America Is 8 Million Jobs Short — And It's Getting Worse

Summary

Impact Theory Podcast Summary

Episode: America Is 8 Million Jobs Short — And It's Getting Worse
Host: Tom Bilyeu
Guest: Jeff Snyder (Eurodollar University)
Date: July 16, 2026

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Overview

This episode features macroeconomic strategist Jeff Snyder, who joins Tom Bilyeu to dissect America’s labor and economic malaise in the wake of pandemic policies, supply shocks, and misunderstood monetary signals. Together, they interrogate mainstream narratives about inflation, stock market “signals,” and the real drivers of economic pain for ordinary Americans. The discussion dives deeply into how distorted economic signals, persistent safety-seeking investment, and a slow-motion jobs crisis have created a depression-like environment masked by asset booms and misleading numbers.

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Key Discussion Points & Insights

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The Misleading Signals: Stock Market ≠ Economy

• Stock market highs do NOT reflect real economic health.

  • Snyder argues that booming equities are fundamentally disconnected from economic realities. Since the 1980s, stock investment has become a cultural default, driven by passive inflows, not as a reflection of actual prosperity.
  • "[The] stock market doesn't really have a whole lot to do with the economy. Anybody who looks at the stock market and thinks it's telling you something about the economy, you're being misled." (Jeff Snyder, 15:14)
  • The stock market, via automatic retirement account flows, continues to inflate even when the underlying economy is weak or stagnant.

• Valuations reflect this disconnect.

  • CAPE ratios (a measure of price vs. earnings over time) are at extremes (referenced as ~44, vs. the ~17 normal), signaling asset bubbles rather than robust earnings growth.
  • "So I look at that and I'm like, oh, this is euphoria. ... But yet you're seeing 1930s. We're in the Depression. Parallels." (Tom Bilyeu, 14:33)

Yield Curve: What It Really Tells Us

• Yield Curve as Truth Detector
  • Snyder emphasizes the importance of the yield curve over conventional indicators. Normally, an upward-sloping yield curve indicates optimism and growth. A flat or inverted curve at low rates signals persistent demand for safety and reflects a fear-driven market (“depressionary” behavior).
  • "A low flat curve is a sign that there is a persistent bid for safety." (Jeff Snyder, 08:40)
  • Historically, rates are low in depressions (1930s US, 1990s–2000s Japan), contrary to the "low-rates-are-stimulus" narrative.
  • "People are taught low rates are stimulus, when historically speaking, low rates are a sign that money is tight." (Jeff Snyder, 05:35)

The Pandemic’s Lasting Damage: Supply Shocks and Labor Gaps

• Inflation was a supply shock, not traditional money printing.

  • The 2021–2022 price surge stemmed from a temporary, severe imbalance as lockdowns crushed supply but demand (boosted by stimulus checks) snapped back fast.
  • "So what ends up happening is simple economics... demand goes up and supply is fixed... the only way to reconcile that... prices go up, which they did." (Jeff Snyder, 22:32)
  • Prices made a “phase shift” higher and stayed, but there was no wage catch-up.

• Jobs Shortfall: The Heart of Depression Economics

  • Post-pandemic, employment growth has stalled. The U.S. now has about 8 million fewer jobs than the pre-pandemic trend would suggest.
  • "It's 8 million jobs short, which means that's 8 million people who aren't working. That probably should be." (Jeff Snyder, 15:14)
  • Many companies hired in anticipation of full recovery but later realized demand was lacking—not due to AI layoffs, but because of a weak recovery. Hiring stopped or reversed for millions.

The K-Shaped Economy: Apart and Unequal

• K-shaped reality: Asset owners gain, ordinary workers stagnate.

  • "What you see is that first of all payroll started to come back after the lockdowns... but then around 2022 and 2023, the trend started to change. And then you get into 24 and 25, and now the trend is sideways to lower... And now the trend continues to go up, but payroll growth has completely stopped." (Jeff Snyder, 15:14)
  • Declining purchasing power and job opportunities create disaffection, particularly among young people.

• Why does it feel so bad?

  • "People really feel that the system doesn't work because it actually doesn't work. But not being able to identify why it doesn't work leads to all of these other confusing topics and confusing takeaways." (Jeff Snyder, 35:48)

Socialism’s Appeal in a Depressed Economy

• Desperation fuels radicalism.

  • Snyder explains the Marxist narrative’s allure: as asset ownership and wealth concentrate, and entry to “a good life” (home, car, security) becomes out of reach, people look for alternative systems.
  • "You can understand where the appeal of socialism is coming from because the socialist is telling you, look, this economy sucks. They're all lying to you... there is no end in sight..." (Jeff Snyder, 40:44)
  • Median age for first-time homebuyers is now 40; huge costs, weak incomes freeze out young people.

• Why is socialism still not “the answer”?

  • "[Socialism] always makes it worse. But you can understand... where this is coming from." (Jeff Snyder, 39:51)
  • Historically, severe downturns led to social/leftist movements, but true recovery has always been tied to system resets and renewed real economy opportunities.

The Path Out: System Reset, Trust, and Digital Currency

• History is cyclical, not linear.

  • Periods of stagnation (like now) end with major resets, technological leaps, or shifts in the monetary system—NOT inevitably with war or collapse.

• The real monetary plumbing is broken: The Eurodollar

  • According to Snyder, the global economy runs on a system of ledger-based offshore dollars (the Eurodollar system), not printed money. Since the 2008 crisis, “risk appetite” and trust evaporated, resulting in chronic under-investment and deflationary psychology.
  • "[The] Eurodollar is the money we all use, whether we know it or not. That is the global reserve currency, not the US Dollar." (Jeff Snyder, 51:37)
  • The breakdown of this trust-driven, mobile system created a “depression mindset” globally—a system freeze that demands a new solution.

• A look forward: Digital, decentralized money and trusted ledgers

  • Snyder predicts the next big prosperity cycle will depend on a new, globally trusted ledger—likely some form of decentralized, stable digital currency—to restore faith and facilitate risk-taking, investment, and economic mobility.
  • "We have some kind of decentralized ledger system that proves itself... Suddenly people start trusting the system again. Sentiment changes. You get out of ... the deflationary mindset." (Jeff Snyder, 61:04)
  • But such a transition will be messy, and getting the needed trust back is a massive challenge.

China: Not a Monetary Savior

• China is accumulating gold but can’t create a new reserve system.
  • While China hoards gold and clamped down on “paper” gold trading, this is more a coping mechanism for its own deflationary/overcapacity crisis and dollar inflows—not a prelude to overtaking the dollar.
  • "The Chinese have the biggest interest in trying to do something different. The problem for them is they can't." (Jeff Snyder, 69:05)
  • Key: A reserve currency must be mobile, accessible, and be supported by respected contract law—criteria China cannot meet.

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Notable Quotes & Memorable Moments

• On Stock Market Disconnect:

  • "Anybody who looks at the stock market and thinks it's telling you something about the economy, you're being misled." (Jeff Snyder, 15:14)

• On Interest Rate Fallacy:

  • "People are taught low rates are stimulus, when historically speaking, low rates are a sign that money is tight." (Jeff Snyder, 05:35)

• On Labor Gap Reality:

  • "You look at where payrolls are versus the trend, it's 8 million jobs short, which means that's 8 million people who aren't working. That probably should be." (Jeff Snyder, 15:14)

• On Depression, Not Recession:

  • "The Depression was not 29 to 32, it was 32 to 41. It was the lack of upside." (Jeff Snyder, 63:59)

• On the Systemic Trap:

  • "People really feel that the system doesn't work because it actually doesn't work. But not being able to identify why it doesn't work leads to all of these other confusing topics..." (Jeff Snyder, 35:48)

• On Socialism’s Appeal:

  • "It looks like the Marxists were right. Because the economy that I live in is nothing like what I keep hearing about from all the people that I'm supposed to trust..." (Jeff Snyder, 43:30)

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Timestamps for Important Segments

• Yield curve explained & why it matters — 02:09–05:35
• Why low rates signal fear, not stimulus — 05:35–08:28
• Why the stock market is not the economy — 15:14–20:45
• The supply shock, not money printing, drove inflation — 22:32–26:50
• America’s 8-million job shortfall and K-shaped aftermath — 15:14–35:48
• The appeal of socialism and why it’s rising — 39:51–44:21
• How the 1950s prosperity cycle was born — and what could work now — 47:09–51:32
• Eurodollar system primer — 51:37–58:21
• Why China can't replace the dollar as world reserve — 68:57–74:53
• Investment strategy during depression economics — 63:25–67:04

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Final Takeaways: What Can Individuals Do?

