with Ursula
vanderlind And and John Williams. You know who very few
people know, and what he did to pull control of
US dollar interest rates away from London right to New York.

(05:04):
When libor was deprecated in favor of Sofur. You and
I've talked about that in the in the you've talked
about it at length, but in the in the episode
that you referred to, we explored it in greater detail.
But the aha of that is the US is no
longer a vassal state of Europe. And it was effectively
that because Europe controlled and specifically London banks controlled US

(05:28):
dollar interest rates all the way up until March thirty
first of this year.

Speaker 1 (05:34):
Yep, that is correct. And so so those are the
two Those are the two competing narratives with Jerome Powell
as as as FMC chair. So the way I still
view Powell, and I'm happy to see Powell leave the
lead the scene now and I'm not going to And
there's a couple of reasons why. You have people are

(05:56):
built to do a specific job. They have a mind set,
they have a they have an imprinting. They you know,
I'm built to do a particular job. I'm not built
so I'm built to do this job. I'm not built
to run the companies, right, I get I get, you know,
I get told that like daily. So Powell is the

(06:17):
guy from you know, from my perspective, going all the
way back to everything I've ever heard about Powell from
the time he was a junior member of the f
O m C that he was one of the hawks
throughout all the Bernacchi and yelling you'res screaming about you know,
zero bound interest rates are wrong Q. He never agreed
with QI, certainly never agreed with with with yield curve
control under yelling he was brought in by wall Street

(06:40):
to do the job that he was brought in to do,
which was to get SOFA implemented and then drain the
ill liquidity, the massive amount of post COVID liquidity.

Speaker 2 (06:50):
Yeah, but he created that post COVID liquid.

Speaker 1 (06:53):
Well, he didn't have any other He didn't have any
other options. You really didn't. The Cares Act passes, the
Treasury goes bidless, and Powell doesn't have much of.

Speaker 2 (07:05):
If Janet Yalm, I agree, I understand, But when history
looks back on this, it was nuts. We literally told
all the producers in the economy to put their pencils
down and stay home, and the US debt exploded during
that period of time. If the Fed had said, no,

(07:27):
we're not doing that, then they wouldn't have been able
to the US government wouldn't have been able to finance it.
So no, absolutely Powell was complicit in that, and he
didn't really push back. Go back and look at what
he said. He didn't really push back. Part of the
problem is the FED itself is a very left wing organization.
Go look at its political donations and it's not just

(07:48):
to moderate Democrats. One of the people recently confirmed to
me a couple of things about what happened in our situation.
Number one that Michael Barr told FED staff to go
find something on us. Another is that I'm not sure
who at the top was told, but FED staff were
told keep Liz happy. Who was their master. It wasn't

(08:10):
Jay Powell. It was Elizabeth Warren during this period of time.

Speaker 1 (08:13):
Sure, and no argument about all of them. I am
not arguing any of that because we all know that.
And when we go back and look at the reconfirmation,
the Powell's, the history around Powell getting confirmed for second term,
and how hard to buy a deministration fought it. As
I've said many times, the insider trading scandal at the

(08:34):
FED was created by It was created by Obama and
Laiel Brainerd to get rid of Powell. And install Leil Brainerd.
And what did they wind up getting three of Powell's
big lieutenants as Hawks, Captain Kreeda and Rosngrend. They were
replaced with literal communists.

Speaker 2 (08:49):
Well m M tiers, Yes, m.

Speaker 1 (08:51):
M tiers, Communists all the way down the line. Damiel
DeMartino Booth has been screaming about this forever that the
future of the FED is post Powell is is So
you can see it in multiple ways. Right, Trump went
along with the Cares acts. Yea, he went along with
I mean everybody Trump. I know he's I know he's

(09:13):
no hawk, but we were in a we're in a
situation during COVID that this was a I still argue
that this was an absolute like operation from the ground
up to destroy what was left to the United States.
And I think it was a coup against both both
the FED chair that they knew wanted to continue to
keep rates above zero, and the sitting president who wanted

(09:37):
to expose everything and start the process of of of
changing everything out. And knowing that SOFA was on the
horizon for the second for powell second term, they had
to get rid of him. So all the data and
all the all the all the incentive structure points there.
Whatever Powell, whatever Powell could or could not stand up to,
is up to our conjecture and our personal you know,

(09:59):
it's more of a mirror of our personal biases than
it is a lens through which to see anything. I'm
gonna be I'm gonna be blunt about that. I see
it this way, you see it another way. It's fine
and mixed and and the listeners can decide what what
they agree with. The truth is probably somewhere in the middle,
right to be honest. So with that said, though, I

(10:20):
think see Powell is the guy to change that system.
Old system out gets help, so for implemented deal with
the problem, deal with the problem that he as best
he could. And at the moment when it was pretty
obvious that you know, at the very last, he didn't
start tightening until the very last possible moment. He could

(10:42):
have tightened, started tightening earlier than that. He could have
started tightening before June of twenty l It was very late,
and you know he was I'm not saying the guy's
perfect or anything. You know, as fed chairs go, like
after Bernaki yelling and green span like.

Speaker 2 (10:58):
You know, the day that chart that it has been
bandied about in the last couple of days that it's
the first dual descent in the FOMC since nineteen ninety three.
And you go back and look at all the FED
votes and how often there were three and four descents,
and I mean, basically it's a bar chart with all

(11:19):
those bars in the you know, fifty sixty seventies, very
common for FED governors to dissent, and then came the
green Span era and there were virtually no descents, and
so the graph is empty because it's got no bar charts.
It's got no bars on the bar chart. Periodically there'd
be one descent here or there since since the green
Span era began. But that became that began the Imperial

(11:42):
Fed Chair era. And you know, Peter County Brown's book
on the FED is phenomenal and he asks the question structurally,
if you look at how the Supreme Court was created
by the founding fathers, and look at how the FED
was created to each have seven members of the board,
why is it that the Court justices are all independent,

(12:03):
have their own staffs, make their own decisions, and the
FED it's the opposite. The chair, it's the Imperial chair,
and you don't see the Chief Justice of the Supreme
Court forcing unanimity and the decisions the way that the
FED chair under Greenspan Forward has done. Now, I actually
think it doesn't matter who's the next FED chair, that

(12:25):
that pendulum is swinging back hard because remember, if you
go look at who's on the Board of Governors, it's
four three Democrats appointees, and that's counting Powell as a Republican, okay,
and he's not a Trump fan, so it's really five too.
But the FOMC is who votes on interest rates. Go
look at the FOMC. It's really easy with AI to

(12:47):
go look and see. You know, of course most of
the people who are regional FED presidents are independent, right,
you can't find a voter affiliation, but go look at
their past contribute to politics, or go look at who
they're married to, or go look at what they did before.
Pretty easy to figure out. This is a clear majority
democratic board. And so that's part of the reason why

(13:11):
I think Trump has not fired Powell, because it doesn't
necessarily accomplish what he wants because the board's then going
to split and go back to what it did before. Well,
you'll have three or four descents and it's no longer
a seven zero vote, or in the case of the FOMC,
I think it was what eleven two or.

Speaker 1 (13:30):
Whatever they yeah, actlualely. I think the doesn't mean there
were plenty of descents. There are only X number of
voting members any one time as a vote and who
gets to vote, and that's all very political and Daniel
very political. Oh yeah, and Daniel Daniel Boot's book on
that in and of itself and how the whole rotating
system works, and it's insane and it's all it's all unnecessary.

(13:54):
This is oh my.

Speaker 2 (13:55):
Gosh, yes, right, including the twenty thousand employees. Right, people
are asking and Trump, I mean that Trump trolling Powell
by going and visiting the construction site was first of
all meme worthy, and the memes that came out of
that have been phenomenal. But it was just a giant
troll because it just it just shows. And I know
a lot about this, obviously, I've sued the FAT and

(14:17):
have had discovery. I can't talk about it, but I
know a lot about well about the inner workings of
that organization. I actually probably know more because I've seen
across the famous silos than internal people do because they're
stuck in those silos right right, and you know most
of them haven't had access to, you know, their colleagues
emails to go look at all this stuff. Granted it

(14:39):
was one than horizontal slice, but it was a horizontal
slice that came out and discovery and you could even
look at what's public in our lawsuit. I'm not revealing
anything here to determine just how many people's emails we
got and the insight that we that we had, but
granted it was specific to our application, so didn't cover
any of the monetary policy stuff to speak of. There

(14:59):
were monetary monetary affairs people who showed up in the
publicly disclosed documents because they the way this thing works,
it's a and you could discern this from looking at
the public documents. I mean, there were like forty different
people who commented on our draft denial letter. It went
around and around and around. I mean, we know from
discovery that they made the Michael bar made the decision

(15:21):
to deny us right after FTX failed on November eleventh,
twenty twenty two. They didn't announce it until January twenty seventh,
twenty twenty three. So during that period of time, right
that the you know, that's when the that's when the
draft letter got passed around. So the whole question of
the bureaucracy. When Powell talks about, oh, you know, you

(15:42):
can't say it's three point one billion because it's the
third building. Trump is coming back and said, why do
you need all these buildings? And then you go look
at the fact that forty different people were involved in
the in the comments and ask what. It's not that
they're not working hard. It's that there are forty different
people involved in doing one thing that in corporate America

(16:02):
maybe three or four people would have done.

Speaker 1 (16:04):
Sure, No, there's no argument here that the goal is
still get rid of the Federal Reserve and get rid
of the whole central banking cartel and everything else. I've
been from my perspective, nothing nothing about what I've like
set my goals on have changed. It's the order of
operations of which these things have to occur in order
to transition from one system, the current system, we have

(16:27):
to the next system.

Speaker 2 (16:29):
That's let's talk about that.

Speaker 1 (16:30):
Yeah, that's where that's where I'm geting. That's that's where
we're going to go here, because you know, it's clear
that you know the history of the last five years
post COVID are a mess, right, And it was clear
also that I don't think they were expecting to lose
the twenty twenty four election. Clearly not clearly not.

Speaker 2 (16:51):
So twenty sixteen.

Speaker 1 (16:52):
Yeah, So Powell being Powell and being very conservative on
what he's going to do, especially after the inflation nonsense
of twenty to twenty one. I look at this and
I go, yeah, we're still running interest rates, We're still
running inflation, not a top line above two percent. He
employment is decent, he saysn't. He has no reason to

(17:15):
cut from a legal perspective, from a quote unquote data perspective.
So he's not going to until there's enough winds up,
there's enough winds up on the board where he can
finally walk start walking away.

Speaker 2 (17:27):
Well, let's talk a little bit about that. Sorry, finish that,
and then I want to come dock.

Speaker 1 (17:30):
So what I'm saying, so I'm getting at now, is
that Trump likes likes to create narratives. We all know
how we how we operate out So Powell is his
scapegoat for everything that's wrong with the Tedal reserve and
it's not you know, you could argue that was Powell's
job to fix the FED while he was FMC share,

(17:50):
but yeah, that was the institutional inertia is just is
is insane, right like, And you can see how hard
it is for Trump, who's literally went in with a
four year plan all off, well out, well out of power,
to get anything done at all. So far, right, So
the institutional nurse has been you know off.

