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the cause effect relationships are by and large Timeless there is evolution evolution is how something changes over a period of time and then around those things are these Cycles because if they're put in the same position let's say a federal reserve put into a position of having to decide do you have defaults or do you print money there's a choice and that choice repeats over history and so you can see what are the indicators of that position and what are the reactions and what are the choices so the cause effect relationships by and large remain the same through history but there's always a reason we're changing the world order okay in 1945 we started the New World Order what I mean is throughout history there's a fight for control cuz there's no world court that you go to and plead your case and so there's a fight for power so there's a war and then the winners come out of that war and the winners set the rules and so 1945 the United States had 80% of the world's money gold was money at the time it had half the world's GDP it had a monopoly on military power so the US Set the World Order that's why the United Nations is in New York Washington DC has the IMF of the World Bank and its currency became the reserve currency because that set of circumstance things evolve things change over history so the three big things that are changing now that happened occur in our lifetime is the amount of debt and money creation which affects the value of money and you could see it affect what's going on every day the large debt puts Central Bankers in a choice do you pay it back with hard money or do you pay it back with printed devalued money and if you pay it back with hard money it's hard in other words that's when you have debt crisises so in all cases they eventually print money and that produces inflation that's the place we are at this moment the second is when there's a great internal conflict usually when there's a large wealth and values Gap at the same time as you have a fin cial problem then you get populism populism of the left and populism of the right in other words those who feel disenfranchised want people who are going to fight for them they don't want compromisers they don't want them to be in the middle cuz middle means that they're not fighting for them they want them to have guts so you have populists of the left and their positions Harden and there are no compromises that's why we're potentially in a situation that you could see in one of these elections maybe 2024 that neither side would accept losing perhaps we see that maybe you don't follow the rulings of the Supreme Court anyway these things have not happened in our lifetime but they happen many times in history so if you look at that you see from those patterns why the gaps become greater and the positions Harden and you see the dynamic so that's the second and the third is the rise of a great power to challenge the existing great power in other words I gave you the example have the United States was so dominant in 1945 now it's not as dominant it is is not dominant in other words China and the opposition is as strong as the United States and its allies and so we have a conflict and there are five kinds of wars and they start in this order just sequentially typically a trade War a technology War a geopolitical influence War then you get into a capital and economic Warfare which we are now with sanctions they always happened in history and then there's a military and so you could see that progression happen through time I think that there's a tendency to look at the economy in a rearview mirror seeing low levels of inflation and also not understanding monetary inflation there are two types of inflation there's an inflation when the demand is pressing up against the ability to produce so we had that kind of inflation unemployment rates go down and there's a limit to the capacity to produce there's also a monetary inflation and a monetary inflation means very simply if you produce more money in credit if that increase is greater than the production of the goods and services prices will go up it creates a spiral which we're seeing now in other words the selling of bonds so it makes the imbalance become greater because not only do you sell the bonds to pay for the deficit guns do but holders of bonds choose to sell bonds because they're not producing a good real return now that just mechanistically may be a little bit tricky for some people but what that means is when you have a big Supply demand and balance like that either interest rates have got to go up to curil that demand or the Central Bank has to print more money and they always print more money so that Dynamic of monetary inflation the type of thing that makes the 70s or the type of thing that makes inflationary depressions like happened in the Yar Republic in Germany early 1920s that kind of inflation I don't think is paid enough attention to inevitably there's a certain amount of debt that has to be paid and one man's debts are another man's assets and the more debt you have the big of the problem and so when you have a lot of debt and you have to pay it back you're either going to pay it back back in hard money or you going to pay it back in depreciated money and that becomes the choice of the central bank that's why you get stack fls that's way we have an environment like we have now you have economic weakness you have a stagnant economy low growth and with high inflation and that happens through this monetary situation that I'm describing in which the Central Bank tries to deal with a middle course other words what is the central bank one not too high inflation and not too low growth and so when there's a lot of debt because one man's debts or another man's assets it becomes very difficult Balancing Act and that is when you have stagflation when you produce it so just like in the 1960s late 60s we spent a lot of money on guns and butter we called it by Vietnam War social programs and so on we wrote too many checks relative to the money we had in the bank which was gold at the time 1971 the devaluation then they print a lot of money into that saf flation so stagflation is the middle course when there's two different Roots so think about it this way how does he literally Lally fight inflation cuz everybody says type money policies and how do you fight inflation the way that happens is you get people to spend less by taking money and credit away from them so he will reduce the amount of money and credit that's available the Federal Reserve is going to sell $1.1 trillion of debt that it has de assets buies and then they're going to raise interest rates so they create a squeeze that reduces demand at the same time as people don't have enough money because inflation is high the buying power is less and then what that act is is to reduce buying power again to reduce inflation but it comes at a big cost and that is stagflation I want to explain inflation in a very simple way there's a certain amount quantity of buying that is of how much money and credit you're given divided by the amount of quantity of goods and services sold in other words if there's a lot more money and credit produced than there is goods and services produced you will have an inflation and the magnitude will be a function of that ratio over the that period of time there was a very enormous amount of money and credit that was produced and there were some bottlenecks and shortages of production in disruption because of mostly of a combination of covid and also geopolitical isses so there was some effect most of the inflation came from the production we attribute it we can go down to actually calculate most of that was due to the enormous increase in money and credit and spending that was produced if you now look at the United States it's no longer dominant militarily it's no longer dominant economically because China has become coer and is a larger trading partner with other countries than the United States is the amount of trade and so on it's a very unique power think of of it you can print the money that the world will accept now that means when they accept it they buy your bonds they buy your debt that's what they hold these in which are promises to receive this currency that you could print so there are two things now that that are jeopardizing that position dollar is now strong but there are two things you know we want to hold on to that position two things that threaten it first is the printing and devaluing money but all countries right now are doing it so in all countries currencies are depreciating against goods and services prices and then the other issue which is interesting is the weaponization of the dollar in the form of sanctions America is certainly in relative toine in other words has been education is not the same military power is not the same economic power is not the same if we're looking at you know how we're behaving with each other it is not the same this is the question all currencies usually during these period of time depreciate together so in the 1930s all the currencies depreciate they depreciated that then against gold they depreciate against assets against real estate prices and the number of things but we're coming into a new world in which the real question is what will be the new currency and it may not be just the government currency is it crypto is it gold is it other things and we'll find out so a currency is a medium of exchange and we'll have all of those currencies continue to be including the dollar but it's also a storeold of wealth and that means that the bonds of what you store it in has to have a real return and none of the major currencies have that that's why you're seeing movements out of all of those and into other assets and why you're seeing the bond market sell
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