Episode 200

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Published on:

26th Apr 2024

Jared Dillian: The Hidden Dangers in the Global Economy

In this episode, the ReSolve team is joined by Jared Dillian, the editor of The Daily Dirtnap and author of the book No Worries: How to Live a Stress-Free Financial Life. They delve into a variety of topics, including the power of diversification, the importance of understanding financial stress, and the current state of global financial markets.

Topics Discussed

• Jared Dillian's perspective on the current macro views on monetary policy, hard assets, and other financial matters

• The concept of financial stress and how to minimize it, focusing on debt and risk

• The importance of time and rational decision-making in buying a house

• A discussion on the current state of advice in the financial industry

• The 'Awesome Portfolio' - a diversification strategy that includes stocks, bonds, cash, gold, and real estate

• The role of gold in a diversified portfolio and its comparison to Dennis Rodman's role in a basketball team

• The potential future of inflation and its impact on the global economy

• An exploration of emerging markets, with a focus on India and Argentina

• A discussion on potential future challenges in the financial market, including the possibility of high interest rates

This episode offers valuable insights into financial stress, diversification strategies, and the future of global financial markets. It's a must-listen for anyone interested in understanding the complexities of the financial world and gaining strategies to navigate the uncertain financial landscape.

Transcript
Jared Dillian:

Dennis Rodman is in the Hall of Fame, Basketball Hall

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of Fame, and he's the lowest scoring

member of the Basketball Hall of Fame.

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And there was actually a controversy

about whether he should even be

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included in the Hall of Fame.

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He scored like six points a

game or something like that.

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If you had a team full of Dennis Rodman's,

if you had five Dennis Rodman's on a team,

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it would be the worst team in basketball.

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Right?

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Because it can't score, but Dennis

Rodman can rebound and he can pass.

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So what happens is if you take

Dennis Rodman and add him to a

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team of four people that can score,

the team gets much, much better.

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Right.

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And that's really what gold is about.

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if you had a portfolio that was just

gold, I mean, you said gold did really

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well in the seventies, but also gold,

kind of like real estate has gone up 4

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percent a year since, you know, the 1930s.

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So if you had a portfolio that

would, that was just gold, it

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would not be very exciting.

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When you, when you take gold and you

add it to a bunch of other stuff,

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that's when things get better.

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Mike Philbrick: All right, welcome

to another edition of Resolve Riffs.

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Today we've got a very special guest,

freshly minted new author of the book

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No Worries, How to Live a Stress Free

Financial Advice, Jared Dillian, also

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the editor of the Daily Dirt Nap, a

fantastic newsletter for I think a lot

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of out of the box thinking and has been

inuously in publication since:

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Jared, welcome to Resolve Riffs.

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I'm sure there'll be lots of, of our

listeners who will be pleased and excited

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to hear what you have to say, both on,

uh, taking the stress out of money and

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what your current macro views are on, you

the current machinations around the world

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with respect to monetary policy, hard

assets, and all of those types of things.

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So welcome to the channel.

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Jared Dillian: Hey, thanks for having me.

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Adam Butler: should mention

it's, it's, this is not Jared,

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your first novel, right?

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You've got a, you've got a few

other novels under your belt.

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What are they?

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Jared Dillian: Uh, well,

the first book was a memoir.

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It was called Street Freak, Money

and Madness at Lehman Brothers.

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And that was in 2011.

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And then in 2016, I published a novel

called All the Evil of This World.

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2023, I published an essay

collection called Those Bastards.

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And then No Worries in 2024.

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And I have a short story collection

coming out later this year.

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Well,

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Adam Butler: kind of cool.

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So I think, you know, Mike and I lived

through many of the, same formative

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milestones of the journey that probably

motivated the writing of your first

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three books, maybe not your exact

experience with Lehman Brothers,

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but the decisions made post Lehman

Brothers and, the constant creep of

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Supervision, regulation, intervention,

markets, making markets less and less.

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free to act on, you know, as

a price setting mechanism and

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more, as a policy mechanism for

various government objectives.

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but this latest book is, is quite

a departure from those themes.

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at least that's my sense.

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If so, what motivated that, that

shift in, in interest or curiosity,

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that thread that you wanted to pull?

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Jared Dillian: I really wanted to

write a book about personal finance.

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around 2018 I started reading

all the classics, right?

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So rich dad, poor dad and the millionaire

next door and the Dave Ramsey book.

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And I read all those and I kind of came

to the conclusion that The advice that

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people were getting, you know, average

people were getting from these personal

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finance gurus was pretty terrible.

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and at the time I had a radio show, uh,

actually had a radio show on personal

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finance that was, not a big show, but I

was, I was on every night for two hours.

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And the themes I kept coming back

to was this idea of financial

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stress and how to minimize it.

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And a lot of the advice

that people are given.

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may help them get more money in

the long run, but it does at a

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cost and that cost is your sanity.

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So really the two sources of

financial stress are debt and risk.

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So the idea is you want to minimize your

debt and minimize your risk to the best

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extent that you can, and then you can

be happy with your financial situation.

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Mike Philbrick: Is there any,

is there anything in particular

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that really bothers you about the

current state of advice going on?

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Any, any particular examples that

are, uh, get under your skin?

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Jared Dillian: Well, a lot of

it focuses on Cutting expenses.

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This, this obsessive focus on

cutting, cutting small expenses.

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And the classic example that everybody

knows because Susie Orman talked about

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it is, buying coffee at Starbucks, right?

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She says if you buy coffee at

Starbucks, it is like peeing a

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million dollars down the drain.