Speaker 2 (18:10):
Oh yeah, was supposed to be two trillion, and now
it's one hundred and forty four billion, and they're fighting
over that.

Speaker 1 (18:16):
Yeah right, you know, and it's it's so here, so
here we are. So all that matters is that I
think Powell was built to do what he did as
a person, but he's not the guy to lead the
FED into the next phase. Okay, So this is That's
just what I think, And that's why I think that
Powell has been cast in his role while we while
the while Bessent and Trump start taking power away from

(18:40):
the FED. And what Trump has to do now is
set the pr campaign to tell teach the Norman. Yeah,
the problem, the problem is the problem with the country.
Part of the problem that I'm having here is I
have to deal with the FED, and I got this
guy over here. This is a very Trump way of
dealing with it, even though Powell's actually doing his job
for you know, within one sigma of reasonable? He is

(19:02):
he a little? Is he a little high at this point? Maybe?
Is he a little? Could he? Could he have cut
twenty five basis points yesterday? He could have if honestly,
I actually made the argument. I thought, you know what,
if I'm Powell right now and the whole market is
expecting me not to cut rates, to cut.

Speaker 2 (19:19):
Rates right, yeah, just to show who is bossing.

Speaker 1 (19:22):
Right, just to show whose boss Like if I have
a real complaint with Powell in the last couple of years,
it's that he's been he holds the market's hand too
much going to do. And let if he had decided
to come back and you know what, Kay, we're cutting
raised twenty five basis points. Yeah, that would have sent
everybody into a hissy.

Speaker 2 (19:42):
But by the way, the market should dictate it.

Speaker 3 (19:43):
Right.

Speaker 2 (19:44):
Coming back to the to FED reform, but let's talk
before we come back to the reason you reached out
to me, which was my tweets about token is treasury
bills We'll come back to that in a minute, because
that is a pathway for Beston to roll the FED.

Speaker 1 (19:56):
But that's exactly where I know where. I know where we're.

Speaker 2 (19:59):
Going to go. There we're going to go anytime. I've
been thinking a lot about this whole notion that the
FED keeps saying, Oh, the terrorists are creating all this uncertainty.
What is different? Okay, to anybody who studied economics understands
what happened to Smooth Holly, and you know how that
kind of that contributed to the depression, et cetera, et cetera,
et cetera. What is different is have you noticed that
each one of these trade deals comes with a foreign

(20:21):
direct investment commitment that's very dollar positive. Okay, So they're
trying to smash the dollar, and they've succeeded, and except
in the last couple weeks the dollars started to rally again,
they've taken a huge they took the dollar down massively
since right before the election. But now here comes all
this foreign direct investment commitment. That's the difference. If the

(20:42):
FED were really honest and they were really focused on
what was actually going to happen with the economy. They
would factor that in because it's very dollar positive and
it has had a lot Every one of those trade
deals came with a commitment for foreign direct investment, and
that did not happen in the smooth holly tariff situation.
That'smashed economic, economic growth and investment. And Trump has made

(21:07):
short I don't know whether it's best, whether it's Trump himself,
whether it's a lot Nick, somebody has had this idea
of these are not just little trade deals. This is
not about teriffs. This is about smashing the non tariff barriers,
and this is about getting foreign direct investment commitments that
come with these trade deals. And no one's really talking

(21:28):
about those those other two things.

Speaker 1 (21:30):
Actually, I have and I have tried. I've actually been
defending Trump on this point and saying at the same time, yeah, dude,
everything you're doing is going to create domestic inflation because
you're bringing all these dollars back on shore and federal
then you expect the thumb reserved to cut rates by
by four hundred basis points. Like what do you want
to what do you want to do here? I mean
every like it's funny, like you know, that's been the

(21:55):
weird thing like, like I said, you're doing all of
these things and then you're expecting your fed share to
act again. What you're doing like nothing. I don't agree.
I don't disagree with what Crump's doing. Yes, let's get
rid of the non tariff barriers, let's get rid of
all of this this regulatory crap. Let's if we have to,
we'll just we'll just we'll just claw back the excess profits.
I made the point to my subscribers a couple of

(22:17):
weeks ago. I said, look, think of it this way.
Everybody went into this with the typical freaking British free
trade globalist bullshit about tariff bad. Well, there's a reason
for that, because tariff's bad because central well, but it
also makes central banks good. This is it? This isn't

(22:38):
it's tariff's bad because we want central banks good. It's
they're the opposite sides of the same coin, because who
issues the money, who issues the liquidity? Now, but what
you've done in this free trade environment where you can
then manage where everybody else can put tariffs on us
and put up trade barriers and everything else, what is
it done?

Speaker 2 (22:58):
Well?

Speaker 1 (22:59):
I said the other day was like, look if you're
Nike and you're making air Jordans, you have every right
as the innovator to command a fifty percent or sixty
percent gross margin in the sneaker market. But if you're
the Indian knockoff or the Chinese knockoff of an air
Jordan pulling in a forty five percent gross margin, when
you're the knockoff, you should be pulling in six percent. Sorry,

(23:21):
we're clawing that back. Fuck you. That's what this whole
thing is about. Like also, scrap. It's like we were
finding out that that that all this stuff on Amazon
that you can buy for twenty last year you bought
for twenty bucks. I got news for you. I'm still
buying the same crap from China for twenty on Amazon,

(23:41):
and we're getting paid for it. So they were dry,
they were getting paid massive effectively rent correct, yes, and
so Trump to say, yeah, no, and we're it's over
and so. But from Powell's perspective, his goal is if
his goal, and I think his goal has been, I

(24:03):
still argue that his goal has been to drain the
offshore dollar system in order to give the FED more
control over its own monetary policy. Then until he feels
comfortable that that system has been brought under control, and
we've got uncertainty in in in with Trump's economic policy

(24:24):
and his disco policy and all of this other stuff,
that there's no good reason for him to cut interest
rates until Trump has put up enough political wins on
the board to get everything passed. Yeah, you know, I
was like, I'm power up sitting there, told Trump, going
plan looks great, prove it, Like I'm going to be
very missouri about this. Show me and you haven't like

(24:45):
as of and look at the June meeting, we were
in the middle of a twelve day war with Israel
and Iran.

Speaker 2 (24:50):
We were right exactly like, excuse.

Speaker 1 (24:52):
Me, I'm not cutting I ain't cutting interest rates into
that bullshit. And then We're here at the end of
July and I'm like, well, maybe he could cut rates here,
but again, you know, he only just got the budget
reconciliation bill under control. No one knows if it's going
to We all know it's going to be very good
for the country, except for the people who are con

(25:12):
global ship decks who are arguing otherwise.

Speaker 2 (25:15):
Right, it's not good for Wall Street investment banks and
not good for the people who benefit or over the last.

Speaker 1 (25:20):
One, and it's not good for and it's not good
for the office, it's not good for the old the
old system of everything else. Yes, right, and so all
that so that dominates the financial press, because financial press
is the worst fake news in the world, right, far
worse than CNN, Like I'm sorry, Bloomberg, and the Financial
Times are far worse than anything that.

Speaker 2 (25:42):
The Financial Times has been just on fire with fake news.

Speaker 1 (25:46):
I know, I know that's crazy. So when you factor
all that together, I'm like, if I'm Powell, politics are otherwise, like, dude, like,
I'm not cutting interest rates until I absolutely have to.
One of my patrons also pointed out the other day
that Powell tends to like to announce big policy changes
at Jackson Hole.

Speaker 2 (26:04):
Well, so that's going to be an interesting thing, okay,
because there's By the way, the Wyoming Blockchain Symposium is
right before the Jackson Hole meeting. It's in It starts
August eighteenth, so two and a half weeks from now.
Guess who's speaking. Bowman and Waller. They didn't come last
year because last year it was you know, crypto bad.

(26:25):
Right now, it's like, oh, okay, you know they're both
on the short list to be potentially replacements, right, So,
and they're both they're both apparently coming. So this is
going to be interesting, very interesting because Scaramucci set up
that event. He approached me about this a few years ago, like,
why don't we do an anti jackson Hole meeting right before,

(26:47):
like a pro crypto you know, kind of an anti
establishment meeting. And the funny thing is, like the establishment
is now coming to us. So and the University of Wyoming,
I chaired the Wyoming Blockchain Stampede that crowd through the
Wyoming Blockchain Center at the College of Business, is actually
a co sponsor and handles a lot of the staff

(27:10):
work for that event. So that's part of the reason
I know that this is all happening. So, yes, so
it's really interesting because you're right that that could be
an interesting time. I don't think that. But coming back
to the prediction that I don't think Trump's gonna gonna
keep Powell in that job until next May. He can't.
Trump can't keep in there just every day browbating him

(27:34):
about something or another. I think there's plenty of cause,
you know, somebody who's done a lot of research into
this that the and the Humphreys Executor case. Can you
can the president like who who who really controls the
executive branch? Is it the elected president of the United States?
Or do we have a fourth branch of government that
is immune from from any democratic checks and balances. And

(27:57):
unfortunately for the last couple of decades it's been the latter.
But Trump is trying to get control over that and
the FED. The Supreme Court even said in one of
its cases that the FED is special for for historical
I forget the phrase that they use that that that
in the in the in the spirit of the First
and Second Banks of the United States, that you know,

(28:20):
the FED is different from other independent agencies. But this
gets to whether he can fire without cause. Is clear
he can fire for cause, and so the question about
cause is in the definition it's malfeasance or dereliction of duty.
I don't think you can make a dereliction of duty
argument malfeasance. I can make a lot of really good arguments.
And I can't remember if I shared this when we

(28:40):
were last on I don't think I did. I think
I've learned it since then that the did you know
the Federal Reserve gave a clearing account to one of
the Mexican banks that Treasury sanctioned for financing the fentanyl trade.
And that happened under J. Powell. Okay, so that kind
of stuff is is it exists?

Speaker 1 (28:59):
Also?

Speaker 2 (29:00):
Man, oh man, is there a lot of smoke? And
I happen to know a lot about this over killing
Solvent banks Silvergate signature, right, the FED shot banks and
literally took the property. I'm saying this in the context
of like the legal concept of a taking of property,
and they did not have that, they did not have

(29:24):
the right to do that. I'm gonna I'm gonna leave
it there, but because I think there may still end
up being litigation over the failures of Silvergate. And once
once the FED leaned on Silvergate and told them they
had to liquidate, the next day was when the Silicon
Valley bank run started. Okay, so so so they were
playing with fire. And I talked about this at the
time that that was how fragile the system really is.

(29:47):
Just by taking a relatively small bank in La Jolla,
California and telling it it had to liquidate started a
systemic event, and that they the FED did not know
that it was playing with fire. But it started that event,
It directed Silvergate to liquidate, and the next day Silicon
Valley has a bank run. That's Malfeasan's that's the kind

(30:09):
of stuff that if he wanted to go after and
by the way, not just Powell. I think he could
go after Bar as well. And I could keep going
on Bar if he wants to shift that FOMC and
shift the board to majority Republican. He's that's the kind
of stuff he has to do. Is let me ask,
let me throw it back to you. Is that what
he's going to do? Or how do you think this ends?

