Chris Whalen: Powell Stays To Block Trump And What To Expect From A Warsh Fed
Summary
Fed Outlook: Potential Warsh-led Fed could shrink the balance sheet, shift models, and lower policy rates while tightening via reserve reduction, impacting bank liquidity dynamics.
Inflation & Commodities: A sulfuric acid shortage (exacerbated by China’s export halt) is seen fueling broader inflation and lifting commodity prices, including precious metals and copper.
Precious Metals Strategy: Guest is adding exposure to gold and especially silver, viewing gold’s recent sideways action as consolidation and favoring direct metal exposure alongside selective silver miners.
Silver Miners Focus: Highlights opportunities in miners less dependent on sulfuric acid inputs and notes idiosyncratic risks by geography and project, suggesting diversified approaches.
Distressed Real Estate: Identifies rising residential and small multifamily delinquencies (~$1T) as a major special-situations trade in loan resolution and asset workouts, with caution on legal/policy risks (e.g., New York).
AI Market Breadth: Equity gains remain narrowly concentrated in mega-cap AI-related names; passive flows dominate, while the guest is cautious on AI monetization and remains negative on NVDA.
Macro Perspective: Inflation remains the policy “cost,” with housing affordability central; gold’s role as a reserve asset is strengthening as investors diversify away from the inflating dollar.
Transcript
That's the cost here of the politics. Donald Trump should have two appointments to make this year. But having said that, a very very significant appointment where essentially Kevin Worsh is really a hawk on inflation. Don't think otherwise. But he is a supply sire. So the way he looks at interest rates and monetary policy is going to be very different. Hey everyone, welcome back to this week's episode of the rap with Chris Whan where we break down what's happening on Wall Street, Washington DC, and everywhere in between. Chris, great to see you. Big week. >> My pleasure. My pleasure. >> Gosh, where to even start? Worshes going to move forward at this point. FOMC voted um with the most descents since 1992. Of course, holding rates steady, PAL's last presser. So, let's start with the Fed this week. Um maybe before we even get into the FOMC, well, I don't know. Where do you want to start? Let's start with the Fed. Um maybe we can start with the FOMC and then we can get into WARSH. >> Yeah, that's the big story. I think this week it was an unusual press conference because you had chairman Powell telling everybody that this is his last appearance as chairman but he's going to stay on the board. I'm sure he's gotten advice of counsel that says, "Well, if they're going to continue to investigate, then you should stay on the board so you see, you know, the uh report." But, you know, if he is the object of an investigation, they would probably isolate him and even make him resign because, you know, that's a serious thing and there are legal issues involved. So, you know, what they said at the presser was no change. There was a written bias towards ease in the statement, but you had, you know, three governors voting against it. >> Uh, and then you had Stephen Meyer, of course, voting for a quarter point rate cut, as he has done almost every month, I believe. So, y >> you know, it was it's unusual stuff for Washington. Washington used to treat the, you know, Fed as a sacred temple when I was a kid. You know, Paul Vulkar and even Alan Greenspan, these were all very deeply respected people in town. nobody would ever criticize him in public and today the whole thing has been reduced to politics. So there you are. >> Do you think Pal staying on as a Fed governor does that kind of create the opportunity for him to almost be like a shadow chair if you will? I'm not really sure about the inner workings of the Fed, but it does make me a bit curious. >> No. And and I spoke about that in the blog uh the rap this week. Um the reality is is that the amendments to the Federal Reserve Act in 1935 that created what we know as the board of governors today, the Fed used to be a totally decentralized entity with no Washington office. Uh and what happened with those changes is the chairman is now clearly the chief executive officer of the board of governors in Washington. The reserve banks are still technically owned by the regional banks in their districts. Um and so what this means is that the chairman can direct a staff. He can veto appointments of uh reserve bank presidents by the regional boards of directors of each of the reserve banks. So he has pretty much uh total authority within the agency and it's not like the SEC or other agencies where the other uh officers have a say and they vote and things like that. the governors at the Fed vote on monetary policy, Julia, and that's it. >> I guess the other question though is with PAL staying on as a Fed governor, that means Trump only gets one seat to fill, not two. Like, how significant is that then? >> Well, if you're the president, it's very significant. You know, you're dealing with an entity uh that's got 12 votes. You've got seven of them on the board that you're able to appoint. and the rest of them come from the regional reserve banks. They rotate. New York always votes. The others rotate. So, it's hard to control the outcome at the best of times anyway. And the fact that Trump can't appoint a second governor now, I think is is extremely significant. It just shows the way he handled Powell was wrong. Julia, the way you handled him two years ago when you first came in as Donald Trump, is ask Congress to investigate, >> have them hold hearings, and you know what? He'd already be gone. So, by personalizing this, which is typical Trump, right? He loves to fight. Um, you know, and setting it up with Bill Py and all the rest of them attacking Powell in public. It made him stay. And now he's doing a Mariner Eckles, which is the last time a chairman actually stayed on the board when they were fighting Harry Truman after World War II. And um you know, he could stay on till 28, frankly. Uh I'm not sure he wants to. He's probably served his country long enough, right? We should honor his service. But I got to tell you, I have been calling for his departure for a while. >> Yeah. >> He has not done a good job. So, you know, that's the cost here of the politics. Donald Trump should have two appointments to make this year and I'm not sure he's going to get an opportunity and the other governors aren't going anywhere either. So, you know, in a sense Wars could be his only appointment to the central bank. But having said that, a very very significant appointment. Uh we put out a client note today as well talking about this where essentially Kevin Worsh is really a hawk on inflation. Don't think otherwise, but he is a supply sire. So the way he looks at interest rates and monetary policy is going to be very different than what we've seen at the Fed in the past decade, which has basically been progressive left politics uh and and economics. >> Yeah. Before I get into war, I want to just stay on pal for just a second longer. Him staying on, choosing to stay on as a governor. You just mentioned Marin May Mariner Eckles. We haven't seen this since Eckles. um back when Truman was in office. What do you think what do you think he's getting at or what do you make of his move? Like what's your assessment? Do you think he should have just left or >> No, I think many people have probably gone to Powell, including many Democrats, people like Elizabeth Warren, and have asked him to stay to block Trump. um you know they don't want to see changes at the central bank particularly at the hands of someone like Kevin Worsh who has always been feared by the Fed staff because he understands he understands how their models work or don't work and he understands how some of the methodologies that they use to formulate monetary policy Julia are just not sound and they do need to be changed and at least updated to comport with what's going on in the markets today, right? So, Worsh is a change agent, make no mistake. And once he's sitting in that chairman's chair and has total executive authority over that agency, he is going to make changes. >> I don't think people fully appreciate this. And it was so striking that they didn't notice this week that Powell specifically said, "Don't mess with the Reserve Bank presidents." Because he knows that Wars can just remove them. That's what it comes down to. you flagged that in the rap and I went back and looked at what he said. Um, yeah, removing reserve bank presidents from office over different views on monetary policy. Um, that would be the beginning of the end of the Fed's ability to make monetary policy independently. Yeah, that was an interesting comment that you highlighted. >> Certainly is. So, I mean, think about the fact that he said that. >> Mhm. What do you make of it, that comment in particular? He