Dario: DC Won't Allow Deflation? DC Wants Open AI & Data Center Bailouts? Silver to $100 in 2026?

Summary

• Precious Metals Bullish: Guest strongly advocates owning gold and silver as core hedges, citing accelerating currency debasement, policy-driven inflation, and global central bank buying.
• Gold Outlook: Targets discussed include gold approaching $5,000, with emphasis on gold as a pure monetary asset preserving purchasing power across cycles and policy regimes.
• Silver Outlook: Structural physical deficits, by-product constrained mine supply, and rising industrial demand support potential for triple-digit silver as recycling is uneconomic below ~$150/oz.
• Industrial Demand Drivers: China’s heavy silver offtake for EVs, semiconductors, solar, and electrical systems is rising; examples include solid-state EV batteries potentially requiring ~1 kg silver each.
• AI/Data Center Risks: AI capex and data center debt look unsustainable; concerns raised about circular financing, weak OpenAI monetization, and potential government bailouts affecting NVDA, ORCL, MSFT, GOOGL, AMZN, AVGO, TSM, and SMCI.
• Macro & Policy: Fed’s de facto yield-curve control via T-bill front-loading and buybacks, low reserves, and rising stagflation signal ongoing liquidity operations despite high long-end yields.
• Banking & Private Credit: The largest bubble flagged is in banks and shadow/private credit, with opaque pricing, CRE stress, and regulatory leniency (HTM accounting) masking losses.
• Portfolio Stance: Preference for gold, silver, and hard assets over timing shorts, expecting liquidity rotation into scarce commodities as policy response likely entails more debasement and stimulus.

Transcript

Hi everyone, this is Jason Brack of Wall Street from Main Street. Welcome back for another Wall Street from Main Street podcast interview. We're recording this interview on Tuesday, December 16th, 2025. The dollar gold price is over $4,300. The silver price has rocketed a lot lately. The last 9 months, I want to say it's gapped up from about 40 $45. It gapped up to about $63, $64. This is $64.19 when we're recording this interview. The asset prices have been juiced. The Fed just announced another rate cut despite Global M2 hitting $96 trillion, an all-time high. Today's special guest is a first-time guest, but I've been following his work for a couple months now over on social media and reading his blog articles. He has an outstanding track record that my listeners might not be aware of. He was warning people about the problems in the uh semiconductor, Nvidia, artificial intelligence, open AI for the last couple years. Finally, it's coming to light. He was initially called a conspiracy theorist. People were calling him crazy. A lot of the stuff that's been coming out the last couple months have proven him correct. He also has been making some uh amazing calls on the silver market there with with sources there talking to sources in Shenzhen in China and also in Hong Kong. Daario, thank you for joining me. >> Thanks a lot. Happy happy to be here. >> So So Daario, how long have you been uh publishing your macro blog for? Oh um my the story of my micro blog is uh is very interesting because um actually I started just.com because I was a bit worried I could have get like banned from social media for what I was writing at that time [laughter] because um back in especially like in uh 2023 in mid 2023 if you say anything about um you know that wasn't like along with uh mainstream narrative of semiconductor and whatever like the amount of uh hatred that you got at that time was was really was was really high you know um and and it was painful like from from a personal perspective but then you know in a in a moment of uh of uh you know a bit of anger I was like you know people were like you know doing community notes on my post and stuff like that. Uh and I was like, but the community note is wrong. And then I like okay, you know what? Let me put my uh my articles on on a blog. So that is going to stay there and no nobody can delete it. Okay. And if anything goes wrong on uh on social media. So actually that's how the blog that's how the blog started because before you know I was just you know actually a lot of my long forms were um were even on um on X before they they allowed like this article formats and other stuff. So yeah this is the real story and and as you said like you know actually I I don't write only about semiconductor. I'm um you know I am um I would describe myself as a very analytical person. Um I have um I I have a strong background in micro and fixed income because I did that professionally for many many years. And um to to be fair with you, I think um a lot of people that are out there uh that I call them macro tourists, they should have spend a little bit more time on on the desk um rather than like you know um spending too much time um building a persona and and broadcasting idea that uh they they sell well because they sound good, but more often than not they they don't make sense. Um, >> also a lot of these macroexperts at your points there have really bad track records. A lot of them used to be bond fund managers at an investment bank. They got fired from their job and then they hired an expensive consultant or marketing expert for six figures to rebrand themselves like you said as a macro expert, but their bias, they have huge confirmation bias for for US Treasury bonds, deflation, Keynesian economics. And your analysis has a lot of good insights there. I think you've been putting out articles what on Japan. Your recent article in the last what two weeks you're talking about how central banks are driving in the rearview mirror. >> Yeah, that's that's actually my latest article and um it builds up on um on a very is the last of a long series of articles. Um the one that uh I wrote about the Fed and the policy mistake they're doing is actually um back in August uh last year and um and then there was another one in 2023 and it was funny because um I remember very vividly the end of 2023 the all the investment banks were saying oh the Fed is going to cut six to seven times next here and I was like actually sorry my mistake 2022 I need to go even further in 2022 they were saying oh like um you know the Fed is like um you know hiking rates but they cannot hike too much whatever and then effectively the they stopped because there was the banking crisis and then they had to stop and then towards the end of the year they were saying oh the Fed is going to cut six to seven times and the thing that shock shocked me the most is at the end of 2023 at the end of 2024 all these banks and um you know analysts as they like to call themselves they were if you look at the yield forecast of 10ear US treasuries the consensus was like 3%. Right now, as we speak, the 10year US Treasury is at 4.15%. The 30 year is at 4.82%. [snorts] So why I'm saying this? Because I wrote this article that you know a lot of things um are difficult to understand. I realize that especially when they are counterintuitive, people think that if you if the Fed lower rates, yields should come down. But that not that's not really how things work. Like the Fed and other central banks in reality, they have control. They have tight control only on a very small portion of the interest rate curve. >> So you're saying so you're saying then that the Fed can't control what the 10year 20 or 30ear US Treasury bond yields unless they officially announce what a quantitative easing program more than operation twist they have to say explicitly that they're going to start buying the long end of the yield curve. >> Exactly. this exactly and um you know it might come shocking to to to your audience but uh um the US has been doing effectively yel curve control for the past almost two years if my memor is correct yell started it they don't call it y curve control anymore they called they call them treasury buybacks what is a treasury buyback so why The yields are not even higher right now because this is another important fact. Yields didn't come down but didn't even explode. And if you look at the level of deficits, if you look