Milk Road's macro framework, with host John Gillen

Transcript

GM. Good morning. Welcome to the Milk Road Show and Milk Road Macro, the crypto and macro show where we're not just here to get rich, we're here to get unreasonably rich. I'm your host, Jay Hamilton. It's Thursday, August the 7th. Now, at Milk Road, we believe that one of the most important aspects of investing is macroeconomics. If I lost you there because you heard the e word economics, don't leave because we know that we can simplify it. We can make it accessible. I'm talking about interest rates, job reports, tariffs and trade deals, wars, and geopolitical tension. How do you take all of that and turn it into signal that will help your investments? Well, that's

exactly why a few weeks ago we launched our new podcast, Milk Macro, hosted by none other than John Gillan. But who is John Gillan and what is the purpose of the Milk Road Macro podcast? Well, that's what today's show is all about. We're going to flip the script. We're going to interview the host. We're going to interview John so you can learn about John's background working at Black Rockck for six years and now as a crypto fund manager and host of the Milk Road Macro podcast and the three pillars of the Milkroad Macro framework that will give you an edge in your investing.

Before we jump in, today is the last time that this show will be published on the Milk Road Show channels on YouTube and on podcasts and on X platforms. Moving forward, our macro shows with guests such as Michael Howell and Dan Tapiierro and Arthur Hayes will only be published on Milro macro platform. So, make sure right now, pause the show and go over to YouTube or Spotify or Apple Podcast or wherever you're listening and make sure you are subscribed to the Milk Road Macro channel because that is where you're going to get all your macro stuff two times a week, every Tuesday and every Thursday to make sure you have the edge in your investing because that's

what we're all about here, being great investors and getting that edge. Today's episode is brought to you by Nexo, the platform that grows your crypto without locking it away. It's also brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns. With that, welcome to the show, John Gillan. >> Hi, Jay. Great to be here. Thanks for having me. I just paused myself to go subscribe to myself, so this is going to be a lot of fun. >> It was It felt really weird to welcome you to your own show. I won't I won't deny. As I was saying that, I was like, it feels like I went into your house, kicked you out, and then welcomed you back in. Uh, but here we are. Very excited. Excited to sit down with you

and really take take the opportunity to introduce you more deeply to the audience and to introduce your framework more deeply to the audience. So, um, let's start. You and I were chatting before the show about some of the most common questions that we're getting from listeners and in the community as we have launched this new show and one of the most common questions we're getting is just what is macro and what is macroeconomics like how do I frame it? So tell us about how you frame macro and macroeconomics so our audience can get up to speed on the way you view it.

>> Sure. Absolutely. Great question and I think the way I would answer this is just the definitions of the terms, right? So economics is a social science that regards the study of the allocation of scarce resources in a given society. Macro just means large or overall. So when we say macro, we're using that as a shortand for macroeconomics, which is a study of how an overall society allocates scarce resources because there's not total infinite abundance and we have to make decisions about these things. So studying how that's being done is what the the discipline or the academic field of macroeconomics is all about. The framework that myself and the other team members at Milk Road Macro have developed um in order to help investors kind of apprehend this and get their minds around it because it is a

very large multivariate multiffactorate um discipline and academic field. Um the framework we we've laid out involves three areas. The first one is the monetary analysis or the monetary system. The next one is economic analysis or studies of the economy itself. Uh and then market analysis. So how is this playing out in the markets? What do we see happening? What trends are we seeing? Um and just trying to make sure that our audience is aware of those and kind of keyed into what's going on in the markets. But as a as a general framework, that's how you think about it. It's how the societyy's allocating its resources. And then we look at it from a a lens of monetary perspective, an economic perspective, and then the actual market and and just positioning as as far as that goes.

>> Okay. So let's walk through each of the three uh areas of the framework. Let's start with money. Uh tell us about how you think about money and the monetary system. >> Sure. So I think the place I would start with for this is going back to Thomas Jefferson actually because I think >> okay let's go way back. >> I I want to go back to the beginning because I think a lot of people will look at where we are currently in the monetary system and think this is the way it's always been right. However, this is a many centuries long debate of of monetary policy and and money itself is a policy. Right? So Thomas Jefferson said banking establish establishments are more dangerous than standing armies.