knows he knows that the more dovish reserve bank presidents um may not be reappointed or could even be removed. The chairman has enormous power within the system. People don't realize this. >> When the price of gold and silver was rising faster and faster by the day, people kept asking if they've missed the boat. They thought that gold and silver were too expensive. Well, if you were looking for lower prices, here they are. And they might not last very long. That's why I'm still a buyer of precious metals and why I encourage you to get your free information kit from our partners over at Goldco. They're the number one gold and silver company in the country. They have over 8,000 five-star reviews. Plus, they have the best gold and silver offer in the business, hands down. And right now they are offering a 10% bonus in gold or silver on qualified orders. Go to goldco.com/therap to learn more. Or you can call 855-573817. Go to goldco.com/therap or call 855-573817 to learn more. Okay, as you mentioned Kevin Walsh, um, and I know in our last conversation, last episode of the rap, you pointed out that he was the best of the candidates. Um, so when we have Worsh at the helm. Um, you mentioned he's a hawk on inflation. The way he will look at rates and policy will be very different. >> What can we expect like what do you think we can expect from a worshled Fed? David Zervos from uh Jeff who's a very smart guy worked at the Fed um really understands some of the issues we've just been kind of going over in a cursory fashion said that Worsh is going to take reductions in the balance sheet which is essentially tightening you're you're reducing reserves in the system and you've got to get banks to go to the discount window you've got to let them count their holdings of treasury bills as part of liquidity. But overall, you're going to have less free money for the banks to earn a float on, right? And by doing this, David's argues that uh Wars is going to then be able to go to the majority on the board and say, "Look, we're going to shrink the balance sheet, which is tightening. Uh we need to lower the target rate so that the the overall average rate in the system, that overnight rate, you know, one-year money, that kind of thing, Julia, is going to be lower." And that gives you more growth. Now also I I think it's neutral to positive for inflation because you know money the cost of money is inflationary. When you force people to pay higher prices to get capital it does impact the system overall in terms of that bias and it's certainly given people a lot of trouble in the world of private credit and private equity right now. So I think he comes from a supply side perspective. That was the really interesting thing about uh David's piece in the FT. You can hear a Westy harumping by the way. >> Oh, that's okay. I'm sure my Winston's going to my my part Westy is going to be scrambling around as well. Um >> whenever he sees a golf cart, he just starts barking. >> Oh. Oh, well, you're going to see a lot of those in Florida. And uh you know, >> yes, we are. >> We'll welcome them. Welcome them on our podcast here. It's okay, Chris. Um, we love them. All right. Uh, elaborate a bit more though on this idea. Um, like what would be some of the implications of this kind of new approach to policy if we're shrinking the balance sheet? Where might we see this kind of show up? Like what? Yeah, just kind of walk us through um because we're all trying to learn as well. Well, um the the immediate way of doing it, the more radical way of doing it would be to get the Fed to swap their mortgage back securities for T bills. In other words, do a transaction with the Treasury where they give them a couple trillion dollars worth of mortgage bonds that have 10, 15, 18year average lives, right? And instead you get a T bill with a one-year average life or less. That's what the Fed wants. That's what Worsh and many other people in the system want. They want to return the central bank back to a more traditional conventional conservative configuration and get away from the progressive nonsense that you saw with Janet Yellen and Ben Bernani who believe more is better. That's why they went to this big reserve model and it was inflationary. It caused home prices to go up by 50%. Uh, if nothing else, that's the biggest sin of Jerome Powell. And that's the burning tire, as I like to say, that they should have hung around his neck. Uh, but for some reason, the guys in the White House are just incapable of developing political messages uh that are compelling. I, you know, I'm the son of a Nixon speech writer, a guy who helped write the first acceptance speech for Ronald Reagan. And there are certain ways that you deliver messages, right, Julia? You've worked in the business long enough. >> Okay. Wait, wait. What would be the message then? Like what is the messaging? >> The Fed is responsible for high home prices. >> I would have pounded that until there was blood in the streets. I would have made every Fed governor resign over that because it's politically powerful. It goes directly to the issue of affordability, right? >> Which is the issue dour. >> That is the only issue today is affordability. Hello. But somehow there people in the Trump White House couldn't get their arms around that. And it's astounding to me. >> And so that was a layup message. >> Yeah. You know, Kevin Worsh understands supply side economics. My god. I I worked for Jack Kemp. Okay. I understand the message. It's called hope. It's called we're going to get things better. And nobody seems to be able to formulate that today. >> Okay. Um, also writing in the rap, you point out that Wars will face some major obstacles um, if he tries to cut rates >> given where the descents landed this week. Um, >> he has he he has a really interesting challenge, which is he's going to change the rules. He's going to make the staff change how they model interest rates and get rid of some of these 20, 30 year old progressive neocanesian models that the Fed still uses which are not very effective. Uh, and by doing that, he's going to change the conversation with these governors, Julia. That's really what it comes down to. And if he can go in there and say, "Look, we're going to reduce the balance sheet more than we thought. Uh, in fact, we're going to take it down by another third and reduce reserves in the system, which is tightening. Let's be fair, that's what they were doing for three and a half plus years, right? With quantitative tightening, they were reducing the balance sheet. Um, and this is why they got to get rid of those mortgage bonds because those mortgage back securities that they own are going to be around for another 15, 18 years. Uh, and that does not help the Fed. So, um, I think that you're going to see him argue to the other governors that we can reduce the Fed funds target dramatically, maybe as much as a point, point and a half if we reduce reserves in the system. >> That's the tradeoff he he's got to make. >> And if he can make that case to the other governors, then he'll have a majority. >> Um, what's the change that you're most looking forward to? Well, I think how the balance sheet is run and how the Fed runs their operations is very important. You know, the Congress dropped the ball on this, Julia. They're responsible for oversight. So, if they're not going to pay attention to what the Fed does and how they do it, then, you know, shame on them. Uh the Fed didn't ask for permission from Congress to uh remodel that very old and historic building that they sit in on Constitution Avenue. They won't let Donald Trump build a ballroom at the White House, but um nobody talks about the Fed building. That's one of the most historic buildings in town and they've torn it in half. Uh it's astounding. And then you have obviously quantitative easing where they lost hundreds of billions of dollars of Treasury funds. And then another one, one of my favorites is Fed Now, the overnight cash service that the Fed created to compete with the private banks. All of these things ought to go to be honest with you. They ought to privatize Fed now. Get rid of it. Um, so, you know, there's been a lot going on at the Fed for really two decades going back to before Bernani. And I think that since the financial crisis, we all got dependent on them and uh, let them do whatever they want. So, that's the change I'm looking for. Accountability. >> I was uh, going back and forth with Judy Shelton on X about this. Uh, I think she got a little angry. saying that's okay. Well, I said that she would have done the same thing as Powell would defend, you know, the Fed, and she said, "No, I wouldn't. I'd be cognizant of the rule of law." And I I think she's right. You know, Judy Shelton's a fine lady, and I I think that she would do the right thing if she was at the Fed. >> Yeah. Chris, um, inflation is still a topic. It's something you've written about >> accelerating. All right. All right, >> Wall