Our Addiction To Deficit Spending Is The Greatest Threat To Our Future Prosperity | Lyn Alden

Summary

• Fiscal Dominance: The podcast discusses how the U.S. is in an era of fiscal dominance, where fiscal spending has become the primary determinant of economic growth and inflation, overshadowing monetary policy.
• Deficit Spending: The U.S. deficit for the 2025 fiscal year is projected to be the third largest in history, continuing unabated despite the absence of a global pandemic, impacting the economy, asset prices, and social stability.
• Investment Strategy: Lyn Alden suggests focusing on hard assets like gold and Bitcoin, energy pipelines, and certain U.S. financials, especially medium-sized banks, as they may benefit from fiscal dominance.
• Market Outlook: The podcast highlights the risk of a recession as medium, with fiscal deficits providing a stimulatory effect, potentially leading to a stagflationary environment.
• Trade and Tariffs: The discussion covers the impact of tariffs on the economy, suggesting they are largely a tax on Americans, affecting trade deficits more than trade itself.
• Interest Rates and Bonds: The potential for lower interest rates with a dovish Fed is discussed, impacting the T-bill and chill trade, and suggesting bonds may play a role in reducing portfolio volatility despite ongoing fiscal dominance.
• Economic Inequality: Fiscal dominance is contributing to a two-speed economy, benefiting asset owners and older demographics, while younger and working-class individuals face challenges due to high living costs and tight monetary policy.
• Decentralized Social Media: Lyn Alden expresses interest in decentralized social media platforms like Noster, which offer alternatives to centralized platforms and promote freedom of speech.

Transcript

The large deficits in general are stimulatory. So the fact that money is pouring out in the economy through social security, Medicare, defense, uh that goes to seniors and their consumer spending. That goes to the healthcare sector and their workers and their spending. That goes to the defense sector, their contractors, their their employees, all of their personal spending, uh interest expense. Uh that does kind of pour out into the economy and stimulate certain parts of it. So the the challenge here is that to actually cut those bigger four, it actually is there's unpopular decisions to be made. [Music] >> Welcome to Thoughtful Money. I'm its founder and your host, Adam Tagert. Today's guest has long been warning that the US, as well as many other countries, is now in an era of fiscal dominance. That's when fiscal spending gets out of control like a runaway train. It becomes so large that it becomes the primary determinant of economic growth and inflation, steamrolling over any impact of monetary policy or private sector lending. At the time of this recording, the deficit for the 2025 US fiscal year is on track to be the third largest in history, only behind the COVID emergency spending years of 2020 and 2021. The key difference, of course, is that this time we're not facing a global pandemic and economic lockdown yet. The proflegleate deficit spending continues unabated. What impact is this having on the economy, asset prices, our currency's purchasing power, and social stability? For answers, we're very fortunate to welcome back to the program Lynn Alden, investment strategist and author of the book Broken Money: Why Our Financial System is Failing Us and How We Can Make It Better. Lynn, thanks so much for joining us today. >> Thanks for having me back. Always happy to be here. >> Thank you, Lynn. I very much appreciate that. And look, um, we're going to get into as as cover as much territory as we can today. Um, but I'm going to let folks know that one topic that we're not going to address today because we're going to address it in depth at the upcoming thoughtful money conference uh that you are speaking at. Um, we're we're going to reserve your thoughts on Bitcoin and crypto for for that conference. Um, but folks, yes, Lynn is uh returning as one of the esteemed faculty members for our online conference. Again, that's coming up on Saturday, October 18th. So, it's just a few weeks away. Um, again, we'll be diving deep into her thoughts on on Bitcoin and crypto, and there's lots to talk about there right now. If you haven't got your ticket yet, just go to thoughtfulmoney.com/conference and buy your ticket there now and buy it there soon so you get the lowest early bird price discount we're offering while it's still around. Um, all right, Lynn. Um, I was thinking about how to kick off this discussion with you and uh was looking back at your book and realizing it's I think we've pretty much coming up on the 2-year anniversary of that book being published. So, I'm curious, have things unfolded since then pretty much as you expected or um have there been any things along the way that have surprised you? >> Uh, so they have. Uh, yeah, we're we just passed the two-year mark. Uh, and and it's certainly been a fun ride. Um I purposely wrote the book in such a way to make it as timeless as possible. So instead of kind of predicting what's going to happen one year, two year, three years out, uh it was basically uh really high level view of what money is, how technology uh changes structures of money and power over time uh and how things you know could look like years and decades in the future and what kind of the big branching decision points are. Um the part that's probably most relevant uh for these past couple years um is the the chapters the kind of the middle chapters of the book which focus on the US long-term debt cycle. Uh you know your your intro talked about the fiscal dominance that we're in. So that has continued to play out. Um in addition um the uh the trade deficit aspect. So I had a chapter called heavy is the head that wears the crown. uh which of course is you know it's a much older reference uh but that goes kind of to the idea that the US structural trade deficits are indeed um a pretty big deal and and they're kind of tied to the global reserve status and so since that book came out obviously trade has been greatly elevated in political discourse um largely because of you know the Trump uh candidacy in the administration. Um the other factor is that uh I published broken money during a a deep Bitcoin bare market. Kind of wrote it and published it during a bare market and of course Bitcoin has more than quadrupled since then. The book takes a pretty favorable view uh on the asset. So I would say that's you know not surprising even though it's again I wasn't trying to make two-year predictions with the book. Um so a lot of things are kind of going as expected uh for better or worse. Some some worse some better. >> Okay. Um, I was going to get to this later in the discussion, but let's let's bring it up here since you mentioned it. So, one of the things that's different since you published the book is we have a new administration in place that has quite different economic and trade policies than the administration that was um in power when you wrote the book. Um, what what what's your general reaction to the new administration's policies? And and maybe if we could start, you know, what what letter grade would you give the policies? um looking through the lens of the broken money thesis. >> Oh, it's hard to give a sing. I mean, there's so many policies, it's hard to give one grade. I think um the the priorities that they're tackling from a fiscal sense, I think make a lot of sense. Uh I I've been on record before saying that I think, for example, the fact that Trump administration elevates trade as being a pretty big deal, uh is the one of the right things to focus on compared to prior administrations. Uh their solutions for addressing it, uh I think are more mixed. Uh that's why I'm more probably more critical of their actions. Um and we can also kind of compare their outcomes compared to their expectations. Um so a lot of things untangle there. One uh you know we uh a partnered with Sam Callahan and we published a report. We wrote it in 2024. It was published in January 2025. It's basically talking about the fiscal dominance thesis kind of reiterating the nothing stops his train uh fiscal dominance view that I've been talking about. Um and it kind of broke down why Doge wouldn't work. Uh the Department of Government Efficiency that was kind of back during the the peak um publicity uh for that. That was kind of the peak optimism. We we broke down kind of mathematically while it was very unlikely to work. And so in the months that followed that that all kind of you know it had obviously shock and all certain certain political implications, but in terms of actually impacting the the budget deficit mostly nothing burger. Um they were originally throwing around numbers like cutting a trillion off the deficit within a couple years. >> I think two trillion was even the starting number. >> Yeah, two trillion was the starting point. Yeah, we we quoted that and then you know they they were kind of bringing it down to like a trillion. Um but it's it's mostly going to be a rounding error. Uh other than you know certain political things were targeted, but from an actual number standpoint, you know, because