YouSaid · the spoken record

Ben Kizemchuk

lines on the record: 59
first: 2025-09-03
most recent: 2025-09-03
sittings or episodes: 1
sources: podcast

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“Very long time now, it's been a massive stellar performer. I've been adding to it on the way up as it's been growing. So very happy with that. The other big thing here to look at for particular clients who are able to look at this type of thing is crypto. I mean, really you're looking at anything that has kind of a fixed supply in this world is something that's deserving of attention at least, like if you want to put it in the portfolio, that's a whole question about risk and objectives and all that, but at least have a look at these ideas, at least see why they're going up. And as I mentioned before, on the flip side of that, bonds to me don't seem to be very exciting investment in this world where you're dealing with financial oppression and inflation humming, where I think it's going to be three and a half percent. Wiley overdue to get you on the show. Really enjoyed that. I feel like there's still a million other things we could talk about, so I'll get you on again in a couple months. Maybe dive into some more philosophical.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Story, right? What do all these securities have in common? Why are they all showing up at this time? What narrative is being formed by what's being showing up today versus what showed up a year ago? As opposed to doing the opposite where I come up with this framework first and then try to impose that view on the market, like what securities fit this framework, that doesn't work. That's not a very good way of doing things. For me, looking using a rules-based process to evaluate the securities on the market and then forming the thesis based on what I'm seeing is far more effective. So what I'm seeing right now is obviously this huge technological boom, Nasdaq 100, for example, being a really easy way to look at that. The other really interesting thing that's come out is obviously like the gold trade, you just can't ignore it, right? So I've been owning gold, gold mining company in the stock portfolio for.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“And so you're kind of beginning now to set up the platform from which an AI economy can bloom. To the degree that you can talk about as investment Pfizer, how do you think about asset allocation and portfolio management within this regime? I think that stocks right now are far easier than bonds, government bonds. I'm not a big fan of fixed income. I haven't held fixed income in the portfolios here since like 2021. That was more so motivated from just a trend following idea. Like everything that I do here in terms of actually managing money is from a very systematic rules-based and ultimately trend following point of view. And I always like to invert that idea where if I get the rules and I run my rules and then I see what qualifies out of that system, then I go back to whatever the assets or the securities that have come out of that system. And I let those securities tell me.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“That you could do something with that wealth in terms of making it produce an income for everybody as well. Not only does this some sort of like net worth idea, but what if we use this to turn on some sort of income from everybody? So no, this isn't like free UVI money, right? But let's say that the government who just recently bought some Intel maybe next buy some MAG 7 or some other companies and all of a sudden they start redistributing income and they send it to everybody who owns a share of this national wealth. That is something that you would need if you were going to enter an AI economy where all of a sudden labor is kind of becoming unnecessary, right? Like if you're going to take a whole bunch of people off work but you still want to make sure that money is flowing through an economy, well then you need to give people money somehow.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Financial wealth is now being turned into a utility. One of the ways that we can see this happening is, for example, if you go back to 1980s and like 30% of households had some sort of investment in the market at that point in time and we're now up past 60%, I believe it is now latest numbers, right? So we've seen this massive growth, this massive distribution in the shared ownership of the nation's capital. Now let's add to this idea and say that every single baby born is now going to get a thousand dollar investment in the S&P 500. Okay, so I mean, not only is this kind of echoing the passive idea, but now we are expanding the ownership of the market. We're making market ownership almost ubiquitous. So that is to suggest that within a generation or two, we might see this kind of like ubiquitous ownership of the nation's wealth. It only takes a half step from there to suggest.