The Final Phase of the Debt Supercycle | Edward Chancellor

What's up, everybody? My name is Demitri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world.

What you're about to hear is the seventh episode in a podcast series hosted by me and my co-host, Grant Williams, titled The Hundred Year Pivot. In it, we speak with some of the smartest and most plugged-in people we know to help position ourselves, our organizations, our families, and our portfolios for the once-in-a-century economic, political, and geopolitical reordering that we believe is currently underway.

In today's conversation, Grant and I speak with financial historian and award-winning journalist Edward Chancellor. Edward is the author of *Devil Take the Hindmost*, a famous book about the history of financial speculation, and is currently a columnist for Reuters Breaking Views and a contributor to many other publications, including *The Wall Street Journal*, *Money Week*, *New York Review of Books*, and *The Financial Times*.

In this wide-ranging conversation, Eddie shares his perspective on how interest rates, monetary policy, and speculative excesses have shaped our modern economies by providing an insightful narrative that traces the evolution of money and finance from the period of the classical gold standard to the rise of free-floating fiat currencies. We also explore the concept of a debt supercycle, the potential consequences that may arise from a generational reset, such as increased financial repression, capital controls, currency crises, and geopolitical and social turmoil, as the debt cycle reaches its climax.

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If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, which includes Q&A calls with guests, access to special research and analysis, in-person events, and dinners, you can also do that on our subscriber page. And if you still have questions, feel free to send an email to info@hiddenforces.io, and I or someone from our team will get right back to you.

Lastly, because this conversation deals with investing, nothing we say on this podcast can or should be viewed as financial advice. All opinions expressed by me and my guests are solely our own opinions and should not be relied upon as the basis for financial decisions. And with that, please enjoy yet another thought-provoking and deeply reflective conversation with our guest, Edward Chancellor.

Welcome, everybody, to another edition of The One Hundred Year Pivot. We're back, and when I say "we," I'm joined, of course, by my co-host, the fantastic Demitri Kofinas. Hello, my friend. How are you?

I'm doing fantastic. How are you, Grant?

I'm very, very well. We've both been away, you to Italy, and me to your homeland of Greece.

Oh, that's right. You were in Greece, you were in—I was in Greece. Where were you in Greece? Are you able to share that with us?

Up in the northern part of Greece. Northern part. Skopelos and Skiathos, and—

Oh, right. The Sporades Island chain. Beautiful. Absolutely beautiful.

I went on a sailing trip on those islands once, back when I was actually willing to be involved in the actual process of sailing. I'm no longer interested in going on a vacation that requires me to do any work, but it was me and seven other friends, and we did the whole chain from Skiathos to Skopelos to Alonnisos, and then we went to the fourth barren island. It sounds so much better when you say it. There was a fourth barren island that we moored off of, and we found a fisherman who sold us some lobsters.

Was that Panagia? Was that what it was called?

I don't remember it being called that. I remember it being called, I think we called it like Hedgehog Island or something. I think that, but I'll have to go back and look.

Well, I was on a boat too, a friend's boat, and it's just magnificent. It's just a beautiful country, mate, it's just lovely. Alonnisos is beautiful, and it has a beautiful old city at the top. An old town. Did you go up to the old town?

No, we didn't go up. It's enchanting. No, we just sailed the whole time. It was sailing around, we moored. It was beautiful, it was absolutely beautiful.

But hey, we're back, and we're both back to work now. And the one thing about having time like that is you just keep thinking about all the things that you've thought about but haven't had time to really sit and think about, because there's always something else you need to do. And so, having the week that I had to just decompress and sit on the boat and talk and think, it was just magnificent. And a lot of the conversations that we've had in this series, it's just still rattling around my head, and I feel like we're about to have another one, just when I emptied some of it out. I've cleared space for our guest, Eddie Chancellor, to fill, no doubt.

Absolutely. When I went the "heterodox"—it's such an ugly word, heterodox—but when I basically went off the reservation in economics after I got my bachelor's degree in the early 2000s, there were certain people that I discovered early on in that journey. Jim Grant was one of them, and Eddie, also an economic and financial historian, is an example of another one of these intellectual giants whose works had a huge influence on me at a time when I was just beginning to question the basic tenets of standard economic theory as it had been taught to me in university.

So, it will be very exciting and interesting to get his perspective as a historian and a lifelong student of political economy on some of the themes that we've been exploring on The One Hundred Year Pivot. *Devil Take the Hindmost* is not only a terrific book, and anyone that's listening to this that hasn't read that, I would strongly encourage you to read it, particularly now, but it had a profound effect on me the first time I read that book. And I've read it two or three times since, and each time it's just such a fascinating set of studies. So I would encourage people to read that.

And I keep coming back to what Eddie writes about. He's written about financial speculation. In his most recent book, *The Price of Time*, he wrote about this history of interest rates. And I believe strongly that they say money is the root of all evil, and I think money is the root of all these problems, and corrupting money by making it too cheap for too long. I think a big part of this 100-year pivot we're talking about is that working its way through the system. It's this idea that you can't corrupt these things forever, and along with working out the societal pressures, the pressure that's built up in the world of money is a big part of that. So I'm looking forward to having the chance to talk to Eddie about that. So, let's do it. Let's get him on.

Eddie, welcome to The One Hundred Year Pivot. Thank you so much for doing this. It's been taking us a while to get this organized with some missed emails and all kinds of stuff, but we're both delighted you could join us.

Thank you. I'm pleased to be with you, nice to see you again.

This podcast Demetri and I started, it's a very random journey. It was really begun because we just had this feeling that things were changing, and there was an awful lot of stuff going on that we didn't really understand. And so, we thought we'd speak to as many people as we could that could give us all kinds of different, maybe, vectors to come at this change from. And of course, right at the center of it all, particularly from where we start and work our way outwards, is money and interest rates and time and prices. And we both thought, who better to speak to than the man that wrote the book, *The Price of Time*? There's no better way to do that.

So, just to start things off, if we can, I'd love to get a sense from you. We're calling the show The One Hundred Year Pivot. The last 100 years of interest rates have been a very particular era, particularly the last half of that century. And it's a very broad question, but I wonder if you could give us an overview of that, interest rates and the price of money over this last 100-year period that we're talking about.

I can try. And I think the first thing I would say is, this is not quite 100 years ago, but almost 100 years ago, society started making this shift from a gold-based currency system to a fiat-based monetary system. And why, you can say it happened. Obviously, you had the German hyperinflation of the early 1920s. So, and as you know, it happens in fits and starts, the shift from a metallic-based money to paper-based money. And why that's important from the perspective of interest rates, is that when you have a metallic-based money, the amount of money is, by definition, limited. And so, to some extent, finance is complicated because you've always got banks making loans out of nothing, but to some extent, there is a limit on where interest rates can go. They can't go very high, and historically, they never went very low under a metallic-based monetary system.