Speaker 1 (30:31):
I think that's on the I think that's all on
the table. I really do. I'm at the point now, Kayal,
And I've been saying this for a long time, and
I don't know if you and I talked about it directly,
but you haven't seen it in my freaking Twitter feed.
I think we're setting up for a pre nineteen thirty
a return to a pre nineteen thirty five FED.

Speaker 2 (30:48):
I don't have this powerful board of government go back
to you.

Speaker 1 (30:51):
Repeal the Banking Act of nineteen thirty five, and you
get the FED out of regulating the treasury market. Yeah,
back to regulator back to basically being the lender of
lands resort in the commercial paper market. New role, slightly
different version of the FED is what I think is
going to happen.

Speaker 2 (31:07):
Interesting.

Speaker 1 (31:07):
And I've been saying this for a long time and
I will continue. And this is something you and I
talked about in episode two thirteen, which is that it
is domestically they're there for the commercial paper market. The
Treasury takes back over control of the treasury market, and
that's what the stable coins are all about, and issuance
and all of that. And then the FED is the

(31:28):
UH is the enforcer of par in the international market
because that and effectively becomes an XM bank, right and
and that's and and that's it.

Speaker 2 (31:42):
But do we put federalism back in the FED where
we have the twelve different regional reserve banks setting there
on discount rights. I don't think that's the way it
used to be.

Speaker 1 (31:50):
I know, I know, and I don't. And the thing is,
I I want that, but I think we actually have
something better than that. Go back to my argument about
SOFA when so when when I first put forth the
ideas about sofa, trying to wrap my brain around all
of it, I had Daniel, but I said, I talked told,
I asked Martin, I'm wrong about this the other this morning,
when to talk to you about it? Now? I had
Daniel Booth on the podcast, and I wanted to try.

(32:11):
I was trying to get some confirmation that I wasn't crazy, basically,
and she said, for all intentsive purposes, said yeah, you're
not crazy. So I went cool. So I have a
really weird thought. So, for with being a market driven rate,
why do we need a Fed funds rate? Why can't
regional banks just quote, you know, quote local capital based

(32:36):
on their own and we have a reregionalization the FED
funds rate by via the market. And she was sounds
like a great idea. They'll they'll never give that power up.

Speaker 2 (32:47):
Well, so here's what's interesting. There's virtually not a Fed
funds market, right. It used to be that the banks
all had Fed funds trading desks because they needed to
make sure that all of their Fed funds were invested overnight.
And there used to be a very active secondary market
for Fed funds. After the two thousand and eight financial crisis,
that essentially disappeared. So the Fed funds market is not

(33:08):
that important. Anymore. The rate itself isn't that important. It's
really the Treasury. It's the so for the secured overnight
funding rate and repo rates that have replaced FED funds.
So now what you reached out to me about to
catch up was the tweet that I sent out that
I found out at an event that Treasury is very

(33:30):
seriously considering issuing tokenized tea bills. Now, the impact of that,
if you start thinking about that, is they're not actually
securities issued in analog form using the traditional system. The
impact of that is you don't need a central Securities
depository to become the custodian. Who's the CSD the Social

(33:51):
Security is depository for the Treasury market the FED. So
Treasury doesn't need the FED anymore. It's a're not issuing
them in traditional securities form using UCC article eight. For
the lawyers out there, they're going to issue it in
tokenized form using UCC article twelve, and they can be
their own custodian. You don't have to have a separate custodian.
And and here's the aha. You start having tea bills

(34:14):
trading on these tokenized platforms, all of a sudden, fedwire
is no longer the only large value payment system anymore.
The FED runs Fedwire, and ach Treasury can effectively make
tea bills into a payment system of its own.

Speaker 1 (34:31):
Ding ding ding ding ding.

Speaker 2 (34:33):
They don't need a big FED reform bill. The Treasury
just goes right around the Fed.

Speaker 1 (34:37):
We already, we already have it. They already, they're passing Congress.
They're going through Congress and getting passed right now. And
then we take it one step further and we realize
that the banks are going to be able to issue
their own tokenized dollars. And now we're back to the
free bank. Now we're back into a nascent form of
free banking that we have in this country previous to

(34:58):
the Federal Reserve in the first place.

Speaker 2 (35:00):
So this is really interesting.

Speaker 1 (35:01):
Sorry, I'm just saying to me. I'm like, all of
a sudden, I was writing up this month's Ultimate Wealth
Report for Newsmax, and I was going over all this stuff.
So just to explain to that audience, which is I
generally write for at a lower level, it's a different audience, right, yeah,
So for that and that audience, I need to go

(35:22):
through this on this, you know, kind of bill by
bill note by note and as I was going through
all of it, I'm like, I got to the end
of it, I'm like, oh my, yeah, this is free banking,
pre Federal Reserve except okay, so yeah, And I've been
saying for weeks I'm like, you know, I'm kind of

(35:44):
over Thomas Massey, and I've been quite excuse me, quite
vocal about this because Donald Trump, of all freaking people
and Scott Besson are going to do more to perform
an end the FED than all of us, and all
of these Ron Paul Lverard Harry's will don't actually accomplish.
And this has been the bit And this was literally
what I said to the Mesa's Institute like six months

(36:06):
nine months ago.

Speaker 2 (36:07):
Yeah, yeah, here we are.

Speaker 1 (36:10):
Yeah.

Speaker 2 (36:11):
Well, it's because of the technology that got created that
that Treasury can harness and because the FED didn't see
the writing on the wall, kept its head in its
very insulated, very group think, very you know, small only
people with PhDs will we listen to. They didn't see

(36:31):
what was really going on, and they missed the forest
through the trees and it's and now it's too late,
right because stable coins are a new payment system that
exists outside of the banking system, tokena's bank deposits are different.
The banks are now looking at the non banks getting
the ability to have their own payment system and saying
we want in on that. And so the interesting question

(36:51):
then is what happens with fractional reserve banking and it
does actually then come back to a very very very
important question, which is who's going to provide credit for
small businesses? Because it ain't Goldman, Sachs and JP Morgan
and City. Okay, it's the small banks on the street
corner and they don't have access to the technology. Guess

(37:11):
who's working with them. You can see from the press
releases we've put out that we are actually bringing that
technology to that market. The vast majority of payments are
still originated through the community banks, but they roll up
to the big banks. So JP, Morgan and Wells Fargo
originate more than half of ACCH payments. You probably didn't

(37:34):
know that they dominate. They dominate ACCH because they're clearing
payments for all these small banks and they're raping them.
The whys formerly transfer Wise put in a comment letter
that did a big analysis a couple of years ago
on the markup that these banks, these big banks charge
for clearing payments for little banks, they charge up to

(37:55):
a one hundred x markup. Okay. So if somebody can
push the cost of payments out to the street corner bank, okay,
it takes some of the power away from these large banks.
A lot of people are looking at this going why
do the community banks exist? I have the opposite question,
why do the gesups exist? We don't need them for
foreign exchange anymore. You don't, you know if they're holding

(38:17):
everybody hostage. It's too big to fail. The real creators
of credit that we care about, for which the securities
markets can't produce the same magnitude of credit, is the
small community banks.

Speaker 1 (38:28):
Exactly. No, this is I've been I've been thinking about
this from a global perspective of how do you break
the city of London in their forks trade? Right? And
That's what I've been thinking about. And I keep I
created it, Heather, Heeather, And then and it looks like Ripple,
the Ripple network is going to do is gonna has
been for a variety of reasons. I'm if you're happy

(38:49):
to push back on me about that. I'm just reading
what I see, So I'm not I bring it up
and everybody's like chilling.

Speaker 2 (38:57):
For rippling, and I don't mind that. I think it
overstates how important that network is. Part of the problem
is the banks have always been suspicious of it, right
because it is a centralized network and the the tokenomics
are backwards, right. One of the step back in creating
these tokenization platforms. The people who extracted money upfront are

(39:22):
never going to be trusted because everybody is going to
look and think that anything that they do is an
exit scam to try to dump on retail. Okay, the
most effective tokenization platforms are the ones where there was
no money upfront or very little money upfront, and that's
bitcoin and ethereum. So it's really that simple. I don't
think you're ever going to get the trust because of

(39:43):
all that money that got raised upfront. That was the
first of the icos in their case, and that's I mean,
they've been after longer than any almost anybody else, and
they haven't made a lot of progress. And now what
did they try to do Instead of trying to sell
that into the banking industry, they're getting their own regulated
financial institutions and trying to issue a stable point. So

(40:05):
that's kind of in some ways an admission that the
that the base layer blockchain didn't get the adoption that
they were looking for. Now, I will also say that
Biden administration did a you know, was a big part
of that right by forcing it offshore and saying, you know,
you can't. Basically, this is the sec Gary Gensler trying

(40:28):
to use that as because it was the obvious case
since it was the first I c O to say
that that was an illegal securities offering, right and going
after that and that that hamstrung them. It didn't. It
didn't hurt hurt Ripple as much as as the fat
hurt us. Right. Everybody who was targeted by the Biden
administration was hurt to varying degrees. So but but I

(40:51):
am acknowledging that that, you know, for the for the
XRP army that's going to come after me for saying
something I think rational about it that it's not going
to take over. It's not. If it were going to
take over, it would have taken over a long time ago.
And now they've actually pivoted to issuing US dollar stable
coins on the network, which kind of tells you that
they understand that the base layer network is not going
to become the base layer of you know, of replacing Swift,

(41:14):
and part of it is because of those tokenomics. But
that said, I mean, I think part of the reason
Ethereum is running the price has run a lot, is
because when the US Treasury decides which permissionless network it's
going to tokenice T bills on. And by the way,
they of course not announced this. I'm speculating based on
something that I heard this is coming. They're not going

(41:36):
to use Repple, They're going to use Ethereum. They may
use bitcoin, but the Bitcoin layer twos are not mature
enough for something like that, right, They've got to think
like a bank. And the most mature blockchain platform by
far for this type of issuece is Ethereum. Solana is

(41:56):
coming up, but it's so centralized. I don't know that
the US govern would would want to would want to
take that risk. So I'm speculating here. You know, the
bitcoiners are trying really hard to be able to push
layer twos, and I think there's some really interesting layer
twos in bitcoin, but it's still a little early, so
I don't know what the sequencing is. How long does

(42:18):
Treasury wait before it does this, does it wait and
see you know who's the new FED chair and whether
Bessett himself might be the new FED chair. I'm sure
he wants to do both jobs. That'd be amazing, it
has happened before, as he's pointed out. And then whether
they can work with the FED or not.

Speaker 1 (42:35):
I think that I think that we're also looking at
a situation where if Trump wants to go off the
board with this FED chair pick and I don't mean
bessn't at this point now I'm talking Now, let's talk
about somebody that he's tried it on the board and
failed to do so because of people in the past,

(42:55):
because of you know, we're coming up on the anniversary
of John McCain's dead.

