0:00Thank you. Well done, that's. Hello and welcome to another episode of the Bitcoin Well Podcast. I am your host, Q. I am coming to you live on the day of the FOMC meeting and we are going to dive right into the news with none other than Bitcoin and markets, host and founder, Ansel Lindner. Ansel, thank you for joining me today. No problem, Q. Yeah, just dropped as we speak, as we hit go live, the FOMC has dropped. Yeah, Zach, we get that pulled up and we will dive right into it. I think this is one of the more anticipated announcements. In a while, I feel like that sort of FOMC expertise that we saw from Bitcoin Twitter in 22 faded. But then the anticipation of this after what we saw, best and the treasury start to do stock buybacks,

1:03led people to have some excitement. But what are you looking for out of the Fed right now? Well, what I'm seeing right here is that they have raised the interest rate. So there was a lot of back and forth about whether they were going to hold or raise the futures market was pricing in. A 90% plus chance that they would raise. And for years, I've been a Fed watcher for at least three chairman now. And this is they usually they tend not to surprise the market. Whatever is priced in is what they tend to go with. And you can see here on on this statement that's that's showing it was a 12 nothing vote, which is very surprising to me. I thought there would be some holdouts wanting to especially wash. I thought he would be voting to hold rates steady, but just glancing at this. It's a very short statement. They've gotten rid of a lot of their boilerplate. And that goes into wash the new wash fed.

2:07He is very against standard operating procedure. He wants to get rid of forward guidance. He doesn't want the market anticipating what the Fed is going to do. He wants he even has talked about reducing the number of meetings and going almost like a as needed basis, maybe quarterly or something like that. So that's what I'm thinking about when I read this, I bet the markets are not going to like it. But being that it was priced in, there's probably not going to be too much movement. So I'm into your point like saw Bitcoin tip down in US dollar terms to up around $75,000. And there's been as of this moment, about three minutes after the FOMC has made their announcement that there has been no movement. I do have another doc, Zach, I sent it in the chat. If you can pull that one up, I want to show because while the statement is short into the point, I want to like lean on your expertise here.

3:08And so, and how do you explain what we're seeing in this like forward, what looks like forward guidance, but not in the way that we've seen in the past. Scroll down, I think it was the page four. Yeah, zoom in on that please. Yeah, so my understanding is like, this is their, this is their new version of the dot plot without be a correct assessment. Or am I misreading this? Yeah, that looks like a standard dot plot today is today. So that must be the very current SEP. Okay, so from the looks of this, we shouldn't be anticipating any material changes that looks like until 2028. Based on what the dot plot says again, my armchair economist analysis of the Federal Reserve. If you go up to slides to slide number two, we'll get a median projection here. So they're showing.

4:12Fed funds rate at the bottom of this table. The median projection for next year is 4.1. And that's up from their last meet their last SEP was 3.6. So in the last three months or they do these every other meeting. And each meeting is six weeks. So that was three months ago. They were at 3.6. They thought that's what the, their policy was going to be going forward into 2027. And now they say it's 4.1. Now with the top of the range here is now 4.0. So this is saying they anticipate something like half of a cut or half of a hike through 2027. And then if you go back down to the dot plot down to slide four, then you can see a kind of gently tapers off into the long run. And that's the farthest to the right. And that median in that bubble, it looks like 3.5%. So that's what they're kind of saying is the neutral rate is 3.5% out into the longer run.

5:16Very interesting. One thing I always say about these dot plots and things is they're so tightly packed. None of them are predicting any sort of recession. If they were, there would be major dips in this because you cut rates. If you go into recession, there's not any big inflationary spikes. It's all very like best case scenario. That's what I, that's what I give to the SEP is it's always the best case scenario. And they always gently trend out to the long run. So that's what I would think about that. That makes sense. I mean, again, it's my question off of like the comments around this being best case scenario. And there being no sort of anticipated recession. Correct from wrong historically speaking, the Fed is not great at projecting like when the markets tumble, there tend to be more reactionary in those instances. So like what we just showed you that dot plot, that is their forecast. Again, as we just mentioned, their original forecast just three months ago was half a percent lower than now when their forecasts are. So they're already shifting what they're thinking.

6:25Do not take that forward looking forecast is like how to read things to me. The tell tale sign the thing to pay attention to what you just highlighted. I want to reiterate this point right now. Fed fund rate sits at three three point seven five to four percent. They're saying that the medium will be four point one next year. That means that they anticipate one more rate hike of a quarter basis or a basis points. So buckle up. It's not going to be fun if you're looking for a new home. But I think my interpretation of this is the Fed is sending a message that their priority still is to try to taper inflation. Would you agree with that assessment or do you? I think that. Man, I really think wash wants to cut rates. Right. That's why I'm that's why I was so surprised at the 12 nothing vote because they don't want to be wagged by the market.

