Latest / The Paul Barron Crypto Show / Bitcoin & Gold vs Global Inflation ️‍🔥Andy Schectman INTERVIEW

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Bitcoin & Gold vs Global Inflation ️‍🔥Andy Schectman INTERVIEW · The Paul Barron Crypto Show

0:05
Speaker 1: My name is Paul bare Welcome back in a tech path.
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Speaker 1: So check it out. Let's go into it. And I
0:41
Speaker 1: do want to introduce and bring back one of our guests,
0:45
Speaker 1: and that is mister Andy Schechner coming in right there
0:47
Speaker 1: from Miles Franklin. Nice to see you again.
0:49
Speaker 2: Nice to see you too, Paul, Thanks for having me brother.
0:52
Speaker 1: Yeah, so we're going to get into it today. Andy
0:54
Speaker 1: and I want to talk a little bit about the
0:57
Speaker 1: inflation scenario that's been playing out right now. You've got
1:00
Speaker 1: the COBEC coming in FED impact. Really, I think when
1:03
Speaker 1: you look at the feds two percent target, whether or
1:06
Speaker 1: not we see that actually occur is going to be
1:09
Speaker 1: the big question mark. So could we see maybe a
1:13
Speaker 1: nineteen seventies rebound around not only inflation, but also maybe
1:18
Speaker 1: a rise in interest rates. What are your thoughts on
1:20
Speaker 1: that right now? With the Fed?
1:22
Speaker 2: Yeah, absolutely, I think you'll see bowl. First of all,
1:24
Speaker 2: we're not going to see two percent inflation for and
1:28
Speaker 2: Pobable to be touting anything regarding a victory over inflation
1:33
Speaker 2: is a lie. I mean, the current CPI numbers come
1:35
Speaker 2: in at an annualized rate at three point four percent,
1:39
Speaker 2: roughly sixty five percent away from their target, and yet
1:42
Speaker 2: we're going to see rates fall again. I would think
1:44
Speaker 2: by twenty five basis points. They're not signaling a victory.
1:48
Speaker 2: They're waving the white flag in other words, and in
1:52
Speaker 2: other words, inflation is getting worse and the Fed is
1:54
Speaker 2: just going to pour more gasoline on the fire. I
1:56
Speaker 2: think you will see much much higher inflation, and I
1:59
Speaker 2: think that's what the tru administration wants prior to cutting
2:02
Speaker 2: via DOGE. I think they want to see a weeaker
2:05
Speaker 2: dollar and higher inflation much more easily managing the debt burden.
2:09
Speaker 2: And as far as rates are concerned, look, we've seen
2:12
Speaker 2: seventy five basis points lopped off the short ender the
2:15
Speaker 2: federal funds rate, and what have we seen simultaneously the
2:19
Speaker 2: ten year treasury move up over ninety bases points. Now,
2:22
Speaker 2: this is a situation that I think will continue to
2:25
Speaker 2: happen unless we see yield curve control where the Fed
2:28
Speaker 2: comes in in essence, monetizes the debt and buys the
2:31
Speaker 2: back end of the bond market quietly in order to
2:35
Speaker 2: keep things from getting out of control. But yeah, I
2:38
Speaker 2: expect higher interest rates and I expect much more inflation.
2:42
Speaker 2: And you could argue that is somewhat to the extent
2:45
Speaker 2: of stagflation, which is higher inflation characterized by little or
2:49
Speaker 2: no economic growth, higher taxes, higher inflation, and in this case,
2:54
Speaker 2: higher interest rates. I think you'll see both.
2:57
Speaker 1: Well, and this will play into the unemployment landscape as
2:59
Speaker 1: well well as we get to see this play out
3:02
Speaker 1: in twenty twenty five. And I have a couple of
3:04
Speaker 1: questions for you about that, because you mentioned something there
3:06
Speaker 1: I thought was intriguing. But I want to go to
3:08
Speaker 1: a clip here. This is Ed Jardini. He's talking about
3:10
Speaker 1: he wishing kind of the same place you're in in
3:12
Speaker 1: terms of FED rate cut. Take a look, why do
3:15
Speaker 1: you wish they wouldn't cut?
3:18
Speaker 3: Well, look, I think the reason they want to cut
3:20
Speaker 3: is they have this perception that the level of the
3:24
Speaker 3: FED fund rate is too restrictive, and that just does
3:27
Speaker 3: jive with what the markets are saying. I mean, are
3:30
Speaker 3: they looking at do they have a screen in their office?
3:33
Speaker 3: They should see that the stock markets at an all
3:35
Speaker 3: time high, Gold is an all time high, Bitcoin is
3:37
Speaker 3: an all time high. And then of course the economic
3:40
Speaker 3: data is extremely strong. We've got real GP a all
3:43
Speaker 3: time high and it's been increasing around three percent on
3:45
Speaker 3: a year over year percent basis. Yeah, inflation has come
3:49
Speaker 3: down as closer to two percent, but it seems to
3:52
Speaker 3: be getting a little sticky here, kind of getting stuck
3:55
Speaker 3: a little bit north of two percent. But look, the
3:59
Speaker 3: goal here is to have full employment. Well, check that
4:02
Speaker 3: we're around four percent and we've got an inflation rate
4:06
Speaker 3: that's close to two percent. So everything to me suggests
4:09
Speaker 3: that interest rates are just about where they should be.