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Because if you, if you saved 4, every day

for the next 40 years and you invested

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it, you could have 100, 000 or whatever.

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So, stop drinking coffee.

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And what I found was, you know, if

you do the math on it, it really

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doesn't make a lot of sense.

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through one decision, like buying a house,

if you get a house that's 500 square

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feet smaller, And it's correspondingly

cheaper than you're paying a lot less in

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interest over the life of the mortgage.

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And it ends up being way more money

than what you might've saved by not

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being, not by not buying coffee.

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So it's really, the goal is to focus on

the big things and not the little things.

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The little things don't matter.

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The big things matter.

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Mike Philbrick: It reminds me a little

bit of you know, the, the willpower

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sort of some of the books on willpower,

where you have these, you know, these

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small things that you're going to deprive

yourself on a regular basis, but they

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chip away at the ability for you to

actually stick to that sort of stuff.

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So you end up failing on the small stuff.

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And if you're not making the big

decisions right in the first place.

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then it's kind of total catastrophic

failure across the board.

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And I guess your point is get these

pillars correct, get the house right,

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get the student debt right, you know,

figure out how to get a car properly,

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use credit cards in a smart way.

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and then the little stuff, enjoy

your life, I guess is kind of the,

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Jared Dillian: The reason why that

fails is because human beings can

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give up large luxuries, but they

can't give up small luxuries, right?

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Like you can live in a slightly

smaller house and you're

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not, Like this house sucks.

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I hate it.

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I can't wait to move out of here.

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It doesn't really matter.

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You're sitting in the living

room watching TV anyway.

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Like you can give up a, you can

give up a slightly larger house, but

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you can't give up coffee every day.

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It's these small luxuries that we need

and they don't cost a lot of money.

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And I said, people can give

up large luxuries, but they

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can't give up small luxuries.

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Mike Philbrick: and I guess those, those

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small, sorry, go ahead Adam.

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Adam Butler: You know, it's cool.

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I was gonna say, you know, so much

of the cost of a home is, not so

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much related to square footage as

it is to time of travel, right?

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Like, you want to live within a

certain time of travel to your,

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to work, for example, right?

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and there's, you know, there's sort

of a minimum amount of space that, a

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new family, for example, can use to

approximate some kind of middle class

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lifestyle, whatever that means these days.

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So, you know, I'm just wondering

how you trade off because that time

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factor is to my mind, quite different

than the space factor, right?

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Because that time factor is something

that you'll just never get back.

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You spend an extra 20 minutes in the

car every day, versus spending a little

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more to live a little closer to work.

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But all those homes are owned by people

who bought them 30 or 40 years ago.

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You know, how do you try to factor

that into the home buying equation?

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Jared Dillian: Well,

time is super important.

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You know, the interesting thing is,

is that, in about two weeks, I'm

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moving into a house that I built.

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And the house has a dedicated office space

and I'm going to be working from home.

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So my commute goes to zero, right?

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my wife's commute gets longer.

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she has about a 45 minute commute right

now, which is going to turn into an hour.

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But she only has to go into work

like two or three days a week.

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So it's not that big of a deal,

but like you said, like time

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is, time is super important.

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So I know I never, I never really

understood these people who lived

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in like Easton, Pennsylvania and

commuted all the way to New York city

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every day, like two hours each way.

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Like, I mean, yes, you can be productive

on the bus and you have a laptop and you

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can read books and stuff like that, but

that's a, that's a colossal waste of time.

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Adam Butler: Yeah, I guess I agree.

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I guess my, my point was, or question

was sort of how you, how you would

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advise thinking through this issue?

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Because I think, you know, the size

of the house has, to my observation,

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kind of largely, Become secondary

to the time you get to spend with,

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family or doing things that you

like rather than commuting, right?

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And that as a function of that,

the, cost of time ends up being

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the limiting factor, not the cost

of more, of more housing space.

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Jared Dillian: Yeah.

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And I think people tend to undervalue

time, with respect to money.

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I think they put a higher value on

money and less value on time when

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it should be the other way around.

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It should be the other way around.

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So

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Adam Butler: Yeah.

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No, I agree.

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And obviously working from home, is a

growing trend or, I guess it's probably

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in the middle of finding some kind

of equilibrium, but at the margin, it

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seems like this is a growing trend and

that trade off will become less and

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less important over the next few years.

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Jared Dillian: yeah.

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Adam Butler: see

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Mike Philbrick: is, is as you have

debt to, you know, pay it down

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quickly, which is interesting.

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I don't know if, you guys ever, you

know, heard about the, uh, when interest

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rates got to that sort of zero bound

and stay there for such a long time.

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Something I heard from the

younger generation was Why

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would I ever pay off, right?

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This idea that I'm always

going to have it anyway.

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And, and the, the management of

the, of that is so, um, it's at

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such a low rate and so manageable,

I'll just leave her up continually.

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And, as someone who.

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You know, witnessed a little

bit of the 70s at the tail end

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and can remember that in some of

the 80s and early 90s in Canada.

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That's kind of a head scratcher.

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People just didn't have the experience

of having a period of time where interest

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rates ratchet up quickly, which they have.

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So maybe this is less of a lesson

today than it was back then.

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But walk us through some of the

thoughts on debt and how you think the

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perception of debt over time has changed.

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Jared Dillian: Well pretend you had a

mortgage with a 0 percent interest rate.

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Okay.

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So you were just making

principal payments.

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You can still default on that mortgage.

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Like you can still default

on it and lose the house.