7:25They want to be the dog that's wagging the tail of the market. And but at the same time, they don't want to go too far against what the market is pricing in because then they could cause more problems than they solve or in their own mind. I mean, when I speak about these things, it's not like what I think the Fed is doing. It's like what I think the Fed thinks that it's doing. And so that's what I would be I'm very surprised it was 12 nothing. And we'll see there's so much the GDP numbers just came out or new expectations of GDP numbers came out and they were blowing out 5.1% annualized. That's some of the fastest growth that we've seen. I mean, during COVID, we had nominal numbers that were way higher than that up to 10% but we had much higher inflation. And so the GDP seems to be growing well. Everything seems to be on track and they just happen to raise rates. We'll see if they can keep this or if they're going to be cutting in an emergency session like they always seem to do.

8:34Well, I want to, you know, as I mentioned at the beginning, we are live right now. If you are listening to this recording, we are going to I'm going to do my best to give you guys live update. So as I just said, like Bitcoin price did nothing on this reaction. Things have shifted positively, not just for Bitcoin, but now the market is also turn positive ever so slightly again. This is we are recording at 210, 210 Eastern time 11 a.m. Pacific time. So things will change very rapidly in real time. But to me, again, I have always believed this. The markets don't like surprises. The markets, we were going into this with a huge shift in the lead up to the days leading up to FOMC, but we were expecting a 25 basis point hike. And the market is reading this like, okay, thank you. We knew this was going to happen. But there's been a lot of conversation around the bond market. And I wanted to know from you, how you think this can either positively or negatively impact treasury yields.

9:37And if that is a priority for the Fed right now or inflation just continues to be there sort of north star. Q, you know me, I'm very kind of a eclectic macro guy. I don't really believe that the Fed does much controlling of the interest rates. And especially when you get out to the longer end of the curve, I don't think the Fed has much to do at all about the long end. And we've seen the long end blowing out around the world. I actually sent a slide deck in with a chart that we can take a look at. Yeah, Zach, let's pull that one up, please. It's going to be slide number five. If we can go there. So sorry for how small it is, but these are long bonds from around the world. USA is in the top left. Then Germany, Japan, UK, Italy, you can see they're all rising. And definitely from the start of the Iran conflict to today, there has been a straight upward to the right movement and all these yields.

10:40So this isn't just a US problem. It's kind of a global problem. And when you think about it, this isn't a global sense. You got to think, okay, it's systemic. And that means it has to do with the dollar. It has to do with the global financial system and not so much like the accounting of the Federal Reserve or the accounting of the US government. This is a systemic problem. There's something going on here. So that's where I would look at it. I kind of see this more as a global signal than just the Fed deciding what to do here and there. I don't they don't want to rock the boat. The ECB has raised twice this year now already. So they're trying to fight the same sort of effect. The Fed is kind of following. I don't know how much there's going to be coordination with central banks because with the de globalization that we see with the trade wars and all this. I think we're going to have a central bank de globalization as well. And they're going to stop being so friendly and having this global coordination and monetary policy.

11:45So we'll have to see how that evolves throughout the next year, two years. But right now, this is a global sell off in bonds. And again, just for explain to me like I'm five, like if the entire world's not institutional. If the entire world sort of sovereign bond market is behaving like this, like what impact does that have on just everyday life as well as what impact does that have on monetary decisions made by each central bank of these governments. Well, it makes debt repayment a lot harder. Right. And so a lot of people are they're facing squeezes on their balance sheet because they want to borrow new money to meet operating costs and debt repayment. Well, if debt repayment is becoming a much bigger slice of their balance sheet, they, you know, they then they they're going to be squeezed and maybe they go out of business. Maybe they make layoffs. Right.

12:50And the we go down this recession track. But high yields are cure for high yields because they put a squeeze on the economy, which turns over the economy. And like during COVID, I remember when we were raising rates at the fastest pace in however many years. And I was like, their actual logic is we're going to crush the economy to stop inflation. And that's what they're doing. So if we have a globally synchronized sell off in bonds, the bond the bond market itself is putting the squeeze on economic activity. And there will be a global recession, most likely. I mean, just look at Japan. They're hitting multi decade highs in their long bond. This is going to be a multi decade like recession or depression that we're going into. Maybe we're maybe we're already in it. I think China is already in it. If you look at China is the only major economy that's not participating in this bond sell off.

13:55When yields are stuck down really low, that's because you're already in recession. Right. So they I think they're already in recession and the rest of the world is about to break and go with them. I don't know if that's going to be this year next year when it's going to happen. But this type of sell off in bonds. It speaks to eventually or soon we're headed towards a pretty hard recession. And look, this all sounds terrifying. I know. But where there's blood, there's also opportunity. What should people be thinking about paying attention to and doing in preparation or anticipation of something that could be drastic? Oh, boy. I have you out this really quickly. I say, none of this should be financial advice. Yeah. The part of it is talking on a YouTube channel. Do not do not. Ain't anything that we say that's for a lot. I tend to be relatively optimistic actually for the United States.