4:12
Speaker 4: Yeah, the commentary that we've gotten from the Fed also
4:15
Speaker 4: gets into this idea that Okay, we're going to cut
4:18
Speaker 4: this time potentially, but then we're going to slow it
4:20
Speaker 4: down and look around because we want to see how
4:21
Speaker 4: things are changing. If that's the case, I'm with you.
4:25
Speaker 4: Why not wait and then cut in January if you
4:27
Speaker 4: think that they're still need for it.
4:29
Speaker 3: Yeah, And the last word we got from FED chared
4:32
Speaker 3: your own Powell was the economy is strong and we
4:36
Speaker 3: don't need to rush to lower interest rates. If that's
4:39
Speaker 3: the case, then why would you do something on Wednesday?
4:44
Speaker 1: All right? So there it is, right there, Andy, And
4:46
Speaker 1: back to your point, A quarter basis most likely is
4:50
Speaker 1: baked into the Wednesday FOMC announcement. That being the case,
4:55
Speaker 1: what's your anticipation for the next two FED or the
5:00
Speaker 1: FMC meetings themselves in the early part of twenty twenty five.
5:03
Speaker 1: Do you think we'll get a stay on rate cuts
5:06
Speaker 1: at that point?
5:07
Speaker 2: No, I don't. I think they'll continue to lower. I mean,
5:10
Speaker 2: Trump is already saying that's what exactly what he wants,
5:13
Speaker 2: and I think they need to before they start cutting.
5:16
Speaker 2: They need to let the inflation genie back out of
5:19
Speaker 2: the bottle before they start implementing these these doge cuts.
5:22
Speaker 2: Otherwise what you're going to see happen. And by the way,
5:24
Speaker 2: to his point, if the economy was so strong, you know,
5:29
Speaker 2: then why would you be imposing more physical uh surplus?
5:35
Speaker 2: If you will right, why would you be a fiscal surplus?
5:39
Speaker 2: Rather you'd be you would you would supposedly want to
5:42
Speaker 2: pay down the debt and the deficits that we're run
5:44
Speaker 2: when the economy was weak. It's not the case. And
5:47
Speaker 2: I think that if we don't let inflation get higher
5:52
Speaker 2: and let rates go lower before they start cutting, you'll
5:55
Speaker 2: have the exact same problem you had with the banks,
5:58
Speaker 2: where you're going to start to see banks fail exactly,
6:01
Speaker 2: rates rising, and if they don't come in with the
6:03
Speaker 2: BTFP program, you get a big bank to fail, which
6:06
Speaker 2: will create bank runs. And if they come in and
6:08
Speaker 2: then and act that BTFP program again and bail out
6:12
Speaker 2: the banks, which the Dodd Frank Act made as illegal,
6:15
Speaker 2: they lose all credibility. They've just signed their death warrant
6:17
Speaker 2: for the remaining four years. And so I think that
6:20
Speaker 2: this has to be done in an order. So I
6:23
Speaker 2: do think we'll see lower rates. I do think we'll
6:25
Speaker 2: see more inflation, uh. And I think that is exactly
6:29
Speaker 2: what Trump is signaling exactly what the administration wants.
6:33
Speaker 1: All right, So you you keep mentioning the concept of
6:35
Speaker 1: DOGE being the potential catalyst here to maybe look, I
6:42
Speaker 1: guess to a certain extent, like it's the bailout mechanism.
6:46
Speaker 1: Is that just cutting all sorts of federal programs, a
6:50
Speaker 1: lot of scenarios that play into governmental you know, overspending,
6:54
Speaker 1: et cetera. You think that's the answer that Trump is
6:57
Speaker 1: going for.
6:59
Speaker 2: No, I think it certainly will be a start. I mean, look,
7:03
Speaker 2: he's coming in with almost a thirty seven trillion dollar debt.
7:07
Speaker 2: Even if they were able to lop off two trillion
7:09
Speaker 2: within two years, which is incredibly ambitious, you're still looking
7:13
Speaker 2: at running a one trillion plus deficit. So he comes
7:17
Speaker 2: in at thirty six thirty seven leaves at forty one.
7:20
Speaker 2: The Congressional Budget Office tells us, and they're nonpartisan, that
7:24
Speaker 2: even with a balanced budget, by twenty thirty one dred
7:29
Speaker 2: percent of all the income tax revenue will go to
7:31
Speaker 2: just to pay the interest on the debt and mandatory
7:34
Speaker 2: entitlement programs which are not even on the balance sheet,
7:37
Speaker 2: like Social Security and Medicare, which would leave things like
7:40
Speaker 2: military spending, which is discretionary in the borrowing category. So no, look,
7:47
Speaker 2: I don't think it's really as much the catalyst as
7:50
Speaker 2: it is something that needs to be done. I'm all
7:53
Speaker 2: for less government spending. I just don't know how successful
8:00
Speaker 2: it will be in righting the ship. I think it's
8:03
Speaker 2: a very ambitious goal, yet one that I think will
8:07
Speaker 2: be a little bit more restrictive than they anticipate because
8:11
Speaker 2: they're not going to touch the things that really need
8:14
Speaker 2: to be touched. They're not going to cut veteran benefits.
8:18
Speaker 2: They're not going to cut Social Security, they're not going
8:21
Speaker 2: to cut Medicare. They're not going to cut the fence
8:23
Speaker 2: spending unless they're planning on doing that by a substantial amount.