at the level of depth in the United States, but not only in the United States, in many countries are there. Actually, this is going on across the board. The reason is like it's too simple for people to you know to believe but effectively what the US Treasury Department has been doing coordinating with the Fed that this is another thing that shouldn't happen. I mean the Fed in theory should be independent in theory but in reality they have been frontloading the issuance of Treasury bills to the extent that next year there is going to be like what 9 trillion up for refinancing. It's a huge amount TBS. So they issuing more TBS than they need because the yield of those is kept capped by the Federal Reserves and they're using that extra money that they're getting from that source of funding to buy back US Treasury on the longer end of the curve especially the 10 years in order to control interest rates. This is year core control. In the same way, the Federal Reserve just announced u how do they call it? Reserve um reserve management operation or something like that. >> It's a stupid name. Yeah, they're just going to increase the reserves into the fractional reserve banking system because the reserves I I think I showed this chart on on my ex profile and I sent it to you. We're back at 2019 repo crisis levels despite all the global M2 hitting 96 trillion. all this liquidity floating around in there that means the banking system in the United States the commercial banking system is not sound right now if the reserve levels are that low. >> Exactly. So this is very important. the Fed this the lag of time between QT nominally speaking because they never did it for real but let's call it QT and QE it's been 12 days 12 days I mean and I think that is very important to understand is that the higher the amount of depth and money supply in the system, the lower the control the central banks have on that stack of supply. To the extent that every time there is a crisis, every time there is something going wrong, the amount of central banking intervention in the system is growing exponentially. And people think in in pillars in um in isolated buckets but in reality the the financial system is is very global is incredibly global. So what the bank of Japan does, what the Federal Reserve does, what the bank of England does, what the Swiss National Bank does and whatever they have ripple effect across their system in different on the order of magnitude. Okay. But back to what you were saying, the ultimate statement of how central banks are old because let's not forget these people talk to each other and they are becoming more and more politicians rather than central bankers and the M2 money supply global in the system kept going higher and higher no matter what and that is a perfect indicator of monetary inflation >> and stagflation too. I mean, didn't drone pow say like 12 months ago he said there wouldn't be any stagflation and then I think like last week at the press conference it basically sounds like he didn't admit word for word it was stagflation but he kind of danced around that we have stagflation now. >> Oh this is um another very very very interesting topic. Um so how GDP is measured the gross domestic product the gross domestic product as as it is measured today as in the equation the number that you see in the that people see in the headline there is the real growth. Okay, what does this mean? Does it mean that the GDP is being calculated and then the level of inflation measured by the BLS in the in the US measured by other public agency around the world is then deducted to show the amount of real growth. But here is the thing. According to BLS data, in the past 10 years, the level of inflation in the US has been 36%. In the past 10 years, you live in the US, but I can make this example in any other country around the world. Is your cost of living just increased by 36% in the past 10 years? Yes or no? >> I'd say no. I say it might have increased by 36% in the last five, six, seven years. >> Exactly. Exactly. This is this is the thing. And furthermore, there is a problem with this measure. There is a problem with statistics. And here I I I make an example that I like to do because it's is a is stupid yet powerful. When you use statistics, in particular, when you use averages, if you have 10 people and 10 chicken, everyone is going to have one chicken for dinner. However, when you look a bit closer, you see that one person has nine chicken and the other nine people, they need to split one chicken. So statistics is telling you is giving you a picture of the reality that doesn't take in consideration the impact on the different layers of society. So long story short, as a whole, the inflation level has been so obviously kept like suppressed on an on a in the public measurement. Why? Because of GDP. So you have to keep showing you're you're growing. But is the economy really growing out there? The level of defaults and chapter 11 filing in the US is at beyond recession level. The level of defaults on consumer debt delinquencies on various form of loan and whatever is a recession level. The level of default in the commercial real estate space is at historic eyes never seen before. the level of transactions in the real estate market in many countries are down to a trickle and I can continue this and this is not just in the US is across the globe. So to conclude on this topic in the same way I was saying for years I actually wrote an article about that how the BLS was lying because even according to their their own numbers in their own numbers 1 plus 1 was not equal to two 1 plus 1 was equal like to seven when they were talking about employment in the US and then it comes later than during the previous administration They overstated like the employment by what 2 million jobs overall. I mean, >> yeah, it got it got revised down. I mean, and the so the Bureau of Labor Statistics, I agree with you. It plays games with the GDP numbers. They don't even use the real CPI data for for adjusting for um real GDP growth. They don't even use the CPI. They use some other type of deflator. So, it's nominal GDP growth. They don't even talk about it being nominal GDP growth, even though the numbers that they talk about in the business TV here in the US is nominal GDP growth, not even subtracting the CPI. The jobs reports are always revised downwards. Uh they used to count what government employee jobs and part-time jobs the same as full-time jobs. And the consumer price index, I mean, I basically call that either the CP lie or the changing propaganda index. I'm not a fan of Keynesian aggregates anyway. the point you made about Keynesian aggregates cuz these companies I mean a lot of them what they do shrinkflation they substitute goods so you might be paying a similar price at the grocery store or restaurant but the portion size is down a lot so there's tricks that the companies themselves play that the consumer price index is not going to be able to account for anyway >> oh man don't get me started on that because I have a hoof I mean [laughter] we can talk for hours but I'm not sure >> how how entertaining It's uh it's going to be >> so so it sounds like you're not you're not a deflationist then. Although we could like the real economy has a recession but it sounds like the the politicians the central bankers do not want to allow real deflation. >> Well, I am a person that lives in the real world. I'm a person that goes to the supermarket that talks to small business owners that you know still check keeps the old bills and check our how price changes and and whatever. And people out there that are talking about deflation with all due respect they don't know what they're talking about. We might be in a disinflation. That means that the level of the grow of inflation is slowing. Okay, fine. Deflation is when prices come down. And I have a personal I mean case of deflation. As people know, I live in Hong Kong. I never made mystery of it. It's actually quite funny because now X and social media they have a they they have this new location features and so many people are coming out like