This is epicenter episode 342 with guest Jim Bianco. Hi, welcome to epicenter. My name is Sebastian Cujo. Today. Our guest is Jim Bianco. Jim is the president and macro strategist. At Bianco research there, a chicago-based firm. And they provide research and Analysis. For institutional Finance, gym is one of the people that I've enjoyed following the most to understand the long-term. Economic Consequences of this pandemic.
I first heard about him on the macro voices, podcast back in March. And I thought this guy brings so much Clarity and sense-making to this entire pandemic and we had him at reset everything in April. If you haven't heard that talk yet. You should definitely watch it. It's quite complementary to this episode. The link will be in the show
notes. So here's what you'll learn in this interview, Jim's background on Wall Street, and how he transitioned into research, why he was so early to talk about, The pandemic and the crisis, the lessons learned from this pandemic. And what's next, what? Long-term? Economic and societal Trends, we can expect the fed their response, the effects on the economy and where to go from here. Jim's views on Ubi and the legitimacy of taxes. If we can just print infinite money, the u.s.
Debt problem caused by the slowing of international trade, the US dollar as a reserve currency. And how it could be displaced the prospect of a crypto based Reserve currency and the disruption to central banks. How close we are to crypto and Bitcoin becoming an asset class in the traditional Finance system. And Jim's vision for the Post virus world to after the interview Brian. I talked for an extra 20 minutes and we had a super interesting conversation where we debriefed.
We talk about what we learned, where we disagreed with Jim and we start our own thoughts about About where things are going with this pandemic, you know, some of the most fun and interesting conversations that I have are with other hosts of epicenter. It's when met her Brian.
Sunny for the lake and I get to just sit down and chat, and this is something you, our listeners have told us to one of the things that you asked for the most our episodes where we just talk to each other, when it's just us, hosts expressing or own opinions. We want to give you more of that today. We're launching epicenter premium, which will give you access. To exclusive content. Here's what you'll get as a premium subscriber number one over time content.
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released. I'm moderating a fireside chat with Joe Lubin and Danny Ryan. It's happening at the maenette conference and you can still get your tickets at May. Net dot events. And next week is the web three form. It's part of COG access organized by fabric Ventures, it's June 8th to June 10th, and I am moderating a panel on the topic of freedom. Versus Civic duties. You can get your tickets, the link to get your free ticket is in the show notes.
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And with that. Here's our interview with Jim Bianco. We're here with Jim Bianco. Jim. Thanks for joining us today. Thanks for having me. Why did you tell us a little bit about your background? Where you came from? And what you do in the beginning? There was light jumping ahead a little bit on this story. I'm born and raised in Chicago. I'm a Midwestern ER tended Marquette University in Milwaukee, Wisconsin moved to New York, got my MBA from Fordham University way back in
1990 30 years ago. When I was in New York, I worked for credit Swiss actually work for first Boston when they merged which credits with so was originally first Boston at that point and then I work for UBS Phillips and Drew when UBS just started their operation in New York. It was less than 100 people worked as a market analyst and a technical analyst is you would call it today at both of those shops. And in 1990. I came back to Chicago was affiliated with a brokerage firm
that I still am to this day. Arbor research and trading their my marketing partner. And in April of 2000, are April of 1998. So, 22 years ago. I spun myself off is Bianco research as an Affiliated company of Arbor research and trading. We do macro research my primary audience. Is anybody who's interested in macro?
So that tends to be more of a fixed income type of audience because that lends itself better to macro then equities, although in recent Years. Thank you to the ETF universe and Also fed involvement in the markets, macros become a lot more important because I remember back in 1998, people would say, well why don't care what the stock market's going to do. What stocks doing fine?
Well, I'm 2020. I can go by is peace, now, so I can just stop there with what I think the stock market's going to do. So that's the short history of my life in 60 Seconds. I'm super excited. Be happy on. I've really enjoyed some of your podcast. You did Don, for example, Eric councils podcast that I've been listening to a lot during this crisis. I study economics.
Originally. It's been really nice to sort of rediscovered, a little bit and spend a lot of time on, you know, macroeconomics and stuff like that. And so it really enjoyed your writings you faults on that topic. Thanks. Thanks a lot getting into the meat here. So of course, this is a little bit unusual as of an interview as well. As we're going to be spending less time on Crypt, although we'll get to crypto and more on where the world is heading. Now, the context of this is this
current pandemic. So let's start there. Like how did you first, you know, learn about this? Like when did you realize? Okay, this is going to be a big thing and what the kind of you engagement which is topic look. Like, I got under this topic as far as the endemic goes in January and I started talking. About it in the last week of January as well, too. I think the big thing that I learned from the pandemic is that being a researcher being a
guy that works with numbers. I'm just keeping it simple. I understand exponential growth and I understood that one China first started reporting, you know, a hundred cases or so. I knew that you could be days away from me going to 1,000 and you could be a couple of weeks away from it, going to 10,000 and that was what really started to concern. And me at least initially was in the early days of the case growth in the exponential nature of it.
And then we saw it pop up inside South Korea in Daegu, South Korea. That was another warning sign as well too. And once it kind of got out, I had a feeling that it was going to be one of these things that was going to be very, very hard to contain. And I also knew that people were going to be arguing and fighting this whole idea that there actually is a pandemic, you know, from the US point. Point of view you heard as late as the first day of March President, Trump still comparing
it to the flu. I used to call them flew truthers. At that point trying to dismiss this as the flu. So that was kind of where I came from it. If I was to just put it simply it was when I saw the things start to go and I understood the power of exponential growth. I knew that this thing can go and go real fast. Did you anticipate that it would become so politicized? I mean, you mentioned like these flu truthers. Did you think that it would get this polarized? No, not at all.
And it's been the most disappointing thing about it is and I won't pull any punches here. It seems like this has been used by some as a politicization, you know, in the United States. We now talk about that. The left the Democrat Party wants to keep things shot, the right, the Republican party wants to open things up. So even the sponsz to this has now become politicized. I've been looking with a wary eye at every biotech company.
Look biotech companies are kind of like oil drillers kind of like Junior miners. There's a lot of hucksters with a lot of fraud in that business as well to that, you know, everybody's trying to run out some kind of a press release saying that. Oh, we're going to Phase 10. We're going to this, we got this, we've made this breakthrough we make that breakthrough just to wrap their stocks up. So everybody's looking to make a buck off of this thing. As well too.
And then you've got the massaging of the message. You know, we've got this operation, warp speed in the US, which is supposed to be when that they're preparing, the ground for being able to mass produce a vaccine. There is no vaccine Mass produce, what you put me in charge of warp speed. Okay, great. I'm in charge. Call me when you get a vaccine because there's nothing to do then at this point. So, it has been a lot politicized as well, too.
And you've seen some of that in the UK, with the Politicization as well. So it has been a bit of a disappointment. And of course, I'd be remiss if I didn't mention the ultimate politicization is got to be China. Continuing to tell us that they've had zero cases for the last 40 days as well too or that the country. There are two originated with 1 billion people that let 11 million people out of Wuhan to travel right before the Lunar New Year claims.