they they as we point out in that report, they couldn't go after the key things really social security, Medicare, defense, interest expense. um they were going after the slice of the pie chart. Um that is not not the biggest thing. Uh not to say that there's no waste there. Of course, any sort of large density this is going to have plenty of waste, but actually the biggest areas spending tend to be lower employees and and major transfers. Social security, Medicare, you know, that's not where there's lots of employees, but that's where a lot of money spent. Um and so that that kind of um is going along as expected. The tariff one's interesting because um Steven Mirren uh he uh was uh Trump's uh uh uh chief of his council of economic adviserss. Now of course he's his uh Fed appointee. Um he published an interesting report back in November 2024. So right after the election uh that kind of walk through how you would restructure trade and what the risks uh and kind of uh approaches there are. It's kind of a more academic treatment of the subject. Um and uh they intended that when you're kind of doing this big tariff policy, you'd likely get a stronger dollar. It would increase your negotiating position. Uh you could get all these deals in place and then you could have uh some sort of Mara Lago accord weaken the dollar and go go toward kind of a more you know kind of back to a global uh kind of a new global system with those negotiations in place. Um the challenge is that uh the dollar weakened during the the tariff uh negotiations uh and a lot of the deals are more like kind of optical understandings rather than kind of detailed breakdowns. Um so it it's more of a headline driven uh administration uh especially when we talk about fiscal stuff or economic stuff. Um the thing I probably monitor closely uh the most closely is the tariffs uh because those are some of the the numbers that affect macrocale things pretty significantly when you go up when you go from an annualized tariff rate of of tens of billions of dollars to hundreds of billions of dollars as we have that does have kind of economic and macro implications. So I've been tracking that pretty closely. Uh there's upcoming kind of Supreme Court decisions potentially. So that those will be kind of interesting to watch. >> Okay. Uh Supreme Court decision aside, uh do you have a distinct point of view on the tariffs on on a net basis? Um are there a net good thing because they either help us negotiate better trade deals, although it sounds like you think we're not getting substantially better trade deals? Um or, you know, it's bringing money in America's coffers, or are you more on the side that look, it's it's a tax on the American people at the end of the day. It puts friction in free trade. Maybe it pushes some allies of ours into the hands of others. Uh so I think it's it's mostly attacks on Americans. Um now there's a data you can look at to see what kind of proportion it might be and it's a moving target over time. So what complicates it is when the terrorists are being kind of considered there was front running of imports. So so you know rational entities said well tariffs might be coming so let's let's buy a lot of stuff in advance. So quarter one of this year was kind of a stocking up quarter. Uh then of course, you know, we're going through quarters two and three, finishing up three here. Um and uh so the numbers are kind of all over the place. Um aside from the weaker dollar, um which weakened a lot this year, but it only went down a little bit since li liberation day. Um there really hasn't been a case uh like a broad case of ex of foreigners paying the tariffs, right? So, you know, in order to offset say 15 or 20% average tariffs, uh you need greater than uh 15 or 20% um price decreases. Um and so, uh there's been kind of minimal to any uh foreign uh reduction in prices, meaning that, you know, they're not really eating the tariffs on their margin side, per se. Uh it's still possible they could eat it on their volume side. Um but so far, it's mostly attacks on Americans. I think the the bigger impact is that it affects the deficits more so than it impacts trade. Uh one of the complicating things is if you're a capital allocator making uh a multi-deade decision to like you know some do some sort of big capex uh it's hard to to make that call if you don't know if tariff's going to be in place for one year two year to the end of the administration or you know into the next administration. It's hard to it's hard to kind of do that calculus uh to determine what to do. So, um, that's kind of been the the most challenging thing. Quantitatively, when you look at say 30 billion a month tariff, um, that's 360 billion annualized, uh, you know, potentially trending a little higher. Um, that's up against a $2 trillion deficit. So, it's not immaterial. Um, but it just kind of mild enough. >> Yeah. Mildly slows the train. And I think a lot of people would rather see some of that in in uh, especially things that affect, you know, the majority of Americans. I think they'd rather see it in in trimming certain things than raising taxes uh while keeping spending kind of fully going. So, you know, that that's kind of where I'd be somewhat critical uh from a fiscal standpoint. >> Okay. Smaller question followed by larger larger question. Um given your point about sort of the reticence of corporate executives to commit capex in an environment where things are still uncertain. Um, and we know for sure from reports, you know, surveys and whatnot that they were not making a lot of capital allocation decisions in Q2 and probably still somewhat in Q3. Is there a lag effect from that? In other words, there's economic activity that otherwise would have happened that didn't happen and might still not be happening. And so, is there a lag effect that we should expect on the economy in the next coming quarters where they'll be slower than they otherwise would have been because of that delayed of activity? I think yes, but that's only one variable among many. The large the large deficits in general are stimulatory. So the fact that money is pouring out into the economy through social security, Medicare, defense, uh that goes to seniors and their consumer spending. That goes to the healthc care sector and their workers and their spending. That goes to the defense sector, their contractors, their their employees, all of their personal spending, uh interest expense. Uh that does kind of pour out into the economy and stimulate certain parts of it. Um but then yeah there are other drags of basically uncertainty is a drag. Um you know PMIs are still fairly weak. We see we've seen a little bit of an uptick in um initial jobless claims. Uh but still the labor market is overall uh in decent shape. Um and the majority of thing of these things like a lot of investors will will have a very political lens on how they view things and while politics does matter it's kind of like the 8020 rule like a lot of these things are bigger structural things uh that kind of cross administration. So for example uh with say oil and gas uh you know one thing I think the administration's been better at has been being more uh allowing of of drilling and things like that. But a point that Exactly. But a point that I've been making since since since since the prior administration was uh the the kind of the fact that US productions kind of peaking and kind of rolling over uh is more of a private sector decision. Uh so the constraint wasn't necessarily at least at least you know except for around the margins. It wasn't really that that kind of um from the administration. >> It wasn't the government policy that was the limiter. It was the corporate decisions. Yeah. >> Yeah. Yeah. And that was mostly due to price which is uh you know basically without kind of there back in the 2010s they were kind of very liberal on on putting putting money back into the ground. So drill more uh increase the price. Now shareholders uh they generally want better balance sheets, dividends uh share buybacks and to only drill when there's a pretty high ROI associated with it. They want profitable drilling. Uh and at current prices, you know, large part parts of it is just not a not a very high conviction decision. So they've been more reticent to drill. Uh now releasing, you know, releasing some of those um uh frictions on them could round the margins uh keep them more elevated than they might otherwise have been in some sort of counterfactual. Um but a lot of these things are structural that they they're more price driven. So depending on what's happening, uh you know, in the broader market um or they're demographics driven in the case of large swash of the deficit. Uh and so these things while while you know political changes matter for a lot of this um the it's kind of that's kind of the part of the iceberg we see and everybody focuses on and it's headline driven whereas the bigger part of the iceberg is is that underneath part that's kind of more structural in many cases >> right and you can chip away on the ice above the water line that you can see but you're you're you're not affecting the majority of the mass of the iceberg. Um all right I'm I'm going to continue mangling my analogies here. So, um