Loading summary
Transcript88 lines
- [00:07]
Peter St. Ange
You've had a dynamic where money's become freer than free. If you talk about a Fed just gone nuts, all, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Probably should be, probably should be.
- [00:37]
Marty
X's professor is back. The econ professor. Professor Peter St. Ange. Welcome back to the show, sir.
- [00:44]
Peter St. Ange
It's good to be back, Marty.
- [00:46]
Marty
It's good to have you. I mean, AI is so hot right now. I mean, you DM or you texted me this morning saying, I really want to talk about AI today. I said, hey, I'm more than willing to talk about AI. You notice that we've been leaning into more AI content before. We just hit record. I said, why don't we just hit record? And I'll tell you why. It's because we've been using AI. We've built basically a company brain and an agentic system that all of our employees can interact with that has allowed us to really expand the breadth of content that we can cover, which has been a very cool process. And you were also mentioning it seems like a lot of the number go up people are focused on AI right now, which is true. And I'm trying to bridge that gap, which is like I'm still fully dedicated to bitcoin. Never been more bullish, despite the fact that we're back in the $58,000 range right now.
- [01:38]
Peter St. Ange
Yeah, what was it, like buck 20 a couple months ago? Right before the war? Yeah, 58. That's insane. Yeah, I think you're right. I think that a lot of the number go up crowd, the sort of hot money they're partying in AI at the moment. AI has longer legs than AMC or some of the Stonks from a couple years ago, so that'll probably hold their attention for a while. Here is my best guess. I think the underlying argument for bitcoin is unchanged. But a lot of people talk about bitcoin like it's stable money, but then in the back of their mind they really think it's money that's going to go up a bunch. And welcome to maturity Bitcoin. And yes, there will be a huge jump if it takes market share from gold and from Fiat. There obviously be the massive step jump where it goes up 10x or 50x or whatever. However, I think that this current crab walk, that's what gold's been going through for 50 years. Sometimes gold will triple, sometimes it'll drop in half, threefold. I think it has nothing to do with the sort of fundamental thesis of Bitcoin. In fact, you know, if you sort of step out and look at gold, like if you didn't know the history of the world, then you would look at gold and you would say, no way can gold be a currency. Because look, you can't have a currency that doubles and drops in half in the course of a year. Right. And you know, of course the reason is because if it's not the main money, then it's a much thinner market. And so, you know, speculation and, you know, its value is going to be derived based on interest rates and this and that, and it's going to be much more volatile than the main currency will be. So, you know, what we're seeing in bitcoin right now, this, this sort of boring crab walk that we've been in for, I think over a year, more or less. I think that's, that's, you know, probably going to continue as long as AI is sucking all the sort of hype oxygen out of the room. But even after that, you know, I'm not sure that, you know, we're going to see this sort of having a process where you have these huge run ups in prices every single time. I think those days, I think for the moment they're gone unless we get some major step up in adoption. At which point, of course, if we take a big share from gold, if we take a big share from Fiat, then you'll see another step.
- [04:12]
Marty
Yeah, no, I haven't been in this for 12 years. It's just another bear market. To me, each bear market is unique. Like 2015, this is probably the worst sentiment since 2015, where I've been in this for 13 years now, which is hard to believe. 2015 people legitimately thought bitcoin was going to die.
- [04:37]
Peter St. Ange
Yeah, we haven't had a real competing investment story I think since bitcoin was born. Like the closest that you could say was maybe the rebound from the 2008 crisis. March of 2009 we saw, and that was Fed or anyway it was just a rebound. And then you had a Fed induced bubble going into Covid where they just dumped out all the liquidity that caused the inflation. So you had two periods where you had broad equity strength, which you know on the margin draws out some of the demand out of bitcoin. But I don't think we've really had like, like a real stonk story like AI since since dot com. So like I'm not surprised at the sucking all of the number go up oxygen out of the room for the moment. But yeah, you know, I think you're right. I mean bitcoin goes through winter, summer, you know, and you know, the fundamentals are unaffected. I don't understand the quantum, but I do understand that, you know, there's a lot of people who are much smarter than me who are not worried about it. And so I don think there's any legs to that. I think this is simply the number go up. People are currently distracted. They're partying down the street.
- [05:49]
Marty
Well, I mean, you messaged me. What, how are you reading what's going on in AI? Are you bullish on it? Do you think there's a mania going on, A irrational exuberance? Is that what we're exhibit, what we're seeing? Or is this truly like a step, function improvement on technology?
- [06:09]
Peter St. Ange
Yeah, I think it's both. So I cut my investment teeth on.com and I got into it because there was an interview with Paul Krugman where he said, he said this thing's a giant bubble. Well, no, no, no, no, no. Earlier than that, I read an article in Wired magazine. It was an interview with Yahoo CEO Terry Siegel, I think it was at the time. And that was 1996. And everybody said the Internet is this giant bubble. Don't invest in it because you're going to lose your money. I bought Yahoo at 60 bucks a share. Everybody told me I was an idiot. But I'm 24, I don't have any kids. You know, I make more money than I spend. Like what am I going to do with the money? So what the hell, gamble it. And of course, split adjusted. You know, Yahoo went to like $1,000. I retired at 25. I went partied around the world. I did, you know, kind of the crypto thing before it was cool and then lost it all because it eventually collapsed. But the moral of the story is that in 1996, everybody knew that dot com was a bubble. Okay? Why? Because the idiots at the Wall Street Journal look at a stock price and if it went up a whole bunch, they say it's a bubble, okay? They don't go any deeper than that. They say, what, it was a dollar last year, now it's $5. It's a bubble. It doesn't occur to them that, okay, yes, it's a bubble, but guess what? Bubbles don't pump just because you called it a bubble. Right. Bubbles can keep going. There's a study, in fact, I can't remember the guy's name. There's a guy out of Columbia University, does some really good empirical work on stock behavior. His name will probably come to me after the interview is over. And what he found is that the main determinant of a bubble, it's not price multiples. Okay? It's not, you know, price to earnings, price to sales. It's not how much it went up. It's none of those things. It's not magnitude. It's just time. Time passes, eventually the bubble goes out. There is no other determinant. So my take home on that is that, you know, if you're looking at AI, okay, did it go up a lot compared to two years ago? Yes, all of it did. Nvidia, Broadcom, whatever. What's the one now? Marvel Micron. Okay. You know, you keep having this rotating cast of guys who go up 10x exactly, like dot com, and. But then, you know. So did it go up a lot? Yes, it's a bubble in that sense. However, number one, if you look at the valuations compared to.com, they are far lower. I mean, we'd have to go up probably 2 to 4x from here to even get close to dot com. Because in dot com, it was all vapor. If you look at the actual earnings, like Nvidia is minting profits, like profits you put in your pocket. Okay? This is not eyeballs. This is not, you know, the kind of hokey metrics that they come up with dot com, because nobody was turning a profit. In fact, I think Internet stocks as a group did not earn a single dollar throughout the entire 1990s. Right. They all lost money. And they were all like, no, no, no, we got to reinvest because we got. The eyeballs are coming, okay? But they didn't. They didn't make any money. Right. If you look at the actual profits on these AI semis, and really, it's the semis we're talking about, right? It's not the actual AI models. We'll talk about that separate. But they don't have any pricing power, I think. And their stocks are reflecting it. It's the AI semis, the picks and shovels. Right. The equivalent of Cisco during dot com, okay? And those guys are absolutely minting money from memory. Like, if you look at Nvidia's Pe Right now, I don't think it's even that high. I think it's like 30 or something. Like it's, it's not astronomically high. It's not a thousand. Right. This is not the dot com. So my takeaway on is that number one, is it a bubble? Well, yes, it went up a whole bunch and I would not be shocked if it dropped in half at some point here. Okay, so in that sense, yes, it's exhibiting bubble behavior. But in any bubble, the question is how long will the bubble go, right? Are you in the first 10% of the bubble? Are you in the last 10% of the bubble? Are you somewhere in between? So if you overlay the AI, semi bubble, just day for day, the reason you're doing day for days, remember that study, right? It's just time. It's nothing else. If you lay it day for day on the dot com, you know, you got to decide when you just start them. So call it Netscape IPO versus chat GPT release. If you overlay those, we're probably 98, arguably early 99. I think we've got another year or a year and a half of free money. Watch it blow up tomorrow. But anyway, I think most likely by the gun to my head, and I had to guess, we got another year, year and a half of free money. Probably scale out gradually because otherwise you can lose all the money like I did when I was young. So scale out gradually over time. But, you know, so to answer the question cleanly, I think yes, it's a bubble, but it's got another year, year and a half to go.
