Title: De-Globalization Is Forcing Nations Worldwide To Choose A Side | Michael Every Show: Thoughtful Money (Adam Taggart, YouTube) Guest: Michael Every (Global Strategist, Rabobank) Date: 2026-08-27 URL: https://youtu.be/QNPCzV_1vFQ Length: ~2:03:25 Note: Fillers (um / uh / you know / I mean / sort of, when contentless) removed and stutters/false starts collapsed; wording otherwise verbatim and every (mm:ss) cue kept in place. Auto-transcript garbles of proper nouns and technical terms were mapped to the correct entity (no other rewording): "Bent" / "Basant" / "Percent" = Bessent (Treasury Secretary Scott Bessent); "Yelen" = Yellen; "hegeimon" = hegemon; "Ruth Goldberg" = Rube Goldberg; "mechanalism" / "mechantalism" = mercantilism; "neomchantalism" = neo-mercantilism; "Cheddar Circle" = Tether / Circle; "prostable coin" = petro-stablecoin; "far craft" = warcraft (the "financial warcraft… World of Warcraft" wordplay); "elacrity" = alacrity; "guilts" = gilts; "hormone" = Hormuz; "Tagert" = Taggart. IMPORTANT: the Michael Every interview ENDS at 1:20:50. Everything from 1:21:08 on is the host's separate weekly segment with Mike Preston of New Harbor Financial — NOT Michael Every. It is retained below only as a clearly-labelled appendix summary; nothing in it is attributable to Every (in particular the TLT 7.5% position is New Harbor's).
00:00 there's going to be an emerging nexus around US markets, US tech, US finance, US stable coins on one side, or you can work with Iran on the other. It's up to you. Now, we all know which countries are going to be targeted by that. It's a short short list, and some of them are very large countries, but we're aware of what that binary means.
00:22 So that's then looming as a larger scale issue which is really potentially going to pull the rug out from underneath a lot of people. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host Adam Taggart. And today we've got the very great pleasure and good fortune to be sitting down in discussion with the one and only Michael Every, Mr.
00:50 mercantilism himself. There's a lot going on in the world about the things that Michael had been predicting for well over a decade, has been proven totally right in spades about it all. And now I can think of really nobody better to give us an audible real time call on what exactly is going on right now. And Michael, there's a lot of things I want to talk about with you specifically, Iran, some of the recent actions in the US, all sorts of geopolitical developments, but I think your interest is more in
01:31 talking about all of this at the 30,000 ft level and trying to take all these disparate pieces of what's going on in the world and try to unify them into kind of a master outlook over it all. And I would love nothing more to hear that too. And I think our readers, our viewers would be really interested in that.
01:49 So, is it okay if we start there? >> Please. It'll give me great pleasure. >> Okay. We will do that. Just a quick apology. Michael has been kind enough to sit down first thing his morning over there in Asia to have this conversation with us. So, it's later my time than I normally record.
02:07 You're getting me straight from the gym, Michael. So, if my hair looks extra extra disheveled, that's why. And I apologize. But with that out of the way, I'd ask you what things have your attention most right now and you feel free to start there if you like but however we can most expeditiously get to your unification at the 30,000 foot level.
02:32 Let's get there as fast as we can. >> Sure. Okay. So let me then try and summarize this. I'm sure everyone watching is fully cognizant of the fact that US Treasury Secretary Bessent has recently introduced what he himself is describing as a Treasury version of operation twist >> where he's increasing buybacks relatively small scale but symbolically very significant of off-the-run longer duration US bonds.
03:08 which are going to be funded by the issuance of more T-bills. I presume everyone's completely on board with that because it moved markets a lot of the time. >> I think one quick question for you. I agree this feels and looks very much like a treasury operation twist. You would put that under the umbrella of yield curve control. Correct.
03:30 >> Not 100%. It's moving in that direction. This is still technically shifting of maturities to the shorter end of the curve which by the way of course is what we saw under Yellen previously at Treasury and of course is what you see in many emerging markets who can't manage their debt profile.
03:52 So that in itself is significant with those two parallels. And I'm sure you'll have a long line of other guests who can talk about that in more granularity >> than I can being based in the US and possibly even trading those markets directly. But what I want to add is that when you look at what is happening around the world at the same time, you can see that I think it's not operation twist, it's special military operation twist.
04:24 Because let me talk you through it. First of all, the day before Bessent did that, he put out a public offering or a suggestion for public input on the Genius Act, which is linked to stable coins, >> of course. >> And we know that the Clarity Act to really bookend that piece of legislation is still imminent.
04:52 We don't know exactly when that will happen, but it looks like it's going to be before the end of the year, which means that you can probably expect stable coins to be pushing out aggressively by 2027 at the latest. Now, this is all going to tie together. Stick with me. But what do we know about stable coins? well several things but the most pertinent to what I've just said is that they will if they are adopted en masse around the world which I expect them to be in emerging markets in particular you're going to see people buying them
05:26 and therefore stable coin issuers will need to buy treasury bills >> right >> so in other words we're going to shift US issuance to the short end of the curve just as we're going to create an artificial bump for several trillion dollar worth potentially which to be frank isn't that big in terms of the US deficits that keep being run but temporarily at least is going to make sure that you don't get too much upward pressure at the short end there.
05:54 Now what that means for the Fed is a whole separate issue. Let's just consider the Treasury in isolation there. Okay. So first of all that's already hanging around in the background. I don't see too many people making that link between what just happened here and the stable coin thing. Stable coins are also absolutely if they do roll out on scale going to be with us or against us.
06:16 George Bush style or George W. Bush style. Basically saying are you going to be in the US monetary camp with these new assets even though they're actually not currency. They're a digital IOU backed by US debt held in the US. Or are you going to reject them at which point maybe we're going to limit market access. >> So you start to bifurcate the world.
06:36 that's inherently geopolitical. So that's happening on one side of the screen and not everyone's linking to it. On the other, we have had the US now say again led by Bessent after the Trump tweet that it's total economic war against Iran. Mhm. Now, you and I >> again to your point, it's a lot like your stable coin positioning where it's we're putting maximum economic pressure on Iran, but we are also pressuring the other countries of the world out there saying if you continue to do business with Iran,
07:08 you're going to get slapped by us. >> Absolutely. there's going to be an emerging nexus around US markets, US tech, US finance, US stable coins on one side, or you can work with Iran on the other. It's up to you. Now, we all know which countries are going to be targeted by that.
07:27 It's a short short list, and some of them are very large countries, but we're aware of what that binary means. So that's then looming as a larger scale issue which is really potentially going to pull the rug out from underneath a lot of people. But in the interim, let's consider this too that I have seen regular commentary from people who are loosely connecting what's been happening in Iran with financial markets saying, "Have you noticed every time the US ten-year gets to a certain threshold, Trump comes out and says there's a deal looming?"
08:02 >> Right? Now, I think that's been true to a degree, but if you're going to be moving issuance down the curve and effectively in brackets doing yield curve control to an extent without doing it openly, but making it very clear that the pattern is to control the curve one way or another, then you are effectively saying we are not going to allow the financial market constraints of the Treasury market to tell us what we do or don't do militarily against Iran.
08:36 >> So I think for now we stick with the economic warfare and we see how hard Iran can be squeezed and it is being squeezed much harder now. There is apparently no oil getting out. So there's no revenue for them. >> No no Iranian oil getting out. >> No Iranian oil. No. >> There are reports that there's actually a fair amount of oil.
08:56 I just saw 10 million barrels I think a day that is sort of sneaking out the Oman route via US chaperone fleets and stuff. I don't know if that's exactly true, but it does seem that oil prices seem to suggest there's some supply getting out because if zero were, I think oil prices would be higher than they are right now.
09:16 >> I think you're right. It's very very open to debate and I know a lot of experts who see it in different ways. >> Sure. But it's certainly there as a ballpark figure because you have to say that the one institution that would know better than anyone what's going on would be the US Navy if they're there on the ground rather than just looking from satellites.