I I said in the intro that um you know the fiscal deficit sort of like a runaway train that obviously was an homage to your line there, Lynn, that nothing stops this train. Um and you're kind of in that case you're comparing uh the train to our our fiscal deficits uh that they're hey for for many reasons some of which you've already alluded to. um they are likely to continue going forward until this experiment, you know, uh has a reckoning and and we can talk about that perhaps in a moment. When when you envision the train, is the train primarily made up of four cars um being those big four you mentioned, Social Security, Medicaid, Medicare, uh defense, and interest on the debt. >> Uh for the most part, yeah, uh Medicaid, I kind of lumped in with Medicare somewhat. that's a little bit more more um trimable as we saw in the in the recent uh like the big beautiful bill um tackled Medicaid a little bit. So, that one's kind of the one that's a little bit more negotiable of them, but yeah, but it's mostly those those big big areas. Um and everything else on the pie chart, uh you know, you can you can trim little bits of it, but those are rounding errors compared to those really big things. You can also lump in uh veterans benefits in with defense. It's kind of like uh our past defense decisions now give us obligations. Y >> um and so those are the really big hard to cut areas. And I think one of the one of the kind of one of the back the the premises behind Doge was the idea that there's so much waste that we can cut things that are that are not really popular like like the other way around that we can avoid cutting things that are popular so we can trim expenses without really feeling it. That was kind of the thesis. It's kind of like um growing away out of the debt. It's something that you can commit to that doesn't actually promise to punish anyone or or lose votes, right? Uh like who who isn't against growing or who isn't against um cutting waste, right? Those are and if you kind of >> removing fraud, who who's going to be on the pro fraud ticket? Yeah, >> exactly. So those are good things optically. But then the question is when we talk about this $2 trillion deficit, how much of that is waste versus how much of that is popular programs going to voters that vote for those things or lobbyists that pay to get those politicians and to to keep that gravy train going. Um the big the biggest sources of waste are in basically the healthcare and defense areas. Um social security is just more of a demographics issue. Uh it's basically past decisions of how they tweaked the payouts and things like that. they always kind of assumed larger generations whereas we got obviously you know lowering birth rate a more um shrinking generation thing. So the the challenge here is that to actually cut those bigger poor, it actually is there's unpopular decisions to be made either against voters in some cases or against major lobbyists in some cases uh or against um you know when it comes to defense uh every Congress person that has anything in their in their uh jurisdiction that might be receiving you know defense related spending uh is going to try to protect >> jobs issue. Yeah. Yeah. Whether or not it actually contributes to our national defense uh effectively or not. >> Yeah. Yeah. Okay. So, but again, point being those four things are by far the biggest, right? That's that's the they make up the bulk of the iceberg that's under the water. Um going back to that analogy. Um, and while there probably, you know, is some fat to to trim off of there and and we know Doge has tried to do that already and and Big Beautiful Bill and a few other things are are doing that, but but primarily you're saying, you know, it's mostly muscle and bone. And so, um, to the extent that they're hard to cut because they're painful like that, it's muscle or bone. So, um, you either have to basically default on your commitments, right, to a certain extent, like, hey, you know, we're going to means test social security. You're not going to get it till you're older or whatever, or we're going to cover less things and Medicare or whatever, which highly highly unpopular. Um uh and then I guess in the case of um the national debt um I mean explains why the administration is so hellbent on trying to get um uh bond yields down particularly you know on the short end with the Fed so that it can at least in the short term you know start rolling over debt over at a cheaper rate uh in in the short term. So there is some stuff that can be done there but that's hard to do. You can't just pull out a wand. You can't you can't lower the the bond yields by executive order right? So, this stuff is really hard. Um, okay. Let me ask you this, Lynn. So, so I'm sorry. Where I was going with this is is that's kind of why you get to this no one stops this train, right? Is it's just the political will just isn't there to cut the bone of the muscle the way that it would need to be done to get that stuff down. And in certain cases, there are things that the administration just really can't control. It can't control really the demographic makeup of the country. It can't really control where the tenure is. I mean there's some stuff it can do uh around the edges and maybe if it got super draconian but then or interventionary but then there would be other prices to pay. So you come to the conclusion that yeah like we're kind of stuck with these runaway deficits for the foreseeable future. >> Yeah, there are Gordian knots that's very difficult to untie. The the interest expense one's interesting because um uh you know every every point cut on the short end uh obviously will cut the short end part of the debt but it doesn't necessarily cut the long end uh portion of the debt. Um now the Fed could do outright yield curve control uh if it's kind of pushed to politically that's kind of a loss of central bank independence uh and it has certain inflationary uh implications uh when that happens. Um so there's there's no free lunch there really. Um and you know probably the longer term I mean it's salvageable in the sense that very long-term decisions could eventually along with basically certain defaults and devaluations get it under control in the sense that um like health care is one of the biggest areas where long-term efficiency gains could be helpful not not just in terms of like you know firing some employees or things like that but basically in terms of the country being healthier uh like I mean on Twitter you're always posting your lifts uh which is very are impressive Uh basically one of one of the structural problems we have in the US is that um our healthare costs are like the most expensive in the world uh despite uh at least for the majority not necessarily having better outcomes. So not like longer life expectancy lower outcomes. Sorry. But it's not even not as good or yeah not it's not not better. It's actually versus most of the developed world or worse. >> Yeah. worse on average that on certain leading edge things we're we're near the top and in certain certain times but it's very heterogeneous um and it's part I mean it's a diet issue it's our specific structure of the health care system issue um and some of that long term uh if there's a lot of people kind of focusing on it could be untied that that Gordian knot could be cut um but that's I wouldn't have I wouldn't have optimism that's going to be undone anytime in the next few years so in any sort of and then it would take years to actually probably have its kind of posit positive effects uh manifest. So, >> sorry to interrupt, but but I'm just curious also given the lopsided demographics we have right now and the fact that most of your medical lifetime med medical costs are in your last years of life. We have like 20 years of the largest generation entering their last years of life, right? So, there's going to be just a big bill to be paid from that alone. >> Exactly. with the with the one caveat that for example Japan is the median age there is 10 years older uh and they pay a smaller fraction of what we do for healthare um because a lot of it's it's health a lot of these kind of like um long-term lifestyle diseases uh and things like that that that also really contributes to the total healthcare burden >> uh in addition you know the the the common statistic that we pay more per pill >> than other countries pay for the same pill um in many in many cases. So there's a whole there's a whole bunch of factors there. But yeah, the everything else being equal, the demographics are a gigantic variable uh for why that's really hard to tackle. Uh and and so the challenge is that a lot of this is is locked in in any sort of like investable time horizon of 5 to 10 years. Um so when I talk about the nothing stopped his train thesis, I kind of point out into the 2030s. You know, any more than that, the the glass gets murky because politics could look totally different. And I mean you could have a war, you could who knows what happens, but basically in any sort of investable time horizon that's the that's the view that's that's locked in pretty much. >> Okay. So I want to try to connect or maybe ask your thoughts about is there um is is it worth it to try to connect your train your runaway train