- [10:57]
Marty
And what do you take of the technology and its effects on the technology?
- [11:03]
Peter St. Ange
It's blown me away. Just absolutely. I thought.com was once in a lifetime thing. If you look at the world before the Internet and after the Internet, I thought we were never going to see something like that in our lifetimes. And AI is 10x. That it is absolutely blown me away. So the areas that I know about, because, you know, I don't know anything about coding, programming, there's a lot of crap I don't know about. I'm not qualified to comment how good it is. The stuff that I know about, which is economics, economic history, I mean, you can. It is like having Murray Rothbard in your pocket. It is like having the Nobel committee, not the socialist politicized one, the real one. It's like having them in your pocket. I am absolutely blown away by the quality. People used to ask me these kind of science fiction questions. You Know, like, I don't know, what if GDP growth went to 50% a year? Or you know, what if we had immortality and then people stopped dying? All right, so people used to ask me these sci fi questions and I mean, it's fascinating as an economist and you say, well, that's really interesting. Let me think about. You have the human capital erosion, okay? Now people don't ask me anymore because they go to AI. And guess what? I go to AI too. I wouldn't ask me either. All right, Just, just go. You know, it's like the old line when somebody would ask something, you say, just Google it. Okay? Just, just go ask Rock. Ask GPT. Ask a couple models, average out the answer because they do make stuff up. Make, make stuff up. But fundamentally, like a combination of AIs is. It's better than, you know, I've asked medical questions. My, my wife has dysautonomia, like with blood pressure. All of our doctors were idiots. They were like, oh, maybe we just change the dose. I don't really know what it is. We asked the AIs, they were like, hey, look into this. We went, I mean, just. It is literally like having the top experts on earth in your pocket on any topic, right? Health, economics, everything in between. I am absolutely blown away by AI. And remember, we're just at the chatbot stage, right? Like when you zoom out to what the AI potential is, this is like the first 1%, right? This is just like the joke, little goofy stuff that you show off to your friends. I mean, you look at this stuff down the pipe. So already a AI. Not AI specifically, but a stupid. Speaking of. Oh, the thumbs up apple used to program intelligently. The, you know, what is it? 2024 Chemistry Nobel was won by a prize or was won by a team using AI. Right? Google's what is it? Deep Seek or something. That's the Nobel. Okay, you know, yeah. You know, people love to trash AI and they're like, ah, you know, this is goofy. What can you do? Put bikinis on, you know, rabbits. No, no, no, dude, like already. Okay, Protein. So that was for protein folding. Protein folding. Again, I'm an idiot on science. But anyway is approximately how your genes translate into actually doing stuff in your body. Okay? That is one of the holy grails in medicine. There's like a half dozen other, I mean, foundational stuff that AI is just solving trivially. So I am number one blown away by how impressive AI is. Yes, it makes crap up. So if it's an important question, run it through two, three AIs. But what I'm really excited about is what's coming next in materials research, medical research. I think AI stands a very good chance of giving us quasi immortality. In other words, an end to aging within 10 years. I think that we're going to see absolutely revolutionary materials that will make things possible. You know, we, we haven't yet imagined. Jeff Bezos, I want to say 10 billion. Anyway, he put us a chunk of change into a new AI startup that's specifically doing that so it looks like new materials. Right. And so, you know, you can have insulating or superconducting or you know, all kinds of interesting things. So I am absolutely blown away by, I think it is 10x the impact that the Internet had in terms of not just the economy, but potentially of, you know, health, of longevity, of politics. You know, people can discover truths that used to be guarded by the gatekeepers. I think it's very exciting. It's literally for me, you know, having cut my teeth on the dot com, I think this is much, much bigger than that.
- [15:26]
Podcast Host / Sponsor Announcer
Yeah, I would agree.
- [15:26]
Marty
And again, it's because again, see, touch, feel. That's right. Anybody who's naysaying AI right now, like if you actually use this, like, yeah, I've used ChatGPT's bot before, it's like not that impressive. It's like, well, you're not actually using it. I mean you are to an extent, but there's so much more that you can do with it. And like bring this back to the bubble conversation. I keep grappling with this in my head. I'm sure you've heard the likes of Gavin Baker from Atreides and others talk about this, but the analog to dot com. Many would argue, and I think myself included, that there are things that really don't comport to what was going on the dot com era, particularly like the dark fiber, like laying of the broadband. There was actually no monetizable businesses in the dot com era or very few outside of Amazon in Google before they, when they found their ad revenue model. But with to your point, like Nvidia, Micron, Marvel, these guys are all printing, printing cash, making profits. And then like even on the frontier models, I mean I saw the headline earlier today. Obviously Anthropic's not public yet, but they're, they're in the process of going public and it seems like they're producing free cash flow. And so that's like the question. I'm like, there's inherent utility out of the box, not that There wasn't for the Internet for the individual, but I think particularly for businesses out of the box today. I think TFTC being one of those examples, like we're able to use it, spend money on it productively, efficiently and profitably to, to expand what we're doing. And so people talk about we're in a bubble. It's like, yeah, we could be in parts of the market. And to your point about time dilation, like how like this, I feel like this could go on longer than the dot com bubble. Like that's what I would be interested to dive into that study and to see if there is like a set amount of time that he, that the, the individual wrote that basically decided like, yeah, bubbles typically last x amount of time or depending on the, the magnitude of the bubble, the, the timescale changes a bit.
- [17:39]
Peter St. Ange
I'm just length of bubbles. Yeah. Well, you made a great point on the dark fiber, right? So the issue if you just zeroing in on the picks and shovels, right? So the issue for companies like Cisco, Lucent, you know, the kind of picks and shovel, the, the Internet, the issue there was the dark fiber that you just mentioned, right? Which was that the Internet, you know, all these people or you know, traffic was exploding and so they built these highways out of fiber optics. The problem is that the price of building A highway with 10,000 lanes is approximately the same as building a Highway with four lanes. And so you may as well make 10,000. But of course the issue is that it took a while for the Internet to grow into those 10,000 lanes. Like a further decade. All right? That is a completely different beast than we're seeing with AI at the moment, which is that companies are like, they will take all the compute they can possibly get their hands on, right? So I can't remember the company, they blew through their AI budget of like $500 million without noticing. I guess there's rumors that it's Uber or somebody.
