YouSaid · the spoken record

Mel Mattison

lines on the record: 105
first: 2024-05-20
most recent: 2024-05-20
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“As he can hold on to, we're anchored at 2%, he will. But at the end of the day, if you read the Federal Reserve website, you know, there's three mandates listed there. It's not just unemployment and price stability. It's also long-term moderate treasury yields. You can read about the Fed, what is our goal, and that if he gets into that corner where the long end starts going haywire, then he will do what is necessary to keep that in check. And that's where I think Yellen is very political in doing things blatantly to keep the yield curve in check. But I think that Paul, if the economy needs it and there's going to be a collapse or a Treasury auction's going to go bad, he will keep Treasury market stability. He will keep moderate long-term yields and he'll do what he needs to do. And if he needs to sacrifice his 2% target, I think he will.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I believe he's a sincere person, and I believe he has the interests of Americans at heart. I don't think he's diabolical Machiavellian central banker twirling his mustache. But I do think that he gets a little bit boxed into a corner. And I think a lot of market participants were surprised in December when he seemingly pivoted when the numbers didn't necessarily say, you know, we should be talking about cuts. And that came right after that spike of 5% in October in the 10 year. And then I think in his last meeting where he talked about, hey, we're still on track. We're still heading this way. I think he really, really, really wants to cut because he knows the rest of the world wants cuts. He knows that the world doesn't want a super strong dollar and that it causes a lot of problems. So I think as long as”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“The IMF had certain rules instituted around it for where currencies essentially should trade. And there were wartime emergency exemptions that a lot of companies took so that they didn't have to fully embrace the Bretton Woods IMF framework until 1961.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I think it would be an interesting book. It's available wherever books are sold, Amazon, Walmart, Target, Barnes& Noble, anywhere. And it's available now. And if people want to give it a read, I think they'll enjoy it.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Everything I say A financial thriller. I tried to build in some of the themes that we talked about today. So it basically takes place in 2027. Quantum computing has merged with AI to actually control the stock markets. And this quantum computer called Icarus is operated out of a sub-level of the Bank for International Settlements in Basel, Switzerland. And there's essentially a bunch of hijinks going around with central bankers from India and China and Russia, also with corrupt US politicians. There's a massive $9 trillion spending bill called the Phoenix Act that essentially triggers a financial collapse. And the hero, Rory O'Connor, who's a crypto trader in San Juan, Puerto Rico, has to kind of save the day. So if you're into thrillers and you also love finance and economics,”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Of a market psychological realization that the US government is not going back to a bout's budget. They're not even going to go back to 2% or 3% deficits unless we do something. And that's when the market is going to come in and say, you know, we demand higher yields and then that's going to cause the politicians to do more of that yield curve control, financial repression type stuff I've talked about. And then at a certain point, even that doesn't work. And that's when the collapse happened.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“It's not that I have a magic number in my head that's going to hit this tipping point. And that's when we hit 138%, then it's going to go over. But what I do look is I look at those monthly treasury reports and I look at where the interest, so interest on the debt. There used to be quite a number of departments and spending buckets that were higher. Now we're passing defense. Later this year, we'll probably pass Medicare. And so at a certain point where we're going to get to, let's say, 30, 40 percent of government spending is to fund interest on the debt. I think that that is going to be kind of a light bulb going off in different investors' heads, saying, hey, there's just too much treasury supply because we're going, it's more of a qualitative thing than a quantitative, like at 138%, it becomes untenable. It's more.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“That makes it particular levels. What's so particular about the 120% debt to GDP? Or is there no particular level? And you just think, okay, this is a long-term thesis and I don't know when it's going to happen, but I think it's going to happen versus the much more specific nope, this is it.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Where the monetary floodgates burst forth, and there's a breaking of 2008 great financial crisis. You say, okay, once subprime delinquencies reach 5%, then the bonds that have those in them, then they'll start to fail. And then derivatives that are composed of that, then they start to fail. And then the banking system is funded and short-term liabilities. Boom, boom, boom. The dominoes fall. Likewise, a much, much more less dramatic crisis, less destructive crisis, the banking issues of 2023. Okay, once interest rates reach a sufficiently high level bond losses will be severe. Okay, then specialty banks like Silicon Valley Bank, the VC that rise in interest rates will slow the VC funding activity. All VC companies, VC-backed companies almost by definition, lose money, or most of them, I should say. So bank deposits will fall because there's no new money being injected to VC. And then they're going to have to raise new capital. And then, okay, the dominant.