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Okay, so the value in paying off a

mortgage is to reduce your stress.

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Now, I paid off a couple of mortgages

in my lifetime, and I can tell you that

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when you own a house free and clear,

it reduces your stress massively.

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If you own your house free and clear.

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There is, you are untouchable.

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You are in an unassailable

financial position.

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It really, no matter what happens

to you, you have a place to live.

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Nobody can take the house away from you.

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So, you know, I say in the book

that everybody should strive.

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to pay down their mortgage

in 10 years at a minimum.

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my last mortgage, I paid off in

three and a half years, right?

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Now the other part of that

is, that's, that was a 3.

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75 percent mortgage.

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so you say, well why did you pay

it off in three and a half years?

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Well, basically, after I paid it off, I

added up all the interest I paid in three

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and a half years, and it was 70, 000.

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And I said to myself, what could

I have done with that 70, 000

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aside from paying it to the bank?

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Like interest interest is the

worst thing in the world because

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you get no enjoyment out of it.

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Is paying interest fun?

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Do you get some utility out of it?

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It's basically all you're doing

is contributing to bank profits.

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And one of the things I say in

the book is you never want to

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be a good customer of the bank.

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And a good customer of the bank

is somebody who makes a minimum

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payment every month, pays the

maximum amount of interest.

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Never prepays, and that's a

good customer of the bank.

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So I never do that.

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Adam Butler: Right, okay.

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So part of your, how to buy a home.

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Is to buy a home that you have a

good shot at paying off aggressively

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or on aggressive timescale, right?

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you, you've got a few other points

in the book about, you know, a lot

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of people don't make thoughtful

decisions in how they buy a home.

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What are some other elements

that people often miss?

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Jared Dillian: Well, you know,

buying a house for a lot of people

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is an emotional decision, right?

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Like they they see a house or, you

know, they get a realtor and the

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realtor shows them a bunch of houses

and they fall in love with one.

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They say, Oh my God, we have

to, we have to live here.

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Right?

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We can, the kids can play in the yard

and we can put the TV here and bedrooms

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over here and they see themselves in the

house, then they have to have the house

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and then it becomes an emotional decision.

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I would say 95 percent of home

buying, really unless you're an

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investor, is an emotional decision.

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Once you've decided you want the house,

you have to have the house and then

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you're willing to overpay for it.

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And that's what happens to

the vast majority of people.

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It has, you have to separate.

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The emotions from buying a house.

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It has to be just a rational decision.

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Adam Butler: One of the things that,

cause I mean, that just seems to make

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a ton of sense to me and I've, I've

always embraced the idea of trying to pay

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off a mortgage as quickly as possible,

even, even during the low rate period.

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but you know, that, that seems to

have just flown out the window.

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And, and part of the reason that

that has, you know, people almost

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laugh at that idea now is that it has

paid so handsomely to be imprudent.

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Over the last 10 years, right?

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I mean, the smartest thing in retrospect,

you could have done 10 or 15 years

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ago is buy a home vastly outside of

your, affordability range, continue

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to ratchet down the interest rate

that you pay on that loan as, as the

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fed and other factors lowered rates.

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And of course, as a function of the

fact that people began to think about

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home prices in terms of not the cost of

the home, But the monthly payment on a

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home that the prices of homes went up

commensurately over that time and made

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everybody who decided to be over leveraged

to buy too much home, very rich, right?

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So how do you, how do you

counter this experience?

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I mean, I struggle with this.

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From a very frustrating

perspective all the time.

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And I'm, I'm wondering how you positioned

it in the book so that it connects to

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people who obviously have had a very

different experience with, with prudence

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and imprudence over the last 10, 15 years.

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Jared Dillian: Well, I didn't talk

about this in the book, but interest

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rates are basically a signal.

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Okay.

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And when interest rates are

low, they're telling you to

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borrow money and buy assets.

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And when interest rates are high, they're

telling you to sell assets and raise cash.

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Right.

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And now interest rates are high.

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So the calculus is completely different.

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I will say that the housing

market is still pretty strong.

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you know, at least in the U.

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S.

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for, demographic reasons.

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You know, you have a huge population

bulge, the millennials that are

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just starting to buy houses.

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And we also had 10 million people

come across the border, which are

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going to need a place to live.

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So, you know, I think housing prices

over the next 10 years in the US

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are going to do what they did in

Canada from:

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So, I think it's, I think they're

going to go parabolic here.

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I think it's going to be crazy.

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Adam Butler: So then, you know, how, how

do you advise, the young person now you

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say, look, get in now doesn't really,

yeah, they're vastly overpriced already,

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but they're never going to get cheaper.

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So just be prepared to have far less

disposable income than your parents

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You know, you're going to have

to spend a lot more on your home.

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Jared Dillian: yeah, I mean, that's, look,

that's an economic forecast and there

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are no economic forecasts in the book.

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You know, I didn't, I didn't, you never

want to put a forecast in a book, right?

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Because

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Adam Butler: Yeah.

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Jared Dillian: going to

turn out to be wrong.

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And then you're going to look stupid.

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Right.

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So I didn't make, I didn't make

any forward looking statements on

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what the housing market is going

to do over the next 10 years.

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But, you know, usually the housing

market is, um, not, doesn't

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really provide a great return.

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Like if you look over the last 100 years,

housing has returned about 4 percent

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a year, which barely beats inflation.

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and it's, you know, having said

that, even though it hasn't been

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a great investment for a lot of

people, it is a great investment.

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Because a lot of people don't have

the ability to save and invest.

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they can't put money in a bank

account, they can't buy stocks,

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they can't buy mutual funds.