- [18:45]
Marty
Uber.
- [18:45]
Peter St. Ange
Yeah, There you go. There is unlimited appetite. Because think about it, right? This is not a highway with 10,000 lanes, okay? This is processing. And the companies are doing stuff with that. Processing, you know, so, you know, you take, I don't know, 40 bucks worth of tokens and you replace three weeks of a Goldman Sachs analyst times a billion people. And it's not just the people you're replacing, right? The vast majority of the stuff you're doing was not being done before, okay? So now you know, you can have like a, like a mom and pop taco shack that can go to AI and you know, they can, they can analyze their, their shoppers so you know, which part of the, you know, week should I buy? Certain type of stuff. Can you make me a logo, can make me a slogan? Can you make me, you know, can you program me a website so I can take over? Like these are things that it's not that somebody was doing it before that was replaced, right? It's that it was so expensive that nobody did it.
- [19:41]
Marty
Right?
- [19:42]
Peter St. Ange
And so now because AI is, I mean for, you know, outside of corporate applications, it's pretty much free for individuals and for small businesses, you know, the vast majority of the things that, that they're able to do now couldn't be done before, right? So you put that together with the corporates, you know, who are actively replacing extremely expensive people. You put those together and there is pretty close to unlimited demand for compute. They can certainly use up everything that anybody can build, including the Chinese. So freaks, this work was brought to
- [20:15]
Podcast Host / Sponsor Announcer
you by our good friends at bitkey. As things happen, things get lost, you need to replace your phone. Life happens. And bitkey has been designed with this in mind. So if you're looking for the easiest way to secure your bitcoin off the exchange, go get a bit key doesn't come with any seed phrases. There's no single point of failure. It's a two or three multisig. You have your device, you have the mobile app and block stores a key in the server. So you have collaborative multi sig there. On top of that the new bit key has a screen so you can actually see and verify what you're approving. You can look at transactions, addresses, account changes. The difference between trusting and knowing has been built into the new bit key. With the screen they've changed code delegation in other advanced features like inheritance recovery. If you're looking to get your bitcoin off exchange, you haven't done so you're looking for the easiest way to do that. Go get a bit key. You can use our code today TFTC to get 10% off the new BitKey. So go download the bit key app, use the code TFTC to get 10% off the new bit key and start your self custody journey Today. This episode has been sponsored by our
- [21:16]
Marty
good friends at bitkey.
- [21:17]
Podcast Host / Sponsor Announcer
All right freaks, you know me, you know I don't take sponsor money from products I wouldn't use myself. So listen up. The Avon Bitcoin Visa card is one of the most interesting things I've seen in the bitcoin lending space in a Long time. Here's the deal. You get a line of credit up to $1 million backed by your Bitcoin without selling a single sat. No gains, no annual fees, no minimum draws. And your Bitcoin is custody by Bitgo, which is one of the most trusted names in digital asset security. Even never lends it out. There's no rehypothecation. You stay in control. And guess what? You can lock in a fixed rate for up to 10 years. That's 10 times longer than most lenders out there. Or go interest only for up to five years. Rates start at 7.99% APR. For a product that lets you keep your stack and still access liquidity, it's hard to beat. I mean, the duration in the rates is the best I've seen in the market to date. You also get 2% unlimited cash back every time you use the card. Spend fiat. Keep your bitcoin the whole game. If you've been stacking for years and you need liquidity without triggering the taxable event, this is worth a serious look. Go to aven.combitcoin that's a V E n.com bitcoin check it out.
- [22:27]
Marty
There's another interesting part of this AI story too. Tying it to the bubble as well as it's pretty clear that the Trump administration has recognized and deemed this AI infrastructure build out. And I think just broad reindustrialization even outside of AI is in national security risk. The view the, the race to AGI as existential particularly is juxtaposed to China. And so you're seeing like a quasi nationalization of certain parts of the market. What are your thoughts on this as a free market guy?
- [23:01]
Peter St. Ange
Yeah, so it's tricky. Okay, first the good, which is that Biden and Kamala, I mean, it's not really them, it's their handlers. You know, they were very hostile to AI. They were trying to turn it into a government pet, essentially the social media censorship model, but this time turning it into Big Brother. I think that was existentially dangerous because at the moment, for a lot of people, AI is truth and they need to verify. They need to check with multiple AIs, of which one should always be groked. But you know, even that's kind of unhealthy. But if government were actively, like if you had a political commissar of the Communist Party sitting at anthropic, literally checking things, which is approximately how it was with social media, that was extremely dangerous. Right. So I'm very pleased that Trump is so pro AI. In the abstract, you know, we were very, very lucky with Dotcom that we had Bill Clinton. I'm not a huge fan in general, but God bless Bill Clinton because he was hands off. It was certainly hands off on content. And it took W, I think was the first one who started with, I can't remember the chain of events. Kamala, by the way, pushed on. I think it was Sasta or Sesta or something. Anyway, the Internet got captured gradually. But God bless Bill Clinton and you know, so I was very happy when Trump won partially for that because I think he's a lot closer to Clinton. Just promote the text, see where it goes. Don't strangle the baby in the crib. Having said, I think that, you know, the idea of government partnering with these companies or owning shares, that puts us right back to maybe not under Trump, maybe Trump has David Sachs and he's got smart people who aren't going to abuse that. But he's not going to be president forever. He's got two years and he keeps building these structures in government as if he's going to be president forever. And all of those things are going to be delivered on a silver platter with a bow tied on them to Gavin Newsom or, you know, Zoran Mamdani or whoever the hell's next. That's what makes me nervous. So I love that Trump is so pro AI. I don't think he personally has strong opinions about AI, but he listens to people who tell him it's cool and so good to go. But yes, I am not a huge fan of this idea of government owning things or partnering. I think there should be a separation of church and state when it comes to business in general, but certainly when it comes to technologies that can influence how voters think. Because if government is tied up, whether it's social media or Internet censorship or AI, if government is controlling how voters think, the voters are not sovereign anymore. The government is a self licking ice cream cone. It runs itself. That is a tyranny. So I'm not a huge fan of that part.
- [25:58]
Marty
No, I mean the silver platter. I mean, you mentioned Zoran Mandani, but the election, the primary elections in New York, I mean, you have, I mean he's the mayor of New York, he's an over socialist, but it looks like the state legislator and I think the senator primary like three, three spots went to overt socialists who want to, who want to seize the means of production and distribute wealth and confiscate wealth and distribute it. You have Sam Piker riding Pretty high on his own supply right now. And you do have this, this growing, unabashed socialist part of the Democratic Party really taking hold. And you can imagine. I mean, I think one of the memes that's been growing in strength over the last six months is as elections moving forward are going to be communism versus nationalism. And the Democratic Party, I think the, the zealots who are overtly socialist and communistic are beginning to take it over.