It stopped at 82 thousand cases where they're like number 16, I think on the list right now of In terms of countries around the world. So there's a big politicization going on there as well, too. So, what's the biggest lesson here that you've learned through this crisis both in terms of maybe political behaviors, but also just in terms of the economic impact on the economic response.
I think the biggest lesson I've learned is the way that the markets after a 20 or 30-year bull market and an 11-year run that we've had that ended in March. It was going to be very difficult for it to die. Let me back up a second, one of the big stories you'll hear from money. Managers in the u.s. Is this, the most hated bull market ever that is 180 degrees wrong. This bull market is is
worryingly popular. And we have a Mania going on with small retail investors as big as it was in the 2000 technique. If not bigger, what these money managers fail to recognize this, is that the public doesn't hate the stock market. They hate you. They are not interested in active managers anymore, and that they're putting their money into the market in a big way. What I didn't anticipate and still have struggling to
understand. Is that through Throughout March and throughout April, when the market was collapsing, the data is showing that the public in the US, had long ran into the collapsing Market opened new accounts deposited. More money bought stocks bought ETFs all throughout the entire Decline and all into April and the amount of activity by small retail has been astonishing. And I think has been one of the big things on the margin. That's been lifting.
Market. I was under the impression, like a lot of people that won the market broke in March small, retail would run away from the market angry and convinced that it was they were burned and that they would never come back again. That's typical of their response. We got the opposite of that. It seems like today after screaming, there is no alternative Tina or fomo fear of missing out.
It's almost like they open up their, their trading apps and it Like let's go find something that's collapsed oil Airlines retail and let's buy it because all the collapsing stuff rebounds and that's where you make the money the most amount of money. They sure they change they change Chase momentum in the big cap stocks as well too.
But if you look at like the Robin Hood app and the Robin Hood API, some of the biggest owners of are like the the singles dollar of the Fords and the Airlines and the Boeing's. Seemed to be looking at the Airlines and saying, I don't need to know anything about the fundamentals. All I know is the government will let them go bust. So I have to buy them because they're going to go back up.
That's what's been. The biggest surprise to me was the resiliency that investors have had to want to just continue to believe and continue to use every debacle in a, either a stock, or the market in general and March to rush in not to run away. Cool, that's super interesting. I mean we want to spend a lot of time today talking about the market, but I'm also just curious if you know like you learned in January about the virus depend emic and started
thinking through this today. We're almost at the start of June. So quite a few months have passed since then. There's been a lot of data. What are your faults today about how this will play out in terms of the actual pandemic and reopening and lockdown. On this. And what's a trajectory at this point? I don't know anything more than anybody else when it comes to whether or not there's going to be a second wave or whether or not how much we're going to go
down. I'll just say that it seems like this is following the pattern of the flu. What you seeing happened is if you look at the world X, the u.s. U.s. This got the biggest number of cases. So let's put that aside separately. We look at the world X2 u.s. It's making new highs, it made. It's all time high in terms of daily case that count daily case. Count not obviously every day is a new high but the daily case count made a new high on Friday.
Little over 100 1000 cases. Most of that's coming from South America. It's coming from Africa. It's coming from the Middle East and a little bit more from Asia as well too. But basically South America is the big one and Africa's the big one early on. When this case, count first started, you weren't getting any cases out of Not in South America.
So it looks like what's happened is as we transition to the northern hemisphere summer and the southern hemispheres winter, which would be their cold and flu season. The virus is moving south of the Equator which suggests to me that it would probably move back north of the equator. When we get back in the cold weather in the northern hemisphere, you know, in October or November, we'll have to see that. And then in the u.s., If you look at the u.s. If you break it down in the u.s.
You can take New York and New Jersey because They're a separate instance. They've clearly peeked in on the downside, but the other 48 states in the US has been holding fairly steady for the last two or three weeks. There hasn't been any kind of our drop-off there as well to that suggest that the case count is not over, but I think really the big story that I've been focusing on is the economy itself. We already damaged the economy.
We did 39 million. People have filed for unemployment us. That's 25%. Us Workforce. That is the highest unemployment rate since the Great Depression. And when this is over, it might exceed the great depressions unemployment rate because he's been damaged. I don't care if we find a vaccine tomorrow, I do care but I don't think it matters if we find a vaccine tomorrow or by the end of this year. How do we get those 39 million people back to work?
How do we get those businesses going again? I fear that the damage is already. Already been done and even a vaccine tomorrow won't undo that will give you a statistic that I've been really trench, championing quite a bit. You look at 2008 and the blow point in 2008. I'll point the US. Economy was 96 percent of what it was in 2007? A 4% drop, that was good to have the stock market. Get your ten percent unemployment rate during the Great Depression at its worst point in 1933.
Output was seventy-four percent of what it was in 1929 and that will give you a Great Depression. So when I hear people like Ross Gerber say, you know, he's a pundit on fin Twitter, a lot saying I really think that we're gonna get back to 85 or 90% of where we were previous by the end of the year. That's a depression. We get back to like, 97 98 percent to have it be a garden-variety recession, 95 percent would be a re-run of 08. 8 85 to 90% economy in The Economist had a cover story
about this about two weeks ago. That is a depression is what that is. And I don't think a lot of people realize that they'll just, you know, when the u.s. Here we'll just get all excited will say, hey, look at this. There's more people in this story this week than last week, this restaurant open. Yeah. Well, it, 50% capacity that restaurants going out of business. There's virtually no restaurant, the United States that can survive at 50% capacity. They need to get back to 95% capacity.
Otherwise Got to start laying off, people in a big way. And that's what I think is, what people they just want to measure the absolute. Oh, it's better this week than it was last week. We're reopening are great. But I need you to get back to 97 98 percent and then a 90% isn't going to cut it. That's going to be a big problem. So that's what I've been struggling with. How do we have a 90% economy?
Because if we do we're still going to have 13 14 percent unemployment, and I don't know if those thirteen or fourteen percent that are unemployed. Are going to be happy with that situation unless we keep paying them forever. Like we are now to be unemployed, which case we're going to blow out the deficit. We're going to have this massive amount of borrowing and create a whole nother set of problems as it stands. Right now.
We're scheduled to stop with the extra payments for unemployment at the end of July, so we'll have to see whether or not it gets extended. I think it will, but I always think it extended to the election in November, but not into perpetuity. Yeah, and that kind of opens up, you know, the question about Universal basic income. And if that is possibly a longer-term trend here, that gets accelerated. So we come back to this a little
bit later. But to what extent has this economic situation been caused by the virus and rather than just triggering some longer-term, secular trends that were going to trigger. Anyway, I mean, What proportion of the economic impact you attribute to the virus versus a Market. That was due to collapse at some point. You're right. The saying you hear a lot? Is that covid-19 with the pin? And it wasn't a bubble itself and that there was a bubble, not
a big difference. Let's talk about viruses for a quick second. You had Stars why a lot of people don't remember SARS because it was really proclaimed as a pandemic, two days after the Gulf War 2003 started, we were too. Is he watching CNN watching the United States attack? Iraq to notice ours. There are Spanish Flu in 1918 happened. When the soldiers returned back from World War one, they brought it back with them. In both cases. The economy was already depressed.