Street had a great piece about this this afternoon. They said prices are rice and along and it's not just energy. And they're absolutely right. >> Mhm. How are you seeing this start to affect the economy? >> It's going to just ripple through in terms of price increases here and there. Um, you know, inflation is always a personal experience. It depends where you live and what the market's like and everything else. But I think the war in the Middle East and the knock-on effects from things like sulfur and the shortage of sulfuric acid that we wrote about this week are going to have a big impact on the economy and they're going to impact commodity prices, precious metals, you know, copper, you name it. Uh they're all going to be impacted by this. >> Okay. You just referenced it. Um, as you point out, you you wrote about in the institutional risk analyst blog about the one word that sums up the threat to the global economy right now, sulfur. >> Yeah. >> Take explain it. >> Well, John, our our friend John Daard talked about this in that interview. Uh, basically, you know, 3/4 of the sulfur that's extracted is turned into sulfuric acid. And you need that for a lot of industrial processes. you need that for technology, for example. Uh so there's all sorts of industries that are vitally dependent on that. And the key thing that's going on here, Julie, is that the Chinese, who are the biggest exporter of sulfuric acid, basically shut down their exports. They're so worried about the farm sector next year, and that's politics in China, right? Food, um that they're not going to allow any exports at all. That's putting a terrible terrible uh weight on the global economy in terms of inflation because you know you see these prices for sulfuric acid in some of these markets and this isn't even the price where you could actually take physical delivery. So there's a problem with physical supply as well as price. Uh you see this in precious metals too uh silver particularly. So, I I think the inflationary effect of this is dramatic. And we wrote very specifically this week about what we think our readers ought to do in terms of their portfolios because sadly, you know, the commodity play is pretty obvious. That's what we focused on. But I also think there's going to be a lot of risk arbitrage in the stock market for specific industries and companies that are going to be impacted by this. Uh our friends at Silver Academy wrote a lot about this uh this week and they were talking about miners in silver for example that don't depend on sulfuric acid. A lot of metals come as a byproduct to other mining you know like copper mining for example. So they will harvest precious metals from the tailings that they're working on on uh producing ore. So that's where some comes from. But there are a lot of mines out there that don't. they're just exclusively focused on, you know, gold or silver. >> So interesting like just how everything is so interconnected and um yeah >> I think more now than ever before the network effect that you see in the world as people tried to optimize around price >> even if the supply chain was a little longer and more complicated than it was in the past is a a big issue. It's certainly something I'm following in terms of >> what's going on in the markets. If you see companies talking about this, uh, I think it's very significant that network effect. >> Um, Chris, what are you what are you doing with your precious metals right now? Are you taking profits? Are you adding positions? >> No, I've been buying some miners. Uh, I'm going to have a fair amount of liquidity to deal with next week. So, we're going to be looking at uh going back into gold. Gold's been going sideways, but I I see this as kind of a consolidation. Um, I am going to increase my exposure to silver and silver miners because of what we were just talking about with sulfur. >> The the ones that don't have that exposure to like or the dependence on >> well they there's many ways to play this. You don't necessarily have to go into a specific minor because they all have idiosyncratic risk. That's the thing. Every company is different. They're all located in a different part of the world. They're dealing with local politics and local economics that will often impact miners a lot. So, you have to do your homework when you're buying a single minor, for example. Um, but I think having exposure to the metal price is the easiest way to do this right now. >> We Let's talk about the equity markets because we here in the US we have markets that continue to hit record highs. >> Yeah. What Well, what do you make of it? I think the byside um manager population after weeks of confusion and uncertainty said to hell with it, let's go buy the MAGA seven tech stocks plus a couple of new ones. Right? And that's what's been driving the indexes. Uh in the blog this week, we featured a great comment from Charlie McLeel at Namura. He's an options uh trader. That's what he does. and he he always writes a very interesting sales comment about what's going on in the market and you just put it perfectly cuz the rest of the market's kind of eh the financials aren't moving many other sectors aren't really moving and what happened this week was you saw a big surge on Wednesday and Thursday in these large cap tech stocks AI you know the Googles all the rest of them and so uh even a a semiconductor stock I've owned for a long time AMD just went soaring and it's all part of this this I think bet on the part of managers that there is going to be value here in terms of not only these companies like a Google but also AI and um you know that's what's driving the performance really it's very narrow very focused on large cap names um and you know somewhat heard behavior you also got to remember you know we'll pay attention to our friend Michael Green that there I was just in New York with him yesterday. He was on the show. >> He's great. But the the passive buy continues to be so powerful that, you know, all those 401ks and, you know, people like me run my own IRA from my business. Well, where do we put that money? We got to put it into the stock market. >> You know, um I I had them on we we recorded an episode. It's coming out next week, but the PA passive is now 55%. And >> yes, it is. >> Yeah. And he >> and it's it's more than that if you look at new money flows. >> And he's going to talk about in that episode the trajectory that we're on and the threshold that's really worrisome when it comes to the models that he has. Um so stay tuned for that. >> If you ever had outflows, if uh retirees were net redeemers, >> then you would have the opposite problem. >> Yeah. Well, well, definitely watch for that one, Chris. I'm not looking forward to that one. >> I think it'll be all right. But, you know, this economy grows so fast and we do still have such a young uh demographic even though you got a lot of old people roaming around. Um, I worry about it less in the US than I do in other nations because if you know, look at China. They still have a shrinking population because of the one child policy. And that demographic fact is going to really really impact them quite severely over the next 10 20 years. >> Okay. You also recently did hedge eyes. I think they had an investment conference you were on with Keith Mccull. Hedge eye. >> I was. I love Keith. >> You said distressed real estate is the next trade. Chris, what can you tell us about the opportunity? Well, I've been, as you know, I work with a lot of different mortgage firms and in particular, I'm starting to work with a good friend of mine, Bill Biml, who you ought to interview, in fact, at First Lean Capital. Bill resolves delinquency. He buys big houses, big jumbo mortgages and that sort of thing, and fixes them. Uh, he works for some big global investors, so they are a capital deployer on the one hand, but they also service loans. They're a master serer and they basically help institutional investors and family offices manage problems. It could be a property that's hard to sell. It could be a property that's in delinquency that has to, you know, really be fixed. And you've got to be sensitive to the local community when you're dealing with residential real estate. You got to try and help people and uh not make the problem worse because you're talking about somebody's home, >> right? So, uh, I'm very excited about that because unfortunately the level of delinquency in the world of residential real estate is going up. There's over a trillion dollars worth of delinquent loans out there in residential like >> resi, you know, small multifamily, small commercial up to, you know, 20, 30, 40. these like individual homeowners who are delinquent or this like investor classes like I know >> could be investor properties that were purchased for rental. Um there's all sorts of scenarios. Every property is different. Julia is every single one of them. >> You said a trillion. >> Uhhuh. >> How worrisome is that number? Like