- [26:59]
Peter St. Ange
They've got the fire. I mean, look, look at the rest of their bench. You know, you got Slimy Newsome, who's dirty. Nobody likes him. I mean, he's not popular. You know, people aren't excited to go work for him. He's. He's like an instrumental. You know, you use him, I guess, as a stepping stone in the Democratic Party. There's no fire in there. Right. He's not even Bernie Sanders. Forget Zoran. Who else? You got people to judge. Everybody say it's a thin bench. So, you know, AOC gets floated as a president. She's, you know, again, she doesn't have a large constituency for her ideas. No, I think Zoran or somebody like him is a future of the Democrat Party, without a doubt on the Republican side. I think that Trump or somebody like that is the future. So, you know, the old parties that we grew up with, right, when I was a kid, the Democrat Party was working class union guys, you know, very patriotic, kind of racist, to be honest. You know, they were kind of the deplorables, as Clinton put it. Okay, that was the Democrat Party. The Republican Party was a bunch of rich guys like Monty, you know, what is it? Mr. Burns out of the Simpsons? Yeah. Who just wanted lower taxes. None of them that, you know, they, they, you know, didn't really have strong opinions. They were like, whatever. You do, what you got to do, invade this country, you know, whatever. That was. Pretty much all they cared about was big business thriving either through lower taxes or through, you know, government partnership. So that was kind of the fault lines. And, you know, Trump broke the Republican Party, I think, amazingly fast. You know, if you consider that in 2012 we have Mitt Romney, who was like 100% a tool of the old. You know, he had. There was nothing about him that was against orthodoxy in the Monty Burns Party. And then four years later, just bam, right? It completely transformed. And I think that's where we're going with the Democrat Party as well. So, you know, if I had to guess, I think there's a very good chance that their nominee for what is it 28? Could actually be Zoran.
- [29:04]
Marty
Could it be he wasn't born in the United States when they changed the rules?
- [29:08]
Peter St. Ange
Very good question. Let me see where he was born by the way. The guy from nyu. It's nyu. His name is Andrew Lowe. Hello. And he's done a lot of empirical research on stocks. Worth a read. You can find all this stuff by going to ChatGPT. Which is, which is who gave me his name too. All right. Zoran. Mom. Donnie.
- [29:33]
Marty
Born.
- [29:36]
Peter St. Ange
All right, let's see if. Kampala, Uganda. The Republic is saved. All right, but, but it's going to be one of his acolytes who are born here. I think that's like there's, there's no fire. The party abandoned the blue collar union guys. That's who Trump picked up. Right. That's like his whole shtick is appealing to the old Democrats. The party then got captured. Or the people who, who, who evicted those union guys were basically faculty professor types, you know, so like people who use Latinsk and, but there's no fire for them. There's no passion for them.
- [30:15]
Marty
Right.
- [30:15]
Peter St. Ange
Like after this last election, their, you know, post ops were all, you know, we gotta learn how to talk to real people. And I mean there's just like, I don't think there's any future with the whole professor shtick, you know. But, but this new group, whether it's piker Mamdani, I think that that's what's capturing the fire in the Democrat party. And so as a party they could choose. I think the professors aren't going anywhere. So they can either go back to the old school union guys or they can go to these new sort of fiery, over educated, underemployed revolutionaries. And the union guys don't really organize. So I think most likely they're going to get captured by the call it the piker man. Danny Wing. Yeah.
- [31:01]
Marty
And oftentimes the piker man. I mean they, they might have a short bench there too because I don't think a lot of them are native foreign. I'm pretty sure he was born in Turkey.
- [31:14]
Peter St. Ange
Some pawn. Some American born pawn. Sup freaks? This rip is brought to you by
- [31:18]
Podcast Host / Sponsor Announcer
good friends at Lygos Finance. Celsius Blockfi ftx. They took your bitcoin and gambled it away. Ligos can't because they never hold it. Non custodial lending on Bitcoin's base. Layer your keys, your collateral, it's verifiable on chain. Go to Lygos Finance, tell them that TFTC sent you.
- [31:34]
Peter St. Ange
Sup freaks? This rip was brought to you by
- [31:36]
Podcast Host / Sponsor Announcer
our good friends at Salt of the Earth. It's so delicious. This is my pink lemonade electrolyte mix. It's pink Himalayan salt. There's no sugar. It's way better than element liquid iv. I went through a. A big electrolyte kick testing them all out and I let landed on this, settled on this. Been drinking it pretty consistently every day for two years now. It is my favorite. This is the pink lemonade. They have orange here, as you can see. This one's ripped. I had this on the train ride back from New York last night. I'm always stocked up with these things. They also have creatine packets. Very convenient, particularly if you're traveling and
- [32:15]
Marty
you like to work out.
- [32:16]
Podcast Host / Sponsor Announcer
You like get those brain juices flowing. They have these creatine packets as well. They're about to launch a bunch more flavors. Lemon, lime, watermelon and. And a few others as well. So go check it out. Go to drink sotE-R-I-N-K-S-O-T-E.com use the code TFTC for 15 off. Seriously, game changer in our house. My wife drinks it, I drink it, our boys drink it. Stay hydrated.
- [32:43]
Marty
It's a beautiful thing. No, it is crazy time. I mean, and then on top of all that going back to sort of overreach and maybe this is an overreach, actually I think some people could view it as refreshing because you're just admitting what's been happening for, for some time and the sort of nomination and sort of nomination and the sort of accepting of that nomination of Kevin Warshoing, the Fed, him sort of shifting gears, no longer doing forward guidance, but I think more explicitly signaling that the treasury and the Federal Reserve are going to be acting incompatico as they try to re industrialize and reorient the economy. And I think that's a whole other can of worms we should jump down. What are your thoughts on Kevin Warsh as Fed governor and his first FOMC meeting and what he plans on doing?