of fiscal dominance with Mike Green's you know concept of passive capital flows and you know he calls it the giant mindless robot. Um, is there a connection between the two e even just in the fact that they're kind of these two things that are right now they're just driving the action and um at some point they might not and the world could be very different uh if they weren't. But we can kind of continue to project um all right if this continues the way that it's going you know then it's going to drive the action to kind of this general predictable point. So like in in in with you with the train the the the further that train barrels, you know, out of control down the track, we know the debt's going to get bigger. We know the deficits are going to get bigger. We know that the purchasing power of our currency is going to diminish as a function of that and therefore that in that that informs your investing decisions, right? Okay, I probably want to be in hard assets and things that can't easily be inflated away, right? That type of thing. I probably don't want to be in bonds if inflation is going to be secularly higher because of all this. Um, the giant mindless robot, you know, in some ways is kind of fed. I think as long as as money is slloshing through the system, it probably help and as long as, you know, there's deficit spending to keep people employed that keeps the the passive flow, the passive bid well in place. Um, is there a connection between the two and does it make sense to sort of think about them as somehow linked? >> I view them as there being a connection. uh and it it partially ties into fiscal but I'd say even more it ties into the the trade aspect. >> Uh so so to recap for a second like uh in in broken money I talked about this certain articles that there's a cost of being the global reserve currency. I mean it goes back to to the economist Triffin talking about this >> dilemma right yeah >> and it takes a couple different forms but basically uh the whole world needs dollars uh the the world uses dollars as its biggest ledger uh for international activities. Uh so most currencies trade on industry differentials uh current account uh balances things like that. The dollar trades on those but then it has this additional overlay of of all this excess kind of inflexible demand uh for uh using the dollar as a reserve asset using as a global funding currency. So if you lend uh money to an entity in another country it'll often be in dollars. >> Sorry but this is this is what's referred to as the Euro dollar market right? >> Yeah exactly. Um, and then also the dollar is on 90% of uh uh foreign uh exchange uh uh trades. So for example, if you want to get out of Egyptian pounds and into Kore Korean Juan, that might not be a very liquid market between them. There's over 100 currencies, so that the number of combinations is massive. Most of them are not very liquid, but most of them are liquid with the dollar. So you can always go one to the dollar and then dollar to the one you actually want to go to. And that is that's that represents by far the majority of trades. Um and it's also the unit of account for a lot of international contract pricing. Uh so there's all this excess demand for dollars and then the question is how do they get all the dollars to do all that? And the answer is that we pour it out every year into the world through trade deficits. Uh and it's not even necessarily an intentional decision because by all this excess demand for dollars, it it basically boosts our import power. It kind of artificially increases our currency strength compared to what it would trade on based on trade based on interest rate differentials. We have this extra extra premium. So it boosts our import power and then it hurts our export competitiveness specifically for a lower margin stuff. So like manufacturing more so than say tech or healthcare. That's like high enough margin that it can ignore that effect whereas low margin stuff uh can't really do that. Uh so we spew the dollars out into the rest of the world. uh now partially they they float around and stay out there but then the countries or the entities in the countries that have a really big persistent surplus they want to do something with the dollars and so in many cases they reinvest those back into the US uh so they go and they you know for some markets it's their real estate market so so in Canada or in Australia forwarders will buy their real estate market in the US it's primarily our equity market our equity market's the it's the biggest deepest most liquid capital market in the world uh you know equities along with bonds funds. Uh it's kind of the jewel of the world's capital markets. Uh and so all this kind of global dollar capital then gets reinvested in the US. And so when we are when we are kind of um running a persistent trade deficit with the world, we're getting more goods and services, but really instead of sending them dollars, we're sending them pieces of our businesses and to some extent pieces of our real estate, pieces of private equity, things like that. but especially our publicly traded equities. We're sending pieces to them because we're sending dollars and then they're buying a greater and greater share of our equities. And so that's where there's a connection there because that that's kind of a big dumb robot that's like a that's just on autopilot. Uh it's entrenched into kind of being the global reserve currency. Uh and all this capitals every year is kind of flowing into the US. Uh so I mean some of it is literally passive, other ones might as well be. It's basically roughly market cap weighted. uh so just kind of piling into whatever the biggest most liquid uh stocks are uh roughly speaking the S&P 500 or or the NASDAQ 100 uh and so that's that's kind of that uh structural flow and then also because it's all that extra excess demand for dollars it allows Washington to run these bigger deficits without immediate punishment. So for example, uh Brazil got into a problem when they were running a similar deficit as a share of GDP as we were. But the difference is there's not like global entrenched demand for Brazilian currency. So uh any sort of emerging market when they run something like our playbook, the market freaks out right away. Global capital pulls away uh and they have to kind of adjust. Whereas the US we have we're kind of given more rope to hang ourselves with. Um and so uh it our trade uh deficit and our fiscal deficit are somewhat tied at the hip and they're somewhat tied to the global reserve status and because that that gigantic engine is just in place uh that capital gets reinvested into our biggest companies which is where you get I would say that connection to the the passive flow uh and the big dumb robot. Um, and you know where that could potentially be reversed is is you know if you do policies that uh potentially reduce imports uh and you do policies that and or weaken the dollar um you could get a a gradual reversal of some of those flows um you don't have to like pull a lot of capital out of the US but if you just kind of slow down the flows that are going into it or even just get get to neutral that can be pretty significant effect on capital markets uh or on the currency itself. >> Okay. Um, super useful. Thank you for connecting all those dots. Um, and so let me let me try to take the beam a little bit more near-term. Um, so you know, next 6 to 12 months. Um, we are sitting here at a at a moment where um, you know, stocks are more or less at all-time highs. I don't think they're on the day we're recording, but they're super close to it. Um actually almost all assets have been kind of moving up uh in sort of almost a combined meltup over the past month or two here at this point. So correlations have sort of moved to one. People who care about valuations, which isn't everybody, but look at them and say, man, you know, these are the most stretch metrics in many cases we've ever seen before on record. So you combine that with um an economy that appears to be slowing now uh a jobs market that no longer appears to be normalizing the way that Pal has been telling us all year but now really appears to be weakening. Um we might have this lag effect even in the next couple of quarters of the economic activity that should have happened but didn't uh kick into gear as well. So, um I I guess first question is is um uh recession risk um high, low, medium. What do you think? >> I I view it as medium in that time frame. Um and I, you know, probably one of the biggest factors to watch there is the is AI capex. Um there's somewhat of a kind of a flywheel there. Um, and it's of course one of those things where the the the big winners so far have been um you know the the chip makers, the data center makers. Um, and whereas like a lot of the actual AI services are not profitable yet. >> Sorry to interrupt, but the analogy that's come to my mind, it's like the old gold rush in California. It's like the guys selling the picks and shovels are making a ton, but we're not really sure too many people have found many gold nuggets yet. >> Yeah. And now it's kind of like the pick and shovel makers are kind of also investing in those people to go out and and you know uh you know keep doing what