A system is only as good as the decisions made by the people running it. Today’s guest expert is highly concerned that the leaders currently in charge of our financial system are out of their depth & putting us on a course to crisis.
A crisis, that when it fully arrives, they will address with “solutions” that require even more centralized control by the people who caused the disaster in the first place.
So what risks exactly does he recommend we prepare for?
We’ll find out now, as we’re fortunate to be joined by Matthew Piepenburg, Commercial Director at Matterhorn Asset Management AG – GoldSwitzerland
Matthew Piepenburg 0:00
All these things from inflation to recession to quantitative easing quantitative tightening, disinflation currency risk, Bond risk risk asset market risk, equity risk, it all flows down from debt and debt all flows down from our policymakers not just at the Fed but globally, but in particular, the ECB, the Fed the Bank of England, the Bank of Japan. It is phenomenally risky. And it’s based on a monetary theory, which I think has bought us some prosperity and some euphoria, but will end with a hell of a hangover.
Adam Taggart 0:39
Welcome to Wealthion. I’m Wealthion founder Adam Taggart, continuing the plan of surfacing several of our best and still most timely interviews while I’m away this week. Today, we turn to our interview with Matthew pipe and Berg, commercial director at Matterhorn Asset Management AG, gold, Switzerland. At the highest level, the global economies biggest challenge is dealing with a massive and exponentially increasing pile of debt that is built up in the era of fiat currencies, deficit spending and promised entitlements with no clear solution in sight and a track record of poor decision making by those in charge of the system. How does this end other than badly? This is one of the most important interviews I’ve had the privilege to record for Wealthion. Let’s hear why.
Matthew Piepenburg 1:25
It’s great to be here. And I’m looking forward to it.
Adam Taggart 1:28
Yeah, it’s just got to be fun. And Matt, you have been a highly requested guest on this channel. And so it’s wonderful that you were able to finally join us here really appreciate you taking the time. Look, I’ve got a lot of questions here for you. A lot of them taken from your your recent piece that you released a few days ago, which is pretty excellent. Before I jump into those specific questions, though, let me just start with a question. I like to ask all the guests here at the beginning of the interview, which your current assessment of the global economy and financial markets
Matthew Piepenburg 2:00
baffled, cynical, concerned, I think the four letter word that describes everything and if everything trickles down to his debt, how it will be sustained or not sustained. The mechanizations used to use lofty words to hide really, really bad math. And I think the lack of transparency and honesty about the ramifications of postponing a debt crisis with more debt, which is just mono monetized with literally money printing out printed out of thin air that’s not linked to an asset a chaperone or a service. And so all these things from inflation to recession to quantitative easing, quantitative tightening, disinflation currency risk, Bond risk, risk asset market risk, equity risk, it all flows down from debt, and debt all flows down from our policymakers, not just at the Fed, but globally, but in particular, the ECB, the Fed the Bank of England, the Bank of Japan, it is phenomenally risky. And it’s based on a monetary theory, which I think has bought us some prosperity and some euphoria, but will end with a hell of a hangover.
Adam Taggart 3:15
All right, you echo, Lacey hunt, former senior economist at the Federal Reserve who we’ve had on this channel, often, in fact, we just had him keynote, our online conference, but a week and a half ago. And, you know, Lacey has basically said, Look, you know, yes, we’re all distracted by this inflation problem we have right now, and we need to get that under control. But we had what seemed like an almost unsolvable debt problem before it arrived. And now that’s even worse. As soon as we get inflation under control, we’re gonna have to, you know, get real about what’s going on with debt again. As I hear you talk, I’m reminded of the title of a Kevin Costner movie, we found out Matt, that you and I went to college around the same time. In fact, we went to the same college. Yeah, and around that time, Kevin Costner was in a movie called no way out. And I’m curious if you had to sort of put a movie title on the debt situation. Is there more optic optimistic when the no way out? Or is this basically a hole that we’re not going to get out of it? At least not without, you know, some sort of massive reset?
Matthew Piepenburg 4:20
What was that other movie hangover? You know, is another series with you know, yeah, there’s no way out other than a massive hangover that we’ve postponed. I’ve used that analogy. There’s many different analogies can kick in hangover, martinis keg parties, but we’ve been enjoying years of a fantastic frat party provided by instant liquidity when needed whenever there was a hiccup and we’ve avoided any hangover by constantly providing Bloody Marys just as that hangover starting to come and think a great movie title would be hanging over because we’re going to suffer a hell of a hangover. We’ve just been able to postpone it with optics and you know fiat money on demand and systemic liquidity or excuse me, synthetic liquidity And it’s absolute fantasy and it buys votes it buys time even buys a Nobel Prize for Bernanke. It’s absolute fiction. To me, it’s completely disingenuous and unsustainable. And again, it’s not even tinfoil hat or sensational, we can get into the math of this. You can, we’ll talk about it. But the bond market is far more honest than a central banker, or a politician left, right or center, or a governor of California or a mayor of Philadelphia or Chicago. The bond market is telling us what we want to hear, unfortunately, bond markets very boring, you know, looking at the implied volatility and the two year futures or the yield on the two year or the four week Treasury or the 10 year long duration. No one wants to see this. I understand. It’s complicated. It’s boring. It’s actually fascinating when you look under it without too, too much complexity. I mean, a lot who would rather watch Gwyneth Paltrow is trial about a ambulance chaser in Deer Valley because they Deer Valley because they don’t want to see this or they don’t want to understand it. I understand the part that’s so boring. But it has massive ramifications for the quality of our life. And not just for political debate or pundit debate on different macro themes. It will it does hit the road eventually affects our lives, it affects our ability to take care of our families to worry about our job security to worry about our mortgages or our tuition. So these things seem esoteric and boring, and they need to be made less boring and more transparent and not weaponized or partisan or political. It just needs to be simple math. And when we get into that, which I hope we will. I hope you know most of your viewers, obviously all your viewers are very informed, but it becomes mathematical rather than just pundit based or debatable. It’s simply it’s simply going to end badly. So yeah, there’s a hangover coming. And there is no way out, you know, reset, you know, great reset QE pivot, whatever you want to call it, it’s going to need mouseclick money to sustain our debt markets and to sustain our completely fed driven equity and credit markets. Now there is no natural price discovery, there’s no natural supply and demand. The markets have been hijacked by Central Bank years ago. And that’s just what it is. The Fed actively manages our economy, like a portfolio, but they’re a bad Portfolio Manager. And they bought they bought time through leverage. They bought time through lofty words and fancy diplomas in high position. But you know, if history isn’t cancelled in 20 years, our kids or grandkids will read about the most epic failure monetary policy since 1971. Really, and certainly since 1913, when the Fed was in an immaculately conceived and brought into law under the pressure that Woodrow Wilson did he want to sign by a bunch of banking cabals. So now that we’re about to hit, you know, serious karma, and you know, timing that is kind of a mug’s game, but the math of it’s fairly, fairly clear to me.