how does that compare? You know >> Well, total bank loans is about 12 trillion. Total assets in the system is about 21. So trillion's a big number. >> Big number. Yeah. >> Um, banks own about uh, you know, two, call it $3 trillion worth of one to fours and then they've got another half trillion in second leans and helocks and things like that. So, you know, real estate is big for banks, but it's not huge. It used to be a third of total bank balance sheets. Now, it's 11%. So, it has gone down over time. >> Where is where is it showing up? >> It's not the banks. It it shows up in, you know, non-bank financial institutions. >> Well, that gets worrisome, too, cuz are they >> Well, yeah, but remember the coupon is twice as high. In the United States, we subsidize housing. >> So, Fanny, Freddy, Jinny, all of those agencies buy loans and guarantee those loans and then sell them to investors. The coupon is anywhere from a point to a point and a half or more lower than it would be without the federal guarantee. Right? So if you're an investor on the one hand the principle is guaranteed right on the other hand the return is low compared to other ways you could deploy capital and you have political issues too if you own an asset in New York for example the lovely progressive people in the state of New York won't let you foreclose on a delinquent tenant there's all sorts of nonsense you've got to go through in this okay because there are many mortgage firms Julia that have a 49 state strategy Y and what that means is they will not do business in New York. >> Wow. >> And I would always recommend to investors be really careful if you're going to play in New York. You want to stay out of New York City. Uh resi commercial is another thing. Uh but you got to be careful because the government may turn around to you and say, "Hey, uh we're changing the rules." There are a lot of investors, you know, big multif family guys who've bought older properties in New York City in the past 10 years, Julia. They gut the building, make it beautiful, turn around and, you know, market rents, right? And now the federal uh state government New York is thinking about turning those back into rent control apartments. Mhm. >> So imagine you as an investor, you spent millions of dollars fixing these properties up and now the state of New York is basically going to take your investment. That that's Kathy Hokll and the Democratic uh socialists who run New York State. This is it's just like China. You might as well be in communist China. You know, you have no rights as an investor. And so everybody keeps coming in New York. They love commercial in New York. They you know, they love the Rasmataz. But I got to tell you, there is a cost to doing business in New York that is profound. And it's not like other parts of the country, like where you are in the Carolinas. >> Yeah. >> Totally different situation. >> Oh, yes. Okay, Chris, we didn't get a viewer question this week, but I'm going to ask you the question I'd like to. So, just give me a second. >> Okay. >> Um, inflated the one-year anniversary is actually next week. I don't know if you know that, but next Tuesday, >> we're getting ready. Alli's been reminding me. >> Okay. So, I thought it'd be nice for you to reflect. I know this is the second edition. You wrote the first one a decade ago, but let's reflect on this because there is a lot of great evergreen content, but a lot of what you have written has come to fruition. So, a year on from re-releasing the second edition here, um do some reflection for me. what has been reinforced for you? Maybe what's something that's surprised you a bit and maybe what's something you're still watching for or waiting for? >> Well, I think the message of inflated is that America has used inflation to achieve an awful lot of things. uh the currency has lost 99% of its value over the past hundred years and that's a function of the fact that a real democracy a marketdriven democracy has a lot of tendencies but one of them is they don't like paying taxes and this goes back to the inception of the republic you know today 25% of Americans pay 85 90% of the taxes that that's what the wealthy do the progressives think that's not enough they want them to pay more. Um, but you know, the way I look at it is we have $40 trillion worth of public debt and people always say, "Oh, Chris, you know, the dollar is going away. You know, we're going to lose our special status in the world." And I say, "No, that's not the way this works. The dollar is a free good that anybody in the world can use." All right? And then particularly for commerce, commerce is big. If you're paying for oil or any kind of commodities or chemicals, you need a big currency. And the other part of the dollar, of course, because of our free marketplace, is that you can raise money, you can do financial transactions that are tied to the dollar. So, while I'm a little bit worried about our political system because, you know, there is no accountability in Washington, members of Congress don't want to be bothered overseeing the Fed or anything else. That's too much like hard work, right? Um, but I think uh overall I'm still pretty optimistic about the outlook for the United States and the doom and gloomers who keep going on and on about the dollar and this and that, they're wrong. But the trouble is is that the American people pay for this through inflation. And that's the part that's really hard because when the Fed took their eye off the ball right after CO, right, and they kept that spigot open, that's what caused home prices to go up dramatically. And that is a huge pain point politically now. Whether you rent or whether you own uh the issue of cost is not going to go away. And you're eventually going to have to see wages go up proportionate to try and catch up a little bit. And that's when you really see inflation. >> That's when you see it in home prices. You see it in other goods that are, you know, in any kind of uh constrained supply. The prices will go up. America's favorite pastime. >> That's why I called it inflated. I mean, if you really review the history and you know, the funny money and everything else, there was a period when the country was really focused on gold. But the Great Depression gave the progressive tendency in America a chance to really use inflation. And this is why FDR tried to discourage gold >> the whole even. >> Yeah. But not just that, they were trying to convince people it wasn't money. And the the real message that I talked about at the end of inflation, and that's why I'm working on a gold book now, is that gold has won the battle. The fact that gold is now a bigger monetary reserve asset than the dollar, the inflating dollar, right? You would think nobody could catch up with the dollar, but in gold terms, um, you know, it's it's equalized. People won't stop using the dollar, Julia. It's just that they're going to keep their money in other assets as well. And that's the change and I think it's a good change. The US should not have a free ride. >> Well, I love it. Chris, I'm gonna encourage everyone who watches the rap to go pick up a copy. I will link it in the show notes. >> Um, >> yeah, we have to have a book signing party. Julia, >> we should have a book signing. >> Let us know if y'all want to have a book signing party. Maybe we should maybe we should do an event or something. U meet and greet with Chris. I'm telling you, that'll be really popular. Um, >> come down to Florida. It's good. >> I think we should do it in Florida, too. Y'all let us know in the comments like what kind of event we should do or plan. All right, Chris. Um, any parting thoughts? What are you watching next week? >> What am I watching next week? I am watching the financial markets to see what these stocks are going to do now. Should we be loading up on tech? Uh, I haven't changed my cautious and indeed negative view on Nvidia. I think the AI phenomenon is still slowing down a lot. What you keep seeing is that every time somebody starts talking about AI, like Facebook for example, uh investors run because they see the numbers in terms of cost, but they don't see the revenue. Um you know, people are still trying to figure out what's going on at the Fed. So, I'm going to be watching that very closely. >> And then we have earnings. We still have the back end of earnings. lot of mortgage stuff. So, we can talk about that next week. >> Love it. Chris Whan, chairman of Whan Global Advisors, author of the institutional risk analyst blog, author of multiple books, including inflated money, debt, and the American dream. Thank you so much. And I have to thank our sponsors, our partners over at Goldco. Head over to goldco.com/thereap to get your free 2026 gold and silver kit. I'm also going to read the phone number for you all. You can call 855-573817. And thank you all so much for joining us. Looking forward to seeing you next Saturday. Have a great weekend, everyone. Thank you.