Speaker 2 (43:01):
Judy Shelton. I'm talking about.

Speaker 1 (43:03):
Yeah, So you get to this, you get to that
moment in time where you say, if he has to
go off the board to put somebody in charge of
the FED who's completely outside of FED culture, and he's
got this Congress to get that through this fall, he's
got to make out that's a that's you know, that's
a big rug, right, that's a big prayer. I don't

(43:24):
care if it takes a flying carpet quote the quote
patent Like that's a that's a pretty big you know,
that's a pretty big ask. And so he's really got
to make that case, and he had to start that
case as early as possible. Like you know what I
mean this is this had to be part of the plan,
and that's why all has to be this has to
be the bad guy in this, in this, in this psychodrama.

(43:47):
The interesting thing is, I don't know if he saw this.
And I've mentioned this in other places, so people are
gonna get tired to be talking about it. But did
you watch the one hour convocation of central bankers at
the DCB at the beginning of the month.

Speaker 2 (43:58):
I did not know.

Speaker 1 (43:59):
Oh you you're you're I see. This is why I
have This is why it's hard for me to have
such a I I every time Powell is given the
opportunity to be to be the bad guy that Trump
wants to be, he doesn't do it. So he's at

(44:19):
he's at is at the ECB for an hour with
Christine Leguard. That's slovenly pricked. Andrew Bailey at the boe
Uweita he was I I was so thoroughly unimpressed with him,
kind of just slouching. I mean again, he's just like,
I'm just like above it all, and so so Bailey,
letguard Uwaita and I can never remember his name that

(44:41):
got from this the Korean South South Korea sthat having
a shin dig over at Q and A hosted by
the AP at the ECB YEP, fifty minutes worth of
boiler plate state of central banker speak and Leguard literally
running a struggle seession with the crowd to try and
puff up J. Powell every time she tries to insinuate

(45:02):
that he and Trump are at odds with each other,
and Palell's like kind of rolling his eyes a little bit.
And then we get to the last two questions that
actually matter, and you can just skip to the last
ten minutes, folks and watch and watch this, which is
he's asked about the reforming the simplementary leverage ratio with
you and I talked about in episode two thirteen. His

(45:23):
answer was, so do I support the thing that we get?
The FOMC overwhelmingly voted in favor of yes, I kind
of do, and that was like room went silent, boom,
fuck off, and then close the fucking door, as it were,
and then he and then the final question was about
stable points. Bailey went first and said, well, I don't

(45:45):
even know if they, you know, rise to the definition
of money or none. A guard comes out and literally
just says, I'm a communist. I believe money is a
public good, and I'm going to regulate it like a
public good, and I'm going to do everything into my
under my in my power to stop this from happening.
We're going to issue the euro and then Powell's like, look,

(46:06):
we're trying. We were trying to work with the Biden
administration to get rational crypto working, and then he said,
we're working with the Trump administration on the new stuff.
So in effect, what he said was, I'm working with
the Trump administration to get these things done. This is
what President Trump wants, this is where things are going.
I'm okay with it moving on, And everybody was.

Speaker 2 (46:29):
Like shit, but they knew.

Speaker 1 (46:34):
I honestly think that Powell is as much like everybody else,
He's like, I'm done with the job. I've done the
job that I set out to do. It's time for
I'm going to exit the scene. But I'm not going
to exit the scene in such a way that I'm
going to set the And then he said, and the
only other thing he said that I found interesting at all.
He said, Look, my job is to leave the next
bets year. I got nine months left in this job.
Because this is what he said, I've got nine months

(46:55):
left in this job. I intended to fill out my
term and to leave the the next incoming FED chair
with the best economy and the president of the best
economy that I can based on what we based on
how we operated at the Federal Reserve and the inference
being and if you don't like the way we do
things at the Federal Reserve, you're free to change it.

(47:18):
And I think that's I think that's fair. I don't
I don't even have a problem with that. I'll be
honest with you. I think Powell understands that the FED
needs to be reformed.

Speaker 2 (47:28):
Oh my god. Yeah. But by the way, Commerce is
going to work on a FED reform bill. So you
were talking about, you know, genius and clarity being part
of it. No, there's a there's an actual reform bill coming.
Because I mean Lommas for example, understands that even though
Trump said it yesterday that Operation Chow point two point
zero is over. Right. You've seen Jadie Vance say that.
Trump himself, I think, has said that it's not true.

(47:50):
She correctly points out that the mechanism by which it
happened where everybody was being debanked for political reasons, and
a lot of the people who did it are still there,
so she understands it's not over and so so. And
by the way, they've been a little busy on Capitol
Hill with legislating. They haven't gotten back to the investigations

(48:14):
they are coming, folks, and I.

Speaker 3 (48:16):
And I know that there's there's just going to be
some bad stuff uncovered, right, and you're starting to see
the Inspector General of the FDIC came out and.

Speaker 2 (48:27):
Got ahead of it and started talking about some of
the bad stuff that happened at the FDIC.

Speaker 1 (48:31):
Right.

Speaker 2 (48:32):
So I think there's some major, major, major reform coming.
And I don't know how, how the how the chips
are going to land. I know the FED wants to
get rid of the fd C. I know the fdi
C doesn't think the FED should be in the bank
supervision job. The OCC wants to have all of the
bank supervision. But then the state system would get rolled
by the national regulators in DC, and they don't want

(48:54):
that either. So how how do all these ships fall?
I don't know, but there is absolutely a understanding. It's
so funny. I've mentioned this before that multiple different groups
between Capitol Hill, both both House and Senate, and then
the Trump group have all there are these lists circulating

(49:17):
of who needs to be fired and basically who are
the who are the bad actors who did all this?
And I've been asked, you know, give me the names,
and I mean, in our case, it's pretty it's out
there in public discovery.

Speaker 1 (49:30):
It's not hard, right, right, right.

Speaker 2 (49:33):
So so we'll see. So but that, but that the
banking thing was, it was a huge issue, and it's
still there. Even though Trump is taking a victory lap
saying it's over, it's not. And they're going to address it.
Tim Scott understands that they have to because if they don't,
and all they've done is just do try to reverse
these things by executive order, the next time a Warrenight

(49:56):
administration gets into power, they're just going to do it
all over again. It's going to be Operation show point
three point zero and four point zero, right, And Obama
did number one, Biden did number two. So the whole
idea is make it such that banking is not politicized.
But now, now let's come back to the fact that
that tether's on the inside. Right, you saw Paolo or Dueno,

(50:19):
the CEO of Tether, sitting in the front row of
the signing ceremony of the Genius at the White House,
and Trump calls him out and asks him to come
on up and shake his hand. Okay, what is that
telling you. That's telling you that all the all the
folks who are concerned about Tether pushing the US dollar

(50:39):
into dark corners of the world are not in power
right now, that they're more focused on getting new buyers
for t bills than they are on surveilling all of
our financial transactions. That's what that's telling.

Speaker 1 (50:56):
You, Which is which is welcome news, and it tells
you like and this is again gets down to this
this this yeah, I I I. It's wholly consistent. Let's
let me put it this way. It's wholly consistent with
what I'm seeing from Trump on the European political front.

(51:17):
The way he's dealing with the UK, the way he's
dealing with Europe and it's consistent now with the trade
with the trade deals that were announced and the way
they're going after the European Union, and the way he
keeps struggle sessioning for cure Starmer. If I it's hard
for me to even have any sympathy for Starmer because

(51:38):
he's such a terrible person. But this is now the
third or fourth time that Trump is just literally like,
you know, treated, I'm like, you know, like the retarded
kid at the Olympics, right, I mean, this is really
really bad and like and he deserves it and and
he really does. I think that Trump is getting is

(52:00):
is putting serious political pressure on behind the scenes. One
of the things no I mean, I'm not talking. I
mean it's like it's obvious. I don't know if you've
noticed it, but I have, which is that since Tulca
Gabbert went to London a couple of weeks ago, the
entire financial press in Europe has started to change, especially

(52:20):
coming out of city in London. Like the times I've noticed,
like when when Starmer and Trump were talking, We're they
were doing the after thing press conference and the I
think it was either the Times it was one of
the big three London newspapers. So the woman asked that
it was a woman, which normally you would expect, Okay,

(52:41):
British woman gonna go after Trump going to say something
really dumb, which Trump is going to have to then
you know, like swat away. No, she turns to Cure
Starmer and asks, so, how do you know about how
easy it's been for President Trump to get all these
deportations done and get and and change the political culture
in the US when you're struggling with it here, like

(53:05):
when's the last time and what the newspaper would do
that when as opposed to the meltdown that they had
when he when Trump went to meet with the queen
five years ago, when you yeah, no, I'm seeing all
sorts of weird stuff. There's there's neutral Trump anti Zelensky stuff.

(53:27):
Now that's starting to come out.

Speaker 2 (53:29):
Oh yeah no.

Speaker 1 (53:30):
And it started in London two and a half weeks ago,
about a week about a week, yes, about four or
five days before Tulsa Gabbert came out and said, we
have all the goods on Obama's and we're gonna drip
it all out, right, but surely I'm gonna I'm gonna
release some documents then I'm gonna go do some interviews

(53:50):
and I'm gonna release some more documents, and then I'm
gonna and then I'm gonna wait for John Brendan to
open his mouth and perjure himself again, and then we're
gonna it's happening, and it's all targeted. And I think
I think every I think every bit of why vonder
Land rolled over the way she did was because he's
got her dead to rights personally on I don't know

(54:16):
all of that stuff Ukraine, all of it, and I
think it's all there, and he's like, yeah, and we're done.
We're we're not doing this anymore. We don't we're not
playing by your rules anymore. You don't, we don't work
for you anymore. And it's going to be messy and
it's going to be ugly. And yes, the Federal Reserve
as an institution is the the last, you know, real

(54:41):
vanguard of that globalist system here in the United States,
correct in the United States States control. It has to
be dealt with. And you know, and if Powell has
to fall on his sword, yeah, but comes from that
sacrifice the FED, then he's I think he's willing to
do it.

Speaker 2 (54:57):
Yeah, so that's interuing. But Boma doesn't come from that, right.
But the problem is that if and I don't know
Waller as well, but they're the two dissenters, they're the
ones whose names are on the list of prospective from
inside to be promoted to FED chair. And then of
course there are the outsiders as well. But but they don't,
they don't, they don't think that way. And by the way,

(55:19):
if you go do some research, you can figure out
that they're not respected by the FED staff, which tells
you that they're actually over the target.