Now, what's interesting in the last 100 years, as I'm sure you're aware, is we have had higher highs in interest rates and we've had lower lows in interest rates. And it seems to me pretty obvious that that would not and could not have happened in a world in which the money stock was defined, if what was defined and limited. And think of it this way, it's—I think I end my book, *The Price of Time*, citing the Cambridge economist, Dennis Robertson. And he's talking about, I can't quite remember what, you need a price, let's say for a packet of matches, and that will coordinate the supply and demand. He says, just like you need a price for some ordinary good, you need a price of interest in order to coordinate the supply and demand of savings. But once you move this into a fiat world, everything in a way is hyper-real. So there are no limitations. So then, first of all, as you're well aware, you have a capacity for high inflation, and for very, very high, and for hyperinflation. So what you see at those times, say Germany in the '20s, and I know the case in Argentina and I think Brazil, probably a couple of other Latin American countries, where you get interest rates going up, tracking the inflation up into the thousands of percentage points a year. And even then, at such times, the interest rates tend to be, let's say, loose compared to the inflation rate and the money printing. But so you see, you had that capacity for interest rates to go very high. And then what we saw more recently was the capacity for interest rates to go to extremely low levels.

So it's true, during the Second World War, the US Treasury and the Fed together coordinated interest rates. They fixed the 10-year yield, and I think the short-term rate, that Treasury note rate, was fixed at about 75 basis points or something like that. But anyhow, you can see that, and we had low interest rates during the war. We then moved to the highest rates under Volcker in US history, and then we moved to a zero rate. And more interesting, I suppose from a historian's perspective, is that we then also moved to negative rates. And given the thrust of my argument in the book was that interest serves all these important functions, and that it puts a price on time, and all economic and financial activities take place over time, that human beings are by nature impatient, i.e., they have positive time preference. Well, if you put a negative rate, you're actually reversing everything. It's really, to my mind, the most unnatural thing you can do in finance, except for perhaps MicroStrategy, leveraged exchange-traded notes on MicroStrategy stock. Anyway, look, as we know, there's a lot of weird stuff going around still, but that negative rate after five millennia of positive rates was, to my mind, the most extraordinary thing we'd ever seen.

Eddie, I have a question. When did the material distortions on the price of credit begin? Was it the breakdown of Bretton Woods, or was it maybe something closer to the admission of China into the WTO beginning in the 21st century, or something around that time? When would you really point to as the start of the distortions that have led us to where we are today?

First of all, if one was going back historically, remember my book had a chapter on John Law and how John Law fiddled the interest rate in France in 1719, controlling the central bank, absorbing the debt. There's the first example in which you have a central bank, a person who, at least wearing the cap of a central bank and along with a few other caps, you see the first time, whereas in a fiat money system, because Law introduces paper currency, of a manipulation of an interest rate generated from paper money, and that's associated, as you know, with the Mississippi bubble. So. And then you could say, go through the 1920s, the US was officially on what people call the gold standard, but it was actually technically a gold exchange standard. And there were all sorts of problems with the flow of gold around the world at times. And I argue, not originally, but I belong to the camp, that even in the 1920s, where you had, by our standards, relatively high rates, the rates look as if they were too low relative to the productivity at the time. And therefore, that played a role in contributing to the great boom on Wall Street.

So, the Bretton Woods period, roughly 1944 to '71, that's a period in which, again, the hybrid monetary system, part gold, part money, but it actually, with capital controls, we see relatively few speculative bubbles in that period. You get a lot of speculative excess as Bretton Woods is breaking down in the '60s. We see electronics booms and go-go markets in the late '60s, but by and large, relatively free of speculation. And then, if we just ignore the '70s and '80s, you get into the '90s, and then it is really a matter of taste as to when you choose your beginning point for this cycle of speculation that we've been on. In fact, actually, you somewhat date it back to the Fed's intervention after the October '87 crash. Others point to the fact that the Fed in the early '90s, after the savings and loan crisis and the recession, and the banks at the time were in a great deal of trouble. I think Citibank was having quite significant solvency issues, and the Fed manipulated, if you will, call it that, a positive yield curve. And you had a very steep yield curve, which was very profitable for bailing out the banks, very profitable for the hedge fund guys like Soros, and I can't remember, I think Julian Robertson, and there was a guy, he was called Michael Steinhardt at the time. Steinhardt. So, there was a lot of carry trading speculation that goes on into the '94, where you get the bond market crash and you get the Mexican crisis. And then you get a response to that, and then you go on into the LTCM, which is, what, late August, September '98.

Grant, do you know a fellow called Doug Noland?

I know Doug. I was actually talking to Doug earlier this week, actually, and we were just talking about it. Doug's fixated, or was fixated, on how the government-sponsored enterprises were expanding their balance sheets, acting like mini unauthorized central banks in the 1990s. And I remember Doug writing right back in '98, he talked about he had a note he put out called *A Coin in the Fuse Box*, and he argued that Alan Greenspan had stuck a coin in the fuse box. So the system wasn't tripping as it ought to be, but it was just heating up.

The way I see it since then, is we've just had these successions of speculative booms underpinned by central bank support and monetary policy. And whether you go from, as I say, LTCM to the dot-com bubble, then post-dot-com bubble, you get your 1% interest rates in 2002, and you start inflating both US real estate and the mortgage credit boom. And then you move through the GFC into the era of zero rates and quantitative easings. So there is this old nursery rhyme that we used to learn—I don't know if people learn it anymore—about a little old lady who swallowed a fly, and it goes, "She swallowed a fly, I don't know why it wriggles and tickles inside her." And then she swallows a spider to catch the fly, and that also wriggles and tickles inside her. So then she swallows a bird to catch the spider. And then the cat. And then she swallows a goat, and then eventually she swallows a horse to catch the goat, and it suddenly, abruptly ends. She's dead, of course. And in a way, I see the progression of what's happened over, let's call it the last 30 years, as a progression from one extreme speculative excess to another, and that held through to late '21.

Then we had the interest rates rise, and you saw—and that's probably roughly at the time you and I last spoke when that book came out in summer of '22, and likewise with Demetri. But then you got a big sell-off in the equity market and a huge sell-off in the bond markets, and all the SPACs went down 90%. And then over the last three years, I've been trying to keep track of what's been happening in terms of higher interest rates that fed through into the system and what consequences they've had. And you see them all over the place. For instance, take renewable energy. I don't know if you're aware, the renewable energy index is down, well, when I last looked, about 75%, but I think, depending on which index, there is a clean energy index which was down about 80%. And there are clear examples where you have things like wind turbines and solar farms with huge upfront costs, where they appear to look viable in the period of ultra-low rates, and then unviable when interest rates rise, or in technical language they use in the energy world, the levelized costs of these things goes through the roof when interest rates rise. And then there was, *The Wall Street Journal* I think had a piece last week about the bottom falling out of trophy art; you can see the consequence. And more obviously, commercial real estate, and many weak—apart from the US, residential housing being weirdly strong—many other parts of the world, very weak residential housing markets.