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Of cash and spending into the economy that keeps things going. This cash and bonds, or sorry, and debt needs somewhere to go. That's where the financial repression and passive frameworks step in. All of this stuff comes together, starts coalescing, and we end up with something that I'm calling the stock market economy, okay? You and I young guys, our entire investment careers, we have been told that the stock market and the economy are two different things, okay? That's not true anymore, in my opinion. I think that instantaneously, the stock market is the economy and vice versa. I think that the degree of financialization in the economy is such that these two ideas are now completely intertwined. This is also leading to something that I think is emerging now, which is this idea of the stock market as a utility, the same way that electricity is a utility, and the same way that your water is a utility, the nation's”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Systemic level of the economy that we're not going to get these super highs anymore. We're not going to do these super lows or negative numbers. But if you can coalesce the economy to operate somewhere around this three and a half percent level, not that there's anything like magic to it, but it just seems that this is where we're seeing a whole lot of economic indicators come down to this point, that maybe that is this volatility of reduction that AI can then bloom from or an AI economy can bloom from. All right, so let's sum it all up together, see where that leads us. What are the implications of this unique moment where we have all four of these firing at the same time for the first time? We've obviously seen all of them in silo happen before, as you mentioned. But yeah, what's the constraints on this? What are the implications? What's your forecast? So let me frame it for you this way. We have fiat money, right, which enables the whole thing to happen. The fiat money is enabling fiscal dominance. Fiscal dominance is producing a massive amount.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Place where they're almost risk free in a way. And I don't mean to suggest that everybody should go out and load up your account with like risk-free MAG 7. Like that is not at all what I'm saying here. It's a new risk-free rate. Yeah. Yeah. That's exactly it. That's more the concept, right? And so if you have this kind of economic kind of convergence around the weighted average coupon spitting out capital three and a half percent corporate revenues at the global level, sorry, at the US level growing at three and a half percent, rents growing at three and a half percent inflation growing at 3.5%, wages growing at 3.5%. Like you're starting to see this really interesting convergence amongst a whole lot of economic indicators that they're all kind of coming together around the same level. That to me suggests that when I'm talking about the four F's being used as a way to reduce the volatility at the”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Valuation is being an issue under this framework. If you look at PE ratios over the last 50 years, increasingly as we see markets form these important bottoms, the bottoming PE ratio in that trough has marched higher every single time to the point where in 2025, in April, you know, the Liberation Day market event and all that, the PE ratio bottomed at, I think it was 22 or 23, which would be the highest market bottom historically. And so I think that points to a trajectory to where we should be used to higher and higher PE ratios forming bottoms to the point where maybe the whole concept of PE ratio isn't so important anymore. What I would say there is like if you do have these quasi-sovereign huge MAG-7 companies, in my opinion, they're kind of trajectory, they're kind of transgressing into this.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“That would be a big problem. However, I don't see any big reason for people to stop investing through their 401ks. I think that the degree of fiscal spending that's happening is one of the reasons for that. I think that the amount of government money spending is really pushing the economy along. And secondly, as I mentioned earlier, this idea that dual engine economy just firing up now, where we're now just now starting to see this private credit credit creation happening, To me, that means that we haven't even seen the big lift in GDP yet. I mean, since 2020, GDP has still been on a downward trajectory. Like, yes, we still have positive absolute GDP, but the rate of growth has slowed down. I think that now we are in like the valley of that and that from here forward, we should now start seeing GDP increasing, right? So I think that that is going to remove that employment constraint. In terms of valuation, I don't see...”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“What are the right ways to think about the constraints around this passive flows? Is it dependent on, you know, when I hear about Mike Green talk about this, he's done a lot of work on it. He discusses these ideas of how it's dependent on employment rates staying low and if they were to rise higher, you would see that mechanism. And is there any sort of dependency on valuation, which are obviously rich by traditional measures? What other dependencies are there here? Yeah, that's great. And this is something that Mike and I have often and in public, we've taken a posing sides all on that idea. I greatly respect Mike's work. I think he's a master and I encourage everybody to go look at Mike's work and investigate it for yourself. I think it's very interesting stuff that he's doing. I don't see the same, well, look, I see that the employment ideal would be a constraint on passive. I mean, obviously, if this money is all being deployed through 401ks and people stop saving in 401k.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“This passive mechanism is important. I mean, yes, that is a very important idea of what's happening and what's causing the market to behave the way it is, why we're seeing the valuations we're seeing. But just the idea that we've already taken on this course to invest our capital in a completely automated way. We're talking about deploying AI across an economy.