8:27
Speaker 2: The debt burden is going to continue to grow. We're
8:29
Speaker 2: too far down the rabbit hole. But I do think
8:31
Speaker 2: it is something that needs to be done. The question
8:35
Speaker 2: is what does it look like after the fact, What
8:37
Speaker 2: are the ramifications? How does this all play out? I
8:39
Speaker 2: think there's a long We're a long way from really
8:42
Speaker 2: determining how that all plays out. But I do think
8:44
Speaker 2: what he wants is a lower dollar, lower interest rates
8:49
Speaker 2: to make our exports stronger. But you know, things that
8:53
Speaker 2: he's talking about on shoring manufacturing. Look, it's kind of
8:57
Speaker 2: like going through a tunnel, you know, like the Shawshank redemption.
9:01
Speaker 2: You want to get to the other side, Fine, I
9:03
Speaker 2: understand that, but you need to go through a tunnel,
9:06
Speaker 2: two mile long tunnel of crap to get through to
9:08
Speaker 2: the other side. Things that he wants to do, as
9:11
Speaker 2: ambitious as they are, would usher in a depression. And
9:15
Speaker 2: unless we're willing to go through something like that, much
9:18
Speaker 2: higher cost on sharing the stuff, you know, bringing back manufacturing.
9:24
Speaker 2: These kinds of things will not be accomplished easily, and
9:27
Speaker 2: they will start with trimming much of the government waste
9:30
Speaker 2: and fat, but it doesn't make the ultimate journey to
9:33
Speaker 2: the other side of that tunnel any easier. We still
9:35
Speaker 2: have to deal with the debt, and that debt is exploding.
9:38
Speaker 2: I mean, it truly is exploding right now. Just look
9:42
Speaker 2: at what's going on here For the first two months
9:44
Speaker 2: of fiscal twenty twenty five, which just came out the
9:49
Speaker 2: Treasury data, so is that we spent five hundred and
9:51
Speaker 2: eighty four point two billion dollars just in the first
9:54
Speaker 2: two months of fiscal twenty twenty five. It was two
9:57
Speaker 2: thousand and nine was the first year we ever spent
10:00
Speaker 2: that much in a whole year. Yeah, now spending it
10:03
Speaker 2: in two months. And so you know, look, he's inheriting.
10:06
Speaker 2: Trump is inheriting a very inflationary economy. Much of the
10:11
Speaker 2: inflation will see over the next year or two won't
10:13
Speaker 2: even be his problem. It will be those problems that
10:16
Speaker 2: he inherited, just like Biden inherited a lot of inflation,
10:20
Speaker 2: even though he doesn't say so. The policies that Biden
10:23
Speaker 2: inherited were also inflationary, and it will continue. We're nowhere
10:27
Speaker 2: near from the end of seeing the inflation story how
10:29
Speaker 2: it all plays out, all right.
10:31
Speaker 1: So with that, you've got to look at some of
10:33
Speaker 1: the market explosions that we've seen only on the traditional markets,
10:37
Speaker 1: but also Bitcoin breaking one five, one hundred and five. Actually,
10:40
Speaker 1: I think if you look at the chart, bitcoin now
10:42
Speaker 1: trading at one oh six, so continuing to outperform here
10:47
Speaker 1: when you look at bitcoin in general as an all
10:49
Speaker 1: time high. And then you look at this tweet here
10:52
Speaker 1: from Peter Brandt, you know he's kind of going at
10:54
Speaker 1: the bitcoin gold ratio now it's eighty nine ounce as
10:57
Speaker 1: of gold. How do you think this plays out with
11:01
Speaker 1: the scenario that we are seeing right now, the two
11:04
Speaker 1: assets somewhat competing head to head.
11:09
Speaker 2: You know, the one thing that I will say is
11:13
Speaker 2: that you're seeing central banks around the world and accumulate
11:16
Speaker 2: gold at record levels, and we're not seeing that with bitcoin.
11:21
Speaker 2: Although I don't think that they should be adversarial whatsoever.
11:24
Speaker 2: The two communities should be complementary to one another. But
11:27
Speaker 2: I will say that what we are seeing across the
11:29
Speaker 2: globe are central banks rushing to buy physical commodities less
11:32
Speaker 2: than they are. And I know there's talk of strategic
11:35
Speaker 2: stock piles and programs or government related with bitcoin. To me,
11:40
Speaker 2: I don't really see them as competing assets. I see
11:45
Speaker 2: them as very complementary. And even if you look at
11:48
Speaker 2: Cynthia Loomis, the Senator from Wyoming who has advocated for
11:53
Speaker 2: a strategic Bitcoin fund, and she actually has already drafted
11:59
Speaker 2: a bill, and in her bills she speaks of revaluing
12:02
Speaker 2: the price of goal in order to that the Fed
12:05
Speaker 2: is holding on behalf of the treasury in order to
12:07
Speaker 2: take some of those proceeds to purchase more bitcoin for
12:11
Speaker 2: the strategic Bitcoin account. I see them as completely and
12:14
Speaker 2: totally complementary and I think those that phrase it in
12:17
Speaker 2: terms of it of them being adversarial or competing, I
12:22
Speaker 2: think are missing the point. I think that it should
12:26
Speaker 2: be a risk on environment. For during his tenure, I
12:31
Speaker 2: think you'll see cryptocurrencies do very well. But I don't
12:35
Speaker 2: think ultimately it's where you want to park your reserves.
