Ten31 Timestamp: Gilt Trip

0:00 John Arnold, here we are, Monday morning, back at it. Back at it again. The situation never sleeps except for when we take weeks off for travel convenience. Yeah, it was a good week. We had our 1031 Portfolio Company retreat in Utah. It was a great week. Feeling refreshed after it. Moisturized, unbothered, in our lanes, collectively.

0:22 It was a good time. It was a good time. A lot of productive conversations in Utah this year. with that we got to get back and we were saying last week when we were driving uh from the airport to our undisclosed location in utah that it was a pretty big bummer that we didn't didn't record that monday because something we've been covering popped off and i'll just leave that as a cliffhanger because we'll get to it later but we'll jump right into it talking about one of the recurring themes of the last six months for us which is the the flow of oil particularly from the middle east a lot of people worried that the war in Iran is going to prevent oil flows.

0:59 They're going to have this diesel crisis, and obviously crude and diesel prices have gone up significantly. But one thing we've been trying to do is get access to the real data behind the scenes, and you have it here in a couple of slides from, it looks like this is a Goldman deck or a Morgan Stanley deck?

1:16 JP Morgan. JP Morgan. We've got Middle East crude flows, Middle East refinery products flows, And they seem to be up and to the right since late March, early April this year. Yeah, I think, I mean, this was the big story last week. And I think it's kind of a bit of a Rorschach test where you can kind of see what you want out of it.

1:34 You know, the left-hand side is what I think got most of the attention and probably rightly so. That basically last week, crude flows got back to roughly pre-war levels, which is kind of, you know, a pretty big narrative violation for a lot of the, you know, the Doom posters and the influencers. that were trying to convince everyone that, you know, if we didn't get this normalized in a couple of weeks, then oil flows would be choked off forever. And the world would immediately plunge into chaos. And obviously there have been significant issues and especially at kind of the margin of countries with much less energy security, there have been significant issues, but this chart is just not, I think definitively not what the consensus narrative would have had

2:12 you believe on the left-hand side here six months ago. So no doubt pretty significant and a culmination of kind of the things that we've been talking about over the last few months, where you've gotten these like dribs and drabs of information about the U.S. helping with dark transits, you know, different kind of ways, different routes kind of around Oman to avoid the Strait of Hormuz.

2:32 And that's led to kind of this rough normalization. Now, we'll see if it holds. Things are not out of the woods yet, and things are far from kind of normalized, as we can all tell. But I think the left-hand side chart is a good thing to keep in mind every time that you kind of evaluate geopolitically, like what's going on.

2:49 And the next kind of doom post headline that you see saying that it's all about to kind of plunge into unmitigated chaos with with no route arounds. Right hand side, I think, gives you a little more of a nuanced view. I think left hand side chart was the foundation for a lot of like victory lapping that I saw last week on Twitter.

3:07 A lot of like, you know, everyone who was opposed to the conflagration in Iran just has TDS and is a complete moron and, you know, was a was a beta loser. right-hand side maybe is a little more nuanced and it's more relevant for the diesel situation. So that's where flows have not gotten nearly back to normal, despite some of the workarounds.

3:27 And so that's a reason to stay somewhat cautious, at least on the industrial side of things. Obviously, diesel is a massive input to industrial economy, to shipping logistics, both in the US and everywhere. And if you're trying to ramp up industrial production as a means of growing your way out of debt, that's not a chart that you really want to see. And we'll talk about more, or maybe later in the episode, kind of some workarounds to that that have geopolitically interesting implications.

3:53 But yeah, something for everyone here, you know, as we survey what's going on in the Persian Gulf now. Yeah, looks like refined products are still probably like 40% below normal, pre-war normal. So climbing back there, that's another question. I think the last time we met, we were talking about the Venezuelan imports into the Gulf of America.

4:12 And I think that's still the question on my mind is what is the refinery capacity looking like there now? Have they been spun up? Are they refining at full tilt? And I need to do deeper research on that. But I think another chart that really highlights something that is a bit of a wrench in trying to facilitate global trade is the cost that it takes to actually ship.

4:36 now that we don't have these pipelines in the straight. I think people are avoiding particular parts of the world in the oceans. And so that has significantly increased the cost of hiring an oil supertanker as the sort of constriction on getting supply out for many months of the straighter Hermes has led to this backup and a relative lack of supply of supertankers that actually moved the stuff.

5:04 Yeah, I mean, it's a crazy chart. We all should have just bought tankers the tanker ETF and then chilled this year But yeah I think just it an interesting one because I think it actually speaks to a lot of the the underlying kind of push and pull of what going on here like the you know this is happening as you said because of all the workarounds that are needed now to um to move oil out of the middle east um and right now i think this is one of the reasons that you're seeing you know everyone's kind of complaining uh and i think rightfully so that you've had this this increase in in crude flows we're not really seeing it at the pump yet And obviously there's some level of lag there, but there is an element of, I think I saw, I believe Bob Elliott had an estimate that, you know, this dynamic is adding like 30 to $40 per barrel of cost to actually getting, you know, a barrel of oil out of this region and kind of into the hands of final, you know, in consumer.

5:50 And so you've got this kind of push and pull where the geopolitical leverage, let's say, of the Stradivar Moves and kind of the disruptions being created there are arguably being – that's being like chiseled away in ways – interesting ways I think we're about to talk about. But at the same time, that's not necessarily flowing through to just like a sudden relief valve on end user costs, which creates pain for the average American at the pump and creates problems for kind of the inflation picture and treasuries that we'll talk about.

6:15 So, you know, it's like kind of this ongoing question of kind of who has the relative leverage and for how long, you know, how you can kind of pay. If you're a sufficiently wealthy country, you can kind of just like eat this cost and deal with it. And hopefully you can just do that for long enough to get the other side to finally cry uncle.

6:33 And maybe there are some reasons to think that's closer than it has ever been. But yeah, I think those two charts kind of in conjunction tell a lot of the story here. If I'm looking at this chart, it looks like a 2017 ICO shitcoin chart. It looks like the blowoff top is here and would not be shocked if a material correction to the downside happens relatively soon.

6:53 We've said it before. I mean, nature, you know, nature abhors a vacuum and nature abhors a vertical chart. Just like when the chart spikes, like, you know, there's nothing in the world like a supply response. So, you know, we'll see if that plays out. Yeah, and you're alluding to it, but creative ways to get around this and put pressure and shift leverage.

7:12 And you have some headlines here pertaining to the deal between China and the United States. I'm assuming this was agreed or the rough framework was agreed upon when President Xi came to the United States a few weeks ago. On top of that, you have a U.S. arm-twisting campaign is cutting Iran off from the rest of the world.

7:32 and Iran's top security official warns of dire economic crisis. And so to your point, how long can Iran survive with all these pressures being put on them from many different angles? And it seems like the U.S. is going to China and saying, hey, let's find something we can work on to put the pressure up on Iran and maybe we'll make some concessions, whether with AI or accepting pandas into the country to make sure that we're happy with this.

7:59 Yeah, it's critical. I so the out of the Xi Trump meeting last week emerged this kind of eight point statement from the Chinese most of its kind of boilerplate or you know talking about recognizing the we reiterate our commitment to having a strong bilateral relationship and we're going to work together on AI and whatever you know the the one thing that really jumped out from it other than as Marty's saying you know point eight was that the United States is going to welcome the arrival of two two giant pandas the Atlanta Zoo which is probably the main takeaway but beyond that the two the two heads of state statement reads, agree that Iran should honor its commitment to not develop nuclear weapons, and no country or institution can be allowed to impose, impose tolls on international

8:35 waterways. So kind of the two big sticking points in this whole thing, you know, China is at least optically and then publicly kind of endorsing the US viewpoint on, which I believe is the first in a number of months, I think they've said before, like, you know, different representatives have kind of hinted, like we, you know, there shouldn't be told. But I think this is the first real official statement kind of leaning in this direction, which is like when you pair that with, to your point, the, you know, this Wall Street Journal article on basically Operation Economic Outcast and the tolls that it's having on Iran domestically. And then, you know, this bottom right-hand article, if you're watching here, is actually interestingly from the New York Times,

9:13 which is maybe more interesting than the actual content, just that the Times is running this headline that's kind of acknowledging that there are these, you know, meaningful domestic disruptions that are not playing in Iran's favor and are theoretically playing in the Trump administration's favor. You kind of couple that all together and it's a bad time, right, to be for your list of allies to be growing thin and for your main kind of sponsor of Iran is like, you know, if you think of it kind of as like this client state for the main sponsor of that state to be kind of pulling back a little bit. We don't have it on here, but, you know, saw some news as well that the Chinese may not be sharing satellite imagery with Iran anymore. You know, you've seen little hints like

9:47 this over the past month or two that maybe China's pulling back. I think this is the most definitive statement that we've seen so far that basically China saying, you know, let's let's cool it here. And, you know, shifting the shifting the talk track firmly kind of toward the U.S. posture. Yeah. And then on top of that, I mean, if you if you are a believer in the the printmine hash perspective of the world and the theory of the world to in parallel to all this, you have chaos in Europe, you have bond yields blowing out in France and Germany or the spread between France in Germany blowing out And I think that that was a that a big point of their thesis is that one of the other parallel sort of leverage points that the Trump administration is playing is to put pressure on Europe to foot the bill for their part of NATO and to stop manipulating euro dollar markets to expand globalist policies throughout the world

10:38 So we'll see what's going on there. But we're moving on and staying on China, though. I think one of the topics that is really underappreciated but extremely important, particularly in the context of reindustrialization here in the United States, is our access to rare earth minerals, critical minerals that are pertinent to battery production, magnet production, whatever it may be.

11:02 And you have the chart here on the left from the Wall Street Journal shows that it's moving in the right direction in terms of our ability to acquire and process these rare earth minerals. Yeah, it's a point that we've been on for pretty much this whole year, ever since we started kind of thinking through what the administration strategy might be.

11:18 And ever since you saw kind of the MP materials deal last year and a few other deals that the admin has done, both in the U.S. and kind of with partners abroad. And then the Chinese rare export restrictions late last year. There's obviously a major theme that's underpinning every single relevant kind of technological vector that, you know, the two great powers are competing on.

11:39 And again, I thought the framing was interesting and kind of a mainstream news source that you're seeing. You can see the subtitle there is that the Trump administration's initiative here to create a China free supply chain is quote unquote starting to work. Now, I think maybe that's like a little generous if you look at this chart here, like moving in the right direction, but also, you know, certainly like going to take a few years to even get kind of, you know, meaningful progress.

11:58 That said, there's good detail in the article I recommend people read about the amount of kind of partnerships that have been struck around the world to, you know, kind of like encircle China with, you know, alternative supply chains. So it's early days on this, but I think the five to 10 years ago, you completely could have said, and I think a lot of analysts were correctly saying like the US is in a, you know, completely is behind the eight ball here and does not have effectively like real sovereignty militarily because they have no plan for controlling these supply chains or reshoring them or having alternatives.

12:28 And that's definitively moving in the opposite direction now. And I thought to that point on the right hand side of the slide, you know, just highlighting this article from, of all people, Jamie Dimon, most important banker in the world outside of maybe Kevin Warsh, basically taking to the Wall Street Journal to write an op-ed saying the U.S. needs to do more explicit industrial policy, including subsidized loans, tax rules, export credits, new immigration policies, direct government investment and development finance initiatives, et cetera, into all these critical industries.

12:56 Now, he's talking his own book here a little bit because JP Morgan has famously committed to billions of dollars of financing and working on all these deals. And they stand to benefit from being the leader of this massive shift in finance policy in the US. But in any case, you've got one of the most important American businessmen out there right now, very aligned with this idea and beating this drum that we've been highlighting over the last year plus.

13:19 So you can kind of clearly see the direction of travel here. It all comes back to that same kind of great game. Yeah. And bringing it back to the US and what I was alluding to at the top of the show, which is the chart that we've been hawking for many, many months now, is the US 10-year treasury yield juxtaposed to the move index, which looks at the volatility in the yield movements.

13:45 And we've been saying it's been relatively suppressed considering that yields have been drifting higher. In the last couple of weeks, they haven't been drifting. They've been running higher. and the movement decks popped while we were away for the last two weeks and reached levels not seen since the tariff tantrum of 2025. Yeah, there's so there's a great old Western if you're into Westerns called Shenandoah starring Jimmy Stewart and his like later years. And it's about like the lead up to the Civil War. And he's in the Shenandoah Valley with his family and like, you know, the Union and the Confederacy are fighting and coming to blows and more and more battles are kind of popping up around, around where they live. And the whole time he's saying like, you know,

14:23 it doesn't concern us. It doesn't concern us. He wants to be neutral. He just wants to like work his farm or his ranch or whatever, and kind of be left alone. And then finally, like midway through the movie, like the turning point is his like youngest son, I think gets like kidnapped, I believe by Confederates and the camera zooms in on him, you know, pushes in or whatever to close up.

14:40 And he's like, now it concerns us. And it's like, this is, that's what I thought of when I, like, when I saw this chart, right, you've got all this noise, you know, with, with rates and people freaking out about one thing or another. And, you know, obviously, obviously, that's, that's relevant to one degree or another. But when you see move, you know, finally rip out of this range from like the 60s to the 80s down up into, you know, the 110s plus, that's when you say, okay, now, now this concerns us, this is interesting. And I think especially so with these two, this couple headlines that I've got on the slide, this is all happening, you know, rates getting to 5.3%. So 20 year highs move blowing out. That's all happening in the same week that you had a Fed

15:15 governor, John Williams. I don't know if he's a governor, he's vice chair of the FOMC, I guess that makes him a governor. I can't tell. I remember who sits in what seat. But in any case, leading light of the Fed comes out and says, Well, there's no need for urgency for on you know, any rate hiking cycle. And I believe you had one other governor come out and say the same thing last week And you also had PCE come in which is allegedly the you know the feds preferred inflation gauge personal consumption expenditure that that came out ex food and energy you know lighter than expected by quite a bit and yet you still had this move right you still had it really didn do anything for yields like i think maybe you know when when the pce headline hit you know you knee

15:50 jerk down like five bips but then pretty much gave it all back in the same session and you know move close the week on uh kind of local local highs um so you know all that is to say like we've been you you know, we could be, we could be, you could be forgiven for thinking that we're, you know, we're idiot Americans and we're saying rah, rah, U.S. over these last few slides and look how great everything's going for the U.S. and, you know, trust the plan, it's all in hand. Like we've been saying it this whole year, but like this is, this is the constraint, right? This is the thing that the U.S. has to watch and dance around. And I think thus far, you know, I think you have to give Besant and Co. some credit for having danced around it reasonably well enough to keep the

16:27 whole thing going. And you could call that, you know, a series of tacos or whatever. But the reality is a lot of the strategic objectives in the physical world seem to be moving in the direction that they want. So now it's a question of what's the next mechanism needed to kind of get this back under control and make sure it doesn't, you know, create excessive squirreliness in the bond market. Yeah. I mean, and that's, I think that's one of the big questions is what's driving this. And again, I think we'll go to the next, the next slide here. Is it what's going on with everything in Iran and the debt situation, or are we beginning to see the effects of other bond markets and their relative weakness leak into the US? Because, I mean, if you look at some of the

17:07 auctions from the Treasury in the last couple of weeks, they've been pretty lackluster and suboptimal, if you will. I mean, many people teetering on the edge of going, being as confident as saying that a lot of the auctions had failed in the last few weeks, looking at different durations but that gets into a before we get to the the european spreads here which i mentioned earlier i think another thing another interesting thing uh at the treasury they brought in judy shelton who is a uh a very vocal sound money advocate and a lot of the commentary i've been reading over the last week is that besant really doesn't care about the long end of the yield curve as much as people want him to because he's trying to move everything to the short end and then

17:49 potentially recapitulize long end by, by doing something like a gold backbone or maybe a bit bond, if you will. Um, so he's trying to force everything to the front end, the yield curve. Uh, we don't have to dive too much into that, but what are your thoughts here, Judy Shelton? Well, you're giving away the alpha dude. We got, we got a couple of slides and then we've got some, some, some Shelton posting that we're going to do. Okay. Okay. I'm sorry. I missed that. I missed that in my first read through, but let's, let's focus on your app now in these spreads. Well, no, I mean, I think it's all, it's all tied together. And like, I would almost to your original comment, I think kind of reverse the causality where the U S has real problems and

18:21 the rest of the world has kind of worse problems. So when the U S you know, kind of sneezes, the rest of the world gets a cold. And I think you're seeing that, you know, clearly here with what's going on in the European bond markets over the last few weeks. And, you know, you mentioned mind print hash earlier dines, Matt dines to his credit has been all over kind of the Europeans over the last year and kind of what the debt market looks like they're relative to the U S.

18:43 And I think, you know, as it relates to what's driving on this, like a bunch of things and some of the very obvious, another like more general macro thing is just like there's very clearly now this push for we've talked about it. We talked about last week, but like you see US PMIs ripping for the first time in a long time, you know, if there really is going to be this push for massive AI build out, massive, you know, industrial reshoring, you're going to have sudden meaningful strain on supply chains that are not really prepared, you know, from a real resource perspective to operate in the way you want to operate at the speed you want to operate.

19:13 And so that's like, that's literally creating just like real financing costs for things are like going up. That's a problem for the US, but it's a much bigger problem for, for the Europeans who, you know, are not basically not net producers of anything except for regulations and compliance laws. And, you know, are sitting with, you know, France has, I believe 120%, 125% US debt or 125% debt to GDP, not US debt to GDP. And it has a lot of demographic issues that are widespread across Europe. And I'll just leave it at that.

19:41 But the interesting thing on this chart that is notable, I mean, a couple of things. So the French spread to German boons, which are kind of like the benchmark for best bond in Europe, most stable government with a real kind of manufacturing capacity to some extent in Germany. When you look at that spread of that benchmark, it's now at 67 bps as of this was over the weekend, relative to in kind of the Greek debt spiral that got up to 59 bps.

20:09 So it's already higher than that one was, despite the fact that like Greece should be like a way more marginal economy. And the other piece is that the when compared to the kind of late 2011 sovereign debt crisis in Europe, France did get higher relative to the German boon at 104 bips. We're not quite there yet, but that happened in 106 trading days.

20:29 And this one has happened in just 23 trading days. So kind of to the point on move, you don't just care about kind of absolute level. You also care about kind of speed of travel. And here you have like scary absolute levels and scary speed of travel. And I think this is, you know, all gets back to what we were saying, that Europe is kind of the sick man of the world, relatively speaking.

20:47 And, you know, I think you've seen I don't think it's entirely to your point, to the, to the dines point, the law point, I don't think it's unintentional, right. To put the Europeans in this position. And, um, if you're trying to, there's the Euro dollar piece, which is huge, but also like, if you're trying to create kind of a decoupling and force a decision, um, but you know, for the, for the entire world to, you know, maybe throw in with the U S or throw in with China and the Chinese sphere, um, you know, one way to do that would be to put significant stress on, uh, on a market like this and kind of see where the chips shake out and where people kind of want to throw in.

21:19 And so I think you've seen maybe some indications of that with this past week where Macron was suddenly out there talking about how China has decimated or massacred Europe's industrial base with all these unfair subsidies and export dumping. And we need to completely reshape that. And it's totally unfair, suddenly sounding like Trump out of nowhere.

21:39 So I think you're seeing the signpost that this is not outside the realm of what the administration is kind of looking for and not necessarily like a random disassociated thing. Yeah. It'll be interesting to see how it all plays out. Dines and Luongo, been pretty dead on. I've had them on TFTC many times over the last couple of years. I'm actually catching up with Tom Luongo on Wednesday. Very interested to see what his perspective is that should be out front or Saturday for those who want to get the distilled thesis there. But moving on, AI, big part of this.

22:11 And I think the administration, the Trump administration, particularly at the executive level, has been frame-mogging the frontier labs and the data center doomers over the last couple of weeks. The Trump administration put their flag in the sand and said, no, we're not decelerating and we're not going to give you the regulatory moats that you guys want, which has been, if I'm speaking objectively, it's been pretty refreshing to see.

22:39 Yeah, look, I mean, you get I don't have the video on here or the photo on here, but this all comes from the White House super intelligence joint committee event or whatever it is they called it. It's now super intelligence. It's not artificial intelligence. So says the so says the big man. So I guess that's what we're going with.

22:56 They all, you know, Trump and every relevant leader got together in D.C. to sign an agreement basically saying, you know, we can we can figure out ways to advance and accelerate AI safely. but we were definitely accelerating. And you can see this in the Mike Johnson quote that, you know, it's all a Chinese psyop to slow us down. So we're not going to do that. And, you know, the same week, Trump did a time interview, which we'll definitely talk about here in a second.

23:21 But one of the things that came out of it was that, you know, wouldn't be opposed to an Intel like stake in the labs, which I think they themselves have allegedly floated in the past. So, you know, ongoing kind of uniting of potentially the government and the frontier labs and AI infrastructure in general, which if you're if you're taking our thesis, you know, at heart, at face value, then that's not something I think would ultimately be totally surprising to see.

23:47 No. Then you also had the Pope come out and say, hey, these things are not conscious. They don't have souls. Very important. That's the whole thing. We're going to people need to people need to people need to build a metaphysical framework. There's going to be a lot of reading that needs to get done.

24:01 Maybe we'll do a side episode on unconsciousness and the nature of the human soul. We'll get deep on Thomas Aquinas. Exactly. Moving on. I alluded to it earlier. I sort of jumped the gun here. But talking about inflation bescent Fed chair picks and Judy Shelton joining the treasury What your take on all this Yeah I mean look it it all all these three things are interesting right The best that comes out and says, well, you know, the Fed needs to keep an open mind on inflation before getting too, uh, getting too frisky with, with interest rates, because we're going to have all these productivity gains from, from AI, um, and, you know, deregulation can drive all this growth. And then, you know, at the same time, hires David Zervos from Jeffries, who famously,

24:47 when he was, when his name was being thrown around in the Fed chair sweepstakes, was known to be someone who was advocating for aggressive interest rate cuts and, you know, financial repression and kind of the whole playbook of Grow Baby Grow. And at the same time, the Treasury brings on Judy Sheldon, who has been, as you said, kind of an advocate of 50-year Treasuries kind of with a gold backing component, you know, at the same time, the same week. Interestingly, I don't really think the Shelton one was like heavily, like you've seen it on Twitter, but it's not gotten really a lot of fair play in mainstream news. Like, um, I I'm, it was in, it was in deal book. Um, the New York times is kind of financial blog, um, and a few other sources. So, you know, reasonably

25:27 certain that it's real, but it hasn't gotten like a, you know, a CNBC article or a profile or anything yet, which is interesting in and of itself. You know, I don't really know what they're going to do. I think that there are a lot of different ways that this could go as we've kind of alluded to, but I just think like all of these things collectively, and then the comments that we'll talk about on the next page, you know, from, from Trump are just seem to be pointing kind of exactly in the direction that you kind of would have thought as, you know, an advocate of hard money. If you've been also paying attention to the way that, you know, Besant has talked about, let's say stable coins and the yield curve and, you know, the priority on, you know,

26:06 outgrowing the debt, et cetera. It all just kind of points in, you know, the same direction. And I think there, again, are a lot of incarnations on what could be done here and what all of these different kind of breadcrumbs could mean. But I'll tell you this, it does not make me bearish on Bitcoin. Not in the least bit, not in the least bit. Let's get to Trump's comments pertaining to how inflation could pay down the debt very rapidly. And so to piggyback off of what you just said, this headline from last week, I think is a glaring alarm bell. Go get as much Bitcoin as you can, because they're going to go for debasement over defaulting on the debt. And then going back to what I was saying earlier, and I do have sort of a setup for you to elaborate on it, but stablecoin

26:50 issuers have a growing appetite for treasury security. So Genius has passed all the rules that genius that come with genius beginning to be implemented and is it like stable coins are here and it seems like they're going to be an integral part of the u.s financial system the global financial system moving forward whether or not you agree with that or like that is a completely separate question we'll talk about that before i ask you the question that i have which is going to be an explanatory like explain it like i'm five uh question thoughts on trump's inflation comments. Yeah. I mean, he's not wrong, right? Like technically he's, he's, uh, he's correct. And generally that's kind of been how that's, that's been the playbook. You know,

27:31 you've seen it where we've talked about it before, like the world war II analog of a, I think what it requires is a, as best instead of maybe a fed that keeps an open mind or a treasury that kind of meaningfully reasserts, um, control over the dollar system in one way or another. Um, but I I think he not wrong but he also telling you to your point uh effectively giving you advice for how to shift your portfolio allocation If if you really take them at face value I think maybe even the more interesting thing in these comments is this bottom quote There are other means to pay off the debt.

28:05 I don't want to tell you what those means are, but you can do it through other means, which is a classic Trumpian comment. But I think that that maybe bleeds into the stablecoin piece that you were alluding to. Yeah. I mean, I think Besant himself has come out and said that he sees demand for stable coins or the market cap for stable coins growing to $3 trillion to $5 trillion by 2030.

28:27 They're looking to grease the skids to make that possible with laws and rulemaking that is accelerating forward. And like I mentioned earlier, when you combine that with the long end of the curve auctions, the longer duration auctions, sort of being lackluster in recent weeks, bringing Judy Shelton in.

28:51 And as we all know, if you've been following this, I mean, you wrote an incredible piece on it more pertaining to which blockchain will win. But I think when it comes to stablecoins, it's very well known that they can only hold short-term bills, essentially. And so if you're going to have a bunch of debt being rolled over in the next few years, trillions of debt, and you've increased the skids for stable coins, one would assume if that market's going to grow from $500 billion to $3 to $5 trillion, a lot of the demand for the curve is going to be pushed to the front end because of stable coins.

29:23 I think depending on stable coins to drive the demand for the front end there. And so might explain it like I'm five. Question is, if you believe in the thesis that Ascent is actively trying to push things to the front end of the yield curve so that you can then rejigger the long end with gold backbonds or bit bonds, whatever it may be, what does that process look like? Yeah, I mean, I think it's, you know, I wish that we were in the rooms to really know this for sure. But I think at a really high level, like the, the way that, and I believe I'm borrowing this metaphor from, from Dines, if not him, then somebody else.

30:00 But if you go back like a hundred plus years, the nation, like before the, before the advent of the Fed, I mean, like the back half of the 19th century, the way that a dollar was defined was not as, you know, liability of an unbacked liability of the federal reserve, right? It, it held some kind of collateral. And generally, it was issued by, it could be issued by a private bank or the treasury, but there was some sort of collateral behind it. And I think if we, if you imagine like the, so the metaphor would be the, in Indiana Jones, Temple of Doom, when he's swapping out, you know, the famous scene of he's swapping out the little golden idol and putting like a, you know, a weighted bag on the same spot so that, you know,

30:42 it won't trigger like a booby trap. I think we are in flight of a version of that right now, with the dollar and the definition of like what a dollar even is? You know, is it an unbacked kind of liability of the Federal Reserve that's redeemable for nothing? Or is it a collateralized liability of some issuer collateralized by potentially an asset like a U.S. Treasury bill, which is effectively a claim on the growth and productive capacity and thus, you know, tax capability of the state, of the U.S. government.

31:16 And if the walking around money that you use that you and I use to the extent that you still have dollars to pay for things that you hold in your bank account or you holding the corporate treasury is subtly subtly becomes you know a collateralized obligation a digitally spendable and instantly spendable collateralized unit instead of the, you know, an unbacked liability sitting on, you know, Fed ledger. That shift in definition of what a dollar even is, I think opens up meaningful incremental capacity for T-bill issuance. There are, To the extent that that's true, there are significant implications on the inflation picture.

31:55 And there are constraints still on how much you can really pump into that at any given interval. I do think this Fed paper from San Francisco Fed, this interestingly timed paper, mentions that they think that the demand for short-term treasury securities could nearly double to more than $400 billion by the end of 2030 with the growth of stable coins.

32:17 I think you probably need a lot more than that. I don't know that you can realistically safely do more than like, you know, say a few trillion. But I think that's like the direction of travel that I'm trying to get my head around that I think is what we're driving toward is basically a reinvention, a subtle reinvention of the dollar in such a way that it's not necessarily going to be obvious to anyone walking around today that like anything happened. But turning your bank account and turning your your local dollar access to just a funnel and a sink for, you know, a new version of like collateralized units that are sopping up T-bills, basically.

32:54 Yeah. It's happening. We're not going to notice, but it's happening. It's happening, freaks. And then on top of that, I mean, you mentioned the dollar. Dixie screaming higher, but the euro is in a bad spot relative to the dollar. It's debasing faster. Not that you have this up, That's another thing I was following over the weekend is the precipitous decline of the euro or rise of the euro, but decline of the purchasing power of the euro compared to dollars.

33:21 And then our good friend, Nick Batia, sharing the Bitcoin to gold ratio chart. It looks like Bitcoin is breaking out. So as all this is happening, the lead up to the first 38 minutes of this discussion is all roads lead to hard assets and our favorite hard asset being Bitcoin. Yeah. I mean, I think, you know, I got two of my favorite line squivers on here.

33:41 the nick on the right, and then the Dixie charts taken from Dines' feed. The interesting piece on that left-hand side chart of dollar versus Bitcoin is just kind of moving into a direction of the two moving much more in tandem over the last couple of months. So strong dollar aligning with strong Bitcoin. Matt's view is that it may be just a counter trend rally. So maybe fade it too soon to tell. But those are the kinds of things, right? That plus like Bitcoin gold ratio moving up meaningfully during sovereign debt sell-off. Those are a couple of data points that I think you'd look for if you were looking for kind of meaningful regime change in Bitcoin specifically and markets more broadly. Yeah. And you don't have this on, but I wanted to pull this up from a great

34:24 account, great file, great poster, the Chivalry Guild. A lot of dooming out there. A lot of people saying it's the end of the world. The plague is upon us. But hard times, bad times, hard times. That is what people keep saying. Let us live well and time shall be good. We are the times. Never forget that.

34:42 Don't let the algo manipulate you into thinking that you can't manifest good times, people. Never do. Never do. We'll see you guys next week.