Adam Taggart 7:37
Okay, and let’s, let’s get into that math. I love the fact that, you know, you’re saying, Look, kid, this isn’t a partisan issue, but it’s certainly, you know, been made one, it’s, it’s part of the whole political kabuki theater that goes on here, it’s sort of the cycle that we’re in, which is that the the mugs, running the system, break it, and then they’re the same people who come in to rescue it. And we’re trapped in this sort of Groundhog Day, that we’re just coming up with all these movie titles here. But, but at the end of the day, it’s just not mathematically sustainable. And we need to really understand there’s also an element in here that maybe at the end, we can reflect on, which is, I will find at times that you know, sort of a just a sort of a comment on on the fact that we don’t really teach financial literacy very well in this country. But that people have have, we’ve sort of abdicated our agency as a society in the financial system. And in matters economic, we just tell ourselves, ooh, math is hard. So we’re just gonna let these really smart people run the show. And as you’ve said, they’ve kind of proven again and again, that there are no, you know, mental giants here. In fact, they’ve got a pretty, pretty poor track record. But, you know, we just say, Look, if it’s above our pay grade is regular people. And the answer is, it’s really, really not all that tough. You know that the math isn’t all that super complex. And we as a as a society just need to sort of get more involved, right? So you’re nodding as I’m saying this year. Okay, well, look, I want to I want to I want to share some of your words back with you here. To give you a jumping off point. Again, they’re from your excellent recent piece called titled Jitta cues to bond killers and other villains destroying our world. Okay, so you’re not, you know, pulling too many punches with the title like that. Here’s what you say, as I look back on just the latest and entirely predictable hours, days and weeks of waste occurring in the global debt markets in general, and the US Treasury markets and banking systems. In particular, the billions and trillions sloshing and churning through emergency swap lines, discount windows and broken financial systems almost defies belief. For the last two years, we’ve consistently shattered from the rooftops that quote, the bond market was the thing and that when it eventually broke, markets and innocent financial lives would tilt towards implosion immediately followed by more centralized controls from the very policymakers who caused the crisis. And then you begin to you go through and say, Look, you know, it’s not talking about a coming bond crisis. It’s already underway, you cite the 2019 repo market blow out there, the sovereign bond fall during the onset of the pandemic and 2020. The like overnight, you know, collapse almost of the UK gilts market in 2022, which almost brought down their entire pension system. And then here in 2023, we’re seeing the weaker banks. So far, at least the weaker ones really begin to buckle under the Feds recent, you know, policy reversal here. So you’re talking about this, the bond market, really, your credit is the lifeblood of the global economy. That’s kind of the foundation that everything runs off of. And you’re basically saying, it’s in the process of a breakdown that this trajectory.
Matthew Piepenburg 10:55
Yeah, it’s an overused phrase, but you know, the Fed can tighten into the greatest debt bubble for as long as they want until something breaks, I’d argue so many things have broken, as you mentioned, there’s been three moments of complete dysfunction in the credit markets, which if people understood credit markets should have been headline, Coffee Talk news every day. And that repo market was the first the 2020 sovereign crisis was the second, the gilt implosion was the third that was last year. And then early this year, we’ve already coming into the first quarter. And now we’re seeing this Silicon Valley Bank narrative that silvergate You know, signature, first republic, etc. They’re all related. They’re all things that have broken as we’re raising rates into a debt bubble, when you raise the cost of debt when debt is the rotten Wind Wind Beneath the wings of the so called post to aid recovery, when you hit record high debt levels to sustain record high stock bond and real estate bubbles. And then you rate when you when you hit that by keeping rates repressed for years and printing money to the tune of billions a month. When you reverse that policy, things start to break. And of course, something broke. We can talk about silver, you know, Silicon Valley Bank, to me, it’s just a metaphor, it has nothing to do really with a 2008 parallel, it rhymes, but it’s very different. But my point is, the Fed has put itself in a corner, they can either raise rates and destroy markets, banks, credit markets, equity markets, equity markets fall the debt markets, because equity markets depend on rolling over cheap debt and buying their own stocks and it low rates, those games are over in a rising rate environment. Powell has ended that that charade, but at the same time as he’s trying to fight inflation, he’s going to get a Pyrrhic victory, looking over the rubble of credit markets, equity markets and economies, and of course, smaller regional banks. But it really does have a ripple effect into the into the mainstream economy to not just depositors. It’s small banks. And so you know, something has broken. I think it’s it’s significant. It’s more of a narrative about how, year after year, headline after headline, another thing breaks because our bond markets are so vulnerable and the Fed and the politicals left or right, some more vociferous and others will try to deny this with lofty words kind of like be calm carry on during the Blitz in London or World War Two, lots of lofty language to hide really, really dangerous math again, 31 trillion in public debt, 90 plus trillion in combined household public and corporate debt, that’s become an aberration. And I said in that article, it’s like Hannah Arendt book, the banality of evil talking about the Holocaust. When you’re talking about millions of lives, it almost becomes a bane. alized abstract. And even for the people at the time, they kind of turn their head or even in history, it’s hard to kind of conceive of those kinds of numbers is the joke if, if I owe you a million dollars, it’s my problem. If I owe you a billion, it’s nobody’s problem. It’s your problem, no one’s gonna pay it. These numbers become abstract, when you’re talking about 31 trillion, and by the end of this year, probably 34 trillion in public debt, which we don’t have the GDP or the tax receipts to pay for. And we’ll of course, let them monetize that debt by printing money in some form, in some way. Mechanized, artificial, it’s an abstraction it’s a banality of mathematical and debt evil to it’s a banality of currency evil. It’s a it’s a banality of trillions and billions that mean nothing to anyone anymore. They just kind of soon we have a debt ceiling. We have a bond crisis, we have an IOU what we’ll pay for that with a mouse click at the Eccles building that works only for so long until you see cracks in the ice. We’ve seen those prior cracks, the repo market, the gilt markets, the Dow this regional banks. I think what we’re seeing now is how many more cracks until the ice breaks beneath our feet and we have a bigger problem, which can only be solved by either some artificial reset a global chapter 11 We’re more likely, as Yellen has been hinting all of last year despite policy puffed chest buffing a pause in the in the aggressive rate hikes and a return to The only solution we have because Ponzi schemes can’t taper and that may sound like a massive simplification. But what we have as monetary policy and this is something David Stockman said years ago, is effectively a Ponzi scheme. That’s not an exaggeration. You can talk about Sam Venkman fried or you can talk about Bernie Madoff, or you can talk about Bernanke, Powell Yellen and Greenspan. Because what they do is they they issue IOUs, for which they don’t have the money, we don’t have the GDP, the tax receipts, the productivity, the income, to pay for those IOUs. And when, when the when the proverbial ex hits the fan, their last resort is always going to the Fed mouse clicking a few extra zeros when needed to pay for those debts. Bellini of sand bank and free to Bernie Madoff or any sticky fingered hedge fund manager would otherwise be corruptly put in prison had a money printer in their basement, which which they can legally use that would they will use it who wouldn’t? It’s addictive. And you know, again, remember Bernanke promises back in 2010. Qe one was going to be temporary with no consequences. You know, this is just a temporary solution for bank raises, just like Powell told us last year that you know, inflation was going to be temporary. They have to use words to to deny the math. And again, this goes to the theme of Who do you listen to do you listen with Powell says are you listening with the bond market says when Powell raises rates, when rates go up, bond prices go down? And yields go up? And that’s what happened in Silicon Valley Bank, we won’t get to the weeds of it. But basically their long duration treasuries lost value across the entire banking system. Anyone holding long duration treasuries lost 2 trillion in market value on the on the collateral those treasuries which are considered risk free return. But when measured against inflation, its return free risk. And so these policies these measures by Powell have ramifications. They throttle the bond market, they throttle the banking market. But let’s keep in mind also last year 2022. All this talk about what a brave Volcker reborn superstar Powell is going to be remember Volcker raised rates in the 80s or late 70s, when our national debt was less than a trillion, it was 800 billion 900 billion at the hot word 31 trillion. So we can’t afford to raise the cost of that debt when our debt is infinitely higher than it was in the Volcker era. So for Powell to pretend to be Volcker is is frankly disingenuous.