• The official numbers are masking real economic pain—be skeptical.
• Don’t mistake asset booms for genuine prosperity.
• Defensive investing (safe havens, gold, some liquidity) makes sense when the world is this uncertain—but total withdrawal isn’t necessary.
• The system’s reset will hinge on regaining widespread trust—a process that could be messy and prolonged, likely involving technological shifts rather than political ones.
• Macro understanding is key: “Depression” means lack of upside and widespread stagnation, not just periodic recessions.
• History’s cycles repeat, and if we can navigate the transition, robust growth can resume; but it will take time, trust, and innovation.

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Where to find Jeff Snyder:

• Eurodollar University (YouTube, Website)

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Memorable closing:
"Speak the truth, be legendary." (Tom Bilyeu, 75:19)

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Summary by Impact Theory — Skip the noise, see the real levers of the modern economy.

Transcript

[Jeff Snyder]

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[Jeff Snyder]

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[Jeff Snyder]

People really feel that the system doesn't work because it actually doesn't work. First of all, the stock market doesn't really have a whole lot to do with the economy. Anybody who looks at the stock market and thinks it's telling you something about the economy, you're being misled. So for the entire 2010s and into the 2020s, we've been sitting here watching the US government get broker and broker and broker stupider and stupider and stupider.

[Tom Bilyeu]

From an investor standpoint, how do you think about this?

[Sponsor/Ad Announcer]

Jeff Snyder, welcome to the show.

[Jeff Snyder]

Thanks for having me. Tom.

[Tom Bilyeu]

Good to see you, man. Truly a pleasure. I've watched a lot of your content. I think you have insights into the way that the global economy works that are extraordinary, have been very helpful to me. Now when I evaluate the economy right now, I see distress despite the stock market hitting all time highs. Now I look primarily at US debt, money printing, inflation to build my thinking. But I know you have a different take on what really drives the economy. So what signals do you look at? And when you look, do you see an economy in trouble right now?

[Jeff Snyder]

Yeah, I mean we've seen an economy that's been in trouble for quite some time and it looks like it's resilient simply because of the fact it hasn't fallen off. You know, it's either, it's we're given either or either the economy collapses tomorrow or everything must be fine. And you know, like anything else in life, it's usually the truth is somewhere in the middle. So what I look at is look at financial information I get, you know, look at, you know, the yield curve is a good place, place to start, but there are many other curves that are just as helpful and just as insightful.

[Tom Bilyeu]

Now if it doesn't know the yield curve, if that's where you start, give me a quick primer on that.

[Jeff Snyder]

The yield curve is nothing more than treasury yields plotted in a line from shortest maturity to longest maturity. What you normally want to see in a generally healthy environment or what's indicated to be a healthy environment is an upward sloping curve. Not steeply upward sloping, but somewhat upward sloping because that tells you the marketplace is thinking generally positive future money rates will be a little bit higher the further out in time you go, which is what you would expect to happen in the financial system. And if now, if rates are nominally at a relatively decent level, historic level, with an upward sloping curve, you think, okay, everything's good. That's the marketplace saying, I'm happy, don't really want to own too many Treasuries. They got upward sloping, which means higher rates in the future. That's the base case, ideal case. If it doesn't look like that, then you got to figure out why that is, what is reshaping the curve or twisting and distorting it out of that ideal yield position. And it could be a number of different things. If we're going into an inflationary period, what you would expect to find is that the yield curve would steepen out, which is this gets into the interest rate fallacy. And what's contrary to most people's perceptions, because what they're taught is that higher rates are restriction and therefore that's anti inflation and lower rates are stimulus and therefore that's, you know, likely inflationary because you hear it all the time, the Fed, lower rates, that's going to be inflationary. That's exactly the opposite.

[Tom Bilyeu]

Okay, I bang that drum hard.

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So this is one of the reasons

[Tom Bilyeu]

that you're so interesting to me. I want to understand what's true. So walk me through as somebody who I look at the deficit spending and I go, we're going to be money burning, because you have to. That money has to come from somewhere. And so now we're assuming we can't just sell all the debt that we want to sell. The Fed's going to have to step in. The Fed's going to have to swallow up some of that. The Fed's going to lower rates, stimulate the economy, get the cheap money flowing so that people can keep everything moving. So when I look at that, the story seems right. You get cheap, easy money into the economy, it's going to be inflationary. So what am I getting wrong? Is there something else that's really driving it or what?

[Jeff Snyder]

Historically speaking, during depressionary periods, interest rates are low and interest rates that we can see are low because people want safety and liquidity. You go back to the 1930s, which is the clearest example. 1930s, you had too many parallels to what we're experiencing today, all the same types of stuff. You got a big crash and then a depression afterwards with lingering unemployment, yet the government went completely insane. You had the New Deal, which a lot of people said at the time was going to lead to skyrocketing interest rates and out of control inflation. The Federal Reserve hiked its reserve requirements in 36 and 37. So there was the same type of setup, but it never actually happened. And the reason was because the banking system had broken down so much and deflationary money became so entrenched that the banking system, financial participants, wealthy individuals, wanted safety and liquidity. So no matter how irresponsible the FDR's New Deal got to be and how fiscally reckless the government became, you know, there was no need to bail out the treasury market because there was endless demand for safety and liquidity. And unfortunately, safety and liquidity means US Government debt, other forms of sovereign debt too. I mean, we wish that wasn't the case. And it's not really about the government so much as that historically speaking, government debt markets are the deepest and most mature. And what really matters more so when we talk about safety is the liquidity characteristics more than say, the credit profile of the issuer.

[Tom Bilyeu]

Okay? Meaning a ton of people are buying the debt. No worries. I put some money in, I'll be able to get it back out.

[Jeff Snyder]

Exactly. I can sell it tomorrow at a price that I'm reasonably assured that I know what it is today. And that becomes very important when you talk about Treasuries and other government bonds as collateral, which is an important part of the monetary system, this Eurodollar system. But in depressionary periods, that demand for safety overwhelms every other consideration. So for the entire 2000 and tens and into the 2000s, we've been sitting here watching the US government get broker and broker and broker, stupider and stupider and stupider. And yet, whatever. Despite all of the proclamations that bond vigilantism was going to come back roaring into the system that the Fed needed to bail out the treasury market, it never once happened. And the reason was because of depression economics, demand for safety overrode every other consideration and continued year after year after year. So in depressionary periods, that demand for safety becomes paramount, which means that interest rates on instruments like government bonds stay lower throughout the deflationary period, which is again contrary to what people are taught. People are taught low rates are stimulus, when historically speaking, low rates are a sign that money is tight. And the conditions are more depression than Not Japan, another perfect example. Throughout the 1990s and into the 2000s, same thing. You had a depressionary case where JGB yields absolutely plunged and then stayed there for decade after decade because of the paramount demand for safety and liquidity. And then the opposite is that is true too. You go to the 1970s in the Great inflation. What were interest rates doing in the great inflation? They were going up. Because in an inflationary period we have nominal opportunities. In the real economy, the last thing you want to own is some kind of safe and liquid government bond. You're going to sell that thing and chase the nominal opportunities. In a real economy, in fact, you have to. Because on a real basis, the only way to generate returns that are sufficient to make a profit is to go into the real economy to ditch your safety and find something else. So interest rates tend to rise during inflationary periods. The interest rates that we watch and we see. So that's the starting point. So you look at the yield curve that should be modestly upward sloping. If it starts to go up in the long end, that's not a sign that the, you know, the world is, is trying to fight inflation. That's a sign that the market expects inflation to happen. Or it could be a better sign if the nominal yields or the yield curve starts to steepen out. That could be a sign the market is thinking, hey, we did it. We finally, we finally achieved lift off and we're into a recovery period and some legitimate economic growth. So growth expectations are rising because that's what a long run yield actually is. A long run yield isn't the Fed, it's growth and inflation expectations through time with the Fed and central banks having some limited influence on the yield curve. So we're trying to figure out what this, what the, what the situation might be today and therefore where the system is going tomorrow. You start with something like the yield curve and see what the shape is and how it's changing. Because the shape and the changes in shape actually give you a clue what the market is thinking about probabilities of how things will evolve through time.