And he said that the principle of spending money to be paid by posterity under the name of funding is swindling on a large scale. And so this is something that's very reminiscent of a lot of arguments we hear today that the government is doing all this deficit spending and growing the debt, stealing from future generations. But my point here is that this has been a debate for centuries in this country and in all countries. Um, so I think the thing I would start out with is just this this image I think kind of helps illustrate this for people in a way that they'll understand. So this looks somewhat similar to a dollar a $20 bill that we would recognize from today except at the bottom it says something very different.

It says $20 in gold coin payable to the bearer on demand. So prior to 1971, if you had what they called greenbacks at the time, you could take this down to a bank, what was part of the American central banking apparatus in some capacity and exchange this for actual gold. If um if you go and look at the dollar bill, this is again from before 1971 at the bottom. And this says $1 in silver payable to the bearer on demand. Again, you could go down to a bank and exchange this for actual gold and silver, right? So it was a bearer asset that was tied to a real world monetary um assets. Now post 1971 this is from you know the Obama administration uh

Secretary Yellen um this says Federal Reserve note $1. So now the the paper money is it looks the same. The pictures are almost the same but it is a huge radical difference in terms of what this actually is. Okay. So before 1971 um there was this exchange of of these dollars for gold and silver and now afterwards it's just the dollar. So what this is this Federal Reserve note this denotes this is a representation of $1 worth of debt owed by the United States Treasury. So the United States of America to the central bank the the Federal Reserve. Um and so what happened in 1971 which I've alluded to Richard Nixon and this was kind of funny. He said in the speech where he did this he temporarily he said temporarily

suspending the fungeability of dollars in gold. So up until that point for a period of about 30 or some years um $20 or no sorry uh $20 yeah so it was an ounce of gold was priced at $30. In 1971 he suspended that fungeability. The stated reason he said was to protect the value of the dollar from speculators. However, the real reason was that the United States had already figured out that they could spend a lot more of these paper dollars certificates without actually having the gold to back them. The French called our bluff and actually sent battleships to New York City to go and exchange their dollars for gold. And they realized, hey, we're going to run out of gold if we do this. So, they suspended it. But since that time, we've been operating on a system of debt. So,

there's no quote unquote money anymore. Now, we have a central banking fiat system. Fiat comes from a Latin word that means faith. And it is faith that the United States government will at some point in the future pay back its debts to the Federal Reserve. Um, so that's sort of like some basic history of the monetary system, how we got from a system of using gold and silver that backed all of these things to this system of central banking, fiat, and just infinite debt. And I can go on from there, but I'll pause there for for a minute. So, so, so what you're saying is pre 1971 the there somebody was holding custody of gold to represent the US dollar the dollars that you had and at any point you could go into the bank and you could

say hey I want my gold or my silver in exchange for the dollar right like that that's the way it was and then the big shift that happened was at some point 1971 there was a shift to okay We're no longer going to to hold gold or hold silver. We're just going to we're going to accumulate debt and the debt will represent the dollars that we give to you. >> Correct? So, we switched from using a system of gold and silver as money to using debt itself as money. So, debt is not money, but we are using it as though it were money. And I think this is an important distinction for people to understand.

>> And why is that such an important distinction to understand? And how does that where are we now in terms of debt? Because everyone understands that we are in a large debt problem. Get us to get us to where we are now. >> Sure. So I think if you want to put up this other slide, this will help me kind of illustrate this. Um so the the situation is that now that we do not have money like in a technical sense, money, we have debt that we're using as money. The only way to repay debt is with more debt, right? So the only way for the Treasury Department to pay the debts that it owes to the Federal Reserve is to get more debt. The only way for it to get more debt is to get borrow more debt from the Federal Reserve. So it only really goes in one

direction. Sometimes it goes faster or slower. But as you can see, since this this chart is I wouldn't say stable, but it it's relatively stable for the decades leading up to the 70s. Once you get to 1971, there's kind of this inflection and we start going towards this asmtote. Now part of this is just how the chart is representing this, but the idea I think is important, right? is that the dollar is only ever going to continue losing value. And the more debt that we have in the system, the more debt we have to borrow to pay back the debt that we have because again there is no money. The Federal Reserve kind of owns everything in an official like technical sense and all we have is debt.