It was already somewhat of a deflated bubble. So when you have a deflated bubble and you stick a pin in it, you don't get much of a reaction. But this one was the 11th year of an expansion. Three and a half percent unemployment all Time highs in the stock market, the president tweeting that the I think is Infamous tweet, the stock market's up 50%. You know, since I became president, why aren't you up 90? Because everybody supposed to outperform even the market.
And then, of course, two weeks after that came, the pandemic and completely deflated all of that away by March as well. To that was the environment we weren't so, it definitely was a pin. The world was waiting for a PIN to come, and this was a big one. This No doubt a big one that came. So I do think that a lot of the problems that we're facing our ones that were there as well.
But give me another thought to about this is when people ask me the question what kind of long-term trends are long-term impact you see from the virus? And I like to say, I don't think that this virus is going to create any new trend. I think what it's going to do is it's going to accelerate existing Trends, so there was a trend for people People to work at home and that's just getting accelerated. There was a trend to de-emphasize brick-and-mortar retail that's getting accelerated.
So there was a trend away from Studio broadcasts to more podcasts like this that was in place before it's getting accelerated. So I think everything we're going to see that comes out of this was a trend that was already in place. We just putting it on high speed and making it happen a lot faster than Would have otherwise. If you serve extrapolate a little bit more and look at trends that are brought on by things like artificial intelligence, automatic vehicles
and stuff like that. I mean, like, for years, we've been saying that what percentage of the US Workforce is either directly involved in transport and Logistics or like secondary player and that like restaurants and truck stops and things like that. These are all trends that push us towards. Presumably more unemployment. Where do you think that this in? Shinto. Other Trends can take us like, you think that Ubi is a longer-term solution that can be viable in this environment?
Take your first quite a part first, but the longer term Trends in the u.s., There are one of the largest job description among tax returns is, the job called driver, whether you're a truck driver, a taxi driver, a limo driver, some kind of driver. It's like four and a half, five million jobs that are listed as driver. And obviously, A lot of those jobs are going to be at risk because of a lot of the automation that's coming.
Not tomorrow, but eventually as well to the good news about this though. Is that Bob Gordon Northwestern University, which is in suburban, Chicago and Evanston, illinois is done a lot of work on this and he said that a lot of these Technologies are net creators of jobs. Uber might have gotten rid of 13,000, taxi drive jobs in Manhattan, but it created 60 to 65 thousand, Uber jobs.
Manhattan as well. So yeah, they're lower paid, but there's more jobs and more, abundant jobs, which has helped to lower the unemployment rate. So the problem with technology is when a new technology comes like autonomous driving, we can immediately see those that are going to lose all those two people that have those driver jobs. They're gone. But what jobs does it create? Those are harder to understand when the iPhone one came out
raise your hand if you thought. Oh, this is the end of the taxi business because of Luber. And this is the end. Of the hotel business because Airbnb because you instantly knew that that's what was going to come out of it. No, you didn't. So these new technologies are going to create new jobs, create whole new Industries.
We just don't know what they are and they're being involved right now, but we can see the jobs is going to lose, and that's why everybody gets so nervous about a lot of this technology. As far as you bi goes. I'll answer you bi this way. I think there's a lot of it as a political question with Ubi, and we're doing a form of Now we set out a twelve hundred dollar check. We're giving everybody an extra $600 a week in federal unemployment, and terms of and tops of what you get from the state.
If you're like in New York state, you're not getting about thousand dollars a week. And unemployment, if we do that, and there is no economic impact from it. There's no inflation. There's no crowding out for higher interest rates. There's no malinvestment. If there's none of that, there's no reason to Stop. They're only reason that people push back about the idea about Ubi on the right, is that it will create inflation.
It will create malinvestment. It will create distortions and Nick those distortions in the long run will be bad. But if we do this and there isn't will continue to do it and probably do more of it and more of it until we get to that Breaking Point, even though Stephanie Kelton of the world, big mmt, modern monetary. Their opponents will tell you, there is a limit to what they can do. There is a point that you could go too far and we can find that
it will create inflation. Their belief is that we could do a lot more than we're doing right now and what I think is where on that row and if we do this and there isn't inflation or there, isn't a problem with the stock market holds above 3000 is that it's now and keeps going. The answer is going to be. Oh good. Let's do some more and then let's do some more and it eventually will eventually overdo it. At some point as well. And I think that's going to be
the biggest problem for the FED. I know that a lot of people are saying, well, the feds going to get in. They're going to support the markets, get everything back to normal and then they're going to withdraw. Why, why are they going to with drop if you went in there and you pumped up everything and all good stuff happened from it? Why stop keep going, especially if Trump, trump loves that. The FED is doing this. He'll definitely be proponent of buy. Some more print, some more go
further. Stop because Trump used to say prior to the pandemic when he was criticizing pile. The Dow would be 10,000 points. Higher of Paula done. The right thing, which is basically cut rates to zero and print money. Well, that's what he did in the markets going up or above 3000 on the S&P. So I'm sure Trump hasn't tweeted about it yet. I think he's a little afraid to but I think he definitely wants to say yap. Ju doing the right thing, print faster. If anything else.
Don't think about when you're going to get out think about getting in deeper. /. That's what I prefer you to do. What are your thoughts on what the FED has done? Do you think this is the right response or how do you wish they had dealt with this? I'm going to say I understand what the FED did and I'm going to say understand what Congress did and I'm going to say understand what most of the
government's did. There's a an old Solano line that there's no atheists in a foxhole and there's no capitalists in a crisis, right? There is no way they're going to sit there and watch 25% of the workforce lose their jobs. Nine weeks. And this stunning statistic that Pol throughout that 40% of those that make forty thousand dollars or less in the United States. 40% of them lost their jobs, in the month of March alone. Just in the month of March alone. Now remember they're on
unemployment. They're getting an extra 600 bucks a week. So financially, they're not hurting because they're being that money's be replaced, but there's no way that was going to happen. And they were going to start exposing libertarian or conservative principles and say that we need to let the market self-adjust and everything. That's I get that I get that from a practical standpoint that they were going to step in and they were going to do something. My biggest argument with the FED
is, what is it? You're trying to do. Are you taking the attitude that Trump is taking Trump? Basically is said, oh, when we get past this pandemic, we're going to go right back to January of 2012. We're going to go right back to 2019. The sap is going to go right to a new high. We're going to go right back to three and a half percent unemployment and it'll be like it never happened. Nothing will change. That's essentially what Trump
has said over and over again. Is that what you're trying to do with the FED? Are you trying to bridge us to going, right back to where we were before with no change? Or do you think there's going to be some kind of post virus peer era, where things are different, which is what I think. And are you trying to manage us into that period? I don't know what the feds trying to do. I don't know if they're trying to get us with Trump. We got to get back to three and a half percent unemployment.