- [33:39]
Peter St. Ange
Yeah, so he's been interesting. If you look back at his history, you could argue that he's a hard money guy. During the 2008 crisis, we had from memory we had something like 8% unemployment and the economy was doing terrible. And he was like, no, no, no, we have to hike, we have to hike interest rates. Which is, I mean that's based. Right? That's like old School. That's 1920s style. You know, when the economy is in bad shape, you know, the reason is because you had all this irrational exuberance, malinvestments in Austria, and he's got to purge all the junk. And, you know, so I love him for that. You know, it's very Volcker adjacent, however, you know, and then there was this kind of accusation that he had had a foxhole conversion because he wanted to get the job from Trump. So he flipped to easy money and starting to push for rates to come down. But he had actually been pushing that for, I think, 2014 is when he started pushing it. And his argument was that we have new technologies coming that are going to make the economy much more productive, and so that lowers prices, and if so, then you have room to lower rates without it showing up as inflation now. And he reiterated that, I think even before he was on Trump's radar, he was talking about AI specifically that that was going to be a massively deflationary. I think he said something like the greatest deflationary technology of our lifetimes. I mean, he was out there. So, you know, I think that the, the, the idea that he's just mouthing the words about rate cuts, but he. But his heart's not in it. I know. I think he's had an evolution since 2008 where, you know, he's. He's learned to love rate cuts. Now, his shtick, immediately before he came in, he was calling it Robin Hood policy or Robinhood monetary policy, where the idea was that, okay, so normally the way that the Fed controls inflation is that it can raise interest rates in order to reduce inflation. Right. But there's a second way that the Fed really picked up starting the 2008 crisis, which is that the Fed just goes out and buys crap. So they go down to the basement, they type a bunch of zeros, then they say, this is money, and then they go and buy stuff. So this is called quantitative easing. And what's happened since 2008 is that the going out and buying stuff kind of. Kind of took over to the point where the Fed has, I think, currently about $7 trillion of assets that are built up on a balance sheet now. Seven trillion, okay. The entire money supply is something like 20, 21 trillion or something. Anyway, it's ballpark three to four times that. So put differently, the Fed has printed approximately 25 to 30% inflation, and it's parked it like a battery on its balance sheet, meaning that anytime the Fed wants, the Fed could just go and pawn all that garbage. Right? It could sell off all those assets that it bought and it bought them in financial crises or so called taper tantrum. There's basically whenever something goes bad, the Fed goes out and buys crap. So it could pawn all that stuff and it could immediately lower prices by 20, 25%. And you would not hurt the economy, you would hurt Wall street. Because Wall street owns all that stuff. They own the treasury bonds and mortgage backed securities. They own all the crap that the Fed bought. The point is that you can immediately lower inflation just by selling off the Fed stash. And it doesn't hurt the economy. Right, because the alternative is that you raise interest rates to fight inflation and that strangles the economy because now, you know, loans are more expensive, you know, mom and pop factories on Wall street can't finance their inventory. Okay? So that, that, that costs jobs, whereas pawning the Fed's garbage doesn't cost jobs. It just causes profits on Wall Street. So that was his shtick immediately before he came on board. Was that, that Robin Hood, Right? So take from Wall street, give to the people. Now unfortunately, he's coming in after the war, right? So the Iran war at the moment is screwing up the numbers. You know, you've got, I think in the first month, inflation was running at annualized 10%. Then it was like 6% and so on. So because of the war, oil prices went up. Now interestingly, so far, what are we, four months into the war? The inflation has not bled outside of energy, it's only in energy. In other words, companies are not raising prices. Right. So he could, what I hope he'll do is simply ignore the current inflation. I hope that he'll stick with that Robin Hood thing and continue pawning off the Fed's assets, bring inflation back down using that, not using interest rates. But the problem is that historically the Fed tends to panic. So when inflation jumps, that gets the plebs upset. The plebs are upset. They call their congressman and their congressman call the Fed and there's always the threat that the Fed could lose power based on bad headlines. So the Fed historically panics on headline inflation. I think that's been the concern at the moment. So if you, you know, if you put that together, Kevin Warsh, I think fundamentally is a hard money guy, just kind of a mini volcker. He has gradually come over to, you know, favoring to being easy money on interest rates and then making up the difference by taking it out of Wall Street. But at the moment I think that he's, he's kind of trying to navigate some tricky Space, you know, he's only one vote out of, I think 13 on the Fed board. And a lot of those guys are Biden appointees. Some of them probably just want to see Trump fail anyway, you know, to hell with the million jobs that are lost in the process. So he's only one vote of 13. And so he's kind of got to herd the cats. And I think that instinctively what he wants to do is ignore the current war driven inflation. The war is going to be over soon enough. Trump is trying everything he can to get out of it. I think he, he understands it was a mistake, even though he'll never say it. But anyway, one way or the other, the war is going to be over soon. The impact on oil price is going to be over. So I think that, you know, Warsh is thinking the way that I am. In other words, just let it go and continue doing the Robin Hood thing, which is good for the economy broadly. My concern is that he's going to be forced into a Fed panic where they hike rates, that then that hits everything, right? It hits investments, it hits jobs, it hits the Trump boom that, that we've been counting on.
- [40:12]
Marty
Well, it's already hitting housing certainly in parts of parts of the market across the country.
- [40:20]
Peter St. Ange
It's hitting housing just the way it is with rates not that particularly high. So if you hike another point or another half point or point from here, then yeah, it's going to be even worse. And of course problem in housing is that the Fed yo yoed rates, right? So you had essentially zero interest rates during COVID in order to finance the lockdowns, the totalitarian lockdowns that then lock all these people in their house where, you know, they can afford their current house at a 3% mortgage, they cannot afford it a 7% mortgage because the payment more than doubles. Right. And so all of these people, they don't necessarily, you know, like maybe their kids moved out, they got a six bedroom house outside of, you know, Boston. Normally they would sell that, put it back in circulation. Now a family can live in a house, they go down to Florida, everybody's happy, but in this case, they're stuck with it because the new mortgage would be 7%. So yeah, the housing market is completely screwed up. You know, it's like a pendulum where, you know, if you smash into it, it's going to go one way too, it's going to go the other way too far, over and over, which kind of captures what the Fed does anyway to pretty much every industry it touches.
- [41:25]
Marty
Yeah, I Hope they keep them higher. I hope they keep the rates higher. It seems like the AI infrastructure build out for at least some of the companies, the return on invested capital is making the, the cost of capital maintainable. And then for the housing market, I mean, I locked in a 675 mortgage in February and yeah, my monthly payment is not great. I think we got, I think we got our house like 20% under market. Luckily we had some, the, the previous owners wanted to give it to a young growing family. And so I think they were very amenable on, on price negotiations. But I speaking if you're looking at housing affordability, it's pretty clear that the sort of sticker price of the houses are too high for any millennial or endeavoring Gen Z to actually afford a down payment. And so maybe prices coming down with mortgage rates at 6,757, 725, maybe it's not a bad thing. I mean, what were mortgage rates in the 80s? Weren't they like in the teens?
- [42:29]
Peter St. Ange
Yeah, well, they were really high in the early 80s. Yeah, that was like an overhang from the 70s. But if you look at a healthy housing market like in the 90s, they were pretty much where they are now, like the rates. So the problem right now isn't necessarily the rates are astronomically high. The problem is that they were low for I think a two or three year period. And so tons of people refinanced, which they were smart to do, but the end result is that now they're, they're, they're kind of stuck. They have these relatively cheap houses and if they try to switch out, then they're going to lose it. And you know, there is some help on the way, like there's regulation you could do that could probably drop the price of new construction by fifty, even a hundred thousand. There's a lot of stuff you can do with, you know, environmental mandates and zoning and rent control could help bring more supply online. There's different regulatory things that you can do. The other moving levers, of course, wages, you know, so if real wages are growing, then maybe house prices don't come down, but wages can grow into it so that millennials can actually get into it. And that brings us to the question, which is kind of the other aspect of AI, which is what's going to happen to wages and jobs? And I think one of the most fascinating things there, just kind of watching AI's impact on the economy evolve, is that so far, and I think for the next couple of years, the main impact on AI is that it is going to reduce wages for college educated generalists, particularly young ones. In other words, people who have credentials but no skills. Those people are going to get absolutely savage. So somebody who graduates, like, if you're graduating this year with a psychology degree or an economics degree. Okay, a general degree, where the purpose of the degree was basically an IQ test. You don't actually. Like, companies don't hire economists because they're going to take over a country.
- [44:20]
Marty
Right.
- [44:20]
Peter St. Ange
Like, like. Or companies don't. Like, like, what are you gonna do with an economist?
- [44:24]
Marty
Right.