09:34 So Iran's being squeezed in terms of revenue now. It's going to be squeezed in terms of everyone else trading with it. That means they can't pay their own soldiers. They can't pay their own militia. So you can and inflation I think is I lose track how high it is. >> I think it's approaching 100%.
09:53 Yeah, I think it's now above the 80s. It was at 50 at the start of the war. >> Absolutely. And the currency is collapsing. So there is real economic pressure. Now Iran will go to a survival economy. Don't get me wrong. I expected that from the beginning. But over time, depending on how long this can be extended for, you could see that really working.
10:13 But not only that, as I've discussed with you before, I believe in our last chat and certainly maybe the one before that, I think that the US will have to return to military action versus Iran, but after the midterms. >> So therefore, you have a couple of months of really, really weakening them, undermining that regime where people aren't even being paid to be out there in uniform doing what Iran's telling them to do while they can't afford to put chicken on the table, etc.
10:36 And at the same time you are removing the constraint which says the market's telling me I can't do this geopolitically >> and you are actually with stable coins making it cheaper to do it whilst at the same time reinforcing the mechanism which makes countries either get with you or against you. So that's what I'm talking about in terms of how to look at the totality but that's only Iran.
11:00 It's not even the broader Middle East and it's not even the broader world. >> Yeah. So a couple of things. So what you're describing here is mercantilism to a large extent, right? It's the state putting its thumb on different parts of the economy saying, I've got a national security interest that trumps your free market, your ability to just live in the free markets.
11:29 And therefore, we're going to really feed stable coins or we're really going to push economically hard here even if that starves from other parts of the economy. And this is something that you have predicted for a super long time, but the playbook I get the sense you're not surprised by any of these tactics.
11:45 Not saying you agree with them, but they all to me at least seem to fit naturally in under a mercantilist regime. Am I seeing it right? >> Yes. The only clarification to be a real boring nerdy purist >> is that I would use the framework of economic statecraft because I think that describes what we're seeing as in using every instrument of state together towards an economic goal.
12:14 Mercantilism is of course and again super super nerdy. Mercantilism is when you're trying to deliberately run a trade surplus to stockpile gold which I think some people would like to go back to. Absolutely. Sure. And neo-mercantilism is when you use the state as much as possible with the private sector to try and run a trade surplus just to have more physical production of stuff.
12:35 So I think the America is moving towards neo-mercantilism rather than mercantilism because they're not going for gold here. >> But we're not there yet because you still have a large trade deficit. So it would be a little bit of a misrepresentation to say a country with such a large deficit is running that policy.
12:52 But it's using economic statecraft which is the thought process of saying this is how we pull different levers in ways we never normally do. And they are definitely aiming at neo-mercantilism. They would like to try and close that trade deficit where possible. >> Okay. I appreciate the clarity there. But economic statecraft especially the way it's being used right now you tend to see much more of it under a mercantilist or neo-mercantilist government than you would a globalist a globalization government. Correct.
13:27 >> Yeah. Yes. To be blunt you still get economic statecraft under a globalist government but it can be very self-harming. I'm not saying that neo-mercantilism can't be if it's done wrong or if it's done >> in a way that you personally object to. You would see that as self harming.
13:45 But if you look at how the US built the global architecture that it's now dismantling, let's not spend too long on this. The US used a lot of economic statecraft in order to achieve the open world goals that it's now retreating from, which was, as I said, inevitable it would do that.
14:07 But it used a lot of policy levers in ways that were not particularly friendly, shall we say, in real classic men in suits and earpieces and black sunglasses kind of fashion to build the world as was. So yes, everyone can use it. It's now being used much more towards neo-mercantilism. I agree. >> Okay. All right.
14:26 That's very helpful clarification. Thank you. I want to ask I know you've got much more to say but I just want to ask for some clarity on a few things you've mentioned here. So while you I think probably correctly made the distinction that operation twist isn't necessarily yield curve control its intent is to flatten the yield curve.
14:51 So it's kind of spiritually aligned with yield curve control. You talk about stable coins again their intent right is to get a lot of demand from the rest of the world buying treasuries that demand should raise treasury prices lower yields again. So in effect that's kind of part of a yield curve control playbook as well.
15:14 So even though maybe it's not textbook definition of yield curve control these things are still spiritually aligned with it. Correct. They are. But in the same way that a knife can be used to peel a piece of fruit or to defend your home from an intruder. >> Mhm. >> That tool has very very different uses depending on the situation.
15:38 And here I would be gobsmacked. I think this really is an important point to stress. If Bessent is doing this just to flatten the yield curve and doesn't have a thought beyond that and they're issuing stable coins just to try and get more people buying treasuries or T-bills in this particular instance and there is no planning strategically beyond that, no second, no third, no fourth order effects.
16:06 >> Well, I'm in the wrong job. This should be our last chat because I have nothing of value to add. I'm just a fantasist. But I would wager strongly given what they say that no there is a comprehensive plan to re-industrialize, reshore if necessary bifurcate the world and to those who are with us and those who are against us and to have a plan where the US economy is more Hamiltonian in its original sense after independence >> and more directed where the government incentivizes and encourages and cajoles
16:42 and threatens the private sector into doing things that increase US power rather than quarterly returns for all and sundry regardless of what they're doing. And I think you would neutrally agree with me that that's exactly what we see happening. >> I can't really think of why anybody could argue with what you just laid out there.
17:06 So basically the takeaway from you is think of these things right now as sort of opening salvos to a much larger grand strategy. >> Well it's an unfolding and evolving grand strategy because for example just very briefly without diving back into this too much necessarily the US had expected to win versus Iran quickly like it did versus Venezuela.
17:30 I don't think there's any question that's what they thought would happen. Yeah. >> That hasn't happened. It's exposed significant and real weaknesses in the US economy in US preparations in the US Pentagon for example like why were there no drone defenses in the Middle East against Iranian attack it's staggering staggering complacency which shows that >> all large bureaucracies even when you've got their leadership talking rah about this new great game they are always behind the curve they're always fighting the last war literally
18:02 >> the last literally. Yeah. >> Yeah. So now things will have to adapt quickly. But I think what we are seeing here is the US continuing to recognize that whether it's through building things or whether it's through tearing them down literally or architecturally, it can still leverage the situation it finds itself in as the legacy hegemon to its advantage.
18:24 So it's not where it wanted to be, but that doesn't mean it's absolutely out in the cold. Now there's one area to segue to very quickly that I would be remiss not to mention which is the energy sector that even if we are getting 10 million barrels a day through Hormuz and let's presume we are for the sake of argument >> that's half what we used to get but then we look at the fact that China is buying much less which it is and we look at the fact that Saudi Arabia is managing to get say maybe five six seven out via the Red Sea etc etc things aren't as urgent
18:56 as they looked up until recently. So maybe that US tactic >> is working but what we are still short of is refined product diesel rather than crude. >> So you see that in the US economy right now and this is where multi-layered thinking rather than saying energy dominance in terms of crude or gas solves your problems.
19:20 You need every kind of distillate in order to have that fully functioning machine. So we are short of the refineries in the Middle East and that's going to be a real issue. Now I'm going to open the door here rather than walking through it. But I have made the joke with you before or the punt which is serious in intent even if it's very loose in detail or sketchy in detail which is if we continue to go down this route the economic statecraft and economic warfare versus Iran works.
19:48 we move towards an acceleration in military activity and maybe far more aggressive military activity this time rather than we won't touch this, we won't touch that >> because we feel more empowered by the success. Yeah. >> Yes. indeed. Then maybe this can all be resolved easily in terms of diesel over a few months.