Chris Whalen: Powell Stays To Block Trump And What To Expect From A Warsh Fed
Summary
Transcript
That's the cost here of the politics. Donald Trump should have two appointments to make this year. But having said that, a very very significant appointment where essentially Kevin Worsh is really a hawk on inflation. Don't think otherwise. But he is a supply sire. So the way he looks at interest rates and monetary policy is going to be very different. Hey everyone, welcome back to this week's episode of the rap with Chris Whan where we break down what's happening on Wall Street, Washington DC, and everywhere in between. Chris, great to see you. Big week. >> My pleasure. My pleasure. >> Gosh, where to even start? Worshes going to move forward at this point. FOMC voted um with the most descents since 1992. Of course, holding rates steady, PAL's last presser. So, let's start with the Fed this week. Um maybe before we even get into the FOMC, well, I don't know. Where do you want to start? Let's start with the Fed. Um maybe we can start with the FOMC and then we can get into WARSH. >> Yeah, that's the big story. I think this week it was an unusual press conference because you had chairman Powell telling everybody that this is his last appearance as chairman but he's going to stay on the board. I'm sure he's gotten advice of counsel that says, "Well, if they're going to continue to investigate, then you should stay on the board so you see, you know, the uh report." But, you know, if he is the object of an investigation, they would probably isolate him and even make him resign because, you know, that's a serious thing and there are legal issues involved. So, you know, what they said at the presser was no change. There was a written bias towards ease in the statement, but you had, you know, three governors voting against it. >> Uh, and then you had Stephen Meyer, of course, voting for a quarter point rate cut, as he has done almost every month, I believe. So, y >> you know, it was it's unusual stuff for Washington. Washington used to treat the, you know, Fed as a sacred temple when I was a kid. You know, Paul Vulkar and even Alan Greenspan, these were all very deeply respected people in town. nobody would ever criticize him in public and today the whole thing has been reduced to politics. So there you are. >> Do you think Pal staying on as a Fed governor does that kind of create the opportunity for him to almost be like a shadow chair if you will? I'm not really sure about the inner workings of the Fed, but it does make me a bit curious. >> No. And and I spoke about that in the blog uh the rap this week. Um the reality is is that the amendments to the Federal Reserve Act in 1935 that created what we know as the board of governors today, the Fed used to be a totally decentralized entity with no Washington office. Uh and what happened with those changes is the chairman is now clearly the chief executive officer of the board of governors in Washington. The reserve banks are still technically owned by the regional banks in their districts. Um and so what this means is that the chairman can direct a staff. He can veto appointments of uh reserve bank presidents by the regional boards of directors of each of the reserve banks. So he has pretty much uh total authority within the agency and it's not like the SEC or other agencies where the other uh officers have a say and they vote and things like that. the governors at the Fed vote on monetary policy, Julia, and that's it. >> I guess the other question though is with PAL staying on as a Fed governor, that means Trump only gets one seat to fill, not two. Like, how significant is that then? >> Well, if you're the president, it's very significant. You know, you're dealing with an entity uh that's got 12 votes. You've got seven of them on the board that you're able to appoint. and the rest of them come from the regional reserve banks. They rotate. New York always votes. The others rotate. So, it's hard to control the outcome at the best of times anyway. And the fact that Trump can't appoint a second governor now, I think is is extremely significant. It just shows the way he handled Powell was wrong. Julia, the way you handled him two years ago when you first came in as Donald Trump, is ask Congress to investigate, >> have them hold hearings, and you know what? He'd already be gone. So, by personalizing this, which is typical Trump, right? He loves to fight. Um, you know, and setting it up with Bill Py and all the rest of them attacking Powell in public. It made him stay. And now he's doing a Mariner Eckles, which is the last time a chairman actually stayed on the board when they were fighting Harry Truman after World War II. And um you know, he could stay on till 28, frankly. Uh I'm not sure he wants to. He's probably served his country long enough, right? We should honor his service. But I got to tell you, I have been calling for his departure for a while. >> Yeah. >> He has not done a good job. So, you know, that's the cost here of the politics. Donald Trump should have two appointments to make this year and I'm not sure he's going to get an opportunity and the other governors aren't going anywhere either. So, you know, in a sense Wars could be his only appointment to the central bank. But having said that, a very very significant appointment. Uh we put out a client note today as well talking about this where essentially Kevin Worsh is really a hawk on inflation. Don't think otherwise, but he is a supply sire. So the way he looks at interest rates and monetary policy is going to be very different than what we've seen at the Fed in the past decade, which has basically been progressive left politics uh and and economics. >> Yeah. Before I get into war, I want to just stay on pal for just a second longer. Him staying on, choosing to stay on as a governor. You just mentioned Marin May Mariner Eckles. We haven't seen this since Eckles. um back when Truman was in office. What do you think what do you think he's getting at or what do you make of his move? Like what's your assessment? Do you think he should have just left or >> No, I think many people have probably gone to Powell, including many Democrats, people like Elizabeth Warren, and have asked him to stay to block Trump. um you know they don't want to see changes at the central bank particularly at the hands of someone like Kevin Worsh who has always been feared by the Fed staff because he understands he understands how their models work or don't work and he understands how some of the methodologies that they use to formulate monetary policy Julia are just not sound and they do need to be changed and at least updated to comport with what's going on in the markets today, right? So, Worsh is a change agent, make no mistake. And once he's sitting in that chairman's chair and has total executive authority over that agency, he is going to make changes. >> I don't think people fully appreciate this. And it was so striking that they didn't notice this week that Powell specifically said, "Don't mess with the Reserve Bank presidents." Because he knows that Wars can just remove them. That's what it comes down to. you flagged that in the rap and I went back and looked at what he said. Um, yeah, removing reserve bank presidents from office over different views on monetary policy. Um, that would be the beginning of the end of the Fed's ability to make monetary policy independently. Yeah, that was an interesting comment that you highlighted. >> Certainly is. So, I mean, think about the fact that he said that. >> Mhm. What do you make of it, that comment in particular? He knows he knows that the more dovish reserve bank presidents um may not be reappointed or could even be removed. The chairman has enormous power within the system. People don't realize this. >> When the price of gold and silver was rising faster and faster by the day, people kept asking if they've missed the boat. They thought that gold and silver were too expensive. Well, if you were looking for lower prices, here they are. And they might not last very long. That's why I'm still a buyer of precious metals and why I encourage you to get your free information kit from our partners over at Goldco. They're the number one gold and silver company in the country. They have over 8,000 five-star reviews. Plus, they have the best gold and silver offer in the business, hands down. And right now they are offering a 10% bonus in gold or silver on qualified orders. Go to goldco.com/therap to learn more. Or you can call 855-573817. Go to goldco.com/therap or call 855-573817 to learn more. Okay, as you mentioned Kevin