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Like, this is that by a factor of like a million. Okay. Like these companies have become so large that in my opinion, they are integral, woven into the very apparatus of the US system. Like, there is no US government. There is no U.S. country without these companies. They are that large. They are that important. In many cases, they are not only like the beneficiaries of government spending, but they are the conduits. They are the distribution mechanism of that government spending. So if you think about space X, for example, like the last time NASA launched a rocket was 2011. Everything after that has been private, more or less, okay. And so these companies are so big and so integrated that they effectively are the US system. The real thing to mention there too is it's not just”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Not a big deal, especially if this was like 1970, 1980, whatever. This is a great way to do things, right? However, at this point in time, we are somewhere around 50% of all market transactions are flowing through this type of an index tracking idea. So what's happening here as a result is you're getting this feedback effect where if you continually buy more and more and more of the largest companies in this way, you're helping to grow their market values larger and larger relative to the smaller companies, which are getting proportionally less and less and less of those dollars. Now, this has resulted in this kind of like quasi-sovereign MAG-7 idea, right, where these things, these companies have gotten so large that they're putting the, you know, remember like the 2008 idea of like banks being too big to fail?”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Us that the corporate profits that are making their way through to you as a wage earner, which then work their way into your retirement savings, that's all coming from government, right? Or not all of it, but a portion of it's coming from government spending flows through for your wages. It lands into your 401k. And then at that point in time, it ends up in some sort of an index tracking product, like the S&P 500. And there's all different ways that there are ETFs, there's private ways of doing this. But essentially, it ends up in an index tracking product. The schematic there, the idea there is that that money gets invested into the America's largest 500 public companies weighted by their market caps or float adjusted market caps, if you want to be technical with you, right? So essentially the bigger companies get more of your dollar and the smaller companies get less of your dollar. Okay, on the surface, pretty innocuous.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“So, this is another way in which you get this fiscal dominance effect coming through, and this is all enabled by fiat, which enables fiscal dominance to actually bloom. Like you can't get fiscal dominance without fiat. Last piece of puzzle here around paths and flows, the last part of your 4F's framework. Where does that send into all of this? Yeah, so passive flows is really a different way of describing the financial repression idea. Okay. Again, the government's printing all this money. It needs somewhere to go. Where is all this money going to go? What are people going to do with all this money when they get it? And so I think passive flows is one of the ways in which this plays out, right? So where's all the money coming from into passive flows? All right. So if you think about, let's say you're a worker our age working somewhere in the US and you're saving in a 401k, the Colleki levy profit equation shows.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“And you take all that old debt, and now you roll that at four and a quarter percent. It's actually going to keep dragging your interest payments up. So even if you get a cut in September, the Treasury is still paying out more interest. Now, if rates stay at about 4.5%, which I think they probably will over the next year, that weighted average coupon is going to come up to about 3.5%. Now, why that's important is because if you have more debt to GDP, every 1% increase in your coupon is 1% more money going out to the economy through forming GDP nominally speaking. In my opinion, we're going to get somewhere around a quarter percent boost to nominal GDP just through this interest channel alone. I think that's going to be playing out over the next year.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“If you looked back at 2020, when interest rates were very low, the entire government bond portfolio was paying somewhere around $1.89. Okay, so as rates have come up, it's forced the government to pay out more. And that's dragged up the weighted average coupon of the government bond portfolio. Now, if we take this idea further and we look and we say, okay, well, September is probably going to be a quarter point cut. We'll get to 4.25%. However, even if the government sorry, even if the Fed cuts rates, that weighted average coupon is still going to be increasing. And that's because if you roll over all of the bills that will be rolling over the next 365 days at four and a quarter percent, let's say, and then you look at all the existing debt that is going to roll over, like the longer-term debt. So the 10-year bond that was issued in 2015, that's now going to be maturing in this year.