20:08 If not, I think we will have to see far more aggressive economic statecraft for the US to say we are going to get diesel in adequate supply and we are going to have it at prices which are suitable for the US economy even if that means other people don't get it because rather than rationing by price which is how a market economy works globally it will be rationing by shut up and give me the stuff.
20:33 >> Yeah. Rationing by supply. Yeah. >> Yeah. We're going to keep most of it because we the domestic priority the rest of you guys sucks to be you. >> Exactly. So I'm not saying we're there yet, but we head in that direction. And if the US therefore suffers because other people say, well, we're not going to be selling to you if you don't sell to us, you have to create a nexus whereby you can guarantee that you will make sure that you in that closed loop have enough of everything you need. And
21:01 that I think is still looming on the horizon. Once you recognize that you can play with the treasury market and you can play with sanctions and you can play with the US dollar via stable coins. Nothing is sacrosanct. Anything and everything can be thrown into the mix. Yeah, that's super interesting.
21:22 And I don't want to get into this for too long because I'm not an energy expert, but if there was a reduction in supply coming out of the Persian Gulf, which there is, we have refineries, right? And they're able to refine the well funnily enough domestically we have a big supply of light sweet crude but we also have the refineries for the much thicker stuff, more dirtier stuff.
22:01 And when you kind of look at it, since we're trying to look from a 30,000 ft level, maybe that does make sense why we went after Venezuela first, right? Because we are increasing our supply to our refineries from either oil we buy from Venezuela or we help them sell and we keep a portion of it.
22:25 So maybe that was 3D chess in advance of all this of saying, hey, if we might potentially crimp world supply because things in the strait go sideways, at least we've got this new source of supply that we can then make diesel out of. So, I know right now diesel is in short supply. I have no idea how quickly the free market can react to that, but it will need supply to react to it.
22:51 And again, Venezuela is a new source of supply that we just coincidentally, who knows, managed to put in place this year. >> Well, I agree. That's one of the reasons why I thought the Venezuela action would happen the way it did. I believe, and these are very rough figures, but I've heard that the US is now taking around half of Venezuela's production, whereas previously almost all of it went to China.
23:17 So, that's a significant pivot. Unfortunately, >> to be clear, when you say take, when you say take, we're buying it from them. It's not like we're just basically absconding with it. Correct. >> Yes. I'm not claiming that you're extracting it as imperial tribute. You're buying it.
23:32 But they clearly need to ramp it up. Unfortunately, many of the things that are happening are going to happen slowly. Like the US needs new refineries. That's a slow process. The US needs to get Venezuela to get back up to where it was, 10, 15, 20 years ago where it's two or three million barrels a day, rather than half a million.
23:50 So, it needs to get them back up there. All these are complicated and difficult things to do. Everything the US is doing is complicated and difficult to do and will take time. And the real physical world constraints to link back to what I was just saying a moment ago, they matter far more than the financial constraints. >> Correct.
24:12 So again, people pulling their hair out and saying, "Oh my god, you're playing with the Treasury market." Have you seen how many peripheral government bonds the ECB has bought, for example, Italian government bonds, peripheral government bonds, the European bond market or bond markets, the spreads between them, they have an overt policy.
24:30 If the spread gets too wide between country X and country Y, we just buy country Y. No one turns around and says, "Well, that's the end. That's disaster. That's doom." The Bank of Japan obviously to an extreme has been buying JGBs left, right and center in some points almost all the issuance for years. The country is still standing.
24:50 All of them and the US together face these physical constraints now. So, and I've made this joke with you before. I'll repeat it because it's one I like. The US is using financial warcraft as in speculative bubbles of gas to try and prepare for a World of Warcraft. you have to use this economic statecraft of financial mechanisms as an adjustment to the curve, stable coins etc towards getting physical supply either within the US economy or from others.
25:23 So that's the game and I'm 100% sure gets that >> and he's working towards that goal. >> That's interesting. I was going to say, no matter what financial gimmickry you can come up with, it's not going to result in an extra barrel of oil coming out of the ground. And I still think that's true. But you have made a good distinction, which is it can be used as a lever to persuade, cajole an ally into selling you more supply.
25:53 So in a secondary effect, maybe can actually help you get more oil. Although it's not more oil coming out of the ground. It's just you're using it to get a bigger part of the pie that already exists. >> Yeah. But it does mean, to shift the metaphor that the blanket is going to be too small and some people are going to get cold feet in that particular world.
26:14 But and that will actually be amplified by what they've done with the Treasury Curve because you are already seeing logically people saying, "Hey, look, if we're going to be running this hot, which we are, if we're going to be keeping borrowing costs down so everyone can continue to pile into AI, for example, to pile into this sector, into that sector, of course, that's going to have an upward pressure on commodity prices because there is only so much physical stuff >> out there at any given time.
26:44 So, ironically, you create even more physical pressure with that financial lubrication, if you will. But that just means you have to have stuff lined up. If you don't, then you really are starting to go the route that many people rather simplistically think the US is already going, which is, well, we're just printing money, etc.
27:03, etc., etc., and it'll all end in catastrophe. Yeah. If you don't have a detailed planned ahead physical plan for the US economy to match the financial that is what will transpire but I think that's what used to be the case so when the Fed as was doing operation twist when the Fed was doing QE on a massive scale do you think for a moment they were thinking about the physical economy do you think for a second they were thinking about supply chains or US industry I put it to you they were not sir Yes.
27:38 All right. Very good point. Well made. And Michael, just to give you a reminder here, I am working up when we get to concluding this conversation to putting the unfair question I give to you every time we talk. Knowing that you don't give out financial recommendations.
27:57 But I will ask, are there general investing themes that come out of your worldview? and sounds like one of them, which I'm pretty sure had already been there before was commodities should actually do pretty well on a relative basis in this type of era for exactly the reasons that you just mentioned.
28:16 But I'll give you a chance to expound on that or correct me in any way when we get near the end of the discussion here. This is a little wonky, but I feel the need to ask it because I think it's an important question and then we'll get back to anything else in your 30,000 foot view you want to share. back to stable coins.
28:34 Let's assume that they are effective in the way that you think the administration hopes they're going to be effective, right? You get this new and large buyer of Treasury debt out there that wasn't there before. I think in a lot of ways you could say, "Wow, that's probably actually really preferable versus having the Fed come in and monetize Treasury debt, right? all these stable coins getting bought, as you said earlier, they're not monetary instruments. So,
29:12 you're not increasing the money supply. You theoretically shouldn't get inflation from them. And so, yeah, if this is a way to make the world more dependent on US dollar denominated assets, and it's non-inflationary, why would you not do it if you could get away with it? >> Well, yes, and let me add a few more thoughts to that.
29:39 I've heard some really interesting arguments around stable coins. To be blunt, most of the conversation is still around how do you make money from it? And look, I understand that and that's not what I do, right? But I think >> I think the answer to that question is you become a stable coin issuer and you get to keep the bond interest, which right now they're not allowed to pass on to stable coin holders.
30:07 So what is it? Oh, I'm having a brain freeze. But the main one >> the genius act. >> Yeah. No, the stable coin issuer themselves. >> Tether, Circle. >> Yeah, maybe Circle. There's one other one that I'm thinking of and it's like the biggest one. It's not coming to my brain. But basically, they're like one of the biggest buyers of gold and gold miners.
30:28 They're actually even buying gold mines at this point because they have this corporate treasury that just keeps growing because they're getting all of the interest income off of their increasingly large treasury portfolio. So that to me seems to be if you're lucky enough to get the gig if you become a large stable coin issuer that's probably a great way to get rich. Other than that, I'm with you.
30:53 I don't really know how you make money off of this stuff. Now, there might be strategic reasons for you to still own it, but I don't see them as a get-rich quick type of crypto like Bitcoin was or Ethereum has been. So, I'm with you is what I'm saying. >> Sure.