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But what they can do is

pay off a mortgage, right?

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And build equity over time.

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There's a lot of people in this

country Who have, you know, they

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bought a house for 70, 000 in 1979.

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And in 2024, they sold it for 900, 000

and it would, the mortgage was paid off

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and they had a hundred percent equity.

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And they take that money and they move

to a place like South Carolina and

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they buy a house for 250, 000 and they

just live off the rest and retirement.

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Like that story happens

over and over again.

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And these are people who never

bought a stock, bought a mutual fund

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or anything, but they just, Yeah,

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Adam Butler: Yeah, I guess the question

is, how do you, how would you advise

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millennials at the moment who are, as

you say, at the point in their lives

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when they do want to start a family?

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For many, the biological clock is ticking,

but they're faced with a housing market

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that is going from strength to strength.

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It started from very expensive,

interest rates have risen.

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So the monthly payment now is even

twice what it was, three years ago.

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I'm just wondering your,

your thoughts on it.

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Cause I, I personally struggle

with what the advice should be.

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Jared Dillian: it's a hard decision.

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I mean, look, it's also an

asset allocation decision.

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You want to have some money in stocks.

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You want to have some money in bonds.

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You want to have some money in cash.

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You want to have some

money in commodities.

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You also want to have

some money in real estate.

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And if you're renting, I mean, there's

nothing wrong with renting, but what

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that means is you don't have any exposure

to real estate as an asset class.

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So if real estate as an asset class

does really, really well, and you

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own stocks and bonds, which don't do

very well, then you're missing out.

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You're missing out on

that diversification.

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So, since you can't predict the

future, you basically want to own

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a little bit of every asset class.

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Which means you're probably going

to have to buy a house and the only

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advice in the book that I give is

that your housing costs should be less

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than 25 percent of your income, which

is difficult to achieve, but that's

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the goal that you should shoot for.

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So your mortgage, your HOA fees.

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Your property taxes, your insurance

should be 25 percent of your income.

355

:

Adam Butler: Which basically, I think

for, you know, the top dozen major,

356

:

major employment centers in the U.

357

:

S.

358

:

means that your average millennial family

is living about 90 minutes one way to

359

:

the office if they have to commute.

360

:

Jared Dillian: Yeah.

361

:

Yeah.

362

:

Pretty much.

363

:

Yeah.

364

:

I mean, you can stretch it a little bit.

365

:

You can do 30 percent of your income,

but what a lot of people do is, you

366

:

know, if you live in San Francisco,

then it's 50 percent of your income

367

:

and that crowds out your ability to

save or even spend money on fun stuff.

368

:

Right.

369

:

So look, it's a balance like, you know,

these are, these are hard choices.

370

:

Adam Butler: Yeah.

371

:

Mike Philbrick: offs,

trade offs, and trade offs.

372

:

Adam Butler: Yeah, for sure.

373

:

Mike Philbrick: Yeah.

374

:

I guess, yeah, those are sources of the

financial stress you talk about, and

375

:

you have two sources of that you talk

about in the book, you want to elaborate

376

:

on that a little bit more, cause you're

beating around the bush a little bit,

377

:

but, you want to lay them out distinctly.

378

:

Jared Dillian: So the two sources of

financial stress are debt and risk.

379

:

And we've spent a lot of time talking

about debt as it comes to housing.

380

:

Um, risk is the investment side,

financial markets risk, and you know,

381

:

the conventional wisdom in investing

is that you should put all your

382

:

money in the S and P 500 index fund.

383

:

And why should you do that?

384

:

Because it returns the most.

385

:

You should put your money in

the thing that returns the most.

386

:

Well, if something has a good return,

it probably also has a lot of risk.

387

:

And if you invest in an index, you

get the returns in the index, but you

388

:

also get the volatility of the index.

389

:

And the S& P 500 is pretty volatile.

390

:

It moves around a lot, about 1

percent a day, 15 20 percent a year.

391

:

And over the course of an investing

lifetime, there's going to be

392

:

one year when it's down 50%.

393

:

It's just going to happen.

394

:

So I don't think that's very good advice.

395

:

because number one, it causes

people a lot of stress, right?

396

:

Number two, they may not be able

to withstand that stress and they

397

:

may liquidate their investments

at the worst possible time.

398

:

So the goal is to be in some kind of

vehicle, which gives you a good return,

399

:

but cut your volatility in half.

400

:

Mike Philbrick: And then how, how

did you approach that in the, in the,

401

:

uh, sleep at night portfolio that,

um, you talked about in the book,

402

:

Jared Dillian: Yeah, I called the

awesome portfolio, and that's 20

403

:

percent stocks, bonds, cash, gold,

and real estate in this portfolio,

404

:

which we backtested back to 1971.

405

:

this has returned 8.

406

:

1 percent a year.

407

:

for the last 53 years with half the

volatility of an 80 20 portfolio and

408

:

the worst drawdown in any year was 12.

409

:

2 percent.

410

:

So you say look, like I'm getting one

percent less than the stock market with

411

:

half the volatility And the worst year

that I can possibly have is down 12%.

412

:

And by the way, in the year of

the financial crisis, it was

413

:

down 9 percent when the, when

the broad market was down 38%.

414

:

So even during the financial

crisis, you were protected.

415

:

So this is.

416

:

this is the solution.

417

:

Mike Philbrick: So it's that

old adage of diversification.

418

:

Yeah.

419

:

And then how do you, so

we're large proponents, big

420

:

proponents of diversification.