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Yes, and I think that gold as an anchor does reign in fiscal spending, which can be a good thing, but if you're in a great depression, it is obviously a horrible thing. I actually like the word anchor because that makes me think of ships and okay, we just discovered this huge silver mine. So because there's a huge influx of silver, suddenly inflation should be at 20%. And nope, the ship who discovered it, it sank. So suddenly there's deflation. I mean, that just seems, you know, we're too advanced as a human civilization to be operating on those rules, in my opinion. But it's very interesting, Mel, final pushback I have for you is, okay, your argument makes sense as a qualitative argument. But as I said, when I was born in the mid-1990s, if someone, you know, if I was a thinking aged then, it might have made sense to me then. What is so magical about this 120% debt to GDP ratio? Why can't we have, okay, if flatlines and then it goes to 150% and then 180%, what is so magical? And in previous instances,”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Monetary system where the spending does not once again get out of control, like I said, the way that it has, where we're now at this point where we need to run 7% deficits, even though we have less than 4% unemployment. And those deficits are only going to go up as, you know, the Social Security Medicare Trust Fund's empty, that we're going to rein in spending a little bit with gold as an anchor.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, a more mild view. I mean, I think Keynes called it the barbaric metal that kind of shackled governments. And I don't think we can ever will ever make that mistake again of going back to whatever the gold is. That's the amount of money supply in the world. But I think that it can be used as an anchor. It can be used as something to essentially handle these trade current account and trade deficit type imbalances where currencies that are able to hold more gold will hold their value better and currencies that need to just print ad infinitum will be weaker and that the cost of that weakness in the currency is going to be inflation in those countries. And so there's going to be a drive to have a little bit more of an”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Mel, if you were to tell me if ladies are going to be hot and whether they're right or the wrong, central banks, including the Fed, but also China, India, they're going to be buying a ton of gold. And that's what drives the price up of gold. More people who want to buy it than people who want to sell it. And gold goes up. I could totally see that. In other words, gold as a percentage of foreign reserves. Gold as a reserve asset increases. And it takes a percentage. I feel like once you get pegging fiat currencies to gold, I feel like haven't we learned in history that that ends as a disaster? Is that what you think? Or do you just, are you believe in the much more mild view of the impressive downing Bretton Woods 3.0? Okay, China buys gold, you know, so what?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“And that we're going to really see this huge spike in silver. And we definitely have seen it recently and silver's playing a little bit of catch-up. But if you look over the long run of human history, the gold silver ratio has been steadily declining, right? So when the country was formed, we were at a 15 to 1 ratio within a decade, the US government needed to change it to 16 to 1 silver to gold. And now we're at like 80 to 1 or something like that. So I do think that, you know, industrial metals like platinum and silver are going to do well. But I think gold has the potential for real outperformance because it gets moved into the monetary framework in a meaningful way that it hasn't been since the 1970s.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Used by the world central banks, even though we're not having this runaway 20% inflation gold, you know, Luke's done work where he's like, you know, if you wanted to take US gold reserves as a percent of foreign GDP, they kind of averaged like 40% for a lot of US history. So in other words, if you took all the gold that the Federal Reserve owns, you could immediately go out and pay off 40% of foreign treasuries. And now that level is, you know, less than half of that. So if we get back to like a 20, 30, 40 percent of foreign treasuries to gold because gold has re-entered the monetary framework in a meaningful way, then that's where you're going to get the gold price. And that's where I'm a little ambivalent about, you know, a lot of people talk about the gold silver ratio.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“So there is an appetite on the part of the BRICS countries to infuse gold into whatever is going to replace this dollar-denominated system in some way. I don't think it's going to be like 1915 where the pound is pegged at 4.2 pounds to an ounce of gold or whatever it was. But I think that gold is going to become a part of it. And you've seen the central bank buying and that these are price-insensitive buyers. They're continuing to buy. You know, Luke Groman has talked about China wants to start buying oil from Saudi Arabia in Yuan. Saudi Arabia is going to be happy to take a certain amount of yuan because they buy a lot of Chinese goods, but they don't buy that many Chinese goods and they're going to want to net settle in gold. And so as gold gets re-entered as a true monetary metal,”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Inflation. I mean, if you think about a $500,000 home going up 60%, you know, that's going to be $800,000 home, you know. And so I think that it's going to be significant. It's going to be hard for the younger generation that wants to buy homes. If you're like a 30-year-old family starting out and you don't have the down payment. And so it's not going to be easy, even though I think it's only three or five percent. I think that is going to have effects. But I just don't think it necessarily has to get skyrocketing like 1980 where we get like 15%, but it could. It definitely could. You were asking me about gold and why would gold do so great in that environment? And I think.