But I mentioned all that just as a prefix to saying, well, the speculative boom that then came out around AI and how that inflated, and how Bitcoin that had been crushed in '21 came back, and then new joke, MicroStrategy, and so forth, came on the scene. This is a bit anomalous to what you've seen historically. Normally, you'd see a nice, clean break. Think back to the dot-com bust; things started to blow in roughly April 2000. It took a while for that to feed through into the big tech stocks, but basically by the autumn of 2000, it was pretty clear the thing was over. And I remember describing, because I'd written, as you know, that history of financial speculation, *Devil Take the Hindmost*. And I remember saying to my editor, analyzing what was going on then was a bit like shooting fish in a barrel. It was so easy because if you knew the narrative, it was pretty predictable. I think what's going on now is, we're not really there, the fish aren't really in a barrel any longer, they're—I don't know what they're in—they're in the ocean. It's a bit more surprising, it's a bit curious. And I still think that my essential take of moving from one bubble to another and the bubbles getting bigger, and those having to be underpinned with a monetary response, I still think that analysis holds. Although, if you'd said to me three years ago the Fed's going to jack up rates and we're going to get super speculative excesses, I would probably not, but that's what we've seen.

When I look back on that period of on and off the gold standard that you talked about at the beginning of this period, it seems to me from my reading that the basis, the foundation upon which everything was built, was the gold standard. So periodically they would go off it, which made it much easier to go back to it, because that was the status quo that everyone was used to. And the anomalous periods were when we went off to any metallic or bi-metallic standard. We've obviously had an extended period now, a lifetime for many people, where we've had a purely fiat system. And so that becomes the norm, that becomes the status quo. And so, any concept of returning to any metallic standard involving gold, silver, platinum, or any combination of the three, seems completely unworkable, unthinkable for people. Except when you look at the length of this particular cycle, the advantages that a purely fiat system bestows upon elected officials is very much a feature as opposed to a bug, because it does allow them to borrow and spend. It doesn't allow them to promise and pay for stuff, and it has allowed central bankers to prop everything up. But it feels to me as though over this extended period of time, once you reach the point where the feature is no longer a feature, it does become a bug. There's no real way back from that without some pain being inflicted somewhere in the system.

I agree that you don't get out of this situation without pain. Actually, I wrote a column yesterday, which goes out from Reuters Breaking Views tomorrow, where I was looking at this whole issue of the debt supercycle. And I used to have a column in the *FT*, and I did look at the last time I addressed the debt supercycle, I think it was back in 2011, wrote a piece about it. And Ray Dalio has got a book out called *How Countries Go Bust: The Big Cycle*. Anyway, it's basically—I don't know whether it's taken from it, his previous book, which I didn't actually see. But it's a pretty conventional look in its way of what long debt cycles or supercycles look like and when they come to an end. And actually, although Dalio is not a good writer and it's incredibly repetitive and so forth, there's another of the argument, which is that based on Bridgewater's study of historic debt booms, is that debt booms, you can't pile on debt ad infinitum to start with. And secondly, the countries that are arriving at the end of their big cycle or their supercycle, if you want to call it that, they have a certain number of common features such as, well, obviously start with record levels of total debt, large fiscal deficits, they tend to have current account deficits. So you have these twin deficits, they tend to have rising debt service ratios relative to the government income, and they tend to have short maturity on their borrowings. And I was just looking at my piece throughout Britain, the US, and France, and really, all those countries tick those boxes. So I would think if we accept that debt can't carry on rising further, that we are getting pretty close, let's say, to the end of the big debt cycle or supercycle.

And when you get to the end of it, again, the very conventional analysis or conclusions that Dalio puts forward, which any of us would have said, is that you can expect the central bank to monetize the problem sooner or later. And then, we'll have to see. You said there's an inevitability to the fiat money system, a fiat money system that has helped grow the role of government and in particular, as you know, these incredible growth of entitlements, so that the share of what they call discretionary spending in any of these government budgets gets smaller and smaller. I'm saying off the top of my head that in the States, I think it's, let's say, roughly about 25% of government spending is now deemed to be discretionary. So, I don't think that that can hold. I think that these systems in which build up both vast amounts of debt, in other words, bringing consumption forward from the future or giving people or providing, so to speak, assets to people. But assets that are not backed with anything because those government bonds, as you know, in theory, their value comes from the future government surpluses discounted to a net present value, which, well, there aren't any. Everyone knows the whole thing is a sham, and the whole thing, it is just a Ponzi scheme, and there really is a Ponzi scheme towards the end of your debt cycle because the borrowing, an increasing amount of borrowing, is just going towards the debt servicing.

And this is, as mentioned, there are certain things that we have seen since interest rates rose that would have fitted very much into my framework of, these are the problems caused by the ultra-low rates, and this is the thing you might expect. But again, what I wouldn't have expected, and I'm sure none of us expected, is that these governments five years after the lockdowns, would be running these deficits of five to 7%, five to 6% in the UK and France, 7% roughly in the States. So there's almost a societal imperative to move inexorably towards the bust. For instance, the Office for Budget Responsibility, which is the UK's fiscal watchdog, they commented, I think in a report out a couple of months ago, they said there seems to be the public's expectation of what the government can do for them and how it can bail them out or face existing and new risks appears to be growing. Obviously that was the case during lockdown, and in my view all along, was that this lockdown just would not, could not have happened because it was so staggeringly expensive and so staggeringly disproportionate to the actual risks that could be analyzed. It could only have happened with this very cheap government funding. So for instance, the British government was in effect borrowing from the Bank of England, with the Bank of England roughly pound for pound, the Bank of England buying gilts equivalent to the British government's deficit. The British government was in effect paying 10 basis points. Well, if you borrow 10 basis points and you have a political class whose time horizon is extremely limited and is fixated on its opinion polling, well, of course they're going to borrow a lot. Again, what I found weird and I don't really understand is, since interest rates have reset or normalized, why this binge continues because, as I say, it accelerates, it brings you closer and closer to the end of the cycle.

And what I was thinking about when I was writing my pieces, that this is not really just purely a financial issue, this is actually also cultural. Now society is, as everyone says, very polarized. You have, and there's again, partly it's a consequence of our incredibly financialized system as you've had the incredible growing inequality. And so, what I think is happening really is that you've got a mass of people out there with no real stake in the system who haven't actually got a huge amount of assets or rubber sheet jobs. Of course they want the government to finance them. And then frankly, I didn't suppose they give a damn, quite rightly, they don't give a damn if the bond markets blow up or if the government finances blow up, which as I said, I think they must be on course to do. It's pretty negative, but when one thinks about it, that looks to be where we're going.