they're doing. >> Yeah. They're almost giving them the capital to then continue to buy their products which smells very much like the dotcomy you know questionable financing that was going on. >> Yeah. I think I think we could temporarily get over our skis there and have a pullback. It doesn't mean the techn is not real. doesn't mean it's not going to change things substantially over the past over the next 5 10 years, but it it just means you can get kind of like how building fiber optics got over its keys in the dot era >> and other things. So, you could certainly uh it doesn't mean the internet wasn't a big deal. It obviously was. Um but I I just took longer to the for the value to get created. No, absolutely. I think that analogy could be very true here. Yeah. >> Yeah. So I think that's probably one of the key variables to watch in that time frame of 6 to 12 months cuz that's if you kind of separate AI related capex to like everything else. It's like two different economies basically. The same thing is generally true for valuations. Like for example if you look at US banks uh many of them are very reasonable valuations >> uh and they're they're profitable they're doing fine. Um whereas like you know you look at Costco and it's trading at 50 times earnings and uh when you look at you know index-wide uh sickly adjusted price to earnings ratio so cape ratios very high market cap to GDP these are all very high uh but it's very concentrated in the top 10 20 names um and so and one of course one of the downsides is if you do get a weaker stock market you can get that wealth effect kicking in. So then wealth wealthier investors are are a little bit slower in their spending uh because they're a little bit spooked by the economy, by the market, and then you can get kind of a self-fulfilling prophecy. So instead of the stock market reflecting what's happening in the economy, sometimes the economy reflects what happens in the stock market once you become this financialized. >> Um now the but the caveat I would say is that recessions look different under fiscal dominance. We're already pre-stimulating by 6 to 7% of GDP fiscal deficits per year. Y >> uh and and so in some ways you get more of like an emerging market light recession uh which is another way of putting it is so back in 2022 uh we we we skipped having an Ember defined recession even though uh the misery index so the combination of unemployment and inflation spiked to recession levels mostly because of inflation component uh consumer confidence absolutely collapsed to recession levels uh PMIs were sub 50 and you look at the conference forward leading indicator. Uh it's it's been flashing recession for the majority of the past 3 years. It kind of briefly got out then went back down. Um PMIs I think I already mentioned those those are super low. That's one of the factors. So a lot of these things are flashing some sometimes red sometimes yellow warning signs for recession. Um but the two things that have been supporting it is one the labor market hasn't cracked uh fully and two partially fueling that is those those deficits. So if you if you have you know real estate's slow and commercial real estate's basically depression uh manufacturing's stagnant uh but you keep pouring money out to social security Medicare defense um interest expense uh all these other things and then that trickles into the rest of the economy uh through employees contractors contracts all that spending just kind of diffusing out there. Uh it's this big lift and you you risk getting more stagflationary type environment where you know you don't get some big disinflationary implosion uh in the way you might get say a global financial crisis something like that but you get more of a a malaise where inflation's still above target and yet also cracks you know early cracks in the in the labor market and things like that. Um and and in fiscal dominance when you have those let's call them shallower recessions but they're these periods of malaise. I don't know but do you get more of them? So they're not it's not like a big bust like 2008 or 2001. Um but it's more you dip into it, maybe you get out a little bit, you dip back in again. Or is there >> you could you could I mean that's that's where the conference board leading indicators kind of pointing that you kind of are in mild recession a little bit out of mild recession then back in mild recession. Um that that could be common. It depends on details. An example I can point to we were talking before we got before we recorded that about Egypt. Uh you know a lot of a lot of viewers might know I spend time in Egypt and for example over the past 10 years um uh if you look at say per capita energy consumption it's been flat to down. Um and if you look at uh let's say over the past 5 years, the labor hours it takes to buy a car there uh especially the same model of car has uh gone up. So people have to work more hours to buy, you know, an imported computer, an imported uh Volkswagen, um whatever the case may be. Um, and so the the instead of kind of being an unemployment spike and then back to growth and unemployment spike, that emerging market style recession is kind of everyone's vaguely poorer or at least a lot of people are vaguely poor and they're not 100% sure why. A lot of it's the currency itself. Um, a lot of it's kind of like weaker productivity going on. And in their case, uh, productivity partially saved them in the sense that that was also during the time where Chinese vehicle exports ramped up dramatically. they became the biggest auto exporter. So they can they're now producing decent quality cars for cheap. So that that is like a a substitute that that Egyptians can and do uh uh switch to. Um but if you look at like the same car like a Volkswagen or something um that's where the recession kind of really shows up. And so I think it that that's an more extreme example. I mean they were dealing with a official like 38% inflation at one point in recent years. Um, but you get kind of the milder version of that, which is everyone's kind of saying something doesn't feel right or things aren't booming, even if they're not exactly collapsing. They're just kind of rolling along uh and and being partially uh hidden by 7% of GDP deficits and ongoing debasement, >> right? And and Lyn, I'm going to guess you're probably you probably hear from a lot of the same people I do who are are contacting me and saying, "That's how I feel right now." Right? I'm being told, look, GDP is over 3%, stock market, it's at all-time highs, unemployment's at, you know, near historic lows. But personally, either I feel like I'm in a recession or I just feel like I'm I'm I'm falling increasingly behind. Is is that a feature of fiscal dominance, not a bug? >> It's a common feature. So fiscal dominance can take different forms in for example the the U last time the US was in it was in that World War II era and a lot of the deficits were actually poured into the bottom half of the economy. It was poured into soldiers. It was poured into manufacturers. It was poured into uh the soldiers coming back and and being subsidized to to buy houses. It wasn't really pouring into the top as much. Um and it was combined with like pretty draconian tax rates as well. So um and so basically bond holders and rich folks got kind of squeezed in various ways. You know obviously handful if you're on the right side of some of those deficits you did well but for the most part it kind of pulled out of the top and cycled into the bottom through inflation. Um whereas uh at the current time it's more it's getting sucked out in multiple parts and kind of put in sometimes to the top sometimes to the very bottom. Uh but basically if someone is not receiving a ton of government aid or anything, so maybe they're working class or middle class or in that kind of ballpark and younger, they're not really on the receiving side of deficits in many cases. They're not receiving social security, they're not receiving Medicare. Um if they don't work for defense, they're not receiving that. Um so they're kind of on their own, but they're on the wrong side of tight monetary policy. So mortgage rates and mortgage expenses are super high. um they're also suffering the inflation from the fact that those deficits are pouring into others. So if you if you give deficits to say social security recipients, they go out and spend it, it it keeps prices elevated what they otherwise would be. And if you're not the receiving side of the deficits, you know, your egg prices or whatever is going your grocery prices are going up. >> You take off the living and you have no relief on the other side of the ledger. Yeah. >> Exactly. So where you are in this matters a lot. So um that's the problem. It's very heterogeneous. It is a two-speed economy. It's not quite as simple as rich and poor or old and young but there's certain there is certain directions there that that are generally happening and that's where you get a lot of that feeling like well the numbers look fine but I don't feel fine and actually the same thing happens in Egypt which is >> officially the GDP per capita is up um but then it's like you know if if energy per capita is down and it's a developing country so energy is not high to begin