421

:

One of the challenges is the tracking

error that comes with, you know,

422

:

having everybody else in your friend

group who are in the S& P and having

423

:

the best of times at times and the

worst of times at times, and you're

424

:

not in that emotional rollercoaster.

425

:

Do you have any thoughts on

that side of the equation?

426

:

Jared Dillian: Yeah, I mean, this is,

this also takes some intestinal fortitude

427

:

because 42% of the time you are going

to underperform the s and p by 10%.

428

:

21% of the time you are going to

outperform the s and p by 10%.

429

:

As it turns out, the times when

you're outperforming the s and p,

430

:

you do it by a lot more than when you

underperform, but 42% of the time.

431

:

You're going to be talking to people

at cocktail parties and they're

432

:

going to be bragging about how the

market is up 30 percent this year.

433

:

And you're going to be up 11 percent

and you're going to be like, why

434

:

am I in this stupid portfolio?

435

:

You know, everybody else is

getting rich but me, but in the bad

436

:

times is when it has real value.

437

:

Mike Philbrick: Yeah.

438

:

And a lot of people have forgotten

that:

439

:

the S and P where you get.

440

:

Two 50 percent declines in the

market and zero returns for, you

441

:

know, better part of 12 to 14 years.

442

:

So it is a, stocks are risky

and they are a certain regime.

443

:

Now that, that might move us

into, um, the area of gold.

444

:

I know Adam, you found a, a

wonderful market carpet that

445

:

showed the top asset classes.

446

:

I forget who published Bank of America,

maybe, and gold seven out of the 10

447

:

years in the seventies was the top

performing asset class, not by a

448

:

little, I know you're a proponent of,

gold, Jared, but, you know, can we walk

449

:

through a little bit of the, the value

of having these different pistons in

450

:

the engine of the awesome portfolio

versus, you know, just betting on, stocks

451

:

and sort of one regime all the time?

452

:

Jared Dillian: Well, a lot of

people, you know, people who have

453

:

an index fund, They say, well, I am

diversified because I have 500 stocks.

454

:

I'm diversified.

455

:

Well, I don't, I don't consider that to be

diversification at all because stocks are

456

:

highly correlated to one another, right?

457

:

So you have this big basket

of highly correlated stuff.

458

:

And they say, well, I'm

going to add some bonds.

459

:

Okay.

460

:

Well, there's long periods of

time where bonds are actually

461

:

positively correlated to stocks.

462

:

We saw that in 2022.

463

:

So basically what you have is if you have

stocks and bonds, a 60 40 portfolio, you

464

:

have this basket of financial assets,

but you don't have any real assets.

465

:

And once you start adding real

assets, like gold commodities, real

466

:

estate, that's when the benefits

of diversification really kick in.

467

:

Right.

468

:

And particularly gold, you know,

the, the most special thing

469

:

about gold is its diversification

qualities, because it is lowly.

470

:

It is very little

correlated to anything else.

471

:

And those correlations are not stable.

472

:

They change over time.

473

:

So it is the perfect

diversifier to any portfolio.

474

:

Once you add gold to a portfolio, The

volatility immediately comes down.

475

:

That's what makes it so useful.

476

:

Adam Butler: uh,

477

:

Mike Philbrick: with the, uh, the Dennis

Rodman analogy, which I think is, it bears

478

:

repeating cause it's such a great, it's a

great illustrative story on the power of

479

:

diversification, via a different avenue

than just scoring all the time, if you

480

:

will, maybe you can walk us through that.

481

:

Jared Dillian: Yeah.

482

:

Well, Dennis Rodman is in Hall of

Fame Basketball Hall of Fame, and

483

:

he's the lowest scoring member

of the Basketball Hall of Fame.

484

:

And there was actually a controversy

about whether he should even be

485

:

included in the Hall of Fame.

486

:

He scored like six points a

game or something like that.

487

:

If you had a team full of Dennis Rodman's,

if you had five Dennis Rodman's on a team,

488

:

it would be the worst team in basketball.

489

:

Right.

490

:

Because it can't score, but Dennis

Rodman can rebound and he can pass.

491

:

So what happens is if you take

Dennis Rodman and add him to a

492

:

team of four people that can score,

the team gets much, much better.

493

:

And that's really what gold is about.

494

:

It if you had a portfolio that was

just gold, I mean, you said gold did

495

:

really well in the seventies, but

also gold kind of like real estate

496

:

has gone up 4 percent a year since.

497

:

You know, the 1930s.

498

:

So if you had a portfolio that would,

that was just gold, it would not

499

:

be very exciting when you take gold

and you add it to a bunch of other

500

:

stuff, that's when things get better.

501

:

Adam Butler: what does gold

respond to that makes it so

502

:

different from stocks and bonds?

503

:

Jared Dillian: I, nobody knows.

504

:

Nobody knows.

505

:

Seriously.

506

:

I mean, gold responds to a

bunch of different things.

507

:

I mean, theoretically inflation,

but not really, lately

508

:

geopolitical risk, but not really.

509

:

the thing that it has the highest

correlation to is budget deficits.

510

:

That is the one thing that it

has the highest correlation to

511

:

is budget deficits over time.

512

:

Adam Butler: So the idea being

that governments have a really

513

:

hard time scaling back spending.

514

:

Eventually, it becomes very hard to fund

deficits through tax receipts because of

515

:

the crowding out effect or what have you.

516

:

And, they become more and more

incentivized to monetize some of

517

:

that and then because the amount

of currency outstanding or Dollars

518

:

outstanding, say relative to a fixed

amount of gold, which really doesn't

519

:

change much from year to year.