- [44:24]
Peter St. Ange
Realistically, a psychologist. Right. The vast majority of psychologists go and work cubicle jobs at like, you know, aircraft parts makers. I mean, like, what the hell is a psychology degree? Those people are gonna get absolutely shafted. Like, at this point, the only reason to go to college is to get a concrete skill. Engineering, programming, health, anything related to health. It's got to be a concrete skill. If you're not getting that, then you are paying $150,000 for an IQ test. They're going to get hurt, the people who are going to get helped. What I think is fascinating is blue collars. So we're already seeing that now, right? We've got some of the strongest blue collar wage growth in 60 years. Pricewaterhouse estimated that 4.7 million construction jobs are coming for AI data centers. Right. Everybody forgets, right? They talk about the AI data centers as if they were dropped out of like, alien spaceships to come eat our jobs. Yeah, but somebody built this, and it was not HR directors with psychology degrees. Right? So 4.7 of which they estimate 1 in 5 are going to be permanent because you got to maintain the crap. And it's not just a data center. It's the, you know, it's the energy and the water, and you got all this infrastructure related to it, okay? So you've got a lot more stuff. And what I think is fun is that effectively the blue collars are taking the jobs from the white collars. The blue collars are getting paid more, which is fitting, right? Because for 50 years now, the blue collars have been sold down the river. They were the main victims of China. Right? So China opening to the world was. If Kevin Warsh thinks AI was the biggest deflationary technology of the century, China was number two. All right? China was massively deflationary. Like when I was a kid, all this stuff, you know, you couldn't go out and buy a pool table for 70 bucks. You're on drugs, right? You can buy like a toaster for $18, that's 18, 20, $26.
- [46:13]
Marty
Right.
- [46:13]
Peter St. Ange
When I was a kid, like a crappy microwave oven was like 50 bucks. That was 1977. What is that, like $1,000 today? China has been astounding, which is great if you're a consumer. It sucks if you're a blue collar, right? So blue collar has got absolutely wiped out. Now. This is like revenge, you know, it's not revenge of the nerves. It's like revenge of the roughnecks or something. It's all coming back around. You know, people worry about robots. Like, you know, whatever you say, this is a blue collar renaissance. They say, yeah, but the robots are coming in, okay? To put that in perspective, right? So you need one AI to serve 8 billion people, okay? You need three or maybe six robots for every McDonald's. Okay? The robots goes much, much slower than the AI for perspective, the first factory in America that electrified, but before then it was like steam power and coal. All right? So the first factory to electrify was something like 1870. It took 80 years for half of the factories to electrify, okay? Capital goes much, much slower than you think. And the reason is that the assembly line in Guangzhou, wherever it is, maybe some other merch. The assembly line is already. It's already amortized. It's already there. It's functioning okay. So you're going to run that thing into the ground before you go out and buy a whole bunch of robots. So I think what we're looking at is the next 10 years or so generalist white collars are going to get gutted. The vast majority of them are, by the way, women. I think Brookings said 84% of the people who are on the front lines for AI displacement are women. Because women get generalized college degrees. They don't have concrete skills. They're just. They're. They're cubicle people. Not all women. I'm married to woman. Women are fantastic. However, cubicle people are overwhelmingly women. People work in governments, they work in big companies, they work in administrative positions. Those are getting gutted. And what they're getting replaced by is the blue is the blue collar. So you have that pattern for, call it the next 10, 20 years. And then maybe at that point, the robots start coming in. Now when the robots start coming in, no problem. Because again, number one, there's a certain amount of human. It's. It's infrastructure. And, you know, once you have physical objects, you know, you've got more things to go wrong. And so you need somebody to make decisions like should we fix this first or should we fix that first? A lot of that has to do with, you know, human interaction valuing. The other part of it is that if you look at the history of massive technological waves, so. So if we imagine a future where AI and robot robots have taken all the jobs, okay, that happened. And it's called the Industrial Revolution, right? So in the Industrial Revolution, you lost something like 80% of jobs, depending on how you count them. 80 to 90%. You lost every job except for the merchants, doctors, which were, you know, there were very few of them back then. They generally just killed you faster. Okay? Like, almost every job imaginable was wiped out in the Industrial Revolution. And here's what happened. So the new jobs. Yes, it redistributed. Okay? So relatively speaking, white collars did much better out of the Industrial Revolution than blue collars did. Right? So before the Industrial Revolution, the wage of a white collar. So like service, employment, I don't know, a tradesman might be two or three times out of a blue collar worker. When the smoke cleared, you're talking more like five, seven times. Okay, so yes, white collars did much better. However. So I was walking around New York a couple of years ago, there were two guys moving cinder blocks out of a truck. And they're New Yorkers, so they're loud. And one of them is telling the other guy how he went to vacation Brazil. So they're thinking, your job is moving rocks. All right? That is, that is the bottom of the barrel. That's as bad as it gets. That is the lowest skilled job conceivable. And you're vacationing in Brazil, right? Blue collars today. So in other words, the losers of the Industrial Revolution, blue collars, men who work with their, you know, muscles, they are unimaginably richer than the blue collars were before the Industrial Revolution, right? Just to give a sense. So a house painter in America makes about nine times more than a house painter in India. Okay. If you're painting a house, about $2, $200 a day in India, it's about $11 or 20, $22. Okay. And okay, both, like, neither were automated.
- [50:45]
Marty
Okay.
- [50:45]
Peter St. Ange
A house painter in the US for the most part is, is, is doing it by hand. There's not much automation. So that's a, you know, massive difference. And India is not pre industrial. I mean, it's got electricity, you know, they have cell phones. Like, if you actually compared what a house painter makes today in terms of like what you can afford with it, right? You can get a Netflix subscription. You can have a cel. You know, house painters live fine. They have like, you know, nice pickup trucks and they live in houses just like the rest of us. They don't actually sleep on the street. You compare that to what life was like for a house painter in, you know, pre industrial America, it's inconsistent. I mean, you're talking 50x, right? So when people get excited about the AI, the robots are going to take all the jobs. We've seen this script before. In fact, technological automation is thousands of years old. The ancient Greeks, I think it was Socrates who worried that oxen were going to replace all the farm workers. You'd have too many men left over and so you'd have to start wars to get rid of the men. In medieval Europe, they worried about water wheels, right? Water wheels were replacing the Millers. And so again, you were going to have all these people who had nothing to do. What are you going to do with all these unemployed people? Technology, it's been around for a very long time. And guess what happens? Humans have an hierarchy of needs. And whenever you have the humans freed up, you know, people step down. It's like on an escalator. They step down to the next job. But the automation itself is making you richer. So that escalator is going up and up. When the smoke clears, you look at the industrial revolution, the absolute worst. The people who move rocks for a living, the people who were in the absolute bullseye of the industrial revolution make 50 times more than they did. So, you know, if, if the AI, if the robots, if they come and take all the jobs, we're talking 20, 30 years down the line. Great. Dog walking will pay 100 bucks an hour. Why? Because the vast majority of people won't be working. If they work, it'll be like salmon. You know, people who work on salmon boats, like, they'll work for like three months and they'll go party in, you know, Thailand for six months or whatever. People won't be working. And so in order to get somebody off their butt to come and walk your dog, it'll cost you 100 bucks. So, you know, the people who worry about it, yes, you have transition pain, right? You have these psychology majors, freshly minted from Yale, who can't find a job. Yes, that is in the here and now. That's absolutely going to happen. You're going to have a transition period. A lot of those people are too good to work blue collar jobs. So they're going to, they're going to hold out. You know, if you look at it today, for example, an adjunct professor in the humanities makes about 20 to $25 an hour.
- [53:19]
Podcast Host / Sponsor Announcer
Right?