12:40
Speaker 2: This is not something that is proven to be a reserve.
12:45
Speaker 2: It is something that a speculative that can make you
12:47
Speaker 2: very wealthy. And I think the way that you win
12:49
Speaker 2: is you take chips off the table and put it
12:51
Speaker 2: into tangibles, into hard assets, leaving your initial investment, let
12:55
Speaker 2: your bitcoin grow, but take those profits and put them
12:58
Speaker 2: into gold. Because the most well informed traders in the world,
13:01
Speaker 2: the central banks, well they're in a massive rush to
13:05
Speaker 2: accumulate commodities. And I think that's to me what I
13:10
Speaker 2: like to look at, less what they're all saying and
13:12
Speaker 2: more what they're all doing.
13:14
Speaker 5: Well.
13:14
Speaker 1: I mean, obviously you have Chair Powell here. He was
13:16
Speaker 1: the one that kind of started this whole thing with
13:18
Speaker 1: the statement he made it the Deal Book summit where
13:22
Speaker 1: he was talking about bitcoin as a competitor.
13:24
Speaker 2: Goal.
13:24
Speaker 1: So back to your point is maybe that's the issue
13:28
Speaker 1: because this is starting to flow into a lot of
13:30
Speaker 1: strategic reserve conversations. Not just here in the US, it's
13:34
Speaker 1: now it's starting to seep into other countries worldwide. And
13:37
Speaker 1: I want to go to a clip real quick because
13:39
Speaker 1: this clip will get into a little bit of a
13:41
Speaker 1: detail on how Sailor. Of course this is Sailor of
13:44
Speaker 1: what his strategy is, but I want to get your
13:46
Speaker 1: opinion on it. Take a look.
13:47
Speaker 5: The very simple idea is by twenty or twenty five
13:51
Speaker 5: percent of the bitcoin network on behalf of the US
13:54
Speaker 5: government catalyze the development of that world reserve capital network,
14:00
Speaker 5: and then let all the Chinese and the Russians and
14:03
Speaker 5: the foreigners sell all their other assets and buy bitcoin,
14:06
Speaker 5: and then the money flows into the United States. If
14:09
Speaker 5: you want to put a great twist on it, dump
14:12
Speaker 5: your gold, sell all the US gold, buy bitcoin. Then
14:16
Speaker 5: the trade is free because you could buy five million
14:18
Speaker 5: bitcoin for the cost of the gold. You will demonetize
14:22
Speaker 5: the entire gold asset class. And our enemies hold gold
14:27
Speaker 5: in their banks, so their assets would go to zero,
14:30
Speaker 5: Our assets would go to one hundred trillion dollars, and
14:34
Speaker 5: we would control the world's reserve capital network as well
14:37
Speaker 5: as the world's reserve currency network.
14:39
Speaker 2: As usual.
14:40
Speaker 4: You're painting a grand and vivid picture, Michael with this.
14:45
Speaker 2: Kind of stuff.
14:45
Speaker 1: Now, granted, I want to just say, you know, this
14:47
Speaker 1: is sailor talking his own book, so we all understand that.
14:52
Speaker 1: But what are your thoughts about that as a strategy,
14:55
Speaker 1: because this is a pretty grand idea of how to
14:58
Speaker 1: become the holder of all the world's assets, whether it
15:03
Speaker 1: be digital or gold. Right now it's sprinkled around the
15:06
Speaker 1: world where gold is being held by a lot of
15:09
Speaker 1: nation states. What are your thoughts there, Andy, I.
15:11
Speaker 2: Think it's silly. First of all, the rest of the
15:12
Speaker 2: world would buy up all the gold if we did that.
15:15
Speaker 2: And to his point, what he's not talking about is
15:17
Speaker 2: the balance of payment problem. We still run massive trade deficits.
15:22
Speaker 2: So if they don't want our treasuries, they'll say, give
15:25
Speaker 2: me the bitcoin, and are we going to give them
15:27
Speaker 2: the bitcoin? Then they own the bitcoin and the gold.
15:30
Speaker 2: We don't want your treasuries anymore. And so I think
15:33
Speaker 2: it's silly to assume that it's that easy just to
15:35
Speaker 2: do that. And these are the types of moves that
15:40
Speaker 2: has inspired the rise of the bricks to begin with,
15:43
Speaker 2: These types of deceptive moves or trying to. I guess
15:47
Speaker 2: you could call financial warfare. And you know, I think
15:50
Speaker 2: that gold has outlived everything the world has ever thrown
15:53
Speaker 2: at it. Two World Wars, German hyperinflation, the Great Depression,
15:56
Speaker 2: every pandemic, everything, And you see the central bank, yet
16:00
Speaker 2: you see them accumulating hand over fist. And to assume
16:05
Speaker 2: that we are just in a new period of time
16:08
Speaker 2: where things like gold are no longer relevant, I think
16:13
Speaker 2: is a big mistake. And of course he is talking
16:15
Speaker 2: his own book. He's gone on margin's borrowing billions and
16:18
Speaker 2: billions and billions worth of dollars to buy bitcoin. It's
16:21
Speaker 2: worked out so far. I get it, but I think
16:24
Speaker 2: it's a silly it's a silly thought experiment, and I
16:28
Speaker 2: don't think it would have a snowball's chance in hell
16:30
Speaker 2: of happening.