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“And, you know, without spiking to those levels, we might get like a year in there when it spikes to 8%. And then the Fed raises rates again and does something and then comes back down. But I'm kind of cost averaging three to five percent over a decade long period, which takes away about 70, 60, 70 percent of your purchasing power. A 10-year period of 5% inflation, I think takes away 62% of your purchasing power. So if you compound 5% over 10 years, you wind up with 1.62 of whatever you started with. And so you can factor that in. So that's still kind of a massive, you know.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I agree that with everything I've laid out, I understand why you're saying, well, I would have expected you to say eight, nine, ten percent inflation. I do think that's possible. So if I was doing a scenario analysis, I had a worst case, base case, best case. In the worst case scenario, like I said, they lose control and you get massive spikes in inflation. But I think that they're going to do their best to try to manage it. And, you know, I think we've already seen like the economy come in a little bit. First quarter GDP wasn't as robust as fourth quarter. So we're not in this runaway economy of like eight percent nominal GDP growth. And I think that's really what they're trying to control it. And it's difficult to control, but I'm giving them credit that they might be able to pull this off and keep inflation.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“And it really is an economically informed play, which you don't get to say that often, about basically this oligarch who recognized there would be hyperinflation in Russia during the fall of the Soviet Union, and he just borrowed as much money as he could and bought a bunch of cars and then sold those cards for three times higher. And his liabilities were basically nothing because there was hyperinflation and he was able to, that's not the environment you're describing. You're describing an environment of the mid-1980s. I mean, like, for example, 1980 to 1990, I don't know, inflation averaged probably 4% and gold collapsed. So why is the environment so going to be so good for gold?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Okay, I thought you would have said higher for me to see Gold does extremely well and gold crushes stocks, which maybe are flat in nominal terms and have negative real returns, i.e. inflation adjusted returns. I would have thought you would have said inflation closer to 10%, such as you had in the 1980s. Actually, Vincent Deluard, a longtime guest on my show, who you may know, he has a great work which shows, yes, a long run rate of 2% inflation, that's what is best for the stock market. But if your goal is to maximize nominal GDP growth, actually something closer to 3% or 4% is actually better. And some people are going to hate me for saying this. They even think a 2% inflation rate is a 2% stealing from savers, which, you know, I mean, that argument, you know, there's definitely an argument for that. But why is it 3% to 5%? That doesn't really seem to me an environment where stocks collapse and gold goes to $10,000. I mean, I saw an excellent play last night called Patriot or Patriots, which was about Russia in the 1990s.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“In the two to three percent range, but I think they're going to be okay with an extended period, a five to 10 year period where we're actually at a 3% to 5% range. And that's going to be the trick that the balancing act they're going to try to pull off.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I think we're probably looking at a five to ten year period now where if they're able to do what they want, their best case scenario, we're going to have a three to five percent inflation. And so, you know, if you look at that over a five or ten year period, I think that will help get GDP levels around the developed world back to where they're somewhat sustainable. If they lose control of this, if people realize that there's a little bit of impotence to raise rates, that Powell can't pull Voker and raise rates to 10, 15% because debt to GDP is so high. You know, in the 70s, debt to GDP was like 30%. And so when borrowing cost for the government skyrocketed, the government was able to absorb that at 120% of GDP, you know, the Fed can't. Take interest rates to eight or nine or ten percent.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“If there is a lot of inflation, I mean, that seems very plausible. In the 1970s, the stocks do not like large amounts of inflation. Yes, profits go up, revenues go up, but so do costs. And it causes bond yields to go up, which means that it's hard to discount the future. So you have price to earnings ratios in the single digits instead of where they are now, I don't know, 28. How high you think inflation is going to be? We went from a peak close to 9% inflation in the US. Now inflation is year over year, 3%. It depends on how you measure it. It's a little bit higher on a six-month, three-month annualized basis. Where do you think inflation is going to be over the next decade?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Lost decade for equities where we might hit a high in 27 or 28 and we might not get back to that high until 37 or 38. And that people should be at least aware that that's a potential outcome here. And I think a lot of Americans are being told by Larry Fink, like you just put your money in the stock market. And as long as you're holding it for five, ten, 15 years, you're going to double your money. And I don't necessarily think that when people start putting their money in the stock market in 2027, that they're going to have their money doubled by 2037. It could be dead money. It could even be a loss in real terms. And so I just want to caution people to at least consider, you know, my thesis as a possibility and that we could be heading for trouble in the coming years.