with it's not like you know in America we have so much extra extra energy that our our energy per capita is not necessary telling a lot because you know mildly more efficient appliances or you know things like that can can tweak things uh or shifting our manufacturing overseas or something whereas Egypt's got like 1/8 of the the energy consumption that we have so the fact that their energy consumption is flat to down brown out brownout rates are going up so so you know things just like the power grid going out during parts of the day in the summer in the Saharan desert um that's what they feel and then they see the numbers that say well but but the numbers say it's And it's we we again we have a milder effect I think of that in the US which is there are pockets that are doing well but the people should believe their eyes to some extent. Um >> yeah no I think I think that that's sort of the increasing risk we run here that I'll I'll I'll ask you more about in just a moment here in terms of purchasing power decline. Um but just one other thing to mention. Um, I mean, I I I agree right now that there's stimulus at different levels, but it's hard not to argue that it is highly correlated with those who own assets um and also highly correlated with age. And and that's just because age is correlated with with asset generation or asset accumulation. Um uh and you know I I I I think that is an output of of fiscal discipline which is that it artificially props up asset prices. But correct me if disabuse me if that's wrong but if it's not then yeah I mean it's explains a lot I think I just saw the latest stats that um what is it the top I think it's less than the top 10% but I'll say the top 10%. uh they control I think now over 50% of all consumer spending and if you look at the bottom 60% I mean maybe it I'm not even sure it's 15% of of spending like it's almost like the bottom 60% could just stop spending altogether and it wouldn't really matter that much um which which shows the oversized advantage that you know the people who are benefiting from this this process get >> yeah as you point out there are a lot of coralates there uh so age and asset ownership are highly correlated. Now, obviously there's >> very different things can happen over the course of a lifetime. Um but uh and and then also of course the the demographics and you know medic Medicare and social security are obviously age dependent uh entitlements that that >> actually most of the most of the things that are on that train those four cars >> benefit the old right if you're young you don't get Medicare you don't get veteran benefit well I guess you get veteran benefits but you have to have had the time to serve right yeah >> uh you don't get social security so to your point >> yeah and another way of looking at it is the like the number it used to be with social security the number of people paying into it per retirey so worker to retirey you know might be yeah it was like five people paying for every one and then it drifts down to three and goes under three for example >> it was actually when it started I can't remember a lot I mean it was in the double digits yeah >> yeah very high um and so that's that's to some extent what people feel and of course I want to be careful to say that there are for example seniors that are not wealthy um for for any number of reasons and you know they wouldn't want to be lumped in with well like the seniors are getting all the goodies cuz they're saying well I I'm not getting I'm I'm barely getting based on security someone could say and that's absolutely true. So it's not as simple as of course breaking it down exactly by age or asset ownership. Uh you know someone could own a lot of assets but then their business is being pounded by tariffs for example and they're saying well I'm not I'm not in the booming camp at the moment either. So there there are spots of exceptions everywhere. But yeah, the general rule with the with uh loose fiscal that's geared toward uh age demographics combined with tight monetary policy is if you're looking to buy a house and you don't have assets yet, you're having a rough go. Uh and if you work in in an area where you're not you're not really for any number of reasons on the receiving side of deficits. Uh whereas if you've already got your assets, if you either don't have any debt attached to it or you've got a fixed rate debt back when it was cheap, uh and you're receiving social security and/or Medicare, um any number of those things, you're on the right side of fiscal dominance and that's where you get that twospeed economy. >> Okay? Which, you know, kind of folks, what we're underlying here is that, you know, there's a lot going on here. So, you really need to understand um the nature of the forces in play. And that's what Lynn's book and her ongoing writings do such a great job of of keeping us uh informed of. Um and then figuring out, okay, how do I actively invest in this type of environment? So, um okay, one or two more questions for you, Lynn, before I start um having to land the plane here. Um I just love to get your thoughts on this. So, another stimulus that has been going to asset owners and largely older asset owners that like to own this uh asset class has been the T- bill and chill trade, right? And and finally, and I'm I'm not I don't begrudge the fact that that there has been a T- bill in chill trade because for much of the the Zerp era, you had seniors, their problem was is they they had worked their whole lives and saved to live off a fixed income and then all of a sudden that fixed income pretty much went went away. Um so anyways, folks have been very happy to get a safe four 5% return over the past couple years. Presumably, there's now uh a timer on that uh an end timer on that um as the Fed resumes a rate hiking regime and it seems that the administration looks to replace Pal and maybe even a few more people on the FOMC with more dovish people. Um so what so that that that four to 5% return on T bills is a monthly injection. Well, I shouldn't say monthly, but it's a regular injection into the portfolios of the people that own them and that's pretty substantial. >> Yeah. >> What impact, if any, or I guess what's the net benefit do you think of the T bill and chill trade going away? Yes, these people will have less money to spend, but our national interest bill will go down. >> Uh yeah, I think that that it'll be exactly what you said. And that's also that's part of fiscal dominance. It's a key part of the thesis which is most of the Fed's tools which is basically balance sheet size and interest rates. Um that's mostly around uh either encouraging more bank lending, accelerating bank lending or slowing down bank lending. Whereas uh when you already and that works when you say you know when vulkar jacked up rates um it helped because most of the money creation was from bank lending federal debt was only you know 35% of GDP. So while raising rates did to some extent blow out the deficits, it slowed down bank lending even more and therefore it did the intended effect that Vulkar had. The problem in the current era is that when federal debts are over 100% of GDP uh and uh the majority of of of you know fiscal spending is bigger than net new bank loan creation. So bank lending is already somewhat subdued. um holding rates high. Uh the problem is that you blow out deficits by literally a bigger dollar figure. Then you slow down bank lending. And as you point out, a lot of that bigger deficits goes to people's money markets, goes to people's portfolios, and it's spendable money into the economy. >> Um and of course, they benefit. Um but and it but it's stimulus. Um and you know, to some if it's if it's older, wealthier people uh then you're kind of exasperating that tweed economy. you're you're basically stimulating the people that are already doing fine and that actually gives them more spending power that then hurts people at the grocery store that aren't receiving that. That's kind of that's the complicating factor. Uh so a lot of these things have winners and losers. Generally speaking, uh we we should expect mildly lower interest rates going forward with a more dovish Fed uh and cracks in the labor market uh which which you know takes the air out of the the tea bill and chill trade. Um but that also you know potentially uh weakens the dollar a little bit, brings back a little bit of inflationary pressure um or at least sustains existing inflationary pressure. Um it uh you know uh it doesn't necessarily affect longerterm rates. So mortgage you know mortgage uh like house buyers might not get a ton of relief. Um you know they might get some but they might not get a ton. uh if the market perceives and this is where like the where longer rates will very ma much matter because if the market perceives that the Fed is doing something rational. So if they say okay this labor market cracks it makes sense to cut rates um then probably mortgage rates and long duration treasur rates will also stay somewhat subdued. Uh whereas if the market perceives it as political saying that well stock market's at all-time high, gold's near all-time high, Bitcoin somewhat near all-time high, um you know that things are running hot still kind of and you're