Adam Taggart 17:21
Right And sorry to interrupt but it’s also more than four times what it was just going into the global financial crisis going
Matthew Piepenburg 17:27
into exactly so we’re talking about math, that doesn’t make sense if you just look at simple balance sheets, and what did Powell achieve He reduced the balance sheet by 300 billion after all that talk last year all this cutie that’s so shocked the markets, the s&p the NASDAQ, the credit markets got shellac last year s&p Down 15, the tech NASDAQ down 30% credit markets down, we had the worst nominal returns in stocks and bonds and 2020. A few nominal together, these are correlated assets. They’re supposed to be hedged. They’re correlated now, stocks and bonds worst nominal returns since 1871, just passed our civil war. So that prove that that little rate, that little reduction in the balance sheet, which is 300 billion, which by the way, just in last few weeks, we’ve already lost that 200 billion in loans to these regional banks and FDIC extensions. So all the work that we got for Cutie last year, well, we saw the reaction in the bond stock market, a 2% reduction in the Fed balance sheet caused massive ripple effects in our credit and equity markets. And frankly, all the the quote unquote money that we tightened is already back in the system. So there is a major thirst for liquidity a major thirst for collateral on the banks a major need to support the Treasury market. Naturally, it can’t be done naturally. There is no natural demand for Uncle Sam’s unloved IOUs. And so regardless of what Powell does this quarter or last quarter, regardless what the FOMC meetings at the Brookings Institute or even what they say in Jackson Hole, the net result is if no one else is buying our debt, who’s going to buy it, it’s simple, but it’s going to have to be a central bank near you. And again, if we don’t, the consequences are going to be dramatic on our in our economy. They’re already dramatic in our banking system, we can go into that. But if we do pivot and instantly liquidity phi, the Treasury markets and therefore the Banking Markets, the bond markets, the repo markets, the Eurodollar markets, all these different exchanges, even the derivative markets for which Treasuries are collateral, all these things rely on liquid treasuries. If we if we liquefy them through mouseclick money, we have the inevitable inflation or possibly hyperinflation people talk about inflation. You know, there are real issues about the war, about COVID about supply chain links, but let’s just keep it simple, stupid. We raised the empty money supply by 14 trillion over the last decade plus, that’s why we have inflation. It’s very simple. If I hand you a glass of good Bordeaux wine, and we put a swimming pool of money into that glass of wine, you know, the wine loses its flavor just like our currency has lost its punch it may be relatively Longer than all the other patients in the ICU, it’s still a sick patient, it’s still, the inherent purchasing power of that currency, like every other currency has lost so much value when measured against real assets that it’s openly obvious. And again, these things are not transparently discussed at them. These are these are boring things about currency risk about yields on bonds about supporting those bonds through printed money or mouseclick. Money. How much is 31 trillion versus 35 trillion or 900, you know, a $909 trillion fed balance sheet versus a $4 trillion balance sheet. They’re just abstractions. And if you saw Yellen recently in front of the Senate, it was embarrassing. I was almost embarrassed for Yellen how little she understood about the extension of the deficit, the rising of the deficit this year, she didn’t have the numbers in front of her and she’s the treasury secretary and a former Fed chair. So again, when you’re when push comes to shove, when you’re asked to look at hard numbers, even our experts don’t even fully grasp them. And certainly the the average person through no fault of their own has, I think, less than less understanding, I think more and more so now, hopefully. But you know, for years, it was just trust the experts, I think that trust, like trust in just about everything, whether it’s the media, politics, social identity, politics, partisan politics, left versus right media, trust, and so many things is palpably changing right now in the US, and certainly here in Europe. It’s a major loss of trust. And that also has invisible hard to quantify ramifications to.
Adam Taggart 21:27
Right. And I’m thinking maybe we get to this in a bit, but let’s touch on it briefly right now, in many ways, you may be getting a preview of what’s still yet to come to American shores, right? Because there’s a there’s a lot of protests and just general civil unrest breaking out, not just in France, but kind of all places around Europe, right?
Matthew Piepenburg 21:48
Oh, sure. I mean, obviously, me, I’ve lived in France for over 20 years, there’s never a season in France was not a strike somewhere, whether it’s on the trains or on the highways or in the cities. But, you know, right now, there’s a major social unrest in Paris in particular about extending the the legal age for retirement from 60 to 62 to 64. There’s concerns about pension risk, there’s concerns about currency risk. It’s a very political unrest, but it all boils down to money and pension risk, which, you know, smarter folks. I mean, including Michael Burry, or Raoul Powell or David Stockman, I’ve written about in a book about pension fund risk, but that’s real in Europe just as much as it is in the US. And you know, this goes to a theme that was in the article you mentioned, which you’re right. Most of the time I talk about boring things like bond spreads or volatility, the bond market or three sigma moves that we saw in US Treasuries, two year treasuries, a three sigma move, according to MIT scholars should happen once every 50 million years. Yeah. Isn’t that crazy? It’s crazy, you know, and that just came out by a Bloomberg, Dan Ingalls. And then the spikes in the volatility the two years in the two year treasury, we haven’t seen that since it was worse than 2008. It was worse than 911 was worse than 97. The volatility and I used to be a bond trader, and I’ve talked to bond traders this week, you couldn’t get a bid or an ask because the prices were moving so quickly. 60 5070 pips when you’re talking about moving millions in there 70 bid moves. That makes the market too volatile to trade, you’re looking at moments of real illiquidity, which again, we haven’t seen since 2008 911 1987, and yet, not really discussed in the headlines not making front page news I joke is Gwyneth Paltrow ski accident, not bond market two year yields. Understandably, when it’s Paltrow ski exits a lot more interesting than two year yield volatility. But when you actually see what that volatility means, do what it’s pointing toward, again, the bond market and the bond traders. And even if you look at something that as boring as you know, Eurodollar futures, they’re pricing in a major pivot at the end of this year, they’re seeing interest rates coming down, because there’s going to be an O shit moment, pardon my French, there’s gonna be an O moment. We can use that as a better word and oh moment in the bond market. And so the market jocks the bond jocks are already, they’re already pricing this in Powell won’t talk about it. But they know what we all know is it’s not sustainable. There’s going to need to be magical money to support Uncle Sam XyO. Us, and therefore, you’ve seen this massive spike in the contract price of your Eurodollar futures. Again, very boring stuff. But what it really just says is, there’s no confidence in our bond market, there’s no confidence in our Fed policy. There’s no confidence in our currency ultimately. And so, you know, these things have to be known so people can prepare. And I think, you know, and be informed. I don’t have an easy answer. Paul doesn’t have an easy answer. We can talk about agile,
Adam Taggart 24:34
I don’t think there are that’s what we’re gonna get into here. But it’s sort of I started with no way out like there. There is no painless, graceful way to change your behavior and go to something better. We’re going to have to have this hangover that you’re talking about, unfortunately, yeah. So Matt, you this is great. You’re identifying a ton of paths. I want to try to take this conversation down. But so, too, You nailed it with this quote, which is that Ponzi schemes can’t taper. Right? So you were just talking about confidence, right? Like every Ponzi scheme is a confidence game, right? It runs on confidence when confidence runs out. That’s when it implodes. Right. So, you know, the challenge the Fed is getting into, is it the cost of continuing the Ponzi is now threatening to be as big as the pause the cost of stopping the Ponzi right, he’s going to trap between the inflation dragon and session this this system, that just the system systemic instability Dragon, right. So but I asked you about, you know, the, the, I don’t know what you want to call them, riots, demonstrations, protests, whatever. Because that is that. So you know, people I say this a lot on this channel, people, people, there’s two ways to change, you can do it. Proactively right? You can, you can project out mentally, where things are going and say, Oh, if I continue this behavior, it’s going to eventually have a bad outcome. Let me start today before things get really bad, right, right. Being human beings, we hardly ever do that. Right? We just continue the status quo until the pain of continuing it outweighs the pain of changing, right. So that’s the guy whose doctors told him, You got to get in better shape, buddy. The guy says, Yeah, I’ll do that someday. And he doesn’t until he has the first heart attack. Right? And then he’s like, oh, okay, right. So you know, all these these manifestations of the, you know, civil anger and stuff like that. Those are the signs of the system, saying the status quo is getting too painful to continue. You’re right. I’m sure most of those protesters don’t really understand central bank policy, they don’t understand the Eurodollar futures market or whatever. But what they know is, wait a minute, just prosperity wise, you know, I’m being diminished here to a point now where it really hurts. And I need to get out there and say that this is no longer working for me. Right? So I think we’re gonna see more of those symptoms break out around the world as people just on that, like, oh, well, I want to go buy some eggs, but Jesus Christ, they’re just I can’t afford him. for it, right? Yeah.
