There's a lot of delusional behavior on the part of our ruling class. What are your thoughts on how Trump is doing his tax proposal? I think he can extend all of his existing tax cuts. That's relatively easy. The problem is... When it comes to tariffs, obviously Trump has freaked everybody out. In Trump, the way that I perceive is he throws some crazy things out there. It's almost like the rubber band effect. Where it's like, okay, let's get people to freak out here and then let's make a deal. And as investors, as Americans, what should we be thinking through? My sense is that Trump has always had a plan, a very specific plan, to turn the card table over and say to all of our allies, look, we got to talk about trade. This is ultimately about China and marginalizing China, Russia, Iran, a couple other states that we have issues with. Talk to me about why no one else wants to be the reserve currency of the world. And also... Bitcoin and gold. Do you think Bitcoin or some type of cryptocurrency is going to replace US dollar? The answer is no. Cryptocurrencies are a polite form of fraud. It's like playing poker. People trust a currency because they trust the system that sponsors the currency. People don't trust coin for much of anything except speculation. Gold, frankly, is going to become a more significant reserve asset in the future. Talk to me about inflation and the debt. Are you saying that the U.S. debt and our unfunded liabilities, is that one of the biggest problems you see in the future? Yes, because it requires inflation. All right, we got Christopher Whalen is the chairman of Whalen Global Advisors and highly respected financial analysis and investment banker. He's also the author of the new book, Inflated Money, Debt and the American Dream, which is not the most optimistic title, I have to say. It's always an honor to talk to people that know what they're talking about in the financial world. It's a happy book. Inflation is the American pastime. That's how we built all this stuff is on borrowed money. Come on. That's right. That's what the wealthy love is they actually like inflation. And so maybe you can dive in a little bit more of that. Before we jump into a couple topics that I'm excited to dive into, is there anything that you are thinking about right now? Like what are you spending your time thinking about and researching right now? Well, I mean, we just... Put out a piece about the treasury market and the Fed. I think the big disconnect I see is that a lot of economists, market people, etc. want to believe that everything's fine, everything's normal. But there are certain parts of the marketplace today, specifically the treasury market, which has had some issues going back to the COVID in 2020, when the Fed had the ride to the rescue. If we have a bad auction... Things are going to change very rapidly, and the folks in Washington are totally unaware of this. They're worried about cutting taxes, right? Like we could go out and borrow $2 trillion more. So, you know, it's a surreal scene is what I'm saying to you. I think that there's a lot of delusional behavior on the part of our ruling class because they just don't want to know at the end of the day. Whether they're Democrats or Republicans, by the way, if they are clued in at all, they don't want to know. Right. and And for the people that are watching this or listening to this, obviously you're an investment analyst, you're an investment banker. What exactly is that and what do you do for your day job essentially? Well, my primary role at Whalen Global Advisors is advising some big financial institutions around the country, especially non-bank lenders. I'm very well known in the mortgage market. I write a column for National Mortgage News. In fact, we're getting ready for the NBA secondary conference here in New York City next week, which is probably the most important event for the industry. The secondary market's where they sell your mortgage. When you buy a house and they finance your mortgage, they sell that mortgage to an investor, like it's a bond. And that is, other than treasuries, that's the second biggest market in the United States, crucial to the U.S. economy. So that's part of my role. We finance for these companies. We do some very basic money market activities. And then I also obviously write for the blog and for other publishers. Yeah, amazing. This is a sidetrack, and I'm sure our producers are not going to be happy with me going off tangent here, but I worked at a local bank, so I was very familiar with us selling mortgages to Fannie, Freddie kind of deal. That's right. It's always amazing. I believe the 30-year mortgage is one of the greatest tools out there. Like, the fact that you can, like... The fact that you can short the American dollar that's getting less valuable and lock it in for 30 years. Like, what is your thoughts from, like, where you stand? Are you a fan of people paying off their debt? Are you a fan of people using 30-year mortgages? Like, what is your thoughts on that? Right now, I think the 30-year mortgage is what you want to do for the simple reason that inflation is going to continue to pull up the price of single-family and also commercial properties. It varies from region to region in the country. Some regions, like I'm in New York, which is an awful market because of the progressive politics in this state. And then surprisingly, California is fine. California, for all the liberal tendencies in that state, still has a mortgage market that functions. You can still do a foreclosure in less than a year. In New York, it's three years plus. So that's why the loans in this jurisdiction don't trade very well when people sell them. You were talking about Fannie Mae and Freddie Mac. People look at New York and they go, I don't really want those. And half of all deals, by the way, in the country are in California. That's how big that state is. It's huge. Yeah, yeah. And then when it comes to your book, obviously people can order slash pre-order your book on Amazon. Go to Barnes & Noble, by the way. Amazon's been a little bit pokey. Okay, we'll get that link. Just if you had to summarize your book, what is it? I mean, Inflated, Money, Debt, and the American Dream. It tells you how we got here. How did the sleepy American Republic of the 1900s... Somehow or another become the custodian of the world's money. 