31:14 Where the advantage lies is more for the US Inc., I believe because it's not just about cementing the role of the dollar which obviously is still primary but people are chipping away at more and more at least in terms of the financial market op-ed pages and understandably to a degree even if they'll maybe look at everything that's wrong with the dollar but then not look at everyone else so they're only looking at one dirty shirt and not genuinely actually holding up the others and seeing how dirty they are right >> which it's true. It
31:46 is it is a dirty shirt. But yeah, go look at all the others and then compare. But here's where I think it could get interesting, and I've hypothesized on this for a while. I don't think we've discussed it. The first one is this. That interest rate spread you were just discussing. I imagine, and I think the Clarity Act is the piece of legislation that's going to cement this one way or the other is going to be passed on to the end user.
32:09 So, some of it will be kept by the issuer, but I think a lot of it will disappear. And where you can get an advantage in doing that is imagine you have a flood of trillions of dollars of capital coming into the US or buying T-bills. What's that going to do to the T-bill rate? >> Well, it'll bring the rate down, right? Ton of capital coming in, buying, pushing up prices. Yeah.
32:30 >> Right. So, the US gets lower interest rates, which is only useful if it's going into useful parts of the economy. That's my question. What is GDP for? If it's going to inflate assets, that's useless. That's old-fashioned Fed thinking. Financial market 101 doesn't help you with economic statecraft. But so you've got that happening.
32:49 That's a tool that can be used if you use it the right way. Two things then happen in conjunction offshore. If you expand the supply of stable coins just enough, but you stay slightly behind where you see demand being. Now the private sector will be doing it so it'll be hard to calibrate >> but I guess T-bill issuance itself can drive that to an extent rather than the capital inflow saying we have to issue this many T-bills you can strategically decide how many T-bills you issue which therefore of course limits how many
33:20 stable coins you can issue because you can't issue them without it if you're backing them by T-bills you can theoretically have a much higher US dollar interest rate abroad than you do at home because the demand will be for them such that people will be bidding them up trying to get them. Right. >> Correct.
33:38 >> So you can have a split in the global interest rate where the dollar is propped up internationally no matter how wobbly it looks on some metrics by paying X and domestically within the US just for a dollar. Not a US dollar stable coin but a dollar. It can be lower if you then make dollars more and more difficult to access abroad because for example you start saying we're going to pay for imports in dollar stable coins or we're going to lean on major energy exporters like Saudi Arabia except to say when we export energy to
34:12 everyone who needs it we want to be paid in stable coins. >> Yeah. It's no longer the petrodollar it's the petro-stablecoin. Yeah. >> Exactly. you suddenly create all this demand. And from a balance sheet perspective, and this is maybe a little bit too technical, I would imagine you'll get a furrowed brow when I say this.
34:32 Most of my economic colleagues get a furrowed brow. They can't work out how it works. And it took me a hell of a long time sketching it down kind of Rube Goldberg style, trying to write a piece of paper. technically if you pay for imports with dollar stable coins, it doesn't even operate on the current account, capital account, the same way that it does under the current metrics.
34:55 >> Okay? >> Because the US bill stays within the US entity. It's held by a stable coin issuer within the US. Now, you could say that Treasury bills and Treasury bonds are still technically maybe held by the Fed, even if they're claimed by other central banks. But here, they're definitely kept within the US, but no dollars leave the US to pay for the goods.
35:16 >> Yeah, >> you get a digital token. >> There you go. There's a shiny digital token which tells you that I've expanded my T-bill supply domestically, which by the way, the government still has there in the US and here's a shiny token rather than a dollar. So effectively, let's go back to that neo-mercantilism argument.
35:36 Well, you're paying for your imports, but you're not actually paying for them anymore. Not directly. That changes the whole balance sheet dynamic. And again, people struggle to get their head around it because all the spreadsheets aren't set up like this. >> Yeah. >> My brow is only semi-furrowed on this, but I totally get what you're saying, and I think this is correct, which is stable coins do not increase the liability of America side of the balance sheet.
36:02 Yeah, correct. We have those treasury bonds. We have that liability, but that's it. Doesn't matter how many stable coins people buy as long as we don't have to increase the supply of treasuries as a result of that. yeah, it's kind of a good gig if you can get it. >> Yeah. look, it's not perfect.
36:19 There are always yes, but there are always workarounds. There are a lot of very clever people that will immediately try and find workarounds to it. But the principle is pretty clear provided you understand how it can work. There are ways in which this is the perfect set of rails on which to try to run a mono-mercantilist policy because then the retort I get from many free traders in Europe is well we won't use them. Yeah.
36:47 Why should we do that? If I export to the US now I get to buy a T-bill or I get to buy a Treasury bond or I get to buy US equity with the dollars that I earn. and I have complete freedom to decide how I want to invest that back in the US, those earnings from selling to the US. That's the Eurodollar system.
37:06 And I said, you have them because America grants them to you. And if you don't want that, don't sell to the US. And then watch your entire economy topple because either directly, second order, third order, everyone is still relying more or less on the US consumer, >> right? >> Yeah, you can have that choice. You can walk away tomorrow, right now if you want. Good luck to you, sir.
37:27 >> Yeah. And that's at the national level, right? Where maybe they might have reasons where they do want to not be as dependent upon the dollar, whatever. But then there's the civilian, I guess, layer in these countries where most of these countries, a lot of people would love access to dollars, but it's not easy for them to buy treasury bills or even get their hands on dollars.
37:50 All of a sudden, the stable coin lets them do that. they can buy, save, transact in a dollar substitute or whatever. But it's for their intents and purposes, as long as the stable coin does its job of holding its value the way it's supposed to, it's effectively the same thing for them.
38:12 So even if the government might decide, I want to do less business with dollars with the US, their citizenry might say, screw that. I'm getting those stable coins as fast as I can. Absolutely. Unless the government says you can't have them and then I would imagine the White House or the Treasury or the Pentagon will be on the phone and say, "Yeah, nice nice NATO membership that you've got there.
38:34 Pity if that, that's the way the game will work." >> I think that's true. But even flip it like let's say that country doesn't care what the US response is. What would you need to do to cut off your citizens access to stable coins? it would have to be a very draconian constraint you're putting out there like we are limiting access to the internet or it's not easy to stop is my point like the country would really have to ask itself how much am I willing to piss off my
39:03 citizens to try to limit this and I think they could only do pretty extreme tactics here and I think very quickly for most countries probably blow up in their face. >> I would agree with you. I think you'll be surprised how many might give it a try and then find out that that's what happens.
39:24 But >> do you think Greece or Italy or Turkey or a country like that would be willing to tell its citizens, you can't have access to this and we're going to do what we need to do to prevent you from getting access to it, which would be again super unpopular.
39:40 Like limiting access to the internet or we're gonna imprison you if we find that you used stable coins. I just find it hard that a country like those at least sure China, whatever. But they're already their citizens are used to a very heavy hand hanging over them. I don't know.
40:00 I could be wrong, but >> Well, I don't think it will happen within Europe without getting into European politics. I don't think it will happen at the national level. That's going to happen at the pan-European level. And it wouldn't surprise me if you didn't see the European Commission or the ECB come out and say, "Well, we're going to mirror what the Genius Act says, which is no foreign stable coin can operate here." now fair enough.
40:21 If they want to do that, then they miss out entirely. The population may be really annoyed. Nothing that they do domestically is likely to be able to have the same international impact that the dollar stable coin does because the dollar stable coin will still be the dollar. So effectively you just decouple yourself from more and more of the global economy.
40:40 Everyone else will be using it and you say I can't transact in that. So that's where I think it will go. That's above and beyond the fact that it will be linked to LNG. It will be linked to NATO. It will be linked to tariffs. But let me just use my methodology that is how I see everything or I try to see everything.
