Impact of Debt on Currency and Assets

Um, they, there is the loss of confidence

in the reserve currency, which drives people to see

alternative store holds of wealth.

So, uh, for example, um, when there's a debt,

um, issue,

um, there are two ways of dealing with debt.

There, there's hard money, you know, traditionally backed by

gold, and when that w- happened, um,

then there was breakdowns in that monetary system,

devaluation. So when, for example, uh, classically,

March 1933, Roosevelt,

um, in ... with the debt problem, uh, was forced

to go off the gold standard, printed a lot of money, devalued the

dollar, and then the, and then it moved on.

Um, in 1971, uh, we had the

same. Uh, Nixon, um, did the same thing, went off the gold

standard, um, and devalued and so on.

And the creation of a lot of debt and money means that

money goes someplace else, and it traditionally, both of those

cases, it went into stocks, gold, and other places.

So money is always the holders of money-

Mm-hmm

... uh, which are the holders of bonds.

Bonds are a promise to receive money, a

lot of money over a period of time. It's a very long

money position. And when those become unattractive,

such as now, let's say, you get zero interest rate

or close to zero interest rate or even a negative interest rate,

and there's a

lot of creation of debt and, um, a lot of printing

of money, that drives, um, that

into other assets. They may not be another currency

if there's not a good currency. They may be stocks, they may be gold,

and they may be another currency. But it is that kind of

time that we're in. So w- next year and the year

after, no matter what, we're going to have large, uh,

deficits. We are going to produce a lot of debt.

And we will monetize that debt, and that debt will have a negative real

return, and therefore, people will borrow in it,

will find it more

advantageous to borrow in it than own it, and then they will move

to other assets