Walsh, um, and I know in our last conversation, last episode of the rap, you pointed out that he was the best of the candidates. Um, so when we have Worsh at the helm. Um, you mentioned he's a hawk on inflation. The way he will look at rates and policy will be very different. >> What can we expect like what do you think we can expect from a worshled Fed? David Zervos from uh Jeff who's a very smart guy worked at the Fed um really understands some of the issues we've just been kind of going over in a cursory fashion said that Worsh is going to take reductions in the balance sheet which is essentially tightening you're you're reducing reserves in the system and you've got to get banks to go to the discount window you've got to let them count their holdings of treasury bills as part of liquidity. But overall, you're going to have less free money for the banks to earn a float on, right? And by doing this, David's argues that uh Wars is going to then be able to go to the majority on the board and say, "Look, we're going to shrink the balance sheet, which is tightening. Uh we need to lower the target rate so that the the overall average rate in the system, that overnight rate, you know, one-year money, that kind of thing, Julia, is going to be lower." And that gives you more growth. Now also I I think it's neutral to positive for inflation because you know money the cost of money is inflationary. When you force people to pay higher prices to get capital it does impact the system overall in terms of that bias and it's certainly given people a lot of trouble in the world of private credit and private equity right now. So I think he comes from a supply side perspective. That was the really interesting thing about uh David's piece in the FT. You can hear a Westy harumping by the way. >> Oh, that's okay. I'm sure my Winston's going to my my part Westy is going to be scrambling around as well. Um >> whenever he sees a golf cart, he just starts barking. >> Oh. Oh, well, you're going to see a lot of those in Florida. And uh you know, >> yes, we are. >> We'll welcome them. Welcome them on our podcast here. It's okay, Chris. Um, we love them. All right. Uh, elaborate a bit more though on this idea. Um, like what would be some of the implications of this kind of new approach to policy if we're shrinking the balance sheet? Where might we see this kind of show up? Like what? Yeah, just kind of walk us through um because we're all trying to learn as well. Well, um the the immediate way of doing it, the more radical way of doing it would be to get the Fed to swap their mortgage back securities for T bills. In other words, do a transaction with the Treasury where they give them a couple trillion dollars worth of mortgage bonds that have 10, 15, 18year average lives, right? And instead you get a T bill with a one-year average life or less. That's what the Fed wants. That's what Worsh and many other people in the system want. They want to return the central bank back to a more traditional conventional conservative configuration and get away from the progressive nonsense that you saw with Janet Yellen and Ben Bernani who believe more is better. That's why they went to this big reserve model and it was inflationary. It caused home prices to go up by 50%. Uh, if nothing else, that's the biggest sin of Jerome Powell. And that's the burning tire, as I like to say, that they should have hung around his neck. Uh, but for some reason, the guys in the White House are just incapable of developing political messages uh that are compelling. I, you know, I'm the son of a Nixon speech writer, a guy who helped write the first acceptance speech for Ronald Reagan. And there are certain ways that you deliver messages, right, Julia? You've worked in the business long enough. >> Okay. Wait, wait. What would be the message then? Like what is the messaging? >> The Fed is responsible for high home prices. >> I would have pounded that until there was blood in the streets. I would have made every Fed governor resign over that because it's politically powerful. It goes directly to the issue of affordability, right? >> Which is the issue dour. >> That is the only issue today is affordability. Hello. But somehow there people in the Trump White House couldn't get their arms around that. And it's astounding to me. >> And so that was a layup message. >> Yeah. You know, Kevin Worsh understands supply side economics. My god. I I worked for Jack Kemp. Okay. I understand the message. It's called hope. It's called we're going to get things better. And nobody seems to be able to formulate that today. >> Okay. Um, also writing in the rap, you point out that Wars will face some major obstacles um, if he tries to cut rates >> given where the descents landed this week. Um, >> he has he he has a really interesting challenge, which is he's going to change the rules. He's going to make the staff change how they model interest rates and get rid of some of these 20, 30 year old progressive neocanesian models that the Fed still uses which are not very effective. Uh, and by doing that, he's going to change the conversation with these governors, Julia. That's really what it comes down to. And if he can go in there and say, "Look, we're going to reduce the balance sheet more than we thought. Uh, in fact, we're going to take it down by another third and reduce reserves in the system, which is tightening. Let's be fair, that's what they were doing for three and a half plus years, right? With quantitative tightening, they were reducing the balance sheet. Um, and this is why they got to get rid of those mortgage bonds because those mortgage back securities that they own are going to be around for another 15, 18 years. Uh, and that does not help the Fed. So, um, I think that you're going to see him argue to the other governors that we can reduce the Fed funds target dramatically, maybe as much as a point, point and a half if we reduce reserves in the system. >> That's the tradeoff he he's got to make. >> And if he can make that case to the other governors, then he'll have a majority. >> Um, what's the change that you're most looking forward to? Well, I think how the balance sheet is run and how the Fed runs their operations is very important. You know, the Congress dropped the ball on this, Julia. They're responsible for oversight. So, if they're not going to pay attention to what the Fed does and how they do it, then, you know, shame on them. Uh the Fed didn't ask for permission from Congress to uh remodel that very old and historic building that they sit in on Constitution Avenue. They won't let Donald Trump build a ballroom at the White House, but um nobody talks about the Fed building. That's one of the most historic buildings in town and they've torn it in half. Uh it's astounding. And then you have obviously quantitative easing where they lost hundreds of billions of dollars of Treasury funds. And then another one, one of my favorites is Fed Now, the overnight cash service that the Fed created to compete with the private banks. All of these things ought to go to be honest with you. They ought to privatize Fed now. Get rid of it. Um, so, you know, there's been a lot going on at the Fed for really two decades going back to before Bernani. And I think that since the financial crisis, we all got dependent on them and uh, let them do whatever they want. So, that's the change I'm looking for. Accountability. >> I was uh, going back and forth with Judy Shelton on X about this. Uh, I think she got a little angry. saying that's okay. Well, I said that she would have done the same thing as Powell would defend, you know, the Fed, and she said, "No, I wouldn't. I'd be cognizant of the rule of law." And I I think she's right. You know, Judy Shelton's a fine lady, and I I think that she would do the right thing if she was at the Fed. >> Yeah. Chris, um, inflation is still a topic. It's something you've written about >> accelerating. All right. All right, >> Wall Street had a great piece about this this afternoon. They said prices are rice and along and it's not just energy. And they're absolutely right. >> Mhm. How are you seeing this start to affect the economy? >> It's going to just ripple through in terms of price increases here and there. Um, you know, inflation is always a personal experience. It depends where you live and what the market's like and everything else. But I think the war in the Middle East and the knock-on effects from things like sulfur and the shortage of sulfuric acid that we wrote about this week are going to have a big impact on the economy and they're going to impact commodity prices, precious metals, you