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“It will get solved, but I mean, look, I mean, even in our lifetimes, right, we had a 50% drawdown in 99. We had a 50% drawdown in 2009. We had a near 50% drawdown in 2020. So in the last 25 years, we've had three 50% drawdowns. I'm not suggesting that this time, like I said, will lead us into living in caves. All I'm suggesting is that the good times are here. The good times are going to stick around because we've got the runway for another year, two years, maybe even three years. But at a certain point, you know, we're going to have another one of these drawdowns. And I think that it's going to be significant. And unlike other times where we had these V recoveries and we immediately got back to highs, that this could be essentially kind of a lost decade. The 2030s could be kind of a”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Would be a quick law to change, it's very fractious, increased payroll taxes, cut benefits for Social Security, elderly people, they vote. Unlike people who are in their 20s who some of them most, some of them don't, but old people vote seems unlike now politically untenable to cut benefits. But yeah, I mean, it's definitely an issue, but it's going to get solved. So, you think that what do you think is going to happen?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Definitely need to be an adjustment in Social Security law in order to allow the U.S. government to fund it through deficit spending.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“The Medicare Trust Fund is much smaller and a lot of Medicare does get funded differently than Social Security. So Social Security is completely funded by previous payers of Social Security. Certain amounts of Medicare are funded through current deficits. And so the Medicare Trust Fund, there's two different trust funds. There's like an old age and survivors disability. It's in just as bad a shape and the CBO predictions are essentially around that 2030 timeframe for when the Medicare Trust Fund runs out. The only thing with the Medicare is that current law allows the government to make up that shortfall. In Social Security, current law does not allow the government to make up the shortfall. It's supposed to be completely funded by what people have paid in. And so there will”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Will get such that it's untenable, there will need to be some pain, and this will be a, I would say, a 40 to 70 percent drawdown in the S&P, and that out of this, world governments will realize we need to adjust this dollar-based system. We need to do something more along the lines of what Kane suggested, which is more of a basket of currencies as like an international trade-weighted unit of account. And that's going to cause financial troubles.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“It's going to be a psychological cause where people say, okay, we're at 35 times forward earnings. Are we going to really go to 45? Are we going to go to 55? Like when does this, when does this train end? And that's when people start heading for the doors. And it's essentially like a massive bank run, but not a bank run, a financial asset run where people are going to say, oh, I want to sell my rental house. I want to sell my stocks. I want to take these profits and lock them in because they've been so amazing. And then you get this dearth of sellers and you don't have buyers because people say, oh, well, I'm not going to buy stocks at 40 times forward earnings. And that's where the collapse happens. That doesn't mean society collapses or we necessarily have World War III or people are out in the streets shooting each other and trading in gold coins. I'm not predicting that. But what I am doing is saying that the situation.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“They're going to find ways to keep this train moving, but there could be financial casualties along the way. And I think part of those casualties are going to be the purchasing power of the dollar. That's going to be the primary casualty because in order to keep all these things funded and keep everything going, it's just simply going to have to be an inflationary period. And like I said, I think people are going to see that writing on the wall. They're going to say, hey, inflation's coming. Stocks do great in inflation, right? Stocks are priced in nominal terms. If Apple can sell an iPhone for $1,000, it'll be even better earnings if they can sell them for $2,000. And so that's going to essentially build this bubble. And the death is not going to be necessarily because some external cause forces it.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Markets of saying, okay, if the United States government is not going to let, you know, they're not going to tell people, okay, you can't collect Social Security until you're 75. Or, you know, which is Social Security is kind of an easy fix because you can do means testing. You could take it away from millionaires. You could raise the age. You could raise the tax from 6% to 8% or whatever for employee-employer. You could do things to kind of get Social Security solvent. Medicare is a little bit more difficult because of, you know, the intense costs and the fact that”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I do agree that ultimately the politicians and the government have a lot more power than people necessarily presume. And you have to break that mode of thinking, well, this is the way the financial system is now. So if it stays this way, then it becomes untenable, but it doesn't have to stay that way. As you said, in World War I, that happened. It happened during the Civil War in the United States, where Lincoln issued his legal tender notes that were colloquially known as greenbacks, which were not backed by gold. And so they instituted this fiat currency. The politicians always have in their back pocket, you know, essentially the military control of the state. And they can enforce things. But that will eventually have cause of rethink, I think, in the financial.