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Sven Henrich

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65
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2022-07-06
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2022-07-06
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  1. “The peak spike was in January. I was baffled, I got to tell you, and I think a lot of people probably baffled that at the June lows when we went into 3,600 area, the VIX was again making a lower high. You would have expected in standard market functioning, you would have some sort of capitulation VIX spike. No. And we can discuss that separately. It's kind of an oddity because it almost makes it feel like this whole thing is a bit controlled. It's like it's managed in some way. And I'm not saying we can't have a massive Vix spike still because I actually long term still see that coming. But I just, in terms of market behavior, I find that very, very odd. So if that was my theory that they're going to let this happen with job boning, then this was all going according to plan. Again, Russia, Ukraine, I think, made things a lot more difficult for them because of the energy price.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  2. “This article talked about okay, maybe this year is all about gaming, the Fed. And if I were the Fed, what I would do is I would jawbone and get the market to tighten for me as much as possible so that actually I don't have to raise rates to the point where I break things, but everything, let stocks fall for once, right? Take the excess demand part of the equation. demand destruction, create, slow it down. And then when the time comes and do all this without actually causing a crash, right? And interesting enough on that point, this is so strange about how this market's been acting this year is because we made lower highs and lower lows, lower highs, lower lows on the S&P. But so did the VIX.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  3. “to over 200% market cap to GDP. And everybody ignored it. This is madness, right? You cannot expect to have a long-term disconnected financial system that is not backed up by actual productive growth in the economy. So the fact that the bubble now burst is maybe a positive in a sense that, okay, we're getting back to a right-sizing type process. The problem is it's so big we're still high. We're still in 165, 170% range. So we're just kind of sitting on top of the tech bubble at this point, right? So how do you, from a policy perspective, convince the market that you're actually serious without then actually breaking something? So this is the art of jawboning as it's called, right? At the beginning of... The year I said”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  4. “It was around 40 to 60 percent. And it went on for decades like this, right? And we had this big tech bubble building and we saw something we'd never seen before. It went to about 150% market cap to GDP. So the market was evaluated a lot more than the economy itself in terms of annual GDP generation. Then we had the tech bubble burst. Then we dropped to about 75%. We went back to the normal range, if you will. That was the bottom. Then they came up with the housing bubble, right? Because they kept interest rates low and then that fueled a new fire speculation got to about 137% market cap to GDP. Then we had the global financial crisis. Went down to 50% market cap to GDP. So these were kind of these excesses that right-sized themselves after things broke. Well, in December, they actually had lifted the whole thing up.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  5. “Well, first of all, they have to have, if you look at now from the Fed's perspective, let's say they are in a box, like I say they are. And they got themselves, they got the policy completely wrong. They got themselves trapped. They are in a position where they've lost a lot of credibility, maybe all credibility at this point, because not only because they got it wrong, but because obviously over the years, they've trained the investor mindset to always expect an intervention. And I would say they were genuinely scared of something ever breaking again like during the financial crisis. So that's why we saw after QE1, we saw QE2, QE3, and all the other central banks starting to apply this in this deflationary environment that we were in. But if you build an entire construct of growth dependent on the market, meaning market levels, last year everybody ignored this, but I kept pointing this out. Market cap to GDP in the 70s, 80s.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  6. “Major recession, they can't raise rates into a major recession. So ultimately I expect there will be a pivot we can discuss what that may look like. They can't do it.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  7. “The dimensions get larger and the debt requirements get larger. I mean, think about it back in just 20 years ago. That was five and a half trillion. Now it's over $30 trillion. We just added $9 trillion in debt in four years. In 2018, they couldn't even get, they got barely to 2.25% on the Fed funds rate. And they stopped. They stopped because the market collapsed. The recession was kind of a risk factor for them. So they pivoted because they can't handle these big market drawdowns. So now we've had an even larger bear market. Actually, it's the most extensive bear market since 2009 in terms of length. Yes, COVID crash was deep. It was fast because they intervened. But this is dragging on. And as you see consumer confidence, the lowest consumer sentiment is the lowest ever. That's recessionary. So you're already risking very much a recession. And my premise in general is to say that there's no way they can get to 3.8% without a”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  8. “Totally financed by cheap money, you cannot raise rates to certain levels without you facing a major, major bear market depression, what have you. So to me, this is just another Fed put that's been placed in the market because while they're saying 3.8% Fed funds rate for 2023, they're also at the same time projecting positive GDB growth. I'll just say it straight out. That's a lie. It's just not going to happen. And the reason that's not going to happen is because we've seen for the last 30, 40 years the Federal Reserve being able to raise rates to a lower high, to a low high, to a lower high. Each cycle, they can tighten policy less and less and less. Why? Because the debt construct has completely blown up in everybody's face. Notice the crisis get larger.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  9. “Those last 15 years intervening at every single step of the way, believing apparently that this all could be consequence free. Well, now we see the consequences unfolding. But now they're in a position where they can't rescue the stock market because of inflation still being a dramatic problem. So the question is, how do you then ultimately solve this? And how can we wiggle through it? Because, and I'll finish on this point, The Fed funds rate that I mentioned earlier, the projected Fed funds rate, that they had at less than 1% in December for 23. They now have over three.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  10. “And it got exacerbated also by the fact that not only stocks dropped, which was the standard kind of curve in the last 40 years because bonds also dropped. So in terms of finding a place to hide, there really wasn't any in terms of the large investment groups. And then, of course, you have a new asset class, crypto, Bitcoin, and everything got smacked, right? So the cumulative impact on the wealth effect is dramatic. And they had for the last Since the financial crisis, they've used and they will never admit it, but I'll just say it, they used the stock market to manage the economy. Hernanke actually, as a former Fed chair, when he was fair chair, he said in 2012, when the stock market goes up, consumers feel more confident. They want to spend more. That's what it really is all about. And they constructed this.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  11. “This inflation question, you have really multiple factors that are coming at play, and it's nasty. You had the monetary fiscal excess, you had the supply chain issues, you had the Russia-Ukraine war, which is ongoing, which is fueled energy and food prices globally, which the Fed does not have any control over. And then the other part is psychology. And we saw this in the 20s in Germany, which is once psychology kind of feeds on itself, you risk that you have that visual cycle, and then wage growth. People demand more wages. And it just feeds on itself in terms of expectations. So it's a really dangerous time in this sense because we are already seeing the economy slowing down rapidly. Asset prices have dropped significantly. In fact, this first half of the year is one of the worst first halves in all of”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  12. “We had fiscal stimulus, the likes we've never seen before, and they just kept adding liquidity into what I last year obviously kept screaming about, was this massive asset bubble and everything, exacerbating housing prices by buying mortgage-backed securities when there was no housing crisis, so everything got literally exacerbated to historic degrees. And then now, of course, what happens while they ignored all this, you know, even in December. I mean, I just need to make this point. In December, CPI was already 7%. And the Fed in their wisdom put out this Fed funds forecast of less than 1% for 2023. So this broad disconnect was already there. They were still living in La La Land. To be fair, they're not controlling a Russia invasion of Ukraine, which certainly exacerbated things. And so you have...”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  13. “Week and says, Well, now that we're producing QE and bringing, or actually starting QT, we've taken the liquidity out. It's going to be bad for asset prices. So while you're not admitting that you're boosting asset prices on the way up, you're certainly now using it as an excuse why asset prices may be going down. So there's an inherent dishonesty in the entire construct. And all of us, you know, we have to listen to all this. And these people tend to put themselves on pedestal or being put on pedestal by the media as the great wise men and women global monetary system. Well, they just reveal themselves to not be that at all. They're not wise. They can be horrifically wrong. And they ignored all precautions. There was a continuing to print into an environment where we did have supply chain issues where”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  14. “Yes, not press in the background. Where do I start? I mean, maybe just a quick background because, you know, I've been known to be kind of a central bank critic for more than a week or two. It's painful for all of us to recognize that the macro environment has devolved in a painful way for a lot of people over the years. I've been a critic on the sense that all the interventions that we've seen over the past 15 years have widened the wealth gap. And central banks Powell himself rating up front how central bank policies do not, absolutely do not contribute to inequality when all the actual evidence is exactly there on the table, creating rifts in society. And then, of course, the goal now to come say, he comes out last.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT

  15. “Hey, Preston. First of all, glad to be with you. Did we have dust ups? I'm not sure. I think we just teased each other a little bit here and there, but it's part of the journey, absolutely. But that's a good thing, by the way. Just maybe starting off with social media in general. You can disagree on some things. And I think everybody got to be humble enough to let their views evolve over time. Amen. I need to be personal or anything like that. Good nature's jive is fair enough, but it's going wild. Amen.”

    2022-07-06 · We Study Billionaires · BTC085: Sven Henrich on the Central Banker's Dilemma (Bitcoin Podcast) · IDENTIFIED FROM THE TRANSCRIPT