um in all sort of like weird location and whatever. For me I always put Hong Kong out there. So I never made mist often and in China there is deflation. I mean prices are going down. But why prices are going down? Because I mean paradoxically speaking, China is more of a capitalist economy right now than what western capitalist economy are. The level of competition across businesses in China is brutal. And this has been driving prices down to a degree that these people like, you know, are basically trying to to to to kill each other to gain business metaphorically speaking. But on the other side, you see the benefit on this on the population. you go in China. I I traveled across the country quite a lot. So, it's not only a matter of specific location. Yes, things are different right now. The the type of spending changed, but restaurants are full, moss are full, people go around. you know the economy you can see a level of comfort in the vast amount of the population that frankly speaking when I travel to London Paris I traveled to New York this year I mean I was shocked how different things I mean you go to I remember when I was living in London around 15 years ago Oh, restaurants were all full. You couldn't if you didn't book well in advance or whatever. Like even small restaurants, it's hard to get a seat. Now they're half empty when they're lucky. And on one side of the globe, the politicians keeps telling you that a good level of inflation is is good for the economy. And on the other side of the of the globe, you have deflation that is not good for companies. I mean, if you compare the stock market of China with the US, they are two miles apart, two worlds away. Even if they are the first and second largest economy in the world, but the level of comfort in the population is is completely is completely different. And this should really give people thought to I mean historically speaking deflation is the one that created the big the the middle class is the one that allowed people in the middle and lower parts of the society to build up wealth and climbed the ladder. On the opposite side, when you had extreme cases of inflation in history, you can talk about the Roman Empire, you can talk about the French Republic, you can talk about China as well when they had actually they invented the paper currency and they had crazy amount of monetary inflation. Everything ended up with significant turmoil in the society because at the end of the day you come to a point that people see the see one narrative that everything is going well but then they don't benefit from that and it starts hurting them and when I read data like the 25% of people using by now pay later in the US use that to buy food That is a huge warning bell that should be taken in consideration. So all people out there talking about deflation and especially in countries like US, UK or even Europe. I'm like what what you guys are talking about? Do you even know what what deflation means? I think it's ideological bias because I think like the Keynesians, the people went to specific business schools, economic programs, they're taught to look for deflation, look for that liquidity trap. Well, guess what? All these policies are creating boom and bus cycles, artificial boom and bus cycles. So, what with the new one is uh private credit. That's the new one. That's the new uh credit credit boom. And it looks like it's going to be a bus. I don't know how it's going to get bled out. You've been covering this in articles as well as the data center. So now there's data center debt that looks like it's going to be bad because the cash flows aren't going to end up supporting that. So we're we're having these credit boom and bust cycles. And if there were a free market, I would agree there would be deflation. But I think like the central bankers, the politicians, the bureaucrats, the people in power in Washington DC or some of these other power centers, they don't seem to want to allow deflation for a bunch of different reasons. Of course, because I mean when you have deflation and you have a lot of depth, that's a problem. So there are effectively what has been going on for many years is to basically inflate your debt away. That that's the that's what's going on. That's why so deflation is a problem for governments that have a lot of depth and unsustainable deficits because this is another this is another thing. I mean economics is is a social science is not like physics. Okay. Physics you have rules you prove it you experiment and there are certain type of law. Economics is more of a social science and as a as a matter of a social science people should understand how it connects with other components in the social landscape around it with which economics interacts. And when you have election every two years for example in the US and every vote counts, what are the benefits for someone in power to take the necessary measures that are going to be painful in the short terms? Like medicines are bitter. They're not nice, but they're good for your body, but you have to take them, right? Or maybe you need to do a surgery that is going to be bad, but in the long term, they're going to fix you. So, no one wants to deliver that amount of necessary pain in order to put the economy on a healthy, sustainable, long-term path because that's not going to be rewarded politically speaking. You're not going to see the benefit of those actions in before the next elections. And people are going to be angry. They're like, "Oh, you you took away my benefits here. You took away my privilege years and whatever and what not." Okay. And this correlates to everything. I mean, now there is this this data center thing. And I've been saying for so long, I mean, I've been like such a broken record. But in business like all other things cash matters right >> cash flow is king. Yeah. Free cash flow especially. >> So cash m. So any business no matter what no matter data center or whatever any type of business is sound when it can the cash flows sustains the operation and any eventual depth used to finance purchases is ultimately being repaid. an economy based on zombie public government, zombie companies that they can only survive if they are able to not only refinance their debt but raise larger and larger quantity of debt is so healthy. You are extracting wealth from the good part of the economy into the sick part of the economy effectively allowing a cancer to spread rather than containing it. So >> are you referring to the US government and like the size of the budget deficits and the national debt how uh the government keeps growing in size and spending? >> I'm referring to not not just the US government and you can see this everywhere in the world. I mean the the look at the Japanese government like now people like talk about Japan more and the the previous prime minister tried briefly Ishiba to take some economic measures to cut some cost and whatever and of course like it didn't end up well and u for himself and then you have the next lady now in power that is like they just approved $120 billion equivalent stimulus package, the largest in Japan history. So, it's not just >> is the stimulus going to actually uh invest in the real economy or is it just going to buy Japanese government bonds with yield curve control to monetize debt with new currency? >> So, what is actually very funny here is that how this stimulus are being justified is like inflation is high in Japan. People are struggling Let's give them money to ease their pain. And then you have the US government is already saying we are going to distribute $2,000 US steamy checks out of the tariffs that we're raising as a dividend to the population and whatn not. That's that's not a dividend. I mean a government imagine a the government as a company you have assets and liabilities. Okay. So you run a business you make you're supposed to make a profit your the b the size of your balance sheet increases. Okay. But then you can only distribute dividends if you have healthy free cash flow and then you distribute dividends. The cash side of your assets decreases. The equity side of