40:56 I look at these hypothetical ideas and I project them forward to the logical endpoint this direction or that direction. And so on one level, if they really work well for the US, and of course there'll be bumps in the road and misapplication and it can go horribly wrong. Let's presume they work well, well, the US ends up basically getting a lot of stuff for free and creates like a third dimension to the two-dimensional balance sheets we're looking at at the moment, which give it a lot of stuff without the liabilities, which if directly and carefully
41:25 applied will help it re-industrialize and rearm and do everything it needs to do. And if it doesn't work and the rest of the world like Europe says we're out, we're out. We're out. We're out. Bit by bit after a transition, and I'm not saying it would be an easy transition. Well, none of those are exporting to the US anymore.
41:45 Ergo, the US will have to re-industrialize because no one's selling to it. >> Yeah. >> So either way, either way, you end up getting what you want. But one way is nicer than the other. >> Yeah, I agree with that logic. probabilistically I find it really hard that Europe would intentionally dramatically wean itself off of trade with the US.
42:04 So I think it's a low probability, but you're right, if it were to happen, it just adds fuel to the fire of reshoring here in the US. And as you were saying earlier there's already some evidence here that the US via these policies which not everybody has to like is increasing its access to stuff and I think oil is a great example.
42:32 right now because the strait's closed the world has to turn to buyers, right? And so America has been exporting record amounts of oil because it's trying to fill that gap and there's certainly a bunch of demand for it. I've made the argument, who knows if it'll be true or not, but that when the strait does reopen, whenever that is, I think there's going to be a lot less trade done through it than was done pre-war because most countries are going to say we underestimated the geopolitical risk of that place. And even if they're
43:04 willing to cut us a discount, I'd much rather just have a predictable source from a country that has a lot less geopolitical risk. And that's going to benefit the Americas and the Mexicos and the Canada and some of these other large oil exporters that can respond to this new shift in demand.
43:29 So I guess I'm saying is I think these tactics are already kind of bearing the type of fruit that you're expecting to see more of going forward. >> They are. again as with refineries is going to take a couple of years. >> Sure. Sure. >> But the number of plans being really rapidly pushed forward, by the way, very often with American backing, very often with American backing in the background to get pipelines built out of the Middle East in different directions so you don't have to go through Hormuz and you can
44:00 get refined product as well as just crude >> crude. They're really significant. Obviously, of course, Iran, this is an important point to stress because I don't want anyone to think that this is a cakewalk that I'm describing here. I mentioned earlier to you that I think the US alongside this economic warfare is likely to go back to a real military stance after the midterms.
44:27 >> Yeah. >> Well, I was muttering this looking at regional intelligence and logic. And then the Wall Street Journal picked up on it and suddenly it became a whole big thing recently, which is that Iran is itself apparently considering escalating well ahead of the midterms because it can see >> that it's currently on a glide path where it doesn't get what it wants.
44:49 >> And when it doesn't get what it wants, the only way to get what it wants is to start blowing things up again. >> Yeah. It's to take a hostage in the region. Yeah, >> indeed. it's a school of thought that's very unpleasant, but it's certainly working for them.
45:04 So, were that to happen, there is a possibility that we get a massive escalation long beforehand. And if so, then everything that we're discussing here is brought to a head even sooner. >> Even sooner. >> But part and parcel of that in the background, I can assure you, is who's going to take sides with who or with whom, thinking on the other side of this, what does the world look like? and where are my pipelines going to be running from and which currency am I going to be paid in? >> And it's really existential. And if the
45:33 US emerges from this mess >> with the Middle East reordered the way it wants it to with the pipelines running west >> right now pursuing with alacrity so it's heading in the direction US wants. Yeah. >> Absolutely. then that really it doesn't solve problems because trust me there are a lot of other issues in the Middle East that will still take a long time to address if they ever can be addressed but it certainly reorders things significantly to its benefit.
46:05 of course if the US loses this the inverse is true suddenly the pipelines payment currencies all the systems look much more favor of a different camp i.e. Iran running the region alongside Russia and China and Korea, as a grouping or no one running it and absolute chaos. There is a downside scenario here where the entire region absolutely goes up in flames.
46:31 I don't think that's what's going to happen. That's not my base case. >> But if Iran says, "Right, we're taking out every desalination plant and every refinery in the region, >> we're in an absolute world of hurt and the region itself is in tremendous trouble." So it's a very very very high stakes game being played here and the only way to play it is to understand a that is the game b the rules are mixed martial arts plus eye gouging biting >> do whatever do whatever it takes yeah >> do whatever it takes and when you
47:03 understand that then look at the treasury curve then look at what's happening with the dollar and put it in some kind of context Got it. And I do think, as somebody who runs a financial podcast channel, I do think sometimes we give more importance to the financial side of things than it merits.
47:29 And I hear what you're saying is hey, it's important like it is definitely influential. It definitely has its role to play. But when it comes to key decisions that countries are making or when it comes to just getting access to real things, atoms not digits, it doesn't trump the world of supply absolutely and I fully understand whatever industry one is in that over your professional career tends to become the be all and end I don't actually know any
48:08 bakers, but I bet if you meet people who really bake, they talk about yeast and dough, right? >> It's the lens they see the world through. Yeah. >> Exactly. Right. So, this is completely natural and finance obviously given how it's been on a pedestal for 40 years is going to see itself as the beginning and end of everything.
48:30 I don't think that is going to be true going forward. And I think if you are asking the question or forced to ask the question what is GDP for very necessarily given what a big slice of GDP it is you will have to ask the question what is finance for and if you don't ask it yourself you will be asked it at some point by someone or the operating network and system around you >> will shift to ask that question to you directly. Yeah, they're great.
49:02 And just the simple explanation in my mind is a lot of people think of the finance industry as the dog. It is the thing that kind of rules everything else. And you're doing a good job of giving a reality check and saying, "No, it's an important appendage, but it's not the dog." >> Yeah, there's a very crude British idiom that I could throw in there, but I won't do.
49:24 Anyone British will immediately start smoking, but I'll leave it at that. >> Okay. All right. I just want to note though that Michael was nodding his head while I was saying that. real quick, Michael, I remembered the name of the stable coin company, Tether. That's the one I was trying for my brain.
49:40 >> Okay. I think we've covered stable coins in and out here, so I don't want to rehash that unless you want to. >> >> well, just one more thing on that very very quickly. Very very quickly. There's one other element that we didn't touch on which is really important too that when you want to go down this economic statecraft route, I've just described the macro environment, trading environment, the capital flows.
50:04 If you're asking what is GDP for, you still need a mechanism to make sure that the right things are being done within the economy. >> Mhm. >> Now, you're either going to do that the old-fashioned way, which is you issue lots of Treasury bonds and treasury bills and the government does everything. >> Yeah.
50:21 or you have private sector doing it for you. And I do believe and we don't need to unpack this I'm just throwing it out there for completeness's sake >> that if they're incentivized right particularly as stable coin issuers who are effectively creating liquidity of a sort which isn't liquidity we know it's quasi liquidity etc.
50:38 >> It's non-inflationary liquidity which is very important but yeah go ahead. >> Yeah. you can see that that can also be used as a mechanism to get the dynamics of the cutting edge private sector who can see some emerging new industry node coming up that they really want to get growing in a way that a bureaucrat in Washington DC would never see.
51:00 >> Yeah. they can do it in a decentralized, more atomized manner well ahead of anything centralized, in a bureaucratic traditional post-World War II paperwork kind of fashion. So, I just want to throw that in there, too. >> No, I think it's really important. And yeah, I think a lot of people would say, I'd much rather have the private sector do whatever, versus the government.
51:27 as you said the most important thing there is getting the incentives aligned to get the private industry to do this but I think we're already seeing some really notable examples of this so let's take the data center buildout right government really wants us to win the AI race right but it is not financing the data center buildout it has gotten all the hyperscalers excited enough and given them free rein to basically build as many as they can as quickly as they can >> that's a really good example.