[Tom Bilyeu]

Now, are you saying that the real vibe of the economy right now is depressionary? That people are in a like pure fear mode?

[Jeff Snyder]

See, that's again, it's not an either or. There's always gradation and shades of gray here. So, yes, what we're saying is that the yield curve, which is at a, historically, it's still at a relatively low nominal level, which I know people don't, it's higher than it was than in 2010s. But when you line it up a chart that shows history rates are still pretty low. And when you have a yield curve that has been flattening out at a low nominal level, that tells you there's more fear, more demand for safety than there is the idea that we're going into an inflationary period with exceptional economic growth opportunities. So a low flat curve is a sign that there is a persistent bid for safety. Which again explains why, despite all of the inflationary rhetoric over the 2000s, again, the government's deficits haven't mattered. Even though they've gotten completely ridiculous. The demand for safety continues to be there year after year after year, which is one of the things that should grab people's attention. You should start asking yourself if the 2020s didn't break the treasury market for either inflation or fiscal reasons, why, what the hell must be? What must be happening? What must the bond market be seeing that continues to keep up this safety bid year after year after year?

[Tom Bilyeu]

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[Tom Bilyeu]

Okay, this is so interesting.

[Jeff Snyder]

All right.

[Tom Bilyeu]

It does feel like we have a tale of two economies. When you first said there are parallels to the 30s, I actually thought you misspoke and I was about to be like wait, do you mean the late twenties? Then as you went on, obviously I realized you really do mean the 30s. So given that a lot of people, myself included, are screaming AI bubble like yo, this is getting crazy. Where the for anybody that knows what a Cape ratio is like, a cape ratio is basically over a 10 year period. What's the typical distance between what they're actually the company's actually making. And then what their Stock sells for 16 to 17 is like the normal multiplier. We're like 44, so we're like way

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out over our skis.

[Tom Bilyeu]

So I look at that and I'm like, oh, this is euphoria. This is exuberance. But you're saying, well, hold on. Even with the 30% inflation that we saw from, like 2020 to now, people are still just, hold on. I need safety. I want to be in bonds. Is it because asset owners are seeing one story and the person on the street is seeing something different? Like, help me understand why. I can very easily give you a narrative that this is euphoria. People weigh out over their skis, but yet you're seeing 1930s. We're in the Depression. Parallels.

[Jeff Snyder]

Yeah. First of all, the stock market doesn't really have a whole lot to do with the economy. Anybody who looks at the stock market and thinks it's telling you something about the economy, you're being misled. I know it's because we're told. Honestly, I've been doing this a long time, and I remember back in school, that's what we're told, that the stock market is the preeminent discounting mechanism for financial and macroeconomic information. It's complete bullshit. It's a story spun by Wall street, and it's a story spun by Wall street to justify how the stock market took over as the preeminent form of savings. So if you look at the Cape ratio, and I'm glad you brought that up, because it's a perfect, simple illustration of this. This phenomenon, somewhere around the early 1980s, something substantial changed, something structural changed. It was with, you know, technology, things advanced. And eventually what ended up happening is people stopped saving money in the way that they had before, which is you put your money in a bank and you get a CD or something like that, some kind of interest be deposit, you started speculating in equities. And then suddenly that speculating in equities became the norm. And as more. And people started piling money into equities, because that's just what you did. And a lot of it was passive. You know, most of people's exposure to equities is through retirement accounts, which you don't really direct. You put your money with your employer or some annuity, and they put the money in the market for you. So the more people who saved in the stock market, the more money flowed into the stock market, regardless of what the conditions were in the financial system or the real economy, which meant that valuations kept getting stretched further and further and further. Not because that people were necessarily over optimistic. Though I do agree with you, the AI bubble is definitely a bubble. But in general terms, the broader stock market continues to grow further and further away from the real economy because it's just a function of people putting more money into the stock market. So all the rising indexes really tell you is that more people are putting the retirement savings in equities and nothing really apart from it. So you can have a situation where you have an economy that absolutely sucks. I mean we heard the Vibe session for the last couple of years. Now everybody talks about a K shaped economy. That's an alarm bell. It's a clue that tells you something isn't right here. So you can have that lackluster economy, stagflation, whatever you hell you want to call it, it's not a good economy, it's really a depression economy. Because the depression isn't about the negative numbers, it's about the lack of upside, which is a K shaped economy. But you can have a K shaped economy at the same time the stock market's hitting record highs. Because those two things don't really relate to one another. And the reason why we have a depression economy is that the inflation that you talk about was really front loaded as a phase shift in 2021 and 2022, which meant that prices zoomed ahead back then while incomes lagged way behind. So in a sense what ended up happening is we friggin impoverished the vast majority of people on the, on the planet. You know, all working people who didn't have any kind of, any kind of access to financial assets found themselves suddenly far behind. Well, in that kind of situation where you're making people poor for not for nothing that they did, you don't really expect to have a well founded, well grounded, sustainable economic boom that comes out of that. We still have to figure out where the bottom is, where the equilibrium is. From the pandemic and the lockdowns, we made people poorer. And that's what they're really complaining about. It's not really about prices, it's about the lack of jobs and the lack of incomes. If you want to really look at statistics that show the depression economy, take the establishment survey payrolls, just payrolls, which is the most over, it's overstated. The most optimistic look at the labor market. You take the payroll number and put it against the trend from the 2010s, which is not a good trend to begin with. What you see is that first of all payroll started to come back after the lockdowns and the pandemic. Some people called it recovery. It really wasn't. But then around 2022 and 2023, the trend started to change. And then you get into 24 and 25, and now the trend is sideways to lower. Now it's not just sideways to lower. It's sideways to lower millions of jobs short of where that trend was. So at best, we got as close to 5 million payrolls in 2024. And since then, the trend continues to go up, but payroll growth has completely stopped. In fact, payrolls have been sighted. In 2025, there was 180,000 payrolls total for the entire year. That's the payroll growth, according to establishment, for an entire year. An economy of this size. I remember a couple of years ago when 180,000 was a bad month. Now 180,000 for an entire year. So you look at where payrolls are versus the trend, it's 8 million jobs short, which means that's 8 million people who aren't working. That probably should be. Maybe you make an adjustment for demographic shifts and something like that, but it's not 8 million. So we have people who are impoverished by the 2021, 2022, supply shock phase shift. You know, prices went up faster than incomes. Then you had companies who realized they didn't need as many people, not because of AI, just because the economy never recovered. So you have fewer people working, less income. Money that they're getting. Their income doesn't go nearly as far as it did. It's the recipe for exactly the type of environment where people would want to own US Treasuries, even though the US Government completely goes insane. But it's tough for the regular person on the street to untangle all this information because they're not watching this. What they hear is the GDP report. They see the stock market. They listen to Jay Powell go on and on about how the. How strong and resilient the economy is, as if he doesn't have a vested interest in lying to your face about it, because he's the one that everybody blames when the economy is poor, and somewhat rightly so. So it's very hard for people. They feel something. They feel something is wrong, but they don't really know what it is because nothing in the mainstream has set them up to be able to really decipher the language of macroeconomics and financial conditions.

[Tom Bilyeu]

Okay, you gave two really interesting things that I want to drill down on. So they're mechanisms. Mechanism number one, you said something changed in the 80s. It sounded like, I'm going to put my own words to it. You tell me what I get wrong here. So 80s mechanism is a cultural narrative takes hold that says, just save in the stock market. Because the vast majority of people that are saving in the stock market can't disentangle all of these signals. They're just like, nah, just put it in. And they're not watching cape ratios. And so as they get crazier and crazier, they're like, well, everybody's telling me the stock market's doing great. I'm just going to keep doing what I'm doing. And so that becomes a cultural behavior that I'll parallel to Japan. So I talk to my audience a lot about Japan. So Japan goes from two nuclear bombs to being the strongest economy in the world. Briefly, in the 80s, bubble burst in 89. They were like the equivalent of putting your hand on the stove, getting burned, and for the next 30 years being like, I'm not going to use the stove. So no matter how much stimulus the government tried to pour in by holding rates low, they just couldn't get inflation going again. Because people are like, I'm paying off my debt, I'm saving money. I'm not buying stuff. Forget that. I lived through that. Not doing that again. So you've got these two different reactions. You've got America, maybe the west, more generalized, just plowing cash into the stock market. It keeps going up. They're not really paying attention. Okay, so if I got that mechanism right, then we've got the next one that I want to better understand, which is what exactly caused mechanistically, the inflation. I think you're pegging it more to 21 and 22. But what mechanistically created that if it wasn't government debts and money printing, what

