Hello, and welcome to another episode of The Mark Moss Show, where of course we're always talking about the decentralized revolution, which is of course as the world's breaking apart.
You know, going forward that centralized world.
That we've been swinging to, that pendulum swinging to, and we're now moving back to a decentralized, multipolar world.
And you know, I like to talk about it from three.
Different revolutionary cycles, a two hundred and fifty two hundred and fifty year political revolution cycle, an eighty year financial revolution cycle, and of course a fifty year technological revolution cycle. Now the interesting thing is people are always amazed when I show them the charts that all three of those are converging right now. But of course today we're going to talk about just one. I want to talk about
the financial revolution cycle, eighty year financial revolution cycle. And we're here witnessing something that we haven't seen for about eighty years since the last time this was reset, and so I want to break it down to you. I want to under I want you to understand exactly what's going on in the financial systems with inflation, federal debt, and what the FED policy has been so far as far as you know, on their warpath raising rates then the fastest pace in history.
And then of.
Course we'll talk about the proverbial wall that they're hitting. Now I've talked about this many many times, that they're stuck between this you know, rock and a hard place, so to speak. Unfortunately, there's probably well it's not really a way out, but there's a most likely, most probable situation that they'll probably try to pull. We know this, we've seen in the past, and we know that all nations at the end of the at the end of the rope, end up doing this. So let's talk about
that a little bit. So of course, we know that inflation has been sky high. Of course the Federal Reserve that all central banks, they want inflation so they can inflate away the debts, so they make the debt much cheaper for them.
It's like if you, let's say, ten years.
Ago, you were the average salary you're making, you know, fifteen bucks an hour, and you take a six hundred dollars loan, and now here you are ten years later, and your rate of pay has gone up to twenty five dollars an hour, but the payment is still the same. So of course you want to inflate it away. Well, the central banks do, specifically the United States, when they
have thirty two trillion of it. However, for you and I, it's not so good because as they create more money, the value of that money, the purchasing power of that money goes down. And so yes, prices go up, but it's the value going down. And so you know, I like to say that the two greatest tricks that the Fed ever played on us was one telling us trickiness that the money supply should always increase. A lot of people think that's the way it should be. It has
to be that way. And the second trick is that asset price is always going up is a good thing. Well, it's a good thing for them, but is it really a good thing for you? So what I typically ask people if they'd say, well, money supply has to increase, doesn't it. So when you increase the money supply, prices go up or thereby your purchasing power the value of have gone down. And I just asked them a simple question, would you rather your money buy you more goods and
services in the future or less? Of course, the answers there's always more. Of course, we wanted to buy us more. We want our quality of life to be getting better and better and better and better. We want to be working less and enjoying more. The problem is that our money continues to buy us less, so the opposite is true. We have to work more and more and more just to try to maintain our quality of living or else even potentially lose our quality of living at the same time.
So that kind of frames it up. But the problem is is that the FED only wants two percent inflation, but they overshot their target. We got up to nine point one percent, and the Fed looked pretty bad. They had to do something about it if they wanted to get back down to two percent, and so they've been on the war path, raising rates at the fastest rate
in history, trying to get that back under wraps. The problem is that there's really a couple different ways, two main ways that you can get price inflation consumer price inflation in an economy, and it usually comes from one or the other, usually a combination of either one money supply growth, and two significant changes in productivity and or resource abundant. So basically supply and demand, that's what it
always comes down to. When there's more demand. So a lot more money in the system creates more demand chasing the same you know, set of supplies or less supplies, then the price goes up. Now, the problem is that the Fed wants inflation to come down, but they really can't do much about the supply side of the situation, so instead they work on the demand side. If they can try to make you and I more poor, we can you know, the bring our stock assets down, all
our assets down, you know. Unfortunately, they want to increase unemployment. Two million people would.
Lose their jobs.
If they could do that. Gas is expensive, stakes expensive, then maybe we don't spend as much. If we don't spend as much, then potentially it comes back down. The problem is, though, they're working on the wrong side of the equation because it's been mostly a supply of course, we've had supply chains breaking down since the pandemic, the war with Russia and Ukraine messing things up. But at the same time they have brought down some of that
consumer demand a little bit a little bit. But the problems they're working on the wrong side, as I said, because it's not the consumer that's the one spending, it's the fiscal spending.