51:56 And by the way, I don't know where you wanted to go next, and if you don't want to go here, we can go straight back to where you wanted to go. What's interesting on that is while we're again describing this from the meta level, looking down, more and more headlines are coming through certainly in the press, I'm seeing about a political backlash to data centers because all of this excitement and this growth and this hyperscaling, for Joe public, it's like, well, my electricity bills are going up. I'm
52:24 being, I'm seeing fields turned into these giant metal boxes, >> right? And the compute these things are making may put me out of a job, right? >> And they may put me out of a job. Exactly. So if you're asking what is GDP for, you can't only do that central planning style as in this will be good for you.
52:44 We are going to do this. You have to make sure that the man and woman in the street absolutely feels that they're getting something from it. far be it from me to tell anyone in America what to do, but the obvious knee-jerk response would be every single local region that's getting an AI center built or a data center built, why the hell aren't those people seeing massive cuts in their local taxes or some kind of incentive in hand to show, hey, we're a steel town, we're a coal mining town, whatever,
53:15 which were not the greatest industries in the world in terms of the totality of clean air, etc., etc. But we're proud of it because there are good jobs here, there's investment in the community, etc., etc. If that's not there, it doesn't surprise me that you just see people looking at stocks going through the roof, worried about losing their job. I don't want it.
53:34 So, I think there'll have to be a political pivot on that front as well. >> I totally agree. And, as you said, we're seeing resistance to data center spread. all I'll say is assuming that AI plays out the way that the hyperscalers expect, the logic should be, okay, you're going to make a ton of profit off of this data center.
54:01 So, at a minimum, you should be making sure that it doesn't increase our electrical bill, but even better, to build the data center here, you got to dedicate x% of profits are going to go back into a public fund for reducing all of our energy bills, right? you want to try to find a reason for it to be a benefit for the community, not just a threat, right? >> 100%.
54:26 And what are we talking about there? We're talking about a voluntary because it wouldn't be legislated, hopefully, a voluntary dynamic market system underneath the umbrella of economic statecraft where actually people feel better off and at the same time national power, however you want to measure it, is increasing. This is the game.
54:47 But you have to have all of it. You have to bring everyone with you. You can't make people feel better off without boosting national power. That doesn't last in the long run. You can't boost national power without making people feel better off and have it sustainable in a democracy. You've got to find a way to bridge it. It's not that hard, but it requires more original thinking than kaching kaching every three months, which is basically how Wall Street thinks about things now.
55:11 >> And what's good is I think there's a financial solution, right? I just gave a good example of what one could look like. But there's also technology solutions that are riding to the rescue. They're going to take a while. But we need to rebuild our energy grid.
55:26 Everybody knows that. We knew that pre-AI. Now we really need to rebuild it because we need to try to at least catch up to China in terms of national energy production. And there's a lot of cool new technologies that are getting approved that I think should have been approved decades ago.
55:43 I'm specifically thinking about nuclear but nuclear micro reactors can be a fantastic solution here right where it's onsite so the data center doesn't even need to tap into the grid it is silent which is another big issue it doesn't require water so it takes away a lot of the issues and it provides always on dependable base load power to the data center and the community doesn't really even notice it.
56:14 they'll notice the data center obviously, but these micro reactors are not that big. I don't know, 10 ft by 10 ft. So there are a lot of potential ways to solve this either financially or through technological innovation. >> Sure. And I think a counterpoint to that which actually makes the same argument is if you want to try and do the entire thing with renewables, good as renewables are, I speak to you with solar panels on my roof providing the power, >> for me to have this
56:44 conversation with you and there's a hybrid car on my drive. >> if you're going to do it purely through that on a national level, then you have to have an awful lot more copper. an awful lot more copper because you're going to have to have multiple levels of the transmission system to allow for periods where you have a surge relative to the base.
57:04 >> Right? >> So, you have to look at the totality of the system. And that's true for everything that I'm describing here, looking at the totality of the system rather than just the individual project. >> Yeah. And I will note that the commodity folks that I interview all of them recent months when I ask them about what they're most excited about copper is like at the top of their list. Yeah.
57:28 And for much of this reason an energy grid rebuild is just going to take a ferocious amount of copper. And of course that's just the US and a lot of other countries are trying to do the same. Okay. So, we're getting near the hour. If you want to go long, that's fine. I think the audience will take as much time as you're willing to give, Michael.
57:49 But let's get back to the theme, which is kind of the 30,000 foot level of what's going on here. Are there any other major trends or developments going on that we haven't talked about yet that you think are worth putting into the conversation here? >> Yeah, sure. Let me just throw them in kind of scatter gun. >> Sure.
58:09 aisle, but they all are different pieces this same jigsaw puzzle. So, for example, we've got Trump trying to talk to Kim in North Korea again >> and all the headlines and hoo-ha about him scaling back military exercises with South Korea, right? >> That's because I think South Korea actually is happy about that.
58:30 South Korea was already making outreach towards North Korea. Trump says, "Right, let's not have these really saber rattling games on the same scale on his doorstep." I don't think it will necessarily work, but I can see what he's aiming for because North Korea in a separate geography, the whisper is they're about to send 50,000 men to Ukraine to fight.
58:50 >> Oh jeez. >> Yeah. And they're already supplying them with munitions. And similar >> just one more reason to want to live in North Korea, right? >> Exactly. Well, that 50,000 men maybe won't be for much longer. But Russia simultaneously to this, the whisper there, if you listen to these things, is that after their parliamentary called the Duma election, September 1920, so September 21st onwards, they may mobilize, they may escalate because they're being smashed
59:23 by Ukrainian drones, right? And Ukraine is very close with really brilliant, innovative, cutting edge, incredibly dynamic economic ecosystems for creating drones in particular, which adapt daily from real-time information. Totally different from the Pentagon's doing it. We all need to look at that in terms of how it works.
59:43 >> Ukraine, no doubt, is the cutting edge of drone technology right now. >> 100% 100%. So they're close to also now developing long-range strike missiles of their own as well. >> So they don't need to rely on the US or European versions. So if they do that and you consider how hard they're hitting Russian logistics and infrastructure and refineries right now because exports of Russian refined product have dropped by half.
1:00:07 >> They've dropped a lot. >> So if they can really accelerate that, they're going to get hurt even more. So Putin may escalate alongside those 50,000. He may find another couple of hundred thousand young men who he can round up from even places like Moscow and St. Petersburg. And we can see a further step up in the war.
1:00:27 There's even a risk, and again, this is just a whisper. I'm not saying I'm hearing it directly or anything. And you see it in some headlines, but maybe not in the States or North America, that Putin might even try and put a foot over the line into a NATO country, just to test and see if NATO then says, "Right, we're at war with you.
1:00:45" Or says, "Well, you only put a foot over the line." >> Yeah. >> Or it's only a small country, we're not going to go to war for one of the Baltics. At which point, you have already dismantled NATO's Article 5. And if that were to happen, don't rule out Iran escalating on the same day. >> That would that if I'm Iran, that's the day that I start firing missiles at everyone in the region again.
1:01:10 Including, by the way, they're talking about hitting US bases in Europe, in Bulgaria, in Greece, in Cyprus. Basically saying, we'll hit whatever we can, wherever we can, as far into Europe as we can. Again, I'm not saying this is going to happen. I just want to stress to people in just how mixed martial arts this is.
1:01:31 Just how much eye gouging and nail digging and biting that there could be coming up and any kind of plan that anyone from the US to Russia to China to Europe is trying to put together has to be cognizant of these risks. And obviously for financial markets, the volatility that's implied in what I'm suggesting could happen is enormous to the point where what we've seen so far in terms of the government stepping in and saying, well, okay, this far and no farther in terms of markets, well, we ain't seen nothing yet
1:02:02 potentially. >> Okay. That's what I'm taking from what you're saying, which is if the Russia, Ukraine, and the US, Iran wars have been giving you heartburn, strap in because it could get an awful lot worse. >> Could doesn't mean it will. >> You're not calling for it to, but you could see the potential that it could happen.