14:58I think since it's the largest capital market, it's the largest like innovation market. We have the globe reserve currency, all these things. We also have one of the kind of things that isn't talked about. We have the best universities in the world. So we have a lot of brain drain that comes into the United States. So like out of the hundred top universities, it's like 30 or 40 of them are in the United States, which is very over representative of our population size. And so there's a lot of brain drain in the United States, a lot of capital drain into United States. So overall, I think the United States is going to be relatively okay versus the rest of the world. I would tell people, again, not financial vice, but it's very scary to be investing in China or Japan right now, South Korea. Europe is not so great. So I would look at your international investments if you have any.

16:01And maybe pull those back and invest in American companies or hard assets. There will be asset price inflation. So when they do print money, there's going to the money is going to flow into asset prices that's going to be real estate stock market and hard assets like gold and silver and Bitcoin. So that's how I would kind of protect myself. I wouldn't be looking to maybe quit your job right now and try to go into a new thing. Try to keep your job, try to move up maybe in your job and become indispensable to your employer. And that way, when hard times come, you're not going to be one of those first round of layoffs, you know. No, absolutely. And if anyone wants to buy Bitcoin at the only non-custodial exchange in the United States, hop on over to BitcoinWell.com. Use promo code podcast and you'll be get you'll be able to purchase Bitcoin and it'll immediately be sent to your cold storage wallet. And if you want to meet with any of us to discuss your strategy and your allocations, hop on over to Bitcoin well.com slash infinite and book a time with one of our Bitcoin advisors today.

17:09You know, I love that you talk about asset inflation. I have this thesis that was proven true. But during the sort of 2020, 2021, like euphoric phase of the stock market, when you'd read these earning reports and they didn't actually make more money, but the share price didn't reflect that. I read that very clearly as, oh, the stock market is inflating. The groceries are not. But that is a tailing indicator that lags versus assets. So to me hearing, oh, there will be asset price inflation. I read that as, okay, and then further down that line, we will also see more inflation. What is your read on that? Do you think I'm just a crazy guy who was living in his mother's basement when I came up that theory or am I on something there? Well, that that is very similar to I would say the broader view that people have out there, the more common view. I am a dissident in that respect.

18:16I think that we're eventually, because you know, think about what you learned about a credit bubble, what happens in a credit bubble, it eventually pops right and that pop is actually deflationary. And so if we're in his credit bubble, a credit bubble inflates, but always, always in the back of the markets mind, it's going to pop someday. And so the overriding force is actually deflationary. It doesn't feel like it when you're in the boom phase, but eventually you get to the bust and it's going to be deflationary. So long term, I think, I think the US dollar is going to die a deflationary death and not an inflationary death. The other currencies might be inflated away. So if you're holding Yen or Euros, you might have an inflationary death of those currencies, but the US dollar is actually going to deflate to its death. And of course, being a Bitcoin, Bitcoin or first, you Bitcoin fits in that model as well, because whenever one's defaulting that somebody has to be holding the asset.

19:25And so hard assets are really important in a deflationary environment. And I do think one day, they're just going to back the dollar with Bitcoin. That's going to be the standard. The dollar has changed many times in the past. It's been just silver, then it was gold and silver, then it was a different weight of gold and different weight of silver. Then it went to just gold and finally not on gold. So the dollar has changed many times and it's just a stroke of a pen to change it back to a hard asset, whether that be gold or Bitcoin. So I think that will happen eventually, whether it's a decade away or two decades or five decades, who knows, but yeah, that's what I would say about that. And that answer the question. So absolutely, I want to again, like double click on this idea of like the dollar dying at deflationary death because so many people online and just in conversations when we talk about like the number go up theory of Bitcoin, like that's rooted in this idea of it will die an inflationary death.

20:29So talk to me like, what does a deflationary death of the dollar mean and look like? So the inflationary there will be inflation 100% there will be inflation, but the inflation is kind of like to stave off the deflation. So if in a credit cycle, you're either growing or you're dying, think about people are either taking out more loans or people are defaulting. And so once people start defaulting, they take out fewer loans, they default the actual credit supply shrinks. And since money is credit, that's, that's a deflation. So you'll see asset prices, like you'll see the stock market. The stock market will be going down because you can the dollar will be going up in value. So these asset prices will be going down. You can buy more of the stock market tomorrow than you could today in a crash.

21:30Same with bonds, you'll see the yields going down crashing down to zero because no one wants to borrow and they have to stimulate demand for loans. For loans. And so you lower yields to stimulate demand for loans. So that's what you kind of see in the end, just think of the great financial crisis. What we saw there yields going down to zero stock market crashed, but it eventually came back right with the asset price inflation. So this the inflation is kind of what we do to stave off the eventual deflation and in the very acute phases of a deflation like we saw in 2020 or we saw in 2008, 2009, they will spend a lot more, they'll stimulate, right, but that won't necessarily end up in retail prices. It can 2020 ended up in retail prices because they gave a lot of steamy checks right to the people to go out there and spend on everyday items. But when you have a bail out in the financial system, that doesn't necessarily get to retail prices. It stays in the financial system. So yeah, the inflation will come.