Speaker 1 (55:30):
Exactly right, exactly, Yes, that's exactly the kind of thing
that you you know, Yes, that's an excellent point. Excellent point.
It's the way we're this is the way we're supposed
to to uh interpret all of this stuff. That when
you see something, when you're hagging flak, you're over the target, correct,
you know, And I live you and I live that day,

(55:52):
live that life every day in the public sphere, right yeah, yeah, yeah,
and and uh and and and if it's happening at
the institutional level, at the Federal Reserve, then it's just
you know, it's just as bad. No, it's it's it's
clearly an organization that you know needs to be depreciated.
And this is this gets me down back into something
else that I think is very interesting and I've been

(56:13):
we've been talking about, which is that there's the theme
of I'm going to gonna sound like a little bit
of a broken record, but this is important to everybody
I talked to realizes where my head is, which is
a rapidly depreciating assets. Yes, yes, the feed itself is
the ultimate rapidly depreciating asseid. In light of everything that
we've talked about, Swift was clearly what I've come to

(56:35):
realize is that Swift was a rapidly depreciating asset. When
Obama first used it to bludgeon the Swiss back in
twenty ten, they realized, I think they already began to
realize that that the world that we're coming towards today
is coming and they were and you know you used.

Speaker 2 (56:55):
Started that though, Yeah a post nine to eleven, and
it wasn't even obom Oh yeah, that's true, because he
forced the end of Swiss banking secrecy. And part of
the reason I know that is I was working in
Zurich then and I had a legit bank account in
Switzerland at the bank when I was working Credit Sweet
at the headquarters, and then after I left that job

(57:16):
and came back to New York and they made me
close it. And I said, guys, I work here, what
are you doing? Well, you're an American and they made
me close the foreign bank account. They were not. This
is the first of the d banking, right, But that
started under Bush. Now, now after that was when Obama
figured out you could use the sanctions and weaponized the
US US system. But what part of it is because

(57:38):
he watched what the Swiss did when Bush forced them
to give up banking secrecy just to stay part of
the international financial system. And I'm not sure that was
the right decision for Switzerland because I was living it
back then. Why why are you giving up your vaunted
banking secrecy? This is what Switzerland was known for and
we were looking at this is when I'm back when

(57:59):
I was working for the CEO co CEOs of Credit
Sweez and back in two thousand and one, the stock
went from ninety to nineteen and it almost went bust.
That was, it almost went bust two more times before
it finally went bust. And then you know, subsequent twenty years.
But in any event that we were looking at what
would happen if it actually did go bust, and we

(58:19):
recognized that it was mostly a US dollar company and
it was going to be the Fed's problem because the
Swiss National Bank was not going to print enough Swiss
franks to bail it out. It was going to rely
on the FED to bail it out.

Speaker 1 (58:32):
So which is what eventually, which is what happened in
the end anyway, Yeah.

Speaker 2 (58:37):
And well and ultimately when credits went.

Speaker 1 (58:39):
Bust, and yeah, it was ultimately twenty twenty three, yeah.

Speaker 2 (58:42):
Correct, correct, But it just we understood like that was
how big the Swiss banking system was relative to the
Swiss economy, and the reason it got that way it was,
you know, forty times the Swiss economy, which is so
so if you think about it from a central banking perspective,
how could you possibly defend the Swiss frank when your
banks are forty times the economy? You can't your collapse

(59:03):
your currency if you try, is which is really all
we're saying is that this was going to be the
FEDS problem if either one of those two big Swiss
banks ever failed, right, same thing now, because there's only
one three actually three of them have consolidated into one
in Switzerland because they keep trying, they keep failing because
they're so leveraged. But I digress. The backdrop is why
did they get so big because of Swiss banking secrecy

(59:26):
and then the US forced it after nine to eleven
to give that up. But it is that as a
signal that caused Obama then to say, well, let's start abusing,
let's start weaponizing the financial system. And then ever since
then it's it's it's it's it's picked up scene.

Speaker 1 (59:41):
Yeah, it makes it makes sense. And you know, Jimson Claire,
I remember him like screaming about it when he went
and when Obama went after UBS in twenty ten, he said,
you never go nuclear. That's when I learned that lesson.
You never go nuclear because if they call your bluff,
well you've got nowhere to go. And so it is
right the Swiss didn't because, as you just pointed out,

(01:00:03):
they were in no position to do so, correct, because
it was actually our problems.

Speaker 2 (01:00:07):
It was our problem.

Speaker 1 (01:00:08):
Yeah, so it really wasn't going nuclear, but it was
still it was in the end, maybe you know, in hindsight,
it maybe wasn't that, but it was. It was certainly
a lesson that everybody could use as an object lesson
to then apply it to when you saw it in
the future. When then when we went after Iran the
same thing in December of twenty twelve or twenty eleven,

(01:00:31):
blah blah, blah blah. And then it was usually against
the Russian.

Speaker 2 (01:00:33):
Well, because Switzerland was still banking the sanctioned countries right right,
and so again because a banking secrecy, they had this history,
and the US was trying to pressure the Swiss banks
not to bank the sanctioned countries, and ultimately the decision
that that the Swiss made, and you know, Switzerland's famous
for its participatory democracy, this never got put to a vote.

(01:00:57):
So that tells you that the Swiss banks were really
in control and that the people in Switzerland were not
in control, because this decision got made by the bank
regulator itself at that time to try to basically keep
the Swiss banks alive and going and continue to keep

(01:01:17):
them leveraged. But and there's another history for the financial
historians here. There's another piece of history. After the two
thousand financial crisis, the FED made all the foreign banks,
the jesibs global systemically important banks set up US holding
companies so that the FED could get its claws into
all those foreign banks. So this gets back to what
we were talking about earlier about the live More scandal.

(01:01:40):
The live More scandal broke in two thousand and eight, right,
because it turns out that the financial stress of these
European banks was boomeranging back on shore in the US
because the interest rate got set by fixing come traders
in London, not implemented by the US. And so part

(01:02:00):
of the strategy was let's get control of these foreign
banks because the euro dollar market was so big, and
that's exactly, and it was bigger. It ultimately grew to
bigger than the onshore market, and the FED doesn't have
control of it. So that was the means by which
they were trying to get some control of it. But
then this is where it becomes a political hot potato.

(01:02:21):
Also because in the two thousand and eight financial crisis,
the vast majority of money that got printed did not
go to US banks. It went to foreign banks because
of the of the stresses in the offshore market. And
I'm not sure Tom if that happened again today whether
the pitchforks would be out if the FED tried to
do the same thing.

Speaker 1 (01:02:41):
I don't, I'll be honest with you, Caitlin. This is why,
this is why I think that this is why I
think Powell's continuing to hold rates at four and a
half percent is because since the end of synthetic libor
on March thirty first, and then the Liberation Day tariffs
happened on April second, second. Yeah, and we get the

(01:03:02):
tariff tantrum. Story after story after story from European low
lights and highlights all said the same thing. We were
worried that the FED mate would be selective in the
use of swap lines and out and that, And that's

(01:03:24):
telling you that Powell's basically told them you're not getting
any money.

Speaker 2 (01:03:28):
Yeah, but this comes back to the whole tokenization of
treasuries and Teather playing into the future because Teather is
partnered with Canter Fitzgerald, which is one of the twenty
four primary dealers of US treasuries. Okay, so all the
money the tether, what Teather's doing. A lot of people
are confused because they've heard all the bad stories and

(01:03:51):
there's probably you know, there's some some history there, okay,
but it's they've done a lot to clean it up.
I don't know how it is, but it probably wouldn't
meet US standards if it were judged against those standards
right now, but the money's there. It's funny. So somebody
just today said, you know, Teather hasn't been subjected to

(01:04:11):
an audit, Well, because you can't. They weren't able to
get auditors to audit them, But that doesn't mean that
they weren't subjected to the only audit that really mattered,
which is whether a US primary dealer was willing to
do business with them, right, and they were okay, So
that was far more important than having you know, KPMG
or you know EY or giving them an audit opinion,

(01:04:34):
because a primary dealer was willing to put its reputation
on the line and did okay. So now let's come
back to when the next financial crisis happens. Here's what's
interesting about what Teather's doing. This is the aha that
I was alluding to earlier. Sure, what's the benefit of
having Tether. People are like, oh, you know, it's it's
all these scammers, and yes, there's some history there, but

(01:04:54):
Tether now has five hundred million active users. They're pushing
it espishly, the US dollar to the people who make
less than a dollar a day and don't even have
access to electricity, and they've built infrastructure. They have these
chaosks in Africa where people can bring their cell phones
and exchange their batteries and deposit their wages in tether

(01:05:17):
and then go back to their villages that doesn't have electricity.
That that whole group has never had access to traditional
financial services at all, and so they're not interest rates sensitive.
And here's the real aha, They're not going to dump
their T bills in the next financial crisis. It's going
to be pricing sensitive and it's going to be durable

(01:05:40):
demand for US treasuries. So why for the banks to
squawk and scream about this. This is actually keeping the
US financial system going. Now, somebody asked a question today,
is this really good? I never made the judgment value judgment.
Is this good or bad? It just is. It is
keeping the US dollar going. It is keeping keeping the

(01:06:02):
You know, the critics would say the Ponzi should collapse today, Well,
there's no question it's keeping that going longer. So I'm
not out there saying that this is this is a
good thing. It just is right, and the US Treasury
is embracing it. And so if if JP Morgan or
City could bring five hundred million daily active users into

(01:06:26):
their fold, they then the then the Treasury would have
put put its you know, warm embrace around them too.
But that's not happening because they were living within that.
You know, w e f globalists. We have to surveil
every transaction. The compliance costs are so high that we
can't afford to bank somebody who earns less than a

(01:06:48):
dollar a day in a in a village that doesn't
even have access to electricity, but you know who can
tether and they did.

Speaker 1 (01:06:54):
Yeah. No, it's a really interesting. It's an incredibly important
point that you know, when you make something too expensive
to do and then the black what are government's good
at the good of two things? Killing people and creating
black markets? And Heather, it's for all intents and purposes,
a black market in the US.

Speaker 2 (01:07:13):
So I mean it started that way, right, I mean
it's more important.

Speaker 1 (01:07:17):
Now than you but no, of course, and it's now
that it's now because it created such a good, a
good hot sink for trade, for certainly for keeping the
tea bill market, like yeah, that why wouldn't you embrace
it like we we we they did issue bills, Yeah, exactly, while.

Speaker 2 (01:07:38):
The banks are screaming like I don't think people realize
how big of an earthquake just hit the bank lobbyists
lost on something. Tell me when the last time that
happened was tom I don't know. I don't know either.

Speaker 1 (01:07:53):
And yeah, and in some ways, like I think everybody
is all the all of them are losing. And so
now it's again we're getting down to that. That that
the very important point, which is that you are now democracy,
you're actually decentralizing US dollar issue and so that we
never ever thought possible, yep, without a return to you know,

(01:08:17):
one reserve banking and all you know, kind of all
roth party and you know, there's never going to happen,
which we knew was ever gonna happen.

Speaker 2 (01:08:24):
So it just did.

Speaker 1 (01:08:26):
It kind of just did. But the backing isn't one
gold with no leverage.

Speaker 2 (01:08:32):
It's not sent T bills and US dollars, but it's
one that's the that's.

Speaker 1 (01:08:37):
But we do have a reserve. We do have let
we we there's still gonna be there, still could potentially
be a leveraged within the system, but that leverage is
now market driven, not FED mandate driven, meaning FED can say, yeah,
the reserve ratio is is five percent or seven percent
or three percent or whatever. All that all that stuff

(01:09:00):
goes out the window. Now the market gets to decide
how liquid Teather or any of the other stable coin
issuers are, and they can compete with each other for
you know.