80% of all foreign exchange transactions have the dollar on one side. Half of all trade. So you look at that and say, my God, how did we come into this? And the reality is we inherited it. So I tell that story. I talk about Lincoln who created paper money. I talk about Franklin Delano Roosevelt who seized gold and tried to socialize our country. And now we have Donald Trump who wants to take us back to the 19th century. So I try and wrap that all up and talk very much about the last 15 years, Janet Yellen, Ben Bernanke, Jerome Powell. What is all this going on? What's happening? And I think it's important for people to understand this because then they'll know what to do with their investments. I love it. I love it. And I hope hoping my listeners and viewers go check that out. So speaking of Donald Trump, let's tee up. Donald Trump, this is a. A little bit ago, he's talking about his bill, his tax and jobs cuts bill, and Trump does Trump, and I would love to get your take on this. Everybody knows Chairman Smith. He's the most knowledgeable person on taxes and finances there is. To be updated on the progress of the one big, beautiful bill. We love that bill. I won't like it if it doesn't pass. Neither will you. It doesn't pass. Your taxes are going to go up 68 percent. So think of it, 68, and this is a religious ceremony to me, but that's part of the religion. Because if your taxes go up 68%, you might give up your religion. You might have no choice. He said that at the prayer breakfast, which is just funny to me. What are your thoughts on how Trump is doing his tax proposal? And I would just love to hear your thoughts on this whole thing. Look, Donald Trump is a natural politician, and the fact that he's from Queens, New York, is special to me because my people are from Queens, too. And when I hear him talk like this, he kind of reminds me of family members. But he, look, he is trying to change an awful lot of things in a very short period of time. I think, you know, we can talk in detail about this legislation, which is just kind of now working its way through the House. The Senate has already said they're going to rewrite the whole thing. So Trump has a tough road to hoe because he's got the conservatives in the House, he's got some centrist Republicans, and then of course the Democrats. And the Senate is a totally different equation. They are almost out of line 180 degrees with the more conservative Republicans in the House. So in order to get the big beautiful bill, he's going to perform some magic. I think he can extend all of his existing tax cuts. That's relatively easy. the The problem is the cuts he's proposed in existing programs, particularly Medicare, Medicaid, a whole raft of other things that go on for pages and pages, because they're desperately trying to reduce the amount of money that the government needs to borrow. That's how you get long-term interest rates to come down. So if you listen to Secretary Best and the Treasury and the president, too, they're really focused on trying to get control of government and reduce government spending, because then they have some hope. of working their way through to a proposal which can hopefully get growth faster. If you don't get up to 3, 3.5% growth, it's hard to grow out of the debt. They're going to try a number of things to reduce the debt. And they've got, you know, this is all under review right now. But I think that overall, the promise early on in the Trump administration and what we see on Capitol Hill this week are kind of two different things. And I think he's still got huge amounts of popularity. So we've got to see how much political capital he's got to get them over the finish line before Labor Day. Because really, if we're not done by Labor Day, then we've got a problem. Yeah. When it comes to this big, beautiful bill, what do you think is at risk of not passing with the current landscape right now? Oh, gosh. You know, I wouldn't want to get into the specifics because they're going to change. I think, as I said, the big issue for the Senate is the cuts. The House is looking for $2 trillion in cuts. One interesting note that your viewers will probably find of interest is that We've been wondering if they're going to try and release Fannie Mae and Freddie Mac from conservatorship in order to pay for more tax cuts. Because by the time they get that done, say it's two years from now, the federal government's going to own 98% of these companies. The existing shareholders are going to be diluted heavily, and the treasury too, by the way. So they can maybe go out and raise a few hundred billion dollars, which is not a trivial amount of money in the grand scheme of things. That hasn't occurred. We don't see any earmark. So my sense is, is that the expectations on both the House and the Senate side are getting reduced as we speak. Because they do want to get something passed, right? You know, if they don't have a result, then it's bad. So I think ultimately Trump's going to have to compromise, but that's typical for him. You know, we came out with the tariffs, world's going to end, you saw the people on CNBC wringing their hands, and it didn't happen. I told my readers, by the way, I said, look, this is a distraction, go do your homework. This is after my banks had given up all the gains from last year, right? And I said, look, go