[Jeff Snyder]

caused it was the imbalance between supply and demand. It was a classic supply shock case. And we've seen this throughout history. In fact, nobody, I mean nobody remembers it in the US because we haven't seen one since the early 1950s, but we had three of them in succession. 40s and 50s, it's the same thing. What ends up happening is you get a rush of demand and supply is not able to respond to it quickly, which makes perfect sense when you think about what was going on in 21 and 22. You had an economy and a global system that was hindered by the lockdowns and emergency Covid and pandemic measures, especially in the labor market, where you Had a sudden increase in demand, which wasn't really an increase in demand, it was sort of the demand. Everything got shut down in 20. So we were operating at a low level and demand started to come back more quickly than supply was able to. Supply was able to service it. So what ends up happening is simple economics. You line up a supply and demand curve against each other. What happens when demand goes up and supply is fixed and supply is relatively inelastic? The only way to, to reconcile that in simple economics is prices go up, which they did. So that was the supply restraints in 21 and 22 were the vast majority of the reason why consumer prices went up as much as they did. And that's why consumer prices largely since then have plateaued. And it's sort of like a new paradigm. So you see this big phase shift in 21 and 22, which is consistent with the supply shock. And then prices kind of level off. They're never going to go back to where they were in 2019 because that's completely impossible. You can never go backward. But it is consistent with a supply shock case that we see throughout history. It's basically a phase shift. And the problem is, and what we're really, what was supposed to have happened is that first of all, prices weren't supposed to be that imbalanced. But assuming that they were, the point of the government stimulus, you know, the government payments, was that, okay, we're going to try to give people some temporary relief from higher prices and the higher costs of interfering in the economy. And then they would be able to, over time, their incomes would rise faster than prices after the supply shock and after the phase shift, so that incomes would rebalance and renormalize at a higher price level. But the problem is that never happened. So instead for the vast majority of people, you got the phase shift where prices went up. And then of course, yes, they continue to go up, but they've gone up at a much slower rate since then. When you take away the rental component and really it's back in the 2010s all over again. But after the phase shift, you know, incomes were, the key was always labor and incomes, incomes were supposed to rise a little bit over time, but incomes were supposed to rise not to just where the prices were, but to then to go above them. And that was the expectation that we were given in 2022. When everybody said we had a red hot recovery, we really didn't. But the, the phase shift in the effect on consumer prices made it seem like that was a legitimate pathway forward in fact, a lot of people bought into it. And companies bought Amazon, some of the big tech companies, they bought into this idea that that was going to be the way that the government had engineered the perfect solution to the pandemic and the lockdowns. What it really did was created, created this impoverishment and lack of recovery. Because once you realize as a business, you know, nominal, your nominal revenues are rising, but you're not actually selling more goods, you don't actually need to rehire the workforce that you had beforehand. So not only do you have incomes that were insufficient to pay for the supply shock and the rise in prices, you also have businesses saying, especially in the car business, perfect illustration, we're making less cars, but making more money per car. Why do we need to hire all the workers back that we let go during the pandemic? And so in business and industry after industry, this is where we get into what I said before about the establishment survey. Jobs never recovered, so incomes could never recover. And if incomes never recovered, spending doesn't really recover. And so there's no pathway forward for generalized income through the economy. And this is not just the US phenomena, this is the entire world. There's no pathway forward for incomes to renormalize to higher price levels. And so we've been stuck for the last several years trying to negotiate a system where people are impoverished and they know it, but they don't know why they're impoverished and why nothing seems to be going in the right direction. So mechanistically we had the supply shock phase shift that made people poor, made their purchasing power go down. It looks like inflation and money printing, but it was only temporary because it was more so the basic imbalance between supply and demand in the economy that was engineered by really stupid, ill thought out, ill conceived government policies related to the pandemics, the lockdowns, and then the opening up afterward.

[Tom Bilyeu]

Okay, so if we wanted to navigate that moment well and not end up here, and we'll get to, we are here, and so what do we do about it? But if we had wanted to avoid that, it's basically you just can't lock down because you create this one thing I think you implied, but didn't quite state, and I want to make sure that I understand it perfectly, is that by doing the lockdowns you made it impossible to make the things that people want to buy. And so you've crushed the supply side. But the demand side either held flat or actually went up because people are sitting at home, they've got a stimmy check. And now they want to buy something, but people can't make new stuff. And so now you have more money chasing not only the same goods, you have more money chasing fewer goods. Boom, you get that phase shift that you're talking about in terms of the jump that comes out somewhere around 30% would have been fine had the jobs recovered, but the jobs didn't recover. Now clearly the jobs didn't recover. You were very articulate about because people realize, oh, well, nominally meaning relatively, not in real terms, but relatively, I'm making more money per car was the example that you used. And therefore I'm making more nominal dollars with fewer employees, fewer cars sold. Cool, I'm good. And so people started saying, well, I'm doing all these layoffs because of AI, but in reality I'm doing these layoffs because the economy hasn't recovered. And so I don't have the re normalized demand and I can sort of mask it with the inflated dollars. And so, meh, I'm just going to keep moving forward. The K shaped economy starts going farther and farther apart and now we have pitchforks sort of looming at the edges as the people who are now 30% underwater plus the call it 8 million people that should be working but aren't. And that's how we've ended up here.

[Jeff Snyder]

That's kind of the generalized overview. And yeah, you can see any number of examples. I mean, a perfect example, you're talking about Block. Jack Dorsey's company made a huge fuss a couple of months ago when he said, we're laying off, what was it, 40 or 50% of our workforce. And everybody's, oh my God, he's doing it because of AI the company. Block did reference AI, but what they're really saying is, look, we hired too many people back in 21 and 22. In fact, Dorsey admitted we hired for two companies because we thought there was going to be legitimate recovery because that's what everybody said. And it looked like that was going to be the pathway forward. We realized that wasn't true. And eventually, I mean, you can hang on a little while because most employers do, there's, there's usually a lag in time before you realize the economy isn't what you think it is because you hold out hope, okay, maybe this year will be the year that it turns around, but eventually you go long enough where it doesn't turn around. You hired too many people a couple of years ago, you start getting, you start making adjustments. And so that's what really happened in the labor market. You know, people started hearing about the establishment survey turn negative in 2025. At the margins, businesses were realized. Amazon, another perfect example. They staffed up tremendously in 21 and 22. And since then, the level of employees, especially United States at Amazon has been, you know, worldwide it's a little bit higher, but in the United States it's been trending lower because businesses realize we hired way too many people back then. We don't have anything for them to do. We got a little bit more nominal revenue. But now we need to readjust to the economy that we have, not the one that we were promised or the one we would like. And in that process, that adjustment process, it makes it even worse because people who are at least aware of the impoverishment and the disparity between income and prices now become even more aware as they see job opportunities diminishing and disappearing all over the place. So the K shaped economy narrative isn't actually a narrative. It's a way to describe the situation in a way that's at least familiar enough for people without having all of these details filled in. But that's really where we are. And you know, what you said earlier, the original problem here, original sin, if you want to call it that, was that the lockdowns, I mean, once you interfere with the economy in that way, you're going to get into the law of unintended consequences. That's just the way it is in a complex system. You can never predict how it's going to go. And if it starts to go in one direction and go too far in one direction, there's really nothing you can do about it. But by interfering in such a big way, they set in train, you know, a set of, they set in motion a train of events that led to all of these imbalances. Because that's what happens when you interfere in a natural system. Any interference will lead to some kind of distortion, which is really what the supply shock in the, in the, the phase shift in prices was. It was a distortion in the economy. Is the economy telling you we were being just, we're being distorted here and this is going to be a big problem. So the problem is, you know, whether or not you're sympathetic to the lockdowns and whether or not that was, that was a necessary thing that had to happen for the pandemic. As far as from an economic economics perspective, a purely economics perspective, there was really no way going back after that.

[Tom Bilyeu]

Okay, well, if the, a lot of companies anyway did the rehiring in an anticipatory fashion.

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[Tom Bilyeu]

So I'm going to hire now, bring people back in. So a lot of people came back into the workforce, but something stopped that from solving the problem. So why by bringing all of those people in, did that not sort of re stimulate the economy? Because now they've got a job again and presumably they've got money, but they were never able to go back to, or they didn't go back to purchasing enough that the economy renormalized. Why not?