That's the problem.
The US federal government was spending roughly four trillion dollars per year into the economy before the pandemic. Going into the pandemic, they increase the spending by about fifty percent, up to six trillion dollars per year, and they're still spending. So while the Fed is doing its best to bring down your spending, you're an eye spending. They haven't done a whole lot for the fiscal policy.
But before we get.
Into all that, I want to kind of give you a little bit of an illustration.
Let's take a look at some ways that we can look at this. So I always like to.
Say this little controversial kind of piece just to get people's attention, and that is that none of us want money. And of course you say, what do you mean, of course we want money, Well, we don't really want money. We want the goods and services that money buys us. And so we have to think about money. Obviously it's just a medium exchange, and so it's really the other
things that we want. And the problem is if we always price those things in dollars, the price of your house and dollars, the price of oil and dollars, then we have a very distorted number. And so we want to look at gold and oil dollars and oil dollars in gold and look at all of those and how
they work together and move between themselves. And so if we take the dollars out of the equation and then we compare a price of oil in gold, or we look at them both in gold and dollars, we can see that since about nineteen thirteen, when you look at a gold for a barrel of oil, zero point two ounces of gold for a barrel of oil to up to zero point one four ounces of gold for a barrel of oil. And so they fluctuated from nineteen thirteen
until now in that period very tight. I mean, they jacked up right around you know, nineteen fourteen fifteen, but since then they've stayed somewhat pretty relatively stable. But if you look at that same chart in oil, the average oil price per year, where of course they've measured in USD. Of course, as they've been continue to increase the USD, the price has shot up, and if you could see
the chart, it looks like a hockey stick. Of course, starting right there in nineteen seventy three, and it has just been going up ever since.
As a matter of.
Fact, you know, the reason why this is such a big deal is because gold has a very low inflation rate. All the gold in existence is still here and it goes up by about one point five percent per year. But on dollars, on the other hand, have been going up for much much faster. And so with that context you can understand how the financial system works, and of course you now understand why central banks want the inflation to rayge on so they can make that debt cheaper
and cheaper and cheaper. The problem, of course, is that central banks, like I said, can only offset a bit of the causes of inflation. And the problem that we have here is that because it's really the fiscal deficits that are causing this, they're spending that money right into the economy, and as the Fed has raised rates, they've made us all poor and poor and poorer. But the other problem is that that means you and I don't
pay as much taxes. There's not as many capital gains taxes, and just unemployment has gone up, there's not as much taxes overall, and that's just made the situation even worse. Because the federal government didn't have enough money at as it is now, taxes went down, and now by the raids going up so fast, the amount of interest they have to pay on the debt is now only making the deficit that much worse. Hey, if you're just tuning in, you're listening to the Mark Maus Show. We're talking about
the situation. The FEDS found themselves in the proverbial rock and a hard place, sort.
Of damned if they do, damned if they don't. I'm going to set this up a little bit more.
You can understand exactly what's going on, you'll know how to position yourself, and you'll find out. Unfortunately, it looks like the most likely outcome. It's not that good, but we can be prepared for it. We're gonna get you ready for that. I got to take a very quick break though.
I'm going to take a minute. I'll be right back.
Don't go away, all right, Welcome back. If you're just tuning in, you're listening to the Mark Maus Show. Of course, we're always talking about the decentralized revolution, talking about the way this world is changing, and today we're looking at one of the three revolutionary cycles, the eighty year Financial revolution cycle, and we're talking about how the FED is sort of damned if they do, damned if they don't. They're trying to bring inflation back down with the kind
of the only tool they have. The problem is that it's not really fixing it because it's not the right tool for the right job. You hear a lot about how inflation was in the seventies, and you'll hear reference to Paul Volker, who raised raids so fast he crushed inflation right, And you might hear that Jerme Powell. The current of the FED Reserve doesn't want to be compared to Arthur Burns. And so Arthur Burns was raising the rates and just when he thought he got out of control,
he lowered the back down. Of course, then inflation raged on. He looked bad. But Vulcar he came in and he did it right. But the problem is is that it's an eighty year financial revolution cycle, and so you have to look back a little bit further, and it seems like the most comparable part of history is really in the nineteen forties. Now I'm getting a lot of this research. Lynn Alden has been amazing. She's got a couple charts that really show how this works out.