look at the things you couldn't buy last year because they were too expensive. And that's, you know, that's, I think, turned out to be good advice. We could go two directions. We'll start on the tariffs. When it comes to tariffs, obviously, Trump has, you know, kind of freaked everybody out. I don't know if you bought the dip. I bought the dip. A little, a little. Yeah, a little bit. And so it was just one of those things where it's pretty clear to me that it's like, hey, everyone's freaking out. And in Trump, the way that I perceive is he throws some crazy things out there. It's almost like the rubber band effect, where it's like, okay, let's get people to freak out here, and then let's make a deal. and some people say I give him way too much credit and then other people I think are way too into Trump that everything that he says can't be criticized. What's your thoughts on the whole tariff thing? I just recently, the... There's a pause in China, but then there's also like some things are pausing, some things are not. So can you explain in your own words what's happening and what do you think Trump is doing behind the scenes? And as investors, as Americans, what should we be thinking through as we're hearing lots of people talk about tariffs, including myself that probably have zero business talking tariffs? Well, people talk about tariffs because they can. It's like monetary policy. You can talk about it for an hour and not say a damn thing. So my sense is that Trump has always had a plan, a very specific plan, to turn the card table over and say to all of our allies, look, we've got to talk about trade. We have to talk about non-trade barriers to American goods. And we're going to cut deals with the countries that we don't really have problems with, like Europe, Japan, you know, the United Kingdom, which is already done. That you knew was going to happen, right? This is ultimately about China. And marginalizing China, Russia, Iran, a couple other states that we have issues with. I think the rest of it just gets done over time. Now, was the rest of the world prepared to engage with Donald Trump 60 days ago? No, but this is what he does. And it's exactly the same as his tactics politically. You know, before he got elected president, he would go out and antagonize various people, see if they respond, number one, and then see what kind of leverage he's got. So he's got leverage now. He's sitting in the White House. And I think, you know, he's going to use that leverage the same way he always has. But mind you, he's always ready to compromise. This is a guy who's still here because he compromises. I used to trade their bonds years ago for Trump Casino, okay? And there was a certain point where the banks just said, no more, give us control. And they took control. So for a while, Trump was basically just a big beautiful face on the front of all these deals. And the banks were running it in the background, right? Now, you know, things are a little different. He's regained control of his world. And I think, again, it's the same MO he has shown us for 30 years. If you follow this man, as I have in the New York media, you know, this is very specific. And I'll tell you an interesting story. I got to hear Art Laffer speak the other day. God bless him. He's 85 years old. And he was at this conference sponsored by Namura Securities in New York. And he said, look, Trump laid out. This whole strategy of Trying to get a more even deal. And he had very specific ideas going down to different products. So this is a guy who is detail-oriented. I don't think people give him enough credit. But that was always the case with Ronald Reagan. My dad was a speechwriter for Reagan. He was sous chef for the kitchen cabinet in Reagan 1. And, you know, it was the same thing. Everybody underestimated Ronald Reagan, but he was actually a very bright guy. Okay. Do you find that being in your type of position in New York that you're kind of on the outskirts? because I feel like... You're very pro-Trump in a world where I feel like a lot of people from New York, investment bankers, I think it's like they like to bash him. Well, that's fair. I mean, Wall Street is mostly a bastion of liberal Democrats. You know, they've grown wealthy on the corporate state and they like it. You know, they don't want change. Trump has threatened a couple of changes that would piss off Wall Street, like getting rid of carried interest or maybe a higher tax rate for millionaires. That's not going to happen. He doesn't have the votes for that in the Senate. But again, you know, it's a rhetorical position. He throws it out there. The phone rings. All of a sudden people start writing checks to PACs. You know, this is politics. Whenever you go see a politician, the first thing you have to do is see the concierge and put a check on the plate, right? Nothing has changed. My people were in Tammany Hall, so I knew this when I was a young person. I love it. Let me tee up another clip that... that Trump talks about the pause of China. And I have a question after this. In addition, yesterday, we achieved a total reset with China after productive talks in Geneva. Both sides now agree to reduce the tariffs imposed after April 2nd to 10 percent for 90 days as negotiators continue on the largest structural issues. And I want to tell you that a couple of things. First of all, that doesn't include the tariffs that are already on that are our tariffs. And it doesn't include tariffs on cars, steel, aluminum, things such as that, or tariffs that may be imposed on pharmaceuticals because we want to bring the pharmaceutical businesses back to the United States. And they're already starting to come back now based on tariffs because they don't want to pay 25, 50 or 100 percent tariff. So in my opinion, he just laid out. He's using tariffs to bring jobs back to America. It's