We got to get back to 3400 on the SMP. We got to get back to like this never happened. Or are we going to a new era? And we need to provide those that make less than 40,000, or those at the lower end. Give them some assistance to bridge through, to this new era, but we're not going back the other way. I don't know which way the Thinking about this at times. It looks like they thinking, like, Trump that this will all go away. And we'll just go right back to
where we were before. Other times. They seem to think, like, this is, we're going to manage ourselves to a new environment. Well, if you're managing yourself to a new environment, maybe we need to let the airline's restructure, let the restaurant industry, restructure, let the retailing industry restructure, let the oil industry restructure, but we don't allow that, we want to just throw money at them and say, don't change. JH just here. Here's some money.
Just sit there and wait, we'll all go back to 2019 and you don't have to change or are we going to allow them to try and change? So I don't know what they're trying to do. And I think the answer is because they don't know either. I think that they're just throwing money at this. They're saying my God, we can't have this many unemployed people. We can't have that social unrest. It would have your throw money at them there. We've done something for it right now.
We'll figure out from there. That sort of ties into, you know, the thing you said before I like, where is is a limit here? So, you know, if they print money and then it seems to work then I guess of course, the question comes about well, why is it taxation? Why don't you just like print money instead of raising tax revenues from the government or like it?
Why not just print money and give it a skew bi or like why can't just a central bank, you know, print money and buy bonds and stocks and all the prices like stay up. Up. So, like where is this heading? You think this isn't some sort of like this can continue for a long time or if it is going to break at some point in what direction? Will it go? That's a good question, you know. Cuz on the right, I've heard a lot of people say and they're they're factually correct in the last 10 weeks.
The government has promised to borrow and the FED is printed the equivalent of between four and five years of tax receipts in 10 weeks. If you can print and borrow four and five years of tax receipts in 10 weeks without a producing inflation without a producing male investment without a producing problems. Then why do we even have an IRS to begin with? Why? Do I even have to pay any taxes at all? Just print it up and borrow it whenever you need those?
Spend the money as well too. So it's kind of like I said, what Ubi part of the problem I see with this. Is that as we keep going, if there isn't a bad response. We're not going to pull back from it. Look at QE. We used to call that unconventional policy 2008. Now it's the most conventional thing. We do. We never stopped QE why? Cuz they printed the money. Here's my little printing. Press, they printed. The money they threw it at the markets there was no inflation.
There was no bad things that happened. So they never stopped. And when they tried to stop Ten Years Later in 2018, 2019, their Market threw a fit and they apologized and they went right back to printing money again. So I just think that if there isn't a bad reaction, none of this is going to stop. We're just going to keep adding on to it and adding on to it as well too. Now you can argue the The politics of it.
But I do think the politics really comes down to those that are against Ubi. Those are against money printing. Like me are against it for a simple reason, then I think it creates distortions and mail investment. And if it doesn't, then I was wrong. And the problem that I see is that if a thousand dollars a month, doesn't produce malinvestment, then we'll try to thousand dollars a month.
And if that doesn't produce male investment, will try three thousand dollars a month and we'll keep going until we get To either inflation or Malgus malinvestment means, we do a lot of dumb things with the money that creates a lot of problems further on down the road. Do you think it creates more inequality? So like I think maybe one could argue that in the last 10 years, you know, we've created a lot of wealth inequality, perhaps, you know, more than before.
Is that a consequence? You think of this kiwi in this money printing, or am I missing something here? No, I think it's absolutely a consequence of it. What is QE doing? What did most of the FED programs designed to do the designed to basically support financial markets that the FED is printing money, pumping money into the financial markets and they're lifting. Financial markets, which is what's happened with small retail investors. They see what's happening.
They want in on the game as well too. So that's why they're opening accounts. And that's why you get that perversion that people like, oh good. Look at this, a couple of stocks that just got crushed by a them because they always go back up. And, as of today, the last week of May, when we're talking, that strategy works. It works all the time by everything that's getting annihilated on the verge of bankruptcy, because it always goes right back up.
At that point that helps the investor class. All of that, people that have money, it helps them see their wealth go up. And that's why they're not complaining as bitterly as they were in March. Because the 40% of the, of the American public, they don't 98% of the stocks have seen the market go up to 60%.
It don't own any stocks. They're not complaining yet because they're getting 600 bucks a week from the government and Get into twelve hundred dollar check and they're being told everything is being reopened and they're being told, jobs will be coming back momentarily. Well, if all of that happens, you know, and that's really to me. The big question is now that we're reopening, what level of activity do we get back to? We get back to 99%, Everybody gets their job back.
No problem as well. It'll be an extraordinary period in American economic history that will be studying for Generations. But if there is some change and that they're left out in the cold without a job and maybe that these benefits run out, you're going to exacerbate the wealth inequality as well too. And with it you're going to exacerbate the social problems that came with it last stop for
you. Remember, I like to famously say that after the FED started QE and pumped up the markets in 2009 and bailed out, the financial system. We had to push back from both sides of the political Spectrum. Bactrim. First, we had the Tea Party Movement, which was on the right, which was if I had to Define it for you. They were mad about the bailouts and they blame the government. Then we had Occupy Wall Street on the left. I was to explain it to you.
They were mad about the bailouts and they blamed Wall Street. So they were both basically arguing about the same thing except the, who they were blaming was completely different. And it was all about inequality, the Arab Spring and a lot of other things were about the inequality. Quality, so yeah, it makes it much worse and this has the potential to make it really bad if it doesn't work out as well as we think. And that what I mean by that is 40% of the public, doesn't own
any stocks. We're not going to hand them stocks and watch him go up. But what they need is, they need their job back. I mean, they need their job back this summer. They don't need their job back in two years, and we need to see several million people a month getting jobs back by July August September October if Happens. And I had my doubts on that, then it worked out. But if it doesn't happen, we're going to have this permanent underclass and an exacerbation of the wealth inequality.
We talked about to keep doing this and if it kind of works, you know, they'll keep printing money. And I totally agree. That's what's going to happen. But you know, it seems like my take would be in the long run. You don't think that can keep going forever. What do you think? Dan game is here? It's a good question. I think the end game is going to
come fairly soon. And what I mean by that is that right now the market is rallying on this idea that We're going to reopen and everything's going to be good. The market is rallying on the idea that there's going to be a vaccine and that that's going to solve the problems taking those one at a time. Right now.
We're in the Hulk face. We're just reopening we haven't reopened Edie past tense so we can pretend or we can project whatever we think the reopening is going to be once we get started on the reopening and we then find what the Reality is I think it might disappoint Starbucks, just recently reported that in their stores in China, which they reopened in late February 3, months ago there at 85% sales.
So I don't think Starbucks is gonna be able to make a profit in China with losing 15 percent revenues in one year. And this is after 90 days and in a country where the last 40 days, they've essentially reported zero cases, they do. The vaccine in China, they got zero cases there. They can only get back to 85 90 percent of their sales if that's the reality that we're going to see. Once we started to reopen gonna be a big, big disappointment.