That's really helpful. But she talks about how.
The nineteen forties and the nineteen twenties are very similar because most of the money supply growth was again from the fiscal deficits, right from the government'spin in it, and mostly both nineteen forty and twenty twenty related to the war and of course twenty twenty pandemic stimulus. Now, in the nineteen seventies, most of the money growth was from the bank lending, and that was mostly related to demographics. And so because the seventies inflation was related to bank lending, well,
then he raised the rates. People don't borrow, no big deal. So that's what happened in the seventies. However, the nineteen forties it was different. It was government spending, which was the case on that. Now, if Jerome Powell wants to treat it like the twenty twenties, then we're probably gonna see him fail.
He's sharply.
You know, he's been raising rates to try to stop that bank lending. But the bank lending isn't the problem. Raising or lowering interest rates, changing the price of money can only affect money creation and price inflation. But only in indirect ways. Now, some people assume that high interest rates are necessary, you know, secure price inflation, but that's not historically the case. In some context, it's neither necessary
nor even sufficient, because again, they're just one tool. It's sort of like when you hear like the Fed's going to have a soft landing, you would imagine like they're like a like a like a jet, you know, with all the gauges and switches and knobs in there, and they can finally too, you know, how this thing is flying.
But the reality is it's like a hot air balloon. They have one lever.
They can pull the lever and let the hot air out, inflation up, and they can close it inflation down. That's really all they have. Inflation up, inflation down. And so they are trying to fight this with the wrong tools, which of course is never going to work. The nineteen forties inflation, both in the US and even some more, you know, all across the world really globally, was again it was all about to monetize fiscal spending on the war.
And when the war stopped, the fiscal deficit spending stopped, the rapid money creation stopped, and then of course, yes inflation stopped. As the war ended, the global supply chain started to improve, and then productivity return.
So you had two things.
One, you had all that money that stopped being spent into the economy, and at the same time you improved productivity, you lowered demand and increased supply. Guess what happens you bring down prices. Imagine that. But if we look at other examples, we can see where things have really gotten
away from this, like Turkey. For example, Turkey has eighty percent year over year inflation, well at least at the peak, and their interest rates were between eight percent and eighteen percent, so obviously way below the eighty percent, and then of course consumer level interest rates were you know, they're higher than that, but it's a massive amount of inflation relative to the interest rates, and so when that happens, it creates a very strong market incentive for people to borrow
against that currency. So, for example, just to kind of lay this out, the Turkish lera, that's what we're talking about. It's gone down eighty percent, It's gone down about ninety five percent to the US dollar like over the last five years. So if you were in Turkey and using Turkish lira and you knew that it was going to go down to time machine and go back in time five years.
What should you have done.
You should have gotten out of Turkish lera. You should have exchanged as much as you could of it four dollars.
That would have been good. What would have been better?
What would have been better would be to borrow as much as you could in Turkish lira and then use it to buy US dollars, gold stocks, real estate, bitcoin, art, anything wine, anything that'd be expected to have a better return than the lira, which is almost anything. And by borrowing lira they could create more lira because remember we're in a debt based system, so you borrow it into existence.
And even if they don't, you know, or they can't borrow it, they could simply refuse to hold it, which also contributes to the collapse of the currency.
So this is a big problem.
It's what known as like a speculative attack, where you can borrow the currency, you can sell against it. Basically nobody wants to hold it, so in these types of situations, historically, raising interest rates above the inflation rate is a key method to try to slow down the bank lending right, and then they would hope to slow down the broad money supply, and it works. It works good when that's the problem bank lendings. The problem, however, the problem is
when that's not the problem, it's not going to work. Now, if inflation is caused by the runaway fiscal debts, which is what we're talking about here, then of course high interest rates they're not going to matter because the central bank, the government's going to spend the money regardless, they don't really care what it is they're borrowing the money anyway, forces the commercial banks and the central banks to finance
the government's runaway fiscal deficits. Now, first when they raise rates, you might see a little bit of an effect, which we did slowed the economy down a little bit, but over time, raising interest rates and then keeping them high in an environment where there's runaway government deficits and high government debts, where they're causing inflation, then it runs the
risk of making the inflation even worse. High interest rates on large amounts of government debt, especially when they get over ninety percent jet to GDP, which now we're up to about one to twenty five, it's always going to result in even bigger runaway debts because now they're dealing with a ballooning interest payments on the debt, and of course this ironically pushes even more money into the economy. Surprise, surprise.
