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Joe Santos on Macroeconomics · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Professional Egg Marketing Podcast.
• 0:04
  SPEAKER_00: If you want a deep dive into the egg markets and risk management strategies, your search is over.
• 0:10
  SPEAKER_00: Come here after every Friday to get your weekly commodity recap.
• 0:14
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This is your host, Mike Minor.
• 0:22
  SPEAKER_00: Let's get started.
• 0:24
  SPEAKER_00: Today is April 21st.
• 0:26
  SPEAKER_00: I have Joe Santos with me today here.
• 0:28
  SPEAKER_00: He is the director and professor of economics in the Nest School of Management and Economics here at South Dakota State.
• 0:36
  SPEAKER_00: And I was actually a student of yours back in the day.
• 0:39
  SPEAKER_00: So this is going to be fun.
• 0:41
  SPEAKER_00: I always enjoyed listening to you in class.
• 0:43
  SPEAKER_00: Your tests weren't so much fun, so fun, but uh I'll tell you what, you were a fun lecturer.
• 0:48
  SPEAKER_01: So thank you.
• 0:49
  SPEAKER_00: Thank you for being on the show today.
• 0:50
  SPEAKER_00: I kind of want to talk about a couple um more macro observations in our economy today, talk about a few things like interest rates, inflation, talk about the bank crisis.
• 1:01
  SPEAKER_00: Uh I really want to steer this in the direction of uh what you have uh in mind for the uh forecast of our uh global economy here.
• 1:10
  SPEAKER_00: So uh let's start with the bank crisis and kind of what we've seen with that.
• 1:13
  SPEAKER_00: Uh what's your take on everything that's gone on so far and uh how big of a problem is it?
• 1:18
  SPEAKER_01: Aaron Ross Powell, Jr.
• 1:19
  SPEAKER_01: Sure.
• 1:19
  SPEAKER_01: And thank you for having me on the show.
• 1:21
  SPEAKER_01: Um Yeah, so the banking crisis is interesting because on a fundamental level, the explanation for the crisis is really simple.
• 1:30
  SPEAKER_01: Um interest rates have gone up aggressively in the last few months, several months.
• 1:36
  SPEAKER_01: And you know, as we know from say that money and banking class, the way these intermediaries, including banks, operate is we like to say they uh they borrow short and they lend long.
• 1:46
  SPEAKER_01: So they borrow for short periods of time, think checking accounts, and then they lend for long periods of time, think 30-year mortgages or something.
• 1:55
  SPEAKER_01: Um and so that means that they're borrowing for these you know very short periods of time.
• 2:01
  SPEAKER_01: And when interest rates rise, the costs of borrowing rise very quickly, because again, no one is sort of locked in as a lender to the bank.
• 2:12
  SPEAKER_01: But on the other side of the balance sheet, when they lend long, the bank is locked in for a long period of time.
• 2:18
  SPEAKER_01: So rates rise suddenly and by a large amount, you know, there's a chapter in a money in banking textbook, probably chapter one, that says this is problematic for a bank, right?
• 2:28
  SPEAKER_01: Because now it doesn't earn anything more on its assets, but it needs to go fish.
• 2:33
  SPEAKER_01: It needs to go find depositors, and the way it does that, of course, is it pays those depositors more.
• 2:39
  SPEAKER_01: So this is interest rate risk in banking lingo, and that's what happens.
• 2:43
  SPEAKER_01: The uh Federal Reserve, as you know, I'm sure your listeners know, have been has been uh tightening uh aggressively, raising interest rates.
• 2:51
  SPEAKER_01: And, you know, a bank like SVB, Silicon Valley Bank, um, found itself in a position where it was either going to have to pay um very high interest rates on those deposits, or it was going to lose those deposits.
• 3:07
  SPEAKER_01: And it sort of both happened at once.
• 3:10
  SPEAKER_01: And what the bank found it needed to do, and this is where this gets, I think, really interesting, is it had really good assets.