So the impact of this is enormous and everyone I think is aware of the fact that they can feel this happening right that inflation is just the dollar losing its value and so that's all that's happening through history is the dollar keeps losing its value. And this is I think something really important to understand because it is a fundamental endemic uh part of the overall system that we live in. It's the the bedrock monetary policy and the reality of the economic system we're living in is this continual debasement of value of the dollar and expansion of the debt supply. >> And what you're saying is pre 1971 this we weren't in this inflationary cycle. We weren't in this debt cycle. So it really is that is a key turning point when ever since then and you can see it

on this chart and for those listening in you know if I look at 1971 like we're less than a trillion dollars US is less than a trillion dollars in national debt. I can't see the exact number but it looks like less than a trillion and and then you fast forward to today and it's 36 trillion 36.5 trillion uh in debt that we're at as of March. It's probably even higher than this uh today if you were >> it's over 37 trillion now. Yeah, >> there you go. There you go. Okay. So, we have we have neverending debt which causes inflation which causes devaluation of your dollars. And if you don't understand that simple concept, you're you're you're losing every day basically, right? Which is it's why it's so important to to understand this and

to be able to to invest wisely so that you don't, you know, get your your money deflated away essentially. Right. So that I'll we I'll talk about that when we get to the economic piece because that is ultimately the goal of economics is to try to continue to protect yourself and defend yourself from this continual debasement, this financial repression that everyone's living under. Um but I think a couple of other things I want to say about this system is that this is not just in the United States. It's I think it's almost every sovereign nation in the world has some version of this where they have fiscal policy which is taxation and spending by the government and then monetary policy which is is is controlled by the central bank or controlled by the central bank of of some neighboring economy. Um but so

those two pieces of policy are how the government control the growth of the debt and the expansion of the economy and it's kind of like a a gas pedal and a brake pedal. with monetary policy that's governed by the central bank, the Federal Reserve. They do that by adjusting interest rates and by adjusting the the money supply. So they can do this through open market operations where they just go buy bonds off the open market and directly inject cash as they did a lot during the the great financial crisis. Um or they can adjust the interest rate um to make the cost of getting more debt either greater or lower. So if they raise the interest rates, it makes the cost of borrowing more debt higher. and that kind of like percolates throughout the whole system and so it's a single dial single control they have to kind of like dial things up

and down. Um fiscal policy on the other side with the government is just about taxation and spending. So um those things are again ways for them to either increase the speed of the growth of the debt of the economy or to bring it in and they they do this at various times for various reasons. Um but that's really the the the system that they're controlling and those are the levers that they do it with and that's pretty consistent across most major economies in the world. >> Okay. So important to understand monetary policy and fiscal policy, not necessarily the inner workings of it. If you're listening to the show and you're thinking, hey, like I I don't understand the exact inner workings of monetary policy versus fiscal policy, that's okay. You just need to understand that those are, as you said, gas pedal and breaks that can be used by the central

bank or by the government in order to control debt and control inflation. Am I getting that right? Correct. And I think that's an important thing to understand is like reducing it to these things is maybe reductionist, but the reality of what's happening behind the scenes, all those machinations is like a a tangled Rube Goldberg machine that I think very few people, if any, people actually fully understand. So you can kind of go crazy trying to like figure out all these machinations of this, but just understanding at a high level what's going on and what these directional changes in policy mean, why they're undertaken, why people disagree about them, that's what I think is important to understand here. Okay. Okay. Anything else to say on monetary

uh analysis before we move on to economic analysis? >> Well, I can talk about this a lot. Um, but I think that's kind of the high level that I want to give people the framing and then I'll just end with something that we said. Um, which is that this is one of the few sure things in finance and economics is that the dollar is going to continue to lose value, right? Like the arrow of time is not going to run backwards. water's not going to flow uphill and the dollar is going to continue to debase as the debt continues to expand. So that's the kind of main takeaway. And then as we we touched on briefly going into the economic ramifications of this, everybody corporations individuals nations has to try to find some way to kind of keep up with this financial repression, this debasement of value.