So if the FED, like if we went back to nineteen forty, if the FED would have raised rates really sharply in the nineteen forties war, it wouldn't have reduced inflation. It could have easily made it much worse, because of course the FED and the banking system we're stuck monetizing the fiscal deficits anyway.
But I get it.
It's kind of hard to understand, isn't it. But let's just say, damned if they do, damned if they don't.
If they continue to leave.
Rates low, then people continue to borrow money and will continue to push inflation. If they raise rates high, people won't borrow the money, but the government will, especially considering their tax receipts will drop and the interest on their debt will be going up at the same time. So what can the FED do? Unfortunately, there's nothing they can do to fix it at this point. Put there is
something they can do to continue the game. And this is like I said earlier at the intro, this is what every nation has tried to do from the beginning of time. It's the final stages. I'm going to talk about that in just a minute, but I gotta take a quick break. If you're just tuning in, you're listening to the Mark mass Show. Of course, we're always talking about the decentralized revolution.
We are talking about.
Here the financial revolution cycle, the eighty year of financial revolution cycle, and how the FED is in the proverbial rock in a hard place with nowhere to go. I'm going to come back and we're going to talk about the endgame and this third scary solution.
But I'm gonna take a quick break. Don't go away. I'll be right back. Hey, welcome back.
If you're just tune in, you're listening to the Mark Moss Show. Of course, we're always talking about the decentralized revolution, and I always talk about three revolutionary cycles. Today we're talking about one of those, which is the financial revolution cycle, and how that is happening right now. Of course, we're talking about how the FEDS back is against the wall, and we're talking about specifically how they've been raising rates
to try to bring inflation down. And I was saying how most people think about the seventies inflation and the Paul Volker and the Arthur Burns and how that's wrong, and really you need to look at the forties for better inflation to understand it.
Because what the Fed is doing, they're.
Trying to attack the wrong thing. They're trying to make you and I retail spending go down. But the problem is it's the governments that are spending the spending the money. And the problem is is that the more they raise rates, the worse it gets for the government, and the more money they spend. It's deficit spending. That's what we're talking about. And like you and I, when we go broke, we stop spending money. The government doesn't. The government doesn't. The
government just runs bigger deficits. That's what they do. And so when inflation is caused by runaway fiscal deficits government deficits, then high interest rates won't stop it.
They won't do much to do it.
And basically what it does is because like I said, it forces the governments to just finance it. It forces the governments to borrow even more money. But the problem is is, like I said, is that as the FED is rates and then the government's borrowing more money, the cost of that borrowing goes up. But it also does something else that's really bad. What it also does is, as they're trying to bring you and I are spending down,
consumer spending down, they're making us broke. So our houses aren't worth as much, our stocks aren't worth as much. We're not buying and selling as much stuff, but we're not making as much money. And what that does is then we don't pay as much taxes, So it's a double whamming for the government. One they don't get near as much revenue, so that makes a bigger deficit. And two, the interest on the debt went up, so.
That makes a bigger deficits.
So now the deficit is going up two times. It's like a really, really, really bad situation for the government, which is why all of this just makes the problem even worse. We can see that over time, raising interest rates and keeping them high in an environment like we're in now with runaway government deficits and high government debts are causing inflations and they just make it worse.
All right.
Now, to understand this a little bit, we want to take a look at some other examples when this has happened and what's going on, And we can look back into some other examples, like for example, in Turkey. So in Turkey we can see that they've been running massive inflation over there. As a matter of fact, we've been seeing eighty percent inflation for the last couple of years.
But what Turkey did is.