liabilities decreases as a result. But that is not going to impair the health of business. However, if you have assets and liabilities, you have a questionable chunk of equity, but you don't have cash and you raise debt to pay dividends. What are you going to do? The cost of that debt is not going to benefit at all the business. You're not going to buy new machinery. You're not going to expand your warehousing, your distribution network or whatever. You're simply raising debt that is going to cost you interest to distribute cash to your shareholder. But that can ultimately continue [snorts] to a point where the cost of your depth is going to impair the health of your operation. So this is exactly what's happening. If governments don't understand that they have to tackle the deficit problem first, this is a spiral that is only going to make things worse in the long run. It's not going to make them better. there is no way it's it's going to make it it's going to make it it's going to make it better in in the grand thing >> and it's going to impoverish their own citizens or most of their own citizens who can't afford to buy the assets or inflation hedges because like uh the gold price in Japanese yen has gone parabolic the gold price in US dollars has started to go parabolic as well the gold price in basically every major currency it was going parabolic before the US dollar gold price so I think like this policy it's been intentional that They figure they don't want to cut the government spending, the budget deficit deficits like you say and the only release valve was to what uh monetize debt or to debase the currency. >> Exactly. So that's that's the that's the bottom line. It's currency the business. So as you said it correctly, the part of the population that is not wise enough to hold assets and protect their purchasing power is going to suffer more and more. And when you live in an era of extreme consumerism, I mean in the latest Black Friday in the US, if if I'm not wrong, 95% of the purchases have been financed with credit. I mean, people keep buying things they cannot afford. like what is what is the statistic like 50% of the population doesn't have like enough cash savings to for any like you know emergency spending or any issue whatever I mean >> and that was before the job losses from HBN1 visa and now what the companies are blaming it on artificial intelligence but I think that just might be a smoke screen right press release saying we're investing in AI and that's why we're firing employees >> of course there's a that's a completely smoke I mean whoever uses I mean every company out there that that try to implement I mean I I'm a let let me be clear on this I always say all the time I sit on next I'm bullish on AI I am building I'm a co-founder of an AI company so AI similar to internet is going to be beneficial to society but what we are seeing right now is not AI What we are seeing right now is [laughter] I don't know how to call it without sounding like >> it's it's a waste of capital inefficient. Um it's like they're saying it's AI but is it mostly just building data centers? It seems like it's benefiting only what a handful of companies what your um open AI, Nvidia, Broadcom, Taiwan Semiconductor, it's only benefiting and big tech. So what uh under 10 companies? >> Okay. Let me let me say one thing. When you when when when a product is successful, right? When it sells, when it makes revenues, right? So people are happy to pay for that that product. As we speak now, Chachi BT has been launched over three years ago. Three year and one month. The revenues that OpenAI managed to bring in are minuscule compared to the amount of capital invested are minuscule. And when I read research reports stating that OpenAI according to the projections that are bullish the revenue projection and growing whatever still is expected to burn $320 billion in the next four years. I'm like who the hell is going to give them that money? >> Yeah. Aren't they losing market share? They're losing on the free side for chat the free version of chat GPT. Aren't they losing market share to Chinese ones and Google Gemini 3? They're losing market share in the free version and then I think they have the paying customers have been cancelling because the free versions of the AI software that are coming out are better than the paid version for chat GBT. >> That's correct. And this is another thing that I have been telling people. I wrote an article the 25th of January remember when I said you know sometimes I'm a bit provoc provocative in my titles but that's a little bit of my style I said the era of AI charters comes to an end the real era of AI begin and I wrote that because the release of the deepseek model came 24 hour after you had Mazon Sam Alman and Larry Ellison at the White House saying that they're going to spend like $500 billion to build AI in the US. Money that none of those companies had, but whatever. Like these big numbers, you know, they they can't they grab the headlines, people love them and whatever. And now you have deepse coming out and deepse you can the open so is open source first of all. Secondly you can run it on a laptop can download it and run it on a of course not like a cheap laptop you need to be a little bit more powerful but you can run it on a laptop. I mean let me let me let me repeat this again. on a laptop. >> So you don't need a d your point is that you don't need a data center then. >> Exactly. And >> so then if you don't need a data center then you don't necessarily need all those expensive Nvidia GPUs. >> So I'm talking to I talked to I'm I'm not like a tech expert from an electronic component. There are people that are super intelligent out there and they know a lot. And what they told me is that man you know all this thing that is happening to memories these people are trying to force the consumers to run their software their calculation on the cloud while in reality all these models you will need a tiny amount of GPUs for training. But then once the model is trained and operational because of the fishman in improvement on the software side, you will be able to running on a laptop and that and this is scaring the out of them. They don't want people to run these models locally and they're trying to kill the consumer market for memory because you need a lot of memory to run those. So, you see where I'm going here? I mean, >> well, you also have uh big tech companies like Google, right? And Google is working on not using any Nvidia chips with the the latest uh video texttovideo software Nano Banana and the latest um their LLM which is Gemini 3 what they were trained without an Nvidia GPU Google switched over to TPU I think there's other companies Meta I think anthropic uh Amazon's making their own custom chips as I sent you that from Anastasia who has over 10 years experience working in semiconductors so you have what this looks like free market forces deflation This doesn't look like the monopoly that Nvidia had the last three or four years. >> Exactly. So what um I mean uh man I I I I wrote and talk so much about Nvidia that every time I hear this name I I I got a bit of nose to be fair with you. Um but what they've been doing is in front of everyone eyes. Now they have no they have nowhere to hide. I mean, when I saw the Wall Street Journal article about circular financing and and everyone start to talk about that when I've been saying that for ages, I mean, I'm like, guys, look at the number. There is there's no real revenues here. This is money going around. I mean, and I have everything on record. And and people should really ask the question. I mean they were saying, "Oh, the narrator, oh, they are selling showers to people looking for gold." Okay, where is the gold? Where is the gold? Well, who's making the money then off the artificial intelligence software? Yeah, that's that's a question then. So, it's not Open AI because when OpenAI tries to increase the capex spending, they're not getting the cash flows for from the capex spending. So, they're not getting more paying customers. are not charging a higher price, but you know the