1:02:22 >> Well, logically, if one front is going to escalate, it makes perfect sense for all of them to escalate in tandem because that's when you put the most pressure on the Western system. And that's when we find out what bends and what breaks. >> really interesting. Okay, I got a lot of questions around that, but we don't have a lot of time left, so let's leave that.
1:02:43 Any other major trends, developments that you want to get on the table here? >> Incredibly quickly. And a headline that just flashed through this morning, my time just before we spoke, which is that I believe Trump's just introduced a new executive order to massively increase space launches within the US, looking for new launch sites.
1:03:01 And I think the target he's talking about is 1,000 launches a year. >> Okay. >> So, if you think everything on Earth is a mess at the moment and it's pretty hard to think it is, well, look up because I think things are about to start getting very contested up in space. >> And I'm curious on that one. So, the US already dominates in space launches, right? If you look at our I don't have the numbers in front of me, but I did actually heard something about it today.
1:03:28 that if you take the US's launches and then you combine the rest of the world's we just blow everybody we blow the collective rest of the world out of the water already. So for really ramping up space launches and it's interesting that the launches themselves is the KPI the key metric that Trump's looking at.
1:03:48 Why are we doing that? Is it to try to get a working base on the moon as fast as we can and then that opens up not only further space exploration but maybe space mining? Or is it just to get our adversaries like we did versus the Soviet Union? pressure them into trying to compete with us and then kind of bankrupt them in the process.
1:04:12 It may be a little of the latter, but that is a dangerous game to play for the West given where it's starting from. I think it leans much more towards the former. I won't profess to be an expert. What I always do on these things is speak to experts before taking a view on them and I haven't had a long conversation about it with them.
1:04:35 But certainly the talking points that have been passed my way are yes there are huge economic opportunities in space but what it will require is the cost per journey to come way down in the same way that >> correct >> you know what marginal cost is in any other industry.
1:04:53 So the same thing needs to happen. If you've got three space launches a week in the US, which is the target that this executive order is talking about, like Monday, Wednesday, Friday, every week there's a rocket going up. >> Yeah. >> That's a very different world to the one we operate in now in that sphere.
1:05:10 >> Yeah. And that is to the extent that that pushes us decades ahead and we're already decades ahead of most countries on the planet. But if that pushes us decades ahead of our nearest competitors, that is a big strategic advantage. if you really truly have cost effective launchability and dependability of the launch, right? You're going to return the rocket with the crew intact and the rocket's probably going to self-land itself so it can be reused.
1:05:40 that actually is a pretty major advantage if we were able to pull it off that we win the AI race at the same time. Whoa. those things could be great for America. >> They could. And let's put them back in the context that we started with. Have you had examples historically of countries that had cutting edge space technology and yet had a collapsing economy, collapsing currency, interest rates through the roof? Oh yeah, Russia, in a period in which I lived in it. But generally speaking, you would
1:06:11 imagine if America can pull this off, it doesn't half help support the argument for stable coins internationally. If that's kind of, hey, look, this is the country that's got space launches that make money, with all the goodies that come with it, Monday, Wednesday, Friday, etc.
1:06:30 That doesn't half therefore help the argument for buying T-bills to push down the cost of borrowing at the short end to then allow people to be lending domestically within this new kind of crypto nexus which allows you to find the next cutting edge technology with reshored supply chains. >> Again, I'm giving you an idealized version of it, right? Lots and lots and lots of things can go wrong.
1:06:50 But there's a lot to be excited about in terms of what could go right if you're American, to be worried about if you're not American. And certainly to be looking at in terms of the financial market and real economy trade flow implications wherever you sit. >> Okay. And look, I'm pro America. I'm pro the American side because a I am an American. I live in America.
1:07:14 So there's the selfish desire to want to be on the winning team. I also think generally with all its flaws, there are many. America has been probably the greatest force for good in the world geopolitically. I know everybody else won't agree necessarily with that. Not everybody will agree with it, but I think it's pretty easy argument to make.
1:07:32 So, I want to see that success continue in the way that it's not just America doing well, but America is helping the rest of the world do well, too. It's helpful though always to talk to folks like you, Michael. one, you're such a fantastic domain expert in general on this whole topic of the new world order that we live in.
1:07:54 But you also live outside of the US. you were born outside of the US. You lived in Russia for part of your life. So, you've got a much better global perspective than the average American does. So, you're not tied to having you don't have the same pressures, selfish interests that I do.
1:08:13 I always ask you when you're on, hey, if you were playing a game of risk and to start you had to pick a country in the world to be your starting place, where would you want to start from? And for a while back there, I think your answer pretty much has always been America. For about a year ago or so, you were saying China's actually doing pretty well here.
1:08:32 You weren't ready to start on team China, but you were saying, "Hey, they're becoming a much more strong competitor." I think the last time we talked, you dialed that back a little bit. So, I guess my question for you is if you had to pick today on that risk board, what country would you start with? Well, I don't think I've made this joke to you before, but I like starting with Australia when I play risk because no one can invade you.
1:08:58 it's not a round world. >> Yeah, you're down there in the corner. >> I always try to start with Australia and then just get those extra two armies every time and just slowly build my base and then try to invade. Yeah, >> exactly. And if only Australia actually had an extra two armies in the real world.
1:09:17 But on balance I'm going to stick with where I was. I'm marginally more optimistic than last time we spoke. >> I'm kind of detecting that. I didn't want to put that word in your mouth, but I've been detecting that in this conversation. >> Well, there is so much doom and gloom out there. I don't ever take the counterpoint to everything just to take the counterpoint.
1:09:35 A lot of the time I go along with the trend, I independently make up my mind on everything. But while there are enormous storm clouds gathering within that chaos, everyone else gets buffeted by it, too. for example, let's just for a second go back and talk about this yield curve thing. I already mentioned it.
1:09:54 The people who are being absolutely outraged by what's just happened weren't outraged when the Fed did it because markets. They're only kind of outraged that the Treasury is doing it now because state >> craft. >> So, it's perfectly okay to do it in order to get the stock market to go up.
1:10:11 It's not okay to do it in order to do things besides the stock market going up, which it is going up, by the way. But equally, have you seen what the ECB's been doing? Have you seen what the BOJ's been doing? Have you seen what the Bank of England did with gilts, etc., etc. >> All sorts of intervention. Yeah.
1:10:25 >> And the PBOC, what do you think the PBOC is doing? Left, right, and center in different ways, right? Lots and lots of dirty shirts out there. So, it's by no means a gimme. It's a very, very big challenge coming up. Absolutely. But I think through that America has still a better chance of prevailing and coming out stronger than it does collapsing.
1:10:48 And as I also point out to people who tend to rub their hands a little bit gleefully thinking well America will collapse particularly if they're based in the west well it will collapse on you. So there's no world in which America collapses and some other constellation steps forward and says hey we're Australia and Canada we're going to rule the world it's not going to happen.
1:11:15 So if you are in the broader west I think you want to try and be optimistic regardless of how you may feel about things. >> Yeah. that's a great summary and it's funny, I get your argument and I agree with it that it's not like if America stumbles, some other country is going to naturally just sort of step up and become the world superpower.
1:11:38 I don't think that's likely for all your reasons and maybe even a few more. But even China, right, America just does a face plant here. America's China's largest trading partner, right? it's not like China's going to come away uninjured by a failing America. Correct. >> Correct. Absolutely.
1:12:01 In fact, you've seen a recent report from the US talking about transshipment with a Trojan horse on the front. very appropriate for the summer where we've had >> these Yeah. >> And underlining that China is in some instances going thousands and thousands and thousands of kilometers, tens of thousands of kilometers out of its way to try and get products into other countries to get the stamp put on and they came from there to still sell to America.