As inflation started going up, they cut rates. But as they cut rates, inflation went even higher. But eventually it started coming back down. They cut interest rates to under fifteen percent, and inflation exploded to over eighty percent. But for a period of time, the money supply and the consumer price index ended up taking off like a rocket
ship for Turkey. But the problem with Turkey situation is that cutting interest rates did reduce the portion of inflation caused by fiscal deficits, but it made the speculative attacks on the currency and inflation caused by bank lending. So
this is the problem. If the FED raises rates, then what happens is then people don't want to hold the currency, or more specifically, they'll borrow against it and cause that speculative At tech, nobody wants to hold the lira, especially foreign Lira is the Turkish currency and especially foreign entities. So what they want to do is they want to
borrow in Lira. So for example, when inflation was at nine percent and I could get a house loan at three percent, then I definitely wanted to do that, and as a matter of fact, I.
Got a couple of them.
Because what happens is, remember at the beginning of this episode, we started talking about how they inflate debts away because you get paid, you know, five years, ten years down the road of that new inflated amount, but your debt was locked in at that old rate. So if I can get a thirty year fixed loan at thirty percent and inflation is above that five percent, seven percent, nine percent, then I want to borrow as much money as I can and let the inflation pay it off. So in
Turkey that's exactly what happens. But the problem is that becomes a speculative attack. So now as many people as they can, they're borrowing more money. But as they borrow more money, that just makes the problem even worse, and then they don't want to hold the currency.
So it's called a speculative attack.
Now Argentina saw similar problem that inflation rate of over one hundred percent. I mean, imagine that one hundred percent. That means your money basically becomes worthless every year. But unlike Turkey, they started aggressively raising interest rates to keep up with it. But yet inflation remains completely uncontained. They haven't been able to do anything about it. It's almost as if interest rate policy isn't the only variable to consider,
which of course it's not. That's the whole point that I'm talking about.
Now.
What we have we're looking back at the nineteen forty is what really caused it was war, Right, They had to spend money to go to World War two, and we had, of course the pandemic war, the war on the pandemic, the war on COVID.
Right.
So if inflation is caused by a war, or by a demic, graphics bulge, or a high rate of bank lending, then it's pretty fixable, right just after the war brings spending back down. If it's the high rate of bank lending, then get the banks to lend less money.
Right. However, like I.
Said, if you can fix it once the war ends, if the government turns back to their budget, then things sort of go away. In the nineteen tens and the nineteen forties, the US had high deficit driven inflation, but had a clear way to bring it down after the war. Why could they do that? Well, the reason why is because back then they didn't have the entitlement spending. And this is where the proverbial rock and the hard place comes into play. This is why this time is different.
Back in the nineteen forties, they didn't have the entitlement spending, which is the Medicare, the Medicaid, the Social security, the interest on the debt, the military spending, all those things. They weren't locked in, and they had a very low amount of workers that were dependent on the system. Today it's the opposite. Today we have the federal governments have bulged and we have more people working for the federal
government than ever before, so dependent on the government. We also have the entitlement spending which is higher than it's ever been at any point, and the government does not make enough revenue to even pay the mandatory spending.
The entitlement spending didn't pay that.
Now, in the seventies, the US had a low sovereign to debt level of about thirty percent debt to GDP. That was in the seventies when you hear about Arthur Burns and vulgar. So it had an easy path to raising the rates because the government didn't have that much debt, So go ahead and raise the rates. It didn't really matter because the government's the amount of debt that the government has just a little bit. So yeah, it makes that debt more expensive, but it's not that.
Big of a deal.
Okay, But today we have a debt to GDP of one hundred and twenty five percent, So from thirty to one hundred and twenty percent, it's a pretty big deal. So the hardest inflation combination for any central bank to deal with is three things. One a high sovereign debt to GDP ratio in the seventies was thirty percent, today it's one hundred and twenty five. Two large and structural fiscal deficits tied to age demographics and imbalanced entitlement programs.
And high military spending. That's a problem. We have high military spending. Check we just went from the war on the pandemic to now we're war in Ukraine and potentially war with China. Two in balance and titament's programs. Yes, I told you, we can't even afford those. They are at highest point ever age demographics, so the baby boom generation is the largest segment of the population.
And then three, a.
Significant supply constraints such as tight oil markets or labor shortages due to high public debt levels. So significant supply constraints on such tight oil markets and labor storage. So the Biden administration has done everything they can to shut down oil in the United States. So we have supply constraints on oil, and because of the high interest rates it imposed is capital constraints and makes it very hard
for the oil companies to get more oil out. Sounds like we're in a pretty bad situation, and so they're trying to bring out the nineteen seventies playbook, but it's.
