United States, Colin Roach, Bros Ns discussed on We Study Billionaires - The Investors Podcast
Multiple investing books in a regular guest on Bloomberg and major financial news outlets on the show. Today we talk about the current market conditions in various trade ideas for navigating this landscape so with that let's get started. You're listening to the investors podcast while we study the financial markets and read the books that influenced self made billionaires the most. We keep you informed and prepared for the unexpected. Will come today's show. I'm your host, Bros Ns, always I'm here with my co host Preston Pysche. On today's show, we'll be talking about equities inflation and what to expect in the financial markets. Therefore, we also excited to bring back. One of my favorite guests Colin Roach calling. Thank you so much for joining us today. Guys thanks for having me. So Colin talked a lot about the potential of new monetary system. Here on our show, we discussed this scenario of fear. Based system with the US dollar is the most important global research currency and the probability of having that system for at least a few more decades and I mean that's basically the system we have today, and then on the other side of the spectrum, also discussed the the opposite scenario with a new monetary system that might come sooner than most people expect. And I guess you can even say for listeners. For three hundred episodes we talked of everything in between, but we really curious to hear how you see this. How do you expect the monetary system to look like in college five years or twenty years from now? I've thought about this a lot especially with the rise of Bitcoin in the whole concept of decentralized money. My view basically is that it's never going to be an either or sort of scenario that plays out. My thinking is that people want something that is more decentralized that they have a little more control over. They have a little more anonymity over and something that is really more convenient for online and appeared here transactions, but here's The bay, and here's the big thing that I have trouble with something like any decentralized form of money. Is that the reason we use centralized forms of money, likely the US dollar to a large degree. This is one of the big drivers is it's backed by government that enforces it. I don't mean men with guns. I mean people are able to take other people to core basically so. From the beginning of time all money is credit. What I mean by that is that all money is basically an agreement between two parties. In the ancient times! The monetary system was basically develop for agrarian agreements where a farmer for instance would agree to lend a certain amount of seed. Somebody else. You needed to grow some crops and they would have this. Agreement between the two of them to next season deliver a certain amount of seed back to the far so for instance you need one hundred acres of corn grown. You would land the amass. To make that doable in the agreement would be that in the future that other farmer has to deliver even more corn seed in the future or something like that, and you'd have this unwritten agreement back then that over time essentially evolved into written contracts in the thing that makes government somewhat essential in all of this is that if those two parties ever have disagreement, farmer, a can take farmer a court, and he can enforce that contract, and it makes the money more credible so. So the debt contracts that we all create between each other in forcible, and that creates an inherent amount of trust inside of the money that we use because you know that it's good. It's good because it's enforceable. You know that the valued is something that you can recoup in the future if the other party just you know tries to nullify the contract for some reason, and so that's the thing that I have trouble with a lot of decentralize money. They don't have that. Degree of trust in them because there is no real way to enforce the contracts if there's ever a problem, that's the thing that I think somewhat hard to decipher with something like bitcoin is, that ultimately is very hard to create debt contracts from because a is not very stable, and be it somewhat hard to enforce, so I think what will ultimately happen is that they're still going to be too man for these other forms of decentralized money, but I think that it's. It's very hard to see a future where something like the US. Dollar or the centralized based types of money goes away just because I think that the legal system in the enforceability of these contracts is such an important part of the structure in any modern economy, and it's hard for me to see that going away in the future, so I could see the two systems kind of running parallel to each other, but neither one necessarily going away or overtaking the other. Thank you for the insatiable response, things very interesting that you it's not an either or would say this to a lot of people, but we can have two systems. You see that all the time even in today's system I. Mean You have a lot of nonfinancial firms that create things that are sort of money like I mean even dachshund. Bonds are issued by. Corporations are very money like I mean they're just financial contracts. Just like any a monetary contract isn't all of these systems are created by the private sector Kinda. Run parallel to the US dollar system in essence. So call in to continue issuing death. The US has to convince investors that the debt will not only be paid back, but that the buying power of the return currency will be retained. What are the arguments for and against investors continuing to trust US treasuries? The way that I like to think of treasuries, is that treasury bonds or really? Most government issued what we call debt. They're really money like instruments. So for instance. What's the big difference between a one month treasury bill that yields zero percent and the cash. No, it really is not much of a difference between these two instruments. The treasury bill in my view is almost as close to cash. Cash as the actual cash notice in the spectrum of money nece along which all of these instruments exists is just a matter of maturity duration basically what the interest rate is on it so a thirty year treasury bond is just a really ill liquid form of cash, basically where it's just harder for us to. You can't go to Walmart and buy with a thirty year. Treasury Bonds So. The degree of money nece in that instrument is relatively low compared to a cash bill, but I think the kicker is that it all comes back to inflation, and what is the level of trust? What is the level of demand for these things so I oftentimes see people say that there's a low demand for treasury bonds or that the US government debt probably can't be trusted in the future and to me. If that ever happens the way you'll see it, play out, is you'll see play out? Out as an increase in inflation, so the way I think this is that if the government were go out and try to finance a whole bunch of spending by just printing cash, they could dump a whole bunch of money on the street. People have to.