22:42The inflation will come. They'll be hyper. They'll be spikes down and spikes back up with money printing to try to save from deflation. But if they didn't do anything, if they wouldn't have done anything in the great financial crisis and they wouldn't have done anything in 2020. The deflation would have gone down to zero and that's really hard for people to grasp that because what do I mean that money supply would go to zero. So everything is a debt, everything is credit. Money is created in the process of making a loan. A bank loans out money. What they do is they put a plus in your deposit account. And then they put a plus actually on their balance sheet too because they have a loan now that they made. So that loan is an offsetting asset. But if everybody defaults at once, what happens? All the money goes away. All the financial assets go away. So if you don't want that, you have to bail it out either with a bank holiday.

23:49And they've done that. Didn't they do that with first Republic and Silicon Valley. They kind of stop the pot. They didn't let anybody take deposits out or something. Right. There was a bank run because people were afraid that the bank didn't have enough money to back their deposits and then they had to stop people from taking the draws from their accounts. Yeah, so they can do a couple of different things to stop this type of deflationary cascade. And they will. Because the other option is everybody like everything grinds to a halt. I remember in the big short and it was that Brad Pitt character in the movie. I know I think I talked about. I think we probably talked about this before actually. And he's like, they're all celebrating. And he's like, did you know that for every percentage point that unemployment goes up 40,000 people die. So if you're at the Fed, if you're at the government, the treasury, and there's a hyper deflationary cascade happening on your watch. Are you not going to step in.

24:58Now, of course, you're going to step in. So that's where we're. This is the milieu that we find ourselves in. This is the projection going forward. I don't see any like systemic collapse that can't be handled. It's just a matter of, do we want to change the system? Are we fed up with this enough that we want to change the system? So, yeah. So one thing that we haven't touched on that I think is worthy of a conversation given the topic we're discussing because where my head goes when we discussed like a credit bubble popping. 2008 is the best example of a credit bubble popping in my opinion of recent memory. But we also saw a government bailout system that kind of allowed that specific credit market, IE the mortgage rates and mortgage bonds in general to survive. And we don't have houses lower housing prices not lower than it was prior to the financial crisis. It's actually housing prices are higher. So I, and I believe that bailouts are not a natural mechanism of a free capitalist market.

26:10Do you anticipate a softball question first is do you anticipate bailouts and what effect could they have on the impending credit bubble pop that is the bond market? Yeah, I definitely anticipate bailouts. They can't just let it, they might do like they did with AIG, you know, they try to consolidate as much bad stuff onto one balance sheet and then let that one entity go under. I think they did the same thing in China when you talk about ever grand and country garden and some of those other real estate entities and you even see that with some smaller banks in China, they'll load up like bad debt. And then let that one entity take the brunt of everything. So they might do something like that. Now, whether it's part of the free market now, that's an interesting question. I know that the Austrian idea is that government is government intervention is not natural. It's not part of the free market.

27:11But if you step back and just consider the government as an economic actor, they're an economic actor like everybody else, they have different incentives, perhaps, and different. Different payoffs, then the rest of the market participants, but their market participants as well. And so you can still have rational market analysis, even with government intervention. You just have to consider the government intervention as part of the market. So that's how I look at that. Definitely bailouts. Again, I don't know when this is going to happen. But I think that most of the world, most of the other large economies are much closer to a recession than the United States. The United States will not escape it, of course. When that happens is anybody's bet. Now, one thing that has been staving this off and maybe this can go into another part of the conversation is the massive amounts of AI capex. The investment into AI, where they're we're pushing up on a trillion dollars a year in AI investment.

28:18That gets it that goes into GDP, right, the investment goes into GDP. But have we seen the payoff of that? So we have all this, you know, the US as an economy, grown 5% or estimated to be grown at 5%. How much of that is real? How much of that is AI capex, probably a third of that is AI capex alone. Another part is coming from diesel prices and oil prices because the US is a net exporter of energy and definitely net exporter of diesel. And that's a very high prices right now. So that can play into GDP numbers. So what is what is the economy look like without AI capex? And without this spike in oil prices? I don't know. I think it's probably pretty weak. No, I was actually talking to Rob over at Bitcoin use last week on the podcast and we were talking about, you know, I love using AI.

29:19I overuse AI like I have multiple accounts with all of your favorite AI companies like I my token. I'm a token spend maxi I'm an AI company is like nightmare. That said, one of my fun little like side quest projects I did was I just had to go through and read every single public earnings report and just count the number of times AI has mentioned and then give me like how much has that grown or dropped in the last three years and surprise. I've seen that number just steadily go up and it correlates with stock price increase as well. Looking best example, RIP all birds very comfortable shoes I owned a pair back when they were like the hot shoe to home now it's an AI company in what wow. This is shades of the dot com bubble. Yes, now in real blockchain. Exactly we're seeing all the same thing and into your point like yes we're spending all this money. I don't think and I would argue that we haven't really seen a proper return on that investment yet.