And so how people do that is I think what we'll talk about next in the economics section. >> Okay, great. Okay, let's let's go on to uh economic analysis. So what's the I think the impact the best way to frame this is like what's the impact of the monetary system and the debt on the economy and how does that impact how people behave? Yeah, absolutely. So what this does, so the the argument that people will make for this sort of modern monetary theory or, you know, neocanesianism, whatever you want to call it. Um, there's there's a lot of different ways you can look at this, but the idea is that this this inflation kind of incentivizes people to

spend and to engage in the economy and to it stimulates economic activity because it means that people have to go out and engage in economic activity to try to outperform their own um their their loss of value from inflation. That's called financial repression. It's also beneficial for the government because inflating the dollar and diminishing its value means that the value, the real value, not the nominal value of the outstanding debt is diminished. So, it's good for the government and it forces people to act. However, it it forces people to act in ways that are uh let's say less than responsible because they're forced to try to keep up with this debasement um which they can't do. And so, it's it's a it's a a kind of a like repressive they call it financial repression. this like persistent taxation on anyone who's

trying to save. The reason for that is that you can't outperform the debasement of the currency just by holding a government bond because it won't pay yield that's higher than um the debasement of the currency. So what happens is we get these business cycles and I'm not going to like again there's a few jumps to go through here but as we get the refinancing of all this debt liquidity becomes either more abundant or less abundant in the system at different times and this stimulates these cycles of business activity and they we go through continuous periods of expansionary economic growth leverage debt um you know a lot of rapid expansion until it gets very frothy then bankruptcies happen, people get washed

out, leverage gets washed out, shorts get liquidated, etc. Longs get liquidated um and then things revert to a period of uh contraction and the cycle starts all over again. Um this is a resource that we created at Milk Road to kind of help like visualize this for people in like broad terms. And again, I think it is just important to have some context in broad terms, right? Like we can drill down for hours on each one of these sections of this cycle, but the progression is sort of like a four-year cycle. This has been a relatively stable pattern since the great financial crisis in the United States. But the the four-year cycle pattern kind of goes one year of winter where everything's a bare market. There's contraction. People are not, you know, taking out debt to start new businesses and it's kind of like a

very like uh contractionary period in the economy. Then spring starts to happen. Um there starts to be recovery in economic activity. People starting more businesses again. Summer happens where things start to really take off. They get, you know, it's kind of the peak of their growth. And then fall happens where things that have grown up have grown too big too fast, gotten further than the market can support and things start to collapse and die off and then we go back into winter again. So that's a little bit of the the highlevel view of the the economy like what's driving this these debt and liquidity cycles, how that translates into economic activity which results in these business cycles and sort of like an understanding of of the progression of this and why it's so cyclical.

>> Right. Okay. which explains everybody loves to talk about I'm going to come at it from the crypto lens uh for a second uh but in crypto everyone loves to talk about the four-year cycle. One thing that I think is very interesting that it to note is that the business cycle that you're talking about happens to line up with the four-year cycle that people like to talk about in crypto. And in crypto, a lot of people use the having as the the Bitcoin having as the event for the four-year cycle.

But in the macro side, there's people who say it's actually not the having that's impacting this. It's the business cycle that's impacting this. And again, these just they just happen to line up. These four-year cycles just happen to be on the same trajectory in terms of when they they peak and when they trough. >> Yes, I think that's absolutely correct. I think there's a lot of times in especially in economic analysis where that happens like people will disagree about what is the underlying actual root cause versus what is the symptom of the activity. So what I'm saying is it's not the Bitcoin having cycle, it's not the business cycle, it's the debt and liquidity cycles that underly all of it and the the bond market and the the the global refinancing cycles. Um, so I'll just, you know, as a quick example of

this, right? Like a lot of people still to this day, economists will debate if FDR's New Deal actually brought the US economy out of the Great Depression or if it was just all the stimulus from fighting World War II. And it's a little bit difficult to sus out between the two, but how you answer that question fundamentally reshapes your understanding of economic history and um, policy and philosophy and so many other things. Um, so I think really taking the time to understand and evaluate potential explanations, the differences between them, um, can be very instructive and learning, but it's it's, uh, I think a mistake to assume that just because one story kind of makes sense that that's the only explanation, then that's like telling the whole story.

>> So, who wins within this uh, debt refinancing cycle that is leading to these bull and bare markets? Uh I think the people who win are well first of all the central banks um and the governments. Um but I think the the people who get the most benefit from this are the people who are on sort of the the forefront of whatever is getting the most attention in the economy most uh the most yeah economic energy being put into it. So that looks different at different times, right? There was the second industrial revolution um around the the turn of the 19th century in the United States where we had tons of, you know, industrial activity, inventions, Ford, the assembly line, all these things. In in our day and age, I think