cutting rates, then maybe I'm going to sell the long end. Uh so it depends how what what ratio the market perceives it as a political kind of necessity versus uh just just kind of um Spock-like decisions on on you know economic and where you're going to trim the the numbers. U but basically that we should expect a mild reduction in that spending going toward seniors. Uh but then um still all the other variables still very big. >> Still very big. Okay. All right. There there's one last question I I want to get to and asking you. It's a little bit different from everything we've been talking about. Before I get to that, Lynn, um, just to kind of get to the like, all right, the so what of it all, um, as you look ahead next sixish months or so, and you're, you know, you a lot of what you do is is, um, analyze and and advise your clientele. Um, what assets look well prepared for the next, you know, for the the road ahead and which ones don't. Um are there any kind of clear trends right now that you're you're you're focused on? >> Uh so apart from like you know hard assets like gold and bitcoin um I you know there's certain energy pipelines I like. Uh one of the one of the somewhat um not very popular trades that I like is actually certain US financials. Uh and part of that is because there there are many you know medium-sized banks that I think are in good uh financial shape. Uh, and because we're in fiscal dominance, I don't expect a recession to like seriously result in uh, like impairment to their balance sheet from loans. Uh, like of course around the margins, any sort of weaken economy, you're going to get an uptick in in loan uh, issues, but I think that's already well priced in terms of their how they're managing risk and in terms of how investors are pricing their stock. Uh, and so um, I actually think many >> medium-sized banks are worth looking into. Uh, and I've also been fairly bullish on emerging markets. Uh now eventually I think that trade will get somewhat overdone. I don't think we're there yet. So I've been you know somewhat bullish on on Brazil for example uh and like Brazilian banks and just Brazilian equities broadly uh especially inclusive of dividends. So sometimes you look at these stocks or ETFs and the and the stocks just kind of it could be grinding sideways, it could be grinding up, but then it's often paying pretty big dividends depending on which one you're looking at. Um so on a total return basis uh that's interesting. uh and and you know to some extent when you have a fiscally dominant environment um you know it's not just hard money is it's kind of some of these value equities that are not value traps so things that are somewhat on the receiving side of the deficits uh so banks are on the receiving side of interest expense as well um uh you know depending on how they manage their loan book and their security book I think we you know we've gotten past the worst of their issues back in 2022 2023 um and so that's an area that I'm constructive on on a name by-name basis. >> Okay. And and obviously for name by-name basis and stuff folks can subscribe to your service and they can they can uh hear your your particular thoughts there with the energy pipeline. So there's mostly like the midstream companies. >> Yeah, I think some of those are reasonably priced and generally there's a phenomenon where the the limited partnerships uh like the mass limited partnerships are better priced than the C corps. Um and there's a bunch of reasons for that. the CC corps are easier to invest in tax-wise by foreign investors, so they tend to prop up the valuations. Um whereas if you're an American and you're looking to buy those long-term, you can generally get a better deal by going into some of the high quality MLPS, you'll basically get a similar like quality company, but generally a somewhat higher yield because there's a little bit lower starting valuation. Um, and so all us being like certain MLPS for longerterm investors, you know, five five plus year income play. >> Okay. And as I understand it, so correct me if I'm wrong, um, in an era of fiscal dominance, bonds aren't a very good bet because you basically have inflation working against you. Um, as you look out to the next six months, and we talked a little bit about, um, I think you gave their risk of recession as moderate. Um, uh, do you still see bonds as something you don't want to touch or is there a potential that if we have disinflation in a slowing economy, uh, and maybe even a little bit of a safety trade as well as the Fed bringing, you know, rates down or whatnot, could there be a a near-term trend to ride in the bond market? >> Uh, so bonds are certainly tradable. Um, it's not something I choose to focus on because I think the upside somewhat capped. Uh, my my general view, so I've been a bond bearer since 2019. I think the worst of the bond market is likely over. So I don't think we're going to have another five years that were as bad as you know 2019 and 2024. Um and I think we're more in the slow motion train wreck part whi which is um you know bond yields are starting from a higher higher yield position than they were before. Um there are certain periods where the equity market could get overvalued and bonds could outperform for 6 months 12 months sometimes more. uh even if the returns aren't great from, you know, a 4% yield standpoint. Um uh and so I I do think that whether it's tips uh especially for for retirees or other people that need kind of low volatility portfolios, I do think that bonds at these levels can play a role. Um it's just kind of understood that they're volatility reducers that are kind of treading water. They're not really adding, you know, that yield is mostly illusionary. it's just kind of offsetting the basement and not even fully doing that, especially when taxes are considered. Um, so it's not the not one of the worst things out there on on a kind of intermediate term basis. Um, but I do think that over the next five plus years, that will continue to be one of the losing areas. um as you have ongoing fiscal dominance. >> Okay. And given all the valuation uh extremes that I mentioned a little while ago, um the fact that the market does seem to be quite euphoric at the moment. Um, do you have any thoughts on, hey, this is a time to to have oversized amount of cash in your portfolio if you still be long but just have some buffer there given how how extended things seem to be or are you not that worried? >> Uh, so I hold a decent amount of T- bills in my portfolio. Uh, it's still a fairly small position. Uh, it would be larger if I was say retirement years. Um, and you know, the other defense instead of in addition to just cash is to own some of the things that are not expensive. Uh, and so kind of the way I've structured my equity positions is just, you know, avoid as much as I can some of the bubble names. Um, stay in names I view as kind of uh, fairly valued but still growing and and attractive on a total return basis. Uh, and there are certain years where that, you know, underperforms because the the the the bubble stocks do really well. But then in pullback years, that strategy generally holds up pretty well. So for example, 2022, which is really bad for like the, you know, the the the mega cap stocks in >> the Kathy Wood stocks were down 80%. Yeah. >> Yeah. Yeah. They were crushed. The Mag 7 was was crushed less. They at least recovered. The ARC style ones didn't fully recover in many cases. Uh whereas like healthcare was up. Energy was great. Um kind of other sort of value adjacent stuff was it depended. It was mixed, but it was it was like not as not as bad. Um, so there are certain times where that strategy pays off, certain times it doesn't. Um, I do a little bit mix of both. U, so that's another thing to consider. It's not just cash, it's also what parts of the market are am I in? Or also another way of putting it is people often assume that if the US market does poorly, it means emerging markets are going to do worse. Um, but when you have dollar weakness and fiscal dominance, um, that's not necessarily the case. Um I mean you know for example this year uh if you if you ask people okay the US is going to do a a US first tariff blitz uh is are US stocks or emerging market stocks outperforming year to date. Most people would say well emerging markets are probably hurt. I mean they're the ones supposedly being tariffed but they're they're doing pretty good this year. Um and so I you there are pockets you can go to that are not necessarily cash but that are kind of beating to their own drum. uh not not to say the cash isn't also useful um but it's just by by having all these different segments like cash, gold, um bitcoin, emerging market equities, value equities, some growth equities too I like. But if you have that kind of mix um any given pullback ends up being less extreme to you uh in most cases. >> Sure. And that's folks the benefit of diversification in general, but obviously Lynn's taking it in a way that uh adds additional risk management in there. All right, Lynn. Well, look, thanks. This has been wonderful. Um, again folks, I specifically didn't ask Lynn about Bitcoin uh and anything else cryptoreated because that's what we're going to do at the