I have a lot of questions that derive from what you said, but just to clarify something, what does it look like? I was going to ask you, what does Ray Dalio suggest it looks like when a country goes broke? But maybe it would just be better to ask you. What is your conception of what that means?

The three countries I mentioned, Britain, France, and America, they all have negative net international investment positions. They all run current account deficits, they have pretty lousy savings rates, and foreigners have a big position in their bond markets. And what happens is the foreigners give up, and then the foreigners give up, and then you get into... It's obviously different. The Euro crisis is obviously different in the sense that countries like Greece had given up their control over their currencies. But what you saw playing out in Greece was again, a reversal of foreign capital flows. And in the case of Greece, had it had a currency, an independent currency, obviously the currency would have collapsed, and you would have got high inflation, but stuck in the Euro, so it had a deflationary bust. I think probably these countries that issue their own currencies and control their own central banks, their currencies will be chronically weak. They'll be run, their bonds will sell off, the currencies will sell off. And then you have to see what happens, whether you get then the central bank, as I say, almost certainly comes in, buys bonds, carries on funding the government. As you know, inflation, it's as much psychological as anything else. Once again, what's quite interesting in the history of the German hyperinflation is that you can see that when they changed the monetary system in, was it, November or October '23, the inflation came to a halt overnight, even though the money supply was technically increasing. So in other words, it is to some extent all in the mind. So, it really depends on how people respond to it. But then you have to anticipate what the government's going to do. And one point Dalio does make, which I think people probably have to wake up to, is that up until the 1980s, capital controls were a very common feature of big government busts. And in fact, as you know, in the Euro crisis, what, you had capital controls prior to the Euro crisis in Iceland. Then you had it in Greece and in Cyprus. And that's going to be pretty hellish for people's asset allocation and investment if they impose capital controls. But it may be that that may be the only way forward.

I don't know whether you've had Russell Napier on your program. I'm sure you've spoken to him. Demetri, you and I did a thing with Russell, didn't we? In two, three years?

We've all done it. Yes, we did one with Russell and Helen Thompson, but we did one with Grant recently as well.

Russell is the standard-bearer for financial repression, but financial repression, it normally requires capital controls. Because otherwise, I've got, and you probably, we've all got these FinTech apps on our thing. I can move money into any currency I want at the drop of a hat, and using, I got Wise or whatever. And so, you can't financially repress me unless you somehow stop me, force me to keep my deposits in your country. So I think when the upshot happens, then that's one probably quite likely outcome. Oh, can I just say one other thing? This is a point that Dalio makes, and I think it is again fair enough, is that as you move through the cycles, the course of the long cycle is from sound money and relatively low debt, and relatively moderate interest rates. By definition, high levels of debt, but also to easier money, to weaker forms of money. And as the system resets, afterwards, you get a return to sound money. That's your little template of how it might happen. And in which case, Grant, to get back to your earlier point here, do you stick with this fiat currency, this paper currency, that it has been useful for smoothing business cycles for sure, but at the cost of huge distortion, economic and social and financial distortions? And my own view is, one shouldn't. And the question then would be, would there be a consensus when you go past the end of this current big cycle and with the denouement, would there be a consensus for a new monetary order with a sounder backing? And one can only hope, we just have to observe, and if we're still alive at the time, to chip in our pennies worth.

Feels like it almost has to go that way, ultimately, because at the end of the cycle, the impetus is not provided necessarily by this idea of gains anymore. It's a fear of losing. It's a fear of losing the purchasing power of what you have, you're losing your savings. And it's interesting, Eddie, because in your book, *The Price of Time*, and we've lived through this era of artificially very low interest rates. And what low interest rates do is they give you the opportunity to have a very low time preference. You are able to buy assets and fund them for a long, long time and take very long views and build capital the old-fashioned way. But what we've seen here with these very low rates has been exactly the opposite. It's been this prioritization of a very high time preference and have tried—

Can I just say one thing? Yes, please. But if those rates were set, so to speak, by the market, reflected the collective time preference of a society, in other words, a low rate being an indication of a very patient, thrifty, capital-accumulating people, such as the Dutch in the 17th or 18th century. That was a time where people thought that the low interest rate reflected the strength of a civilization, that the lower your rate was, the stronger your civilization was. And that's a comment by this fellow Eugen von Böhm-Bawerk, one of the luminaries of the Austrian school. Anyhow, go forward into our current era, and actually the ultra-low rates, as you are—

suggesting, they don't reflect. You have ultra-low rates that look as if people are patient, and then you look out and you've got people trading meme stocks or cryptos or the like, in other words, with very short time preferences. And you have a political class with incredibly short time preferences too. So, just for me, it's another aside, the interest rates really didn't reflect actually what was going on. We're completely corrupted or distorted.

I just want to propose that we might be thinking about this in a paradigm that may no longer hold in the future. So I don't expect, for example, the People's Bank of China and the Chinese Communist Party and the Chinese government to ever necessarily fall back on a hard-money standard. I think that that is obviously not a preferred way for a command-and-control state capitalist society to operate. And I just wonder whether or not we may be moving in a similar direction here in the US, and part of that I think could be driven by innovations happening in technology that allow governments to exercise more control over their populations.

Also, I think to me the really interesting and concerning scenario involves the political repercussions of the things that we're describing today. And certainly debasement of the US dollar would benefit, would help reduce the real value of the outstanding US government debt. But it would do little if nothing at all to alleviate the challenges facing the bottom 90% or 80% or whatever the percentages of the country that's been struggling, especially because we no longer live in this industrial economy where labor is a large input. And so, the reduction of the value of a country's currency makes them more competitive in the race to build up market share in the export driven economy.

So my question is, first to you Eddie and Grant, feel free to respond. What is the risk that maybe we could see a rise of left-wing populism in the US, and we don't necessarily fall back to a place where we have a revaluation of money, but rather, we just go deeper into the vortex of a more socialist command and control driven US economy, and that this also is the case for other developed countries that are facing similar challenges? I think that's a reasonable scenario. I think it would be blithe to assume that you are suddenly going to move from this distorted world to a libertarian paradise. That a million millets will bloom. It'd be a nice idea as far as I'm concerned, but I don't think it's in the bag. You see what's happening in the New York mayor's race. So, it could easily shift to a system in which it's very punitive against those who've accumulated anything or those who I can see that happening. And it's particularly clear in Europe, but it's pretty clear in the states, of the polarization of populists on both the left and the right attracting followings.