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“It's almost creating a bit of this like reflexive feedback effect in regards to inflation. So one of the concepts that I'll touch on there is this idea of like the weighted average coupon that I've been writing about and why that's so important and how that feedbacking into the economy and GDP. So when you When you have more debt than you have GDP right now, the interest rate on the government debt is really important. So if you look at the entire government bond portfolio and the amount of interest that is flowing out of that, right now we're up about three and a quarter percent.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“In my opinion, you do still need a Fed funds rate to kind of help steer at this point in time. Maybe in the future you get some sort of an AI version of the Fed, which automatically tries to allocate resources or something like that. But at this stage of the game, it would be far too radical to suggest like a permanent zero rate or something like that. Like I know these concepts exist. I don't know that they'd be particularly useful right now in this sort of formulation of the economy. But I do think also that the pegging federal fronts to where it is right now and particularly that we have all this bullish ones coming up, it does tie a lot of this, like there's almost like this convergence effect that I believe is underway right now because so much of the funding is being done sorry not funding, but because so much of the federal debt kind of issuance is being done at the short end of the”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Very different from what some people view the definition of quantitative easing. So, yeah, what's the role of these 2010 to 2020 mechanisms of monetary policy in this new regime? The 2010s was a period of massive innovation at the Fed. Like not only did we get corn out of easing, but we got this whole idea of job owning the market at every single circumstance you possibly could. The whole psychological aspect of the Fed really, really got very big. And that's because they were hitting against the zero lower bound and they needed to invent new tools in order to manage that. I'm not sure to the degree to which these new tools will be useful going forward. I think that, for example, we've seen even newer things like standing repo facility being implemented. Some of those things might become more useful. Obviously, Fed funds rate is...”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“What's the use of federal funds rate in this regime and quantitative using? You mentioned yield curve control earlier. You mentioned this idea of money creation comes from either private commercial bank lenders or the government. And that seems...”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Therefore, a higher fiscal deficit and therefore higher inflation, and that reflexive loop, where does that sit within this idea that they're unrestrained by supply and demand? Yeah, right. That's a good question. So when you're selling one currency to buy another, there's somebody else on the other side of that transaction that's buying that currency and selling something else to fund that purchase. So the same amount of currency is still in the system. The only thing that's going to move currency in or out of a monetary system is either government money creation or private money creation in terms of like lending, bank lending or taxes, taxes being one mechanism that's going to take the money out of the system. So as long as that money is still in the system, it's being used by somebody and that is kind of checking against, so to speak, the supply and demand of interest rates moving around. Within this whole framework, where do traditional monetary policy mechanisms sit?”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Government being a monopoly on currency issuance, and therefore they're unrestrained. And I assume you're of the belief that the key constraint that this entire framework you've outlined so far is inflation. But walk me through this idea that, okay, they can, because of the money, they're the monopoly of currency issuance, they can sort of do whatever supply and demand does not matter. I would agree with that in isolation, but we are in a world where we have separate different currency fiat currencies that exist why can I as somebody who is seeing higher inflation because of more money printing, not just decide to go sell that currency and go buy a different fiat currency or a different hard currency like Bitcoin or gold. And by doing so, are you saying that because supply and demand doesn't matter? If I go and sell that bond of that currency, if that would lead to a higher interest rate, that would lead to, I assume higher interest payments.