Kevin Warsh Is Ending the One-Man Fed

Transcript

Bankless Nation, we are joined once again with a friend of the pod, Jim Biano from Jim Biano Research. Jim, it's good to have you back. >> Thanks for having me. Looking forward to the conversation. There has been a structural transformation at the Fed. I think these are the right words to describe what's going on with the incoming new Fed chair, Kevin Walsh. And there's so much to talk about. There's whether it's hawkish or dovish or neutral Fed. We we got to talk about the the increasing rates at the long end of the curve, the inflation regime. So much to talk about.

I don't really know how to start off this interview other than asking the big abroad question, which is when you look at the Fed and you try to read Kevin W and what the Fed is up to, what's your what's your first reaction? How are you reading the Fed? >> So, I think there you're right. There has been a big change at the Fed and that change is that usually what we think about with the Fed is the way you structured the question. How do we read the chairman? What is the chairman think? There's 12 voters. What about the other 11? And for decades, they didn't count. You know, they did what the chairman told them to do. Now, behind the scenes, they could kind of,

you know, make their case to the chairman and quiet, but when it came to the vote, everybody fell in line and voted with the chairman. I think that's changing right now. And I think that if you wanted to use an analogy, they're going to be more like the Supreme Court that, you know, we don't hear, we we wouldn't as Americans tolerate for one second if the Supreme Court heard all arguments and then they retired to their cloak room and they all looked at Chief Chief Justice Roberts and go, "So boss, how we voting on this one?" You know, but that's essentially how the Fed has been working. Now, what's changed is that I think it's Trump's incessant attacks on the Fed and the Fed worrying about their independence, worrying that

Trump's appointees are going to do his bidding. And how does the Fed maintain its independence if it has a bunch of people that just do what the president wants him to do? And what the Fed is starting to wind up being is 12 independent voters. And so we've seen this now. We've had 10 descents this year, more than any time in the last couple decades. The last meeting on July 29th, we had three denters all in the same direction to raise rates, nine to not raise rates. That's the most desenters in the same direction. And sometimes you get them two-sided, some to raise, some to lower, and then some in the middle,

but the most in the same direction in 10 years. And we also saw going into the July 29th meeting that the Fed fund futures or Kelshi or PY if you want to look at those because they kind of say the same thing had a 3540% chance that the Fed was going to hike rates. And we've always been comfortable with this idea that or used to I should say this idea going into a Fed meeting that the probability of a move was either 2% or 98%. And so this is kind of in the middle. So what I think has changed about this Fed is it's 12 voters and Fed watching I've been arguing is a voting exercise. Listen to their speeches. put them in the hikeolder cut

column and then the day before the meeting which one has a majority that's the way they're going to vote. Now, one last thing, you're always going to have Fed officials that are in the middle on the you know um could be persuaded either way. So, the chairman's going to have a lot of influence. So, when it comes to I'm 50/50, I could go either way. Then if the chairman says, "I'm voting this way," there might they most likely might want to vote with that chair with the with the chairman. So, he's still going to be the most important voice, but he's not going to be the only voice. And then finally, don't forget that J. Paul is still a Fed governor. He didn't leave. Uh, and Jal said, "I'm going to f fold into the

background," meaning he's not going to give any speeches and he's going to vote with the chairman. So, the chairman kind of walks into the meeting with two votes, right? his impal's vote is what he does. So he's still important but he's not nearly as important. So to understand this Fed, you have to understand the dynamics of how everybody is viewing things and how everybody is voting. How much of this transformation is a strategic intentional choice by the new Fed chair Kevin WH? And how much of it is a reaction to what you were saying where we don't want the Fed to be, you know, under the direction of Donald Trump. And so maybe because the Fed is a board of governors who vote is somewhat

Democratic, maybe the Fed is reacting to it's being it's being anti-fragile and it's reacting to the potential corruption of Donald Trump and it's it's doing something to, you know, protect his legitimacy, protect his sovereignty, and that's good. Or is it more at the direction of Kevin Worsh of saying this this strategic ambiguity and the removal of the key man importance is actually an intentional direction that I want to set the Fed in. Which one of these rings more true to you?

>> Can I can I weasel out and say both and explain why and explain why I say both? I think it started off as to protect the institution against a president um let's write it general a president it's Trump now it could be a future president that wants to appoint his own people to the board and tell them how to vote uh but I also think that when Wars got there he basically said you know what I'm fine with this and he calls it the good family fight is what he refers to it as so he was predisposed to say if that's the direction that the Fed was going to go anyway. I'm okay with it to begin with. So, he wasn't about to push back or try and fight against it in any way.

And I would argue to get kind of in the weeds a little bit, there's a different Kevin, Kevin Hasset that was also being considered to be Fed chairman. I would argue that Scott Bessett, the Treasury Secretary and Donald Trump understand that this board is more independent and Trump has basically said that even in the last week that he said, "I know what he said. I know what Worsh wants, but I also know that the board might want something different effectively to those words." Kevin Hasset was early on considered to be a frontr runner um under strong consideration to be Fed chairman. Kevin Hasset, Harvard trained economist, very very well um qualified to be Fed chairman, but he's kind of one

of those congenial academic types. And the the Besson and Trump said, you know what, if this is going to be, you know, hurting the cats, we need a little stronger personality than a congenial academic type. Not that um Worsh is a bully. Not like Trump is a bully, but Worsh is a bully. Uh, but I think that he's more of a forceful personality than Hasset. And I think that that might be one of the deciding reasons that Worsh got the job. And like I said, he's okay with them being a little bit more independent, but he's okay with standing in front of them and, you know, kind of making his case and trying to convince people to vote with him instead of just

dictating like the Fed used to do. Travel rewards have gotten way more complicated than they need to be. You've got points that expire, transfer partners, blackout dates, and somehow you still end up wondering if you actually got a good deal. Coinbase is taking a much simpler approach. When you book flights, hotels, rental cars, or vacation rentals through the Coinbase 1 travel portal using your Coinbase 1 card, you'll earn 5% in Bitcoin on eligible travel bookings. Book a $400 flight and you'll earn about $20 back in Bitcoin. No reward charts, no transfer partners, no redemption gains, just Bitcoin that you can hold or trade. And every other purchase on your Coinbase One card can earn up to 4% back in Bitcoin. Plus, new card holders earn a $50 Bitcoin bonus after spending $100 in their first 30 days. So, if you've got