Matthew Piepenburg 27:11
Yeah, you don’t need to be an economist or a pundit or a former hedge fund guy or an executive in Switzerland in real assets to to know that when, when your purchasing power is disintegrating when inflation is hitting you, especially at the middle class levels, something’s wrong, something feels off. And then frustration, stress, anxiety, employment concerns, all those things snowball. And I think this is something I’ve said many times that, you know, again, it’s it’s, it’s, it’s not an opinion, it’s historically confirmed that every debt crisis throughout history, every debt crisis ends in well, it ends in a market crisis, which ends in a currency crisis, which then leads to social unrest. And at the end, ultimately, it leads to extreme control from the political left or the right extreme centralization, when we could talk about that in banking sector and our social lives in our private lives. Centralized digital currencies are all sinners, we’re seeing a tilt towards more and more centralization and control and social unrest is always a symptom. And I used to think in college that economics was not nearly as interesting as history or philosophy or psychology and understanding the movements of history. It’s great or bad men and women who affect history, it’s great or bad philosophical movements, but I realized with at least from experience, that something as banal and boring as economics and inflation and and mathematical events really move history if you look at leisure, I’ve everything there were all those people react exactly. And so they’re all connected. They’re all very important. They’re all ultimately human all too human because it affects our personal safety, our sense of security, our sense of trust. You know, Chairman Mao came in after inflation Napoleon came in after the National Assembly blew out the the French currency and 79 Hitler, Mussolini and Franco came in after inflation in the 30s. In Europe, almost all of Latin Americans regime changes and horrific stories from Argentina, Peru to Venezuela always happen in periods of inflation. So inflation does matter. Monetary policy does matter. Reckless drunk driving of our currency and financial system and our banking system through centralized controls, which Andrew Jackson and Thomas Jefferson, you know, Ludwig von Mises warned of, always kills the currency, which always creates two inflation. I even quoted Hemingway, you can go from Thomas Jefferson, Ernest Hemingway. Every time you destroy the currency system, you buy short term prospect, prosperity, and ultimate ruin. And part of that ruin. He said three things. This is Hemingway not a Fed chair, not a politician, fairly bright guy, fairly brave guy, fairly troubled guy who spent a couple of times in two world wars. He said you have you haven’t you have inflation. You have currency debasement you have war, we’re seeing that play out in real time right now. And, you know, it’s whether you’re Hemingway or Powell, you have to understand the power of math. And I think again, many people are starting to figure that out. They don’t need To understand Eurodollar futures, they just know something feels wrong or debts wrong. There’s too much control. There’s too many excuses. They don’t know who to believe anymore because the media like our currency and our fed and our policies are so weaponized now that people have a hard time even trusting me you must be selling your book must be gold a gold bug again, I understand that there that that debate that open discourse, which I’d love to see more of. You remember the Days of Gore Vidal and William Buckley you know, two very different views but brilliant, articulate and passion. honest men trying to debate facts what we have now are a lot of social justice warriors or a lot of angry emotional people debating emotions, they’re not looking at the facts. We’ve seen a depth of facts
Adam Taggart 30:46
in Tiktok sighs soundbites to Yeah, it’s small
Matthew Piepenburg 30:49
attention spans. And so I think the more we can get facts on adulterated, nonpartisan, but at least intelligently debated, including views I might have. I love a debate, I would love to see someone give me better news than I’m providing. And rather than try to beat that person in the debate, I lean into the table I listen, I’m trying to look for good news or rays of hope. I just don’t see it right now. So the best we can do is prepare financially, psychologically cynically, for the ramifications of reckless driving really, since since Greenspan came into office, I can see him the patient zero of this, but it really is, since the Fed was created, and since central banks took over our markets, as Ron said, Give me a central bank and the power to control money. I control the world, right.
Adam Taggart 31:33
And the shift to purely fiat currency as well. And that journey, right,
Matthew Piepenburg 31:36
yeah, exactly. Yeah. All right.
Adam Taggart 31:39
Well, look, it’s so it sounds like to steal Hemingway’s words there that that you’re you’re worried about, in terms of sort of where this ends is currency debasement, inflation, and war. And I know you’re, you’re looking for better news than that. And I’d love to hear it too. But I think what you’re saying is like, it’s just prudent for those of us who have studied history or are studying the markets can can project things out mathematically, that those things are uncomfortably high from a probability standpoint. And so we should be taking steps today to at least say, Okay, if they happen, what can I do now to be less vulnerable to them. And we can talk a bit about sort of your capital manager, so we can talk about how you are trying to manage capital in this type of world. But before that, so to your point about the Ponzi schemes can’t taper right. From everything you’ve said, it doesn’t sound to me like you see a way that the Fed can, can I find a way to magically avoid all of this right at some point is faced with the choice of, you know, I’m going to die by fire or die by ice here, right?
Matthew Piepenburg 32:50
Yeah. Yeah. I mean, we, you know, you said what’s my first thought for the world economy? And I, my answer was debt, right. And so the Fed like the ECB, or the Bank of England or the Bank of Japan or slip Powell, for example, because of all this debt surrounding him that he is that his institution has helped build because you can’t solve a debt crisis with more debt 2008 debt crisis solution more debt paid for with printed money. He’s like a kind of a blind man walking through a powder keg with a candle in his hand hoping not to hit anything and blow it up and trying to walk a very fine line with QE Qt raising rates or something to lower optically talk about controlling inflation, maybe we’ll have a higher target inflation, it will just misreport inflation, all kinds of tricks and gains. We all know on Wall Street did the CPI scale I always joke is as bogus as a 42nd street Rolex. We all know that it’s bogus. It’s much higher if you use the scale that Volcker used were much higher inflation reported. They can play with maybe a higher target inflation rate. They can play with even unemployment statistics. Nick Eberstadt has done a great job of showing the fiction behind our employment data. And the fiction buying our CPI data. And these again, this is not sensational. It’s not tinfoil hat it I’ve got no horse in that game. It’s just trying to be as candid as I can, again, happy to be challenged. We all are thirsty for blunt, open, honest math right now. And so, you know, what can we do? And what will Powell do? He has very little options. He is walking through a powder keg of debt with a candle and he doesn’t have good options
Adam Taggart 34:20
in this quarter is narrowing and narrowing the piles of open gunpowder or hired. Exactly, yes. Yeah. So that’s where I wanted to go here. Just to sort of ask you to pontificate here and nobody knows. Right? So you’re more than welcome. Anytime you want to come back on and give us an update as events develop from here, man, giving you that open invite, but But what do you think is the end game here? Right, it’s at some point, the central banks are not going to be able to, you know, lie, cheat or steal, you know, a way to kick the can further down the road. And so maybe two unfair questions to ask you to pontificate on one is what How does this break? Do you think? Did they think they eventually choose the hyperinflation or the route that leads to high inflation and currency destruction? Because it’s the it’s always the politically palatable one in the moment itself? Or do we have a Volcker moment or something like that, where we just tried to break, you know, break the system? And yeah, it’s gonna get bad. But then we can build a tarp that rubble when the dust settles and do something more sane going forward. And sorry, to make such a long question, but do you have any sort of gut feel on the timeline of this, right? In other words, like, is this going to be the rest of our lifetimes that we’re going to be just sort of sloshing through all this? And guys, like you and I, who are in our 50s, are probably not going to see the new dawn? Or is this something that might happen a lot faster?