that the two major themes that I've been seeing emerge are um digital assets, the proliferation of those, the the conversion of a lot of existing lines of business and forms of economic activity into the digital asset space. And then the other one is obviously gargantuan which has come up pretty quickly here is uh artificial intelligence and everything that goes into enabling supporting and unlocking the the power and the economic output there. Um power is one of them right. So like energy for example is going to have to expand enormously as an industry in order to support artificial intelligence. And so that's a big winner here. But so yeah, I think that that's kind of like where you want to look for like the the people that benefit the most from these cycles are going to be the places that are getting the most economic energy and

attention at any given time in the market cycle. That's going to vary from one business cycle to another. But understanding where those are, what you know, they they call these like the meta narratives that dominate a business cycle. Um understanding where those are and how you want to articulate your investment thesis around those I think is very important for investors to understand. Yeah, I got to say uh and I'm sure everybody listening is is feeling the same thing is is amazing what a student of history you are, John. Like you really approach your your thinking and your analysis from a perspective of we can we can learn from the past and there is so much to be learned from the past. So you your your view of of history and thinking about the past is very fascinating. And then the other thing I would say is it it is

very clear the one thing that is consistent between your example of the industrial re revolution versus the revolution of today in terms of crypto and AI is tech right you know different forms of tech right one is you know digital software tech and the other was you know tech on a larger scale of factories and manufacturing but it is technological improvements here right and so the biggest winners are those who are on the forefront of tech, which everybody listening in, hey, give yourselves a pat on the back. You are doing that already. If long meetings and judgmental bankers are your thing, Nexo is probably not. Nexo is a premier wealth platform built for people who value their time and money. It's built

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It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you. Download the Figure Markets app today and get 9% on your idol funds. Go to milkroad.com/figuremarkets. Okay, so we've covered the first two areas of the milk macro framework which are monetary analysis and economic analysis. Uh let's go to the third. The third is market positioning. Uh how are you positioning in this market environment and how do you recommend our listeners position?

>> Yeah, so great question. I think where we are in the business cycles that we referenced before which again are a symptom of the underlying global liquidity cycles. Um we are somewhere in summer and moving towards fall. Um and I think it's it's it's wrong to try to like pinpoint exactly where we are on that but it's important to to kind of understand where we are. Um so I think when you're in that kind of you know a riskon expansionary environment where uh there's a lot of growth a lot of activity in the market um generally speaking I think it's a a pretty agreed upon uh view right now in the markets is to not be long on government bonds and and sovereign debt just in general not specific to the US but just in general I think that there's uh a lot of refinancing crisises that are are

brewing if not actively playing out in a lot of uh sovereign debt markets. Um and so I think that's a place where a lot of investors are steering clear of and then you know on the other side of that you know that's like don't go that way but where do you go in this? I think the the real thing that's been an emergent technology and financial asset at the same time has been Bitcoin digital assets and that entire industry. Um the current administration, the Trump administration has been like night and day difference from the the prior administration in terms of accommodation of that asset class and creating a regulatory framework for it to grow and thrive and survive. Um not just in the United States but generally because a lot of other legal you know business jurisdictions take um not only like leadership but like policy signal from

the United States. So I think it's very constructive uh in digital assets right now. Um the the bull run in Bitcoin has gone from a low of like 17,000 in 2022 up to over 120,000. I think there's still room to continue there. But I'm not just on Bitcoin, but I'm constructive on the the whole digital asset space. I think there's a lot of value that's being created and a lot of like I said existing businesses that are have proven like product market fit that are going to start using digital asset rails to conduct their business because it's better for all stakeholders. Um, so I think just in general, I'm I'm long on digital assets and then, you know, as I said before, I'm constructive on AI's uh on AI rather. Um, I think that we're seeing an interesting thing in the US equities market. I'm very bullish on US

equities, but I don't think that all all of them are created equal, and that's starting to show much more in the market. So, I think this, you know, this was I shared on Twitter recently by Mark Andre. This just recently shows how uh the the mag seven the top 10 stocks in the S&P 500 are really beginning to pull away much more radically from the rest of the index. And so, you know, it used to just be you could buy an index fund and turn your brain off. I think in this environment, you need to be much more actively managed and you need to be much more nimble. Um, and specifically, I think you need to be seeking opportunities to get outperformance that don't just involve a passive turn your brain off investment, right? So the the biggest stocks in the S&P 500 have reported earnings this quarter. You know