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Illicit a textbook kind of progression where the government prints a bunch of money. That creates a safety net under the economy. Banks see that banks understand that money flowing through the economy, that de-risks debt service for the private sector. And so banks start lending more in response to that. And then you see GDP pick up, right? That's kind of like if you were like the Minsky cycle really just looks at the latter two elements of that. It just looks at GDP and bank lending. If you want to see where the bank lending comes from, then you look over here and the bank lending is coming from the manifederal spending. So those three concepts are all tied in together and they kind of all move together as well. Okay, I want to circle back on what you're discussing earlier with these sort of MMT style connotations of”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Proof point in 2022 everybody thought you were going to have a recession, and yet here we are, and there's been no recession. Now what's starting to happen is now you're starting to see the lending portion pick up. Now you're starting to see loans and leases increase. So you're about to switch from a single engine economy to a dual engine economy. I think that this right now, we're at the beginning of a new kind of growth wave, maybe the second inning, I would say. But as far as we were looking at at examples of how we can grow an economy in this kind of new way, I'd say that we already have our very first proof point and we're on the trajectory to do more of rack. What's driving that private sector credit impulse? Anything, or is it just natural business cycle? I think that the private side is actually a response to the government money creation. You tend to see this very kind of like normal.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Money creation happening through the bank channels, through lending, and that's that type of money creation. But underneath it all, you built this new kind of foundation of fiscal support, right? So let me highlight an interesting idea where economic growth, nominal economic growth, I should say, really comes from the ability to create money, right? That is the big part of growing an economy is being able to create money that supports that economic growth, right? Money creation comes from two sources. Either the government can create it or banks can create it through lending, right? And that's it. You get one of those too. And right now, the fiscal part is what's really powering the economy, right? And we've seen that since 2022. It has already saved us from having a recession. It's already worked. Like we've already had this.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Recession and extended recession for years now. This is the longest we've gone as a society without recession. But isn't the argument there that we're just suppressing volatility and recessions are inevitability and we're just making the future ones possibly worse because we have this whole level of zombie companies that aren't getting flushed out by creative destruction? I don't see it that way. I mean, I see our innovation to skyrocketing right now. I mean, all the innovation is still happening in North America. I think that through this 4F's framework, we can continue operating this way. My whole argument is that this is exactly how we end up operating this way through the fiscal channel, through that ongoing fiscal spending. It kind of de-risks the economy to an extent, right? If you can continue doing this kind of fiscal spending, it provides a safety net under the economy. And yes, we're still going to have private.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Okay, when Nixon closed the gold window in 1971 and we moved to this fiat standard, all of a sudden things changed and you could now as a policymaker you could have the ability to defray a recession if one was unfolding. And that is like basically the policy option every single time now. If you look at the long history of US recessions and inflation and deflation, the US economy is absolutely riddled with recession, periods of recession, periods of inflation and deflation pre-1971. It's like a yo-yo. Literally, you pull the chart up and it looks like a yo-yo. After 1971, you go through this adjustment period. And then like if you look at like recent history, we really haven't had a recession since the global financial crisis, right? Yes, we had a COVID recession. It lasted two months. That was very, very fast. But if you look at the history, like there just, there hasn't been.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“You can't just freely print more money if you need to, right? That would have very dire consequences. You'd end up in this now Ferguson idea where your interest payments go too high and you go bust and you don't have any more gold. The fiat system is a workaround that idea. It's almost like the difference between block”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“It's managed by the Fed, and this is at the overnight rate, for example. And then everything that follows along that, along the yield curve, are just reflections of that initial policy rate with some volatility built in. Okay, you have some allowances like some banding for volatility on that pathway. What that does in turn is it lets the US government print money freely, right? And now we're really getting into this fiat idea under the fore. Let's dive into that one. So US government is allowed to print money freely, okay, if and when it wants. Now, this gives the US government the ability to forestall recession if it wants to, right? Recession now becomes a policy decision, right? You don't have to endure austerity the way that you did under Goldback system, right? Because if you got into such, if you got into a recessionary period under a gold-backed system,”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Under a fiat system, that mechanism does not exist, right? It's not that the interest rate is not subject to supply and demand. If I show up at the Treasury and I ask for my, there's no goal to ask for back. The Treasury just gives me new money back. So that means that that interest rate is not subject to supply and demand. It's purely a policy rate, right? So what I mean by that is the U.S. government is a monopoly issuer of its own debt, of its own currency, all right? You can't get that anywhere else. If you were to show up at the Treasury and you ask for your money back, all that the US government is going to do is just print more money and give you that money, right? And so what that entails is that the U.S. interest, the interest rate on U.S. government debt is a policy rate. It's set by the Fed.