• 3:17
  SPEAKER_01: But when a depositor walks in and says, I want my money back, you can't say, here's a really good asset instead.
• 3:23
  SPEAKER_01: So what you have to do is sell the really good asset.
• 3:26
  SPEAKER_01: But the point is, it's a really good asset.
• 3:28
  SPEAKER_01: This wasn't a story about default risk.
• 3:30
  SPEAKER_01: Um, it wasn't a story about borrowers not being able to pay back the bank.
• 3:36
  SPEAKER_01: Um, it was instead a story of the bank having to sell those good assets in what we sometimes call a fire sale, right?
• 3:44
  SPEAKER_01: Get rid of the assets, turn them into cash so you could pay those depositors.
• 3:49
  SPEAKER_00: Do you think this was a risk management problem?
• 3:53
  SPEAKER_01: Yeah, I I really now, you know, hindsight's 2020, and I've I wasn't in the boardroom.
• 3:57
  SPEAKER_01: But yeah, I mean, the way you would deal with this in the lead up to this circumstance, particularly when it is so clearly telegraphed by the central bank, right?
• 4:05
  SPEAKER_01: Central bank saying, look, you know, the federal funds rate is 25 basis points.
• 4:10
  SPEAKER_01: We'd like it to be 500 basis points, um, and we'd like that pretty soon.
• 4:14
  SPEAKER_01: That's a pretty good indication to say what we often refer to as an ALCO committee, an asset liability committee in a bank, um, to sit down and say, gang, we have to shorten the duration of our assets.
• 4:26
  SPEAKER_01: And that's not fun because you can't charge people as much if you don't lend them lend for a long time.
• 4:31
  SPEAKER_01: And we're gonna have to extend the duration of our liabilities.
• 4:34
  SPEAKER_01: And that's no fun because the only way to keep people from their money is to pay them, right?
• 4:37
  SPEAKER_01: Yeah.
• 4:37
  SPEAKER_01: But that's the tough conversation you probably need to have, and by probably I mean certainly, um, before those interest rates rise so dramatically.
• 4:48
  SPEAKER_01: So part of this is just a fundamental issue, as you say, of risk management and in particular interest rate risk management.
• 4:55
  SPEAKER_01: And I suspect it's not a matter of, you know, board members or committee members you know not knowing any of this.
• 5:02
  SPEAKER_01: It's the old punch bowl, you know, not wanting to take the punch bowl away, right?
• 5:06
  SPEAKER_01: Um, it's too much fun borrowing really short and paying very little for it.
• 5:10
  SPEAKER_01: And so no one wants to be the member of the committee that says, let's increase our interest rates on our certificates of deposit.
• 5:17
  SPEAKER_00: So does that make this a pretty uh isolated event, you think?
• 5:22
  SPEAKER_00: Uh what's your opinion on that?
• 5:24
  SPEAKER_01: Aaron Powell Yeah, I I've been sort of going on uh to my you know three Twitter followers um that uh this is not a liquidity crisis.
• 5:31
  SPEAKER_01: It was sort of a liquidity event.
• 5:34
  SPEAKER_01: Um yeah, I I think it was mostly uh provoked by just higher interest rates.
• 5:42
  SPEAKER_01: I mean, there's been a lot of talk about um large deposit balances that exceeded the FDIC insurance minimum uh maximum and so on.
• 5:50
  SPEAKER_01: So they were uninsured deposits.
• 5:52
  SPEAKER_01: But I think these deposits would have been a flight risk no matter if they were insured or not, to the extent that interest rates were rising aggressively.
• 6:00
  SPEAKER_01: Um so so the problem is very understandable, and I think it's it's contained in part because of the central bank.
• 6:07
  SPEAKER_01: So it could lead to sort of fire sales and um capital losses.
• 6:13
  SPEAKER_01: Remember, when when that bank sells that, say, mortgage, or in this case they were often US Treasury bonds, sells that bond uh at a fire sale price, it takes a capital loss and that absorbs their equity position.