Speaker 2 (01:09:11):
I've had so many fascinating conversations with trad five people
over who look at that and say, oh, my gosh,
Teather's so risky or USDC is so risky. And I
lay it out. They've got all these T bills, they've
got all this cash, especially the on shore regulated ones,
and they're like, well, it's not FDIC insured, it doesn't

(01:09:31):
have access to the discount window. And then you go
look at a balance sheet. It's one hundred percent cash
plus there's some capital to back it, so it's really
one hundred three or one hundred four percent cash. And
then compare.

Speaker 1 (01:09:42):
They've got the Actually, I was doing some numbers the
other day, I said, I asked I actually asked Rock
because and I've done this before. They made thirteen something
billion dollars last year profit. Tether ask yourself the question, tether,
ask yourself a question. How many companies in the world

(01:10:02):
made more than thirteen billion dollars in profit last year?
And the number is not very high, it's certainly less.

Speaker 2 (01:10:08):
Yeah, oh yeah, yeah, yeah, no, it's incredibly impressive as
a right.

Speaker 1 (01:10:11):
And this was and this was this and this is
the same argument that we were making for private for
relisting and privatizing fany Man and Freddy mac even as
as functional as they currently are together, they made for
seven billion dollars last year. Yeah, that makes them the
ninth most profitable company or pair of companies in the world.

(01:10:34):
They would immediately enter the S and P fifty, right
if they were relisted and added and and and uh
and then fully privatized, and the government would to sell
off its warrants, which the government is going to do.
That's a different story. That and that and that gets
into all and there's a there's a there's a through
line between these two stories, of.

Speaker 2 (01:10:56):
Course, and tether treasury market.

Speaker 1 (01:10:59):
Yeah, and and and how we're going to support the
current evaluations within the housing market in order to then
take that foreign direct investment that's coming in to produce
new jobs and new factories and new everything else along
with the return of community banking. That's your model for
growing your way out of out of this.

Speaker 2 (01:11:20):
Absolutely final nightmare. Ye's really terrific.

Speaker 1 (01:11:24):
Sorry, go ahead, all right. And again this is like
I'm glad you see what I've been seeing because somebody
else sees it like other than maybe you, me and
Vince Launchi season as well.

Speaker 2 (01:11:35):
Luke Groman also saw you kind of have three choices.
You're either going to inflate away, You're going to try
to grow your way out, or you're going to default. Okay,
and it's very obvious which one Trump is choosing. He's
trying to grow his way out. And he's making a
prediction that the economy is going to run really hot there.
And that's and that he's critical of Powell because Powell

(01:11:55):
didn't understand this and should have let it run hot,
because had he at it run hot instead of raising
rates as high as he did, that we would have
inflated away the debt and our debt to GDP wouldn't
be as high as it is right now. And and
over a couple of years of financial repression, which let's
face it, that's what it is. We would have actually
reloaded the balance sheet as and so he's critical of

(01:12:18):
Powell for that reason. Really interesting his most recent his
most recent podcast. But but this is exactly back to
back to your point. This is what this is what
Trump is trying to do grow his way out of it.
He's going to have to have credit coming out of
the places where real credit gets created. It's either the
securities market or the community banks. It's not it's not
really the big guys. But but coming back to comparing

(01:12:41):
a stable coin back by one hundred three percent cash,
you know, or one hundred and five in our case,
it's it was one hundred and eight percent cash in
our first few years, right, and the Fed said that
was risky. But on the other side too, I.

Speaker 1 (01:12:54):
Know now they understand you guys can't see it because
it's an audio only podcast, but I had literally just
did like I literally just did the card face pom you.

Speaker 2 (01:13:04):
Did you face palmed. Yeah, that was funny because we
were watching each other on zoom. But on the flip side,
the other alternative, and this is what a really really
smart Pradi five people were saying, I'd rather have a
bank deposit and a traditional bank that's backed by eight
cents in cash and then another say six percent six

(01:13:26):
cents in capital, So there's fourteen cents of loss absorbing
capacity and then eighty six cents of loans and securities
that may or may not be liquid, probably aren't and
are likely to take a haircut in the event there's
ever a bank runt. Right, But on top of that,
you've got FHLB borrowing, and you've got FDIC insurance, and
you've got discount Window, which package is from a credit

(01:13:49):
risk perspective better. Would you rather have one hundred call
one hundred and five percent cash backing your one dollar
liability or fourteen cents in loss absorbing capacity plus all
these other backstops. And I look at that and say,
it's pretty clear to me. But I will tell you
in tradfy they're all thinking, no, we'd rather have FDIC

(01:14:11):
insurance and discount window an eight cents of cash backing
your demand deposits.

Speaker 1 (01:14:17):
And they're going to lose.

Speaker 2 (01:14:19):
Well, if that's how they're thinking, they are going to lose.
But here's the crazy thing. I don't know how this
market's going to go. I don't think anybody knows I
just did give an interview with the American banker today.
What's going to happen? I don't know. Anybody who's predicting
isn't going to be accurate because nobody knows. Nobody knows
right now. I mean, City is saying they're out there
with a forecast that stable coints could be three point

(01:14:39):
seven trillion, and they're just about two hundred billion right
now for context outstanding, there'll be three point seven trillion
by twenty thirty. And I looked at it and went,
that's way too low because the banks which currently originate
all the payment volume are not even in the arena yet.
And fedwire processes one point one quadrillion, ACH processes something

(01:15:02):
like eighty seven trillion, Swift processes four hundred trillion. These
are not precise numbers, but that gives you a sense
of like how massive payment volumes are. Okay, all that
right now runs through the FED one way or another,
and here comes tether. Yeah, okay, it's it's like one
hundred and seventy five billion right now, the total stable

(01:15:23):
quaint markets around two hundred billion. Cities like, oh, it's
gonna you know, more than ten x between now and
twenty thirty. I look at it and go, if this
thing takes hold, which I am ninety nine percent sure
it will, it's going to be massively higher than three
point seven trillion, because it's going to be like an
uber momentsus versus you know, the taxi and limousine commissions,

(01:15:45):
where the only thing that keeps the old yellow cabs
on the streets is regulation trying to trying to basically
join them as opposed to as opposed to trying to compete,
because if they try to compete, they won't. These old
payment systems and the whole notion that you're gonna you know,
the banks get to earn one or two days afloat
because it takes so long to settle a payment. That

(01:16:07):
game is over. And the people who the people who
understand that it's over are the corporates. But the real
question is, I don't know at this point are they
going to go with tokenized bank deposits or are they
going to go with stable coins. And if they go
with tokenized bank departsent deposits, and the markets, you know,
all that all that one point one quadrillion of fed
wire at eighty seven trillion of AH ends up getting

(01:16:28):
issued in tokenized form. Now, the question then becomes is
how on top of the bank run risk is the
FED going to be Because the Selfon Valley bank bank
run happened in the span of forty eight hours. Back then,
the FED was making banks go through you know, contingency
planning exercises called tabletalk exercises, assuming that the bank run

(01:16:50):
would take two weeks. Okay, so they were planned for
a two week bank run, it actually happened in forty
eight hours. You start tokenizing demand liabilities, the bank could
be done in an hour, okay. So are you really
going to allow From the bank regulator's perspective, I asked
this rhetorically, are you really going to allow a traditional
bank to take in a dollar of tokenized deposits and

(01:17:10):
make a thirty year mortgage loan with it? Is that
just a recipe for the next bank runs that are
going to happen a lot faster. How are these bank
regulators going to deal with that? And what's interesting is
the President's Working Group report yesterday punted on all this,
and I think they did it because they Trump just
got his people confirmed at the two of the three
bank regulators hasn't even nominated a third one yet and

(01:17:32):
he didn't want to jam them, is how I read
the situation. But you can kind of see the setup
here is right for massive change, Yes, and I think
because the horses are out of the barn, there's nothing
to stop it.

Speaker 1 (01:17:49):
Yeah, no, I can. I can see that as well.
And it's going to be the interesting part of this
is going to be, you know, the inertia of people
and how they did. Literally was having this conversation with
my adr last night. To be honestly, I was trying
to get her up the speed on some of the
stuff because she's, by the way, like classically hyper cynical zoomer.
She's nineteen, but she she fucking hates crypto. Was going

(01:18:12):
to say, in every way because because of all the
potential for fraud, theft and the nails. And I'm like,
and I say, yeah, and it is scary doing it.
And I said, but you don't understand is that when
I'm describing here, isn't something you're even going to interface.

Speaker 2 (01:18:29):
With exactly we're going to What's.

Speaker 1 (01:18:31):
Going to happen is the banks are going to have
the banks are going to be either issuing stable coins
on these payments on these payment layers based on your deposits,
or they're going to be taking tether, or they're going
to just be taking tether in.

Speaker 2 (01:18:44):
You know, it's yeah, you know, much bigger. It's much
bigger than crypto fraud, check fraud, I know, you know,
do you know how easy it is to write an
ET check. All you need is the routing number and
account number the moment you write a paper check to
somebody that random person has access to all in order
to write a E check on your account. That's why
there's so much fraud in the financial system. And you know,

(01:19:06):
obviously there's a lot of credit cards as well. But
that check fraud thing is a big deal. If we
can get behind those gateways where we actually convert that
e check into a stable coin payment, right now, all
of a sudden, it's traceable. Now you're massively going to
cut the fraud. Right But but but your daughter who

(01:19:26):
might be originating in e check payment to pay her taxes.
That's what I just had to do recently to pay
my property taxes. I had to you know, you either
pay the three percent fee on your credit card, which
of course you're not going to do on a property
tax payment, or you do an e check and the
E check, you know, all you need is the routing
number in the account number. Unfortunately, it is really easy.

(01:19:46):
They need to deal with this fraud problem, no question,
because the system was built when it for analog things
and everything being slow. But my point is that we
have the solution for it. You just convert that into
a stable coin and then it's traceable.

Speaker 1 (01:20:01):
You're going to.

Speaker 2 (01:20:01):
Massively cut back, cut cut fraud.

Speaker 1 (01:20:04):
By the way.

Speaker 2 (01:20:04):
That's going to solve a big problem for the banks
right there. And so instead of stable quaint being this
great new payment system that is better, faster, cheaper, and
more traceable than ah, you go in and say, oh,
we'll cut your fraud for you by.

Speaker 1 (01:20:20):
Right, well, for you by well how much all of them?

Speaker 2 (01:20:24):
I don't know. Well, I mean, obviously you're still going
to get some right. Unfortunately, there are criminals in the world,
and you know this is this is frankly why all
these regulatory regimes exist. So yes, we will, as Martin
Armstrong likes to say, human nature never changes, there are
criminals in the world, and so we do. We do
need laws. But in any event, it's interesting to that

(01:20:48):
that that your daughter is not a crypto fan. But
I agree with where you're going, which is that she
won't know she's using it because it's all going to
get distracted away in the background, right.