520

:

They don't mind hardly any

of it out of the ground.

521

:

then, you know, over time, it's not

that gold so much as rising as it, as

522

:

other stores of wealth are falling.

523

:

Right?

524

:

And, and gold stands out

from that perspective.

525

:

That might be one narrative that,

helps explain why it's a nice

526

:

diversifier against stocks and bonds.

527

:

Jared Dillian: Yeah, that's right.

528

:

I actually had a tweet thread

about that a couple of weeks

529

:

ago that was pretty popular.

530

:

I just, that's the exact concept

that I was talking about.

531

:

So,

532

:

Adam Butler: Gotcha.

533

:

And then real estate, typically

people own real estate with

534

:

quite a bit of leverage, right?

535

:

Because they're, you know, they're

buying it, with a mortgage, right?

536

:

I mean, obviously, if they pay it

down really quickly, then that, that

537

:

leverage factor declines conventionally.

538

:

But for many years, they end up with this.

539

:

Like highly levered bet on, on real

estate and obviously equities are

540

:

much more risky than bonds are.

541

:

Any thought to the fact that you've

got, you know, different types of

542

:

assets which are diverse in their nature

and what drives them from day to day

543

:

and week to week and month to month.

544

:

but they have very

different, Risk profiles.

545

:

And that a lot of the time, you know,

leave a real estate or, the equity

546

:

side of the, basket will dominate

what happens in the portfolio and the

547

:

diversification opportunity from stuff

like bonds and cash are, they don't

548

:

really have a chance to shine through.

549

:

Jared Dillian: well, I mean, the funny

thing is, is that, you know, that 12.

550

:

2 percent drawdown that I talked

about in the awesome portfolio,

551

:

uh, that actually happened in 2022.

552

:

that was, that was the worst

year for the awesome portfolio.

553

:

Stocks were down, bonds were down,

real estate was on, you started to

554

:

earn more money on cash and it was

also a pretty bad year for gold too.

555

:

so that the one vulnerability to

any kind of diversification is

556

:

rapidly rising interest rates.

557

:

In a period of rapidly rising

interest rates, really, the

558

:

only place to hide is cash.

559

:

The only place to hide is cash.

560

:

So that actually might happen again.

561

:

You know, that, that

could be:

562

:

It's possible that interest

rates could go up a lot more.

563

:

We go through that again.

564

:

so yeah, I mean, in times when interest

rates go up a lot, then everything

565

:

becomes correlated to the downside.

566

:

Adam Butler: Right.

567

:

So let's, let's discuss some themes here.

568

:

I mean, you mentioned that we, we

could see another, inflation push

569

:

over the next couple of years or so.

570

:

what might drive that?

571

:

In your view, and then we'll also sort

of move around a little bit into some

572

:

of the other themes you're watching.

573

:

Jared Dillian: well, I mean, really

inflation is, you know, as Milton

574

:

Friedman said, a monetary phenomenon,

but it's also a psychological phenomenon.

575

:

And for years, even though the fed

was printing a lot of money, we

576

:

had a disinflationary psychology.

577

:

People did not expect price rises.

578

:

The, this is how people behave.

579

:

If you think that prices are

going to rise, then you act in

580

:

such a way to make prices rise.

581

:

Yeah.

582

:

Let's say you're going to Home

Depot and you're going to buy a bag

583

:

of fertilizer and it costs like 8.

584

:

And you get to Home Depot and you're

like, well, you know, we have inflation

585

:

and, I don't know what this bag of

fertilizer is going to cost a year

586

:

from now and I might need some more.

587

:

So instead of buying one, I'm

going to buy 10 and I'm just

588

:

going to keep them in my basement.

589

:

And the act of me buying 10 and

everybody else buying 10 pushes

590

:

up the cost of fertilizer.

591

:

It accelerates economic activity, right?

592

:

So even though inflation has come

down from the highs, which were

593

:

about 9 percent and now we're at 3.

594

:

5%, we still have an

inflationary psychology, which

595

:

I'm sure you would agree with.

596

:

People are expecting

prices to go higher, right?

597

:

If you go back to the late 70s, early

80s when Paul Volcker was chairman,

598

:

the thing that he did that was so

special was he raised interest rates

599

:

so much and so fast that it broke

that inflationary psychology, right?

600

:

And we haven't done that yet.

601

:

And if you go back to the 70s,

and if you look, There were

602

:

really three waves of inflation.

603

:

In 1969, you had a bump of inflation

to about four or five percent.

604

:

Then in 1973, 74 went up to

about eight or nine percent.

605

:

And then in 1979, it went

up to like 14 percent.

606

:

So we are currently in, we just passed

the second wave of inflation, and I think

607

:

that we are going to get another one

that is bigger than the previous one.

608

:

So, because we did not break

that inflationary psychology.

609

:

And this is going to continue until we do.

610

:

Adam Butler: Right, and what would be

some signs that we were beginning to break

611

:

that inflationary society, um, psychology?

612

:

Do we need a major uptick in

unemployment or a major fall in prices,

613

:

say in equity prices or, , you know,

in aggregate prices in order to.

614

:

To believe that, that cycle may be over.

615

:

Jared Dillian: You need all those things,

but interestingly, interestingly, one

616

:

big component of inflation is regulation.

617

:

And regulation is known

as inflation by fiat.

618

:

So if you regulate an industry, you impose

costs on it, and the industry has to raise

619

:

prices in order to cover those costs.

620

:

So if you have a period of

time where you have increasing

621

:

regulation, Increased costs.