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Right, and your interest rate is meant to deter the bondholder from getting the gold back. The trader says, oh, well, what if we offer you 7%? Okay, okay, I'll keep my bond. You keep the gold and I'll go and I'll collect my 7%, for example.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“If our monetary, if the US monetary operations were backed by gold, I would agree. We'd have a really big problem. But it's not backed by gold. One thing that tends to confuse people is the terminology for both systems, gold-backed and fiat, you're using the same terminology, but the concepts are different. And so the best way I could describe this, for example, is one of the big things that got a lot of press back there was now Ferguson wrote this or came up with this idea that when your interest payments exceed your amount of defense spending, then your nation is going to like go bust or something like that. Okay. And if you think about it under a gold back system, that makes a lot of sense. The interest rate in a gold back system is meant to deter people from showing up at the treasury and withdrawing their gold, right? Like if I own a bond and it's a gold-backed system, I can go to the treasury and I can say, here, here, here's my bond. Give me the gold back.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“At the beginning about how you personally feel that everything you just mentioned isn't actually required. And I think that I've raised as a very deep question about the structure and framework of our modern economy and just this idea of governments issuing debt because what you're characterizing there is where is the fair value of the nominal treasury bond yield versus where it's actually trading at currently and how do you value that perhaps as a reflection of NGDP or just inflation but yeah would love me just hear a little bit more about why you think that's not required why is it that high debt to GDP ratio isn't as much of an issue as you think it is and just digging deeper into this idea of just the mechanics behind just the simple function of governments issuing debt and yeah i know you have some hot takes here so i'll just like expand it on it using a similar philosophy to smh the”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“That would be kind of something that you'd see after a ton of issuance happens, right? So if we move through 2025 into 2026, we're still getting all these bills that are being issued. I think at that point in time, that becomes a little bit more relevant, but it's certainly on my radar right now. You know, your question about what does the financial repression do? Well, in my opinion, financial repression serves to reduce volatility because if you can peg rates at, let's say four and a quarter percent down here, and you can nominally grow the economy at, let's say, five percent up here, there's a 75 beep spread in there that is plenty of economic activity in that spread for the private sector to go out and borrow down here, invest up here, and they make the difference all day long. And that is a huge growth wave. I mean, you could really power an economy for a long time doing something like that. I want to circle back on what you said.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“We even got the Soma manager to talk about this in an interview like a couple months ago in the summer. And I think what may be happening here is there's like a $500 billion like cap on it right now, but I think what you could see here is, for example, a primary dealer like at auction buys a bond and then immediately pledges that bond to the facility. So they get some cash back. And then the facility. And then if you just like roll that bond daily. especially if that bond is like, or sorry, if it's not a bond, if it's a bill, right? And you're rolling it daily, you've never like really held that bond on an unleverry basis if you're the dealer. Like if you immediately pledge that bond, you get some cash back. And then it's kind of sitting at the Fed the whole time, which is like a soft version of yield curve control, if you think about it. So again, we'll wait and see. It's far too early to tell at this point in time how that plays out, if anything.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Thing called the SLR was put on banks, and it was very effective. The banks stopped lending a lot. That's almost why financial or that's why the fiscal repression idea came into it to kind of its own, or at least one of the reasons. But anyways, if you can remove this SLR ratio, then banks can lend $600 to $700 billion more. There's more cash out there. There's more growth happening. Another idea is yield curve control. This would be an explicit kind of way to tackle financial oppression. This would be where the Fed would actively buy a whole bunch of government bonds. I don't think that that's going to happen. Some people say that that might happen.