16:31
Speaker 1: Okay, all right, well, I like I like to have
16:33
Speaker 1: you on the show because you don't pull any punches,
16:36
Speaker 1: so that's good. But I do want to throw this
16:39
Speaker 1: at you, and that is Trump's bitcoin reserve plan is
16:42
Speaker 1: looking at potentially fueling what could be maybe up to
16:45
Speaker 1: a round a fifteen trill market cap for bitcoin. If
16:48
Speaker 1: you look at a couple of the statements in here,
16:50
Speaker 1: there's leaks suggesting that Russia could be gearing up for
16:53
Speaker 1: a bitcoin cold war. This is interesting because we are
16:56
Speaker 1: starting to see other nation stakes. I think even German
17:00
Speaker 1: and he came in and we're talking about trying to
17:01
Speaker 1: create a strategic reserve. How do you see that? Do
17:05
Speaker 1: you think this is going to be a delicate balance
17:07
Speaker 1: between gold and bitcoin as a strategic reserve model for
17:12
Speaker 1: the world and we're just going to see kind of
17:14
Speaker 1: the balance of those two assets play out?
17:17
Speaker 2: Yeah? Why not? I mean, I guess there is room
17:20
Speaker 2: for it. And that's what it really is. The value
17:22
Speaker 2: is based upon adoption. If all of a sudden you
17:25
Speaker 2: start to see the world adopt it in that manner, fine,
17:28
Speaker 2: that makes sense. But I don't think it needs to
17:30
Speaker 2: be one or the other. I mean, I just don't.
17:35
Speaker 2: You know. For example, you look at you look at
17:37
Speaker 2: the way that we are doing things, and Yellen is
17:40
Speaker 2: telling the Chinese banks that the US sanctions are still
17:43
Speaker 2: a real risk and we're going to sanction their banks
17:47
Speaker 2: for their involvement with Russian ties in the Ukraine War.
17:51
Speaker 2: We are losing trust and that's just the bottom line.
17:54
Speaker 2: So I think anything other than US treasuries is a
17:58
Speaker 2: good idea for a strategic reserve. It doesn't just have
18:01
Speaker 2: to be gold. But if I had to guess, what
18:04
Speaker 2: you will see is gold revalued much much higher. Maybe
18:06
Speaker 2: it happens on a Sunday night. I think it benefits
18:09
Speaker 2: all of the central banks. I think you will see
18:11
Speaker 2: gold tied to a new currency system. I don't think
18:14
Speaker 2: you'll see that with bitcoin. I think you'll see bitcoin
18:16
Speaker 2: in the form of an asset as a reserve. But
18:20
Speaker 2: if I had to guess, you will see the West
18:22
Speaker 2: adopt some form of a marriage between blockchain technology, something
18:26
Speaker 2: like XRP or the rails, and gold as the foundation
18:30
Speaker 2: or the backing of a new system. There is no
18:32
Speaker 2: reason for the Bank of International Settlements to have reclassified
18:36
Speaker 2: gold as the world's only other Tier one reserve asset.
18:39
Speaker 2: There is no reason that the central banks are accumulating
18:42
Speaker 2: at the level they are and draining the Western exchanges
18:45
Speaker 2: in a very methodical fashion due to our brain dead
18:48
Speaker 2: suppression and manipulation of the market. I don't think you
18:53
Speaker 2: can tie bitcoin to the back end of a currency.
18:55
Speaker 2: It's too volatile, but it certainly can be an asset.
18:58
Speaker 2: It's proven such they can exist in a in a
19:05
Speaker 2: harmonious way. They do not have to be mutually exclusive
19:07
Speaker 2: of one another. My guess goal tied to a new
19:10
Speaker 2: reserve system, bitcoin being more of a reserve asset. I
19:14
Speaker 2: think they both act filled that role without competing with
19:19
Speaker 2: one another or in either or situation.
19:21
Speaker 1: So the Bricks has gone on record talking about holding
19:24
Speaker 1: gold as a reserve within potentially the alternative to holding
19:29
Speaker 1: the US dollar. This is an article talking about the
19:33
Speaker 1: Bricks currency affecting the US dollar. This one a couple
19:36
Speaker 1: of points within this everybody was looking at. However, this
19:40
Speaker 1: the unit which is I think when I had you
19:42
Speaker 1: on last we talked about the unit. We haven't seen
19:45
Speaker 1: much update on that. Can you share anything or have
19:48
Speaker 1: you heard anything around.
19:51
Speaker 2: What happened right out of James Bond movie, Paul, It's espionage.
19:55
Speaker 2: What happened? I'm dead serious. I mean it really is.
19:58
Speaker 2: Let's this is exactly why the West is losing confidence
20:02
Speaker 2: or has lost confidence in the eyes of the Bricks.
20:06
Speaker 2: So for the last five six seven years, China, Hong Kong,
20:11
Speaker 2: Thailand and the United Arab Emirates, in conjunction with the
20:15
Speaker 2: Bank of International Settlements Innovation Hub, developed Mbridge it's Chinese technology.
20:24
Speaker 2: And you know, I should have thought about this more.