we saw $18 billion of cumulative outperformance by I think five of the biggest ones um Meta, Google, Tesla, Nvidia and then other companies that have had successful businesses for many many years. Whirlpool, Ford are struggling to to remain fiscally solvent and and continue their their operations. So I think this is something investors need to be mindful of because there's a lot of opportunity. I think they're going to continue to see overvaluations in some of these leading AI focused equities. Um, but I don't think that the rest of the S&P is going to, you know, suddenly match that performance. And so I think that there's there's opportunity here, but there's also risks. And so you have to be, like I said, actively managed and making very like specific choices about how you're allocating in

this environment. >> Okay, so long digital assets, love it. short the bond market makes a ton of sense. US equities uh and and then and then I guess you're saying long AI and there is uh various ways to it's tough for a retail investor to get exposure to AI right now and we don't need to dive into how we're going to do that. We're actually trying to get more shows and more guests in the future to talk about that. Um where what what is what what is the don't go zone? what's the the no-go zone in terms of where do you stay away from as a macro investor?

>> Sure. So, I think that so the way I'll answer this question, there's for any given investment thesis, like say you're bullish on people eating more hamburgers next year, right? You could articulate that thesis any different way you wanted to and it's going to make sense for for you and your portfolio and how you think that's going to play out. You could short chicken manufacturers. You could go long on beef manufacturers. you could go long on specific companies that sell hamburgers that you think are going to do the best, right? So, whatever your thesis is, you have to come up with a way to articulate that. Same thing with artificial intelligence. So, you have to figure out for you what makes sense, what makes sense for your time horizon.

What's a thesis that you understand? Um, I think a general guiding principle from a macro macro perspective on this is not to try to master everything. You can't catch every pump. If you chase everything that's a bright and shiny object that that goes up, you know, 15%, you're going to end up missing things. you're going to end up chasing pumps and ending up being a bag holder, catching falling knives. So, um I think don't don't try to master everything. Understand a niche, understand a thesis, and then stick to your guns and deeply invest in it. I think something that was, you know, one of my one of the executives at BlackRock talked about this. In prior generations, Wall Street's big challenge was converting savers who had survived the Great Depression into investors, getting them to trust the financial system and the

banking system again as opposed to just stashing their money under their mattress. Now, I think we have the opposite problem. Now, we have a bunch of people who are educating themselves in the markets, participating in the markets. Retail has come into investment like never before. However, most of them are treating it like speculation, like gambling. And I think that the the real value unlock is to understand that you don't have to invest like you're watching a Tik Tok video. You can take a more long-term investment horizon. Be more patient with your capital and you can outperform if you do that. If you understand your investments, understand your thesis, and then don't get shaken out. Don't let people, you know, scare you away. Um, and treat your your capital like an investment as opposed to a poker chip. Um, I think that there's a

lot of opportunity in that. So from a macro perspective, that's how I would tell people to think about this as they approach investing. >> Yeah. Well, there's a reason that uh retail and I'm referring to myself when I say this is called dumb money, right? Like it's for for a good reason. So, you know, don't be dumb money, right? And uh it was a good movie though. >> Great movie. Great movie. Uh highly recommend. I'm sure many people have seen it, but if you haven't, go check it out. Uh okay. Um I I want to you brought up working at Black Rockck. Uh I want to touch on your experience there. Uh and then I want to jump into where where the show goes next and the topics people can expect in the coming weeks. But before we do, just summarize, bring this all

together for us, John. So we got these three areas of the framework. Uh we got monetary, we've got economic, and we've got market positioning. um give us the the summary of of of all of it one more time so we all make sure we have the takeaways and we can you know explain it to our buddy at the bar tonight. >> Sure. Uh yeah, absolutely. So I think I'll go back to the beginning. Macroeconomics is the study of how large scale societies allocate scarce resources um and what goes into those decisions. And then there's uh policy that controls the behavior of the the market. Um there's monetary policy, fiscal policy. Um from the the the monetary perspective, what's important to understand there is that we live in a

system of debt and the debt always grows. Um what's important to understand about that is that means you have to protect your wealth if you want to acrue defend your capital. Um that translates into economic behaviors. How people are allocating their scarce resources to try to stay ahead of the debasement of their currency. Um that leads to these boom and bust cycles. these winter, spring, summer, fall cycles of of the business cycle during different times of those cycles, how you allocate your capital to take advantage of the opportunities in the market are going to vary. Um, and where we are right now looking ahead at, like I said, market analysis. What's what's the market trend? what's the meta narrative that's that's driving a lot of capital, driving a lot of economic activity. That comes down to, I think, right now, you know, staying generally