clear that we don't want all the jobs. I don't know if everyone, like, I don't know if we want to start building, making tennis shoes in the States, but certain things like pharmaceuticals and all, it's important. It seems to me that it's important to Trump that we have that, that we're not getting some of our precious drugs from China. What is your take on what's going on with China? And it sounds like he's pausing, but he's not pausing everything. What is... Yeah, unpack this. I don't think at the end of the day he's going to cut any really deep concessions to China. I think he wants to build up a wall of tariffs that are going to force major manufacturers to go elsewhere. Whether they come back to the United States is not really clear. You know, for example, Apple is moving a lot of their assembly to India. The reality is China's actually gotten rather expensive in recent years. There's a lot of corruption, a lot of people you got to pay off. Same thing in India, of course. But they've realized that they have to diversify. Whatever problems there are between the US and India, and there are some issues, it's nothing compared to what we're dealing with with China. Because, you know, let's face it, China, I read Chinese history as an undergrad at Villanova, is a modern mercantilist state. It's kind of frightening. It's like Great Britain on steroids with the internet and, you know, 24-7 surveillance and everything else. So to me, you know, China represents a much larger threat than just the economy and trade. And because of the people in the White House led by Peter Navarro, they're not going to back off on this. They want to make a change in the U.S.-China relationship permanent, even though they're not looking to fully decouple. But things like semiconductors, rare earth metals, there's a whole list of things I think it's going to be very hard to agree on. And the Chinese are pressed because let's face it, China is still a very small, weak country. They depend on this mercantilist export-driven model. They don't have domestic demand that can soak that up. They've tried to create it. You saw that over the last decade with their housing boom. But now they have cities that are empty and buildings that nobody wants. So it's a total misallocation of resource. And that, to me, is interesting because I think over time, and we may see some change in China, the model's just not stable under Xi Jinping. Because remember, before that, they were growing pretty strongly. They had gone through a period of liberalization. There were some very interesting developments in the gold market we could talk about. So, you know, in a lot of ways, China has been leading the world in some significant areas. But the Xi period has been about political retrenchment and, you know, making sure that the party is in complete control, which means that you have party people making economic decisions, which is bad. They make monumental, disastrous decisions. Look at their Belt and Road program. where they were going to go out and do business with all these little countries around the world. There's not a single one of them where the country, the partner, is happy. They basically got over levered, they can't pay the debt. And now the Chinese are looking like the US when we were, you know, operating gunboats in China. They remember that, by the way. Yeah. So, you know, that to me is the issue with China. How can they transition this model to something that's a little more amenable to having a normal relationship with other countries? Because, you know, the Europeans have problems with China, too. I think the Europeans have had an awakening when it comes to China, much the same way they have with Russia. So, you know, it's going to be interesting. But I don't expect anything like a full deal with China the way you're going to see with Europe or Japan. Yeah. What do you what do you think? Does Trump want to just not work with China or does he want to get something like does he want China just pay more money? Or like what do you think is a good outcome for what Trump's trying to do with China? I think he would like to reduce the trade deficit with China, which is very difficult. That's not something you can just wave the magic wand and make it happen. I think we did $16 billion in incremental revenue from tariffs this month. We've got to add a zero to that before it starts to become significant, but I don't think we're going to do that to most of our trading partners. We're not going to do that to Canada. Although, I think he's having fun tormenting the Canadians. You've got to remember, this is Trump. He's having fun. Yeah, but I don't get it. Like, I know a lot of concern. I don't want Canada like the Canada Joe. Like what what is he? I don't get that from from Trump. Newfoundland and Prince Edward Island would be pretty cool. Yeah, I guess. I also don't get fishing up there. I also want to know like who in Trump's who who's in Trump's camp that thought the Pope meme was a good idea. Like, I don't know. I'm not Catholic. But I just like those are the kind of things that you're like, okay, he's he clearly doesn't care. and he's maybe able to... He's having fun. I don't think members... Look, I'm a Roman Catholic. I don't think members of the church were offended. It's okay. And plus, we have a Villanova boy as Pope now. That's right. I wasn't in his class. I was three years ahead of him, but God bless. I think it's great. Absolutely. I love it. I think let's... One more question on tariffs. When the... Most economists will say that tariffs increase costs on the American people and such, that we should go as most free trade as possible and tariffs are a bad thing. It sounds like you disagree with that or maybe have a counterpoint. I would love to hear that before we talk about the Fed and gold. So before we switch, I just would