normal stuff from another business. >> Exactly. And um >> and this brings me back to an article that you just put out recently. You're like, will the US government have to end up bailing out the data center companies like Oracle or OpenAI or some of the others that are announcing these ridiculously high uh capital spending deals for data centers and buying NVIDIA chips because of the the cash flows here aren't there to justify a lot of the spending projects because if they're building they're like a bad commercial real estate developer from the 80s or 90s that built like a hotel or casino on speculation because they're they're not the odds of them getting the cash flow to pay all the debt that they're using to build these things out, the probability is pretty low, I would say. >> Exactly. This is what you know when people ask me this question, I always tell them, man, the only entity that can burn that amount of money left available are governments. That's it. There's there's not much I swear that's government. So and now it comes to a point that are governments that willing to take the risk of giving that much money to these companies when effectively so far the benefit for the broader society has been let's say negligible. I think it's fair to say negligible. >> Well mo most governments hate big tech. I mean the only one that seems to be friends with them is the Washington DC. Both political parties seems to be buddy buddy now with a lot of these tech bro billionaires. Well, uh I don't want to to to to comment on on on on politics and this kind of things because I mean you know it's it's not it's not my field but um some things are not nice. >> Yeah. Well, let's just talk about history then for the US government because I know you you wrote a recent piece about Little Bigghorn with Oracle and some [laughter] But I I mean in terms of like the the US federal government, the US federal government has a long history unfortunately of subsidies and bailouts for these large scale infrastructure projects dating back to canal projects that were inefficient and bloated and wasteful and corrupt. And then after the civil war, you also had all these railroads that were built out by a bunch of companies. there was congressmen in certain districts that got, you know, unbidded contracts to their friend who was running a railroad company and there were bailouts. It was a mess. So, I I I hope that we don't go down this route. But unfortunately, I know Washington DC and I think both political parties, you know, if there's enough money involved for some of the uh you know, for other people with deals later on, maybe they get a a seat on the board of directors or they have a friend or family member involved at one of the tech companies or job or something like that. I I think there will be bailouts. Uh I hope I'm wrong, but um unfortunately I think like history says uh I'm going to be proven right. >> Yeah, that's exactly that's exactly the thing. I mean uh what what what makes me what worries me is like when the vast majority of GDP growth in the latest year in particular this year is due to all these like all that's going on about data center construction and whatever effective if that isn't there anymore what's going to happen to the growth >> well they'll have to find another bubble cuz it seems like the last couple decades, Dario, that they've gone from bubble to bubble to bubble really since like Alan Greenspan was the Fed chairman. He just focused on inflating asset prices with the wealth effect and creating new credit bubbles. So, and even Paul Krugman right after the tech bubble burst, he was like he was writing opeds. Let's create a real estate bubble. >> Exactly. Exactly. That's that's totally correct. >> Yep. So we we have a bubble economy and I I even heard recently like Trump had his like uh economic adviserss Larry Cuddlo, some of the other talking he has that go on business TV and they started mentioning the phrase and I hate this phrase the wealth effect again. [laughter] >> Yeah. And you know what what scares me a lot? People think the AI bubble is the biggest one out there. [snorts] That's far from being the case. What bubbles would you say are the biggest bubbles? >> The biggest bubble out there is the bubble in the banking system. the amount of depth and non-performing assets in the banking system but most like even more scaring in the shadow banking system the completely unregulated one that according to the latest analysis has ballooned to 250 I think I read 250 over $250 billion if I'm not wrong without capital. >> Is that private credit or is that something else? >> Private credit. Private credit. Uh um also like pension fund investing in private credit is all connected. And um and uh I am um I'm a fixed income guys as I said at the beginning by training and I spend a lot of time into the like sitting on the plumbing of the financial system. You know I was I was one of those people that by the nature of his job I was sitting on top of the Chinese board. So I was seeing both sides of what happening in into the banking system and the degree of mispricing and manipulation on the mark to market of those assets that is going on right now is astounding. The losses are beyond anyone imaginations. Is this similar to like 2005, six and seven where a lot of this garb those garbage mortgage back securities were chopped up and rubber stamped by the agencies as like AAA credit rating that they were you know investment grade very very safe but we knew in reality that what the agencies were getting bribed to rubber stamp these things as investment grade is is it very similar to back then? >> Yes. Um, but the size is way bigger, way bigger than that. And not sure if you saw my my article on this matter, I wrote about the latest stress test that the Federalists have run. And they excluded exposure to private credit. That is the largest item in measure bank's balance sheets right now. They excluded it. >> Wow. Well, you you also have you also it's very illquid this stuff to sell similar to mortgage back securities from the la what 2005 6 and 7. So these things are liquid to sell. You said they're mispriced. They need to be they're worth like pennies on the dollar compared to what the companies are valuing them on their balance sheet. On top of this you also have entities what insurance companies pension funds. You have university endowments that bought into the stuff. it was viewed at the time when they bought this stuff was as a safe investment grade income product and now that we're seeing that the um when the tide goes out that the emperor has no clothes. >> Exactly. Um what what makes me very worried is that the level of the extent that these people are hiding the the information right now like how obscure banks accounting became during the year. How big has been the shift from mark tomarket accounting from proper mark to market accounting to hold to maturity type of accounting and what's even worse is that the regulators know there is a paper written I think in December last year one year ago by the New York Fed that basically was telling banks we know that you are inflating ing your the value of your commercial mortgage back securities. We know that you are negotiating [snorts] with all these borrowers to effectively extend and pretend and not to record a delinquency and write off the value of that assets. And then you see reports in the United States of buildings, skyscrapers, real estate communities, whatever. Then when they go into bankruptcy court and then they are sold, they are sold for 70, 80, 90% lower prices than the previous transaction on record where the banks financed that purchase for tens of millions of dollar. And that's not those are not isolated cases. That's that's the thing. They keep talking about isolated cases, but you cannot have hundreds of isolated cases. You get what I mean? >> Yeah. This is a huge many trillions of dollars commercial real estate bubble. But you're saying that the the private credit is it mostly commercial real estate or is it other stuff too in there? >> Private credit spreads across commercial mortgage back