• 6:27
  SPEAKER_01: And once that equity position goes negative, that's the definition of bankruptcy.
• 6:30
  SPEAKER_01: So this could have gotten really bad, but what the central bank stepped in uh and did was it played the role of so-called lender of last resort and said basically to these banks, you know, in sort of colloquial terms, look, gang, don't sell those things in a fire sale.
• 6:47
  SPEAKER_01: Pledge them as collateral to us.
• 6:50
  SPEAKER_01: We'll lend you the cash.
• 6:51
  SPEAKER_01: Right?
• 6:52
  SPEAKER_01: And and the Feder can do that all day because it just creates the cash.
• 6:56
  SPEAKER_01: Right.
• 6:56
  SPEAKER_01: So so that's what they did, and they they um you know stopped the the the crisis from um becoming you know more contagious.
• 7:06
  SPEAKER_01: So uh I didn't lose sleep over this one.
• 7:09
  SPEAKER_01: Um if if there's anything maybe to lose sleep over, it's what you brought up, and that was just that this is a fundamental risk management problem that was so grossly overlooked.
• 7:19
  SPEAKER_00: I gotcha.
• 7:20
  SPEAKER_00: Interesting.
• 7:21
  SPEAKER_00: So uh uh looking forward with the bank crisis, I know there's been a couple other ones who have been caught in a similar situation so far.
• 7:28
  SPEAKER_00: Uh do you th see this extending for some time or is this pretty much it then?
• 7:33
  SPEAKER_00: I know that's a billion-dollar crisis.
• 7:35
  SPEAKER_01: Yeah, it's a billion dollar, yeah, or many, many billions.
• 7:37
  SPEAKER_01: Many billions.
• 7:38
  SPEAKER_01: Yeah.
• 7:38
  SPEAKER_01: Um again, I I think as long as the central bank is in a position, which it is, to play this lender of last resort role, um there's really no such thing as a liquidity crisis if the central bank's willing and able to provide unlimited amounts of liquidity, and they are.
• 7:57
  SPEAKER_01: So um I I think they've got this covered.
• 7:59
  SPEAKER_01: Now, that's in the short run.
• 8:01
  SPEAKER_01: The the long run problem here um isn't of a liquidity crisis sort, it's of a sort of expectation sort.
• 8:08
  SPEAKER_01: So you're that you're on that asset liability committee and you're observing the central bank step in and save the day.
• 8:16
  SPEAKER_01: Um, and so the incentive as a committee member to address interest rate risk early, which comes with the cost, right?
• 8:24
  SPEAKER_01: Pay your depositors more.
• 8:25
  SPEAKER_01: The incentive to do that is reduced.
• 8:28
  SPEAKER_01: Because you think, well, we could pay our depositors more depositors more and keep our depositors, or we can just wait till they start running away and then we can pledge our assets as collateral.
• 8:37
  SPEAKER_00: Rewarding some bad behavior.
• 8:39
  SPEAKER_01: Exactly.
• 8:40
  SPEAKER_01: And and and that's the real trick, I think, of this is how as a central bank you you lend into that crisis, and operationally that's easy.
• 8:50
  SPEAKER_01: You know, you take the loans as collateral and blah, blah, blah.
• 8:54
  SPEAKER_01: Um, but then how you do that and at the same time say, and this is the only time I'm doing it, and I mean it, right?
• 9:00
  SPEAKER_01: That's that's a really tough thing to say with any credibility.
• 9:03
  SPEAKER_00: Aaron Powell Makes sense.
• 9:05
  SPEAKER_00: Does this accelerate a little bit different topic, but does this accelerate the uh money flow to bigger banks?
• 9:13
  SPEAKER_01: It it yeah, and it probably for the same reason.
• 9:16
  SPEAKER_01: That's a really good question.
• 9:17
  SPEAKER_01: So, and we saw that, right?