Just not working. Now.
They can reduce money creation from bank lending in the intermediate term, but ironically it only makes inflation worse. So that's exactly what's playing out at this point. Fun fun, fun fun. Now let's talk about the nineteen forties playbook, right, that's about nineteen forties playbook and how they can if they keep interest rates low even though we have high inflation, how it could actually reduce the fiscal driven inflation a bit. But the problem is, as I said, if they do that,
then it encourages speculative attacks on the currency. If they bring rates down and inflation is running high, everybody's gonna want to borrow the money and attack the currency. I'm going to tell you what is the only outcome from this. When we come back, I'm gonna take a quick break, don't I'll be right back, all.
Right, Welcome back.
If you're just tune in, you're listening to the Mark Moss Show. We're talking about the FED, the FED, the central bank policy and how you know, the we'll just take it higher for longer, we'll just keep it higher, what the Fed's doing to fight inflation, and how it's completely wrong, and how they're really stuck. They're really between the proverbial rock and a hard place. Unfortunately, there's maybe only one way out of this, and it's not good.
As a matter of fact, it's not good at all.
So they've been raising rates to try to bring inflation down. But the problem is I've been explaining. If you've missed it, to go back and listen to the podcast to search the Mark More Show and your favorite podcast player. Catch me on YouTube at market disruptors. But as they've been raising rates, they haven't really slowed inflation down because it's not the consumers spending that's the problem. It's the government spinning that's the problem. And the governments are going to
spend no matter what they do with the rates. But what it does do is it makes the government spend even more for two reasons. One, as they raise the rates, consumers, you and I were more broke, which is what they're trying to do. And so the government doesn't have as much that they don't have as much income, we don't pay as much taxes, So the government's income goes down, which means they need to spend more deficits, spending more debt. And because the interest rates went up, the cost of
that debt, the payments on the debt go up. As a matter of fact, the United States government debt, the interest on the debt has now eclipsed the amount of money that the US spends on its military. Now the US spends more money on its military than the next ten countries combined, more than China, more than Russia, more than France, England, Britain, whatever, all of them combined. And the interest not paying down the debt. Just the interest on the debt has now eclipsed that. So it's really
causing a problem now. As I said in the nineteen forties playbook, if they were to keep interest rates low even though inflation was high, then it could reduce the fiscal the governments inside of the inflation a little bit. But it encourages a speculative attack on the currency, where we go borrow as much in that currency as we
can to go buy any assets that we can. Like how I went and bought a couple of properties when I could get thirty year fixed at three percent when inflation was over that all right, I explained how that works before.
I'm not going to go through that again. So what do they do.
It's a pretty dangerous situation. If we don't raise rates and inflation runs hot, we get the speculative attack. If we do continue to raise rates, then we just make inflation worse.
So what do we do? Well, this is where things get a little scary.
So if we let's just run this back one more time. So let's see if we continue to raise rates, we make retail broke. But that doesn't really solve the problem, and it actually makes the government deficits worse because the deficit spending. But if we do lower rates, it will reduce the government deficit spending, which is the main problem. But then we open ourselves up to a speculative attacks. So there's a third potential choice. And this is where it starts getting scary.
And this is what.