Matthew Piepenburg 35:43
Yeah, it means a lot in those questions. And I’ll try and really be specific in the answer in terms of what to expect. Again, you drink 20, martinis, you will have a hangover, you swim way out past the big surf without a surfboard, or at least you’re probably going to drown. If you you know, if you play with, with too many weapons with no training, you’re gonna get injured. And at this point, there is no solution to the debt unless we pivot at some point. And it’s not a question of q2, q3 or q4, the Fed will pivot when we have another Oh, eight or another March of 2020. Remember, 2020, we printed more money in a period of 12 months. So we did in the prior eight years, that was not a market recovery. That was a counterfeit solution to a real problem, which was openly inflationary and hidden behind a lot of bad math. But Powell, I think, you know, thinks he can be Volcker. But he also isn’t stupid. He knows he’s really raising rates right now. So he has something to lower when the recession that they denied, that they redefined becomes too hard to deny, inevitable. I think we’re either in a recession now we’re clearly on the border one. But that even won’t be enough for him to pause. What will happen, I think is we’ll see it where the pain is always most visible and making the most headlines when you see it, like an overweight moment, or a 36% drop in in March of 2020, which would have been 5060 70% Drop, had they not printed trillions in a matter of weeks and months, that was appalling. And behind the scenes of the COVID crisis, and the PPL checks in the STEMI checks and all that, but we really saw was a backdoor another 2008 bailout of the bond market that again, not making the headlines, it was getting the cut conspiracy theory, whether they engineered COVID, or whether they exploited a crisis to benefit but it really was just another bailout because no one wants to see another too big to fail bank or corrupt bond market or banking practices or Wall Street get bailed out again, nothing better than to try and sneak that bail in. And that kind of trillions in liquidity than a humanitarian crisis like COVID, which again, smarter people than me pro or con can debate about the sincerity or insincere of the COVID narrative. But it was a backdoor bailout. So to your question, I think what the Fed will do right now, Powell, I think needs negative real rates and inflation to inflate away debt. He’ll optically pretend to fight inflation, but you can’t fight six or nine or 10% inflation with five or 6% interest rates. What he’s really doing is raising rates. So he has something to lower when there is a recession or a market crash. He tried that in 2018. We have short memories throughout 2018. They tried to tighten and raise rates throughout 2018. I was in the south of France at con on Christmas Eve. It was a disaster markets tanked by 2019. We went into a pause in a pivot. The markets, the bond markets and the stock markets can’t handle rising rates, eventually something breaks. So to your point, what will happen, something will break more than Silicon Valley Bank, something will break bigger than first republic or silvergate, which are Pauline for other reasons. We’re talking about a major disinflationary movement in the risk. So risk asset markets. When that happens, Powell will reach into the only tools he has, which is more money printing and more rate reduction, and that will be inherently inflationary. The solution, it’s a doom loop, it’s a doom loop. The solution is always going to be synthetic money on demand, which is inherently inflationary. So he’s trying to fight inflation. Can’t do it. Can’t do it. If you really wanted to do it’d be like any family, I say this all the time you and your wife sit down, honey, we can’t put our kids at Choate. It’s too expensive. Can’t buy the Porsche too expensive. We have to tighten our belts. We can’t live on a Visa, MasterCard and an Amex in your mother’s help. We have to tighten our belts. We have to face austere, we have to focus on productivity. We have to get better jobs, better income. That’s what every American has to do in real time, because we don’t have money printers in our basement. But our government won’t do this. I had a long conversation with Grant Williams about this. The lack of responsibility and accountability. The Fed will always blame you know, war. Viruses, extraneous events when they when the mirror is right in front of them. It’s very simple. Who’s to blame for this? There’s no accountability. I find that criminal almost if not super, super unethical. But again, they’re politicians they need spin. They won’t take accountability. When was the last time we any of us saw a central banker say maybe that extra 8 trillion on the Fed’s balance sheet was a bad idea. Maybe modern monetary theory, which was a fringe concept when you and I are in college or grad school is now mainstream. It’s an absolute fairy tale. Anyone knows it’s a 10 year old with no if you explained it, that you can solve a problem by creating money out of nowhere and paying for it with no actual value. So, you know, at some point, the narrative breaks but you know, they’re in a doom loop, they’ll print the other option, of course, Adam is they could do a reset a global chapter 11. I’m not talking about a Klaus Schwab type of reset. But you’ll if you you may or may not have noticed I wrote about this in 2020. It was so obvious like a cavity to a dentist. They were exploiting the COVID crisis. The IMF did it first, then the Bank of International Settlements, then the Fed, but they were already telegraphing, almost like a psyop. Like a CIA program. They were already telegraphing, in 220, in the height of the COVID crisis, that COVID was like World War Two, this is a debt crisis we haven’t seen since World War Two. And we need to come together and think about maybe a centralized digital currency or some way to monetize this debt. It’s not our fault. God knows it’s not our fault, not big banks. And they were comparing COVID, which wasn’t plenty of pleasant for any of us for a lot of different reasons, a lot of different cynical reasons. But to compare COVID A World War Two is an insult, certainly to a European American, anyone lives overseas, where 80 million people died and cities like Rotterdam, London, Frankfurt, Dresden, obliterated all of the Ukraine, Russia, the Crimea death, like you can’t imagine you cannot compare World War Two, economically or human terms to COVID, no matter what you think of COVID, for the IMF to do that, to kind of plant that comparison to create that fear to to justify, again, no accountability for central bank policy, blaming it on some virus, or now of course, Putin very debatable issue Putin Solinsky, whatever, we won’t get into the weeds of that, but there’s always someone else to blame. When it’s so simple. It’s right in front of you. It’s money printing Gone Wild, which is what David Stockman warned about long before COVID, long before Putin long before supply chain disruptions. It’s very simple. You’re adding buckets of water to a glass of wine, you’re killing the currency, you’re creating inflation, and you’re hurting people. And you’re creating social unrest and distrust. And so when there’s distrust, they have to create some kind of new fear narrative. So there’s no one blames them. Because the biggest fear of any corrupt leadership left, right or center is people being informed and aware of housing is accountability. Yeah, imagine that.
Adam Taggart 42:26
And what’s what’s what sort of creates makes this sort of a vicious cycle, right is, you know, they create these problems, and you’re saying and they do everything to deflect, you know, their own responsibility and role in it. But But when the symptoms of the problem really emerge that full and strength, the populace says, well, then give me more stimulus. Right. We’re still at the point where we’re asking for, we’re asking for more alcohol. Right, right, the overgenerous Bartender, right. So yes, they need to embrace austerity. We’re be increasingly having to just be forced to embrace it because it costs a living and our real wages are still going down. But what we’re asking for is more profligacy. And I think that there’s I put the blame with the central planners, I understand why they’re trying to put food on the table is asking for help here. But until we have sort of a realization in the shift that you know what, like, some form of austerity, living within our means, is really what we’re going to need the heavy a long term sustainable. You know, better tomorrow out of all this. You know it until we stop asking for these guys to do what to do what they’re doing, we’re probably just gonna get more of the problem. This is what I’m saying.