1:12:27 >> Yeah. >> And let's say America does completely stumble. China is building up its exports to the rest of the world. They are now larger than to most other places. A lot of that's to Europe. Europe is about to push back hard, it would appear. So finally, after having resisted and laughed at everything Trump did, from a trade perspective, Europe may end up following it, which could ironically therefore bring the US and Europe together.
1:12:51 Again, something I've been suggesting was logical for a long period of time. But the rest of the world, unless it's raw materials, China basically sells and doesn't buy much from those countries. So were it to end up just dealing with those guys, fine. How are you going to prop them up? >> Right? >> Effectively, you're running the trade surplus with them.
1:13:06 you're going to have to keep pumping your money into them to get them buying from you. And ultimately, that doesn't end too well as we saw with Germany and Greece. So, it's a messy messy messy global system we're in now. And one of the reasons on an underlying basis why I am optimistic if you see it coming through is because I am not and have not been for the longest time a believer that the world that we had pre-Trump was in any way fair, equitable or sustainable. It wasn't.
1:13:36 It was an accident waiting to happen and that accident's now happening. But on the other side of it, maybe we build a more crash proof car. >> Yeah. I totally get that, especially with your long arc study of global geopolitical dynamics that globalization that was not the norm.
1:14:01 That was the aberration, right? And like it or not, we're returning to the system that really pretty much ruled the world for centuries. And just hopefully maybe we'll do a better time of it this time around. >> Well, we travel in hope. >> We travel in hope. That's a great way to say it, my brother. Okay. so one last big question for you, unless you've got some other key themes you want to squeeze in here.
1:14:26 And it's the one I know you don't love answering. so apologies for that. But while not being personal financial advice to anybody, are there key investment themes that you see coming out of the action that you see right now? I kind of threw two up there, I think earlier. One was commodities should probably do well on a relative basis here.
1:14:52 And well, I guess we didn't really get into where you think the direction of interest rates are going, but if stable coins help lower bond yields, then maybe actually bonds will have a good secular period ahead of them. >> Well, those two are linked and I agree with both. So commodities are very clear in a more zero sum neo-mercantilist rearming world where supply chains are being deliberately disrupted as a strategy >> to make sure that stuff is expensive for the other side and cheap for you but of course they can do that back at you. So
1:15:27 it gets disrupted for everybody. yeah commodities are a good place to be absolutely although of course they need to be tied to something. Pure speculation is not going to be encouraged in this particular world order. They want to or world disorder. The powers that be will want to see that you're actually putting it to some use rather than hoarding it for example.
1:15:48 >> Right. Copper is to build out the energy grid not to sit in a warehouse. Yeah. >> Exactly. And then be rehypothecated as money. No, no, no. It has to be something physical. the T-bill argument from stable coins I think is clear. And the FX argument. Now, I'm not in any way giving an FX trade here because I don't do FX strategy.
1:16:08 But logically and looking at the headlines around you right now, everyone is like, well, the dollar is going to suffer from what the Treasury is doing. despite the fact that you can say that, well, okay, the yen suffered a lot from what the BOJ was doing. And look at the volatility in the yen.
1:16:23 the euro's gone up and gone down depending on the circumstances, but hasn't always moved one-to-one with what the ECB has been doing vis-a-vis peripheral bond markets. But let's say that the dollar does have a couple of bad months, which I think is entirely possible on the back of this. I think the people saying that and not making the argument I am for stable coins.
1:16:45 So in other words, you could get really big volatility where you can have a significant move in one direction and then everything comes screaming back the other way. >> All right. well, thank you so much for providing your best answer to that question because like I said, I know it's you generally issue trying to direct people towards investments.
1:17:07 And again, a reminder, these are just themes we're talking about and they're secular themes, meaning there will be cyclical times where this trade works really well and where it doesn't work at all, but over the long arc of what you see coming, you think those are decent themes. all right, my friend.
1:17:24 It is always it's just really fun to have these discussions with you. I very much appreciate you making the time to do it. And obviously, not only they fun, but they're very informative. There are few people with your kind of holistic geopolitical expertise, Michael, and it really is a privilege to have it here on this channel. So, thank you.
1:17:46 And my question around that is for folks that would like to follow you and your work in between now and the next time you appear on this channel, where should they go? >> Sure. Well, if you're a Rabobank client, you can find my work in its totality on Rabobank knowledge, but you do have to be one of our clients.
1:18:05 If you're not, you can find some of my work on LinkedIn. And if you don't want to go there, I like to continue the conversation on X and my handle is all one word at the Michael Every. So, come and join the conversation. >> Yeah, I would change your handle to the only Michael Every that matters. because you're such a great mind.
1:18:30 And I've been following you at Twitter pretty much since you started your X account. And I highly recommend everybody watching, if they don't already follow you there and they like your work, they should definitely go follow that. Michael is I won't say prolific, but you do post pretty frequently.
1:18:48 I would say daily. And a lot of the things that we've talked about in this discussion, the genesis, the initial thought of it, first or very early on appears on X. So, it's a really great way to see how Michael sees the world on a real-time basis, but it's really interesting to see how he'll get an idea and then over the next couple of days, he'll just flesh it out more, build on it, and then start to tie it to everything that's happening in the world. So, it's a great account. You do
1:19:16 a great job, Michael. Thank you very much. So do you. >> You're so kind. Okay. well, we'll start wrapping it up here. So folks, first off, please join me in thanking Michael for giving us so much of his time and his expertise here today. He went long for us very generously. do that.
1:19:35 Show him that gratitude by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. All right, Michael. Thanks for being patient through that. let's definitely do this a bit later in the year for an update on your view and we'll inform everybody about it.
1:19:54 But I just again just want to thank you for the role you're playing out there for so many myself at the top of the list and giving us such a great expanded way to sort of see what's happening around the world with these major trends and then tie it all together for us and in sort of your unifying overall view.
1:20:14 It's incredibly useful and in my opinion the world needs a lot more Michael Everys. Well, thank you very much and thank you for giving me the platform to share it. Ah, >> no. You're anytime, my friend. And literally anytime if you see something that's happening out of cycle that you want to get the word out about, please let me know and we'll have you right back on the channel ASAP.
1:20:34 And like I said, I think the world needs a lot more Michael Everys. That said, I stand by my claim that you're the only Michael Every that really truly matters. >> Well, thank you very much. I'll tell my wife. >> Please do. And please apologize to her for me keeping you here a bit late. But it's been wonderful, my friend.
1:20:50 Again, I hope we see you again soon. >> Thank you. Bye-bye.
=== APPENDIX — separate host segment, NOT Michael Every (Adam Taggart with Mike Preston, New Harbor Financial) ===
1:21:08 >> All right. Well, now is the time on the program where we bring in the lead partners from New Harbor Financial. Today, it's just going to be the lead partner. John Lodra has the week off. But we've got Mike Preston. Mike, thanks so much for joining us. >> Glad to be here, Adam. Thank you. [Segment summary — Mike Preston (New Harbor Financial) reacting to the Every interview and discussing portfolio management: agrees on de-globalization/statecraft framing; notes Treasury buying long bonds gave Treasuries a lift and sentiment in bonds had been very bad; New Harbor holds a TLT position at 7.5% of their model expecting a drop in long rates over the next ~2 years while agreeing inflation is the longer-run risk; believes "we're in a commodities bull market that should last at least 10 years"; currently 50% in equities, expects a blowoff top in the S&P possibly above 8,500 followed by a market that could lose two-thirds of its value in the next down market; hasn't been a real recession allowed to clear since the GFC; uses covered calls / selling puts for income and occasional index puts as hedges; philosophical close — most clients with $2–3M have "won the game," 80%+ of prospects are okay; own assets / avoid debt; health and relationships over money; DIY investors over 50 should have a succession plan (mentor a family member or line up an advisor early). Host plugs: thoughtfulmoney.com/hedging options primer, fall online conference.]