As far as a vaccine goes. I just throw out a thought for you. We just had the Memorial Day weekend in the United States and the big thing about the Memorial Day weekend in the United States is lots of examples of people that did not social distance lots of crowds and beaches. Lots of crowds in pools. Not wearing masks all within six feet of each other. Another story that we've seen two is the testing in the United States. Is now running into an unused problem.
We got a lot more testing than we have people that are willing to get tested and that they're actually now begging people to please come and get tested for covid and they're not really showing up public. Doesn't seem to be taking this threat. Seriously. They're all not wearing masks breathing on each other and they can go Street and get a test for free and they don't even bother to do it. So I don't know if we come up with a vaccine if people are going to Care.
Oh, that's great. You got a vaccine. I'm not taking it. I didn't wear masks. I didn't go for a test. Why would I bother to take a vaccine? I'm not going to take it. So it seems like I don't know if that's going to be the Panacea that the market thinks it is because the market jumps on every vaccine story that we see. I think they seem to think and maybe I'm wrong on this that, you know, as soon as a vaccine
is available. Bailable if one is available and I'll give you a fun statistic real quick. How many coronavirus vaccines his medicine developed in history? 0 has never developed one. They're very difficult to develop. Now. The bullish argument is well with they've never been is motivated to do. One is they are now. Well, I didn't know that it was lack of money or lack of will. I thought it was, it was very complicated to make these things.
But I have this feeling that even if they come up with one it's going to be met with large in. Meaning that whatever the economy is now in the post virus period, you can't change it. Can't change it with a vaccine. We've changed it, and we have to learn that there's a new post virus economy and we have to now start to understand what that is, and what that is. It's probably more work at home. It's probably less brick-and-mortar retailing.
It's a lot of other things that we're going to have to learn less mass transit, more driving, that kind of stuff, because that's an Social distance thing and if we don't like that, if that means New York City is a loser. It's going to be very difficult to change that equation. If that means commercial, real estate people that make Office Buildings, are hotels Trump. The Trump organization. If they're going to be a loser in That vaccine isn't going to
fix that. If people are that indifferent about this disease, right now, we have changed the course of the economy to be very difficult to change it back. No, one thing that I've been hearing a bunch of times, I think, especially like growl Powell was like talking a lot about that. But with a bunch of other articles stuff in these two, is this idea that okay, you have a lot of dollar debt that's held outside of the US.
And then this, you know, they were like, revenues from businesses or Commodities sales or maybe people were investing in those countries. And those dollars were used to pay, you know, the service that death and now a lot of that is kind of dropped. It away.
And you know, they don't get the quantitative easing or like the FED asset purchases, all over the world for like, you know, normal businesses and governments so that you didn't have to sort of shortage of US dollar which maybe drives up, actually the value of the US dollar and creates this big debt problem. What are your thoughts on that? And what are your thoughts on? Kind of the US dollar as a reserve currency in general in the longer term?
So as far as the the dollar goes keep in mind and I seen Ron Paul's comments on this and I think he's right on roughly 80% of all trade in the world is done in dollars. So if a Japanese businessman meets would have, Brazilian businessman to agree to do a transaction by Brazilian Wood or something like that. It's done in dollars. They negotiate the price 80% of the time in dollars. So it is the reserve currency, when things go south like they did in February. March, and April.
What do people say? Well, in order to get business done. I'm going to need dollars. And when I am unsure of the investment environment, I am going to default to the reserve currency, which is dollars, which is why the dollar rallies and to me, that makes perfect sense. So, when I hear people talk about that the doll, Will fall against another fiat currency the Euro began. The one whichever one you wanted the pound. Why why would people then prefer those currencies over the dollar?
It would only am, I think mean that they think that the crisis is completely over and it's about relative opportunity. But if there's any kind of concern you want to hide in the reserve currency. See, so I can see the dollar being strong against all the Fiats. I could see it getting weak against something more, stable like gold or a crypto, or something like that, which is somewhat. What's been happening as well
too. But I also think that there they've got a different problem that they're still in, expertly linked to the financial system. Anyway, you can't get them away from the financial system as much as you would like to, as far as the next Reserve currency or the dollars use. Currency, the dollar is the reserve currency because there's no alternative. There is not going to be a Fiat alternative. The euro is not going to be the
next Reserve currency. The one that you won the Yen, the pound, and you take whatever Fiat you want. It's not going to replace the dollar. I think, what will replace the dollar will be a whole new structure and that will be a global cryptocurrency. Now that I've said that because I Fiat will not replace the
dollar. I don't think a Fiat crypto, the Central Bank the People's Republic of China bank is going to print a crypto and that's going to be it or the year or the digital euro is going to be. Well, the paper one would be it if they were going to do that as well too, but I'm not sure it's going to be Bitcoin or it's going to be ether or it's going to be stable coin or one of those other ones Maybe. It doesn't exist yet. But I do think that it will come
out of that space. That will be the next Reserve currency. I had it for a hot second. I thought it might be Libra. It looked like it was very promising, but it kind of stumbled out of the gates. Dave, Marcus left in there. Trying to reorient the thing. We'll have to see where that goes as well too. And the last thought for you about this and let me speak to the Americans in the crowd here. If you travel the world, you will see the digital payments wiping your phone using your
iPad. Your Apple watch. Like I'm I love to use as well too. Is much more popular in the rest of the world. Em pay. Some in Kenya is a digital payment system. That is very popular. There are villages in Kenya, where they live in dirt floor, Hut's middle of the hot in the middle of the village is a Honda Charging, a hundred phones overnight and do subsistence Farmers when they have to send money to each other. They send it with their phones to each other.
It's digital payments in the, in the developing world, and in Europe is much farther ahead than it is in the United States. So if you come up with a Global Currency, a global crypto that satisfies the needs of a payment system. Yeah, you could go to a bunch of Millennials in a coffee shop. Shop in New York City, they'll marry be interested in it. Go ask some people in Nebraska in a Walmart and they won't know what the hell you're talking about.
But if you go to a hot or you go to a small village in, Kenya there already for it right now you go to a lot of other places, they're ready for it. So it won't start in the u.s. It will start everywhere else and it will be pushed upon the us as far as the. As far as the crypto. The world is ready for it is getting involved with digital payments. It just But he needs to develop the structure to replace the dollar for it again. Let me emphasize it doesn't exist.
Now. I don't know if that if that crypto is out there yet if it's Uther or something else and it's not going to happen imminently, but that's where I think we go with this story. Some Curious here. What do you think? When you look at something like Bitcoin? What do you what? Characteristics of Bitcoin you think make it kind of like suited for fulfilling that role? And in what regards you think? Okay. No, these are big problems.
And something that actually fulfills her troll has like what would have to look like? The biggest problem will be coin. It's been more smoothly compared to Gold. I think the biggest problem Bitcoin has is 21. It's not a stable value of, it's not a stable value. I own Bitcoin and I can't use it to agree to do payments in a Fiat world when its value, can jump around 10 or 20 percent a day. If I have to buy my Brazilian Wood in a month.