conference. Um, Lynn, uh, I'm going to wrap this up in just a minute with some housekeeping, but before I do, um, let me ask you this question. I noted on your on your ex feed the other day that you posted a famous Norman Rockwell portrait that we all know and uh and said uh or asked, "Hey, does anyone know the name of this portrait because it has a name?" And the title was freedom of speech. Um, we've had uh a lot uh happen in light of recent events around free speech uh that's um caused us to reflect I think not even just as a nation I think as a global society uh on on its role and its its importance. I'm just I wanted to give you a chance to just sort of share your thoughts if any around u what you've been mulling on free speech given again recent events. Yeah, I think it's important to just reiterate, especially as Americans, I mean, free speech is something that that you know is kind of structural to how I think the country's been so successful. Um, and speech can be taken away in multiple ways. It can be taken away from violence. It can be taken away from from government oppression. Um, some people of course mix it up uh between private uh actions. So, freedom of speech doesn't necessarily mean freedom or guarantee of a platform. So, private entities could certainly um take action or there could be consequences uh you know for for certain certain types of speech um that that is either unpopular or wrong or whatever the case may be. Um but that's very different than obviously violence towards speech or government attempts to um suppress speech. Um you know one of the areas I've been interested in uh it's not really Bitcoin or crypto but it's kind of adjacent is decentralized social media for example. um you know back back in the in the prior administration and before I was really interested in alternatives to these big centralized um platforms that are kind of unilaterally sensorable. Um so having decentralized ways to go around uh as well as just a general culture that um uh you know uh is willing to disagree with people um but that will defend their right to to to speak. Um, again, not necessary to have a platform, but that they can say what they want and if they can build a platform, then they get it. And if they can't, then then they don't. So, um, yeah, whenever we go through these times, I think it's important to kind of go back to some of our fundamental values and some of the things that have that have gotten us this far. >> All right. Well, I completely agree and, uh, you haven't talked about it all that much, but have talked about it, I think, enough in in recent weeks, uh, to say that hopefully, you know, this is one of those values that we can all agree on, right? as divided as this nation is, um free speech is the bedrock of uh western society and um is a reason that's the first amendment here in the states and that you know in in in no circumstances is violence an acceptable uh response to someone expressing their freedom of speech. So seems like you're you're all right there. For folks that are maybe perhaps interested in learning a little bit more about decentralized social media, is there any direction you could point them in to learn more? Uh there's a protocol called Noster uh notes and other stuff transferred by relays. Um like primal.net is one of the clients. But it's kind of like how we when we use email um you know all of our different email clients can talk to each other because they use an underlying communication protocol simple mail transfer protocol and certain others. Whereas in social media, we're in these kind of more isolated ecosystems like you know if you're on Twitter X you can't talk to people on Facebook whereas if you're on Gmail you can talk to people on Yahoo or Proton and and so Nostra is kind of like that where you have a open- source substrate an open- source you communication standard a language and then people can build different clients and you can have something that looks like a Twitter clone you can have something that looks like an Instagram clone you can have entirely your own thing and they have their own aesthetics and ecosystems and and algorithm policies. whatever the case may be. It's open source, you can build it, but then they they they communicate in a similar way that email clients communicate. Um, so I I generally found that interesting and and last year it's 2024, I interviewed Jack Dorsey at the Oslo Freedom Forum uh because we were talking about that. Um, it was it was uh so that's that's an area that he's been uh focusing on too. And for people that know his history, he he had challenges trying to figure out how to >> run a centralized platform in a time of of heat around that subject. And then also he tried um Blue Sky, which is he try he tried to kind of take part of the substrate and separate it from uh Twitter. >> Um and the problem was that kind of got captured as well. So now Blue Sky is basically kind of like how Twitter X is sort of right leaning, Blue Sky is kind of Twitter for the left. was not not really. >> Did Jack Dorsey did he develop Blue Sky? >> Uh, it spun out of of stuff he was he kind of helped spearheaded it. Um, okay. And he was like he was initially on its board. Um, and when that kind of didn't I don't want to speak for him, but there are articles and quotes he's talked about, but basically uh his latest focus is on Noster. Um, which is kind of more open source and kind of more, you know, kind of closer to I think what he was intending you could say. Um but basically it's just it's kind of the idea of ecosystems can kind of manage themselves but you got a lot of power if those ecosystems can also talk to other ecosystems in an open source way so that you know you can still filter spam and you know extreme hate or whatever the case you're trying to do with different platforms can have different policies but then there is that underlying thing so that if something gets blocked you still you kind of control your own key like you can you control your own um identity that can kind of rotate to different ecosystems kind of like how you know imagine if you could go to a different web mail provider but still have your emails for example, >> right? >> That's kind of how that works. >> And it makes it harder for a central authority to deplatform you, if you will. Ex. >> Exactly. >> Yeah. Okay. Fascinating. Um all right, Lynn. Well, look, most important question of the interview. Um besides attending the conference uh in a couple weeks, um where can people go to follow you and your work? >> Uh people can check out lindalton.com or they can check out broken money on Amazon or elsewhere. Thank you. Okay. So, um and and uh Broken Money is basically sold anywhere books are sold. >> Yep. >> All right. Well, in wrapping up here, um folks, uh please join me in thanking Lynn for giving us so much time, uh and being so liberal with her insights here by hitting that like button and then clicking on the subscribe button below as well as um clicking that little bell icon right next to it. Um, again, reminder if you um would like to hear Lynn Opine specifically on her thoughts on Bitcoin and what's going on in crypto right now and there is a lot going on right now. Uh, and it's an asset that many of you in this audience tell me you don't fully understand and and want to get the insights of a good expert. That's why I invited Lynn to come uh talk at the conference. Um, then go get your ticket right now if you haven't already got it uh for Thoughtful Money's fall online conference on Saturday uh October 18th. To do that, you can just go to thoughtfulmoney.com/conference. And if you go now, you can still lock in the early bird price discount. It's the lowest price that we're offering. I want as many people as possible to get that lowest price. And if you are a premium subscriber to our Substack, um, make sure you check your email inbox for the emails I've sent you that have the code u, the discount code you can use to get an additional $50 off of that lowest price, uh, early bird discount. Um, and lastly too, if you can't watch live on October 18th, don't worry. Everybody who registers will get sent replay videos of the entire event, all the presentations, all the live Q&A. Uh lastly, if you would like to get some uh help from a professional financial adviser about how to position your portfolio and your financial wealth uh for this era of uh fiscal dominance uh and particularly for, you know, maybe the next 6 months uh ahead that I talked about right there with Lynn, um then consider talking to one of the financial adviserss that thoughtful money endorses. These are the firms you see with me on this channel week in and week out. to schedule one of those consultations. Just go to thoughtfulmoney.com, fill out the short form there. Only takes you a couple seconds. These consultations are totally free. There's no commitments involved. It's just a free service these firms offer to be as helpful to as many people as possible. Um, and with that said, Lynn, thank you so much. Um, it is always such a joy having you on the program. Really is a privilege. Really looking forward to talking to you at the conference. Uh, but again, thanks so much. >> Thank you. >> All right. All right, everybody else. Thanks so much for watching.