travel coming up, check out the link in the show notes and see if you're approved today with no impact on your credit score. Or just visit coinbase.com/banklist. Terms apply. That's coinbase.com/banklist for more information. I've been trading crypto for almost a decade and I've used so many different wallets, the exchanges aggregators different frontends over the years. And I'm always kind of looking for the same thing, just one interface with deep liquidity across a bunch of chains and assets where I can access all the markets like per earn yield, trade confidentially, and still control all my own funds. And I've never really found this experience, and I'm always switching wallets, juggling gas fees, and just getting eaten by slippage. Near.com is not that. It feels fundamentally different to me. I can do everything I want from any chain and I

keep all my activity confidential. I can even earn yield confidentially. It's the way crypto should work. The near.com wallet is powered by Near and it's moved over $25 billion crosschain using postquantum signing and has run over 5 years on mainet with zero downtime. Near.com is simply the best way to be onchain and be in control. Get 20% of your trading fees back using the bank list link in the show notes. Not investment advice. Self-custody won, but it still has a usability problem. A seed phrase on paper is still a single point of failure. Phones get lost, devices break, backups disappear. Bit Key is a self-custodial hardware wallet built for that reality. It uses a two of three multisig with keys split across your

phone, the Bit Key hardware device, and Block. No single key can move your Bitcoin, and Block can never move it alone. There's no seed phrase to lose or expose. And if you lose your phone, your Bit Key, or both, built-in recovery gives you a path back. The hardware screen also lets you verify the destination before approving a transaction. And that's the point. More control without one mistake putting everything at risk. So download BitKey today and use promo code bankless to get 10% off of your BitKey. This episode has been sponsored by BitKey. So it seems like with the removal of the key man of the Fed and giving the authority and the governance of the Fed over to the governors, which just by the words that we use, it seems to make sense that it

is structured like that. What's the point of having a board of governors who votes if we're not if we're only going to have a single key man leading the Fed? So seems like we're going back to a little bit of the way that the Fed was meant to operate in the first place. Maybe it maybe we when we put so much legitimacy and power and emphasis into the single Fed chair, it was never supposed to be that be that way. So, we're going back to an older version of the Fed, a more original version of the Fed. The market needs to adapt around that new status quo. Uh investors who are looking at the Fed are going to be receiving different data, different information from the Fed. How would you

explain just the difference in signal coming out of the Fed to the market these days? What's the qualitative difference in that communication signal from the Fed to the market and how is the market reacting? >> Right? So quick anecdote about how the Fed used to work and it got to its most extreme during Greenspan about 20 years ago. So when the Fed meeting occurred, Greenspan would walk into the room and he'd welcome everybody to the Fed meeting and they had an agenda and they would start the agenda and the meeting runs four to six hours and Greenspan would hardly ever speak during those four to six hours and then after towards the end he'd say okay enough and he'd reach into his bag and he'd pull out the Fed statement which he personally wrote

the night before the meeting and said everybody agree to this and we'll put it out and we'll be done. And it's like, what was the point of the meeting if you already decided the night before what everybody's going to do? So, we've come a long way from that. But along the way, the Fed developed these two fancy words, forward guidance and reaction function. And I think that that's really where the market is struggling. Forward guidance. That's a fancy word for signal to me what you're going to do next. You're going to raise rates? You're going to hold? You're going to lower rates? kind of give me a smoke signal here so I know what to expect. Now, Wars has been dead set against forward guidance. He did one venue for forward guidance. The Fed puts

out this dot plot where they tell you where they think the funds rate's going to be at the end of this year, next year, and the year after. And he did not submit a dot and he wants to do away with the dot. >> Um I am >> all the dots. Everyone dots the governors get a dots. >> Yeah. all the he wants to do away with the whole exercise. I am one that agrees with him that this forward guidance should be done away with. Why? Because too often the market takes forward guidance is a promise. The Fed says, you know, we're getting ready to hold and we're going to not move rates. And I'm thinking of 2021 and inflation is transitory. Okay, they're not going to move. and the inflation rate goes to

four to five to six and the Fed keeps saying inflation's transitory and they feel boxed because they told the market we're not going to raise rates and if we raise rates we might upset the market so you wait till March of 22 before you raise rates and incredibly the inflation rate was 8.6% 6% when they finally started to raise rates, you wait too long because you promised them or you told them you weren't going to do it and the market takes it as a promise and so you wind up with the wrong policy is what you wind up waiting way too long or you go back to 2013. That was what we refer to as the taper tantrum. Um Bernani was the Fed chairman and he said the same thing. We're not going to move.

We're on we're steady. We're not going to move. We're not going to change the size of the balance sheet. And then in May of 20 2013, he comes out of the blue and says, "We might change the the the size of the balance sheet. We might reduce it. We might, you know, stop the money printing and start um you doing quantitative tightening." And the market freaked out and the 10-year yield went up 140 basis points in four months in 2013. point I'm trying to bring is forward guidance for every instance you say the Fed tells you what we're going to do and everybody relaxes and then they do it and it's seamless and painless and nobody notices it creates another problem. So it it also blows up markets because you you know to use the

crypto term you rug them. You told them what you're going to do and then you do something else or it forces you to do something you don't think is right to do. So I'm all in favor of getting rid of forward guidance and wars desperately wants to do it. The other fancy word is reaction function. Reaction function is give me the rules of the road. You don't have to tell me what you're going to do in September, but tell me what data you look at, what you think constitutes data that would be a hike, a hold, or a cut, and then I'll just follow the rules of the road. Now, Walsh isn't offering reaction function, and I disagree with that. I think he should, but the reason I think he's not is he's got all these task forces, one

on inflation, one on communications, one on the size of the balance sheet, one on the labor market, you know, and and the like. And he's waiting for them to come back because I think you're asking for what are the rules of the road? What data should I be looking at? How should I react to it? And he's saying I might change that in four or five months. So, I don't want to give you some rules now. and then say now you can forget those rules. Here's a new set of rules. I think he should. But I'd also point out if it's 12 different Fed people, 12 different voters, it might be 12 reaction functions that you need.