[Jeff Snyder]

Just simply because it wasn't enough People, the number of people who were let go during the lockdowns and the number of people who were brought back after them just never normalized. Yeah, you look at it again, you have to keep in mind population growth and expansion. So while there is nominally more jobs now than there was in 20, you know, 20, early 2020, just before the lockdowns, it's nowhere near enough. Again, that's where the trend line becomes important because you need at least 2 million jobs every year just to absorb new entrants into the marketplace. So if you're, you know, what is that, six years ago? So six years you should have at least probably, you know, two and a half million. But just to be safe, let's say 2 million. So six years you should have 12 million more jobs. When we only have about 7 million more jobs, it's actually more, it's worse than that. But when you look at some of the other statistics, like the household surveys, it's more like 10 or 11 million jobs short. But either way, the point stands. You have two basic problems. People who now they can no longer buy as much as they did with the same amount of income. That's the phase shift in prices. So you want to go buy a car. Well, it's 30% more expensive, which means some people are no longer able to afford a car because their incomes didn't go up by 30%. That's number one. Incomes don't go far enough to you for you, for more people to be able to buy the same stuff that they used to buy before. And the second thing is people can't buy anything when they're not working. Yes, the government gave you a bit of a transfer there for a couple years, but those transfers ended up running out. And after those transfers ran out, what happened? There was no jobs available, so you couldn't get to work. So you've got people who can't buy as much as they did before. And at the same time, you've got millions of people who aren't working that should be working. And that amount of marginal missing activity explains why we never really got to a full recovery. But because it doesn't look like the typical traditional recession period, businesses have been stuck in this weird limbo where they're trying to figure out, well, where's the right level of business? It doesn't look like a recession, say like we went through in 2001. We just fire a bunch of people, we go through a downturn and come back on the other side. It's been this slow moving kind of train wreck where a few businesses here figure out, well, I'm going to stop hiring, I'm not going to hire anybody because I don't have anything for them to do. A couple of businesses over here think, well, I've got too many employees, I'm going to let one or two go. You don't get the mass waves of unemployment that looks like a traditional recession, yet you get all of the problems that you would associate with recession because it's these unique circumstances that created it. So we have this kind of quasi recessionary environment. Which again gets back to the original discussion. Why is there so much demand for safety and liquidity? Because we're in this weird type of period or weird type of situation where it's neither growth nor the end of the world. It's kind of somewhere in the middle. And I think most people, like I said, perceive that there's something wrong here. We feel like we've been left behind because they have been left behind and nothing is changing. That's the other part of this. When you think about moving forward. It's been how many years now and nothing has changed. I mean, you hear about the no higher economy. It's been no higher since really around 22 and 23. That's several years without really big time job opportunities, which leads to all sorts of other consequences, not just in the macroeconomic realm. And we've got, you know, socialism, you got political upheaval and things like that because people really feel that the system doesn't work because it actually doesn't work. But not being able to be able to. Not being able to identify why it doesn't work leads to all of these other confusing topics and confusing takeaways.

[Tom Bilyeu]

Taking a short break, but there's more impact theory after. Stay tuned.

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[Tom Bilyeu]

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[Tom Bilyeu]

Thanks for staying tuned. Now let's get back to it. Okay, so we are where we are. Is socialism the answer or is there a better way out of this conundrum?

[Jeff Snyder]

Socialism is never the answer. Let's be honest about that. It always makes it worse. But you can understand, and not to, not to have too much sympathy, but you can understand where this is coming from. And let me throw a couple of statistics out there, the national association of Realtors, to really drive home this point about people being left behind and too many people being left behind. The K shaped economy, every economy is K shaped, but economy that's healthy has fewer people in the bottom than the top. An economy that's unhealthy has got more people in the bottom and more people moving from the top to the bottom. And so in a situation like that, the national association of Realtors, the biggest realtor firm in the US they're the ones that put out the resale numbers every month. So every time you hear the housing sales that comes from the nar, they do an annual survey. And last year, the annual survey that came out in November, one of the things that they found was that the median age of first time home buyers was 40.

[Tom Bilyeu]

40.

[Jeff Snyder]

First time home buyer 40. So what that tells you is that the situation in the economy not just in the 2010, 2020s, but also goes back to the 2010s. This really goes back to 2008. Income has been so weak, the labor market has been so insufficient, and you know, credit financing has been so unavailable, it now makes for the average, the average young person, a house is out of reach and it feels like it's out of reach. So in that situation where you can't afford a house until you're 40, you can't afford a new car because a car is 35% more expensive than it was in 2019 and your income is nowhere near that, nobody is hiring. Careers don't start, you don't have any pathway for it. You can understand where the, where the appeal of socialism is coming from because the socialist is telling you, look, this economy sucks. They're all lying to you. Look at those fat cats on Wall Street. They keep getting richer and richer and richer while your life sucks more and more and more and there is no end in sight to it. And furthermore, if you understand what the socialists are actually saying, talking about Marxist theory, Marx appears like he predicted a lot of this. If you know anything about Marx, what he was saying back in the 1800s, what he said was capitalism always needs endless new markets to exploit. You know, using the language of the socialist. And eventually capitalism would reach, would get to a point where it has exploited all the new markets, it's innovated as far as creating new products. It can't go into a new land because everything has been conquered by capitalism. And once capitalism gets to its end stage, this is a term you hear a lot these days, end stage capitalism or late stage capitalism. Once it gets to its end stage, the capitalist who only cares about increasing the profits will have to turn inward, which means instead of exploiting new markets, we're going to start exploiting workers. And when the capitalist starts exploiting workers and end stage capitalism, what ends up happening? They start cutting wages, they start cutting jobs, they make housing and cars unaffordable. And everything that the Marxists have been preaching for years and years and years sounds a hell of a lot like most people's everyday lived experience. So you put the shit economy up against this Marxist doctrine and then you've got everybody, you know, mainstream political people saying, well, the stock market's great, you can understand where this is coming from because nobody is telling the truth. Because, because most people don't know what the actual truth is. So it really does start with economic depressionary conditions, which is why you should always start with the yield curve in the bond market. Because the bond market has been telling you this from the very beginning with low interest rates. Depression economics, the reason why there's so much safety and liquidity, demand, despite the fact the government goes completely crazy. And that's the reason why the government goes crazy, because they're trying to chase the, try to do something about depression conditions, conditions to begin with. But the bond market told you there's no economic growth, there's limited upside, the situation is not good, it's not changing, it's not getting any better. And so the inevitable consequences were never going to stay strictly macroeconomic or financial volatility. That's nothing. Mark said too. Mark said, when you get to end stage capitalism, there'll be more and more frequent crises so as far as most people on the street are concerned, especially young people, young people have been absolutely screwed by this. They have very little future and very little hope because the economy doesn't work. So for young people, you can see where this is coming from. It looks like the Marxists were right. Because the economy that I live in is nothing like what I keep hearing about from all the people that I'm supposed to trust, including the stock market on Wall street. If the stock market says the economy is robust and booming, which it doesn't, but that's what people believe, and this is a boom, give me something else. Give me something kind of, give me a radical change. I'll sign up for this because this just sucks and it's not changing anytime soon.

[Tom Bilyeu]

Okay? So one of the best explanations as to why people are feeling the pull towards socialism I've ever heard. Very well played. Why then are they wrong in big picture terms?