securities. mortgage back mortgage back security especially there were like during covid time I remember there were blackstone black croc and other funds that were going they were buying entire community developments single family houses and whatever rent and you have the clo market you have the assetback securities auto loan market that is beyond ridiculous I You talk about rating agencies giving AAA rating to garbage, right? I mean, just take a look at the ABS trashes of Carvana out there. Just look at what is inside. There is most of the assets there is auto loans to it's not even subprime borrowers is undocumented. Well on top of that if it's a new car I mean the value of the car depreciates so rapidly too. So the car loan is worth way more than the actual car the underlying asset which is depreciating rapidly in value. >> That's correct. So you're I said already publicly many times I'm like guys all your eyes are on the this AI bubble whatever you know like these valuations are sober and bloated and whatn not fine but then people say oh the the eye companies are too big to fail and I'm like man they're not too big to fail I mean compare the size of the balance sheet of JP Morgan with the size of the balance sheet of Nvidia I mean JP JP Morgan is too big to fill. If JP Morgan goes bust, that will never do. We go back to barter like whatever. >> They'll destroy the currency before they allow a too big to fail bank to go bankrupt. They'll they'll devalue the currency further. They'll allow additional accounting rules. They they allow they suspended the FASB what in March of 2009. People forget about this. They suspended marktomarket accounting to save the big banks because City Bank was leveraged 100 to one. >> Yeah. >> So they'll Yeah. They'll move the gold post. They'll do bailouts. They'll change the rules. I mean all this though, Dario, and this brings me back to gold and silver >> rather than, you know, bet on a stock market crash or, you know, betting on deflation hedges, the traditional deflation hedges like US Treasury bonds. I think like kind of like the safest short here is to just have gold and silver exposure. You have like a currency instability hedge. You have a uh stock market crash hedge, inflation deflation hedge. Gold and silver, especially gold, if there is a deflation, gold will will be a good hedge outside of the system because we don't know what rules changes or goalpost moving or bailouts or whatever the people in power uh are planning for us. cuz the stuff you laid out, I mean, like it's math, it's numbers, but the people in power, they could change the rules on us and rugpull us. >> Exactly. So, this is effectively my my weakness. I I I am a nerdy number, guys. Um, so I love numbers. I put numbers out there. Uh, in the field that I'm familiar with, I do um a ton of research. I c I crunch the numbers. I I love forensic accounting and stuff like that, but people don't like numbers. People love narratives. Narratives are easy. Narratives are sexy, especially when the price action confirms the narrative and validates that. It's like, man, like things are going going to the moon. What are you talking about? And I'm like, sure, but this is what the numbers are saying. So there's a little bit of discrepancy here guys. I'm like yeah but price are going up and you know fine. I'm like guys wish I mean I I wish you like make good profit but forget don't forget to to cash out before before things get ugly because that's another things about number and bubbles. So yeah, you're I think you're specifically talking about Nvidia and some of the other uh stocks that were exposed to this stuff, but there was super micro SMCI that had what the accounting scandal and the shares crashed temporarily and then they started rallying again despite the accounting scandal. What only a few months after the accounting scandal? >> Exactly. and and what it's the the the the the attention problem and these people have. I mean in the moment that I saw the big article from the Wall Street Journal out there talking about circular financing, I was like this is it. It's over. No, they kept rallying. Oracle rallied 40% in a day when they announced those giant amount of RPOS that is basically open AI nonsense and I challenge everyone out there look at the reaction of all CEOs commentators and whatever the latest one has been during the broadcast investor call every single person that has been asked to comment on the fact whether open AI will be able to pay for his commitment put on on a crown show pretty much. It's like, "Oh, yeah, they will grow. Yeah, I think so. Yeah, yeah, we believe in them." Blah, blah, blah. I'm like, "Do they have do they have the money to pay you?" That that's a question. I mean, once upon a time, these RPOs were not even reported because they don't mean anything. you start reporting future orders in the moment someone gives you a chunky cash up front as a collateral. It's like okay I'm going to expand my operations. I'm going to expand my production or whatever because I have collateral commitment and then I have guarantees that I'm going to get the money if not from them from the banks that they're issuing the guarantees upon this commitment. That's not the case. >> Well, the banks are supposed the rumor is that the banks are trying to offload this data center debt because they know it's bad. They're trying to find some suckers. What? mention funds or to chop it up into an income product or something to dump onto real estate investors. >> That's totally correct. And uh and what is more shocking to me is that I put a tweet out there um few months ago after the the latest core wave. Um no, not the latest, sorry, the previous core wave. Um thank you. And there is a chart in that thank you themselves put it. And [snorts] whoever looks at that chart and as two grams of gray matter in his skull. We see immediately how that is upon his skin. effectively. You are trying to raise money in order to finance the previous commitments that you had in place. So you're using future clients money to finance today commitments. And this commitment that they have today is basically one customer. It's Microsoft for the most. Well, that's surprising Cor is doing that because I thought they were partners with Nvidia because it didn't they start off it was a hedge a bunch of hedge fund guys out of New York in New Jersey. They started Corweave as a shell company back in like 2017 or 18 and it was just doing crypto mining and Nvidia was I think like basically giving them discounted loans to go buy the um the graphics cards to do the crypto mining. So there was like shenanigans there years ago, many years ago. >> I wrote an article about that. I put the SEC fine and statement that was put out at that time and let's not forget there is still a class action ongoing because the US Supreme Court didn't dismiss it. There is still a class going about that and people don't even care. So they were already doing that stuff. They already got caught and fined for that stuff and they are doing it again at a biblical proportion. Now, how is this going to end? I mean, >> I'd rather just hedge this stuff rather than try to time it shorting or betting it's going to crash because who knows like which the rumor is what Sam Alman was in Washington DC working both political parties trying to negotiate some type of uh subsidy or bailout or something like that. He's obviously because of um how effective lobbying is here in Washington DC area. He was obviously trying to work that angle. He might end up getting some lobbying dollars. who who knows what happens with Congress or the White House a couple years from now. I'd just rather as an investor, you know, looking at this stuff. I can't tell you exactly what's going to happen, but probabilities. I mean, if they do the bailouts, if they subsidize or stim checks, those $2,000 stim checks or whatever they were saying they're claiming it's going to be from tariffs. I don't believe that either. If they do print the stimmy checks, I I'd rather just I think gold's going to 5,000. I think silver, you you were talking about triple digits by March. I don't