My hunch is that America is a bit closer to, there are more people who love freedom in the states and there are a few people who love freedom genuinely in Europe, which is a whole, one of the arguments for those of us who voted to lead the European Union, was a bureaucratic super state and we didn't particularly like that. But Europe has a strong bureaucratic side to it. Europe also has a strong tradition, the bureaucratic side of it, the academic side of it, of giving China a very easy ride. The natural bureaucrats love China, because they just see it as a Mandarin state in which you have a small number of officials who have complete control. So I could see one moving to Europe in particular, I could see, funny enough, getting closer to China and adopting more of these Chinese type controls and that would go into the currency. I don't think the Europeans are getting anywhere as far as I know with their own central bank digital currency. But as you know, in the case of China, and I think it really comes from Xi Jinping seeing what Alibaba and Tencent being able to do with their own monetary systems, their own private monetary systems. Xi realized that you could have a system in which you observe people and control the flow of money. And I think that to my mind, somewhat dystopian outcome is a possibility, I'd say.

One of the features of the Cold War was the ideological competition between the Soviet Union and the United States, based around the economic models. The Americans were promoters of free market capitalism and the Soviets were promoters of state-driven communism. It seems that there is something going on today that is somewhat similar, though it's not acknowledged, which is the competition between the Chinese state capitalist model, which is not the same, it is sufficiently different from the Soviet model. And then what we used to think of as American free market capitalism, but which has I think become a more corrupt form of capitalism today. So we don't quite know what we stand for and what is the alternative. And I wonder if we're also doing ourselves a disservice by not actually being more forceful and explicit about what we stand for.

But to your point, I do think your point about Americans loving freedom, I think it is encouraging to see the current Treasury Department and Scott Bessent and the Trump Administration throwing their weight behind stablecoins, because stablecoins are a furtherance of the decentralized dollar. There are furtherance of private sector issuance of dollars, and there's certainly not an endorsement of central bank digital currency. So my question is, is something similar happening today? Should we be more forceful in staking a claim in what we stand for? And do you see evidence actually in the policies of this administration that we may in fact be moving more towards a free market, an explicit embrace of the free market model within the new digital paradigm?

Yes, a complicated question. I want to just get back to this question of state control of economic activity, and you say China's state-directed capitalism is one model. And then you say that what we have had, and I would say this was partly furthered by these distorted corrupted interest rates, is you might call it, we have a sort rent-seekers capitalism fostered by the ultra-low rates, which I'd say private equity was part of. And that shift and move towards monopolies. You know that my friend Jonathan Tepper wrote a good book called The Myth of Capitalism, which is an analysis of how capitalism had been undermined by the shift towards oligopolies and monopolies, and then you of course got the tech monopolies. So, that's not the capitalism of Adam Smith.

And then the other thing I find very interesting and read quite a lot about, occasionally write about, is the whole net-zero thing, because the forced energy transition is really the most ambitious type of state direction and control that one could envisage, or at least that I can envisage, because all activity, all life requires the expenditure of energy, the use of energy. In Britain for instance, we have something called a Climate Change Committee, and they do these scenarios and make these suggestions that seem to have almost semi legal statutory authority saying this is what people must do, this is what people should do. And those of us who looked upon it a bit askance and say, well actually, we live in a hydrocarbon civilization, which everything is based on. And if you pull the rug out under people very quickly, then the civilization collapses. And the reason I mentioned that, is that clearly under the new administration in the US, they have clearly defined themselves against this encroachment of the state into forcing people off hydrocarbon energies, of selecting and subsidizing particular types of their favorite energies, whether it's so-called renewables or whether it's providing subsidies for electric vehicles or the like. And I think that is something clearly separating what the US are trying to do now, to what is happening in Europe, for instance. And in Europe, I mean you must be aware, what is it? A month or two ago, the entire Spanish electricity grid went down and taking down bits of Portugal and bits of France too, because of over dependence on unreliable renewables. The reason I'm mentioning this, is just that that whole net-zero area or the forced energy transition gave, to my mind, the greater scope for the bureaucrats to envisage and dictate what people would do. Now, and the fact that it couldn't conceivably have worked with the current technology and that individual countries attempting it achieved absolute nothing on their own, people have ignored. But I do think in that case, there is America is trying to do something different.

I don't quite know the current state of antitrust in America. Obviously, things did seem to have changed under Lina Khan at the FTC, if you will, a more robust antitrust policy. I didn't know where things go from that, but I would say that America is changing, whatever you think of President Trump. He is elected because a lot of people were dissatisfied with the system and a lot of changes are being put in place. I say particularly on the energy front. And Scott Bessent is a full, intelligent guy. I've met him a few times before he was Treasury Secretary. And these conversations that we're having is exactly his conversations you'd have with Scott, who'd be engaged with it. And none of the stuff we're talking about is at all foreign to Scott, let's say. He talked to the same people as we talk to and reads the same books as we read.

It's interesting, Eddie, because this podcast, we call it The One Hundred Year Pivot, because it feels like there's something very big happening. And Demetri's talked about America moving more towards a socialist model, and you've mentioned the word civilization collapses at the end of this thing, and that fits very much in with this feeling that Demetri and I both had, that there's something big moving. And I look at Scott Bessent and the Treasury role, and I've not met him. I have very good friends that know him quite well and they've all said great things about him. And to your point, they've echoed those sentiments about he understands all this, he's listening, and he's asking the right questions, and he's talking to the right people, which is encouraging. However, it feels to me as though the coincidence of this period of change, this shift, this reversal of a lot of things that have been going on over a long period of time, it's not coincidental that it's happened at the time the cost of money has gone up. And I feel like people reverse this. They think that, oh, the price of money's gone up because things are getting weirder. Personally, I think it's the other way around. I think the trigger for a lot of this is exactly what you've written about in your books, the fact that the cost of money is going up. And I look at Scott Bessent and I look at what people say about him and what you've just said about him. And yet, what I see is someone who seems largely trapped and isn't able to do the right thing based on everything he understands to be true, but is forced to do either the expedient thing or more possibly, the least damaging thing and just try and keep this thing together, whether he believes it's right or wrong, whether he believes it's the proper long-term thing to do. We're past that now. It feels as though we are in the triage state and the triage is going to go on until the patient dies. I don't know that the patient can be saved at this point, but perhaps palliative care is a better analogy than triage. I'm not sure. I wouldn't personally want to be US Treasury Secretary. It'd be nice on one's CV but I think it'd be an impossible job. And in particular, given that Trump has big spending proclivities and Bessent, I think he says one of the reasons he took the job is he doesn't want America to go bust. But whether he's actually succeeding in preventing America going bust is hard to say. And clearly, you read the newspapers and they say, well, on issues such as tariffs and this and that, Bessent would appear to be, so to speak the reality principle whispering in Trump's ear saying, "Would you really want to do that?" So, at least I would guess that he's doing more good than harm, even if he's not doing a huge amount of good.