[Jeff Snyder]

We've heard this argument from them repeatedly throughout history. And that's the positive message in all this. We've been through, we've been here before, we've done this. History is circular, not linear. We go through these cycles. We go through periods where capitalism looks like it's going to hit to the end stage. The 1930s, perfect example. The last time we had a major flirtation with communism and socialism in the US was in the 1930s for understandable reasons. All the same reasons, it looked like the, you know, the predictions that Marx made were coming true. You know, the economy fell off a cliff and it never really came back. At least, you know, World War II. And by then, you know, World War II just made it even worse. It looked like Marx was right. But then what happened after World War II? What happened after World War II is the system reset itself. It got past all of the imbalances that led into the Great Collapse and the Great Depression. We got the monetary system back on some kind of solid and stable format. And suddenly it unleashed this tidal wave of prosperity. And when you're going through the upswing in these long term global cycles, the tidal wave of prosperity that becomes paramount in people's minds. And so socialism, what do we need socialism for? We have a legitimate economic boom that is creating widespread prosperity. Living standards are rising not just a little bit, but noticeably all over the world. So what ends up happening? We go through these cycles, you go through the downswing. People necessarily and quite naturally look for alternative solutions because they don't know we're in a long term downswing and they don't see Any pathway out of it, when the pathway out of it is just, you know, a little bit out of reach. But once we get to the, the end of that downswing of the cycle, socialism, people, people will forget about socialism because you'll get, you get into a period, another period, a long run period where we recreate the prosperity that we've seen time and time again. I think there's this idea that globalization is something that we invented in the latter half of the 20th century and that's not the case. We've gone through these long, long run cycles, multi decade cycles, repeatedly throughout the last couple hundred years. And they look generally the same despite the changes in technology and the, you know, the gloss and the facades of them. They're basically the same types of behavior, the same types of trends and the same types of developments. So you get it's no fun to go through the downswing, but we've been in the downside for ever since August of 2007. So we're 20 years closer to getting out of it, which is the positive message here. The problem is the clock is ticking. We're 20 years into it, but also we got 20 years where people are really pissed off and thinking enough is enough here. So can we get to the upside of that cycle before something really breaks down and leads to, you know, longer term structural problems?

[Tom Bilyeu]

All right, I'm going to speed run the last time that we got ourselves out of this. Tell me if I get anything wrong and then tell me what we do this time. Because the setup is different enough. It doesn't seem self evident to me. So World War II goes like this. Hey, Europe, you're doing great. Sorry, going to smash you in the face. World War I and World War II. By the end of it, you guys are exhausted, you're wildly in debt, everything in your manufacturing base is broken. But hey, America comes out of it with all of your gold. You owe America a ton of money. And we have an industrial base the likes of which we have never seen before. And we are now going to, even though we have roughly the same kind of debt that we have now, which is just completely irresponsible. We're going to do yield curve control, so we're going to artificially hold the interest rates below inflation. Inflation. So that we can inflate the debt away. But the key Post World War II was that the growth rate of the real economy was one widespread prosperity. So working class, middle class, they're thriving. So their growth rate is faster than the inflation rate. So everybody is loving Life. And we absolutely boom, really up until the 70s when we start hitting some hiccups, but just a real run of prosperity. The US establishes itself as the people that buy everything the world over. So everybody else leverages our prosperity to export things to us. So we get an incredible life. They get money, they get a rebuild. Marshall Plan, all of that. And we come out the other side and large swaths of the world are doing so well that it was like, awesome. We reset this bad boy. We're in good shape now. Do we have to go through all the bombings? Like, must we bomb bomb them all? Like, China is the manufacturer, it's not us. So how do we reset today?

[Jeff Snyder]

Yeah, that's the. I don't think the key to me getting out of the Great Depression era wasn't necessarily World War II, except that World War II kind of speeded up the process a bit because, you know, by necessity we had to start thinking about what the other side would look like. And because the old system had been smashed so much, it was much easier. There was, there was less hysteresis to get through to restart and reset the system. What I think was the key was resetting the monetary system allowed for the risk taking behavior. The Keynesians call it animal spirits, and there's a lot of truth to that. But the risk taking behavior that was absent in the 1930s came roaring back in the 1950s. And a large part for what you just said, I would add to it, the biggest part of that was the US became the buyer and therefore the most prosperous system which allowed it to create collateral. Collateral which, which, which is, you know, collateral is an incredibly important part of any modern society. Because risk taking, nobody, nobody does. Blind risk. I mean, when you, when you borrow money for a house, your house is the collateral. When you buy a car, your car is the collateral. So essentially the US Leverages position not just to, you know, do, you know, to prosper itself, but it created enormous amounts of collateral in all different kinds of ways that allowed for monetary expansion to grease the wheels of things that were finally moving in the right direction. So that's kind of the general outline that we should look for moving forward is get to a situation where we have, we have enough. I hope this doesn't happen where we have to destroy the old system in order to get to a new system. Because there have been periods in history where that's not been the case that, you know, eventually human ingenuity takes over. We figure out the problems that we need to figure out. Yes, it takes us A long time because we're not as ingenious as we think we are. Plus, there's always institutional inertia, which is always something you have to overcome. Essentially, institutions don't want to change. They don't want to get with the program. They're going to resist change at all costs, whether it's to their detriment or not. They don't care. Especially true of bureaucracies. But you have all of these frictions going in one direction at the same time. You got ingenuity and innovation going in the other direction. And hopefully you end up with more ingenuity, more opportunity, more people who sense the opportunity and try to take advantage of it. That leads to overcoming all of the past frictions and resetting the system. What that looks like in where we are today, I think it looks like something more like a digital currency system where you have competing digital currencies. Because one of the things that you have to understand here in the middle of 20th century, the eurodollar system's role in all of that was absolutely critical and vital. Because what essentially created, not quite from scratch, but almost from scratch, was money mobility. It allows.

[Tom Bilyeu]

The vast majority of humanity does not know what the Eurodollar system is. Can you give a quick primer?

[Jeff Snyder]

Well, the Eurodollar is the money we all use, whether we, whether we know it or not. That is the global reserve currency, not the US Dollar. The Eurodollar and the euro dollar is ledger money. And ledger money is nothing more than banks keeping track of who owes what and who owns what. That's why, if you think about what a bank is, it's not a vault with cash in it. In fact, there's no cash in banks anymore. Even. Nobody even uses ATMs anymore. Banks are nothing more than glorified bookkeepers because we've been moving to a ledger money system for centuries. And in the latter half of the 19th century, banks started to perfect ledger money, which made it easier for money to move from A to B. Because instead of you having to take physical currency out of a bank vault, get on your horse and ride across the state to pay somebody off for a good that you're buying from them and take the currency with you and then have that person take that currency and put it and deposit it in their bank on the other side of the state, wouldn't it be easier if your bank over here could just send a telegraph message to the bank over here and say, I'm crediting you X number of dollars? You can, you can take them in Any at any time you wish. And then the ledger money that we're creating is also useful for the bank over here and the bank over here. You end up getting what's, what's called a network effect where the more banks and financial institutions got involved in this ledger money network, the more mobile money would become. So now you can just sit in your house and you can order goods from China because there's a ledger money system behind it that you don't know about or even you're really even aware of that allows money to move from A to B. That at the end of this, somebody over in China is perfectly happy with what they're getting in return, which is really nothing more than a number on a paper to send you some cheap product through the mail. And everybody gets paid at every stop along the supply chain using the same ledger money. So money becomes mobile to the point that we can have a hyper efficient economic system. That's an important point about it. And the Eurodollar system, this ledger money system developed out of the banks because banks were really the only specialized institutions that could operate this type of payment network which is really all it really, it really is just a payment network. And so you have this payment network that evolved on national lines, but after World War II it led to speeding up of the evolution into alongside telecommunications innovations. You had the speeding up the process where now you don't just have banks in a region of the country or in a single country. Now you have international banks that are able to, to communicate with each other and to pay, to pay for things one or to transfer funds between each other using a common system and a common denomination. They call it US Dollar but it's really Euro dollar and the term Euro dollar in its earliest days. It's not, it has nothing to do with Europe necessarily or the European common currency, which makes it kind of confusing. This developed long before the European the Euro was ever invented or you came into being. But the Euro dollar simply meant these were US Dollars that were on deposit outside the outside the United States. So Euro simply means offshore. So Euro dollar is offshore dollars. And that's because you had these international banks that had created essentially a payment network that spanned most of the entire world and it came to span the entire world. That allowed money to be mobile from almost anywhere on the planet. You could get on a plane tomorrow and go to some other place in the world. You stick your credit card in a machine and it's going to work, work. Nobody stops and thinks about how that actually works. Well, that's the magic of the Eurodollar. And the problem is the Eurodollar system broke down on August 9th of 2007 and it's never been able to go back to where it was before, largely because of risk taking animal spirits and the depression economics that we went through. But the Eurodollar system is begging to be replaced. And once it's replaced and done so probably in an organic and smart way, we can get back into a situation where there is no longer this hyper demand for safety and liquidity. We're going to stop putting all of our savings in either chasing AI bubbles or you know, stuck in safe returns in US Treasuries. People start seeing opportunity in the real economy because they can trust that it's actually real. And once people start investing in the real economy again, it unlocks all of the, you know, the, the waiting prosperity and innovation that have been stuck behind this depression economics for a couple of decades now. Yeah, that's kind of an idealistic view of the future, but it's not an unrealistic one because again like I've said, we've been here before, before. The only real question is whether or not we have enough time left to achieve it. You know, before something really breaks down.