• 9:18
  SPEAKER_01: We saw that flow, and and that um was when when there were these sort of anxieties or fragilities around the lack of deposit insurance for folks who wanted to keep their deposits in banks, and that is to keep them in a very low default risk situation, um, they moved them to bigger banks.
• 9:41
  SPEAKER_01: And and that movement itself is very troubling because what it means is that that banking sector, those depositors, reasoned almost as if instinctively, that I'll just put this in a big bank because a big bank can't fail.
• 9:56
  SPEAKER_01: That is they're safe.
• 9:58
  SPEAKER_01: Now, not you know, for the listeners, right?
• 10:00
  SPEAKER_01: We're not saying there's something unique about the accounting identity of a big bank.
• 10:03
  SPEAKER_01: They they still can have negative equity, but no policymaker in their right mind would allow that, right?
• 10:10
  SPEAKER_01: That's the thinking.
• 10:11
  SPEAKER_01: So they're too big to fail, and so let's put our money in too big to fail institutions.
• 10:15
  SPEAKER_01: And you know, if you're a policymaker and look or looking down at this behavior, that's gotta leave you with an uncomfortable feeling in your stomach, thinking, my gosh, this is this is moral hazard playing itself out, right?
• 10:26
  SPEAKER_00: And it's hard to it it's hard to fix that moral hazard, isn't it?
• 10:30
  SPEAKER_00: They can't really put guidelines in to protect that.
• 10:34
  SPEAKER_01: It's very difficult.
• 10:35
  SPEAKER_01: And you know, the one, I think, um, classic attempt to deal with it is now infamous, and that was Lehman Brothers, right?
• 10:45
  SPEAKER_01: To say, well, um, this is, you know, we say sometimes it's it's m madman theory, right?
• 10:50
  SPEAKER_01: I'll I'll act crazy enough to scare them into reasoning that there is no moral hazard because I'm crazy enough to not let it, you know, play out.
• 10:59
  SPEAKER_01: And so letting Lehman sink was, I think, a demonstration of that approach, which of course we all know backfired and so on.
• 11:07
  SPEAKER_01: Um, so you're right.
• 11:08
  SPEAKER_01: I mean, I think it's extremely difficult.
• 11:10
  SPEAKER_01: Um, and so there there have been solutions proposed, um one of which is, for example, to have banks borrow in forms other than insured deposits.
• 11:20
  SPEAKER_01: So banks must sell, say, bonds of some sort that are not FDIC insured, and you know, the bondholders will discipline the banks, as supposedly.
• 11:28
  SPEAKER_01: There's that theory.
• 11:29
  SPEAKER_01: Another is to have them hold significantly more capital so they absorb these losses, and then you could credibly sit there and say, no, I'm not going to lend as a last resort, just take a loss.
• 11:39
  SPEAKER_01: But you can't say that when they have 8% capital, you can say it when they have 18, maybe.
• 11:43
  SPEAKER_01: So that's another solution.
• 11:45
  SPEAKER_01: But those are very difficult to get.
• 11:47
  SPEAKER_01: You know, there's Wall Street, and I like to say, and then there's K Street.
• 11:50
  SPEAKER_01: And so lobbyists understandably push against this if they're representing bank interests because returns on equity are reduced if you hold more equity.
• 12:01
  SPEAKER_00: So does this incentivize people to put money in more than one bank?
• 12:04
  SPEAKER_00: You know, a lot of people have got so just tied into the one bank if we're comfortable.
• 12:09
  SPEAKER_00: Uh, you know, if you go overseas, many people have many different banks.
• 12:14
  SPEAKER_00: Uh what's your opinion on that?
• 12:15
  SPEAKER_01: Yeah, I think that's right.
• 12:16
  SPEAKER_01: Uh we got very complacent.
• 12:18
  SPEAKER_01: Now, I should say, um, and I should have said earlier, one thing to keep in mind, and maybe in fairness to that fictitious asset liability committee we keep accusing of of sort of reckless behavior, um, is that they were operating in a pandemic, and not so much the physio the the sort of epidemiological aspects of the pandemic, but the financial aspects of the pandemic, which was to say all of those stimulus payments flooding into checking accounts, left them in a in a sort of state of mind where I mean they were nothing if not liquid, and there was no such thing as a flight risk.