By the way, on the subject of your 100 years, I read the Ray Dalio book, alongside a book, which I'd say was good in parts, you've probably come across Neil, is he called Neil Howe who does this? Neil Howe. And he has this idea of four generation cycles. And so they last roughly, I think roughly 88 years or 90 years. And Dalio's cycles, which didn't have any theory towards them, I just think he just measured the historical debt cycles. He talks about an eighty-year cycle, so in a way these long cycles and your 100 year flood, they're not so far off. And I do think, you said, "Well, you can't explain this apart from the interest rate creates some of these distortions that bring us to the end point." And sure, if interest is the cost of leverage or the cost of borrowing, well once they brought it down you were going to get more of it. But also, we live in a world that actually wanted the lower, there was a demand for it, there was a demand for something out of nothing. And now look, we obviously understand the demand for easy money on Wall Street, because if you have access to cheap funding, you can do things, you can make money, private equity and so on, or leveraged buybacks, you name it. But there seems to be more broadly a demand for government borrowing to fund welfare spending and transfers. So, you could say that actually because everything is complex and interactive, that the interest rates, the ultra low interest rates both distorted the society and the economy and the finance system, but the fact that they were brought so low also reflected some demands within the society. The easiest way of saying it, we used to talk about kicking the can, didn't we? I mean you were talking about earlier of people with very short time preferences or time horizons. In these ways, the ultra-low rates allowed consumption to be brought forward.

Now, I found this book on the so-called Fourth Turning, there's a lot of, to my mind, a bit of mumbo jumbo in it about different generations having different characteristics and those reflecting archetypes, blah, blah, blah. But just take your 90 to 100-year cycle and say, yes, society moves from a position of cohesion and responsibility. We might even call it rationality, to eventually breaking down. And I don't quite know why you have these 80 to 100-year cycles. But one of the things that one at least that I feel, say, strongly about, when we see things particularly over the last five years, is the incessant madness of the modern world. Whether it's in, I mentioned earlier, this absurd idea that you're going to give up hydrocarbon energy overnight or the gender stuff or the lockdown excesses, this and that. We live in a world that almost is striving to break its self down or society that is striving to break itself up. And I think that probably explains why the debt growth is so strong, because no one really wants to put a brake on it. And so from an investment perspective, when one analyzes it, and all of us like to analyze these things and then think, what does this mean from an investment perspective? And it means that people's wealth, what they think of as their wealth, a lot of it is not backed by anything. That we call government debt a risk-free asset, but if you look at different way, it's a pure risk asset. It's the riskiest asset you can have because it's something backed by absolute nothing, given that the governments can't produce fiscal surpluses, and that therefore is entirely dependent on people retaining confidence in it.

And then I think, go back. I watched your program on gold, which is interesting. I think that is very bullish, from a gold perspective. I think that one of the points Dalio has, it wouldn't surprise you, is that the end of debt super cycles on average, gold outperforms bonds by 71%. And obviously, in the case of... well, the German hyperinflation year might an outlier, but I think the entire national debt of Germany that let's say had been two or three times GDP, by the end of the hyperinflation, that all those issued bonds wouldn't have bought you a single gold coin. So in that sense, I think we moved into a world of fantasy, in which a lot of our wealth is fantastical and we will sooner or later... And we're already somewhere along the lines, but we are moving gradually to a world in which wealth will be more closely attached to things of, so to speak, real value. And that's something I've been hammering on for about three or four years. And again, go back to the hyperinflation in Germany, is that they had this thing called the flight into things of real value, "Der flug in die sach werten." And I think we are in the process of a flight, a very slow one, of a flight into real value. And I think if you try and explain, why has gold done so well when it is probably been running for about 15 months or something like that? That it would seem, one gets these things wrong and gold can move to any number of different things. I know central banks are buying it and you know this better than I do, but I'd guess that the strength of gold is telling you that it's a harbinger of breakdown. But one could be wrong because as you know, the gold bugs, they'll hold it when it's going up for completely the wrong reasons, and then they'll take a hit when it goes down. I don't know what you feel, but now it feels in my bones, like the movement in gold is relatively solid. Not that other metals might not be more attractive. And I'm also thinking from just an asset allocation perspective, if you look at the end of your 100-year cycles, if they end in crisis, you really probably want to have an asset allocation, which is roughly 50% gold, 50% equities. You don't want nominal assets, paper assets or nominal assets at such times. That's my thinking, anyhow.

I don't know if this will be a popular question with the audience, because I feel like maybe people will want to hear more about gold, but your comments about this longing for destruction, you didn't use the word longing. But earlier in your response, Eddie, you talked about how there seems to be this urge to tear things down. It reminded me of this conversation I had with Joshua Schrei is the host of this really beautiful podcast called The Emerald, where he goes on these very long poetic monologues. And he had one called, I think the title was, So You Want to Be a Sorcerer in the Age of Mythic Powers. And it was about artificial intelligence. And there was this point in the monologue where he said that there is, we long for annihilation. He actually had this interesting audio that he extracted from a panel of tech luminaries where Elon Musk has also made comments to this effect, that maybe the purpose of human beings was to bootstrap AI. And in a lot of these conferences, I don't know that this is going on anymore, but it was certainly going on for many years, where there was these conversations about existential risk. And in the case of this particular example, these luminaries were laughing, giddily. And he said, "What are they laughing about?" And I think Joshua was trying to suggest that maybe the reason that we long for annihilation is that we feel overwhelmed. Again, I apologize for going in this direction, I know it's very different from finance, but that we feel overwhelmed by the responsibilities that we carry and by the godlessness with which we live, that we have surrendered the idea of there being a power greater than us and we ourselves see ourselves in many ways as Gods of this earth. And that there's a desire to experience awe and that there is something psycho spiritual going on here, that we are on almost like on uninterruptible course towards trying to cause a reset of some sort. And I'm throwing that out there, just I'm curious to hear what each of you thinks about that.