Obviously, three members of the Fed voted to hike rates at the July 29th meeting. They have a different reaction function than Worsh who did not vote to hike rates. Lisa Cook is a Fed governor. that's the one that Trump wants to fire. She gave a speech in Anchorage last week and said in the speech, I stand ready to raise rates. She might be a fourth reaction function. So, there's also going to be it's not I think Wars owes us his reaction function. His will be the most important one, but it's not the only one. We're going to have to get everybody else's. So, what I'm trying to tell everybody is this Fed is in a state of flux. It was one way. It's becoming

another way. I don't think the new way it's becoming is necessarily bad. It's just that transitions are always messy. And that's what we're in right now. We're in a transition. >> I think the big question that I wanted to get you on the podcast to answer is the market's reaction to that transition. If we're going from if we're doing a phase change, we're going from A to B with the Fed regime, the market is going to be different once we go from A to B. Maybe it's a marginal change, maybe it's a very big change. My my gut reaction is that if the Fed the Fed seems to be withholding information somewhat strategically and it's it's saying less. It's being more mum. It's

reducing the signals to the market. And what we do know about markets is that markets like clarity. Markets like promises. They like to be able to look into the long term. And it seems that the behavior of this new Fed is to reduce some of the clarity that it's it perceives its job it is to give to the market. And so it wants to descope its role about giving information to the market and the market was previously giving some amount of clarity getting some long long-term planning from the signal from the Fed that it's not getting anymore. And if we understand that markets don't enjoy ambiguity, but the Fed is supplying some amount of

ambiguity or at least withholding some amount of signal, it seems to be that markets might trend slightly more conservative. We maybe we go away from risk and uh the market trends towards being a little bit more conservative in the market. Do you agree with that assessment or what other data do we have about the market's reaction to this new Fed regime? No, I agree with that assessment and I would argue, you know, what I said before that we had a 35 to 40% chance the Fed was going to hike rates and it wasn't 98 or two. And I saw on social media when I was pointing that out, people are like, "Are you out of your mind? They're not going to raise rates. Of course, they're not going to raise rates." And I'm like, "This is not the 98 or two world anymore." There was

a 40% chance they were going to raise rates. They didn't. But, you know, because it's a binary outcome, don't assume that yes, it was always a 1% chance that they were going to raise rates. No, it was 40. And get used to that because I think every meeting as we go, not every meeting, but most of the meetings, if you look at Paulie or if you look at Kelsey, if you look at the Fed fund futures, it's going to be somewhere between 33 and 66% for most of those meetings. And it's going to be a closer call than we than we think. And we need to kind of get used to that.

Now, why does the Fed want to do that? Another phrase they like to use, moral hazard. Moral hazard is the the term that the Fed likes to use to say that all of those promises create problems. You want an example? I would give you Silicon Valley Bank. Silicon Valley Bank. Now, let me be clear. They screwed up. It's their fault. But they said, "Look, we were long bonds big time without a hedge because the Fed promised us they weren't going to raise rates." And then the Fed finally caved after saying transitory inflation and started hiking and hiking aggressively. Bond sold off hard, we lost so much money, the bank went bankrupt. Now, yes, it's

their fault. They should have known it. But there is some truth that if it they're an extreme example that people take this forward guidance that the Fed used to use and say that's it. I know what the Fed's going to do. Leverage to the maximum and this is what causes problems over and over again in markets is that there's too much risk takingaking. So if they want to back off and say look we might raise rates we might not raise rates you have to make an independent adjustment assessment and you have to you know consider all the probabilities that walking into this meeting it's not a 2% chance that we're going to hike rates it's a 40. So make sure that your positioning is for a 40% chance that we're going to hike rates.

And so they want to reduce those blowups and extreme movements um and the like. So I definitely think that this is what we're going to have to get used to with this Fed. And like I said, I don't think it's a bad thing as well. And then finally, the Fed wants the market to go back to basically reacting to the data and how the data looks as opposed to reacting to how's the Fed going to interpret the data. Now, I get that. That's the one I think that the Fed's going to have the hardest time with. It's easy to say, you know, that's the phrase that he uses, you know, play the ball, not the referee. Um, yeah, I understand what you're trying to say, but you're still

pretty damn important, you know, as far as you're more than a referee. You're also a partial player. Maybe you're not a total player like you used to be, but you're a partial player in this game as well, too. It's going to take a while before you become an objective referee. So part of what the Fed wants is they want the market to assess. They want the market to price in various scenarios so they could look at the market and start to look at and start to say the market thinks this and that and that's an important input in our process as opposed to the market just guessing what they're going to try and do. Has the question of whether the Fed is hawkish or dovish or neutral? Is the nature of

that question different now in the sense that like maybe I could just ask you the question, Jim, what do you think if the do you think the Fed is hawkish? But now that there's a little bit more of a democratic process to the Fed, maybe your answer is like, well, there's a hawkish bias in these governors, but that could change very quickly. And so maybe the question is less relevant. Is the nature of that question different now? >> Yeah, I think it is. And I'll give you a great example because let's go back to September 18th, 2024, right before the election. The Fed cut rates by 50 basis points. That was their first rate cut.

And they've cut rates six times for 175 basis points. They cut them 50 at the first meeting and then 25 at every at everyone after that. Um the last time they cut rates was December of last year and they've been on hold ever since. Now normally um and I was even tweeting about this yesterday and people were kind of cogn dissident not listening to what I was trying to say. Normally you'd think if the Fed was cutting rates 175 basis points, interest rates would fall. But on the 10ear and the 30-year yield, they have not. The 10-year yield, roughly speaking, right now, is about 95 basis points, almost 1% higher than it was in

September of 24. The 30-year yield is about 1 and a4% higher than it was in September of 24. I got 55 years of data, and that's why I was tweeting out yesterday, there's no there's no other example of the Fed cutting this much, this long and rates going up. Now, why was that? Because Jay Pal for most of that was the Fed chairman. He met with the staff. They met and made a decision. We're going to cut rates. We're going to be dovish. And I think that the market was signaling to the Fed, we don't agree with your policy. We're a little bit more worried about inflation. We're a

little bit more worried about some other things. We think the appropriate path for interest rates would be higher. And I've used this line, this old bond line. Bond traders can stop panicking when the Fed starts panicking. And what I've argued was if you are uncomfortable, remember that the 30-year yield, we're recording on Thursday. The 30-year yield made its 19-year high on Tuesday, two days ago. If you're uncomfortable with that and you want that yield to go down, don't scream for the Fed to keep cutting rates because they have been and it's been going up. Maybe if the Fed panicked a little bit about inflation, then the bond market would calm down and

you'd actually see falling yields. I'll give you an example. In 2022 when the Fed started raising rates, they were going by the summer of 22 75 basis points in meeting, but interest rates, even though the inflation rate was going to 9%. Interest rates settled down a little bit. Why? Because the Fed was in full froth panic about 9% inflation. As a bond investor, okay, if you're going to the bed about it, I don't have to. And that's basically the way they were because before that they were saying if you don't care then I'm going to worry and that's a we're getting a lowgrade version of that now. You're now worrying about inflation so I'm worrying about inflation. So if you start raising

rates and worrying a little bit about this long-term yields could come down. As I try to explain this like I said the kind this is everybody come back be are you crazy? if they raise rates, no one will be able to afford a house and, you know, it will choke off the economy. And I was like, I just said if they raised rates, I think long-term yields would come down, not go up. And that's where I think people are trying to, you know, trying to understand how this Fed works. The market has been saying for two years that this rate cutting policy has been wrong by seeing higher rates. So, if you raise rates, maybe then those long-term yields will reverse and start coming down.

>> Let's talk about uh the inflation regime right now. Uh inflation has been above 2% for 64 months ever since the Zera. It's been really sticky at 3 to 4%. I think we're at 3.4% right now as this latest month. Uh are we tolerating 3.4% these days? And what do you think Kevin Walsh and this new Fed regime thinks about this like three plus percent sticky inflation? >> So let me take the last part first. Worsh has given a couple of speeches right now, a couple of uh press conferences and at the end of the month he'll give us Jackson Hole speech as well.

>> And in those speeches he said about you remember the Fed has a dual mandate high employment and low inflation. And he said regarding the employment data, you know, the payroll report that we always look at that he referred to that as echoes of history that's only good on the third revision. Meaning I don't think it's a very good report. The third revision is 18 months later that maybe by that point it's fairly accurate, but it's only telling you what it was like a year and a half ago. And so he's been dismissing the the methodology of that report and he's got a task force that's going to work on trying to find what he called

more realistic me or real-time measures, excuse me. But he's also at the same time said that the inflation data seems to be more important to him than the employment data. So he's really focused on the inflation data um right now. And he's talked about that even there he's talked about potentially looking at different ways to measure the inflation data that wouldn't be out of out of precedent. J Paul invented a thing called super core which was core inflationless housing services. That was the measure that we referred to as supercore. That was invented by J. Paul and the Fed. Uh it's still out there. We don't look at it as much right now but uh they were looking they were that was

very important about two or three years ago. So if Worsh wants to invent a new measure, he can invent a new measure. It wouldn't be unprecedented. But I do think that as far as the inflation measures go, the Fed itself is getting more worried about it. Three people wanted to raise rates at the July meeting. As I said, Lisa Cook has already said she stands ready to raise rates. I will offer an opinion in that Chris Waller, another Fed governor who hasn't given a speech since July 29th, he probably will before the September 16th meeting at some point. And I would guess that when he does, he too very well might be in favor of raising rates

in September. And then we're talking about five people ready to raise rates in September. Seven we either have said no or we're still unsure because they haven't given a speech. So, this Fed is definitely more worried about inflation. That's why the odds were 40%. Because I think the market is thinking that that's kind of where the Fed is right now. And that's why the odds are like 40 40 50% right now on the September meeting because that's kind of where we're where we are with this Fed. There is an inflation problem. As you pointed out, we have been above 2% for 64 months. By the way, if you go back to 2010 to 2020, we were only above 2% like three or four months out of that entire decade. And

now we haven't been below it in over 5 years. So I do think that there is an inflation concern in the market. It is not, as I like to joke, an 810 Zimbabwe worry about inflation, but it is a lowgrade 3 to 4%. Well, if it is low grade 3 to four, that means that interest rates might should be in the five range. Maybe some of them should be closer to six. And that has a lot of people worried that if rates go up, what does it mean for housing? Does that impair the economy? I don't think it does, but I do think that the path for interest rates is higher because of this inflation fear that we have.

>> Is raising rates or tinkering with rates uh the primary tool that this Fed is going to use to fight inflation? because there's a there's um some uh just thinking there's a a tweet that I remember reading out on the bankless weekly roll up not terribly long ago about how worsh might allow the Fed to fight inflation through balance sheet reduction rather than rate hikes. Uh what are the main tools that you see the Fed using to fight inflation and is it the normal ones or are we doing something new here? >> No, those are the two major tools. It's it's either raise rates or reduce the balance sheet. Now let me mention something about the balance. Let me say it this way. Raising rates is the immediate thing you can do in September.

Reducing the balance sheet is far more complicated for the following reason. Um, going back to DoddFrank, I'm sorry, going back to the financial crisis in 2008, we passed the law called the DoddFrank bill after uh Barney Frank and Chris Dodd, the senator and congressman. That was thousands of pages of regulation on the financial system following that that crisis. In that bill, we identified the funding markets, the overnight repo market, um, and secured overnight funding rates or sulfur, which was what we call it now, as being sources of concern. So, we've choked those markets from growing.

Federal debt keeps going up, but the size of the funding markets as a percentage of federal debt is at the lowest levels since the 1990s. In other words, the funding markets are too small is what I'm trying to say. We've made up for that difference by having the Fed provide funding every day for the markets through its massive balance sheet. The amount of bills that are traded and everything, they would step up and do it uh through reverse repos and the like. So, in 2025, the Fed started to or let me back up. In 2019, the Fed made a pass at saying it's time to reduce the balance sheet. And when they started to reduce the balance

sheet, what they said was, "We're going to get out of the business of funding Wall Street." But Wall Street couldn't expand to meet that missing funding. So you had a repo crisis in September of 29. The repo rate rocketed to 9% because there was a shortage of funding and it created havoc on Wall Street. Okay. The Fed re uh uh red uh increased the size of their balance sheet and the like. In 2025, they tried again or 2023, they started to reduce their balance sheet. But by 2025, we started to see more volatility in the funding market because as they reduced it down to a certain level, Wall Street couldn't increase the funding market as well. So the point I'm trying to bring up is, is it more

effective to reduce the balance sheet to deal with inflation? It might be, but they can't do that in September. They can't do that in October. They need to have their they their task force come back and say, "Here's how much you can reduce the balance sheet. If we want Wall Street to take up that that missing Fed part of funding, we need to change the rules in order to allow Wall Street to get much more into the funding business. The Fed is not the arbiter of those rules. The Treasury is." and they refer to that as the as a new Fed Treasury accord between Bessant and Worsh and all of this is complicated and the board has to approve it. So what

I'm trying to say is reduce the balance sheet fine that'll happen in a year maybe in two years when they get the ability to do it. So right now they got one tool if they want to deal with inflation and that's raise rates. And that's why that tool might have to be used now. Maybe in the second half of 27 or 28. If they could get the ability to reduce the balance sheet, they could back off that tool. So I hear a lot of people say, "Well, they could reduce the balance sheet." Yes, but they're they can't do it now. If they reduce the balance sheet now, you wind up risking a shortage in the funding market. Repo rates spike. Wall Street can't get funding. It creates all kind of systemic problems and you don't want to do that.