love to hear your take on tariffs because most of the people I've talked to believe that tariffs are not a good thing. and I would say that the market in general believes that. That's why the market freaked out two months, three months ago. The first thing you have to understand, if you recall the movie with Keanu Reeves, is we live in the Matrix. And what I mean by that is that the history of the United States going back to the Great Depression was written by progressive Democrats. One of the reasons I came out with the second edition of my book is that it's filled with wonderful references for conservative and moderate economists who never get any time. You know, you don't see conservatives working at the Federal Reserve Board because the Fed, by definition, is a progressive New Deal organization. That's where it really got its ethos. So, you know, people have to understand that we had high tariffs in this country for 50 years before the Great Depression. The Smoot-Hawley tariff that everybody yells and screams about was primarily focused on agriculture. And American agriculture had been through... More than a decade of deflation following World War I, it was just horrendous. I mean, you can't put it in negative enough terms. It was the precursor for the crash, because if you watch what was happening in the farm sector, eventually that damage and that loss in terms of credit got into other markets. It eventually caused the collapse in Florida in 1926-27 that Galbraith writes about in his great book. And then by the time we get to Wall Street in 29, that's the end. It had nothing to do with the Smoot-Hawley tariff later on. It was FDR's seizure of gold, which terrified Americans. That was probably the most important reason the Depression got worse. And then the dollar devaluation, which did nothing to reflate the U.S. economy. If you look at Milton Schwartz and Anna Friedman's history, the financial history of the United States, they talk about the fact that all private debt in the U.S. basically liquidated in the 1930s. Why was that? People didn't trust the government. FDR had convinced them not to trust the government. If he hadn't seized gold, his government would have collapsed. Think about that. So even though he, you know, he didn't quite kill gold, everybody thinks Nixon did, but he still had to look at gold because people saw gold as money. They saw paper as debt. And that is now changing, by the way. We're coming full circle a century later. And I think it's fascinating. But tariffs did not cause the Great Depression. That's one of the key points I make in my book. Okay. Okay. So definitely another plug to get Chris's book at Barnes & Noble. We'll have the link down below. Chris, congrats on that. Okay, let's talk about the Fed. Sure. Help us understand what the Fed is and why it could be the evil thing behind the scenes and making the world tick? Well, it's not evil. It's just a big federal agency in Washington. The decentralized central bank that Congress originally envisioned in 1913 was turned into a Washington agency a decade and a half later. It has not gotten better with time. The Fed is very much a Soviet-style central planning organization that thinks that they're in control. But what we're finding is, and Kevin Warsh was talking about this the other day at the Hoover Institute, is that they are seeing their mission creep and get larger and larger. And yet they're not doing a particularly good job. They're losing a lot of money, hundreds of billions of dollars, and they have managed to screw up monetary policy several times going back to before COVID. Do you recall in 2019 when suddenly Jerome Powell had to pivot? And Janet Yellen and Ben Bernanke had to go out and do a presser with him to show solidarity. Well, he panicked. He started dropping interest rates a year before COVID. I'm talking about early 2019. I work in the mortgage market, and I'm watching the yield on Ginnie Mae's fall to levels I didn't even think were possible. And it was because the Fed was selling forward these contracts and just driving interest rates down into the dirt. Well, they really helped during COVID. There was about a year there where we needed that. That's how we paid for forbearance for millions of Americans who couldn't pay their mortgages. Fine. But they didn't stop. They kept on going. And so you had three extra years of extraordinary Fed policy buying securities in the market. And it totally distorted the U.S. financial system. It caused U.S. banks to grow by almost 30% in three years. That's not normal. So it's experimentation on the U.S. economy by the Fed that I think is dangerous. I really do. We need a conservative Fed chairman. I hope Kevin Warsh gets it. I really do. So you take the stance that having the Federal Reserve is fine because there's some I follow a lot of people in the Austrian economic space that want to end the Fed. But I think that's maybe an easy thing to say, but it could have ripple effects that aren't so good. But so you're a layer of leverage. Look at it this way. When we had free banking and all the little state charter banks in the country had to keep X amount of gold in their vault, and then they could issue debt, which people used as money for day to day. Right. Unfortunately, that didn't grow fast enough. It wasn't big enough for the country. The same way the big dollar is now the world's currency. There's no other country that wants to do that, by the way. So before you were talking about the 30 year mortgage, why do we have a 30 year mortgage. Because we have Fanny Man. Fannie Mae gave banks the ability to sell mortgages to them so the banks didn't have to take the duration risk. You know, taking the risk of owning a mortgage for 30 years. You can't finance that over 30 years if you're a bank. You have to use short-term deposits to finance it. Remember the