clear of um sovereign debt markets and leaning more in favor of things that are pushing new forms of economic activity or bringing all existing forms of economic activity into a more technically advanced um solution or or system. So, for me, that's being long on digital assets, long on artificial intelligence. How you specifically articulate that thesis is up to you to figure out with a financial adviser and you know based on your circumstances, your risk appetite, and what you can understand and what you're you're comfortable with. But I think that's where we are. I think that's going to be continuous. I think that these are going to be long-term investment opportunities, not like, you know, like I said, like a poker chip, a gambling thing. Um, but there's there's a long

view opportunity here that's being created that's, I think, pretty unique and exciting. Um, so that's what I would say like just there's there's the the framework of the monetary system, the economic system, and how the market's behaving. And then I would just say stay educated. There's nothing there's nothing better than just continually trying to learn. Challenge your own assumptions, challenge your own knowledge and and preconceived notions about what does or does not need to happen. You know, like this the the Bitcoin thesis about the having being what's driving the cycles in Bitcoin. you know, kick the tires on some of these things and try to educate yourself because even if you end up coming back to the same place you were, you're still going to have a deeper understanding.

You're going to have strengthened your position by hearing dissenting opinions and you're only going to get better as an investor if you continue to do that. >> Yeah, it it's wonderful advice. Uh, okay. Prior to joining Milk Road and becoming the new host of Milk Road Macro, you worked at BlackRock for six years. Uh, you mentioned already one story. uh talk to us a little bit about how your time there shaped your understanding of investing. >> Well, I'll tell you the story how we orangepilled learning fin sometime, but that's a different story. Uh what what it did to shape my view of >> how you going to tease us with that?

Come on. Come on. >> It's a different story. It's a different story, my friend. Um so, but what I learned about Larry on the show? There's the question. There's the question. Larry, you up there? >> You're joking. I think this is an incredible signal. He went on CNBC this week and was bragging about how he's the most successful Bitcoin salesman of all time. And you can see in his smile he's so proud of IBIT and the performance of it. It's the best performing ETF of all time and he smiles like a proud father when he says it. Um that was not his disposition several years ago, like just a few years ago even. Um he was very cool about Bitcoin and like he called it an index of moneyaundering. So look, things change all the time, right? um you have to pay attention to to see

what's going to happen in the markets because circumstances are always changing, sentiments always shifting. So I think what I what I learned from my time at Black Rockck, there were a lot of things. One of the key takeaways I took from it though was they speak in a language of risk. If you're managing trillions of dollars, you have a different way of thinking about your portfolio than you do if you're, you know, if you've got a few thousand dollars in a Phantom wallet, right? So um I think the the way that they speak there is in terms of the language of risk. What really I think turned a lot of minds about Bitcoin as an asset from a macro perspective was just that the macro perspective. The risk that Bitcoin might find a lasting role in the global economic marketplace and not having an allocation to it in that scenario is a

huge risk to the defense of your capital and the preservation of your portfolio. So hedging out that risk became a huge thesis um for purchasing the asset for a lot of people. Um so that that kind of like inversion of this from you know seeking alpha and outperformance to defending your wealth um as a as a as a you know a asset manager and a portfolio manager was something I learned there and just a different perspective than I think a lot of especially retail investors have about investing. Um but I I think you know I learned that also at every institution just like in any like community that exists there's going to be certain people who think one way and certain people who think another. Some people are going to be very bullish on, you know, new things like AI or crypto and some people are going to be very

bearish. Doesn't mean anybody's necessarily right or wrong. It just means that there's a diversity of thought and opinion and you can always learn from uh, you know, talking to people and and gaining their perspective, seeing what they're seeing. Yeah. And I I worked a lot with the digital assets team at Black Rockck and had a lot of respect for for what they did and how they did it, not getting caught up in hype, but rather saying like, hey, what are the fundamentals here? What are the practical applications of this? and how do we build for long-term success in digital assets? Uh, and that's kind of the mindset that I've tried to bring to my fund, to to Milk Road Macro, and to my own personal portfolio of management.