Basically every single empire and country in the world eventually leads to. This is the final stage when this happens. It's kind of over. A lot of the world has this, and a lot of the United States has it, but we don't have it on a big scale, and that is something called capital controls. Capital controls are basically controlling the capital, controlling the money, controlling the flow of money in and out of the country, and also the price of good So for example, in California, in Los Angeles,
for example, they have rent control. Right, that's a price control, it's a capital control. So well, rents are going up too much, so we'll just say that homeowners can't raise the price of those rents anymore. Right, But capital controls are much worse because it controls the flow of capital in and out. I literally just today at the time of this recording, got home from being over in Spain
where I was at a conference. I was speaking in a conference over there, and most of the people there were international, which I guess is why I was in Spain. Probably at least two thirds of the group were international, and they're all business, business people, entrepreneurs, et cetera. And many of them I talked to from sort of like
the Nordic countries, so Denmark, Finland, Sweden, et cetera. And I was really surprised, like in the Netherlands, for example, I didn't understand the extent of the capital controls that they have. And so these are business owners and they're doing business selling you know whatever, they're selling supplements or fitness equipment or whatever, all across Europe, but the government doesn't want money to go in and out of the country, and so it makes it very difficult for them to
do business. Some of the team that ran the event are from Argentina. Argentina has some of the highest inflation in the world, and they also have capital controls. So for example, you have this the Argentine I think it's the Argentine peso that's losing one hundred percent of its value, and so you don't want to hold that right, so you want to exchange it for something else, Well, what would you exchange it for. Well, people would like to
exchange it for a dollar. So the official exchange rate, I don't have it pulled up in front of me, so don't quote me exactly. But the government tells you that the official exchange rate, because they're trying to make it look like it's not so bad, is like two hundred and fifty to one, two hundred fifty Argentine pesos to one dollar. But they only allow you to exchange and they just told me this this last weekend, so I don't have a written down, so again sorry for
my not being completely factual. But something like the government only allows you to exchange, you know, one hundred dollars of that or something like that. So then there's a black market for that, and the black market is like five hundred to one approximately, because people don't want to hold the Argentine payso they want a dollar. So even though the official rate says that, since they can't really do much of it, they'll just pay the black rate five hundred, five hundred fifty to one.
But here's the thing.
The government won't let you spend more than I mean, I should have written these numbers down. I think it was like three hundred dollars on their credit card. So these people they're in Spain, they're traveling from Argentinita, but they can't spend money on the credit card. Well they can, but only up to like a couple hundred dollars. Once they go over that, then it's way worse than even the black market rate. Then it's like exchange like a
seven hundred and one ratio. Why do they do that because they know that the people are going to be dumping the Argentine pace so as fast as they possibly can, causing a speculative attack. That's exactly what they don't want, and so that's the only way to stop it. Nobody's going to want to hold a currency when inflation is running that high, and that's exactly where the United States finds itself in. So damned if you do, damned if you don't. Inflation is raging high. The more we raise rates,
the worse it actually gets. But if we lower rates, we have a speculative attack. So what do we do. Well, we do what every other country in the world has done is doing right now, and that is imposing capital controls, and like I said, that is very, very very scary, especially you know, being in the United States, the land of the Free. We don't want our money being locked down. But of course this is what they have to do.
It's the only way they can do it. It's the only way they can do it if they want to try to protect their currency. Some countries, you know, Argentina, Nigeria, they've completely cut off access points to cryptocurrency because again, people will trade their currency that's losing value for anything.
It's what Libwoo Vunmesis calls the crackup boom, and he says, and then suddenly the people realize that inflation is both permanent and intentional, and then they lose all confidence and they want to exchange that currency for anything they can as fast as they can. In the currency ultimate plummets unless the government doesn't allow you to do it. It's the only way to stop it. And this is not a conspiracy. So what's been done in the nineteen forties.
The IMF International Monetary Fund put out of paper in twenty fifteen titled quote the Liquidation of Government Debt and an outline something that we call financial repression, and it says that in this paper. Quoting it, it says here quote, we suggest that once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt and advanced economies. So what they're saying it says here quote financial repression is most successful
in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were negative half the time. So what they're saying in this paper is the goal to get rid of the debt is to lock you in into the bond market that pays a very low yield when you have high inflation, so they inflate their debt away, trapping you in the system so there's no escape out for you, and stealing your wealth to.
Bring theirs back down. It's a very very scary thing.
Now we've seen this in some shape or form already, but it's only getting worse, and unfortunately it appears that it's the government's only way out. Damned if you do, damned if you don't. And you and I are cott in the middle. Now, what do you do?
Will you get out?
While you still can buy gold, buy bitcoin, buy some houses, by buy something, because otherwise you're going to be stuck in this financial repression nightmare. If you're just tune in, you're listening to the Mark Moss Show. Of course, we're always talking about the decentralized revolution of three revolutionary cycles are converging in today. We just broke down the eighty year financial revolution cycle and exactly what's happening. Hopefully, this
isn't meant to scare you. It's to tell you what's coming so you can prepare. I'd love to hear what you have to say. Leave me a comment, hit me up on social media. I want to hear that you're listening to the show. I want to hear you get some value and please, if I can't ask a favor, would you please rate and review this show and a podcast player.
That's what I got. Thanks so much for listening. Until next time,