You have to adjust the rules. You have to approve all of this and that's going to take time. Is it my read from you is it tell me if this is correct is that you actually think that higher interest rates at least like you know marginally moderately highest higher interest rates will actually calm the bomb bond market because the bond market will understand that bonds will be safer over the long term because inflation will be lower. Is that is that your read? Yeah, because remember that as a bond investor, they're called fixed income securities because that's what you get. You get a coupon that is fixed. You get a certain amount of cash flow. I don't want my cash flow devalued by higher inflation.

>> Yeah. Right. >> Yeah. I don't want it devalued by higher inflation. So inflation or the devaluation of your dollars, same thing, is the enemy to any bond investor. So either the Federal Reserve use its tool to raise interest rates, raise their short-term interest rates and pull back some of the pressure on interest on inflation or will do it by in the way the bond market will do it. will being the bond market will do it by saying since nobody cares about inflation, I'm out of here.

I'm just going to sell my bonds and I'm going to leave. And that pushes the price of bonds down and that pushes the yield up. So if somebody, like I said, if somebody's panicking a little bit about inflation like the Fed, oh good. As a bond investor with a fixed income, even if there is a little bit of inflation, they're working on it and I can relax a little bit. I don't have to sell my bonds. But if they keep coming out and giving me another reason and another reason and another reason that there is no inflation, I don't have to worry about it. We're not going to raise rates. As a bond investor, I might say, "Now, I disagree with you, and I'm going to sell my bonds and leave." And that's why we're sitting at 5.2% on the 30-year, which is just a handful of

basis points away from the 19-year high, which was set two days ago. the if you tell the typical investor like then the typical response perhaps even the the naive response is that if we watch the Fed and the Fed increases rates me on the risk side of the investment spectrum I get scared it's like oh no they're raising rates like my risk assets are going to go down but hearing what you're saying is like well maybe that happens as like you know a spinal reflex like a gut reaction but if the bond market is happy I actually feel safer as an equity investor. Would you agree with that assessment?

>> Yes. And if you want an example of that typical investor that just has that knee-jerk reaction, you could just replace that word with Donald Trump because that's the way that Trump has been, you know, saying that he constantly demands that the Fed cut rates and he constantly thinks rates should go to zero. Um, right. >> Um, you know, I I tweeted out the shot in the arm right before the midterms, >> right? I I tweeted out last night, United Wholesale Mortgage is in a world of hurt right now because they didn't hedge against rising interest rates.

United Wholesale Mortgage is the largest mortgage company in the world. They didn't hedge uh against rising interest rates according to a CNBC story and they've lost billions of dollars. Their stock price is down by 50%. Um and and they've run into trouble. And I and I tweeted out about that and I said, "If there's one thing to take away from this interview, never ever ever take your interest rate advice from somebody in the real estate business." Because everybody in the real estate business always thinks that interest rates are too high and they should go to 0 to 1%. Always under any circumstance in any environment. And oh, by the way, what was the business of the president before he became president? And what does he think interest rates should be at? He

said they should be 1%. Every real estate person thinks that um as well. So yes, everybody thinks like that, right? Trump has done a very good job of making everybody think that the way you look at interest rates is down on yields is always good for any reason whatsoever and up is always bad. And I've argued that's wrong. That's not the way to look at interest rates. They're more nuanced. They're way more nuanced. There's a fair the cost of money. Money shouldn't be free. It should approximate some metrics in the economy. How fast your economy is going, how much inflation you have, how much debt you're borrowing should be your cost of money. I think that the cost of money is drifting higher. If interest rates drift higher with the

cost of money, we'll be fine. Two days ago, we made a 19-year high on the 30-year yield. We're also at an all-time high in the stock market. It's not bothered by it. Now, if they go too high, that's a problem. It could choke off the economy. If interest rates are too low, Trump doesn't think or any a lot of people I shouldn't just pick on Trump. He's too easy. It's easy to pick on Trump, but everybody thinks that if interest rates are too low, that's a problem, too. It encourages mindless speculation and poor investments. If I can borrow 1% and I can buy an investment that yields three, I can make money on it. But if the economy is growing at six, that means the average investment returns you 6%. That's what the economy's growth is. But I can make

money at a 3% investment. I encourage people to do bad things, to do stupid things, and that slows the economy down over time. So if the economy is growing at five or 6%, the appropriate interest rate is five or 6%. You should break even with the average investment. You should be incentivized to look for an abovea investment. You should be penalized for having a below average investment. That's the way interest rates should be. If the economy is moving up, which I think it is, then interest rates should move up and it's fine. If they get too high, it's bad.

And if they get too low, it's bad. That's way more nuanced than Trump is. Down is always better and we're the best country in the world and we should have the lowest interest rates. It's a simplistic view which I don't think is correct. Well, if you tell me that you're interested in slowly increasing higher interest rates because that's what the bond market is signaling, my next question goes to the economy. And can the economy support higher interest rates? And if the answer is yes, I'm pretty stoked about that because that means the economy is strong. You know, it has it has room to pay higher interest rates while while still growing. I'll look at the AI industry and the AI capex numbers and I'll say

like, well, man, if it wasn't for AI right now, would the economy actually be strong enough to pay higher interest rates? Because what if there there's a bunch of things to talk about with with AI and and how the AI industry, the AI revolution is impacting the economy. And the only thing I can say with any sort of asurances, confidence is that AI capex spending is very very high and that's giving us a shot shot in the arm and any sort of like positive other effects of AI second order consequences like uh you know AI productivity disinflation or you know AI job loss. I don't know anything. The only thing I know about AI is that there's a lot of

capex spending. And so I'd be excited to see higher interest rates because the economy can support it. Without this AI, I don't want to call it a bubble, but AI pocket of growth, I don't know if the economy can support it. What do we know about the health of the economy? Oh, I you know, you're right about the AI spending and that it is a significant part of the economy, but also it isn't going away. I I don't think it's going away anytime soon. Now let me just say this upfront. I am of the opinion I am a big AI bull.

Don't confuse that with saying run out and buy SpaceX and you know and stuff stuff like that. That might be a different >> I do think that AI is the biggest technology we have seen since the railroads 150 years ago. It is bigger than the PC. It is bigger than the internet. It is bigger than mobile. It is bigger than the cloud. It is the biggest technology. That's why you're seeing mind-bogglingly large numbers of capex spending. A lot of people agree with that assessment. And I'll give you two fun facts about how mindboggling these numbers are. Alphabet Google's capex this year at $190 billion is more than Russia is going to spend on the

Ukraine war. And all the hyperscalers at 1.2 trillion is bigger than the defense department's budget. That's how massive this spending has been. Now, real quick, what is it about AI? I've argued in very simple terms, we sit in front of computers all day long. Modern modern jobs are you and I and everybody else sit in front of a computer with about 15 different software programs. Whether it's your email, it's a spreadsheet, it's some kind of quote, it's a browser, fill in the blank, you know, you might have a customer relations monitor, you might have security software and everything else. And your job and my job is none of this software talks to each other. And we always juggle everything.

