Chaos in the Bond Market with Greg Foss & Lawrence Lepard

 
 

Where to find the show

Download Episode MP3 File
The file will open in a new window. Click down arrow to download the file.

“There comes a point where everybody knows holy cannoli these currencies have no value, none, zero. Get me out of here, get me something else… get me something that doesn’t represent a claim that is run by a government that is completely, utterly, devoid of morals and out of control.”
— Lawrence Lepard

SHOW DESCRIPTION

Location: Remote
Date: Wednesday 12th January
Company: Validus Power Corp; Equity Management Associates
Role: Bitcoin Strategist; Investment Manager

For an extended period of time, a working career for many, the economic system has been going in one direction: interest rates have been declining, whilst bonds have been on an extended bull market. Since the economic chaos of the 1970s, a globalizing world has been aligning around a reasonably stable and predictable financial paradigm.

That all changed in 2007 when the global financial crisis turned traditional financial markets upside down. The crisis normalised extraordinary measures like open market operations and quantitative easing.

Little did we know that the turmoil of the global financial crisis was setting the stage for even more anomalous actions by central banks. In response to the pandemic, the US treasury in 2020 increased the money supply by 20%. This stimulus was mirrored by governments across the world. 

In a collective state of denial, the world's leaders all seem to have believed that this sudden massive injection of money will not have a systemic impact on world economies. The velocity of money would keep pace, that deflationary pressures would balance out, or that these massive sums of new money somehow wouldn’t seep into the ‘real’ economy.

Herbert Stein was an American economist, who amongst other things was chairman of the Council of Economic Advisers under Richard Nixon and Gerald Ford. In 1986 he presented Stein's Law: "If something cannot go on forever, it will stop." Unprecedented activity on the bond markets last week suggest that the can being kicked has run out of road; the state of denial may be over.

In this interview, I talk to Bitcoin Strategist Greg Foss and Investment Manager Lawrence Lepard about last week's extraordinary activity in the bond markets. We discuss the convergence of economic constraints boxing in the Fed, the pretence of bond value, contagion risks, and using Bitcoin for capital protection at the individual and national level.

TIMESTAMPS

00:03:51: Introductions
00:04:52: The bond market 101
00:11:17: The role of the Fed in the bond market
00:14:36: Swap line explained
00:17:57: Pain to be felt somewhere
00:22:45: Global debt is the world's biggest market
00:25:53: What happened to spark this thread
00:30:36: Suggested resolutions
00:37:23: Are Treasury bonds junk bonds?
00:41:41: Impact for pensioners
00:45:40: Looming inevitable currency debasement
00:48:22: The Bitcoin standard solution
00:54:26: Historical precedents for the current debt crisis
00:58:58: Monetary insurance assets and alternate portfolios
01:03:46: Final comments

 

SUPPORT THE SHOW

If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:

If you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.

SPONSORS

 
 
 
 
 
 
 
 
 

SHOW NOTES

Connect with Greg:

Connect with Lawrence:

Mentioned in the interview:

Other Relevant WBD Podcasts:

PodcastPeter McCormack