• 12:51
  SPEAKER_01: Um and so they became very used to this, as did to your point, as did the depositors.
• 12:59
  SPEAKER_01: Um banks were super safe, there was nothing but cash there.
• 13:04
  SPEAKER_01: Um, and so folks went, let their balances exceed insured limits and so on.
• 13:09
  SPEAKER_01: Again, a lot of this though had to do with the stimulus.
• 13:13
  SPEAKER_01: Um I'm not you know litigating the right or wrong of the stimulus, but just mechanically, it put a lot of um it funded demand deposits or checking accounts to a large degree.
• 13:24
  SPEAKER_01: And I think it it sort of um led banks and depositors to sort of disregard the entire process that we're describing.
• 13:35
  SPEAKER_00: Very interesting.
• 13:36
  SPEAKER_00: So if we take it more down to a personal level, let's say you know the the average person has their uh 401k, for example, uh managing that going forward or their retirement accounts.
• 13:49
  SPEAKER_00: Um, for example, you've seen uh two-year treasuries, uh massive money flow into things like that at 5% interest versus the index funds have flowed out of commodities really aggressively or other riskier investments.
• 14:03
  SPEAKER_00: Uh how do you think that's gonna trend going forward and the health of the global economy?
• 14:08
  SPEAKER_00: Um do you think that people should get a little bit more safe with their money going forward here, or do you think the problem's fixed, it's okay, we're gonna sail off into the sunset on this just fine.
• 14:19
  SPEAKER_01: Sure.
• 14:19
  SPEAKER_01: Um I I think the the you know the problem of in conventionally insured deposits or or not insured and all that, and you know, what the FDIC will cover and what it won't.
• 14:30
  SPEAKER_01: Yeah, for better or worse, I think we've got that uh covered, uh the worst being the moral hazard and all that that comes.
• 14:37
  SPEAKER_01: Um the the larger issue of sort of uninsured, more sort of market-based investment vehicles like mutual funds and the you know, commodity funds that you're describing, the index funds.
• 14:47
  SPEAKER_01: Um, I think that performance or the performance in those accounts uh probably draws uh depends heavily on monetary policy.
• 14:57
  SPEAKER_01: And that policy right now is I think rightly determined to slay this inflation dragon.
• 15:05
  SPEAKER_01: And so that means these interest rates at the very least must remain as high as they are in again, nominal terms, right?
• 15:12
  SPEAKER_01: It's a little wonky, but there's the interest rate and then there's the inflation rate.
• 15:15
  SPEAKER_01: And if you subtract the inflation rate from the interest rate, credit is still pretty cheap.
• 15:20
  SPEAKER_01: So this is the thinking that that drives the notion that the central bank has to continue to, if not raise rates, uh keep them high.
• 15:28
  SPEAKER_01: And that's just not consistent with high commodity prices.
• 15:32
  SPEAKER_01: It's not consistent with robust economic growth, right?
• 15:34
  SPEAKER_01: It's it's just a break on economic activity, or as macroeconomists often say, it's it's a demand destroyer.
• 15:41
  SPEAKER_01: So um you know, the the the present discounted value of the earnings that a firm generates, that is their stock price, um, is not likely to be very high as a result of this.
• 15:53
  SPEAKER_01: So I I think the pressure you see in these sort of market-based investment spaces is likely to continue because interest rates must remain high, if not go higher, in order to deal with this inflation, which you know we we should point out is it's not just economists who are perfectionists who don't like two and a half percent, we'd rather two, right?
• 16:16
  SPEAKER_01: This stuff this is high.
• 16:17
  SPEAKER_01: This is five and six, depending on how you measure it.
• 16:20
  SPEAKER_01: And it seems in some ways persistently so.
• 16:22
  SPEAKER_01: It seems to have now gotten into services and ways that really concern policymakers.