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“A lot, if you think about it, there's so many things in financial history that are so much more complicated than this. And I'll give you an example. You know, in World War I, before World War I happened, the bankers said there would never be a World War, you know, okay, fine, we'll go to war, but don't worry. The war is not going to last that long, you know, not longer than a few months because we'll eventually run out of money. And that definitely was true using the pre-World War I gold standard rules, but political will just said, no, we'll print more money. Easy, done. If political will is there, the financial barriers that seem like they are so impossible, they definitely are possible to break. So I agree that this definitely could happen, but it would be because a lack of a political will, not because of a true financial reason. Do you agree or no?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Melt, isn't the issue with Social Security entirely political? In other words, from a financial standpoint, it is ridiculously easy to solve. And I think you could write a bill that would, I don't know, 30 words that could say you say, okay, instead of funding Social Security with a payroll tax whose surpluses go into a CECL trust fund that pays Social Security, or if they have deficits, as we do now, it comes out of the trust fund. It's just part of the government. And you fund it just as the same way you fund the firefighters or the military or paying the congressional salaries. You borrow money. And if you have a national surplus as you did in 2000, then you'll pay it from taxes. But you pay it by taxes and tariffs and the rest. If you have a deficit, you fund by borrowing money. That was probably a little more than 30 words, but it's simple. And isn't, you know, you've studied financial history so much more than I have. You've read 200 books, which really isn't.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I peg on like a year or two of stock market anticipation of this happening, and I get to 27, 26, 27, 28, sometime during the next presidential election cycle where the market understands this. And I think even Jeffrey Gunlock said that debt and deficits are not a major issue for the 2024 election. They will be the major issue for the 2028 election. And so I think as we head into the end of this decade, that's when this is going to ramp up. I can't give you like, you know, May of 2027, that's when it's all going to come down. I have to give a broad period. And I can't underestimate the ability of Treasury or the Federal Reserve to continue this charade. But I do think that there is an end point coming and it's probably going to be before the 2020. Election, and that's when we're going to have the rubber meet the road.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I have no idea. I have the numbers here. I mean, the accumulated holdings of the Social Security Trust Fund in 2019 were 2.8 trillion. The next year 2.9 trillion. And it was in 2021 where we started going down. We went back to 2.8 trillion. So there's still 2.8 trillion. Then it goes to 2.7. By 2027, we're at 2.2 trillion. And then it really starts like almost like a free fall and starts going down so that by 2032, according to this report, we're at less than a trillion. Now, the thing about these CBO reports and predictions is they predict no recessions. They predict everything going great. And so it could be 2032. It could be 2033. I think it's going to happen a little bit sooner, closer to 2030 when the trust fund goes empty. And then that's where I...”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“And people are going to start heading for the doors. So, what I feel is it's going to be a growing realization of the necessary issuance that needs to happen at the end of this decade because of Social Security Trust Fund going broke, but that the market's going to anticipate that by a year or two. And that's when people are going to start heading for the exits.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Is that people are going to be looking at the Social Security Trust Fund and they're going to start saying, hey, we're now paying out a lot more of the Social Security benefits than we're taking in and we're not getting that boost of free money from excess social security. And we're getting into trouble where we're going to have to issue even more and more bonds. And that at that point, the market is going to start recognizing it. The bond market visual antis, if you will, will start coming in and we'll see these renewed tales on Treasury auctions. And that's going to essentially make the market nervous and then people are going to say, wow, S&P is at 7,000. I should take my gains and get out and go home.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“I believe that the Federal Reserve is going to cut rates this year. I believe they're going to be forced into it regardless of what inflation does because of the global macro picture with things like we talked about that they're going to need to be cutting in Europe and they're need to be cutting in UK. And if they don't cut that the dollar is going to get too strong. And so this is going to inject the liquidity. This is going to fuel the animal spirits. And we're going to continue this melt up.