know about March, but I I think we will see triple digit if they're going to do these bailouts like at hundreds of billions of dollars or uh give out semi checks. I mean, we're going to see gold at 5,000 or silver at $100 pretty easily in the next couple years. >> Yeah, that's correct. Although I would like to clarify one thing. Um gold is a pure monetary asset. So the effect on gold is going to be um higher from this policy. Silver is still too cheap to be a monetary assets. So it's actually more of an industrial asset than what people um appreciate and actually the demand of silver has been growing steadily while the production remained at an incredibly low level. So to the point that for several years and for the foreseeable future there is a strong deficit in supply of physical silver. So the first repricing in silver is actually going to be of a factor of scarcity of the physical stuff. Then when the price will get to a point that it becomes a viable monetary resource because silver takes a lot of space right now you know compared to gold. But if silver reprises to where historically the silver go ratio has been then it becomes a monetary asset. And frankly, as I kept telling people for years, I always had like a lot of gold and silver because ultimately any type of asset with a hinder level of scarcity and growing demand while the scarcity degree worsen is going to be bound to significantly increase in pricing in a very extreme monetary inflationary environment like the one we are living today. Well, plus there will be a slow supply response on the silver side because the majority of annual silver production is on the byproduct. The largest producers of silver used to be Peru 10 years ago. It's now falling like a rock. It's very tough to bring on a new silver mine. Some of the best silver projects are delayed. They might not come online at all. There's a huge silver mine in Guatemala called Escobal. There's another large silver mine in Argentina called L Navid. That mine might might not go into production for many, many years. Escobal has been offline for the last couple years. They built out the mine and now it's shut down with an environmental protest. I I think that you brought up an important point here with like commodities like whether it's uh gold, silver, platinum, and platium. For many, many years the price was so low they were at or below the production cost, especially for silver. Silver was in many instances below the production cost for a lot of these miners. So a lot of the silver miners Dario had to leave producing silver. They had to go buy a gold mine just to so that way they didn't go bankrupt. Correct. That's perfectly correct. >> So uh you have visited this is very interesting since you're in Hong Kong and you go uh to China. Are you seeing a lot of long lines at gold and silver bullion dealers? Is there uh what is the industrial demand for silver out of China right now? >> What is it for? The >> This is very interesting. Um I visited I visited the the Shenzhen market pretty often because you know I go there to buy Christmas gifts. So in this period I went there the last weekend but and I periodically go and um I put out this this famous tweet like a while ago two years ago around the same period when the gold price was 1,800 and I told people like guys you don't understand here people were calling a top on gold at that time I remember I was like oh my god this is completely ridiculous I told them you don't understand Chinese people are buying all physical gold they can get their hands off. Chinese people don't they don't like stocks, they don't like paper investments and whatever. They like hard investments. They they they took a big hit with real estate and they moved into gold. And from that tweet to today, the price of gold is two and a half time higher. Not 25% higher, two and a half time higher. Now actually gold is a bit expensive for people that miss the train. So what you actually see in China right now you don't see lines to buy silver yet because there is always like this skepticism about silver of being a very like unreliable assets if things you know going the wrong way in financial markets. So people have been burned before several times in history and so they are really ignoring this this fact of this industrial demand. So what you see right now is very large industrial demand. You see 15 kilograms bar of rose silvers being delivered like around the clock around and people keep are buying a ton of that because they need to have that in order not to stop their industrial production. >> Is this for electronics or jewelry or solar panels? What is uh what are the industrial end users? What which industry are they in? >> Um jewelry is not that much uh in the grand scheme of thing. mostly is like EVs, semiconductors, solar panel, um electricity like conducting system. Uh I mean you you need in the Samsung just just announced they have this new solid state battery technology for EVs that is going to be groundbreaking and it's going to solve so many problems that EV cars have now. There is a small problem with that. The small problem is that you need 1 kilogram of silver for every battery. One freaking kilo of silver. And then people say, "Okay, but then you know they can start recycling." I mean, no, that's not how does it work. In order for silver to become economic, economically viable to start recycling it, the price of silver needs to go beyond $150. So you can have all that industrial structure that you need to collect all these like junk electronics, EVs and whatever around, scrap them, extract the silver and repurpose that. But till you reach that level, it's not going to be economically viable to do it. It's very expensive. >> Yeah. The silver is in small small trace amounts and like contact switches and it's in junkyards and landfills and it's it's energy intensive. It's timeconuming. It's very difficult to extract a tiny amount of silver out of a junkyard or landfill. Like you said, you need tripledigit silver at least for the economic incentive for someone to make the investments into recycling um all that difficulty e-waste. >> Exactly. Just to give you a sense of the matter here, for every phone roughly there are seven milligrams of silver. But without those 7 mgs of silver, you you cannot build a phone. The phone doesn't work because everything became so thin, so efficient, so whatever. So you need a metal with very high conductivity. And people say, "Oh, but silver can be replaced." Yes, as Mike Maloney said, actually quoting one of my tweet, it can be replaced by gold, platinum, and paladium. So, in order to be replaceable, the silver price needs to get to those levels to be replaceable in the supply chain. So, it's not possible. >> Okay. So, it's it sounds like it's it's more or less irreplaceable unless it's at a certain price. It's similar to the rare permanent magnets, too. Those things are difficult to replace as well. Exactly. That's totally correct. So, I mean to conclude on on this matter. People should should really like watch themselves because in the past years like stocks have been considered an inflation edge. Frankly, it only worked in in some countries. If you if you look like um at China for example like there is this huge diversions as I said or whatever and this incredibly multiple expansions have been possible because monetary inflation. But once the hard reality of business economics hits and people realize that Nvidia as it stands right now in order to recover their investments has to pay as dividend 100% of its revenues for the next 30 years just to recover your investment. That is going to be a moment where you are going to see because liquidity is not going to disappear. It's going to slosh around in the system. So the amount of demand for commodities in particular and for anything that is going to be related to that space with inherent scarcity is going to be enormous. >> Well, also the central banks Dario outside of the G7. So the bricks and the nonG7 central banks, they do not like the policies from either political party, the White House and Congress, from Washington DC with