20:27
Speaker 2: I really should have. I should have, because every time
20:29
Speaker 2: my brain went over the BIS part, it just kind
20:31
Speaker 2: of glossed over. Thing. Yeah, well they reclassified gold tier
20:34
Speaker 2: one and doing an interview with Michelle McCrory of Kikosh,
20:37
Speaker 2: this is BANIINDI isn't Isn't the BIS a Western institution
20:41
Speaker 2: in Dinging, Ding, Ding Ding. I should have just said,
20:43
Speaker 2: you're right. We're going back and forth trying to figure
20:45
Speaker 2: how it all plays out. So at the thirteenth hour,
20:49
Speaker 2: not the twelfth hour, the thirteenth hour, right in towards
20:52
Speaker 2: the end of the meeting in Kazan, where you know
20:55
Speaker 2: they're introducing all of this stuff, talking about the unit.
20:58
Speaker 2: Is the unit it confirmed by del Marusov, the head
21:02
Speaker 2: of the bank, not the bricks and Development Bank, the
21:07
Speaker 2: former president of Brazil. She came out and said, yeah,
21:09
Speaker 2: we've agreed in principle to the unit. Forty percent gold
21:12
Speaker 2: back traded over mbridge. The thirteenth hour. This man named
21:16
Speaker 2: Augustus Carstons, he's the general manager or the guy in
21:21
Speaker 2: charge at the BIS. He's on his way out. He'll
21:24
Speaker 2: be out in June, he comes out and he publicly says, oh,
21:27
Speaker 2: just so you all know, the BIS can't be involved
21:31
Speaker 2: in anything with Russia because they're being sanctioned. So we're
21:36
Speaker 2: basically going to have to pull the plug on mbridge. Now.
21:39
Speaker 2: It's as if Augustas just realized for the first time
21:43
Speaker 2: that Russia is the Hour in bricks. They've been doing
21:45
Speaker 2: this for four years, and at the twelfth thirteenth hour
21:49
Speaker 2: bank they pull the plug. Now, what this is going
21:51
Speaker 2: to do is crystallize the resolve of the Bricks nations
21:55
Speaker 2: and they will continue to grow their mbridge technology just
22:00
Speaker 2: without the assistance of the BIS and the Western intermediaries.
22:04
Speaker 2: I think it will it will double down the efforts
22:09
Speaker 2: that these countries have of accumulating goal. Just like Janet
22:12
Speaker 2: Yellen's comment of we're going to sanction the Chinese banks
22:15
Speaker 2: if they give any money to the Russian war machine,
22:18
Speaker 2: doesn't matter what we've done two hundred plus billion to
22:20
Speaker 2: the Ukraine, that doesn't count where the reserve currency. So
22:23
Speaker 2: even though we're not hearing as much right now and
22:25
Speaker 2: it is eerily quiet, I think that's by design. I
22:28
Speaker 2: think they were they feel that they were double crossed.
22:32
Speaker 2: It is espionage. It's right out of James Bond. The
22:35
Speaker 2: BIS comes in, cozies up, helps them develop the technology,
22:38
Speaker 2: learns of technology, and then pulls the plug at the
22:41
Speaker 2: twelve hour. And I think it really has aggravated the
22:43
Speaker 2: bricks nations a little bit of a hurdle, but one
22:46
Speaker 2: that may actually double down their efforts. And then you
22:48
Speaker 2: see Trump come in and say, well, we're going to
22:50
Speaker 2: put one hundred percent tariffs on you guys. But they
22:53
Speaker 2: were never talking about a common currency. They're talking about
22:56
Speaker 2: a common settlement currency. So they all maintain their own
23:00
Speaker 2: local currencies over mbridge. They trade with one another, but
23:03
Speaker 2: settle any imbalances on a net basis using the unit
23:08
Speaker 2: or in gold, and they will overcome this, but they
23:12
Speaker 2: will not forget it by the same token.
23:14
Speaker 1: So you've got Ripple and XRP cross border payment systems
23:18
Speaker 1: now cited than back to Russia in the Russian Central
23:22
Speaker 1: Bank paper. This was just here a couple of months ago.
23:26
Speaker 1: Where do you think Ripple will stand. I mean, we've
23:28
Speaker 1: got r l USD going live today, and you've got
23:32
Speaker 1: Ripple now being strategically put across in a lot of
23:36
Speaker 1: ecosystems out there as a new settlement layer could ripple
23:40
Speaker 1: and or what we're seeing within r l USD and
23:44
Speaker 1: ripple itself. Could that start to play in some of
23:46
Speaker 1: the strategies for bricks.
23:48
Speaker 2: I think it could, yeah, absolutely, I just don't know
23:50
Speaker 2: if it's something that they want to you know, the people,
23:55
Speaker 2: A lot of people argue that it's not decentralized, more centralized,
24:01
Speaker 2: and it's Western centralized. So I don't know. I don't
24:05
Speaker 2: know if it will or not. It will. Certainly it
24:07
Speaker 2: would fit the bill, I'll put it to that way.
24:09
Speaker 2: Their ability to seamlessly cross border transact and a trade
24:13
Speaker 2: in an efficient manner certainly is what they're looking for.
24:17
Speaker 2: And I don't know how similar the Umbridge technology is
24:21
Speaker 2: to Ripple, because the Mbridge technology is cross border payment
24:25
Speaker 2: system evading avoiding the Swift system using central bank digital currencies.