Matthew Piepenburg 43:42
That’s a very good point. It’s easy to point the finger at IT people like Paul or Bernanke, Yellen, or Greenspan, and it’s true, they deserve it. But we also ourselves got addicted to easy money I saw in the 90s when the NASDAQ bubble and the post Oh, eight bubble, I saw it leading up to the subprime crisis, you know, who doesn’t like a handout who doesn’t like low rates? What markets don’t low rates give us rising markets and rising rates give us low markets, you can go long or short based on a simple trend indicator the yield on a 10 year but you’re right, we all love tailwind. And when the Fed is giving you one giving you liquidity giving the economy the liquidity it needs to sustain itself. You know, we’re all suddenly experts in stocks and bonds or digital currencies or whatever sexy trend is of the month or the week, and yet we can get into that as well. So it creates a moral hazard at every level. Understandably, I think it’s fine if the average retail investor wants to take advantage of a tailwind. And part of the reasons we have these conversations is to warn them though, that these tailwinds have very dangerous turning points. Yeah. And if if you don’t want to contain a market, you can get caught in a short squeezes you can get long while it can be very scary, but you got to kind of know when you’re near a top and near a bottom, no one buys at the bottom and sells at the top. It’s always the opposite, but we’re all clearly near a top question is how do you prepare for that in your portfolio? What assets are safe and that’s a whole other conversation too. But yes, the moral hazard is not just and small banks, like, you know, or depositors like SVB, or big banks, like the central bank or the BIS, the moral hazard affects investors across the board sophisticated, unsophisticated, we get used to this keg party, we don’t want it to end. So give us more. We can make fun of Powell, but we’ve all profited from them as well. Right, to some extent. And so that’s a very good point.
Adam Taggart 45:21
I mean, every semester, not every but most investors there are rooting for the pivot. Oh, great. I’m gonna go back to the way it was right. And then every year and I just buy the dip, right. And,
Matthew Piepenburg 45:31
yeah, it’s funny, that um, that was a bank term funding program that kind of came out during the Silicon Valley thing. It was nothing like tarp. But the joke was the what was the BTF P, they were calling it by the frickin pivot. That’s what the signal was. And that’s what the Eurodollar futures say, it’s not next week, next tomorrow, but the markets are pricing in a pivot again, markets no more than what Powell is going to say. And I think that’s an important point.
Adam Taggart 45:57
Right. And let me just ask you about that. So you said that look, at some point, something’s gonna break somewhere. And that’s what’s going to force Powell to pivot. So the market is, is pricing in a pivot this year? It’s pricing in several rate cuts this year? Yeah. Does that mean that the market is expecting something systemic to break badly enough to force powers hand there? And if it if it is, then why are stocks still where they are right now? Why are they not getting repriced downwards? Because, presumably, some systemic break like that is not bullish?
Matthew Piepenburg 46:31
No, I mean, there but that goes to the moral hazard. Most first of all, many investors are just stuck in passive risk parity portfolios that somebody in the corner online runs for them, it’s mostly stock bond diversification they just riding this wave and their keep their head in the sand and most advisors tell them don’t worry if there’s a correction, they always correct they always bounce back. So just right, it was a lot of things wrong with that philosophy. But nevertheless, you know, why our markets so high despite the fact that everyone’s you know, everything looks so bad. Again, it is because there’s a moral hazard that when when things get really bad, the Fed will do what it has always done since 2008. In every dip, you could buy it in every even major correction or, or downturn, including March of 2020. There’s nothing the Fed can’t fix. So if you can bite a stick through even a 36% drawdown like we saw on March 2020 2020, the Fed will save us so we love and hate the Fed. And again, if they save us, that just means we’re gonna have hyperinflation. So the 20% you made on your s&p will be eaten alive in real terms by the inflation, it’s running up, running uphill and rollerskates. But I think, you know, again, this goes to, you know, memories are short and fantasy is long, and no one wants to think about sensational tinfoil hat in reality or math. But remember, again, you and I were teenagers, but when the Nikkei crashed in 89, or, you know, at that time in Japan, everyone thought, well, how can we get hurt if we’re all crossing the road at the same time we’re in this together, we’re going to be fine. Well, the Nikkei crashed 1989. That was well over 30 years ago, it has not recovered sighs I’m not saying that we’re going to have a Nikkei like crash this year, although the markets are pricing in a major rate cut because of pricing in a major market disaster. But right or wrong. Remember, all bubbles pop. The last bubble to pop is always a currency bubble without exception period timing that is very hard, you gotta look at again, look at the signals from the bond market. But assuming that all bubbles pop, and the currencies are the last to pop, how can you prepare yourself but Nikkei crashed over 30 years ago, if you were 70, over 30 years ago, you never got that money back. If you were 25 Fine, you want to wait it out. So how you manage this risk, how you think about the future is very different depending on your personality, your age, your profile, but if we have a Nikkei like crash, which we will unless we print more money and have hyperinflation, there’s gonna be a lot of people that are going to be very, very hurt. And that’s where again, the reality of the economy the reality of your personal life, actually becomes the real issue here not bond spreads, indicators Eurodollar futures yield curves, it’s just you don’t have any purchasing power. You don’t have a portfolio that was valued the same next year as it was last year. You don’t know what to do you don’t know who to trust, you don’t know what signals to look at. You don’t know how to prepare so you trust you trust the drunk drivers the wheel the Fed, which is create a moral hazard that they can be trusted so far since 2008. They’ve kept us above our nose just above water then some create the greatest risk acid bubble I’ve ever studied or seen and I’ve seen the NASDAQ bubble I got a profit off that IPO it made me a very independent man by accident. So I’m all in favor of bubbles. But you got to also know their dark side and you got to also know you got to think about that again. There is no exception all bubbles pop. The only way I think theoretically you could keep this bubble from popping is very simple. You monetize it with mouse click money, but that just creates a whole other set of problems with inflation. So technically, you could have a market that never dies deficits without tears, but you can’t avoid the inflation. So pick your poison, unnecessary austerity moment the markets or the absolute murder of the purchasing power of your currency be the Euro $1 yen, Awana Franc, a peso. And we joke about banana republics and South America, Central America, America’s balance sheets, it’s a Banana Republic were just the world reserve currency. But eventually and as we’re seeing massive signals of D dollarization, a whole other theme, even America like Rome, like Mao, like China, like Napoleon, like the great powers of the 30s, even those empires collapse, always because of a debase currency. Always. That again, sounds sensational, like I get it sounds crazy, or at least not in our time. what’s already happening? What anyway, warned about currency inflation war isn’t down the road, it’s right now, it’s already happening. It’s just a matter of degree of how much worse it gets you and I have no idea whether the war in the Ukraine escalates or not, that’s out of our hands. 365 planes are just sent over when we talk about some Linskey in the criminal, it’s not Zelinsky. It’s NATO. He doesn’t have an Air Force, let’s call it duck a duck. This is not Ukraine against Russia. It is a proxy war against Russia, whatever you think of it, I’m not gonna get to that debate. But let’s just be honest of what it is, let’s have an open debate. Again, same thing with markets. Unlike politics, though, markets a moron it’s that’s my point from the very beginning, the bond markets are more honest, the yields are more honest. You can track those regardless of what the Fed does, you can see the direction of the market by you know how the bond markets in the asset classes react. Again, that doesn’t make you perfect market timer, but it opens your eyes real fast. And again, without getting in the weeds of Silicon Valley Bank. At the end of the day, why didn’t they go to a discount window? Why didn’t they go to a dealer? Why didn’t they take on a $90 million loan on $100 million with the collateral, it’s not about the banking risk. It’s about the fact that no other banks wanted to help Silicon Valley Bank and no discount windows or rent or loan against them. Because they the actually she wasn’t just long duration risk in their treasuries, the actual risk was their collateral, their loans, their loans, a 30 year mortgage, nobody wants them. That loan is a symbol of the economy. And that loan is no longer valuable because the Fed raised rates into a debt bubble and ruin the value of that long term duration paper. So again, it’s not about banks, it’s not about loans. It’s about the faith and the economy, it all trickles down to the economy. And that economy is where Mr. And Mrs. Smith, you, me and everybody listening, that’s where the real world is worrying about their portfolios, worrying about their job stability, worrying about their kids education, worrying about the 10,000. In their checking account, they may only buy worth 5000 Next year in terms of purchasing power. Those things are boring, but meaningful. They’re not nearly as exciting as what’s on Netflix tonight, but they affect our lives. And that’s why the bond markets and history and cycles are important. They’re not easy, but they’re not that hard. And again, it doesn’t mean take my opinion or my books or my articles. Look at other people’s But what’s amazing now is there’s a lot of consensus, whether it’s Ray Dalio in the US or me in Switzerland, or whether it’s Lacey hunt, or Daniel Martina booth or David Stockman are good, intelligent, courageous journalists, they’re all trying to say the same thing. And again, we’re not saying we are the truth, we’re saying we are honest about what we think. And that’s what’s missing in the media. That’s what’s missing in politics. And that’s certainly what’s missing at the central bank. Honesty doesn’t have to be genius. Just be blunt. Just be blunt. For God’s sakes, just give us some some real simple math. And that’s what I’m driven by now. Because it’s so important to our lives. Right now. We’re in a historical turning point right now, that is not an exaggeration. It’s already in our lives in real time. So it’s not even postulating or speculating. It’s actually happening to us right now.