What you are saying would fit with the theory around the so-called turnings and getting to the fourth turning. And I think this whole idea, it goes back to this 15th century Arab historian called Ibn Khaldun, who was talking, I think again roughly 100 or 120 year dynastic cycles for when dynasty establishes itself and grows stronger. And then over several generations becomes weak can corrupt, and in the end, what he calls the destroyers. He says it ends with complex laws, evasion of laws, and people seeking to destroy the dynasty. And then, I don't know, ending in civil war or domestic or external civil war, and then the regeneration of society where we stop having all these luxury beliefs, if you want to call them that. Also, we stop conflicting with each other over things, frankly, issues such as gender stuff, which is frankly completely irrelevant. It's neither here nor there, and to my mind, it's a sign of extreme decadence in society that it gets its knickers in a twist over these things. And it may be be that this is a natural progression within civilization. Mankind is a restless creature, unfortunately. And so, even when he has things good, they're not good enough and he seeks to then overturn or to reimpose new values to change, whether it's religion or whether it's now just ideology of imposing new one, and then turning against each other in this most dismaying way. Take for instance, this whole issue of racism. Everyone accepted anti-racism and suddenly it was weaponized against actually the anti-racism. There's so much madness in this world. And again, I would've thought, you look back, America in the '30s, a very divided society. Obviously in Germany in the '20s and '30s, well particularly in the '20s, extremely divided society. And so those divisions, how do they end? It can be the case within a democracy that an individual can come and lead and bring people, to bring the nation together. Now, I'm not a huge fan of Roosevelt for his economic policies in the '30s, but clearly as a war leader at least, the war brought Americans together and their divisions from the 1930s were overcome. America was a more united, more consensual place after the war. Look, blasted Germany. Now, Germany committed the most heinous acts in history. It was completely leveled as a country and yet reemerged out of it in a way, conformist, boring, bourgeois society, same with Japan. So, one can say the futures, we can. I'm not very keen on putting decades to cycles and being prescriptive, say it is inevitable what the outcome is going to be. But it would seem as if some or other, the divisions in our societies, and they're not very different in Europe to the United States, that some conflagration at the end of it may be what is necessary to bring people together. I don't know.

But as you say, within our field, it would seem to me that the issue is to speak quite narrowly, the issue is one of debt and how that debt gets purged out of the system. And the financial crisis can be the catalyst for a societal collapse, but it can also actually be the catalyst for the reformation of society. So actually, it could be a good thing. And I actually think, going back to my work on interest rates, that of course, if one understands why the central banks kept interest rates low after the financial crisis, but what it meant was that things didn't really change that much. Go back to private equity was going gangbusters in 2006, '07, into the GFC. And then it came back, those guys should have lost a lot of money, and their portfolio companies should have gone bust. But actually, they were able to borrow as you know, the lowest, easiest financing ever by late 2009. So it all continued, the financialization of the economy continued, so on. And so we've avoided our bust at the expense potentially of making the final conflagration or bigger, but also I think perhaps of these societal rifts.

Like Greece, for instance. I don't follow it particularly closely, but Greece now would seem to more or less got its act together so you're growing faster than the rest of Europe. Apparently whereas these other countries expect to add 10 or 20 points to their debt, to GDP over the next few years. Greece is bringing its debt down, it runs the fiscal surplus. And this is why I suppose at heart I'm an Austrian in sense, I'm a liquidationist. And my view is, when you're in a bad position financially or even the government position, you need to liquidate structures and rebuild them. And that's what Greece went through. Not very pleasant, but I would say Greece, I think, is probably in a stronger place today than say, France. It absolutely is. I can tell you that. Culturally, especially. Greece is a different country than it was before the financial crisis. And quite frankly, it's a different country than it was during the course of my entire lifetime. And Demetri, if you think, was it beforehand the idea that the government could bail out their people, that Greece could continually borrow from within the EU? So in a way, if you will, cite rent seeking mentality and that has been purged by the system. One of the biggest reforms that I've seen in Greece, besides the fact that it's become more entrepreneurial. Actually, you know what? I take that back. It hasn't become more entrepreneurial, more of Greece's entrepreneurial spirit has been channeled into the private sector and out of the illicit economy. And I think this is what the demand side Keynesians like Paul Krugman, who were advocating for stimulus during Greece's financial crisis didn't quite appreciate. Which is that the state and the bureaucracy in Greece had become such an operational burden on the economy that Greeks were habitually pouring so much of their entrepreneurial energy into figuring out ever more clever ways to game the system or to locate the right connection to help them land a cushy job or a lucrative contract. And so you had this at once both adversarial and patronizing political economy that was suffocating innovation and generating a whole lot of misery and complaining among the populace. And so, I think what you've seen in the last 10 years is that a lot of young Greek emigres who were educated abroad in elite universities in England and the United States have moved back to Greece to start companies. And while there are many factors to explain this, I think the economic depression that the country went through brought people together in ways that I had never experienced in my entire lifetime. And it also made them much more grateful for what they had in a way that transformed the country, not only economically, but also on a spiritual level.

Listening to the two of you there, it's again, Eddie, I keep coming back to the importance of what you've written about because Demetri, you talked about this wish for annihilation that you were talking about. And Eddie, you talk about some of the divisions in society. And it strikes me that to get to where you are, Demetri, for people to want the system to be torn down, is a point of hopelessness, essentially. And Eddie, the divisions you spoke about, whether it's politically left or right, whether it's racism, human beings, there is always racism because every human being mistrusts people that don't look like them or talk like them or believe in the same things, and those are things that are always there under the surface for many, many people. But it's only when the divisions become rich and poor that these things tend to blow up, because suddenly there's this feeling that other people are doing much better than me. And whether it's your financial nihilism, Demetri, this hopelessness that I'm so far behind now, I can't catch up.

But Grant, can I stop you there? Please. What's interesting is that you get... Look at the states and again, it's very similar to what's happening in Europe. That the people who are most nihilistic actually come from the richest families. It's the crazy extremists at Columbia or Harvard or the rich kids supporting, what's it called? Mamdani, how do I pronounce his name? The mayoral- Zohran Mamdani, I think. And you go back to this, the potentially economic catastrophe, civilizational catastrophe of the accelerated energy transition, that tends by and large to have been supported by very well-off people, educated people. And in that sense, actually, so there is a class divide, but in some ways the people with fewer assets often, well, they're much more conservative. And that is, again, it's a bit abnormal, it's a bit Alice in Wonderland, that the people who have everything want to embark upon actions that would blow everything up. But also, the people who benefited most from their society having the strongest visceral feelings against the society. These are all Alice in Wonderland characteristics where everything is turned upside down. It's not quite normal. It is not completely abnormal because you always had large number of communists or this and that from privileged backgrounds, but it seems to be more pervasive today. It's the quirk, the thing, we have this inequality, and yet the people who are angriest are also actually those who seem to have been born with several silver spoons in their mouths. Just bizarre.