sanctions, the amount of monthly gold purchases, the gold tonnage purchases after the Russia sanctions in 2022 when the $300 billion of reserve assets were confiscated and the interest payments were confiscated, they've about doubled. And if you listen to the comments from the central bankers in Poland and elsewhere, they sound like they read your articles and read Austrian school economics, they sound like we're just buying gold here as an inflation hedge or a currency debasement hedge against Washington DC doing dumb policies whether they're um bailouts or quantitative easing or bad um you know um tariff not tariff not just tariffs but um you know other uh sanctions on on people that DC decides all of a sudden oh we don't like Russia, oh we don't like ven Venezuela, those types of things. >> Yes, this is correct. But also another element that people should bear in mind is that we are talking nominal prices here. If you look at the purchasing power of 1 oz of gold through history, it has been one of the few assets that constantly maintain the level of purchasing power. So if there is a market crash, whatever the price goes down, it's not going to bother me because the purchasing power of that ounce of gold is going to remain intact. What is going to change is eventually and cause prices to crash as monetary supply destruction. That nevertheless is going to be temporary because these people they have no other playbook that keep printing a whole bunch of new money in order to reinflate things all the way back up. And Ben Bernanke even got a Nobel Prize for this. Sorry, he got the guy was saying, "Oh, there's going to be a trickle down effect into the economy. We're going to inflate asset prices going to benefit everyone." No, you created the worst wealth inequality in hundreds of years out there, effectively bringing back society to a level of inequality and poverty to a certain extent. It wasn't seen since the era of industrial revolution almost. >> Yeah. Yeah, it's creating creating a record wealth disparity because what less than 10% of the American population owns the majority of the assets here here in the United States, the exposure to the stock market and expensive real estate and uh lots of physical gold and things like that. Actually, Ben Bernanki, wasn't he hired as a consultant? I think not just by hedge funds, but by the Bank of Japan, didn't he recommend like zero coupon perpetual bonds? I know you're a bond guy. That sounds like a Ponzi scheme to me. Yeah, I mean man, don't get me started on that otherwise this interview is going to last for all six [laughter] hours. >> Okay. So, so ba basically then um the the policy decisions for for a lot of these PhD economists. I mean like I I call it stackflake tax lie. They're looking at the cancel on effect. It's just easier for the people in power in Washington DC. They don't like deflation for a bunch of reasons. That means what? less economic activity, less tax receipts for sales tax, less income tax, less corporate taxes. The asset prices fall, that means less capital gains tax and property taxes. That's bad for a government that's as in debt as the US is federal government. >> Yeah, of course. Like I mean deficit is going to hurt and they need to finance that >> and that's the re then we're getting into the real reason for QE. So they said one reason for quantitative easing in the past in 2008, 2009 and 2020. I don't think that that was a real reason. One of the main reasons was tax receipts dropped by 20% or more in a short amount of time and quantitative easing was put in place to help make sure the government gets funded. >> Yeah. Yeah, that's correct. >> Well, might be back there. It's starting to sound what we're starting to see. You pointed out what the repo spikes are happening. The reserve levels are dangerously low. what drone pal is back to repeating the exa almost the exact same speech he did dur in summer 2019 during that repo crisis when the Fed's balance sheet increased by a trillion dollars in 3 months give or take in 2019 he said this is not QE back then and the Fed's balance sheet increased by a trillion dollars in three months oh we're just going to uh increase reserves in the banking system so it's not QE but the Fed's balance sheet is increasing go try to think on that one [laughter] >> I mean I I I I don't want to comment on that further because uh it's unnecessary. I mean, it's it's out there and it's it's ridiculous. >> Well, it's just it's just more games. Uh they'll call it something else. It probably won't be called quantitative easing. Who knows what it's going to be? It'll be an emergency liquidity program. It'll be an emergency liquidity program like BTFP or one of these other ones, but the Fed's balance sheet will probably increase substantially in size. >> Yeah, of course. like it will it will increase and they they will undo. I mean they the right now the level of the the index of financial conditions is even lower than when be even before they started hiking rates. I mean the Fed not only didn't hike rates high enough because if they did that the whole banking system was going to collapse in 2023. >> Yep. Not only they didn't do that, but because they fell short in getting to a real level where they put inflation under control, the next wave of inflation is going to be even greater, even more painful. So their balance sheet of course is going to balloon and debase the currency. But again, you need to look at this thing globally speaking, which currency is going to debase the most. So ultimately the dollar might even end up appreciating compared to the other currency. So what the real indicator of currency debasement is gold. >> I agree and I think that's like the safest way to bet against the system is by hedging inflation hedges real stuff real assets especially you know but two or three years ago platinum and palladium was a good trade. It was below the cost of production back then. That's totally correct and people should learn how to handle this kind of situation looking at what Germans, some very intelligent Germans did during the Vhimmer Republic where there was an incredible level of upper inflation and how these people handled it effectively was holding assets, hard assets or productive assets that allowed them to have income in other currency. that were debasing like at a slower speed if not not debasing but strengthening like the US dollar. So at that time actually a lot of the family that ended up making a ton of like generational money is because they were exporting and getting foreign currency instead of their local one. >> Well, I think we should just wrap up on that. I've kept you for over an hour. It just sounds like we're going to see a lot more rules changes in the basement. I I don't think that we're going to be getting sty checks for the for the tariff revenue. I mean, they said other stuff about Doge and how much savings that we were going to get a Doge dividend from a trillion or two trillion dollars in savings. They got to about 10% of that, I think, with about 200 billion give or take in in government savings compared to their goal of what around two trillion. So, um you know, like I I've been right outside of Washington DC for 25 years. a lot of the stuff they say in public, it ends up being a lie or it doesn't come to fruition. >> Yeah, I I'm totally with you on this. >> Okay. Well, thank you so much for your time today, Dar. I definitely want to have you back. This was awesome. And I'll put a link to I'll put a link to your macro blog article. You have more in-depth articles behind the payw wall. And you also have a podcast, too, on YouTube, right? >> Well, actually, I don't have a payw wall. Everything I've done was always free for everyone because I'm not doing this uh, you know, for a living. I'm doing this as a hobby. I I actually manage my portfolio based on what I write and it allows me to, you know, get going pretty nicely and even if I don't touch stocks even with a 10-ft pole. So, >> well, it's important to practice what you preach. They say, uh, you can't trust a chef who doesn't eat his own cooking. So, >> Exactly. Exactly.