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“To be holding all this government debt, you need somewhere to put all this cash that's being put out there, right? So, where are you going to put it? Well, if you can get all these stablecoins to be backed by U.S. treasuries, well, then there you go. Now you have a new buyer of government debt, right? So that's one avenue you could kind of exercise this financial repression. A second avenue would be, you know, if you can encourage banks to lend more, right? That's a kind of a different way that you could tackle this type of a problem. And I think that's kind of where this SLR exemption or the SLR removal idea is coming into play, the supplementary leverage ratio that is. This was something that was put into, that was put onto banks as a new regulation in the aftermath of the global financial crisis. If you recall back then, everybody was very concerned that the banks were lending too much. And so the idea is we need to stop them from lending so much. And so this.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Debt or at least result in some sort of financial repression where you inflate away the value of your debt in like nominal terms, right? And so if you have that kind of a thinking right now and you see that US debt to GDP is up over 100% as it is today, then you have these alarm bells going off and you're trying to think about ways to go through a financial repression framework, right? So how is this being implemented behind the scenes? The first thing that I think is most obvious here is the idea of stablecoins. Okay, so right now you have about what, $900 billion worth of stablecoins out there. And the trajectory implies somewhere around $2 trillion on the low end. I think up around another estimate I read was like $3 trillion. I think maybe it was Goldman or somebody else at $3 trillion. But anyways, stablecoins are going to be growing. Okay. And so according to these policymakers, you need some.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Much more of this to come that we're still in the early stages of this idea. Let's dig into the next one of financial repression. I would love to sharpen the question around there a little bit in terms of how that interplay that we just established a fiscal dominance in terms of just the effectiveness of monetary policy. Is that where it starts to lead into how financial repression gets employed? And what is the goal here of financial repression as you see it? Yeah, that's a great question. First off, I just want to like put it out there that I don't think that we need financial repression. I'm not of the opinion this matters. I think that rates can go to 6% and the economy will keep humming and we'll be fine. However, that's not the world that we live in. The world that we live in is populated with policy makers that all went to school at all the ivies and all of these people learned that when your debt to GDP gets past a certain point in time, you should be concerned and then you need to do things that will lower the...”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Has been going into technology and related capital. It's been about $700 billion. Over that time, real GDP has grown by like three and a half, 3.6 trillion, right? So that's like, what, like 5x, right? If you go back to prior kind of big capital spending booms, if you want to call them that, technological breakthroughs, that kind of thing, you could canals, railroads. You want to look at fibering.com. Those were like two to 4x kind of back of the envelope kind of multipliers. So right now I'd say that this actually quite a successful deployment of capital. And I think that we're just getting started, to be honest with you at this cool stage. Like we're reading about chat GPT being like limited at this point in time because they literally can't get the energy to do all the tokens they need to, right? So I think that there's so”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“The GDP formula, and you get the collective levy profit equation. What that is telling you is that corporate profits are really dependent upon government spending. Okay, so if government increases spending, corporate profits go up. And this is pretty well kind of a direct relationship here. And I think that we're seeing this play out in the real world today in how we're looking at the amount of spending on tech, AI, data centers, et cetera. This is obviously the hot place where all the money is getting spent today, all the growth capital, all the fixed investment is getting spent in this area. If you want to look at this from a real GDP growth perspective, like since 2018, X technology, there's been like no fixed capital investment, right? So that means that all of the fixed capital investment since 2018.