I'm not sure about that. I understand why you're saying and where that comes from, but I just think a lot of these uber rich guys like the Peter Thiels of the world who was saying some of these outrageous things about the end of society, the end of mankind and all this... You saw that interview that he did with Ross Douthat where he asked them about the Antichrist? Yes, it's remarkable, remarkable. But I think those people are just given such a platform now, that they become representative of a small but important class of people, and I'm not sure that's necessarily the case. But I think if you divide vertically, if you go left and right, if you go along race grounds, if you go along religious grounds, once you draw the line horizontally and you go up and down, rich and poor, all the racists, all the left wing, all the right wing, every race of religion, every creed, they're all below that line. So you grab everybody below that line and you're not just looking for the racists and the non-racists, you get all of them. And I think that's the problem with this horizontal line, is that the target, the people who are the focus of people's ire are the rich, and the rich have done themselves no favors by making themselves incredibly prominent more and more so in fact. And there's a certain amount of lightning rod behavior going on, and that's why I keep coming back.... Eddie, it's what you wrote about. I think money facilitates them getting rich in the first place. Low interest rates facilitate the borrowing of money to gather assets and all the things that have helped a lot of these rich guys, these super rich guys become rich, has all been financialization and share price improvements and all the things that financialization bestows upon them. And now, there's this sense that we're never going to catch up with these people. And guess what? The cost of money is going up and that hurts the wrong people. And these super rich guys who seem aspirational now just seem incredibly out of touch. Not because they're saying anything different, but because the people who are now below that line are outraged by it. Rather than saying, oh, well look what Peter Thiel's saying because I was doing pretty well until now, and now the cost of money's gone up, inflation has gone up, my bills have gone up. How dare he say that? How can he be so out of touch with poor people like me who are struggling to make ends meet? And I just keep coming back to this idea of how important money is in society, and by extension, the price of that money is arguably the most important price on the planet. I'd be curious to hear your thoughts on that.

I attended one of Jim Grant's conferences about, I don't know, seven or eight years ago, and there was a Swiss guy whose name I can't remember, talking about inflation. And he was citing a short story by Thomas Mann, the German novelist describing the hyperinflation. And the guy's reading of this Thomas Mann story was that money is the medium through which we transmit our values, and it becomes a stable currency in ways associated with stable values in a society. And that once you inflate everything away, then actually society itself becomes disordered and values become disordered. And the reason I mentioned that, is that we were talking earlier about interest being time preference and how all our decisions involve time, our financial and economic decisions. And how the price of things, the price of capital assets is determined to a large extent by the discount rate or the interest rates. And it seems to me that it's possible that that distortion of the interest rate, and I think I try and describe this in my book, it has so many ramifications that it upsets both, if you will, the real economy and the financial economy, and then it upsets the real economy in a number of different ways. But I'd argue just by so, in effect, by encouraging misallocation of capital and slowing... This is a Jim Graham point, which it slows the pace at which things turn over because you don't have an impetus to be more efficient. And yet you have also this hyper-financialized economy. So it may be, that to some extent that the dislocations of the society have been fed by this manipulation of rates and that, we would accept that in any other field. We think if the government went in to maintain the price of something and distort the price of something, we would see how the consumption and investment and so forth around that, whatever it was, widget, whatever, would be distorted. But the interest rate people, they hadn't thought that deeply enough about it.

But having said all that, we are moving, we have moved back to a more normal era of interest rates. I would've expected by now, society's wealth to have started to move decisively downwards. Because actually the US stock market, highest valuation levels highest ever. Probably, I haven't checked it recently, but the Fed's household net wealth, that it's probably must be again at the highest level ever. So, we have a weird disconnect now and you're bound to see this because it gets written about from time to time, between what the interest rates are telling you and the valuation all the assets. There is no equity risk premium anymore on the US stock market, for instance. So the cyclically adjusted price earnings ratio will be at a lower yield than the 10-year treasury, and I do know, a 10-year TIPs around... what are they, about 2.3, 2.5%? I haven't looked at them, but again, there would be very little, even if you take an inflation protected bond, very little leeway. So it may be that we're in an era where things don't quite make sense. That you'd have all these high asset prices as you move back to the normalization of rates. I think I mentioned it in the past, US residential real estate in aggregate is weirdly... I know people lock in long rates in their mortgages in the states, it's weirdly high relative to other places. So it may be that the states catch up some or other, and that there's disconnect between the interest rates and the valuation no longer holds. We'll see.

Well, Eddie, I've just seen the time and I know you have to walk your dogs before you go out for dinner. Demetri and I have kept you for far longer than we planned to. So listen, thank you so much for doing this. It's been equal parts fascinating and thought-provoking, and I know I'm going to go away and think more about this because you've set another load of wheels spinning in my head. So, I thank you for that. And I look forward to your editorial coming out in the next couple of days and digging into whatever it was you had to say. So, thank you.

Okay, very nice to speak to you again, Grant. Very nice to speak to you again, Demetri. It's great to see you again, Eddie. My pleasure.

Well, D, it's just fascinating. Eddie's work has been extraordinarily important I think, and having the chance to talk to him about the importance of money and the cost of that money. It's interesting, some of the places you took us and some places he took us, I keep coming back to this idea that money plays a far more important role in all this than most people are seeing. The other thing that I didn't bring up, because it's always challenging in these conversations, you want to try to keep some coherent storyline in place. But one of the things that I wanted to ask Eddie that I didn't was, how has concept of the price of time as being the interest rate, comports with a world where maybe our concepts of moral hazard driven by the bailouts that occurred over several decades. He mentioned not just the 2008 financial crisis, but also LTCM, that this created a sense of moral hazard and that that may be a bigger source of distortion on the price of time than the actual interbank lending market and the lower fed funds. That's something that again, I didn't have a chance to ask him. Because I think that, back to this thing about financial nihilism, I think the thing that's really been detrimental in my view that's been most detrimental, has been people's loss of respect for money. It's not just that the price of money is cheaper, it's that people have lost respect for it. We've gone through various stages where lots of people, younger people in particular have viewed it like toilet paper. And I don't know if we talked about it on this series, but I've certainly talked about it on my podcast in the past, especially during that 2020, 2021 period, where you had those memes of Jay Powell holding onto the podium and money's flying out of it and it's like money printer go brr. And I think that again, that's where a lot of my thoughts around nihilism came from. So, I think it goes much deeper than just the lowering of interest rates. It is all the things we've done to distort the market's pricing of money and the pricing of time. And once money's mispriced, everything's mispriced because that money's a common denominator and that includes values like morals and principles and all those things. Everything becomes mispriced. I think there's a fascinating thread to pick on, and I have a funny feeling we'll be back to it again at some point in this journey because it's not getting any less complicated with each episode, is it? It is not. But that's the fun. We knew this when we set out, and it's, I for one, just revel in this idea that, I don't know what we're going to talk about, where we're going to go with it all, but it all feeds back in somewhere. And at some point we may feel like we have a clearer sense of this, but in the meantime, it's fascinating to get all these different angles. I'm looking forward to the next episodes that we have planned, Grant, and I'm sure our listeners are too.

Well, all that remains is to thank our guest, Eddie Chancellor for the time he gave us. As I said, do check out those two books. The Price of Time and Devil Take the Hindmost, are extraordinary reads. And as Eddie said, he writes for Reuters and the FT, and you'll find Eddie's work everywhere, and I would encourage you to seek him out wherever you can find him. We will be back with another conversation in this series. In the meantime, thanks to you for listening. D, let's do this again soon. Looking forward to it, Grant. Nothing we discussed should be considered as investment advice. This conversation is for informational and hopefully, entertainment purposes only. So while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets.