Chaos in the Bond Market with Greg Foss & Lawrence Lepard - WBD449

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


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


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


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


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


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


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