30:22Do I think there will be absolutely I just think we're in that kind of like. Explo it like the great explorers going out into this vast unknown of AI trying to figure out how to harness the technology to generate profits we haven't gotten there yet we will the question is can we get there before the like ground out under us like stops existing. Yeah, you're more optimistic than I am I not that I think that's crazy not that I think the AI is going to fail but I saw this chart the other day and it was it was comparing like productivity after net scape navigator launched. In like what 94 something 95 and then productivity after that that versus productivity after chat GPT launched.

31:22So these are like two seminal moments in technology and the net scape navigator is way higher like the productivity return from that was much higher than the productivity return from AI so I don't know that I think there will be some applications of course for AI that will be very productive. But man the the spidey sense the hairs on the back of my neck stand up when I we've seen this before in blockchain and with altcoins everybody wants a little piece there we can do x y and z I've talked about this so much on my in my content. I watch this commercial from one of these AI shops where it's like oh I just made a calendar app they're in the office setting it's like I just made a calendar app oh I just did made it to do this oh I just made a chat bot that we can all talk to each other and it's like they're just replicating ideas. All those things already exist you know that but they're wasting their time and their token money on creating these things that already exist and they're already paying for sales force or whatever they're paying for now can they make up open source version of sales force and what they're doing maybe but is that their business model you say they're going from shoes to AI like is that really your competitive advantage is AI or are you just fooling yourself.

32:43That you could maybe raise some money with the AI tagline and you really aren't going to produce anything productive in the end so I'm I'm very I'm man yes it's very calm ask like you said and I'm skeptical that 98% of these things just like in altcoins and Bitcoin 98% is going to be noise and just going to be rug pulls and going to be crashes and you're going to be having that one or two percent that's going to be a lot of things. It's actually legit so that's how I look at AI. No like I I do agree with you and I find it funny that you think that I'm the optimistic one I literally turned to my girlfriend on Monday when we were working from home together and I was like I think Wednesday is going to be like a reckoning day in the economy like I think it's going to be it's going to get really I really think so I really I I and watching these bond markets like in the way you described for example like what we did in 2007 humans we are not a creative species we are not we build on top of what previous generations have built so I try to apply that line of thinking whenever I try to look forward when you explain to me like oh in 2008 they consolidated all the debt under this one company AIG and then they just let the company fail look at the global market right now we've already been in Japan for the first time in what

34:0825 30 years we're seeing like Europe absolutely fall off the map every other country turkey today just saw their yields jumped over 32% like highest rates there in 30 years I think to your point there will be a sacrificial country there will be a country that you're going to say you know what sorry your currency sucks you guys are going under you can come under our umbrella will give you guys more dollars but you're going to use a dollar eyes system going on. And I that is my read on what you've said but I was interesting I was a contrai I present that to you. Yeah that's interesting I tweeted out something very similar either yesterday or the day before that I thought something was just about to break because if you look at low prices you look at yield the treasure yields I mean they're all going very very overbought but the narrative is still to go higher and whenever I am looking at the markets like that you know finally the you know like the the oil bulls have been right over the last few weeks and so they're on on on X saying yeah we're right we told you so blah blah blah but then I see oh it's very very overbought right now right so most likely you're you're going to be done being right very soon and same with the yields on US

35:34I think that they're coming to some sort of blow off top so whether that is today with with wash and the FOMC I haven't looked at the markets since then but yeah we could have a reckoning very soon I agree and which is the scapegoat country it might be Japan since they're in the worst shape anyway. I see I for the sake of like where Japan sits as far as like a manufacturing hub and technology hub I want to believe that I I want to believe it will be a country of less importance to the global economy but to feel maximum and it should be a company of value. Jack I see all these charts are pulling up throw something on there or let's go into the slide deck to answer shared with us I want to talk a little bit about just oil prices in general right now there was one chart it was the CPI without oil and I wanted to first share my thoughts on this chart with you and then I have you kind of explaining me why my thought process is wrong.