Not going to use a currency that could be 50% higher, fifty percent lower in a month to pay for it. I can't agree to that price. And if I, and if I'm taking it to the dollar, and just saying, whatever, the, the Bitcoin exchange rate is at that minute. Well, then it's I'm still on the dollar base and I really haven't gotten away from the dollar base as well. To the other problem Bitcoin has, is that it can't handle tens of millions of transactions. A minute.
There's not enough electricity on the planet in order to handle that kind. Of transactional volume that you would want if you were going to become a true payment system as well too, but these are known problems in. These are problems, people are working on to try and solve. So what I think you need is something is got a more stable value. You know, my dollar my pocket is
going to be worth. I can buy with it today when I can buy with it next month with which I can buy with it next year plus or minus 1%. Or 2% at the most next year. I have this belief. I want inflation's going to do it. I might be off by one or two percent. I'm not going to be off by 200%
as well. So if you know some kind of stable value with it, and the other thing, it needs to be able to do is handle Mass amounts of payments, you know, efficiently in safely and for very little money Bitcoin, can't really do that right now. The mining costs are way too high, but Is 1.0 of this whole exercise and it's done an extraordinary job of what it was, but we need to move in the
other direction. When I, I like to use the analogy that when the internet first came on, in the early Citrus search engine, you had Alta Vista. You had like hoes, they all went bankrupt and then you had Yahoo, which was very successful. As far as search engine goes, is the fastest company make the S&P 500 ever. Then you got Google and that changed everything. So you're kind of like in the Altavista like ozera in the crypto space and you're hoping that we're going to get to the
Yahoo thing soon. But really when we got to get to is to Google thing and when we get to the Google of cryptos dead and that becomes the reserve currency and it changes everything and that becomes the thing that makes it all different. Yeah, I would tend to agree with that. Generally. I think that if there is a challenger Reserve currency, that looks nothing like what we've seen in terms of Reserve currencies over like the history of Economics, right?
It would probably come from something, similar to Libra with an existing user base with large, tech companies behind it. And I could definitely see a future where central banks themselves. Elves are are disrupted by this new system. So much like Google has disrupted publishing Spotify, has this type of the music
industry and Netflix excetera. And you know, I could very much see a future where government start basically delegating their monetary policy to and their money to some kind of a Libra like platform. Is that something that you think makes sense in this context? Or is that like a Hopefully, you know, I think that that's exactly what it is. You know, what disrupt Central Banking is, you know, every
industry that gets disrupted. The industry itself has a monopoly newspaper industry at a monopoly on information, you know, the retailing industry had a monopoly on the transportation of goods and services as well too. And then something comes in and breaks their Monopoly. Well, the central bank has a monopoly on money and as long as they hold that Monopoly, Money. They have this incredible sway
over everybody. Once they're that Monopoly of money is broken, and they lose that ability, then you've changed. And then you've marginalized the central bank's. That's why I found it. Not a surprise that when Facebook announced the Libra thing Congress lost its mind. And the first thing they did was they brought Dave Marcus up to the hill and they started ruling him and going crazy over this idea. Yeah, because it's a more. Threat.
It's a mortal threat to the way that business is done in this era of the fiat currency run by the central bank, and they don't like this idea at all the thing that made Libra. So interesting. And I love to quote Scott Galloway to Professor New York University on this is, he says, I'll remind you that there is 2.2 billion Christians on the planet. And there's 2.3 billion Facebook accounts on the planet, Facebook is more popular than Chris.
Gianna T. So that the minute that it has a payment system, it can start with a user base larger than Christianity to get it going, that is enormously powerful for something like that. And that is what a lot of these Tech Giants have, is they have these enormous basis of people that can immediately start something like start using something like that. The game changer, that will tell you that a crypto is here to stay.
It's going to be Amazon Prime. Sixty percent 60 percent of the American households have a Prime account the minute that they can start paying for that stuff with a crypto untethered from the US dollar is the day that the u.s. Dollars going to lose. Its Cruiser, not that day, but it's on the road to losing its Reserve currency status that, Amazon holds that power, what's holding you back Amazon, from doing it. There's not an acceptable alternative.
There's too much Financial Risk for Amazon to take. I think Bitcoin or ether as they're currently structured, but I have no doubt that when one comes down or maybe Bitcoin or ether, they have some Fork that gets them there. That is going, you know that they've remade their product or their currency crypto into what they needed to be that people.
Like them will jump on top of it and the telegrams and the, what's apps and the Facebook's. They'll all start accepting it and start using their platforms as mediums of Exchange. Well to it, it will come very fast. And like I said, the third world, they're already there with krita with digital payments as well. So it could come. We just don't have the so we don't have the structure yet and they're trying to get it going right now and we'll see how long it takes.
It might still take several more years before it happens. Sounds like there's an opportunity for the Vatican here to get on the crypto train starts on currency before Facebook gets to it. I think there's some interesting analogies with tech Monopoly. He's here. And I wonder if, if we go into this direction where there are sort of Challenger currencies, there are these new currencies that exist that aren't tied to governments. Well, okay. Well, that first of all, it's
very much challenges. The power of nation-states I think for one, but the other thing too is you mean, we may see similar dynamics that play out like in Tech, right? Like so, you know, there are, you know, Facebook obviously has massive user base, but so does Twitter and so Instagram, okay, they're owned by Facebook, but isn't one clear player and one clear winner, you know, Amazon could do its own currency.
Facebook, could do its own currency by do or, you know, whatever platforms exist in China, could do their own currency and sure. At some point you're going to have aggregation and there might be consolidation there, but we may end up in a situation where these things end up competing
against each other. Like, this is something we're talking about earlier, you know, we don't know, none of us could figure out whether or not there have ever been, you know, multiple Reserve currencies competing against each other in the past. Past it may be that this opens up competition for currencies in a way that we haven't ever seen before. Oh, I definitely think that's a
possibility in you, right? I don't think I can't find a period in the past where you've had multiple Reserve currencies. You mean, you probably have to go back to, you know, before you even had the concept of currency or something like that, but you could have some loose Confederation of these as well too, but I do think what we're talking about. What you were suggesting is they're all outside the hand of
the government. And when they are outside of the hand of the government, first of all, the government will have to admit radically change, not only does the Central Bank lose but the government loses as well too. Because in that environment, how do we tax people? Now, we tax people on money. We tax people, I didn't come. If you have a, if you have a digitally secured outside the government Krypto that they can't touch.
They can go to a guy with a big house with lots of cars on his on his driveway and they can At him. And they could come to the conclusion that he has no money because they are incapable of getting to the accounts. Getting passed his encryption to see. It government will have to change the way that it raises money. It might have to go to a use tax as opposed to an income tax. A use tax is if you have a car we're going to charge you X to use it a year.