know, copper, you name it. Uh they're all going to be impacted by this. >> Okay. You just referenced it. Um, as you point out, you you wrote about in the institutional risk analyst blog about the one word that sums up the threat to the global economy right now, sulfur. >> Yeah. >> Take explain it. >> Well, John, our our friend John Daard talked about this in that interview. Uh, basically, you know, 3/4 of the sulfur that's extracted is turned into sulfuric acid. And you need that for a lot of industrial processes. you need that for technology, for example. Uh so there's all sorts of industries that are vitally dependent on that. And the key thing that's going on here, Julie, is that the Chinese, who are the biggest exporter of sulfuric acid, basically shut down their exports. They're so worried about the farm sector next year, and that's politics in China, right? Food, um that they're not going to allow any exports at all. That's putting a terrible terrible uh weight on the global economy in terms of inflation because you know you see these prices for sulfuric acid in some of these markets and this isn't even the price where you could actually take physical delivery. So there's a problem with physical supply as well as price. Uh you see this in precious metals too uh silver particularly. So, I I think the inflationary effect of this is dramatic. And we wrote very specifically this week about what we think our readers ought to do in terms of their portfolios because sadly, you know, the commodity play is pretty obvious. That's what we focused on. But I also think there's going to be a lot of risk arbitrage in the stock market for specific industries and companies that are going to be impacted by this. Uh our friends at Silver Academy wrote a lot about this uh this week and they were talking about miners in silver for example that don't depend on sulfuric acid. A lot of metals come as a byproduct to other mining you know like copper mining for example. So they will harvest precious metals from the tailings that they're working on on uh producing ore. So that's where some comes from. But there are a lot of mines out there that don't. they're just exclusively focused on, you know, gold or silver. >> So interesting like just how everything is so interconnected and um yeah >> I think more now than ever before the network effect that you see in the world as people tried to optimize around price >> even if the supply chain was a little longer and more complicated than it was in the past is a a big issue. It's certainly something I'm following in terms of >> what's going on in the markets. If you see companies talking about this, uh, I think it's very significant that network effect. >> Um, Chris, what are you what are you doing with your precious metals right now? Are you taking profits? Are you adding positions? >> No, I've been buying some miners. Uh, I'm going to have a fair amount of liquidity to deal with next week. So, we're going to be looking at uh going back into gold. Gold's been going sideways, but I I see this as kind of a consolidation. Um, I am going to increase my exposure to silver and silver miners because of what we were just talking about with sulfur. >> The the ones that don't have that exposure to like or the dependence on >> well they there's many ways to play this. You don't necessarily have to go into a specific minor because they all have idiosyncratic risk. That's the thing. Every company is different. They're all located in a different part of the world. They're dealing with local politics and local economics that will often impact miners a lot. So, you have to do your homework when you're buying a single minor, for example. Um, but I think having exposure to the metal price is the easiest way to do this right now. >> We Let's talk about the equity markets because we here in the US we have markets that continue to hit record highs. >> Yeah. What Well, what do you make of it? I think the byside um manager population after weeks of confusion and uncertainty said to hell with it, let's go buy the MAGA seven tech stocks plus a couple of new ones. Right? And that's what's been driving the indexes. Uh in the blog this week, we featured a great comment from Charlie McLeel at Namura. He's an options uh trader. That's what he does. and he he always writes a very interesting sales comment about what's going on in the market and you just put it perfectly cuz the rest of the market's kind of eh the financials aren't moving many other sectors aren't really moving and what happened this week was you saw a big surge on Wednesday and Thursday in these large cap tech stocks AI you know the Googles all the rest of them and so uh even a a semiconductor stock I've owned for a long time AMD just went soaring and it's all part of this this I think bet on the part of managers that there is going to be value here in terms of not only these companies like a Google but also AI and um you know that's what's driving the performance really it's very narrow very focused on large cap names um and you know somewhat heard behavior you also got to remember you know we'll pay attention to our friend Michael Green that there I was just in New York with him yesterday. He was on the show. >> He's great. But the the passive buy continues to be so powerful that, you know, all those 401ks and, you know, people like me run my own IRA from my business. Well, where do we put that money? We got to put it into the stock market. >> You know, um I I had them on we we recorded an episode. It's coming out next week, but the PA passive is now 55%. And >> yes, it is. >> Yeah. And he >> and it's it's more than that if you look at new money flows. >> And he's going to talk about in that episode the trajectory that we're on and the threshold that's really worrisome when it comes to the models that he has. Um so stay tuned for that. >> If you ever had outflows, if uh retirees were net redeemers, >> then you would have the opposite problem. >> Yeah. Well, well, definitely watch for that one, Chris. I'm not looking forward to that one. >> I think it'll be all right. But, you know, this economy grows so fast and we do still have such a young uh demographic even though you got a lot of old people roaming around. Um, I worry about it less in the US than I do in other nations because if you know, look at China. They still have a shrinking population because of the one child policy. And that demographic fact is going to really really impact them quite severely over the next 10 20 years. >> Okay. You also recently did hedge eyes. I think they had an investment conference you were on with Keith Mccull. Hedge eye. >> I was. I love Keith. >> You said distressed real estate is the next trade. Chris, what can you tell us about the opportunity? Well, I've been, as you know, I work with a lot of different mortgage firms and in particular, I'm starting to work with a good friend of mine, Bill Biml, who you ought to interview, in fact, at First Lean Capital. Bill resolves delinquency. He buys big houses, big jumbo mortgages and that sort of thing, and fixes them. Uh, he works for some big global investors, so they are a capital deployer on the one hand, but they also service loans. They're a master serer and they basically help institutional investors and family offices manage problems. It could be a property that's hard to sell. It could be a property that's in delinquency that has to, you know, really be fixed. And you've got to be sensitive to the local community when you're dealing with residential real estate. You got to try and help people and uh not make the problem worse because you're talking about somebody's home, >> right? So, uh, I'm very excited about that because unfortunately the level of delinquency in the world of residential real estate is going up. There's over a trillion dollars worth of delinquent loans out there in residential like >> resi, you know, small multifamily, small commercial up to, you know, 20, 30, 40. these like individual homeowners who are delinquent or this like investor classes like I know >> could be investor properties that were purchased for rental. Um there's all sorts of scenarios. Every property is different. Julia is every single one of them. >> You said a trillion. >> Uhhuh. >> How worrisome is that number? Like how does that compare? You know >> Well, total bank loans is about 12 trillion. Total assets in the system is about 21. So trillion's a big number. >> Big number. Yeah. >> Um, banks own about uh, you know, two, call it $3 trillion worth of one to fours and then they've got another half trillion in second leans and helocks and things like