622

:

And what you, another thing that

you saw correspondingly in the

623

:

late seventies and early eighties

was a big wave of deregulation.

624

:

We saw that in the airlines, we

saw that in a lot of industries

625

:

and prices dropped a lot.

626

:

And it was actually

because of deregulation.

627

:

So that's a big part of it.

628

:

Adam Butler: Gotcha.

629

:

And we don't seem to be in a

cycle where the government is

630

:

hurrying to get out of the way.

631

:

They, they seem to be moving, steadfastly

in, in the opposite direction.

632

:

Jared Dillian: no.

633

:

And if, and if we did, if the government

did get out of the way and started a

634

:

wave of deregulation, you would want

to buy bonds until your head caves in.

635

:

So

636

:

Adam Butler: what are some of the other

themes that you're watching though?

637

:

Jared Dillian: Uh, well, gold for sure.

638

:

private equity is probably the biggest

one I'm focused on at the moment.

639

:

I am of the belief that we have a

private equity bubble, like, so I saw,

640

:

An article today that private equity

is going to be buying NFL teams.

641

:

they've already bought minor

league baseball teams, but they've

642

:

been buying dental practices and

pizza parlors and car washes.

643

:

And, you know, the funny thing about

finance, Is that somebody comes up with

644

:

a good idea and implements it and they

make money and then it turns into monkey

645

:

see monkey do and everybody is doing it.

646

:

We have 17, 000 private equity firms in

the United States and this all made sense

647

:

when You know, interest rates were zero

and you could buy a business for four or

648

:

five times multiples, but now interest

rates are 5 percent and you're buying

649

:

businesses at 10 or 12 times multiples.

650

:

Like, this is not going to end well.

651

:

And it's going to have systemic effects.

652

:

It's going to crash.

653

:

It's going to be a problem.

654

:

So

655

:

Adam Butler: when private equity

gets involved is that, and it's this,

656

:

it's this weird cycle where, you

know, so much of private equity is,

657

:

investors are, are pension funds and

sovereign wealth funds and endowments.

658

:

And so you've got these, pension

funds who are acting on behalf of.

659

:

Their stakeholders, you know, ex employees

of a company or, you know, but just your

660

:

average everyday citizens, and this is

their retirement savings and you give

661

:

them money to private equity and they go

out and they buy homes and they go out

662

:

and they buy gas stations and they buy

dental practices and they buy, um, health

663

:

insurance providers, et cetera, et cetera.

664

:

And then they proceed to make the margins

in all of those different businesses.

665

:

wider, the, you know, cut the

customer service out in order

666

:

to, to get those wider margins.

667

:

And, you know, these are all

relatively essential services to

668

:

the very people that Are funding

these private equity investments

669

:

via their pension contributions.

670

:

And it just goes round and around

and makes everybody's life worse.

671

:

Jared Dillian: Well, I can tell you

that Pension funds and endowments,

672

:

you know, places like CalPERS,

like, the, the goal in those

673

:

places is to avoid accountability.

674

:

the, those decisions are being made by

committees of lots of different people

675

:

and, uh, everybody, you know, the,

the goal is to, Prevent embarrassment.

676

:

So people do what is

popular or fashionable.

677

:

So, you know, CalPERS actually

just put another 34 billion into

678

:

private equity, on the highs.

679

:

So, yeah.

680

:

Adam Butler: Might be a good segue

into, um, we touched on it a little bit

681

:

earlier, but you know, Mike and I, and

well, we have just in general on this

682

:

podcast and at Resolve and of the view

that, that benchmarking in general is one

683

:

of the most insidiously evil, pursuits.

684

:

That, seem to be absolutely pervasive

in the investment management industry.

685

:

any, any thoughts on, on

benchmarking in general?

686

:

I mean, obviously, benchmarking is

driving the phenomenon that you were

687

:

describing in private equity, but

it kind of drives a lot of those.

688

:

You know, in the end, very

bad investments, right?

689

:

Jared Dillian: what do

you mean by benchmarking?

690

:

I don't understand.

691

:

Adam Butler: Just like having a

policy portfolio, making sure that

692

:

your policy portfolio is close to

the other policy portfolios or asset

693

:

allocation mixes of your peer group,

and then being held accountable not to

694

:

whether that asset allocation actually

makes sense or is aligned with the

695

:

objectives of your stakeholders, but

using that benchmark allocation or

696

:

the The underlying equity benchmarks

within the equity sleeve of the policy

697

:

portfolio, or the bond benchmark within

that bond sleeve as an end in itself.

698

:

Jared Dillian: Well, I, you know, I, I,

look, I think about things in terms of

699

:

absolute return and not relative return.

700

:

You know, like the mutual fund

world is very weird to me.

701

:

You know, if you have a small cap manager,

and they lose 15% in a year, and the index

702

:

is down 20%, then they're thrilled, right?

703

:

Like, they're happy.

704

:

And I'm like, guys, you've lost money.

705

:

Like, I, you know, like, I don't get it.

706

:

so I've always been, you know,

of the absolute return mindset.

707

:

I don't, I don't really

understand that at all.

708

:

So,

709

:

Adam Butler: Yeah.

710

:

I mean, the strange thing about that

example is that if the small cap

711

:

manager who, you know, 95 percent of

people who allocated to that small

712

:

cap manager wanted that manager to be

down just slightly less than the small

713

:

cap index, and if the manager had.

714

:

Too much tracking error to that index

and, did wildly differently, but

715

:

even in a good way in that year, many

allocators would be pulling money from

716

:

Jared Dillian: yeah, absolutely.