24:30
Speaker 2: But look, I think it has a better shot than
24:32
Speaker 2: most and the fact that they have aligned with some
24:35
Speaker 2: of the bricks countries is certainly a step in the
24:37
Speaker 2: right direction. I wouldn't put it past certainly. I just
24:42
Speaker 2: don't know what they're after, what has happened with Mbridge
24:45
Speaker 2: and their view of Western assistance or using Western tools,
24:50
Speaker 2: how they feel about that. I guess we'll see, but
24:53
Speaker 2: I wouldn't count it out certainly.
24:56
Speaker 1: Yeah, well, I think you look at everything's kind of
24:58
Speaker 1: changed obviously with tru going into office, him being cosied
25:02
Speaker 1: up to the crypto industry, stable coin litigate or should
25:07
Speaker 1: say regulation about to take place. We've already seen rlus
25:10
Speaker 1: T get approved by New York. All of that lined
25:13
Speaker 1: up traditionally, I think into what you're pointing at, which
25:16
Speaker 1: is a lot of Western technology that still is controlling
25:19
Speaker 1: the world, much like Swift, which is what is kind
25:22
Speaker 1: of counteracted to what bricks has been trying to do.
25:24
Speaker 1: One last point I want to get on is China.
25:28
Speaker 1: And you look at the strategies that have been used globally,
25:32
Speaker 1: both from reserve gold to now strategic reserves a bitcoin.
25:37
Speaker 1: Do you think that China could relax its crypto policy,
25:41
Speaker 1: especially around banning bitcoin, to possibly join force forces out
25:46
Speaker 1: there to jump into bitcoin strategic reserves? Again, what are
25:50
Speaker 1: your thoughts.
25:51
Speaker 2: I think China will do whatever they need to do
25:53
Speaker 2: to affect their best interests. They vary well may do that,
26:01
Speaker 2: I'm not sure. What I do know is that they
26:04
Speaker 2: are buying gold handover fist. In fact, they're buying. In fact,
26:07
Speaker 2: they've tried to tell the world that they weren't buying
26:09
Speaker 2: as much, but the import export numbers kind of betrayed
26:13
Speaker 2: that rhetoric, and we now know that they've been buying
26:16
Speaker 2: as much as sixty tons a month. They're loading up
26:19
Speaker 2: on precious metals and base commodities and commodities in general.
26:25
Speaker 2: I don't know how they look at bitcoin, but I'm
26:27
Speaker 2: assuming much of what they tell us probably is less
26:31
Speaker 2: than the truth. Maybe they're people. Maybe the People's Liberation
26:37
Speaker 2: Army or the PBOC is actually heavily involved in bitcoin mining,
26:42
Speaker 2: but the people not so much. I'm not sure. All
26:45
Speaker 2: I can tell you is that what we do know
26:48
Speaker 2: is that they've been accumulating commodities handover fist, and we
26:51
Speaker 2: can see that not only precious metals, they bought the
26:55
Speaker 2: London Metals Exchange, which are all the base metals. I
26:58
Speaker 2: think what they are looking at is a situation as
27:02
Speaker 2: old to imposer calls at breton Wood's three, a system
27:05
Speaker 2: that will be all about commodities. Now, I would add
27:08
Speaker 2: into that transparency. They are not adverse to anything crypto
27:13
Speaker 2: or blockchain. I think as it relates to a new system,
27:17
Speaker 2: I don't know how they will, how they're aspirations with
27:20
Speaker 2: bitcoin fit into all of this, I would be guessing,
27:23
Speaker 2: to be honest with you. I do know that they
27:25
Speaker 2: look at commodities very differently than the West does, and
27:28
Speaker 2: I think they have a head start at cornering the
27:30
Speaker 2: market on that. And if you look at, for example,
27:34
Speaker 2: their Belt Road initiative, one hundred and fifty plus countries
27:37
Speaker 2: seventy five percent of human population, most of the countries
27:40
Speaker 2: are underdeveloped in resource rich. If you look at the
27:43
Speaker 2: countries that have signed on to bricks and those at
27:46
Speaker 2: forty plus that want to, most of every single one
27:50
Speaker 2: of them are resource rich or have strategic points of access,
27:54
Speaker 2: either on land or sea. So the Chinese think in
27:57
Speaker 2: terms of decades people in this country, instat gratification is
28:00
Speaker 2: not fast enough. And that's the one mistake I think
28:03
Speaker 2: we're making in terms of analyzing these things. They are
28:06
Speaker 2: laying out a very strategic plan. And if owning bitcoin
28:10
Speaker 2: benefits the PBOC, you can rest assured that they are
28:13
Speaker 2: already doing what they get quietly to do that.
28:16
Speaker 1: All right, give me one thing that you're worried about
28:19
Speaker 1: for twenty twenty five right now, Andy, Besides I'm sure
28:22
Speaker 1: there's many, but is there one that you're really keeping
28:25
Speaker 1: an eye on right now?
28:27
Speaker 2: I think the biggest thing that I think people will
28:30
Speaker 2: have to pay attention to is inflation. I think it's
28:34
Speaker 2: going to get much much worse. And the other thing
28:38
Speaker 2: that I would be concerned about would be the banks.
28:41
Speaker 2: I don't think we are out of the woods yet
28:43
Speaker 2: with the banking issues. As rates rise and we see
28:46
Speaker 2: one point four to one point five trillion dollars in
28:50
Speaker 2: commercial real estate mortgage is coming do in twenty twenty five,
28:54
Speaker 2: even more in twenty twenty six. As rates rise, that
28:57
Speaker 2: puts incredible strain on the system. And I would not
29:01
Speaker 2: be surprised to see a massive consolidation of the banks.