- [53:20]
Peter St. Ange
That's for the PhD. Okay. A babysitter, there was just a study. A babysitter makes 20, $25 an hour. Many of them are 16 years old. Okay. So, yes, you can have a holdout like that where the professor is like, screw that. I'm like, I'm not. I'm not working at Panera, man. But eventually they're going to give it up. And, you know, I'm sure it's going to be very traumatic for them. But, yes, you're going to have, you know, people have difficulty adjusting, but when the smoke clears on the other side, it's going to be absolutely amazing.
- [53:51]
Marty
They have to have all these cubicle white collar women who make up, go down to the dive bar, find your blue collar hubby. You know, the fertility rate back up.
- [54:02]
Peter St. Ange
That's what's happening. You know, there was a recent study that found that, you know, normally women do not marry below their education because women are high hypergamous, and they can't stand the idea of a man being with them is dumb. But what's happening now is that you have all these women who have, you know, master's degrees and they're hooking up with, like, electricians, because the electricians are making like 150. Right. So, you know, you know, they can either party with the philosophy major who's between jobs at the moment, or the electrician. So, no, it's beautiful. It's Revenge of the blue collars.
- [54:35]
Marty
Yeah. I feel like we've been weaving in and out of incredibly bullish and somewhat cautious commentary here. What's your overall view of the economy of the state of America right now?
- [54:50]
Peter St. Ange
Yeah, I think the economy itself. So I came into 2026 thinking that it was going to be really strong. I think the war is in the way at the moment, but, you know, I think the war is going to bounce off. I think the fundamentals are really strong in the economy. And the fundamentals are taxes, regulation. Those are kind of the two big moving parts where the government can have an impact anyway. And on both of those, Trump's instincts are very good. You know, Republicans in Congress haven't done as much as, I hope they haven't done as much as they promised. They never do. However, at least they're not causing new problems the way that, you know, Joe Biden might have. So, you know, we've got little bits of deregulation here and there. I think there was actually about 450 major deregulations last year, which is the best in history. That allows, you know, investment to come in and offer new products. That's a big deal. Taxes. Extending Trump's tax cuts was big. He particularly had a part in there for accelerated depreciation, which sounds boring, but it's very important because what that means is that. So, like, if you go out and buy a business, like if you buy a Laundromat, or by the way, if you buy a bitcoin rig, you can expense the entire amount against your income. So it's almost like a 401k. So, like, literally, you know, you can make 200,000, you go out and buy a bunch of bitcoin rigs or a cafe, you know, whatever, something that creates jobs, and you could literally pay no taxes. So that's a very, very big deal. That's, you know, rocket fuel to investment. Even the tariffs, you know, broadly speaking, tariffs are taxes. They're not great. However, the way that Trump's been using these tariffs is to put pressure on other countries. He's basically been saying, look, you can buy your way out of the tariffs if you invest in America. So Taiwan Semiconductor, I think put $100 billion factory in Arizona, a whole bunch of semiconductors, German auto parts makers are moving to America. There's all these companies that are coming in, they're investing. You're not seeing the jobs yet because it takes time, right? Like the Taiwan Semiconductor, I think it was like five years between blueprint and actually employing somebody on assembly. So these things take time. You know, Democrats keep pounding away. We're still losing manufacturing jobs. Now, if you look at what's in the pipeline, between the deregulation, the taxes, the accelerated, you know, beautiful things are coming. So I'm very optimistic about that. The Fed is a risk. It always is. The main concern there is that it panics, hikes rates. General rule of thumb is that every point you hike rates costs about a million jobs. Okay? So the Fed could absolutely strangle the economy. Hopefully it doesn't. I don't think, you know, Wash wants to. The other. I mean, those are really the only meteors on the horizon, you know, in the war. I mean, Iran's trying to get all kinds of stuff, frankly, the kinds of things that Iran wants, I don't think, like, for me, being a mega guy, I don't care. Like, I don't care if Iran controls the Hormuz. That's not my problem. That's somebody's problem. But it's not my problem. So, you know, I don't think the war is going to end up leaving any lasting damage. So I think the rest of the world, I'm pretty optimistic. Or the rest of this year I'm pretty optimistic. You know, if you look at inflation before the war, truflation is a private sector alternative to government statistics. They scrape real time. They do something like 1.4 million numbers and, and they look at the real numbers like they go to Zillow and they say, okay, what are houses actually selling for? Right. They don't have these BLS models, BS models. And before the war, truflation had US at about 0.7% annualized inflation. You can't get any lower than that. Literally, if you try to get lower than that, the Fed's going to come in and print money on purpose because it's an inflation machine. So that's literally as good as it gets. So you know, between the pre war inflation numbers, the jobs numbers, which again, you know, we've had a lot of strength in jobs, it's muddled because we got rid of 3 million migrants who were being counted as jobs. We got rid of. What's the number? 300,000 plus federal workers. Again, those are counted by jobs even though they're parasites. So you know, when you control for those things, good jobs numbers, good inflation numbers, I think very good growth numbers. So I'm actually, I'm very optimistic and you know, I think going back to the I thing, so we're seeing this massive bubble in AI. Normally in Austrian business cycle theory you expect to see those stupid bubbles during, you know, when rates are too low, rates are not particularly low. Rates are probably neutral at this point. In other words, if the Fed didn't exist, interest rates would probably be roughly where they are right now. So to see a.com style, you know, explosion, it, it's not the Fed, it's not that the Fed make money made, made money too cheap. That's certainly what they did in early covet. Right. That's why everything went up in covet, even though half the economy was shut. But at the moment it doesn't even look like that. So yeah, you know, without a doubt there will come a day when, you know, AI stocks will drop by 30 to 50%. Okay. The question is, you know, do they go from 200 to 1,000 back to 500? So that, that's my expectation. The question is just when is that going to happen? But in terms of the broader economy, I think we're actually in a very good Spot right now.
- [60:04]
Marty
Well, actually bringing this back to Warsh, had a conversation about this yesterday on the show. Another sort of policy position that he's put out there is that he doesn't want to do bailouts anymore. Like his definition of a recession is his businesses failing due to their own volition. If they get overextended on debt and they can't pay it back, they deserve to fail. And to your point, do they overreact one way or the other with interest rates? I'm very interested to see if he holds that line as well, because I think that's desperately needed is this ability to let companies fail.
- [60:41]
Peter St. Ange
Yeah, I'm cautiously optimistic about Warsh. It feels like he read James Grant's book the Forgotten Depression, which any listeners, if you haven't read that very strongly recommend. He talks about the last time we had a recession that the government did not try to fix. It's an amazing read, but. And you know, the punchline is, you know, let all the losers who created the recession get wiped out. That's capitalism. Suck it up. You know, that's what should happen. In 2008, Warren Buffett was ready to buy all those banks out of bankruptcy. Like, if Citibank goes bankrupt, it's not that, like the whole thing vanishes. Like, you know, it's not like a nuclear weapon just explodes, okay? Everything's still there. The bank's there, the employees are there, the whole thing's there. The deposit, it just gets bought by somebody else and shareholders get wiped out. So that's what should happen every time. You know, purge the stuff that everybody used to understand that. But anyway, yeah, it feels like Warsh is familiar with that history and he's familiar with the way that you actually do fix economic weakness, which is government gets the hell out of the way.
- [61:45]
Marty
What was that? 19? 19. 1918.