Adam Taggart 53:39
Well, you’re preaching to the choir, that’s actually a big part of the mission of why I created Wealthion, in the first place was to sort of have this platform for this kind of honest, fact based dialogue. And of course, it only works if we get smart people like yourself, who had the courage to come on and just say, hey, look, this is not going to sugarcoat it for you, this is just what it is. Right? So okay, so all the Mr. And Mrs. Smith’s of Main Street that are watching this video right now and listen to this interview, you know, I’m sure are saying, Whoa, okay, so that’s a really challenging future that Matt has laid out for us here. You know, what should we consider doing about it if we just don’t want to become, you know, unwitting collateral damage to what’s coming. And of course, your day job is managing capital and priority number one is preserving it. And then party number two is trying to prudently grow it in this environment, if that’s possible. How are you looking at, you know, the decision making a portfolio allocation in this environment?
Matthew Piepenburg 54:38
Yeah, and this is where again, in completely understandable, this is where the cynics will say, well, here comes the honest experts suddenly selling his book, and they’re going to question that and I need to be aware that I, I always say my colleague, John von Grier’s and I have been talking about gold for years or precious metals or real assets or commodity cycles, and portfolios. We’re not trying to sell a book Look, we’re selling conviction, or this is my opinion. And we’ll talk about I’ll answer the question. But I think it’s important not to be cynical, it doesn’t mean believe every word I say, but this is I can be a Goldman Sachs selling bonds for a fee. I don’t want to do that most of us could be doing that. But I don’t believe in those bonds. I didn’t do that when I was managing funds. And I’m, I came to precious metals and real assets only because in this particular environment, you’ve got to own an asset that can’t be printed, or manufactured at will, that has a kind of an infinite, you know, infinite duration, but finite sight, you know, finite supply. And so no, I’m not gonna say just go out and buy gold, you know, go buy buy gold from us. It’s not that simple. Gold is not sexy. It’s not a speculation asset, I don’t think it’s the sexiest thing that every client or every person listening should be buying, I just see it as currency insurance, for currencies that are already dying. And I’ll just say it in real simple terms. You know, I, when I was in high school, I played baseball. And if we had a really good pitcher, or the other team had a really good pitcher, we knew who was going to win the game who was pitching, who was pitching, we had to go play through the motions, nine innings, six innings looking at my watch sitting on third base waiting for the seven. But if we had the right picture, we were going to win. And it’s really hard to say in anything in the markets that you’re certain of something if I do and that worries me, it’s just how certain I am. I don’t know a lot of things I can’t time the market. I do know that since 1971, when Nixon took away the chaperone of gold from the currency that since 1971, every major currency has lost at least 95% of its value when measured against a real asset like physical gold. Again, whether you believe in gold or not just look at the math, there’s all kinds of cycles and trends and gold can go up and down. It’s not Bitcoin doesn’t have a standard deviation of 170. I just know this, like I knew I had a good picture or a bad picture, I’m going to win, I’m going to lose, I know that gold is going to ensure my purchasing power better than a one $1 A peso franc or a euro. That’s all I know. That doesn’t mean everyone should put everything they have in gold. My first thing is just, it’s a mathematical fact that currencies have lost 95% of their value since the we closed the gold window and 71. That’s just objective fact doesn’t talk about volatility in prices. I own gold, like every one of our clients, as insurance against banking risk and currency risks. It’s that simple. And I feel high conviction to say that in terms of other things you can do, again, own assets that can’t be printed at will by a corrupt central system. There’s a lot of talk about Bitcoin or digital currencies. There’s all kinds of risk all kinds of greatness, the philosophy behind digital currencies, there are many who I don’t have to be a gold fanatic, or gold bug, which I think is a cheap term for people who understand gold but don’t have to be a gold bug and have to hate Bitcoin or other digital currencies. I think Bitcoin has is a major existential threat to the powers that be for a lot of good reasons. And that’s why I think there’s risk in it. But there’s certainly arguments to be made that Bitcoin is another alternative currency to an openly dying Fiat world. I think Bitcoin is coming under a lot of pressure from Central Bank, digital currencies, power, politics, etc. I have no interest or desire to see Bitcoin investors get hurt. I’d love to see them make more money. I’m jealous of that. I wish I had bought it at $10 Like everyone else, but I, I worry about the volatility in the long term use of it, but I would be thrilled to see Bitcoin succeed. I worry that they are a real threat, though, to the powers that be into this trend towards Central Bank digital currency
Adam Taggart 58:29
in therefore Heaven has a target on its back. Oh, absolutely. It’s too smart.