If you have a painting on your wall, we're going to charge you why for it. I use tax as well. So yeah, we're going to have to see. Things change and along those ways. We could definitely see multiple currencies along those lines. This is the reason that this is, this is such an interesting topic. We talked so much about it. Is, this isn't just shifting from the pound. The dollar, this is going to be changing the very structure of
government and everything else. So in our earlier conversation, when we were talking about Ubi and when we were talking about, you know, six hundred bucks a week for unemployment that Because the government has control over its own currency and can create that money to give to people and in future environment, when there's another pandemic, that causes a shutdown and you have a global crypto as your reserve. They can't just make that money out of thin air at that point in
order to satisfy these needs. So a lot of things are going to have to change along the way. And that's what makes everybody very nervous about it because Cuz like I was using with my example with technology and jobs, I understand how I lose. One, this new technology come. It's murky how I win with this new technology. It's not clear to me when the iPhone was made that that was the end of the taxi industry.
It was clear to me that there were going to be some jobs that were going to be lost and that's the same thing here as well, too. Totally. Well, I would love to talk a bit about the topic that, you know, since when I became interested in Bitcoin, in 13, there was already, you know, the beginning of this bubble back. Then we're Bitcoin went from like $50 to, you know, over a
thousand. And there I remember there was this this sort of expect and of people will recognize that it's Bitcoins going to be a big thing and then they will realize Oh, it comes back is very valuable. So I should get some now right before that happens, and it will become this kind of asset class like gold. So I think it was already that the idea there and that idea that it will become part of, you know, sort of every Investment Portfolio and that, of course, I
didn't happen back then. Then there was, you know, this bubble in 2017 18 and it again didn't really happen then and, you know, I think We are sort of an in similar Point again where people are expecting that or this will happen. And you know, now you have custodians and certainly there has been some influx from you know, from institutional investors and from funds. But how where do you see that?
You think crypto and Bitcoin is becoming kind of like an asset class that, you know, is part of sort of a any responsible portfolio. How is that going to happen? And where are we? In that. We're in early stages. I think really what, what a crypto needs in order to become a true asset class is a function on itself outside of the dollar. In other words, what I mean by that? Is I own a bunch of a crypto ether Bitcoin, fill in the blank and it goes up a lot.
How do I know that I've made money? Because I can convert it back to dollars at a much greater value. I still need the Fiat in that system, in order for it to work. Work when it really becomes it's true. And at the same is true for Real Estate or gold. I mean, maybe land you can grow stuff but in their case is real estate gold stocks and everything else. They are part of the Fiat system.
They are part of it. They were developed specifically, as part of it, a crypto is supposed to be outside of it. It's not supposed to be another version of a crypto. One of the arguments. Let me point to this. We one of the arguments people have asked me is why didn't goal. Go up a lot more. I went up some, but why didn't go go up a lot more in March. And when the, when the stock
market was falling apart. And I said, I believe part of the problem with gold is I look at gold and I think this is a way to get my money out of the financial system, but I really can't get my money out, you know, and everybody winds up, buying gold by buying GLD the big ETF on gold and is used to
joke. Well, then by Tesla, because you're still stuck in the financials of, you're buying something on the New York Stock Exchange and your Still stuck in the same Financial system that you worried about buying GLD. If you really want to get out of the system, you got to buy coins and burying them in your backyard. Well, the price of physical gold is up, but not nearly. That's hard to do. Nobody knows how to do it. No one wants to do it. They're not that big a prepper
and stuff like that. So gold has been trapped by too much paper gold and that it's in the financial system. It's part of the financial system itself that if the financial system had a problem, gold has a problem. Well, The same thing is kind of what's happening with with a crypto. I can own a bunch of Bitcoin and if the financial system goes to hell, it doesn't do me any good. Now stocks and gold and real estate. Were designed. I mean, not gold but real estate
and stocks and stuff. They're designed to be part of that system cryptos deciding to be separate from that system, but it can only get so far away from it because you need to go back to it. In order for it to ultimately work, just like you seen the problems with coinbase. As you know, when the, when the IRS comes in and says, we're going to tax all the accounts and stuff like that.
It destroys their business because it can't get away from it. Got to get away from it in order for it to really Thrive, and we're sort of kind of getting there, but the last couple of years after 2017. It really stalled. There hasn't been, you know, I own a bunch of Bitcoin other than exchange it to dollars. What can I, what can and of course by other cryptos with it? But beyond that, what can I do with it? Can I buy a car with? It can buy home with it?
Can I buy an investment with it? No, not really. There's a couple of one-off examples here or there but it's not widespread and it's not a bit cutest. I agree with the premise, but I don't necessarily agree that we're getting there in terms of getting away from the system because like crypto is just becoming more and more of a I guess I can institutional thing where you need to K YC and you have custodians and they're being regulated and like here in France. We have all this.
Regulation for like regularly and custodians, or anybody who sells crypto or even now, you know, in Europe in a couple of years. It's likely that we'll have even kyc for crypto to crypto exchange, which we haven't had previously. Yeah. I don't know how crypto gets away from from the system as you as you put it. How about it just creates its own system. It creates a parallel system that it doesn't rely on the Fiat system. But you know, if you want a crypto, to be the reserve
currency. It's got to have its own parallel system so that it doesn't need the dollar anymore. But if it's always going to be the needs that Fiat reserved, then we're never going to get rid of it. We're never going to get rid of the dollar as the reserve currency and no other Fiat at this point. Looks like it's ever going to supplant the dollar. Yeah. We see that a little bit in
defy. Right? Like defy I think is trying to build an alternative system, but at the moment it feels just so. Early and I fail to see like the real value in what Defy is building except for interesting Financial experiments. I agree that, you know, there are a lot of interesting things that are going on. I guess really, really what it is? Is it what is it that we really want?
I think what we really need is a medium of exchange, you know, a payment system, a the, you know, others would argue. No, we need to store value. We need to store a value outside of the financial system. I guess we kind of need both and maybe we need to. We need one to become a store value like the Bitcoin and other one to be in a medium of exchange and have them linked together in some ways.
But beyond that is, you know, if the idea is, I'm going to buy this crypto and it's going to go up a lot and then I'm going to exchange it back into dollars. And then I'm going to go buy a Porsche. We're defeating the purpose of what we're trying to do here. It's I'm going to buy these cryptos and then I'm going to use the cryptos to buy the Porsche. We're not, we're not there yet. We're not going to be there yet for.
I mean, well, I think we have Capability to get there and the problem that we're pushing back on his, what you just said. We keep pushing back every time somebody makes a step forward. We keep trying to regulate them every time they take a step forward just like we saw with, like I said, when Libre was a white paper, it was an idea. It was just an idea from Facebook. We had televised hearings about Dave, Marcus being just skewered by everybody in Congress.
And that was, you could see It was so transparent. They were worried about the competition. We've got the dollar. We've got our banking system and I'm a senator on the Senate Banking Committee. And do you have any idea how much these Banks put into my re-election campaign? And you're going to wreck this for me by coming up with a whole new scheme. No, we're not going to have any of that. I know all you did was write a white paper about what a good idea. This would be, but that was just
too much right there. They need to actually get to the point of actually creating the thing in the first place before they Been started jumping all over them on this. So you can see that how worried they are about something like that because it room is a big disruptor for them. A big big. Yeah, I think on that that's
exactly why. I personally I'm not particularly bullish on the idea of you know, we probably experiments like that because you still have you know, these companies behind it. And you know, it's just too centralized and then the government's can basically go in and shut. Shut those things down. And of course, they will because as you point out, it's extremely
threatening. So I do think the the way to do this will have to come from for more radically decentralized projects like Bitcoin you theorem. But yeah, it's it is a long road. I mean, I think if you look at defy, it's very cool, but you can do like things like maker and you know, you taking out these collateralized positions and stuff. But the user experience is horrible. Like the throughput like it can only support Few users that transactions are way too expensive and assume.