[Tom Bilyeu]

Okay, I'm going to try to put a layer of simplicity on that and tell me if I go wrong because we were talking about this in the context of we're coming out of World War II. We have this thing, the euro dollar that greases the wheels, allows money to move and that becomes part of how we get this global prosperity and that most people just don't understand how it works. Now I can't remember if you've said this before or if it's just been said or if I fever dreamed this, but I have in my head that the Eurodollar system can be thought of as the respiratory of the global monetary system and that literally in some cases overnight. So the vast majority, and if I'm not mistaken, it's trillions of dollars every night that sort of comes into existence and then gets cleared in the morning. And so it's a massive amount of money where people go, hey, I'm going to trust you for this amount of money. I know you're good for it. Tomorrow morning. Sometimes it's 30, 60, 90 days. But it's very, very short term lending. And so money is being created and destroyed constantly. And that creation and destruction allows us to move things around using trust. And in an inflationary environment that trust begins to diminish and people Aren't sure, Like, are you worth this credit? Is there something hiding somewhere that I don't know, which is why this is happening in 2007, 2008, where people realize, whoa, you were hiding bad debt that I didn't realize your collateral was not what I thought it was. And so now everybody's like, yo, I'm Japan, I been burned by this and now I'm terrified. And so you get sort of constricted breathing, if you will, in the Eurodollar market. And I believe, though this is the first time I'm hearing it. The reason that you're saying that this could be a digital asset of some kind is if the digital asset is basically provably there, we overcome some of the fractional lending, bad debt kind of trouble that we got burned by in 2007. And so you're prognosticating that this new system would need to have trust baked in, basically. So I don't have to trust you. I just look at the ledger and I know that thing is like, that money exists. And so we're good. How close did I get?

[Jeff Snyder]

That's exactly it. And I think that's a really good analogy talking about like oxygen. Because money is not the important. You know, money is not the issue here. Money's not the impulsive, the most important thing. It's a tool that allows the commercial system to thrive when it works really well. But when you, you know, when their money isn't there, when money and money needs to move, it needs to be mobile. Which is why the Eurodollar system thrived as much as it was, because it was focused on mobility. And it's, you know, you have somebody who has funds, say in Switzerland, who has, you know, and then you have somebody on the other side of the world who has an opportunity to build a factory in Singapore in a system that's fractured and fragmented. That person in Singapore never gets to build a factory because they can't connect to the person in Switzerland who has the money that would allow them to build the factory. But suddenly you have a fluid mobile system where the Eurodollar functions really well. Suddenly that money that's sitting there, pooled up in Switzerland becomes available for good real economy opportunities in other parts of the world. And suddenly it allows, it unlocks the ability of the system to thrive. Instead of being held back by lack of money and lack of commitment, it's now fully. I mean, we've got money flowing from here, there. We can take it from wherever money is to where it really needs to be. And of course it's a messier process than that. But. But idealistically speaking, that's what ends up happening. So if we deprive the system of that mobility, a lot of that mobility, because trust is baked into money whether we like it or not. Trust is at the core of every single form of money that humans have ever used. And the trust is really kind of simple. It's really, am I getting something that if I get it that I'll be able to use it someplace at some other time? Because we could always do a barter system. And barter is incredibly inefficient. So what overcomes that trust is, okay, I get something that I perceive of as valuable and useful, but so does the person over here and the person over here and the person over here. If everybody looks at this thing and says this thing, I trust it. I think it's what we all think it is, whether it's a ledger entry or whether it's a piece of gold or just some kind of rock or something. If we all believe that this thing is what we want it to be, a medium of exchange, then I'll accept that money readily because I know that when I have it it, I can use it at all these different places to get what I want to get. But when that trust breaks down, like you said in Tom in 2007 and 2008, suddenly the money doesn't flow, it doesn't become as available. It starts to lead to all these drags and frictions on the real economy and real system. So we can get. The problem is you can't go backwards. It's not backwards compatible. Once people realize the risk that we're building up in the system, we couldn't just say, the Fed couldn't just wave its hand and say, oh, we did a bunch of qe. We can go back to the way things were in 2005 that the banking sector, as you pointed out, what is it, Japan? They burned their hand on the stove. That's exactly what happened. Bear Stearns was abs. Bear Stearns was the moment the Eurodollar system touched the stove. Because Bear Stearns created a shockwave through the banking system. Because up until that point it was sort of like this is all kind of theoretical. Yeah, things don't. Things seem to be going bad. When Bear Stearns, it actually failed. It was sold to JP Morgan. But from the perspective of Wall street and bank managers, what it said was failure and being wiped out are a real possibility. So everybody touched the stove in 2008 and said we can't ever be in that situation again. Unfortunately, by pulling back and becoming risk averse and only wanting to own safe and liquid instruments, it deprived the economy of mobility and funds and availability, which led to this depressionary, these depressionary conditions. So how do we get out of that is to reestablish trust in the system. And reestablishing trust in the system is incredibly difficult. It seems like a very simple thing when you have it, but when it's lost, it's incredibly difficult to get back. Just ask any, any, any country or economy that goes through a hyperinflationary collapse. How do you get out of it? It's really difficult to reestablish trust. And it's no different on a deflationary side is the hyperinflation side. So in many ways it really is like we're looking at a new, brand new system. But you don't want to just impose a brand new system on the current system that we have, especially if they're kind of incompatible, because that leads all sorts of messiness. It leads to the same type of situation and distortions that we just talked about with the pandemic and lockdowns. What would be the ideal solution is that many, many generations of cryptocurrencies from now, and I'm not talking about meme coins or something like that, or even really bitcoin, really talking more about stablecoins, but some type of digital ledger that's decentralized. It doesn't depend upon banks because banks are no longer willing to trust each other. So we have some kind of decentralized ledger system that, that proves itself in terms of function as well as reliability. Suddenly people start trusting the system again. Sentiment changes. You get out of what the Japanese called for decades the deflationary mindset. It wasn't really deflationary mindset. It's the scar tissue from everybody saw their hand, right? I burned my hand in 1990. I'm not going to do that again. Once you get past that, sentiment loosens up, risk taking, animal spirits start to take over and it leads to this, you know, the 1950s all over again. At least what we Hope is the 1950s all over again. That's the overview of how we get out of where we are today into where we could be tomorrow. There's just a lot of, lot of wiggle room in there and a lot of problems that need to be solved first.

[Tom Bilyeu]

Yeah, okay, that one, because it's so unknown, that one is a little bit scary. So we have to contend right now, with where things are at in the this moment, from an investor standpoint, how do you think about this? Are you like, well, I'm going to ride the bubble while I can and I'm going to, as I get the gains, I'm going to rebalance out of the high risk stuff into the safety and liquidity of the bond market. How do you navigate this reality? Knowing the future remains a bunch of question marks.

[Jeff Snyder]

Well, that's it. I mean, that's why there's so much demand for safety and liquidity. It's not just in bonds. I mean, why is gold gone vertical at least? You know, up until earlier this year, gold went vertical because a lot of people around the entire world, China is a big one, could sense that the system is breaking down. It doesn't seem to work. Therefore, you want some kind of asset that, historically speaking, has been something that's able to bridge from A to B, because that's what we're really talking about. We are stuck in A, we're not going to get out of A anytime soon. We can see B, we can see the possibility of reaching B and B would be really, really good. We can also see C, which would be really, really bad. But between A and B and maybe C, there's going to be a whole lot of uncertainty in between. That's the allure of gold and other, other instruments that act in the same way. Safe haven, demand. So when you're looking at this level of uncertainty, understanding what the risks are, where we actually are not just following along with the mainstream narrative about how everything is fine and we're, you know, the economy is resilient and strong and all that kind of stuff, you really, really do want to be. And I'm not saying you do. I'm not saying you want to sit out the marketplace. I'm not saying you don't want to own stocks or you don't want to own risky assets, but you want to be mindful when you do. Always understanding that this uncertainty by its very nature is unpredictable. And unpredictable means that it can show up tomorrow and be something that you were not prepared for. Which is one reason why you want to have some kind of allocation to safe havens and safety, whatever that actually means. It depends on your own individual circumstances. But that's the reason why, again, depression economics, the reason why safety becomes in such demand during depression economics is because of the uncertainty. Now the uncertainty leads toward probabilities that are skewing to the downside rather than the upside. In fact, that's the Single biggest thing which distinguishes depressionary conditions, it's not the negative numbers. When you say the term depression. I just did a video on this. When you say depression, a lot of people think what you're saying is it's a big recession because you think, you know, 1930s you had the great collapse between 29 and 32. And so that's what you're talking about when you talk about a depression. No, the Depression was not 29 to 32, it was 32 to 41. It was the lack of upside. And when you have a situation where there's a lack of upside in the real commercial system, not talking about financial upside, but in the real commercial system, that's a high degree of uncertainty that leads to more frequent downside cases than maybe you're prepared for. So under depressionary conditions, demand for safety, which is multifaceted, becomes. It never leaves your thinking. Not saying you don't want to put all your money into gold or all your money into bonds, but you do want to at least have some idea or at least some good, useful handle on how you're going to protect yourself from that uncertainty, knowing that the uncertainty is always there. Don't fall into the trap where you fool yourself into thinking GDP is positive. The payroll report looked pretty good, therefore nothing could be possibly wrong because that's really not the case. There's both short run as well as long run changes that are taking place and we really have no idea how those are going to, how those are going to play out over time.