Speaker 1 (01:20:57):
I'm talking about that. What I'm talking about is I
hate this. Eplained it to her. This is middleware, this
is not You're not going to have to sit there
with some crypto with some crypto wallet on your phone necessarily.
And I actually look at and I said, look, you
have you have a bank account, you have the app
for the bank on your your your phone. I'm gonna
tell you what banks you uses, but I got news

(01:21:18):
for you. Do you think that that little local community
credit union has a really robust fraud production service that
you know they contract that out to somebody else, And like,
the reality is you don't even understand how the system
is architected in the first place. You just have this
idea in your head that this is safe because it's

(01:21:39):
the older system and the newer system, which has been
which is you know, which has been subject to the
wild West for a long time, is an issue. Like
at the end of the day, what you have to
realize is that the world is going to move to
this because the middleware layer, the payment layer, is going
to be much more secure.

Speaker 2 (01:21:58):
Secure, We're going to come more.

Speaker 1 (01:22:00):
And you're you're never gonna you're never gonna interface with
it in the way that you think you're where you're right,
you know, And she's you know, but I get why.
You know, she grew up during the last you know,
she was a teenager during the last you know, round
of fraud in crypto and DJ on crypto, right, and
I teased this and everything else, and that's what she's

(01:22:21):
and that's what she and her friends have been chatting
amongst themselves about. And they don't know any better because
they're not they're fourteen years old, Like they're not going
to be they're a banking expert, right, and neither should they.

Speaker 2 (01:22:32):
Be, right. But you know what, Paradigm put out a survey.
For the first time in US history, a majority of
people are getting other types of financial instruments before they
get a bank account. Usually, when you gave your first
job as a you know, teenager, that's when you open
up a bank account. That's what I did. I think
I was thirteen for my paper route. As a you know,

(01:22:55):
start earning money, you open a bank account. Right, But
now people are getting to accounts before they open a
bank account, if they ever bothered open a bank account,
and if they ever bothered to set and put in
set foot into a bank branch. So because our world
is going digital so fast. And yeah, so I mean,
I candidly, I hope that you sit her down and

(01:23:17):
teach her a little bit about how to manage a
manage a wallet so she can control her own financial
destiny and not have some random unelected you know economics PhD.

Speaker 1 (01:23:28):
Destroy your life. Right, And this is this is this
is this is part of a longer and larger conversation
that I'm having with her as she moves into every day.
Every day, she's moving into a dolphin. My wife and
I were like, so, I mean, my my, my daughter
has a series of you know, she's slightly autistic, so
she's got a lot of like, you know, she's got
a lot of you know, child I think it's mostly

(01:23:51):
childhood PTSD, to be honest with you. But what I
mean is that she's you know, she she doesn't like
to go into the store, she doesn't like to do
these she got all these like kind of classic in
many ways, kind of classic Zoomer issues and so she's learning,
like the other day, I guess today are well blew
up and we're getting a new well having to get
a new well drill next week? And oh wow, yeah,

(01:24:12):
it's it was time. I knew it was coming. Like actually,
so what was interesting is my wife had the text
her and her like, you have to stop at the
at the store on the way home and get ice. Okay, seriously,
you have to get ice because we don't have any
because we I got drinking water, but I forgot to
get ice. She's like, how do I do that? I'm like,
I actually before she even texted, I said, you're gonna
go ask my daughter. Wife, go ask the daughter, text

(01:24:36):
her and say go buy some ice, and like, and
you know she's going to ask you how do I
buy ice? Because she's never bought ice before? Right, I mean,
you know how to buy a candy bar you go
to but ice when you walk into the seven eleven,
you know, you know you know what to do. I'm
like so, and of course she did ask that question.
But on the way home she stopped and she did it.
And she doesn't like to do it, but she did it.
Like every day a little bit like so that was

(01:24:57):
yesterday today the adulting is hard, and but she also is,
you know, because we're getting very close to absconding off
the Tennessee. So I'm actually kind of happy that the
well blew up now so we could project manage that
get taken care of, so that she's going to take
over the house down here, So she's going to have
to be a homeowner. So Joy's a home owner of you.

(01:25:20):
So you can feel that she's already getting into her head. Yeah,
I have to step up and start doing the things
that I didn't have to do before. His mom and
dad always did it, and now she's actually embracing those ideas.
So it's like everything else, slowly but surely, her crazy
dad explains to her the weirdness of how the world
actually works. You have a front row seat to the
changes because I'm going to be rant about it every

(01:25:41):
night if you want to listen to it. If not,
up in your room and go play Balderskate. We're good.
But it's really fascinating to watch this play out as
the father of a nineteen year old. Knowing what I know, right,
you can imagine what those.

Speaker 2 (01:25:53):
Conversations she's not going to have the benefit of social
security all the things, you know. Yeah, no, And you
and I are about the same age where the boom ye seven,
I'm fifty six. The boomers, you know, just just they
were locusts, right, they've And it was interesting. Luke Roman's
podcast talked about how his there there are so few

(01:26:15):
trades people, plumbers, electricians. Right, we need even more of those, right,
we over educated with college and underinvested in trade schools.
And his friend was was talking about how he's booked
out eighteen months already, and Luke said, why don't you
just raise your price forty percent for the boomers and

(01:26:35):
they'll pay. And you know what he did.

Speaker 1 (01:26:38):
I've got story. I got stories of one of my
patrons and who's now one of a friend of mine
who's I'll be he's up in Tennessee as well, and
I'm getting them. Actually he's an electrician. I'm getting to
actually do the electrical work because I want to spread
the love. He's a friend. He and I played World
of the Warcraft together and we were talking about he's like, yeah,
his his business is finally taking off. He's finally because

(01:27:00):
he had just moved out there a couple of years ago.
So he's like building the contract and misses out. And
he said to me the other day, he's like, yeah,
like that guy, Yeah, that guy campaign extra. I'm going
to quote him some some crazy We'll pay it. And
it's and it's happening, and he's like, that's hilarious. I'm like,
well that was point, Luke.

Speaker 2 (01:27:19):
Oh sorry, go ahead.

Speaker 1 (01:27:21):
So yeah, no, I can see it even in I
can see it in other areas as well, even if
it's not boomers, it's just in general, it's just the
the certainly in that market.

Speaker 2 (01:27:30):
Like well, he was making a point about boomers specifically,
because the boomers have all the assets right now, okay,
but they also ran up the debt, right so what
what did that? What is debt? Debt is allowing you
to consume more today by reducing your your consumption in
the future. Okay. The boomers figured out how to borrow
from a group of people that had no say in
the matter, which was kids not even born yet, okay,

(01:27:52):
and then ran up all this debt during their lifetimes. Okay.
So they've got all these retirement assets, they're they're bringing
them down now, and and Luke's point is the younger generations,
the zoomers, who can't afford to own a house, right,
I mean, especially for somebody who's you know, a trades person,
you know, run up the price on the boomers.

Speaker 1 (01:28:11):
They're the ones which as loving.

Speaker 2 (01:28:13):
And they're the ones that don't have the time, and
they're going to pay.

Speaker 1 (01:28:16):
And that this is and and and it's actually a
really good point on Luke's part, and which is that
you're actually doing the wealth transfer back, correct, You're taking
you're taking the money back that you sold from us,
right and you know, and that's and that's and that's
the way of looking at it. And oh and the
other and the other story that came out. I saw
another one today, which is that as we as I

(01:28:37):
said about government, how the boomers and the old and
the and the tail end of the silent generation who
refuse to pass political power to their children who they
always hated us, you and me, the x right where
the gen xers were like, yeah, they don't want to
give us the power because they know we're we're going
to tear down all the ship because we know what
they did, we know what they did, right, And so

(01:28:59):
they're trying to try so they're doing so they they're
trying to transfer and skip a generation and handed directly
to the millennials, to their grandchildren, who you know, they're
thinking that they'll you know, they'll take care of them.
And they're doing the same. But what's happened in government
you're seeing and promotions within corporates that the boomers are
passing down to the millennials and there skipping gen xiga

(01:29:21):
and they won't give gen x the power. They will
because they they because they know in their heart of
hearts that well they hate their childre they always hated
their children anyway. My parents were silent generation. My parents
were you know, I'm a weird I'm a weird person.
Not actually both Dexter and White and I are are
are similar this way we have we have a different
we have a different experience even though we're like when

(01:29:43):
essentially gen X and our ethos, we have a different
experience of how we dealt with our home life or
we actually had responsible parents. I have boomer sisters who
I don't get along with. What just to give you
an idea the family dynamic there, right, So yeah, no,
this is if you you know, that's another conversation for

(01:30:05):
a different day is why I don't speak to my family.
But the uh that that dynamic is playing out at
so many levels within our society, and and and and
it's a and it's a real problem that we're going
to have to get through over the course in the
next couple of years. And this is and it's part
of the reason why, you know, as the zoomers become

(01:30:25):
part of the voting age population and we start to
see the massive shift to the right that's occurring within
the massive shift to the right, that they're looking to
their gen X quote unquote grandparents. In my case, I
had my own grandchild because I'm fifty seven of my
daughter's nineteen. Like, let's I kid ourselves. I didn't have
a kid, toll I was thirty eight. I should have
had my kid when I was, you know, twenty eight, right.

(01:30:48):
But the that that that alignment is starting to come
together and fight and fight against the millennial boomer dynamic.
And it's a very interesting like thing that's occurring right now.

Speaker 2 (01:31:02):
And a lot of it it is the housing market.
Trump is right to put his finger on the pulse
of that. That's part of the reason why Zoomer, especially
Zoomer young men, were heavily in favor of Trump because
they look at this and say, how am I ever
going to be able to afford a house? How am
I ever going to be able to replicate my parents,
much less my grandparents' quality of life. So, yeah, there's

(01:31:27):
a lot of resentment. And part of the reason I
love being back home in Wyoming and out of New
York and DC is and even frankly to some extent,
you know, the more local cities like a Denver. Part
of the reason is that I really sense, because I
live every day the people who got screwed by the

(01:31:49):
last you know, forty years, really since the early actually
fifty years, really since since the early seventies, with all
the inflation and all this money that ended up going
to Washington, d C. Go look at the I could
just go look at the real estate market in New
York and DC and you'll realize something's really wrong, something's
really off right. All this there was this giant sucking

(01:32:11):
sound of value. They got sucked out of the heartland
into New York and d C. And maybe this is
a good place to end. The person who warned about
this was a rancher from a tiny town in Newcastle, Wyoming,
debating the original Federal Reserve Act. He was Wyoming's first congressman.
His name was Frank Mandel, and he warned back then

(01:32:31):
it was more agrarian. He warned that credit, money and
credit would that the power over money and credit would
concentrate in Washington, d C. In New York if the
Federal Reserve got created, and that is exactly what happened.
And part of the offset to that was that the
intention was to create a decentralized create some federalism in

(01:32:52):
the FED. That why are their twelve regional federal Reserve banks?
Because they wanted to have at least some federalism. They
did not want to recreate the Bank of England to
one of our Twitter exchanges. They did not want an
all powerful, centralized central bank in the United States. They
wanted to try to at least have some check in
balance on the on the on the power over credit,

(01:33:15):
and have it concentrate in the big cities. And Frank
Londell warned as he was voting against it, and said,
you guys are trying not to make this a Bank
of England. You are trying not to centralize all the
power over money and credit in New York and d C.
And you're going to fail. It's going to centralize anyway.
And that's what happened.