- [61:49]
Peter St. Ange
Yeah, it was like it was right after World War I. So, you know, you had the, what, guns going back to butter. So there was a bunch of adjustments to that and it's basically stretched over about a three or three four year period of which I think only about six to nine months were, were proper depression. And the government essentially just let it rip. They said, look, you know, you got to purge all this crap. Murray Rothbard is a great example or a great metaphor. He says, okay, imagine that you had an industry of locust fighters. So you had all these guys, and whenever the locusts come, these guys go out and fight the locusts. But you only use them one out of seven years, right? So every seven Years, you've got this explosion in the locust industry and then you have a locust recession. So what do you do? Do you give them free money? Do you give them money to tide them over the six years until the Locust. No, you let them go liquidate it. You know, they'll sell the locust fighting equipment at all, at a loss, but that's fine because they made profits when the sun was shining. You just let it be. And, you know, that's when you had like an actual legitimate temporary industry.
- [62:56]
Podcast Host / Sponsor Announcer
Right.
- [62:56]
Peter St. Ange
On the other hand, if you have pets.com and the economy implodes, what do you bail out? Pets.com? no, of course not. Right. That's obvious to everybody. Well, then why are you bailing out Citibank?
- [63:06]
Marty
Yeah, well, I mean, a lot of these private credit funds, too. Private equity, dealing with the private credit
- [63:13]
Peter St. Ange
funds that, you know, that's why part of me is actually okay with this whole shadow banking thing. Because the beautiful thing about shadow banking or or even shitcoins for that matter, is that there's no chance they're going to get bailed out. You know, when Wall street makes a mistake, they, you know, they essentially, they apparently get their. Get the right of check on your credit. You know, the rest of these guys, the, you know, private equity, the Blue Owl, the, you know, Solana, when, you know, when these guys wipe out, they wipe out alone. It's beautiful.
- [63:46]
Marty
Yeah, we need more of that.
- [63:48]
Peter St. Ange
Yeah, absolutely. So, you know, there's only a couple industries that have guaranteed bailouts. So cut those strings. If Kevin Marsh is amenable to that, then, you know, that'd be fantastic. Now we need Congress to get on board. And Trump, unfortunately, I'm not. Trump is mixed when it comes to helping corporations, unfortunately. But yeah, I would love to. To cut those strings.
- [64:11]
Marty
Yeah. Anything else on your mind that we didn't touch on before we wrap up here?
- [64:16]
Peter St. Ange
Let's see. We covered everything. Did we get the Politically Incorrect. What was it? Yeah, yeah, no, yeah. I think we covered pretty much everything. Oh, yeah. AI boyfriends and girlfriends. Apparently spending on AI Companions is now higher than it is on traditional dating apps. So that's what's coming.
- [64:38]
Marty
The waifus are here.
- [64:40]
Peter St. Ange
The waifus and the husbandus. Yes.
- [64:45]
Marty
That's depressing. I mean, that's.
- [64:48]
Peter St. Ange
I mean, it was always going to happen.
- [64:49]
Marty
I mean, Japan, Japan foretold. Foretold that trend coming. I mean, Japan was a leading indicator of that.
- [64:57]
Peter St. Ange
You know, young people are such a mixed bag, man. Like, If I were like 20 right now, like on the one hand, you have so much opportunity. On the other hand, you know, you have so many falling boulders. It's, it's a tricky time to be young.
- [65:10]
Marty
Tricky times. A lot of opportunity though. Now Gen Z, in my view, it's like half trad cast like crazy right wing and then half like nihilistic streamers that are, that are just trying to party.
- [65:26]
Peter St. Ange
Gen Z. Okay, so that's the question. So Gen Z already looks significantly more based than millennials. You know, like each generation sort of echo, like, you know, it's like a reaction against their parents. Right. So, you know, the boomers are communists. Gen X are based. Millennials are communists again. So that's my question for Gen Z. Honestly, I'm kind of optimistic. You know, I just saw my own kids who are, they're right at the tail end of Gen z. They're, they're 15 and 17 and you know, they cut their teeth or they learned about the world when, before the censorship went in. Right. So you could say, you know, you could say racist shit. You could say just the craziest out of control stuff that came to mind on YouTube. Really, up until what, 2016, 17. They grew up. So they got it all. And I mean, they are freaking out there, man. They're like more extreme than I am just in terms of, you know, like, they have no respect for, you know, any of like what they're told for the establishment. If they hear it from an official source, like their, their knee jerk reaction is bullshit and then they will look it up themselves. So I'm, I'm very optimistic for Gen Z. Now, having said, you know, the vast majority of them, they went through the socialist school system, you know, that 16 years of brainwashing if they went on to college. So I mean, yeah, a lot of them are. We're gonna have to pull them out of the matrix one by one. But broadly speaking, I'm, I'm pretty, I'm much more excited about Gen Z than I was about millennials.
- [67:06]
Marty
You love to see it, I mean, as a millennial, and I feel like I'm an outlier in the millennial millennial demographic. But you love to see Gen Z taking the reins and the distrusting authority. We need more of that these days.
- [67:19]
Peter St. Ange
We're absolutely. And you know, if they're like this currently when they're like still in the matrix, you know, like they're literally still in school, right. They have to, you know, parrot the, you know, BS their professors. So if they're already kind of based when they're still literally mid brainwash. I mean, you know, I think they're going to be nuts.
- [67:38]
Marty
Yeah, well, we'll see. This is. There's been a great catch up.
- [67:43]
Peter St. Ange
Yeah, always, man. It's great talking to you, man.
- [67:48]
Marty
It was a good amount of time between the last one and this one, so there's a lot to catch up on. The AI thing really took over over the last year, and I'm bullish right now. It's going to be chaotic, like you said, to be a lot of change, drastic change. But that is life. That is the arc of human history is constant change up into the right
- [68:07]
Peter St. Ange
to put it in perspective. So the average person changes jobs, I want to say, every three or four years. They change careers about every 10 years. Okay. So even. Even if the AI job losses are all career changes, that's about a 10% difference. Okay. It's not that big a deal. Like, so I'm 53. I've changed careers four times. I mean, like, and each time it was kind of fun. I mean, for me personally, it was fun. And, you know, I kind of like the blue collar jobs better than the white collar jobs. But anyway, I mean, it's part of life. It's been happening forever. People act as if, number one, cubicle jobs are like, amazing. Everybody hates cubicle jobs. Have you ever seen the Money? The movie Office Space? He's working in cubicle jobs. It's soul crushing. He's got to do the TPS reports, and the movie ends with him with the sun in his eyes digging a hole. That's AI. But the kicker is that digging the hole pays twice what the cubicle did. Like, future generations are gonna be like, why did you guys. Why were you, you know, mourning the loss of cubicle jobs? No, I think it's. I think it's good stuff that's. That's coming down the pike.
- [69:22]
Marty
I do as well. I do as well. Well, Peter, it's been a pleasure. And maybe we don't wait like a year or however long we waited to do it again. Catch up. Catch up this fall.
- [69:36]
Peter St. Ange
All right. All right, Marty, Be good.
- [69:39]
Marty
All right. Peace and love, freaks.
- [69:40]
Podcast Host / Sponsor Announcer
Okay, thank you for listening to this episode of tftc. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show and if you can leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and ad free, make sure you download the Fountain podcasting app. You can go to Fountain FM to find that $5 a month get you every episode a day early ad free helps. The show gives you incredible value, so please consider subscribing via Fountain as well. Thank you for your time and until next time.