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Like stable coins, which also hold bills, you know, T-bills. And you just had last month a bill by senators Loomis and Gillibrand, the Stablecoin Payments Act, which was not passed, but I think it's eventually going to come, which requires that stablecoin custodians use a depository institution underneath the Federal Reserve. And so they're trying to swoop in all this stablecoin money. I think that instead of a CBDC, they can basically take these private stable coins and have them mandated to hold their deposits at banking institutions, which is what this bill does. So it's like a backdoor CBDC. And this is going to essentially allow the government to continue to print larger amounts of bills. And do everything they can to keep that long end issuance low. But at a certain point, they just can't keep. There will be a tipping point.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Into the market. And you're just not only are you having U.S. issuance skyrocketing, but then you could get central bank foreign holders of treasuries selling. And so it becomes this perfect storm where you have just tons of supply and who is going to mop that up. I mean, there was, I think, 10, 15 years ago, like 25, 30 percent of US treasuries were owned by foreign central banks. And now that number is down to like 10 or 12 percent. And so it's US insurance companies, it's banks like JP Morgan. And that, you know, ties back into that, that is the letter where they ask to be able to hold treasuries without it counting against their tier one capital so that the banks are going to be called upon to swoop this up. And you have things.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“They would need the dollar to pay their international trade. So China is the world's largest net importer of oil. They're the second largest foreign holder of treasuries. And when they need to buy oil, they're working out arrangements to buy with yuan and other things. But they've already stopped buying treasuries. They were buying tons of treasuries and now they've basically held flat. And other countries would do the same Japan with their currency, they need to, they cannot let the again go into free fall. It hit 160 last week or so. And so they're the largest foreign holder of treasuries. And if they sell treasuries to essentially buy yen to strengthen the yen, then again, you're going to have more treasuries.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Are all tied into this, and that if you get into a situation where there's this need for liquidity and the dollar starts going up, then that is exactly going to coincide with higher yields and it's going to coincide with this market stress.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“The dollar has been the best house in a bad neighborhood for sure. And that makes sense, right? Because ultimately it's a dollar system and the dollar has that ability. But what the US government is afraid of is a strong dollar. And when you get a strong dollar, so if you start having distress in these other places first, like the UK or Germany or China and people move into dollars and you strengthen the dollar, then that is when you get yields up and you get these problems. So we had the dollar index at, I believe, 114 or thereabouts, you know, during the time of crisis last year. And now the dollar index is at around 105. So we've had this amazing rally because of dollar weakness. And when we had the dollar strengthening, that was when we were in trouble. So the dollar and the currency.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“How is the problem now in dollars against other fiat currencies? The issue of bond yields and duration of owning a 10-year bond, whether it's a German Bund or a Japanese government bond, JGB, or a 10-year treasury, all of them have lost money in all currencies. But when it comes to the dollar versus other currencies, the dollar has been strong, right?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Real assets, and then you're not going to have the rally in the treasuries that you normally would because that's where the problem is this time. And in the past, you know, the problem was not in the treasury market.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“Well, not last year, no. It was, I think it was deficit spending was like 7% nominal GDP was like five and a half or six percent, I think. So it's still not quite there. But what I think is different this time is that in all those other instances, whether it's 1933, whether it's the SNL crisis, whether it's the dot-com crisis, whether it's the GFC with housing is the bubble was in an asset other than treasuries. And so what happened was in a time of market stress, everybody moved into treasuries as a safe haven. What I think will be different here, and this is actually part of the plot of Quaz, is that when there's a time of market stress, all of a sudden the dollar and treasuries are not rallying. And that's what's going to be new is that a time of market stress and what you're going to see rallying, I think, is going to be things like gold.”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT
“So you said when, if and when there's an extession and the stock market goes down, the US government is going to have to issue even more debt, which is going to cause bond yields to rise. Empirically, though, doesn't that not happen? When the US government issues a ton of debt, it's because there is a recession, yes, but actually bond yields fall because everyone wants debt. What is going to cause? You see, the World War II sterling was completely wiped out. Don't you need a monumental event? Cause what you're saying debt to GDP, it went from 60% in 2007 to basically 100% in 2013. And then it was flat. And then 100% to 130%, 1125% in 2020. But since then, debt to GDP has actually been going down because the nominal GDP has been growing faster than the debt, right?”
2024-05-20 · Forward Guidance · Mel Mattison: Asset Bubble Crescendo Until 2027 Collapse When U.S. Treasury Market Implodes · IDENTIFIED FROM THE TRANSCRIPT