I take stuff off the internet, I put it into a spreadsheet, I transform it, I make it into a PDF, I put it into an Outlook and um and then I send it to seven people, you know, and I I spend all this time because I can't in a context window just tell my computer, go get this data, make this table of it, and send it to David. And there I'm done. I'm done. It took me 15 seconds to do it. That's what AI is going to do for us. And so we're going to not have to use as much software. And so that's why it is such a transformational technology because all of our jobs are sitting in front of a screen juggling software.

Even if it's your phone, you're trying to, you know, order something from Starbucks and order something from Amazon and read an email and answer a text. That's four different software programs. They don't all talk to each other. You can't just in one sentence say, "Order my favorite drink. buy this from Amazon, answer David's text, you know, and send Ryan an email saying this all in one sentence, and your computer just does it. You have to do what each one individually. AI will do that for us. That's why I think we're going to see such a big transformation in this. So, what I'm trying to argue is this AI revolution is here and it's going to stay and it's going to stay for a while.

Now, every technology, every technology ends in a bubble. This one will be no different. I don't think we're there yet. I don't think we're at the bubble stage. What is the bubble stage? I live through the 90s um with the internet. And I remember Greenspan in 96 saying irrational exuberance. Man, these stocks are out of control with this internet thing. It's just a glorified fax machine. I don't get it. Why is everybody all worked up about the internet? By 2000, everybody was so sure that the internet had infinite demand that there was so much overcapacity built because we were willing to fund anything. Right now, I don't think we're at that. We have a

compute problem, right? We don't have enough compute. We don't have infinite compute. So, I do think we're going to continue to see this go. So, the economy is continuing to expand. The data center buildout, the AI buildout, the capex is real. A bunch right now. There's more data center building going on than there is office construction. If you are a plumber, if you are an electrician, if you are a concrete guy, if you are a roofer, you're getting jobs and you're probably getting jobs building a data center. So it does it does be it is part of the economy right now and it is leading to higher interest rates. What

about housing would be the answer that everybody screams at me. What about the poor homeowner who's going to have to suffer through higher mortgage rates because of higher interest rates if that's the way we're going? I'll point out that according to the National Association of Realtors, the latest data we got for June is the average home price in the United States is $440,000, an all-time record high right now. And the thing about this is we have to remember that housing is a complicated thing. Everybody, there's 180 million people that live in an owner occupied house. They live in the house they own.

They want the price to go up. There's 140 million people that rent. They want the house to price, they want home prices to go down so they can afford a home. So affordability is a big problem. So so far these high mortgage rates that everybody's complaining about hasn't stopped home prices from going to all-time highs. They've been advancing. Now if we get higher mortgage rates and home prices stall, yeah, there's going to be a lot of homeowners that are going to be very mad about it. But there's going to be 140 million renters going, "Wow, now I might be able to afford something." And this has always been the the conflict with the housing market

when it comes to interest rates. Trump summed it up perfectly earlier this year. If you own your home, we're going to make sure we have policies that are going I'm sorry, I'm saying it backwards. He said, "If you're a renter, we're going to build homes. We're going to make homes affordable. We're going to make sure that you can get into a home. You can start a family. You can live in the neighborhood you want." And then he caught himself. But if you own a home in that neighborhood, it's going to keep going up, too. Well, wait a minute, Don. How can everything's you could get a cheap home next door to me, but my house will keep going up in price. How's that work? You know, and by the way, we tried that, you know, 20 years ago, and we said, well, we'll we'll come up with

negative amortization mortgages and adjustable rate mortgages. And we almost blew up the world with the financial crisis by 2008. So, this is always the conflict. So, whenever I talk about higher rates are okay, people will scream at me, you're going to kill the housing market. Well, first, it's at an all-time high. Second of all, if home prices stall, I got 140 million renters that are okay with that because they want to be able to afford a home and it's a little bit out of their reach right now. >> Would you say that this is uh congruous with Worsh's model of the economy? Because it it seems that Kevin Worsh has an actual like opinion about the economy. He has a model of the economy.

He he's talked about AIdriven deflation. He's talked about, you know, a handful of these subjects. How would you say uh how would you describe what Kevin Worsh's model of the economy is? And how conf how how much do you like it? Like do you agree with it? >> Yeah. I think if if you took my model of what I said about AI, he's even more stridened about it than me. and that he thinks that AI is going to be so transformational that it's going to produce disinflation and deflation. And I don't disagree with him. The only quibble I would have with him is we're not there yet and we might not be there for several more years. You and I are not ready to say, you know what, I could get rid of Microsoft Office. I could get

rid of Windows. I could get rid of Outlook. I could get rid of Chrome, my web browser. I could get rid of um Salesforce customer relations monitors. I can get rid of whatever I use to get quotes on financial markets and replace it with a little context window and just yell at my computer, give me this, give me this, give me this. And it just produces all that stuff. We'll get there. I think we will get there someday. We're not there now. But where we are right now is we're in the massive buildout to try and get there. So that means more pri higher prices for construction, higher prices for chips, semiconductor chips. That means higher prices for tokens. That means a lot of demand for a lot of this stuff. And then

once we're there, we'll get that disinflation for the next few years. I think we're going to have that higher inflation. And then maybe by 2030 once we fully integrated into this new system, we might then say that that 10year cycle of inflation that started in 2020 when we started to see inflation, you know, go to 29% started in 2020, it was a 10-year cycle and it was over. So I think where Worsh is, he would argue that disinflation cycle is going to come a lot faster than where I think it's going to come. I'm more worried that this demand to reorient our economy towards AI uh is going to cost is going to take more time. It's going

to take more spending and it's going to take higher levels of inflation. If you try and convince the market to say, "Yeah, but we're eventually going to get there at this inflation." Bond investors to say, "Fine, you can get there without me. I'm going to sell my bonds and I'll uh because I think the immediate immediate being the next couple years is going to be higher inflation and that could produce an overreaction of interest rates going up too much. So he's in that definitely in that deflation camp for it for AI because of massive productivity gains. I might actually be too. The difference is I just don't think it's 26 27 or 28. It's out there but it's not quite immediate.