Matthew Piepenburg 58:33
It’s smarter than the Fed. That’s the problem. Bitcoin is too smart. And there’s other problems. But that’s the main problem. But that’s a high class problem, but it still has risk for investors. The other thing I would say, getting away from real assets, and again, it’s not just gold and silver. There’s all there is I’ll send you a chart after this and you can put it up there. It’s probably the most important chart of the decades provided by a good friend of ours Ronnie ster fellow, he’s an advisor at Mater horn. He’s wrote the in gold we trust report. He’s one of the smartest guys out there. That’s an amazing annual report he puts out. Yeah, it’s it’s brilliant. He’s brilliant. He’s modest and humble. But he’s absolutely genius. And he certainly knows the real asset space, I’ll send you the graph. He called the most important graph and the decade it’s just the commodity cycles again, buy low, sell high, get out of asset bubbles, get out of fiat currencies get out of tops, and in think longer term, not month to month, day to day, quarter to quarter. And when I send you this chart, it’s just simple, stupid. You get at the bottom of a commodity supercycle you that’s where you want to be. If you’re an investor, as opposed to a trader, if you’re a trader, you have your own signals. You have your own volatility. You have your long shorts, you have your options. You have your Keltner bands, your bollinger bands. If someone’s a trade, that’s a different conversation. But for investors, we don’t have time to learn everything. It is about being a professional trader. Just buy low and sell high, get out of assets that are overpriced, get out of risky assets, get into solid boring things that preserve purchasing power and get into at least have some portion of your portfolio in the commodity cycle that’s going to be they’d be painful in the short term, but it’s trending clearly up into the North. That’s my advice. I would also recommend to people that are listening, you know, talk to their advisors. Most advisors are consensus thinkers because they can group together in a bull market and then blame extraneous events in a bear market on something that they didn’t see. I’m very cynical about the standard IRAs. I’ve seen too many, I’ve seen too many hedge fund managers that I’ve invested in that were full of whatever. But I think I would really, really start to question the risk parity portfolio where that 6040 7030 As we’ve been wanting for years, stocks and bonds are no longer hedged assets, they’re correlated assets. So that what worked for our fathers and grandfathers or even us prior to 2008, those type of portfolios are only good and a tailwind. They’re absolutely brutal. In a headwind, they correlate to zero. And so your your bond market won’t save you. Your bond allocations won’t save you, as we saw from junk bond to investment grade last year in 2022. Just a horrible performance of the bond market. At the same time that, you know, equity markets were getting crushed, again, should have been a headline worse nominal returns in stocks and bonds since 1871. The volatility in the last couple of weeks in the treasury market worse since 2000. Since 911 2000, what nine 2001, September 11 911, that that was a pretty big headline 911. The markets were volatile, then, markets were volatile in 2008. markets are volatile, and the flash crash of 87. And yet, just last week, now this stuff made the headlines in the mainstream media, among pundits and among bond traders. And among folks like us, we talked about it, but again, people would rather watch Netflix, but these what happened in Silicon Valley Bank wasn’t 911. But what the market says what the market says is, oh, oh, and again, we saw that in the repo crisis we saw in the gilt crisis we saw in 2000, there’s been so many I told you so’s that when, when, when an if, and I think, sort of printing trillions more, which is inherently inflationary. When and if we have another oh moment, no one listening, including us can say we didn’t know better. That’s it. You don’t have to agree. But I think the warning signs are there. And one thing I’ve learned having made and lost money in my life, and I’ve done both brilliantly, I’ve lost more than I made many times. The way to get or the way to be rich is not to lose money. It’s not to lose your wealth, wealth preservation. Egan says it over and over. It’s not just a phrase, it’s a way of life. You make money by not losing money. Every time I invest in a hedge fund manager, I didn’t invest in the ones who told me all I was going to make what the prognosis was, what the projections were. I always listen to the manager who said these are the risks I’m worried about first, this is where you can lose money. This is where I see risk in my portfolio. They were honest, they were thinking more about risk than reward. Because everyone looks great in a tailwind. Everyone looks smart when they’re on the trend. But the real smart money always is thinking risk first not reward always looking like a lawyer what’s gonna what’s gonna get me like that famous line in The Big Short, where you’re going to screw me right using, you know, and I think people need to think more defensively and think 30 years out, not three weeks out, and and be cynical. And by the way, again, don’t trust everything I’m saying or anyone else that you interview, but put it all together Think for yourself. Consensus thinking is almost gone today in America, any kind of consensus view of reality and everything again, politics, media, entertainment, social justice, warriors, canceled culture, will culture based bias, whatever, there’s so much mess there. It’s hard to trust anyone I get it. But I think, try critical thinking, look at math, draw your own conclusions. Look at not just graphs, look at history, listen to people you agree with and disagree with including gold, including silver, including hard assets, including Kryptos. But be critical thinking take a little time and your viewers already do that. That’s why they’re here. But I think the sad part is the vast majority of Americans trust too much or don’t look enough at what’s going on, trust their leaders. And that doesn’t make them stupid. They’re trusting people. But sadly, they’re not critically thinking enough, or they’re not cynical enough as they could be when it comes to their portfolios. And some people even have portfolios, they just have checking accounts with money in there. And that’s the saddest of all because inflation is eating away that every day it’s an invisible tax always hurts the poor and more than the upper class. That’s history. Sadly, they’re always the plankton for Wall Street’s whales, you know, always the first to get drafted in the first to get hit in the downturn.
Adam Taggart 1:04:20
Always the plankton for Wall Street whales, that’s such a great line. I hate the fact that it’s so spot. Matt, this this has been wonderful. I literally could go on for another couple hours with you. And I’m sure people are gonna be screaming in the comments. Adam, why didn’t you but I promised you a certain amount of time and we’ve already generously gone way over it. In beginning to wrap up here, Matt, for folks that have really enjoyed this discussion. And perhaps this might be their first real introduction to you. Where can they go to follow you in your work?
Matthew Piepenburg 1:04:52
Yeah, it’s easy URL. Egon von Grier’s and I are writing articles every week on gold. switzerland.com Very simple gold switzerland.com The name of our enterprise is Matterhorn Asset Management and we we only deal exclusively and physical precious metals, gold and silver primarily stored in the safest vault in the world. It’s like a James Bond movie you got to see it’s hidden deep in the Swiss Alps. Most of the gold we buy is direct from the refiners. 70% of the gold in the world is refined in Switzerland. And so we get the finest highest quality gold but I think far more smart, important than Egon eyes, we have this huge staff behind us that brokers and transports and does logistics and holds the gold in a truly safe way outside of the banking system. Because for years econ was way ahead of this, we never trusted the banking system, whether that was Lehman or Credit Suisse, small banks in Switzerland or small banks in Silicon Valley. We’ve always been, I think prescient and distrusting the major commercial banks and currency risk and political risk. So you have to hold I think, physical gold outside of your own jurisdiction, but in a safe private vault, and the counterparty risk is always the vault. So it has to be a good vault. And what Egan put together decades ago is really, I think, we think it’s the best way to hold gold outside of the big commercial banks that I would never hold my gold in a major commercial bank. And that’s a whole other story. But yeah, so it’s this gold, Switzerland, and we’re called Matt horn Asset Management.
Adam Taggart 1:06:19
Okay, great. And when we edit this map, I’ll put up the URL to gold Switzerland there. So exactly where to go. We’ll put a link in the description to Tupelo, thanks. All right. Well, look, man, this has been fantastic. I just want to do a couple quick housekeeping notes. As we say goodbye to folks here, you did a really good job, you’re going to end up getting some sort of fruit basket or spiff from the financial advisors that that Wealthion endorses, because these guys are sort of exactly the type that you were saying you should look forward to advisor, which is they prioritize risk management first. Right? It’s all about Okay, first do no harm by trying not to lose anything. And then what can I potentially prudently do on top of that, folks, if you’ve listened this interview, you know, Matt has just explained why this is such a challenging time for investors, particularly the independent regular retail investor here. And so highly recommend, as I always do. Most people especially forget real lives that demand your attention. And you can’t be watching all these swirling storm clouds that Matt’s talking about, that you find a good financial adviser, good professional financial adviser who takes into account all of these macro issues that Matt’s been talking about, uses those to create a personalized portfolio strategy for you, but then actually helps you execute it. As you know, the shoes are dropping along the path here. If you’ve got a good one who’s doing that for you, great, stick with them. But if you don’t if you’d like a second opinion, someone who does just schedule a free consultation with one of the financial advisors that Wealthion endorses, just go to wealthion.com Fill out the short form there. It’s totally free, no commitment to work with these guys. It’s just a public service they offer like Matt, they’re just trying to help people make decisions to prove themselves more sorry, position themselves more prudently. Now in advance of what’s likely coming all the things that Matt talked about. Secondly, just a reminder, if you missed our online conference from a week and a half ago, where we had Lacey hunt, and a bunch of those other greats like Danielle DiMartino, booth and Stephanie Pomeroy and Michael pento, and Rick Rule, and a lot of the names that Matt mentioned here earlier, don’t worry if you missed it, you can still buy a replay video of the entire event, all the presentations, all the live q&a by going to wealthion.com/conference. And if you’ve enjoyed having met on this program, half as much as I had and Matt, it’s been wonderful. I’m very serious about you having an open invitation to come back on this program anytime you want. So folks, if you’d like to see that, please support this program by hitting the like button, then clicking on the red subscribe button below, as well as that little bell icon right next to it. Matt, this has been an absolute joy even though we talked about some heavy things. Thank you so much for coming on.
Matthew Piepenburg 1:09:00
And it was my pleasure really was thanks. I talk a lot but I hope it was helpful.
Adam Taggart 1:09:04
Oh, it was wonderful. I know. I can already tell the great feedback we’re gonna get from this. So thanks so much, everybody else thanks so much for watching.