36:41I think this is the dumbest CPI metric because I think that it's like the lazy version of like see like there's like barely any inflation it doesn't factor in the largest cost for goods naturally which is shipping energy like all of the cost like I want to send something from my home to yours there's a shipping cost the shipping cost also includes a cost of oil gas prices gas prices to send one product to another we're seeing those prices skyrocket day after day so why do you care about CPI less energy well transportation is not necessarily energy cost energy cost would be oil fuel oil the diesel those types of things and you know the thing about CPI is it it highly highly correlates with the oil price. It's probably the most correlated thing and so it's really hard that's why we have core you know so we have core CPI because if you take out food and energy food tends to be very very volatile energy tends to be volatile as well but it's also that it's just highly correlated with everything else and so if you take that out you get a more of a underlying read now the reason why I included this chart in here is just because I thought it was interesting when war

38:08and the FOMC are looking at their inflation measures they're definitely going to be looking at this and saying look oil price is not something that the FOMC needs to get involved in it's a market it's not like by us raising or lowering interest rates we can get any more million barrels per day going around the world and so this totally I would I could see them looking at this but if you go to another let's see what's my other slide this related to this I think slide six is the oil inventory slide well first let's go to just to let's just go to two and this is the trimmed mean PCE so wash is this is his favorite metric for inflation and what they do with trimmed mean is it's like core so core always takes out food and energy but trim mean takes out the most volatile thing so when you look at every single component every month you take out the two or three or four most volatile components and then that's your trimmed mean okay and so some months it might be food and it might be oil and some months it might be used cars or something like that so as you can see if you go to the 12 months on the bottom of here PCE is sitting at 3.7 but the trimmed mean PCE is 2.3

39:35and that matches up very well with that CPI less energy so that's that's how I think that's kind of what they're looking at and then if we go to that one that you were talking about there is oil inventories number six you can see this is just this last week and crude oil is down half a million but gasoline and distillates which distillates is highly you know pretty much diesel so diesel is and gasoline the inventories are going up even though the prices are going up like crazy so so explain that it's like where do inventories say as far as like strategic petroleum reserves all the way to like what we get at the pump like where are these inventories in that sort of like thread well I can tell you what I know I don't know a ton about it but the strategic petroleum reserves we have these big salt caverns I think in the southeast United States and so they store a lot of the strategic petroleum reserve in there and one reason why there there's a there's a caution well the first off there's a statutory limit and you have to keep 150 million barrels in the strategic petroleum reserves

40:50by statute there is a caution limit of 300 I think or 250 million barrels we're getting close that we're just under two just under 300 million barrels but there's a geological caution zone because we don't know if the salt caverns can handle getting drained all the way down right so there is something some people call this a floor but it's not it's just a caution and okay so that's the strategic strategic petroleum reserve we have other inventories that are held at Cushing, Oklahoma that's the main big hub that's where WTI West Texas intermediate that's where it's based off of is trading there at Cushing and they have these big silo things of oil with a floating cap on them and they go up and down people take delivery people deliver there and so I think the best way to do that is to get the best out of the way they do it floor there the the workable floor is 20 million barrels and anything under that it's like hard to suck that much out so it's it's kind of like for pressure reasons it's a it's a floor at 20 million barrel 20 million barrels and we've been right around that for most of this last six months give or take before you know we can get up probably the limit there is a hundred million I'm not I'm not really sure on that now the other inventories will be in personal inventories personal

42:18companies will have inventory the United States military will have I you know they have their inventory there's all sorts of different inventories around and they'll have different stages so you'll people will store diesel fuel for their big truck for their truck fleets and so all of those added up around the country you know come out to very a very high amount so it's the strategic petroleum reserve is around 300 million barrels right now and the amount of commercial storage of crude is 425 million barrels so we have a ton of inventory out there it's that's why it's it's really hard to look at the oil price and be like okay price is going up because there's a shortage well not really there there is there's stuff going on there there's financialization of the trading of the futures market it's a global market so maybe the US might have inventory but China doesn't have inventory or India doesn't have inventory and they're getting worried and so there's going to be different demand and supply from around the world and it's a matter of balancing that out and the last wrench I'll put in here this at this part is you know closed or moves down at least like 90% 80% then hormones are mooses opening back up now it's back up

43:46to 50% or 75% or whatever you want to say but Mandab is now down right and so there's these the oil market the price that you see on the chart it's the most sophisticated commodities market in the world everybody traders around the world it's a high flow to stock asset right so every year most oil is burnt there's not a lot of stock pile compared to how much is burned every year so like well you know from stock to flow for Bitcoin and for money you want to high stock and a low flow low inflation rate well with oil you want a high flow rate and a low stock and so it's a very sophisticated market with a lot of moving pieces futures present demand changing geopolitical things so I'm not surprised that we're at 100 but I will say that if you listen to the the biggest like fear mongers going back six months we would be at 200 300 dollars a barrel and we're not there we're at 100 still so I think that generally that's how I think of the oil market lots of moving pieces.

45:03No look I don't disagree that there's always financial engineering going on with all asset prices like I do not think that the market operates in this like you know lucky go dandy like hey we're going to find the cheapest price to give you assets like no we are maximizing profits in any way shape or form and we create these ancillary marketplaces like futures markets to in theory help protect businesses but in turn we have like use them for I would say more nefarious reasons if you will. I think where I will like softly disagree with you to start is I don't I still don't buy at why I have to pay so much at the Tam Gas pump for gas prices and I think I think that's what everyday Americans feel and while you and I and countless others those who are watching exact callous big corners like we kind of stay in the trenches if you will like we are reading the tea leaves a lot more than like every day person every day person maybe sees a high like a highlight on some tick talk real that they watched and now they think that they understand the global oil markets or they just go to the gas station or grocery store and they're like wow they this is way more expensive than a year ago.