>> Markets don't move one asset at a time. One day it's Bitcoin, the next Nvidia, then gold, and then the S&P. But most traders are still managing their portfolio across different platforms, different accounts, and different pools of capital. Bit just changed that. Their new stocks 2.0 product lets you trade tokenized equities directly with USDT, all inside the same app you already use for crypto. This is not just another tokenized stock product. Stocks 2.0 is designed around deeper liquidity, faster execution, and the lowest fees in the market at just 0.04% 04% and 1:1 economic exposure to the underlying stock. Dividends, stock splits, and other corporate actions are reflected automatically, helping your position stay aligned with the asset you actually want exposure to. One platform, one account, multiple markets, crypto, equities, commodities, and more. All

accessessible with USDT. Bit trade smarter. Start trading today through the link in the show notes. This is not investment advice. Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. the best cryptocycle investor I know. His name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes. They're short. They're punchy. I think this crypto cycle is harder to navigate than

most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast YouTube Apple Spotify or find a link in the show notes. There's a new episode waiting for you now. >> Yeah, it it seems what you're saying is that uh all of the productivity gains, the real growth in the real side of the economy as opposed to just capex spending uh is is real. It's going to happen. the maybe the optimistic the bullc case is that you know we are going to bubble we bubble the railroads were real and they bubbled anyways there were still like a financial crash despite the railroad buildout maybe that's the same thing that happens with the AI buildout and so everyone gets a little bit too exuberant spending gets a little bit too

high we go into somewhat of a bubble but the real productivity gains catch us on the other side you know maybe maybe the bubble pops but there's a softerish landing because the real productivity gains starts to actually positively impact the economy. That's maybe the optimistic case of of that's my I feel optimistic saying that. I don't know if if you agree with that. >> No, I agree. In fact, if you Google Gartner hype cycle um from the Gartner group, there's a chart that they have that that's exactly what we're describing. It'll get overdone. In 2000, give you a quick anecdote about 2000.

>> By the time we got to 2000, people thought that the internet was so limitless. There was a company called Global Crossings and what they were doing is they were laboring fiber optic cable around the planet. They laid a 100,000 miles of fiber optic cable to 2026 they don't let me back up. Most of their fiber optic cable by 2000 was dark meaning it wasn't being used 2026 26 years later we're only using a fraction of it. That they laid like more fiber optic cable than like humanity might ever need. But at that point, by that the hype was so much that there wasn't such a thing as too much fiber optic cable because we thought that the demand for the internet was infinite. We overdid it. We might do the same thing with AI before we get there. And we'll

overhype it and then we'll have a big correction. Remember the NASDAQ fell 83% from 2000 to 2002. >> And then we started to state reality. We still got Google. We still got Meta which was called Facebook at the time. We still had Amazon. And today, you know, the the the NASDAQ is 10x higher than it was even, you know, at the peak in 2000, but we overdid it. We had a massive correction and then we had, you know, the sustainable path on the way up. We'll overdo this with AI and we'll have a massive correction. My only difference is I hear a lot of people screaming that we're at that peak of inflated expectations right now and we're about to crash. I still think that

might be two or three years away and there might be you know a lot more to go on the upside before we get there. But also I'm trying to also say at the same time when that crash comes it's going to be very painful for a lot of for a lot of people because it'll come at a point where you'll think that AI is limitless. There's nothing it can do and there's no amount of of constraint on the demand that we will need for it because everybody's life will be about a context window asking your computer the most complicated or simplest questions you know simple question order me my favorite drink done complicated questions about math or science or whatever and it gives you an answer on those two and we'll think it's limitless

and that's when we'll get it to the peak of inflated expectations before we have the crash crash. Are you arguing for an equivalence in the size of these two bubbles? Because the 2020 or the 20, excuse me, the 2001 tech bubble was massive. And I know we had actual real productivity catch up eventually, you know, Amazon, Facebook, like all all these companies eventually showed up, you know, 6 8 10 years later. But the actual crash was massive and the time it took for you know real productivity gains of the internet. It also took you know the better part of a decade if not a whole entire decade. That's not my expectation for the AIdriven bubble. The

like people were being conservative and are conservative about the AI bubble calling it a bubble even before it got started. And so my my take is that it's not going to be so bubbly and it's going to be less of a crash and more of a correction simply because investors have more data these days. We have more information. Information travels faster. Markets are probably more efficient these days. And so I'm I'm not in the camp that this thing is going to be nearly as violent as 2001. What what what would you you respond to? How would you respond to that? You see the the difference I think really what's why we're talking about AI being a bubble, why we're afraid of AI is these astronomically large numbers. Like I

said, you know, we're spending more than the defense department's budget on on capex buildout. Um the other measure you might have seen is that the AI and AI related stocks, that would be the semiconductors, the capital equipment, the MAG 7, um you know, and the like is like half the stock market. It's half the S&P's 500 capitalization, more like 45% to be exact. But that's like 50 stocks in the S&P are half of the stock market and 450 stocks are the other half. And those 50 stocks are all related to AI. So we look at the massive size of this thing and we get worried about it. In 2000, we never saw these kind of numbers. You know, even at the

peak, we didn't see these types of numbers. So you got people screaming that this has to be a bubble because of the size. And I would argue this is what's holding us back is we're afraid of the size. But the size is justified because of the massive impact this technology would have. in the 1880s, 1870s, railroad stocks were 70 or 80% of the stock market at that point because that was remember before the railroad before uh the transcontinental uh line, it took you four months by covered wagon to go from St. Louis to San Francisco. After that, after that railroad line was put

in, it took you 5 days. And that was a huge transformation of the US economy. our way of life changed because of the railroads. And I and this could have that kind of impact. That's why we're worried about job displacement. We have kids walking out on graduation ceremonies. We've got politicians like Bernie Sanders calling for moratoriums on either data centers or LLM uh advancements because we're so worried about how big this is. So, I do think this could wind up being as big a bubble as 2000, if not bigger. But if you want me to put it into these perspective, this is like 97 or 98 right now is where

we're at. We're not at 2000. And in 97 or 98, there was a lot more to go. And then we got to 2000 and then it, you know, like I said, it fell 83%. The problem you're going to face is, yes, it's like 97 or 98. I can make 300% in the stock market if I buy the AI stocks maybe. And then if you hold too long, you'll give it all back. And that and how do you know when we've hit that peak? That's going to be very hard because the history has shown is that you'll get 30 or 40% corrections along the way and you'll be immune. You'll be thinking, ah, this is just another correction. This is another correction.