• 16:28
  SPEAKER_01: So I just I don't think they'll slow up.
• 16:31
  SPEAKER_01: And again, back to your point on commodities, interest rates and commodities all else equal are inversely related, right?
• 16:36
  SPEAKER_01: Cost of storage rise, and so on, you know, arbitrage arguments for why commodity prices go down when interest rates go up.
• 16:41
  SPEAKER_01: Um I just don't think that pressure is going to be relieved anytime soon.
• 16:47
  SPEAKER_00: Very interesting.
• 16:48
  SPEAKER_00: Are there any other topics you want to kind of wrap up with today or want to talk about?
• 16:52
  SPEAKER_00: I mean, we can spend all the time of the world in this room, but I want to see what you want to talk about here today.
• 16:57
  SPEAKER_01: I I I think one thing to consider in all of this is the reason why we are so sort of um relaxed about the liquidity issue and the uninsured deposits and so on, is that sure we have the Federal Reserve, uh, but we also have the Federal Deposit Insurance Corporation.
• 17:14
  SPEAKER_01: And the Federal Deposit Insurance Corporation has this bank insurance fund, which is backed by the U.S.
• 17:18
  SPEAKER_01: Treasury, which faces a debt ceiling.
• 17:21
  SPEAKER_01: And so, you know, I think it's important to note that when we talk about the sort of debt ceiling football that gets tossed back and forth and the sort of technical default that could ensue if legislators don't agree to raise the ceiling and so on, um, that means that the Treasury could not fund its activities.
• 17:40
  SPEAKER_01: And one of the things it does is backstop the FDIC.
• 17:44
  SPEAKER_01: So um the sort of safety and soundness of the insured deposit system ultimately, not on a daily basis, there's in fund that's supplied by banks paying premiums.
• 17:55
  SPEAKER_01: But but in extremists, when if things were to go really badly, um the treasury is the backstop.
• 18:02
  SPEAKER_01: So the treasury can't borrow money.
• 18:05
  SPEAKER_00: Seems like problem.
• 18:06
  SPEAKER_01: That that's a problem.
• 18:06
  SPEAKER_01: So I I I guess what I'm getting at is the debt is high.
• 18:10
  SPEAKER_01: That's a sort of one issue.
• 18:11
  SPEAKER_01: Um but maybe more importantly, uh short term, is that it cannot go higher than thirty-one point four trillion dollars if that ceiling is not lifted.
• 18:22
  SPEAKER_00: That ceiling will continue to get lifted, won't it?
• 18:24
  SPEAKER_01: I I it you would you would hope.
• 18:27
  SPEAKER_01: Um but I mean that.
• 18:28
  SPEAKER_01: You know, if yeah, if you have a sort of a even if it's a technical default, um you know that could that could certainly that would certainly not solve problems.
• 18:38
  SPEAKER_00: I mean, so what in in what case does this go bad?
• 18:41
  SPEAKER_01: Aaron Ross Powell It goes bad if Congress does not uh raise it in a way that would allow the Treasury the room to maneuver, issue more debt, um, generate the proceeds and then do whatever it needs to do with the proceeds, and there's a lot of stuff it does with the proceeds, but in the in in the context of our discussion, one of the things it could find itself doing is backstopping the FDIC and all those deposits that are you know in excess of 250,000 per you know per owner per bank or whatever.
• 19:10
  SPEAKER_01: And um that that's that adds anxiety and fear to the market, it adds volatility to the market.
• 19:18
  SPEAKER_01: So it it's a really, really bad thing if treasury debt, which is presumed to be risk-free, were to suddenly not be.
• 19:28
  SPEAKER_00: So that brings me all the way around we've kind of walked around it here, and uh something more five to ten years out, I would argue, is uh using the US dollar as our reserve currency.
• 19:40
  SPEAKER_00: Yep.
• 19:41
  SPEAKER_00: Now you hear of uh you know the BRICS dollar.