[Tom Bilyeu]

Speaking that so you painted a picture a decentralized future where we reboot the system with a new kind of ledger that people can really trust. I want to contrast that with what I think China is doing and I'll be very curious to see if you have the same read. So China recently clamped down on paper gold trading. And the way that I interpret that is they are trying to get a bunch of gold physically present in China so they know that there's still appetite for gold among the Chinese population. But if they can't trade paper, then they're going to buy the physical asset. China as a central bank has been hoovering up gold in massive quantities. Quantities. But I imagine the Chinese people could do a lot more. China could very easily turn that into a one way valve so that gold gets into the country but can't get back out. For people that don't know gold works in a very similar fashion to reserve banking in that you don't necessarily need, you definitely don't need a one to one gold bar for every paper trading on it. So you can get into whatever 10 to 1, whatever the real number is on that. And so if I'm China and I'm like, I want to get out from under the dollar, I want the yuan to be the reserve currency, but I know I'm going to have to do something to reset the system. So I'm going to get enough gold that I could peg it even if it's not one to one, but I could peg it to the yuan and over time take over the status as the reserve currency. Even if they had to partner with another country to say, listen, we're going to hold the gold in some sort of corridor where it's not physically in China but it's like in different places with a partner country or something. Am I crazy or do you see them grappling with the same thing that you're talking about where we need a reset system, but they're just looking backwards instead of forwards to a new technology?

[Jeff Snyder]

Well, the Chinese are an interesting position because they're one of the biggest, they're one of the ones who have the biggest downside from the dollar system.

[Progressive Insurance Announcer]

It is.

[Jeff Snyder]

And I'm not talking about politics, I'm talking about the economic consequences. China's in a lot more trouble than people think. People realize they have a banking crisis and a property crisis that are going on in parallel and it's getting really dicey over there in the real economy. In fact, the five year plan that just came out just completely omitted their employment, employment targets for the next five years because they're not really sure they can actually hit them. But setting that aside, that just creates some kind of. The Chinese have the biggest interest in trying to do something different. The problem for them is they can't. Because when you're talking about a reserve currency, it's not as simple as pegging a currency to a gold bar. Because you got to remember what made the Eurodollar system in a reserve currency. This is true of any reserve currency. What it is is its mobility. Gold by its very nature is not mobile. To have a currency become truly mobile, which means it has to be available as many places as possible and has to be accessible, acceptable as any places as possible. And those two things do not describe anything of China, whether it be finance or money. So the Chinese realize they have zero chance of creating a reserve currency. Even if they could create a currency that could theoretically be available, not many people are going to want to take it, which kind of undermines the entire point of a reserve currency. So what the Chinese are really trying to do is make the best of a bad situation. So they're building up their gold reserves. So. And part of it is just mechanical. One of the reasons they're building up gold reserves is because they have tons of dollars coming into the country. Ever since 2024, they made a tactical strategy to basically dump their excess production on the rest of the world in order to save employment. The Chinese, Chinese internal economy, as it becomes an increasingly a mess, leads to this imbalance between supply and demand, which is why China has been suffering from deflationary, deflationary conditions since 2023, because they produce way too much for them to be able to absorb for the internal demand. So they take the rest of their excess production and just fling it around the rest of the world charging whatever they can charge. Which means, among other things, when you're selling more goods to the rest of the world, you've got a lot of more dollars coming back because almost everything is traded in dollars. And it doesn't have to be dollars. You could invoice in euros. You're going to end up with dollars anyway because dollars are the reserve currency. So they have a flood, an absolutely biblical flood of dollars available to China. You got to do something with them normally. What happened in the 1990s and 2000s when they had a flood of dollars coming in? They took those dollars and reinvested them internally in the Chinese economy. They built factories, they built roads, they built glittering cities. They tried to transform the country from a subsistence agriculture one to a modern industrial society. And they were partially successful. They got kind of halfway through the system before 2008 hit, but. But these days they have the export boom. They've got dollars available, but really no appetite to do anything with them. So in many ways they're buying gold because what else are they going to do with the money that they have? They don't want to put it in, they don't want to invest it locally, which is as much a commentary on the situation, the Chinese economy, as anything else. So. And they don't want to buy in U.S. treasuries because there's a political thing there. We can't buy more Treasuries because we're at war with. We're at war the United States, or at least we're not. We're no longer strategic allies. So gold is a perfect solution because it gives you the idea or gives you the possibility of being, owning a safe haven at the same time during uncertain period. But it's also potentially useful if you actually have to. So gold is for them. It's a pretty good bridge solution for where they are today in the conditions that they have. But as far as replacing the dollar, they gave up on that a long time ago. We're talking more than 10 years ago. There was a flirtation with making the yuan more like the Eurodollar which would be offshore focused and elastic. That was around 2010 and 2011. They created C and H which is offshore yuan in Hong Kong. But they realized very quickly that wasn't going to work. And again the bigger problem for them is to make a reserve currency workable. It has to be available everywhere and it has to be acceptable everywhere. China doesn't want to make the yuan available everywhere because that would mean it would be out of, outside of the authorities control. And as far as being acceptable everywhere, that's just never going to happen. Because one of the underappreciated parts of the Eurodollar and any reserve currency system, it's not just, it's not just currency, whether it's ledger currency or physical paper or you know, gold nuggets or gold coins. It's also the, all the stuff that comes along with it. I'm talking about arbitration, contract, respect for law that is incredibly important. The system that's in place that actually, that arbitrates disputes. Nobody's going to own a Chinese yuan because if you get into dispute in yuan terms with a Chinese state owned company, who's going to win? Doesn't matter what contract you have. One of the secrets behind the Eurodollar system, which has been able to hold on, hold on as long as it has, is because whatever you think about the US legal system, and it's far from perfect, the respect for contracts and contract law is right at the center of everything. So if you have a contract with the US government, chances are the US government is going to have to obey the contract because the independent courts will back that up. You're not going to have the same type of, same type of leverage and leeway with the Chinese system. In fact we know that because with the developers that have defaulted over the last couple of years, whether it be Evergrande or some of the other ones, the Chinese have repeatedly, repeatedly torn up contracts, repeatedly tried to move bankruptcy proceedings inside of the mainland China. So I mean, point is, and the reserve currency China does not, will not allow the currency to be elastic enough that it's available where it needs to be everywhere to be reserve currency. And nobody's going to want a Chinese yuan anyway, so they have given up on the idea of a reserve currency and instead are trying to deal with the situation that they have as best as they possibly can.

[Tom Bilyeu]

Jeff, this has been insanely educational. I can't thank you enough for your time. I've watched a lot of your content. It is an absolute embarrassment of riches. Where can people follow along with you, connect with you online?

[Jeff Snyder]

Just find me at Eurodollar University, Whether it's at YouTube or Eurodollar University, which is our website.

[Tom Bilyeu]

I love it man. I can't recommend it highly enough, boys and girls. If you have not already, be sure to subscribe. And until next time my friends, be legendary.

[Sponsor/Ad Announcer]

Take care.

[Tom Bilyeu]

Peace.

[Progressive Insurance Announcer]

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