46:24Again I will always go back to a point to this like why do the CPI metrics that don't measure the actual things that we spend money on on a day to day basis matter why should we care about those metrics versus the tangible metrics in front of our eyes of it's costing more for me to feed my family. So you're saying why why don't I why shouldn't you care about your actual bottom line versus what the CPI is telling us specifically like like the basket of CPI goods that are measured are like frankly arbitrary like I'm not regularly checking into buy a used car why is that a measurement in your opinion of like how healthy or the rate of inflation that we're going to be able to do that. We are trying to measure again like why shouldn't we try to measure inflation against you know a gallon of milk and the price of ground beef like you know things that we want to actually put in our bodies versus a used car that I'm going to buy maybe once every 10 15 20 years hopefully.

47:33So there's a couple of pieces of that one in inflation rate is tied to interest rates right so if I want to take out a loan from the bank the bank wants to know what to expect. Of inflation and so does the borrower I mean everybody does if you're in business you want to know about what to expect with inflation so you can know how much to produce how much to borrow how much to finance how much not to finance so it the inflation rate is an important number for projecting out into the future of business if you're if you're in any sort of active business that you're buying a selling. Goods and so that's the first piece the second piece is we inflation really is inflation of the money supply we often forget that and so why do we measure prices why don't we just measure today money supply why don't we look at M2 or something like that and be like look M2 is going up by 10% every year so that's that should be the inflation rate but prices aren't going up by 10%

48:46So I think that the reason they don't count the money and this is what they said back in the day Alan Greenspan is the one that kind of went off of M3 so they they were going off of the monetary base. Then M1 then M2 and M3 and each time they added to these M's they added different things like okay we're going to add checking accounts now now we're going to add demand deposits now we're going to add different other exotic different forms of bank deposits and and all these things to the what the money supply is but they they over the time they could not track money supply money supply did not. Not correlate with what was going on in the market and so they said okay we can't count money apparently we don't know we lost track of what the money supplies it's so many exotic different types of deposits types of relationships you have banks in China and banks in Japan and Europe that are using dollars and having to loans made in dollars other countries actually do government bonds denominated in dollars right so they'll they're really going to be

50:00they're trying to accept dollars so that they can pay their dollar debts. So other governments issue bonds and dollars. And so there's so many different exotic ways to count money these days that they just gave up and said, we're going to target prices. So that's where they're at. They're like, hey, we're just going to target prices because that's a proxy for the money supply. And now we're going through this thing. Oh, do we do PCE or CPI or trimmed mean or core? Like what kind of price measurement do we measure? So we've lost the plot so far. And that's why I think the Fed has fallen into this trap over the last since the great financial crisis, really, of just doing what's priced in. That's why forward guidance was so important to them because they thought what we're going to do is we're going to massage the message, have the market price in, what we want it to price in, and then we'll follow along. So it looks like we're doing something, but we're really just managing

51:02the message the whole time. But when Marsh wants to go against forward guidance, he wants to go against this type of trying to lead the market. I mean, this is going to be a radical change. I think Marsh is really going to have a radical change at the Fed of Reserve. So we'll have to wait and see how his tenure works out. I mean, I love the adjective of just exotic ways to count money because it's so true. It's a giant game of like, and it's an accounting class of how to like hide and make something with little to no value look like it's valuable or vice versa. And unfortunately, like we the everyday citizens are the ones who are left kind of feeling the brunt of these decisions. To your point about kind of what Powell's post COVID Fed looked like, I know that you and I had lots of conversations about this during that time of a how like that is useless. Like we would be better served not paying their salaries and just letting the market take these terms. But

52:07we're using AI. No, no, no, no, no, no, think about all the water. Oh, no, you can't do that. And put I want you to put on your hat as you know, in a in the perfect world, I imagine sure, there's still a federal reserve, but you, Ansel Lindner, you are in charge of the Fed outside of abolishing the Fed. Okay, you are stuck in this position. You have to do it. Some of the decisions have been questionable to say best. We saw, you know, Powell pause the hikes thinking that inflation was done. And then all of a sudden like here we here we are. We have not gone to that 2% sort of target. I should put 2% target in quotes because it's completely arbitrary number as we all know. Like going back to the COVID times to present, how would you have handled some of these decisions? Where would you have liked to see the Fed Fundrate be sitting at? And what do you think