S&L crisis in the 80s. They all ended up upside down. They went out of business. So government does provide a collective solution to certain things. Does that violate the Constitution? Does that violate our individual rights? No, but it is a slippery slope. Because as soon as you create these things, our progressive friends in Washington who like to give away everybody's property to ingratiate themselves with voters, they find other things to do. And so, for example, today you've got a trillion and a half dollars worth of small, crappy, urban apartment buildings in New York and Chicago and Los Angeles. They're all financed by HUD and Fannie Mae and Freddie Mac. Okay? It's a big problem. You're going to be hearing about this in the next couple of years. It's going to be a mess. And so what's happened is that consumers couldn't afford to see rent go up, right? Their incomes have been flat. Nobody talked about landlords during COVID, remember? Nobody was paying these people. They didn't get paid for two years. Do you think a single politician said thank you to them? Or said thank you to the mortgage industry for doing all that forbearance? They weren't paid for that either, by the way. But nobody in Congress thinks about these things because they're pretty clueless. So, you know, what I'm trying to say is that as a country, there are certain things we do need to do on a national basis. Having a national market for 30-year mortgages is a good thing. Because if you didn't have government support for it, guess what? We go back to seven-year balloons, which is what my grandmother had. And she lost her home in the Great Depression. Because at the end of the seven years, you had to pay off the house. Yeah, yeah. And you know... It was almost impossible to get a mortgage in those days. I don't think people realize I did a biography of Stan Middleman, the founder of Freedom Mortgage, last year. He had trouble getting a mortgage in the late 90s. He had to go to a bank and wait for like a year. And when he got his mortgage, there was one mortgage underwritten by the bank that whole month. So in a way, you're saying, hey, the Federal Reserve, there's issues, but it also unlocks a ton of wealth that we don't appreciate that we have. And talk to me about why no one else wants to be the reserve currency of the world, because you hear things about other countries potentially, like if America loses that, we were. I don't know your thoughts if we ever lose the reserve currency of the world. I'd love to hear your thoughts on that. And then also Bitcoin and gold. Do you think Bitcoin or some type of cryptocurrency is going to replace U.S. dollar? Well, let's start with that. The answer is no. Cryptocurrencies are a polite form of fraud. It's like playing poker. Do I think the federal government should regulate it or endorse stablecoins, whatever that is? Now, the first cryptocurrency was the dollar. I wrote a piece for The Reckoning about this last week. And the difference is that people trust a currency because they trust the system that sponsors the currency. People don't trust coin for much of anything except speculation. I was sitting next to a lady on the train yesterday who was speculating on Bitcoin. God bless her, all right? She's done very well. But the point is, is that it's not investing. It's just a game. And I think that gold, frankly, is going to become a more significant reserve asset in the future. So if you want to play with coin, that's fine. Don't play with the rent money. But you know, keep it in proportion. It's like trading for an exchange. My favorite Bitcoin guys, by the way, were all either poker players or commodities traders. That's the MO. And they've done well. But the thing is, is it The global system with the dollar as the center is very expensive for Americans. There was a guy named Triffin, Triffin's Dilemma, and he used to worry that we'd have to run big external deficits if we were the reserve currency. Now we find out there's another dimension to this, which is that we have to run very high inflation internally. It costs our citizens a lot. The big problem, though, going back to your earlier question, though, about the dollar and all this stuff is Congress and the deficits. If you have a fiat currency, that's issued by the Federal Reserve System, right? You can't have a lot of debt on top of it. That's the stupidity that America has indulged in for the past 50 years. And that's ultimately going to stop. So if there's anything that's going to force people out of the dollar, it's that excessive debt. But let me say this. Nations of the world will use our currency as a global means of exchange until the very end because they don't have to pay for it. They can use it for financing. and they can immediately swap the proceeds of a financing into another currency. Pretty cool. The Chinese use our currency extensively for that. In fact, the offshore market in dollars is vast. Because, let's face it, China, Europe, Japan, could any of these markets take over for the dollar tomorrow? No. They're not big enough. You can't deliver oil in yen. You know, yen is probably the next after the dollar, to be fair. But they don't want to increase the size of their currency to accommodate that because they would import all of the inflation. So talk to me about inflation and the debt. Are you saying that the U.S. debt and our unfunded liabilities, is that one of the biggest problems you see in the future? Yes, because it requires inflation. When you see the banking system double in 15 years after 2008, what that's telling you is that the Fed's actions in the market where they buy securities, what does that do? That makes bank deposits go up a lot. And they haven't been willing to really squeeze. Even this rate hike since 2021, they haven't squeezed that hard. They didn't make home prices go back down, did they? Yeah. But, you know, the Fed caused home prices to go up 50, 60 percent in four or five years. That's crazy. And yet that was the action that they felt that they had to take during COVID, partly because the treasury market fell apart in March of 2020. It just did not function for like three weeks. I remember this because my lenders hedged in the treasury market. And that was a difficult period. It's interesting because you're making some points that a lot of Bitcoin people make, but you're anti-Bitcoin, I believe, and pro-gold. So you would be in the camp of... a hedge against inflation put into precious metals. And why not Bitcoin? I mean, it seems like all institutions, including Trump, is pro cryptocurrency. It's a speculative fad. See, I'm a member of FINRA. I can't touch coins without becoming a problem. If I even trade coins, I become a compliance problem and I got to spend God knows how much time talking about it. Now, I'm not talking about onshore ETFs and other products that are exclusively onshore and are traded on an exchange. If you want to play with the Bitcoin ETF, okay. But the problem is that when you start trading actual coins and you start interacting with people who are offshore and you don't know who they are, automatically, even though you don't know it, you have a KYC and an AML problem. And if you do enough business with the wrong people... The folks from FinCEN are going to knock on your door. So what I always tell my readers is you want to play with coin and other types of instruments like that, stay on shore. Because if you live in the United States, you don't want to mess with that. I have friends who are offshore. I have friends in Lebanon who use Bitcoin as money. I mean, they don't have a country, right? So how do you pay for stuff in Lebanon? You pay with Bitcoin. They will hand people the numbers. But part of the pitch for Bitcoin is... It's inflation. It's a hedge against inflation because they're not it's not necessarily printing more coins. And it's way more transparent and efficient than gold. What's the argument for gold over Bitcoin? Gold is real intangible. Bitcoin is notional. What I have with Bitcoin is I have the opportunity to find a greater fool. That's the option I hold. OK, I mean, I traded options for years. So if I really decompose it down, you know, that's all I've got. I might as well, I would prefer to go play dice in Las Vegas. You want to have some fun? Would you be down to debating any cryptocurrency? Yeah, I would love to set that up because I'm here wanting to learn. I totally respect your angle, but I also, I have a lot of respect for my friends on the Bitcoin space. And I think it would be a fun dialogue to hash that out. It is, but remember, countries are trusted not because of... you know, who issues the currency. We're done with that. That was free banking. Crypto is kind of like returning to free banking, except we don't have a bank. But, you know, to me, the real issue is what can I use to do basic transactions, buy groceries, buy real estate? Now, some people have tried to work coin into it. I follow a lot of companies that trade coin. I write about coin, for example, just joined the S&P 500. But would I rather own Discover Financial or coin? I'd rather undiscover financial. It was just acquired by Capital One, unfortunately. We publish an index on the top 100 banks, so I have a pretty developed opinion of most of them. You said that you would like the Fed chair to be more conservative. What do you think the Fed should do right now? Less. If you could snap your fingers, what does less mean? Like lower interest rates or just less? No, I think they should focus on monetary policy. And when a fiscal crisis rears its ugly head, they should turn to Congress and say, hey, this isn't our table. You've got to fix this. They're far too willing to jump in and be creative. I don't want them to be creative. Trump wants interest rates down, but if you were the Federal Reserve, you'd just keep interest rates where they're at? We could definitely drop short-term rates down to four, maybe three and a half. But ultimately, what I'm worried about is long-term rates. If the Fed were to drop Fed funds, target a quarter or half a point in the next year, if long-term rates go up because they're concerned about the deficit, then we know we've gone back to normal. Because since 2008, all of these markets were correlated. Yeah. They would, you know, they would intervene, stocks would go up, bond prices would go up, rates would go down. If that is no longer the case, then we get into a different world. And that's a world where people are going to be more focused on the deficit, on whether or not Congress is doing the right thing. Because if not, long term rates will go up. And that's bad for a lot of reasons. What I would tell you about Trump is this, he's got to stop baiting Jerome Powell. And I'll tell you why I wrote about this in the blog today. Powell's term as governor goes through 2028. His term as chairman is up next year. Now, if he really wants to thwart Donald Trump, he can just stay on the board through 2028. He doesn't have to leave, and I'll tell you why I think this is going to happen. If you piss off governors, I don't care if they're Republicans or Democrats, they will defend the institution. Even Mickey Bowman, okay? So Trump ought to just leave this alone. Work on the budget deficit, see if you can get some returns by getting rates down. And Scott Besson has talked about this. He said long-term rates are my problem. Short-term rates are the Fed's problem. Because ultimately you want to see Powell retire next year, maybe nominate somebody like a Warsh or another conservative who can reduce the tendency for mission drift that the Fed has shown over the last decade and more, especially open market operations. That's got to stop. If the budget deficit is out of hand, fine. We have to pay the political price. But when the Fed bails out Joe Biden by coming in and buying a lot of securities, that's political. And we don't want to see our Fed playing politics because then independence becomes a ridiculous conversation. I would say we're already there now. The Fed cannot be independent when the Treasury has got $37 trillion in debt, right? The Fed is the banker for the Treasury at the end of the day. What is your thoughts when people say that, you know, our interest rates are high and we have to we we have to pay those interest rates on our national debt. And so lowering interest rates help. Like, what's the what's the logic there from a standpoint of lower interest rates that actually help the U.S. government manage their debt? We did that during World War Two and then the Fed regained their independence in 1951. Again, that was when Mayor Echols said no to Harry Truman. Truman appointed another governor as chairman, Tom McCabe, and Echols stayed on the board just so Truman could nominate another governor. I don't think that's required now. We can deal with the budget deficit if we get a little more serious about it. I don't think rates are terribly high. I think they were too low during COVID. That was the problem. We're not that much above where mortgages were trading right before COVID in 2018, 2019. if they had a six handle low six instead of a low seven. I think that would be better. But you're only going to get that if you make progress on the deficit. Yeah, I got you. That's the 10 year treasury, by the way. That's how you price that. Yeah, I got two more questions for you. Before we wrap this up. Number one, if you were if you're Donald Trump, or had the influence of the president or in his ear, what would you what would you be doing? And why? I would tell him to start using the existing treasury debt, especially the low coupon stuff. that trades at a sharp discount. It's a fiscal currency. In other words, investors should be able to go buy those Fannie Mae twos and one and a halves. I have a three, by the way, and use them to pay their taxes or pay tariffs at par. Why do you do that? You save the interest expense for the Treasury and you reduce the debt. Scott Besson's been trying to buy back little bits of it to make the market more liquid because dealers don't want to hold a and he made one and a half. They're losing four points on the funding. So I think reforming and kind of reducing the damage that the Fed did during 2020-21 in the bond market would be a big priority for me. Okay. And then last question, when it comes to predictions, a lot of people watch this, a lot of entrepreneurs, investors, not that you can give investment advice, but what are some of your predictions? I'm a fully qualified investment banker. And give us your investment advice. And predictions on how we can maximize our returns and what we should be looking out for over this next year. Well, I'll tell you what I do. I often publish my portfolio for my readers. I have one large portfolio that is bank preferreds and then some interesting things like NVIDIA and AMD. I covered the semiconductor industry years ago, so I'm comfortable with financials. I've done very well on some other mainstream things, you know, in the energy sector. But I do think that you have to stay long gold. The US Congress is not about to embrace fiscal sobriety anytime soon. If you want to trade coins and things like that, that's fine. I macro trade dollars. I will go long and short dollars. And I also follow, obviously, the S&P. So when we got oversold, what did I do? I bought American Express, which is one of the best performing banks in my index. And I loaded up on spoofs and we did very well. But that's a trade. It's not something you're going to just leave and forget. follow that every day So I would tell people, do what you're comfortable with. If you're not comfortable looking at your positions three, four, five times a day, then you've got to pick a different strategy that's a little less volatile. But you're long S&P if people are putting their money. Okay. Well, you've got to because the system is governed by inflation. So when you see stocks sell off, when you see my banks sell off 30, 40% from the highs last year, You know they're going to bounce because the managers are going to run back in. You know, I'll never forget when that company Square first came out, the little credit card issuer. My God, it was dead for a couple of years. And then all of a sudden, the equity managers discovered it. Boom. Next thing you know, they were 40% of the stock, and that alone drove it up. So you have to be cognizant, not just of the fundamentals of the companies you follow, and I do my own work, but you have to say to yourself, what's the crowd doing? Because a lot of the fintechs I follow that were hot three and four years ago, they're, you know, bumpkins today. Nothing. Lending clubs, SoFi. And SoFi is actually a bank now. They were one of my better performing banks. But they're in the middle of the group with, you know, the fintechs right now. I love it. Maybe we'll have you back on. I would love to learn more about fintechs. I want to be respectful of our time. Chris, thank you. What's the best way for my audience to support you, follow what you're up to, and get your book? Well, get the book online. I would recommend Barnes & Noble. They've been doing the best on fulfillment. I published the Institutional Risk Analyst, which is my primary newsletter. I also have a premium service there, which gets very specific on some of my ideas. I write a column for National Mortgage News if you're interested in housing, and I'm very active on X and LinkedIn under R.C. Whalen, W-H-A-L-E-N. Look forward to your comments. Chris, thank you.
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