>> The thing that really stands out to me there is your mention of community and the every investor needs to have a community where they can share their thoughts, get feedback, hear different opinions, right? And as you said, when you were at Black Rockck, wow, what an incredible community. You know, you're you're surrounded by some of the best investors in the world, the best finance managers in the world. Obviously, everybody listening in here doesn't have the opportunity to go get a job at BlackRock. So, how how do you find this community? Well, one of the best ways you can do it is to join Milk Road Macro Pro. So if you guys are listening in and you're looking for a community, you know, John, every day I know you're active talking to various the you know

thousands of community members that we have in our Discord and it's amazing to see that conversation happening. So, uh, everybody listening in, if you want a community to join, it is just it's it's the best edge I think you can get is having that community to talk to on a regular basis where you can get that feedback and, you know, not feel alone in your investing, which is a very much the truth I think for a lot of investors because we all invest from a computer screen right now, right? Like we don't and most of us self-invest too. We self-manage, right? We don't talk to brokers much anymore. Most of our generation is all on our own. So yeah, make sure you have a community whether it be with us or whether it be with somebody else. Uh before we wrap up here, John, uh give us a uh a lens of

what our listeners can expect in the coming weeks and the coming months from the Milk Road Macro podcast. >> Yeah. So I think that something I love about macroeconomics is the diversity of opinion and like you know like I said like the debate that comes up as a result of these different ways of thinking, different ways of looking at the market. Um, a lot of people right now are debating, are we about to enter a recession or is the economy actually strong? How much is artificial intelligence actually going to help the economy? Is it going to create jobs, destroy them? Is it going to increase GDP? Are we just going to, you know, make ourselves broke building data centers? Uh, should the Fed cut rates?

Should there even be a Federal Reserve? Um there's so much going on right now in the area of macroeconomic policy and uh macroeconomic activity that has huge consequences not just in the short term but in the long term for our entire country and and and the globe overall. So I'm really looking forward to getting a lot of experts in macroeconomics on the platform to not not just debate these ideas but to like explore their thinking about it, right? Because I think if you just go ask good questions, turn over a lot of stones, you find a lot more gold than you would if you just stay in your house and and only look at the four walls. So that's what I'm excited about is getting a lot of experts on getting them to share their views with the community and then just getting smarter together, right? Like I

think what you said about community is spot on. That's one thing I've loved about Milk Road. I've been a follower for years. Um I I love being part of the community. I love uh getting to ask and answer questions and just, you know, see what people have uh as a different perspective on these things. So there's a lot that's being debated in the headlines by the president, by everybody. Um, and so just getting to be part of that conversation and uh create a dialogue there is going to be really exciting and fun and informative. So I'm I'm excited about all of that. >> It's an exciting time at Milk Row. This is I'm getting fired up here. We like this is so exciting. It's great to hear the the outlook that you have, John.

Great to learn from the way you look at macro. exciting to learn a little bit about your past, your passion for history, your passion for money and the uh the way that you have sharpened your saw and become uh the investor that you have become. Uh and really excited to see you share that with uh with our community and with our uh with our audience. And you know, everybody tuning in, thanks thanks so much for being here. This isn't possible without you guys. Got to remind you one more time, today is the last day that these episodes will be airing on the Milk Road Show. So do John a solid, support the Milk Road Macro squad, and go over on YouTube or on Spotify or on Apple Podcast, wherever you're listening, uh X

even, and subscribe, follow Milk Road Macro. Links are in the show notes. If you don't know where they are, make sure you subscribe so you get every Tuesday and Thursday, there will be a new episode coming out where John is sitting down with one of the leaders in the space. Go back and listen, you know what? We got to plug Michael Hallow's episode from earlier this week. go back and listen to Tuesday's episode with Michael Howell because that was absolutely incredible. And as you said, global liquidity is a big part of what impacts the business cycle. And Michael Howell broke down exactly where we are and where we're going with global liquidity. John, uh, thanks for joining us today. It sounds so weird because it's your show, but yeah, thanks thanks for sharing with us today.

>> Yeah, thanks for having me on my show, Jay. Really, really happy to be here with you. >> Thanks all for listening in. One more time. Got to remind you, none of today's episode is financial advice. I'm not your investment adviser. John is not your investment adviser. These episodes are for educational andformational purposes only. Be careful out there. And if you need a community to help you with your investing, go pro. Hit the link in the show notes. Join the Milkro Pro community. I guarantee you, you will get the money well well back in terms of the gains you get in your investment and the community that you're able to interact with. Stay informed. Stay safe out there, folks. Have a wicked awesome day.

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