There's so many issues can't do anything with you. Can't buy anything with it, writer hard to do anything with that money that you make, right? Like, you have a collateralized position and you maybe you make some interest there. But like then what? Let me throw a, let me throw another idea. You two coming back to what we talking about a few minutes ago. It's an interesting idea, but there's really no motivation because as of right now, the perception by most is the current system is fine.
We we had a pandemic in the FED came in and promised to print up a you know, throw 15 kitchen sinks at the problem to use that metaphor and the markets levitated and everybody thinks things are getting better. But if we turn around and we go back down and it looks like the central banks have a limit to what they could do or it produces the male investment that I'm worried about or the inflation that I think we're not
going to deflation this year. We're going to still As you know, the economy is Contracting but on the other side too and 21 22, you're going to have drop in aggregate supply because 25% less people have jobs. We're not gonna be making as much stuff, whether it's restaurants or actual things as we did before and if we keep giving people 600 bucks a week to spend, we're going to keep demand up or going to have Supply down that produces inflation.
You produce Financial pain and dislocation out of this problem. Out of this instance, people will be willing to entertain a new idea and then the kryptos can jump into that space But if we have a pandemic and a market crash and we print up a bunch of money and we throw it at everybody and we give them Ubi and everything seems to get better and no one complains and there is no inflation or is no male vessel. Why do we need to change it? We don't need to change it then
at that point. So if there is, if we go to the point of Go to the point of inflation or problems in financial markets that they turn back down south again in a big way. Then I think people will be open to the idea of we got to find an alternative and then that's when the defy experiments and everything else will take you to taken a lot more seriously, but right now there are limited by this idea of. It's a good idea.
It's kind of interesting. It's cool, but it stops there because I don't need it. I got a system that I perceive is just fine right now. Yeah, maybe one final question before we wrap up. So probably many people also thinking through, you know, how do they themselves manage this situation? What lies ahead, maybe how do they position themselves from an investment perspective, you know, to make sure they're kind of, you know, safe and
protected. You have any advice or recommendations for people who are thinking about, how to handle what lies ahead in the coming years? Yeah, I'd say, you know, I'm not going to, you know, Say by this cell that or something like that, but I put it more conceptually. First of all, let's think about the economy, forget what we've been, we damage the economy, 25% of lost, their jobs, and similar numbers in Europe, as well, to similar numbers in the developed world.
How do we get back? How do we get back to that? How do we unworked from home? How do we get? Two million people to ride the New York City subway a day, as opposed to 200,000 ride the subway a day. What is the next time we're going to see a football match in Europe with 70,000 people in the stands 70,000 people. How do we get back? And if the answer is it's a long slugging road to get back to those kind of questions, then there's going to be permanent change.
If no one writes who wants to ride the tube in London. London is going to change. No one wants to ride the underground in Paris Paris is going to change in a big way. If nobody wants ride, the subway system in New York. It's going to change in a big way. So, the first question you have to ask yourself is is, do you think that we can get back all the way back to that? Do you think we can go back to 2019?
Is it a vaccine or do you think like me, even if they, even if I read headline, came across my Bloomberg in the next two minutes and said, found vaccine? You know, you know, within 30 days we're going to start vaccinations. I still think we've done so much change to the economy. I want to see damage that I don't think we could go all the way back. So that's the first question. You have to ask yourself. Do you think we can get back?
I think we don't. I think the second thing is, if we don't get back, human Ingenuity, means we are going to have to change its not. We're going to permanently be damaged and never get better again. We're going to change so that coming out of this. As I like to say, coming out of this, the big companies that you're going to want to buy that are going to power the market up and power. Your Investments are going to be companies that don't exist right now that are going to be created
because of this change. What are those companies? What do they do where they going to go? You know, it's kind of like, like I said, when the iPhone one came out, Got to really think hard about what is this mean, other than I could call my mother easier and it did and, you know, and you have to be early on the idea that wow, it means the end of the taxi business and stuff. And so we got to start thinking that way.
I don't know what those are and that's what I'm and that's really where I'm trying to think about. What are going to be those. What are those changes going to be? I have a hard time believing. Like I said, I think every Trend that we're seeing exposed. One wants to work in the office, work at home. What movement away from retailing.
A movement more towards an online world, you know, people that are even said that they don't even want to touch current paper currencies anymore because of the transmission of disease and stuff. So we're going to go to contactless payments and stuff. All of those Trends were in existence before this all it's doing is it's making him go faster and if it's making them go faster, we're not going back.
We're not going back. We're not all going to sit at home and talk to each other on Zoom until the moment becomes that we can all pile into a subway car and breathe all over each other to go into the 48th floor of an office building with 9,000 people in it. Seven or eight or nine hours a day, five days a week. I think that that era ended.
And with that the worst business to be and I think is commercial real estate right now, especially high-end densely, Urban commercial real estate is got a real problem. My other hands right now. If that's the environment that we're in, right? Then after that, what are they going to be the opportunity? So, I want to try and answer that question, that way, instead of saying by the SNP until it goes to X or with your stop that y or something along those lines. That's why I've been struggling
with this with the rally. I understand the rally in the market. I understand small retail is piling in and helping to support the market. I'm a big believer of that. As well too, but beyond that beyond that. Really, where are we going with this? I think we're going to a post virus world and you got to start thinking about there's going to be great opportunities in the post virus World. It may not be by Ford and by United Airlines type of opportunities. Those were the pre virus World.
It might be something completely different and we'll just have to figure out what that is. I hope that answers your question if you get any thoughts or follow-ups on it. Now that's I think that's a great note to end on and I for one am very much looking forward to the next time that I can go to Berlin and pay with my credit card everywhere, because currently you can't do that and maybe this will be the thing that tips the scales and in Germany, you can finally pay
with your credit card. It has it has. Oh really? Wow. That didn't take long. I'm just looking for the next time I can go to Berlin, you know, we do Jim. Thank you so much for joining us today. This is fascinating and I'm sure our listeners will very much. Get your insights. I certainly have been really enjoying all of your insights on other podcast and also on, on, I reset everything which we feel that we haven't mentioned. But yeah, you were also speaking there.
So this one should definitely check out the talk. I will leave the link in the show notes and happy to have you back on at some point in future. Thank you. I enjoyed it. Thanks so much. Thanks. It doesn't end here. There's much more to this conversation and you can hear it by signing up for epicenter premium as a premium subscriber, you'll get access to a private RSS feed where you can hear the interview debrief, which goes on for an extra 20 minutes.
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