29:04
Speaker 2: If you see one big bank get bailed in like
29:07
Speaker 2: we saw in Oklahoma. No talk about First National Bank
29:13
Speaker 2: of Lindsay, Oklahoma. No one's speaking about it yet, it's
29:15
Speaker 2: the first bailing in this country. One bank gets bailed
29:18
Speaker 2: in bank, the whole system starts to spiral, and I
29:22
Speaker 2: don't know, you know, I think when you look at optimism,
29:24
Speaker 2: speculation and all time high valuations in cryptos, in commodities,
29:29
Speaker 2: in stocks, in real estate, that's a dangerous blend, So
29:33
Speaker 2: I would simply say be cautious. To me, it's the banks,
29:37
Speaker 2: it's inflation, and it's I think not irrational, but it's
29:43
Speaker 2: exuberance in an atmosphere that could very quickly lend itself
29:49
Speaker 2: to a wobbly market. Where it goes from there, I'm
29:51
Speaker 2: not quite sure, but I would certainly I would certainly
29:54
Speaker 2: be vigilant in terms of these valuations at this point.
29:57
Speaker 2: One last thing, when you look at the insider cell,
30:00
Speaker 2: it's never been more than what we are seeing right now. Ever,
30:04
Speaker 2: it's at its all time highs, and I think that's
30:06
Speaker 2: something to be thinking about. At the same time, we're
30:09
Speaker 2: seeing Bezos sell, we're seeing Zuckerberg sell, We're seeing the
30:14
Speaker 2: insiders and video sell. We're seeing lots of insider selling
30:18
Speaker 2: at six to one in terms of insider selling versus
30:21
Speaker 2: insider buying. So not quite sure what that means. But
30:26
Speaker 2: at the same time, forty six percent of US individual
30:29
Speaker 2: investors see a ten percent chance or less of a
30:32
Speaker 2: market crash, and I don't think we've seen this type
30:35
Speaker 2: of exuberance in a long time. That's a that's a
30:39
Speaker 2: big dangerous things. Look where all the money is you
30:42
Speaker 2: got in just a few places six seven trillion money markets.
30:47
Speaker 2: You have tons of money in a handful of stocks,
30:51
Speaker 2: and then everyone in crypto. So yeah, I mean it's
30:53
Speaker 2: it's wouldn't be very difficult to really create a very
30:57
Speaker 2: very dangerous situation just like that, especially when you have
31:03
Speaker 2: the massive indebtedness that is accelerating, and you know, there's
31:09
Speaker 2: this fine line between conspiracy and reality, and you see,
31:12
Speaker 2: you know, almost like the FED is pushing everyone into cryptos,
31:17
Speaker 2: and the stable coins now are all eighty five percent
31:19
Speaker 2: back by US treasuries as the rest of the market,
31:23
Speaker 2: the rest of the world is shedding treasureies. Is that
31:25
Speaker 2: done for a reason? So you have a bubble in treasuries,
31:27
Speaker 2: you have a bubble in cryptos, you have a bubble
31:31
Speaker 2: in real estate. You have a bu everything bubble right now.
31:35
Speaker 2: Massive speculation, massive overvaluation, exuberance. That's not a good recipe.
31:40
Speaker 2: At the same time, insiders are selling at a record
31:43
Speaker 2: no one's ever seen. So you know, it's kind of
31:46
Speaker 2: a bummer being a contrarian, kind of being the buzzkill
31:48
Speaker 2: at the party. But I think we haven't experienced that
31:52
Speaker 2: correction that mother nature needs to clear the underbrush. Hasn't
31:56
Speaker 2: happened yet. So I guess at these valuations, if people
31:59
Speaker 2: are comfort piling in expecting them to go higher, I
32:03
Speaker 2: guess that's possible. The markets can stay in this in
32:05
Speaker 2: this range longer than people can stay solvent. But I
32:09
Speaker 2: would be defensive at the same time.
32:10
Speaker 1: All right, Well, there it is Andy Stek coming into
32:13
Speaker 1: us from Miles Franklin. Again. Andy, always fun to get
32:16
Speaker 1: your insights. Will definitely have you back on the show
32:19
Speaker 1: as things start to I.
32:20
Speaker 2: Would like it, and I just want to leave you
32:22
Speaker 2: and your listeners at one thought, I honestly truly believe
32:26
Speaker 2: that our two communities, those in the cryptocurrency and those
32:28
Speaker 2: in the hard asset community, our portfolios, and our entire
32:33
Speaker 2: ecosystem is a whole hell of a lot stronger if
32:35
Speaker 2: we're all on the same team. Let's stop being adversarial
32:38
Speaker 2: and realize that there's a lot of symbionic symbiotic harmony,
32:44
Speaker 2: if you will, and sure intertwining the two communities. So
32:48
Speaker 2: that's what I'd like to leave people.
32:50
Speaker 1: I agree. I like that. Good to hear from you.
32:52
Speaker 1: Thanks again for stepping We appreciate it. You bet, you
32:54
Speaker 1: bet all right. If you guys are not in on
32:57
Speaker 1: the Diamond Circle. Make sure and jump in on that.
32:59
Speaker 1: It's a great place to get additional content from us,
33:01
Speaker 1: and also catch me out there on X at Paul Baron.
33:04
Speaker 1: We'll catch you next time right here on Techpath