• 19:45
  SPEAKER_00: Tell me and walk me through that entire situation and kind of what you see happening going forward with the United States retaining that status.
• 19:55
  SPEAKER_01: So I I tend to be on uh team retain.
• 19:59
  SPEAKER_01: Um I I've never really worried much at all about this.
• 20:05
  SPEAKER_01: Um I think the dollar will remain a reserve currency.
• 20:07
  SPEAKER_01: I understand that there is a sort of a uh kind of discussion in the dark corners of wherever about the fragility of the US dollar as a reserve currency.
• 20:18
  SPEAKER_01: Um I just I I don't see any evidence of this.
• 20:21
  SPEAKER_01: And um and and if there are competing currencies, I don't think it's you know, China and Russia, it's probably the euro or something.
• 20:32
  SPEAKER_01: And again, I'm not suggesting it is a competing currency right now.
• 20:35
  SPEAKER_01: I think the dollar um is is you know at the moment supreme.
• 20:38
  SPEAKER_01: Um but I don't think um authoritarian, centrally planned, sort of non or weak market economies would be the economies with a stable reserve currency, if only because the pricing systems in those economies are so flawed and limited that it's really difficult to have a medium of exchange with any sort of interpretable value if the economy that it's that money circulates in doesn't have a stable price system.
• 21:11
  SPEAKER_01: So it's gotta be a market economy, it seems to me, that is a contender against the dollar.
• 21:17
  SPEAKER_00: So what about a cryptocurrency?
• 21:20
  SPEAKER_00: Uh yeah, I I I um because that seems like it's one of the leaders right now if it is gonna have a competitor.
• 21:28
  SPEAKER_01: No, that fair fair question.
• 21:30
  SPEAKER_01: I think if we're talking about a private market cryptocurrency, so not like a central bank digital currency, um, which isn't anything like a cryptocurrency, uh, I I think there, um, you know, I always say that it's a solution in search of a problem.
• 21:44
  SPEAKER_01: I I don't see the sort of fundamental definition of money being satisfied there.
• 21:50
  SPEAKER_01: And that fundamental definition is a generally accepted means of payment.
• 21:56
  SPEAKER_01: Um it just cryptocurrencies do not at the moment exhibit that quality.
• 22:03
  SPEAKER_01: Um, it's possible that some sort of um you know transactional uh blockchain property right like a digital currency could be exchanged as money.
• 22:17
  SPEAKER_01: But at the moment, it's it's nowhere near uh that.
• 22:21
  SPEAKER_01: And again, there you need store of value.
• 22:24
  SPEAKER_01: I I need to be able to plan my purchases so I could optimally go about the rest of my life.
• 22:29
  SPEAKER_01: I don't want to buy lunch at seven o'clock in the morning because that's when the dollar's strong, right?
• 22:32
  SPEAKER_01: Um, that's the way it works right now with cryptocurrency.
• 22:36
  SPEAKER_01: So you can't smooth consumption in any optimal way.
• 22:39
  SPEAKER_01: You're constantly, you're spending all your time gaming the cryptocurrency to determine when best to spend it.
• 22:45
  SPEAKER_01: It's just really, really inefficient.
• 22:47
  SPEAKER_01: And so I think, you know, it's sort of revealed by the fact that no one's really using it in any meaningful way that it's just not a stable store of value and a viable, generally accepted means of payment.
• 22:59
  SPEAKER_01: Now, perhaps that can change, but um, you know, I if for second place against the dollar, I think I'd put conventional market-based currencies first.
• 23:08
  SPEAKER_00: All right.
• 23:09
  SPEAKER_00: Well, thank you for your time today, Joe.
• 23:11
  SPEAKER_00: I had a fantastic time, and uh, I'm sure we'll have you on later.
• 23:14
  SPEAKER_00: Thank you so much.
• 23:15
  SPEAKER_00: And thank you to all our listeners.
• 23:17
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 23:21
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 23:26
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 23:32
  SPEAKER_00: See you next time.