that. So, you know, real estate is big for banks, but it's not huge. It used to be a third of total bank balance sheets. Now, it's 11%. So, it has gone down over time. >> Where is where is it showing up? >> It's not the banks. It it shows up in, you know, non-bank financial institutions. >> Well, that gets worrisome, too, cuz are they >> Well, yeah, but remember the coupon is twice as high. In the United States, we subsidize housing. >> So, Fanny, Freddy, Jinny, all of those agencies buy loans and guarantee those loans and then sell them to investors. The coupon is anywhere from a point to a point and a half or more lower than it would be without the federal guarantee. Right? So if you're an investor on the one hand the principle is guaranteed right on the other hand the return is low compared to other ways you could deploy capital and you have political issues too if you own an asset in New York for example the lovely progressive people in the state of New York won't let you foreclose on a delinquent tenant there's all sorts of nonsense you've got to go through in this okay because there are many mortgage firms Julia that have a 49 state strategy Y and what that means is they will not do business in New York. >> Wow. >> And I would always recommend to investors be really careful if you're going to play in New York. You want to stay out of New York City. Uh resi commercial is another thing. Uh but you got to be careful because the government may turn around to you and say, "Hey, uh we're changing the rules." There are a lot of investors, you know, big multif family guys who've bought older properties in New York City in the past 10 years, Julia. They gut the building, make it beautiful, turn around and, you know, market rents, right? And now the federal uh state government New York is thinking about turning those back into rent control apartments. Mhm. >> So imagine you as an investor, you spent millions of dollars fixing these properties up and now the state of New York is basically going to take your investment. That that's Kathy Hokll and the Democratic uh socialists who run New York State. This is it's just like China. You might as well be in communist China. You know, you have no rights as an investor. And so everybody keeps coming in New York. They love commercial in New York. They you know, they love the Rasmataz. But I got to tell you, there is a cost to doing business in New York that is profound. And it's not like other parts of the country, like where you are in the Carolinas. >> Yeah. >> Totally different situation. >> Oh, yes. Okay, Chris, we didn't get a viewer question this week, but I'm going to ask you the question I'd like to. So, just give me a second. >> Okay. >> Um, inflated the one-year anniversary is actually next week. I don't know if you know that, but next Tuesday, >> we're getting ready. Alli's been reminding me. >> Okay. So, I thought it'd be nice for you to reflect. I know this is the second edition. You wrote the first one a decade ago, but let's reflect on this because there is a lot of great evergreen content, but a lot of what you have written has come to fruition. So, a year on from re-releasing the second edition here, um do some reflection for me. what has been reinforced for you? Maybe what's something that's surprised you a bit and maybe what's something you're still watching for or waiting for? >> Well, I think the message of inflated is that America has used inflation to achieve an awful lot of things. uh the currency has lost 99% of its value over the past hundred years and that's a function of the fact that a real democracy a marketdriven democracy has a lot of tendencies but one of them is they don't like paying taxes and this goes back to the inception of the republic you know today 25% of Americans pay 85 90% of the taxes that that's what the wealthy do the progressives think that's not enough they want them to pay more. Um, but you know, the way I look at it is we have $40 trillion worth of public debt and people always say, "Oh, Chris, you know, the dollar is going away. You know, we're going to lose our special status in the world." And I say, "No, that's not the way this works. The dollar is a free good that anybody in the world can use." All right? And then particularly for commerce, commerce is big. If you're paying for oil or any kind of commodities or chemicals, you need a big currency. And the other part of the dollar, of course, because of our free marketplace, is that you can raise money, you can do financial transactions that are tied to the dollar. So, while I'm a little bit worried about our political system because, you know, there is no accountability in Washington, members of Congress don't want to be bothered overseeing the Fed or anything else. That's too much like hard work, right? Um, but I think uh overall I'm still pretty optimistic about the outlook for the United States and the doom and gloomers who keep going on and on about the dollar and this and that, they're wrong. But the trouble is is that the American people pay for this through inflation. And that's the part that's really hard because when the Fed took their eye off the ball right after CO, right, and they kept that spigot open, that's what caused home prices to go up dramatically. And that is a huge pain point politically now. Whether you rent or whether you own uh the issue of cost is not going to go away. And you're eventually going to have to see wages go up proportionate to try and catch up a little bit. And that's when you really see inflation. >> That's when you see it in home prices. You see it in other goods that are, you know, in any kind of uh constrained supply. The prices will go up. America's favorite pastime. >> That's why I called it inflated. I mean, if you really review the history and you know, the funny money and everything else, there was a period when the country was really focused on gold. But the Great Depression gave the progressive tendency in America a chance to really use inflation. And this is why FDR tried to discourage gold >> the whole even. >> Yeah. But not just that, they were trying to convince people it wasn't money. And the the real message that I talked about at the end of inflation, and that's why I'm working on a gold book now, is that gold has won the battle. The fact that gold is now a bigger monetary reserve asset than the dollar, the inflating dollar, right? You would think nobody could catch up with the dollar, but in gold terms, um, you know, it's it's equalized. People won't stop using the dollar, Julia. It's just that they're going to keep their money in other assets as well. And that's the change and I think it's a good change. The US should not have a free ride. >> Well, I love it. Chris, I'm gonna encourage everyone who watches the rap to go pick up a copy. I will link it in the show notes. >> Um, >> yeah, we have to have a book signing party. Julia, >> we should have a book signing. >> Let us know if y'all want to have a book signing party. Maybe we should maybe we should do an event or something. U meet and greet with Chris. I'm telling you, that'll be really popular. Um, >> come down to Florida. It's good. >> I think we should do it in Florida, too. Y'all let us know in the comments like what kind of event we should do or plan. All right, Chris. Um, any parting thoughts? What are you watching next week? >> What am I watching next week? I am watching the financial markets to see what these stocks are going to do now. Should we be loading up on tech? Uh, I haven't changed my cautious and indeed negative view on Nvidia. I think the AI phenomenon is still slowing down a lot. What you keep seeing is that every time somebody starts talking about AI, like Facebook for example, uh investors run because they see the numbers in terms of cost, but they don't see the revenue. Um you know, people are still trying to figure out what's going on at the Fed. So, I'm going to be watching that very closely. >> And then we have earnings. We still have the back end of earnings. lot of mortgage stuff. So, we can talk about that next week. >> Love it. Chris Whan, chairman of Whan Global Advisors, author of the institutional risk analyst blog, author of multiple books, including inflated money, debt, and the American dream. Thank you so much. And I have to thank our sponsors, our partners over at Goldco. Head over to goldco.com/thereap to get your free 2026 gold and silver kit. I'm also going to read the phone number for you all. You can call 855-573817. And thank you all so much for joining us. Looking forward to seeing you next Saturday. Have a great weekend, everyone. Thank you.