Speaker 1 (01:33:35):
No, you're right, and that's the and that's the and
I agree, and I've always agreed with that basic criticism,
that that basic you know, austrol libertarian criticism. You know,
it's what drove me to become the person I am today.
To be honest, what I've noticed in that what I've
begun to realize in the last year or two. And
I don't know that you and i've spoken about this directly,

(01:33:55):
but I looked to the Banking Act in nineteen thirty five,
which created the mode as the thing that created the
durable It created a durable arbitrage on for the cost
of capital within the United States that allowed Washington to
pick and choose winners. Correct they chose to give California

(01:34:16):
the capital YEP to build out the military industrial complex,
Delicon Valley, that set, and everything else, and leave the
rest of the heartland behind. For the newsletter, about seven
or eight months ago, I did an analysis and I said,
so let's look at the let's look at the rise
of the let's look at the change and a number

(01:34:38):
of electoral voteses of California and Mississippi as a function
of the Banking Act of nineteen thirty five, which created
wow and oh no, and it's clear in nineteen hundred
Mississippi and California both had nine electoral votes. Wow, they
both had the same number and percentage of electrical votes. Yeah.

(01:35:01):
At two thy and twenty, California had fifty four and
Mississippi had six. Wow. Now even so, even as height,
New York never claimed more than eight to eight and
a half percent of the of the electoral votes, today
California continues to hold on to ten percent, down a

(01:35:21):
little bit, and they should have lost three or four seats.
The twenty twenty cents had been honest. Yeah, I had
been honest, So that it lays right out and it's
the same. And then the argument is simply that California
Mississippi paying four percent for capital disadvantages Mississippi and subsidizes California.

Speaker 2 (01:35:41):
No different.

Speaker 1 (01:35:42):
And I but I came onto this idea analyzing the
euro and the Europe and Europe when I said the monolithic,
the centralize, the central exchange rate of advantage Germany. Here's
the deutsch market. Yes, yes, and the Lira would have
been seventy cents and this internal markets within country. Correct,
but it was Germany.

Speaker 2 (01:36:03):
But that wasn't even advantaging the average German. It was
advantaging the equity owners in the manufacturers of the German companies,
That's what it was.

Speaker 1 (01:36:14):
And then created the and then created the political monstrosity
today we know as the European Union.

Speaker 2 (01:36:19):
Correct, right, But the average German got their pocket picked,
the average Greek and Spaniard and Italian got a wealth transferred, yes, right,
but but but the businesses in those countries got screwed.
The businesses in Germany won, the consumers in those countries won,
but the consumers in Germany lost. That's that's the creation.

(01:36:40):
But ultimately that you're what you're describing. If we didn't
have a single market in the United States, and we
didn't have a single discount rate set by the Fed,
we would actually have a great deal of difference in
interest rates right now? So Will, yeah, Will Will this,
Will Will what's best in going to end up doing?
He's a financial his story and clearly a brilliant guy.

(01:37:02):
Interesting question is what is he going to convince Trump
to do is with the FED. You know, everyone's focusing
on the short term, but I think what you and
I are looking at is what happens with the post
foul post Powell Fed, right, And is a big pet
FED reform bill coming or is best just going to
go around them and start setting interest rates on his own?

(01:37:25):
I mean, ultimately, that's what's in the US Constitution. The
FED is not in the US Constitution. There are a
lot of people who don't think the FEED is even constitutional.

Speaker 1 (01:37:32):
I would argue that the FED is not constitutional at all.
I want to repeal of the coup against the United
States of nineteen thirteen.

Speaker 2 (01:37:42):
Yeah, well, that was the income tax and the FED.

Speaker 1 (01:37:45):
And direct election of senators, and direct election of senators,
which is the most important one of the three, which
is the most important of the three. Yeah, without doubt,
it destroyed the federal structure of the United It destroyed
the true separation of powers in the United States. I
will go to my grave on that one. Dexter White
and I will like do well, I'll make sure we

(01:38:05):
do nine podcasts beating people over the head with this one.
This has to be understood that the senators are supposed
to be there for to represent the states, and the
state legislatures should have the ability to call their freaking senators,
and people like Lindsay Graham would not be able to
run around the world acting like they own they own

(01:38:27):
our foreign policy for another country.

Speaker 2 (01:38:29):
No, right, good, good point. Yeah, Well, and how corrupt
that all is? I mean, the magnitude of corruption. I've
alluded to this before. Yeah, you know a lot about
our story, but you don't know all of it because
a lot of it I haven't been able to talk about.
I mean, I'm sitting on some bombshells about the magnitude
of the corruption in the system. And it's like I
was reading one of our Armstrong's pieces where he said

(01:38:52):
he didn't regret what they did to him. He was
wrongfully prosecuted, and he was actually he went all the
way to the Supreme Court for people who I'm not
familiar with his case because they never charged him, and
I think they sat for like eighteen years in jail
and he was never charged, and he finally got to
the Supreme Court and the Supreme Court said at that point, no,
you have to actually charge, So you can't incarcerate somebody

(01:39:13):
who hasn't actually been charged. I'm sure not getting this
quite right, but directionally I'm getting it right. And anyway,
so the guy was in jail, wrongful, wrongfully incarcerated. Took
him that long to get out of jail, and they realized,
he alleges they never had the money to or they
never had the goods on him. One of my good

(01:39:35):
friend's brother in laws was his lawyer and is absolutely
convinced that he was not even not guilty of any crimes,
and of course Armstrong maintains that as well. For what
it's worth, the US government never actually charged him with
a crime. So what he ended up doing is settling
to get out, and he I think he pled to
a misdemeanor or something and he got out. Anyway, long

(01:39:57):
story short, if anybody should be angry their life was disrupted, okay,
it should be him. But he said he's not angry
because what he learned opened his eyes to how the
system really worked, how corrupt it really was, what the
power structure in the United States really was, and it
made him a better analyst for it. And I look
at at at our situation and the things that I've learned.

(01:40:18):
It's not over yet. And and and maybe you know,
he kind of said, look, maybe my job was to
go tell these stories, right and I and and that
resonated with me when he was telling when he was
telling his story, I mean, the end, the end is
not written for us yet. Obviously in his case he
was able to get back out and you know, start
his business back up again. For us, we don't know
what the end, what the end game is going to be,

(01:40:39):
but but we'll see. I uh, I very much look
forward to being able to tell the real story. And
it's not going to shock any of your listeners because
your listeners, my nature, are critics of the system and
they're going to understand that it gets abused against good actors.
And that's exactly what happened to us.

Speaker 1 (01:40:58):
Yeah no, And having having been having gotten to meet
Marty personally and hang out with him up in Calgary
a couple of months ago, and then be able to
a couple of podcasts I can I can tell you
I haven't you know, and yeah, no, it's there is
a it is. It is interesting to see just how
Serenie is about it all. I know that I'm not

(01:41:22):
that I'm not built that way. I'm built I built
the whole crutches and in ways that are are so
I look at it and I went, wow, more palty exactly,
it got to be due. It's it's great. So yeah, no,
it's it's interesting. So all right, those are these are

(01:41:42):
these are the stories that if we continue to tell
them this way, that we set the we set the
zeitgeist up for the change that needs to happen. That's
in all of this. Yes, and and we you know,
we do our very best, and you know we don't
always get everything right. But you get what you you
can write, and you do it honestly, and you hope
that uh, you know, tomorrow you're giving an opportunity to

(01:42:02):
do it again the next day. That's that's all we
can ask. That's all we can hope for.

Speaker 2 (01:42:06):
Well, salute to your hive mind patrons who help you,
you know, see a lot of these things. I do
give you credit rightfully, so and you've given your patron
credit for opening your eyes about sofa. That's the biggest
story nobody's talking about, that the US got control of
its financial destiny back and then and.

Speaker 1 (01:42:23):
Then everything else and everything else is the chess came
after everything else.

Speaker 2 (01:42:26):
Just move counter yes, and so when you understand that,
you understand why Europe was going to have to cave.
And so maybe last thing to end on is which
which country goes into a depression first, the UK or Germany?

Speaker 1 (01:42:41):
Germany, because I think Trump is trying to save the UK. Interesting, definitely,
that'll be it. That'll be it. That'll be a different
podcast for a different day. But I'm gonna probably talk
to Alex Krainer about that tomorrow. I think that Trump
is trying to save the Commonwealth from the old colonial
banking assets, open colonial banking assets, families of Europe, that
city of London, plus you know, Luxembourg, Frankfurt, Zurich, all

(01:43:05):
of that. And you know, one of the things that
Ian Berling Game said to me, and the first time
I met him, he said, have you noticed that you
know you railed about the British Empire? Did England participate
in that? No? They got destroyed to so little England
has gotten destroyed. And you know, I always I've always

(01:43:28):
used the example that you know, why was Stanley cooper
able to make full metal jacket in England? Because there
was because it hadn't been rebuilt after World War Two? Okay,
so he was able to import palm trees and re create,
recreate Quay City in the north of England. When I
watched Clarkson's farm and I watched the struggle of the

(01:43:49):
small farmers and how Jeremy Clarkson started out as you know,
doing top here on with with sheep and then turned
it into a reformation, you know, and an hire uh
recitation on how they're destroying farmers, and watching his conversion
as a person into you know, it's it's it's powerful ship,

(01:44:12):
and it's it's powerful in a way that is necessary.
And I think, you know Trump, I think Trump's a
Royalist in a in a weird way, and I think
he's He's coming to the entire Commonwealth Canada. He just
sent Costell to New Zealand.

Speaker 2 (01:44:26):
By the way, oh interesting, okay, yeah, well and by
the way, another piece on the chessboard is all of
a sudden, brand starts it and then the UK then
Canada to recognize Palestine. I don't want to get into
that topic, but just the coincidence, it's not a coincidence
that they out did it within one day of each other.

Speaker 1 (01:44:44):
Yet it's yeah, yeah, and we'll go on. So I'm gonna.

Speaker 2 (01:44:49):
Happen and try to save my save save my garden here, all.

Speaker 1 (01:44:53):
Right, so much for everything.

Speaker 2 (01:44:56):
Yeah, and we will do this again when we have
other big events to come in and uh and analyze
from a non traditional perspective. Always learn a lot from
you really appreciate this.

Speaker 1 (01:45:06):
I appreciate absolutely. So she's kittlin along. I'm tomml Luongo.
You guys know the drill. He will keep your sick
on the ice.

All Episodes

Episode #225 - Caitlin Long and Mapping Out the Post-Powell Fed

Episode Transcript

Popular Podcasts

Stuff You Should Know

Dateline NBC

The Herd with Colin Cowherd

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.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 #225 - Caitlin Long and Mapping Out the Post-Powell Fed