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Of just floating the economy through with high government expenditure. Well, I think that it was actually quite sustainable. This is kind of bleeding into a little bit about the fiat money portion of the 4Fs, but I'm of the opinion that if you're operating under a fiat system, there is no hard limit to the amount of government debt that an economy can handle. That is to say that inflation is still a very real constraint. You can't just print your way into prosperity. That's never worked and you can't do that certainly today. But as long as the government can channel that money into corporations and then those corporations are putting this money to work in various ways that are beneficial to the economy, that do create actual growth. This can be sustainable for quite a long period of time, right? I would say that right now, for example, if you were to rearrange”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“And part of what I'm going to argue later on is that that's stability of the government spending is part of what makes an AI economy work. You need a stable kind of foundation to grow from. And this transition that we're going to where you get that stability more so from the government sector is integral to this whole idea. Next question, just on the sustainability of fiscal dominance. You almost characterize it there a little bit, but there's always this risk of high government expenditures creating this crowding out effect of the private sector and just this notion of you can't just float an economy through with positive growth by just throwing government expenditure at it if consumption and investment aren't following in that same vein. It sort of brings up this idea of the K-shaped economy or the silent recession that some people say that we've been in for the past few years. So how sustainable is this dynamic?”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“We're at a point now where the cyclicality of the private sector debt is actually leading to lower efficiency than government spending, right? So what I mean by that is if you look at government spending to GDP, the multiplier there has actually been pretty consistent somewhere around two.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Especially in the household sector, that certainly was a big part of making this whole thing happen. For corporations not so much, I mean, to some extent that is true, but corporations roll their debt a little bit more frequently. You don't tend to have a lot of three-year corporate debt outstanding, right? And so to some degree, corporations are a little bit more sensitive to this idea. But one thing that kind of like overarchs this entire idea is that if you go back and you look at government spending over time, government spending tends to grow around somewhere around 5.5% per year annually going all the way back to 1985. And actually, if you want to look before then, like from the 50s until 1985, the rate of growth was actually much higher. And so one thing that's been happening here is government spending just keeps growing at this compounding rate, 5.5%, whereas the private sector tends to be a little bit more cyclical, we could say.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“But there's been no explicit agreement, right? It's not like in 2022, the Fed and the Treasury got together and said, this is what we're going to do and we're going to save the economy still. Like this was fiscal dominance almost by accident. And even though this is kind of come about almost by accident, I think that what's happening in the background now is that the Federal Reserve is becoming aware of what's happening. I think it's almost too hard to ignore at this point in time. And you have to remember, these are very highly educated, very smart people. They don't live in a bubble. They see what's happening out there. And I think to some degree right now, some of the back and forth around Fed independence, where we are on interest rate policy, et cetera, Powell at Jackson Hole, I think some of these ideas, the Fed is starting to realize that they can help either slow down or increase the amount of”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“Expansion. And so that's where now this fiscal component becomes dominant. If we look back in history even further, we can see that we've seen we've been through something like this before. During the World War II period, the Federal Reserve and the U.S. Treasury came into a direct agreement that the Federal Reserve would lower rates in order to explicitly help the U.S. government fund the war effort, right? And that was like, that was a very explicit agreement. That ended in the early 50s under the Treasury Fed Accord, when they agreed at that point in time after the war that they were now going to separate and the Fed was going to become independent again. And incidentally, that's kind of still the framework that the Fed relies upon today to acknowledge its own independence, right? It really stemmed from that key agreement. The interesting thing about, again, what's happening recently is like we're at this fiscal dominance.”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT
“The best example of that that we can point to is you go back to 2022 where the Federal Reserve raised rates, you know, 5% in a year, massive raise in a short amount of time. And if you recall back, as you said just a moment ago about the yield curve inverting, all of this stuff started coming out where that was supposed to contract the economy. But that's not at all what we got. Instead, what happened was the Federal Reserve raised rates, which caused the amount of interest payments flowing out of the U.S. Treasury to also go up. Well, somebody's on the other side of all that interest payments that are being paid out. These are private entities, right? Corporations, people, pensions, funds, et cetera, and they're taking that money and they're either saving it, they're spending it, they're investing it, and that money is flowing out into the economy. And what was supposed to be an economic contraction turned into an economic”
2025-09-03 · Forward Guidance · Why Everyone Keeps Misreading The New Macro Regime | Ben Kizemchuk · IDENTIFIED FROM THE TRANSCRIPT