저자: 996 Rainmaker 造雨俠 · 외국인
다듬은 글
And we are right now rising close to— closer to, not at the same level in 2000 and same level in 1929. Is it a bubble that bursts eventually? So I think it is. Yes. And at that moment, there's always the issue of a bubble. All great technology changes produce bubbles. And the reason they produce bubbles is because nobody can get it exactly right.
You have to spend a ton of money to capture your market share and so on, and you don't worry about whether it's too much or not, or you don't spend enough money and you lose your market share, and it's very imprecise with a lot of competition. Thank you so much for joining, and look , you've been doing a lot of work.
You've been busy with these five forces that have been shaping the global economy. Just to quickly go through them: money and debt, internal order, power conflict, acts of nature, and technology. I want to start on that first one, though. It's a point that you've made globally, but here in the US: trillions in spending but only trillions in revenue, right?
Are we already past the point of no return? That the fact we have this dynamic means that some sort of crisis is inevitable? Um, yes. We're past the point of no return, meaning, uh, when debt service payments flow, measuring that there and sue, the supply of one budget deficit means that has to be sold, and you have a supply-demand issue, and we could see it happening in the bond market.
And we could see that bonds have been a bad investment and that there's pressure on interest rates there, and that's one of the five factors as you're saying. But that dynamic is happening. People are treating it, uh, like, um, if it hasn't happened before. They don't understand that, like, the plaque in the arteries that it builds up, and they have that exposure.
So, I think when you're looking, I think a particularly vulnerable period, and preside, because as we connect these forces, we have that, that is the issue. And we also are going to have a great deal of political conflict that has implications for taxes, it has implications for all sorts of things. So what does history tell us that this looks like when we get closer to that point?
Is failed what you look to here. It could be seen in the bond market action by long rates rising relative to short rates. In other words, they're trying to hold the short rates down and the long rates are rising, and then you're seeing the weakening then of the dollar market because now going down. The returns now of stocks are now down low relative to the respective returns of bonds.
And so that upward pressure then starts to translate into a stock market pressure. That is the classic dynamic and something that the Federal Reserve then or any central bank is in a position of not easily being able to manage because it becomes more of a stagflationary environment. So the stagflation that we're seeing right now , the Fed wrestles with the question: if it's tightening or if it's easing.
That also in economy there is such a wealth disparity, but also think about the implications of whether you own stocks, whether you don't own stocks. And that difference, that impact is, is very different. That has huge political implications. That's where that period, this is an administration that has been very explicit in its desire for cuts, and this is part of the reason that Kevin Warsh is now our Fed chair who, of course, has said, "I am independent.
" Do you think throughout history there have often been bond markets that test a Federal Reserve chair? Is Kevin about to get a big test? Of course, one man's debts are another man's assets, and if there's not a high enough real return then those bonds are not appreciated. So what are you holding the bond for?
You're holding it for 19 out. That is exactly headed to the kind of thing which we also saw a number of times through quantitative easing called financial repression. And the idea is that you drive the bond yields down with buying of assets and so on. Sometimes it includes even foreign exchange controls to try to prevent money from going outside, um, the country and so on, but to have that forced low real rates and then that's usually accompanied by high taxation and a higher level of inflation to bring in revenue.
And because money wants to go to other things, I do think yes, market is all, high enough to compensate people going to manipulate in this way that for is people edit on that ignoring it. Compared to this crisis in 1956, are we heading to a similar environment where we become Britain, where if we can't control the Strait of Hormuz, US in dispute?
And I travel around the world and I speak with world leaders. I was just a month in Asia and 10 days in China and so, and what we're seeing around the world is the question of will the United States, can the United States fight a war in defense of others, China and in Asia? Right now all the leaders I spoke with would say, "We, we, it's clear the United States cannot fight a war because the population doesn't want the cost of living impact, they don't want people to die, they don't want—they want it to be over fast." And how can we fight in the Middle East and fight there and get that attention, is having geopolitical implications for those who expect, because it was a policy of containment for China.
There's the Taiwan issue and then around the Taiwan issue are questions of borders, and so there was a process of containment, Taiwan, and a very serious case because not all and for example entirely with the power of the Chinese government to basically say, "Let's take, let's put a block and have no chips coming out—" that.
That signal was given to the market, all the, all the stocks, AI stocks and everything would crash, the stock market would crash. Yes, and considering how high we're coming from, I would kind of love to combine these ideas. Because on one hand, you have the spending we're already doing, war has been incredibly expensive, that's more spending from the US.
And then there's AI and the desire for AI sovereignty. Debt for AI all bet raising debt, offering 5 billion, are you concerned that there is crowding out happening in this market? Can we handle that coming? All great technology changes produce bubbles, and the reason they produce bubbles is because nobody can get it exactly right.
You have to capture market share and so and don't worry about whether too much or not, or you don't spend enough money and you lose market share, and it's very imprecise with a lot of competition. And then when people bet on the technology, which I'll bet on the technology, but they think that buying the stocks is betting on the technologies, which is a different thing because the stocks can be expensive and so on.
That's, that's a problem. And what happens is when wealth grows a lot relative to incomes, I want to distinguish wealth from incomes. Okay. Wealth is, you can create wealth very easily in the following way: You say I'm going to have a—uh—raise $ 50 million on a billion valuation. Okay, that's counted as a billion of money.
And now you're a billionaire, but you only put up 50 million. And so wealth, you cannot is you have wealth, together you can only spend money, so when there is a lot of wealth relative to the amount of money, there is, there is a vulnerability, and bubbles burst when money, when wealth needs to be converted into money, often that—often that's because of debt, but it could be for anything, it could be for wealth taxes, for example.
Supposing you put in wealth taxes, are some that dicing the miracle tech over time has wonder implications, I don't think, but I do think. It has wealth implications: a very small end of the population is going to do unbelievably, and a lot of people won't. So what do we do? Can we work together to deal with those issues?
And how do you—you do not believe I'm not optimistic on us working together to have the end? Is it a bubble that bursts eventually? So I think it is. Yes. And then at that moment there's always the issue of a bubble and we can measure a bubble. I have indicators, and there, how many people are over-sentiment?
A lot of indicators, 2000 here, thing about 2000 , there, bubble, and then there is the pricking. A bubble happens when there's a need for wealth to be sold to get the money, like, normally in a dynamic. If you take—take '29, take 2000, all of them have an element of, you know, tightening money too, because it can't go on forever.
It finds a bubble, the question is how long you let the bubble go before there's the pricking, so in order to do the market timing to know how—to market time, it requires both the understanding of the bubble and the looking for the pricking and the pricking. I need money. Have some, dynamics, following that, even though wonderful that we have, we could talk about this all day, and I'm so upset we're out of time because I know you're using it specifically in your family office.
So, we're going to have to talk again specifically about that because I'm really interested to hear more about that. Today, thank you so much for sitting down with me, really appreciate your time.
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