53:08those changes that you would have made have impacted in the economy? That's a really hard question because like, do I answer this from the perspective of what they think? So I'm doing the best I'm doing the best policy according to their thought process or my own thought process. We're on thought process with hindsight too. So like you have the answers to the test. Okay. And another complication is that fiscal policy. So as a Federal Reserve Chairman, you don't have any control necessarily over stimulus checks. Trump has just gone out and promised people another $5,000 stimulus check that would be going straight into Bitcoin by the way if they if they send that out. So if it does go out, you should buy Bitcoin and Bitcoin. Well, the only non-constitutional exchange is promo code podcasts and you will get free Bitcoin. There you go. So yeah, there's a few different complicating factors, but I would not have raised

54:08rates as fast as Powell. I would have probably raised them to what I thought at the time was neutral let inflation burn itself a little bit longer because if you look at I could bring this up, but if you look at a chart of the month over month, inflation rate, okay, it was July of like 2022, I think I could be wrong, it might be 2021, but it was July. And I remember this. I was doing my podcast. I'm talking and I'm saying, guys, we're going to hit a wall on this inflation rate. So in June, it was like 100% what do we got here? I think inflation rate month over month go back five years. All right, just do the fight. Yeah, all right, I guess 10 years. So yeah, it's July of 2022. You can see on the left hand side that max one, it got over 1.2% per month in June. And then July, it went down to zero basically. That was a big

55:12brick wall that we hit. So inflation was coming down. And I said at the time that it would take time to work its way out, work that inflationary, the inflationary boom that we had with the stimulus checks, it would work its way out of the economy. And so I was in the transitory camp all along. I wish Powell would have said, you know, he would have stuck to his guns and said, it is transitory, God damn it. We're going to keep it at 3% and not go all the way to 5%. I think he would have had very similar results. But it would have been, I mean, it was a soft landing so far. But I think it would have been helping the economy continue to work its way out of the COVID recession. So that's maybe what I would say. And right now, I don't agree with raising rates. I think they should have probably held steady right here. But we will see how the messaging is.

56:13Again, Marsh doesn't like forward guidance. So he might not even say anything. I don't know how the press conference went. I usually do a live stream of the press conference with my telegram, guys. But yeah, we'll have to see how his messaging was. Well, I appreciate you joining us on a day of the FOMC meeting because it's always a pleasure talking to you. And as you were talking, I remember the biggest argument we got into when we were at Bitcoin magazine together. Transitory inflation is the dumbest tagline ever. I was so angry because people don't understand the definition of transitory. That would assume the prices went down to pre-COVID levels, which they were never going to. And that, I hate that top tagline. So I disagree with it would be it would be a pre-COVID normal. So there was a post GFC normal, right? Like between one and three percent that it kind of fluctuated between. And it came back down. It went to nine percent nominal, right? Or something like that. And it came

57:18back down. It's back down now into the threes. So it's back down. This is where I now understand where our disagreement is. Your definition of transitory in mind are different. Is that transitory just simply means that the inflation rate itself is back down. I am more concerned with actual price because you tell me that for one year you have six percent inflation. The next year it's three. And then the next year after that it's going to be two. We transition back. That's not transitory. That does not mean the prices went back to those prices. That just means that you had a huge spike up. And then every other spike up after that is like back to like a normal spike up. So that is where okay. Now I understand why we disagree because one of us did not know the definition of trans story. And it ain't me brother. It ain't me. I'll have to come back on it. We'll have to have a hash that out. The transitory inflation rate. I mean, I think that inflation in our current system, it's not the best possible system. You know, the financial system we have now has many,

58:23many flaws, but it is the system that we have. And it is globally ingrained to the point where a billion people would die if we had a flash crash of the system. And so I don't want to see a flash crash of the system. I want to see somehow working towards a way. And again, my idea of the end of the system is not a inflationary bust. It is a deflationary grind. And we will eventually return to that as soon as we get done with this Middle East stuff, as soon as we can get back to just hopefully America first, hopefully coming back to our own shores and dealing with our own economy and our own problems. We'll see if that's possible because we are going through a very rough deglobalization period. So that's how I look at things. No, and I always appreciate your perspective and what you share. And so before I let you sign off and let everyone know where to stay up to date with the way you think and the work that you're

59:26doing. I want to remind everyone who is still watching, please like and subscribe down below. And of course, hop on over to bitcoinwell.com. Use promo code podcast. You will get free Bitcoin. Like there's free Bitcoin for you to win if you do this. You are leaving money on the table. Ansel, I will let you have the final word, my friend. Yeah, you guys can follow me at Ansel Lindner. Also, my my macro stuff is at Robe macro underscore. You can follow me there as well. I do a weekly paid newsletter. Bitcoin to markets.com or on substack. They both are the same thing. And during the bear market, my content kind of whittles down to just that weekly newsletter. But during the bull market, we're going to get back into full swing with live streams and lots of blog posts. So yeah, hope come on over guys and check it out. Absolutely. You have to answer. You are one of my favorite people to talk to and read. I'm going to annoy you to come back on very soon. No doubt about it, brother. Thank you for your time. All right. Thanks.