And then before you know it, you go, what happened to my five years of gains? They're all gone. And that's the re that's the thing that you're going to have to be careful of. It's not going to be easy to make that money, but I do think that we are in the process of building this. Getting back to your original question, AI isn't going to go away. It's going to continue to be a major part of our economy. It's not going to pop and stop being a part of our economy. So, when people say when people say um you know, AI is you what's the economy like without AI? It's kind of like saying how much do I weigh without my left foot? Well, I can't take my left foot off. It's part of the It's part of me. It's part, you know, AI is

part of the economy. It is part of it. It's not going away. One last question, Jim, before I let you go. The debasement trade. Uh, gold is making some new highs. Bitcoin is not. Uh, we have the 30-year yield at a 20-year high and the 10-year yield is is higher on it on it on its range. Where do you think the debasement trade is right now? uh especially as it relates to Bitcoin cuz like at least half of this podcast listeners have own at least Bitcoin. Uh it feels like it always kind of feels like it's looming on the horizon debasement is but never actually here like how would you assess the state of debasement right now?

>> I don't think there is a debasement trade. I think that the dollar goes up, the dollar goes down, gold goes up, gold goes down. Um and there are fears like last year around liberation day. Uh that there was fears about uh debasement in the market because Trump so angered our allies by trying to impose a tax a tariff on them. Uh that people were starting to worry and that's why gold took off and the dollar weakened. But then we had the Iran war and whether or not we started it or didn't start it or Iran started it, everybody said, you know, when the world gets messy and uncertain, everybody hides in the dollar and then the dollar recovered. Um, and

like so I don't necessarily think that there is a debasement trade. Gold is rebounding, but it's still working on a retracement right now. crypto. Um, I think that the problem with crypto, and to be honest with you, I kind of got it from you guys at Banklist watching you guys, you know, in the summers the in crypto summers, you get too much DGEN speculation and in the crypto winters you get building, you get development. And I think if there's a problem with Bitcoin that is causing it to be down is your technology is 17 years old and you need now to be showing that you've built an entire alternative financial system

around it. ETH has kind of done that with DeFi and some of the other things. Bitcoin has been a little bit slow. It's not enough to just call it, you know, um to just call it um permissionless decentralized money. That's good, but it needs more than that. It needs an entire ecosystem around it. And that it's been slow at developing. And I think that that has been the problem with it. And I'll go you with I don't know how much this will be for you for an outside the box view, but I look at things like the Genius Act and I look at things like the Clarity Act and I think that those are the wrong things to do. is that the the

strength of crypto is decentralized and permissionless and you're on bended knee at Washington asking for permission with those acts and asking to be in because it seems like for a while there we kind of gave up instead of trying to build an alternative financial system. We all got excited because Larry Frink bu put put IBIT out there and said he was going to get all the boomers to buy 5% in their wealth management accounts and that was going to be all we needed for Bitcoin to go up and it it worked for a while and then it kind of reversed. So I think if the crypto crowd wants to get back to the old highs and stuff, build an alternative financial system, something

else. Don't be at Washington on bended knees going please please please plastic clarity act because then we you will anoint us as being okay. And I'll give you one other quick antidote. If you were in Venezuela right now the Venezuela Boulevard their currency is trash and everybody wants to trade in dollars. What is the place that you go to get a quote on the Venezuelan Boulevard to dollars? It's probably to a crypto exchange to exchange it to Tether. It is not to exchange it to hard currencies.

Afghanistan, after we pulled out in 21, we saw the same thing, too. Is that when when countries dollarize now, they dollarize to a stable coin on a crypto exchange. That's your business right now. There is a billion plus people that live in Asia in Latin America, in Africa, in the Middle East that have unstable financial systems and have devalued currencies. That's who desperately needs crypto. Who doesn't need crypto is who they've been chasing for the last couple years. We need the rich guys from the Greenwich Country Club to tell their wealth manager to put 5% of their money in bit. And that worked for a while, but it's not going

to work. So if you get back to building u you know a a financial system a decentralized and they need decentralized permissionless because they don't trust their financial systems or their governments so they can't take it away from them. Yeah, cryptos sky's the limit. But when we stop doing that and we start dejing ourselves then it works for a while and it winds up roundt tripping. >> A phrase that I've used to I think describe the idea that that you're talking about Jim is there strong crypto and weak crypto. Strong crypto is the FU to the banks, FU to the government version of crypto. It's like decentralized identity. It's DeFi. It's, you know, permissionlessness. It's what the cipher punks wanted. That's like strong crypto. And then there's weak crypto which is we are ledger technology

backend for Black Rockck and the banks and we're just a vassel of Wall Street. And it was always we're always going to be like good at doing that. But it's about strong. The whole story about crypto is strong crypto. And I think what I'm hearing from you is that there's not enough strong crypto to uh to be to meet the expectations that we had as crypto investors five plus years ago. Does that sound right? >> I agree. I'm a I'm a cipher punk at heart and it will always be and I believe that that's where we want to go. And by the way, for those that want weak crypto, I love your term weak crypto and you want the the uh Clarity Act to pass.

Look, blockchains are hard. Let's just go the whole way. get rid of the blockchain and let's just run it on a server at the New York Fed, you know, you know, and then you've completely defeated the purpose of what you're trying to do. But that seems to be the path that they seem to because all they want to, you know, I there's too many people in the crypto market to go, if we just run it in a server at the New York Fed, they almost want to come back to me and go, yeah, that might get the the boomers to buy more IBIT. I was like, you've lost the plot. You've completely lost the plot if that's the way you're thinking about this stuff. Jim, I always appreciate your wisdom and perspective. Thanks for coming on the show today. You've got a new podcast.

So, you've started a new podcast. I think you might be number two or even beating Vitalic as number one as a bankless repeat guest. So, we appreciate you coming on all over the years. Uh listeners clearly enjoy you. Every time you come on, we always get some chatter in the Discord. If people want to hear more of you, tell them about your new podcast. >> Yeah, so it's Rational Descent is what its name is. Uh it's on all the podcast platforms. Our fourth podcast, our fourth weekly for is coming out tomorrow. So, it just started a month ago. You can also follow me at Biano Research. That's kind of my day job business uh um on all the socials on on YouTube um on X uh on X Twitter and on um LinkedIn um as well.

>> Jim will get all those links in the show notes for the listeners who want to follow you there. Thanks for coming on the show, Jim. >> Thank you. Appreciate it. >> Thanks. You guys know the deal. Crypto is risky, but that is why we are here. The institutions have landed, so we are going even further west. It's not for everyone. This is a frontier, but we are glad you're with us on the bankless journey. Thanks a lot.