Bailouts, Bitcoin, Disruption, Failures and Hope

Automatic TRANSCRIPT

As I mentioned at the top we're going to discuss three basic things. One is the growing. Bipartisan and global shutdown and bail out everything movement to is the inability of even extraordinary and unprecedented monetary policy to actually resolve these issues in a way. That seems like it'll do anything. Productive for any sort of length of time and three the revival of the system is breaking and when it does will need something new that doesn't share the same problems of being vulnerable to politically expedient overreactions narrative. That frankly is what drove. I think many of our initial interest in Bitcoin in the first place but before we get into those topics Stephanie. Can you a quick update on the virus itself and recent events? Yes so we released a show a couple of weeks ago where I think everyone is going through these waves of accepting that our lives are going to change in a big way. The situation has certainly changed since the last time we discussed it on the show we have some bonus content also from last week if you want to hear more perspectives on this but basically you know the US and other countries that were later hit by the virus pandemic are starting to finally take things more seriously. Some people are understandably concerned. Alarmed making lots of preparations for their lives to change including you know taking measures to not have contact with other people in order to avoid spreading the virus. It's come to light that this particular virus has a long incubation period. Potentially where someone can have the virus and transmitted to other people but not show any symptoms. And so of course you know. This causes a lot of concern. What if this person has it? What if this person has it? It's a scary prospect rate and so social distancing or staying out of spaces large gatherings of people restaurants bars anywhere where people gather has been the prescription as the way to stop this thing because of course if too many people get it especially older people seem very vulnerable. The hospitals will get overwhelmed. There are not enough respiratory critical care resources to take care of everybody who would potentially get sick and need critical care if this thing spreads quickly so our best hope of beating. It is to reduce contact with each other and avoid transmitting it. So that has had a number of real world effects first of all. The economy is really changing in a situation where people are staying in. Tours there not patronizing restaurants and bars. Obviously this is very hard hit. Employees of those establishments are finding themselves. Suddenly out of Work Schools Workplaces colleges other institutions are closing places where people normally gather and they're transitioning to remote learning which could have effects on Internet bandwidth. We don't really know yet. But as many schools transition to remote and has many workplaces transition to remote we could see lots of effects of that. People are staying with their families. You know we could see some sociological effects from this for some people. This is extremely psychologically burdensome to be deprived of interaction with other people or the ability to really go out and do stuff. So you know. There's a lot of anxiety and mental health issues. That could come out of this too. We've seen bailouts from government already. Basically orders to kind of enforce these quarantining measures combined with bailouts of industries that are affected by them. And we're definitely going to talk about those on the show today. I think a month ago if you said that Donald Trump would be supporting you and the European Union. Close all their borders. You'd be called crazy. Yeah and yet of the timelines available to us. That's where we're at today. Yeah we were talking about that on the show with Andrew Yang his presidential campaign. I heard a quote from him saying that. I didn't think that I would end my presidential campaign in February and then in March. We'll be doing the exact thing that I campaigned on. But here we are. I just want to point out that in a recent meeting I believe sectors treasury. Steve Said. That's what we must absolutely do is avoid using the word bailouts in any discussion of this in the public. This was leaked and one of the people present raise their hand and asked if we could instead call them freedom payments in the vein of freedom fries. We're now going to get freedom payments and yeah. The bailouts are starting two weeks ago. I tweeted that Boeing would be one of the first companies to go under and it seems like that may well be the case. Yeah you call that good job injuries. They're going to get a bailout. I but you know this is a much broader thing. But I think it's important to separates two different aspects of this so a lot of people are going to see this as the director salts of the pandemic but the truth is and we've been talking about the last ten years is that especially the US economy but many economies around the world have been an increasingly precarious condition long before this pandemic hit the US was operating at abnormally low interest rates with quantitative easing continuing. In fact if you remember we had the latest round of content. Amazing started in October Long. Before the pandemic with problems in the feds repo market and the overnight lending market the tried out because of liquidity shortages in the Thala markets. So this was an economy that already was underperforming especially for the vast majority of people and underperforming wall on a steady full drip of stimulus and low interest rates. It was by no means the healthy economy so this is the environment into which the pandemic has now creating a secondary problem. I think it is bordered to separate the issues of financial ization the monetary issues which are issues of keep credit misallocation of credit debt portfolios that are distressed and bad loans companies doing share buybacks in order to prop their shares. And all of that crap. That was happening for the past ten years and was a steady drumbeat of fake financial news and fake financial numbers. To make everything look like. It was okay. Now we're dealing with a very different problem. And the thing here is that we now have a fundamental simultaneous supply chain crisis as as productivity crisis people are going to become unemployed in very large numbers that we haven't seen before especially in some of the most affected industries. This is going to hit an already distress middle class and below much harder. And you can't stimulus your way out of demands collapse and a productivity collapse because the problem is you know even with giving people money like helicopter. Payments People are going to spend on absolute essentials like Renton utilities which is going to go right back into the pockets of very large companies and already rich real estate magnates. It's not gonNA circulates and create jobs for the people who actually need them. So we've got these two issues one. A monetary crisis and to a labor crisis now ended artificially keeps Renton food prices higher than the market wishes them to be absolutely. Yeah because it's not as if you know. Forty percent of all landlords are going to take zero dollars off of units that they can't rent versus seventy percent or seventy cents on the dollar forever unit. They could rent so you know. The unconscionable thought that perhaps Manhattan real estate would go down for year is just. We can't let that happen so I think it's worth talking about sort of the bailouts kind of the principals level right because for me a lot of the reason why I was. I think many of us were vehemently opposed to the bailout of the banking system and many of the companies during the financial crisis was it. Sure looked like they acted in ways. That were fundamentally irresponsible. And then wound up blowing themselves up and so in that sort of circumstance there was this concern and continues to be concerned of moral hazard. Where if you bail these people out his her awarding bad behavior exactly and you're doing it at the expense of the tax payers who obviously had no involvement in that did not make any of those business decisions. What's going on now is a little bit different because as centuries it's a collapse of demand right as we shut down our normal interactions as we shut down the way that kind of life works right now. That's not really the case and my point broadly is that I am also opposed to these bailouts. But I'm opposed for fundamentally different reason. Which is I don't think it's GonNa work. I think that the attempt to solve this problem using that same old tool kit is effectively. Going to make things worse and at the end of the day not actually resolve the problem in a way that anybody is hoping for.

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