717

:

Yeah.

718

:

Adam Butler: Yeah.

719

:

That's the insidiously strange and evil

dimension, or one of them anyways, of

720

:

this obsession with, with benchmarking.

721

:

Really makes no sense.

722

:

Mike Philbrick: So what do

you, also let's, uh, expand.

723

:

We gold, obviously you're a big

proponent of gold, both as a long

724

:

term diversifier, as well as

potentially a short term opportunity.

725

:

I think you're on sort of record for that.

726

:

Anything you want to add there?

727

:

And I'd like to broaden

the gold discussion out to

728

:

commodities more generally.

729

:

If you're seeing things, um, in the energy

space that are particularly interesting

730

:

and how you're interpreting the impact

of oil and the oil shocks might have

731

:

on, your current global macro thesis.

732

:

Jared Dillian: gosh, I don't have a,

I don't have a global macro thesis.

733

:

I'm just, uh, I'm, I'm just a trader.

734

:

I just, I, I mean, I would just

say that commodities broadly have,

735

:

you probably seen that chart.

736

:

of commodities relative to financial

assets over like the last 15

737

:

years or something like that.

738

:

And financial assets were very

expensive and commodities were very

739

:

cheap and that chart was on the lows

and now it's starting to tick up again.

740

:

So if we really do have an

inflationary environment, which I

741

:

think we will over the next couple

years, commodities are going to

742

:

outperform and they're starting to.

743

:

gold and copper for sure.

744

:

Oil has come up a lot.

745

:

the one thing that really has,

we've seen cocoa and, uh, orange

746

:

juice obviously have exploded.

747

:

Some of the soft commodities,

coffee has gone up a lot.

748

:

Uh, the one thing that really hasn't

gone up, Is agriculture, which

749

:

is kind of a function of, climate

change, which has been beneficial

750

:

for agricultural production and also

crop yields and stuff like that.

751

:

So, but yeah, commodities have

come up a lot and I expect

752

:

them to come up even more.

753

:

Mike Philbrick: And then, yeah, so

that this idea of diversity as well,

754

:

I think, you know, there's been a few

folks out there talking about, for

755

:

example, the S& P 500, 500 stocks, but

you know, 4 percent is designated, 4.

756

:

5 percent designated to sort of

the energy sector and another 2

757

:

percent to the material sector.

758

:

And so if you're thinking that.

759

:

Your stock portfolio has

any hedge to energy prices.

760

:

It's really not true.

761

:

I mean, you have to go back to 2008

when, the exposure to the energy

762

:

sector was up in the 16 percent range.

763

:

At least then you had some exposure.

764

:

Today's exposure exposure is de minimis

and the cashflow is coming from the energy

765

:

sector, you know, sort of three times.

766

:

The size of the free cashflow coming

from Microsoft and Microsoft, you know,

767

:

three times the valuation in the index.

768

:

So it's, we are set in a particularly

strange way for, you know, a dis

769

:

inflationary environment, sort

of peaking in the S and P 500.

770

:

And if we get an inflationary environment.

771

:

You know, underneath the surface,

the index can churn a long time,

772

:

not go very far as the sectors

underlying sort of readjust to

773

:

where cash flows are coming from.

774

:

Jared Dillian: yeah, I mean,

uh, a lot of things there.

775

:

First of all, the good news is, is that

unlike the seventies, you can, it's now

776

:

super easy with the click of a button.

777

:

You can get exposure to the energy sector.

778

:

We have ETFs, right?

779

:

So, you know, you can, you

can build whatever portfolio

780

:

of sector ETFs you want.

781

:

you don't have to just accept

what's in the S& P 500.

782

:

So that's really easy to do.

783

:

Yeah.

784

:

Mike Philbrick: Yeah, so you

should, you should empower yourself.

785

:

And then the awesome portfolio, it

seems a little bit, it's somewhat

786

:

similar to the Talmud as well.

787

:

I don't know if you've, if you've

ever seen the Talmud portfolio from

788

:

several thousand years ago, I think

it was a A third businesses, a

789

:

third gold and a third, is it cash?

790

:

Something along those lines.

791

:

Jared Dillian: I don't know about this.

792

:

Mike Philbrick: You know, it's,

it's a, it's like a:

793

:

portfolio, like of a, of a similar

elk you've, you've, dissected a

794

:

little more at a little bit more, uh,

795

:

Adam Butler: certainly in the same family

as the permanent portfolio and, you know,

796

:

the idea of global risk parity, you know,

you know, this sort of the idea being that

797

:

we want to be diversified Against regimes

that are unfriendly to equities, right?

798

:

I think that's, that's the basic theme.

799

:

Jared Dillian: Yup.

800

:

Yup.

801

:

Adam Butler: that we can, that we

can see through history and that are

802

:

favorable for different asset classes.

803

:

And, and you should be positioned

to benefit from that and not be

804

:

completely at the whims of whether you

happen to be in a positive tailwind

805

:

environment for equities, right?

806

:

What about international equities?

807

:

Jared Dillian: Well, that's

a great question because US

808

:

stocks are super expensive and

foreign stocks are really cheap.

809

:

So gee whiz, like you should definitely

be overweighted to international stocks.

810

:

And so I actually got this question

recently about the awesome portfolio.

811

:

Like somebody who's like, why

don't you have any international

812

:

stocks in the awesome portfolio?

813

:

I mean, Think of the Awesome

Portfolio as an index, and you

814

:

can depart from that index.

815

:

I actually, I have almost

nothing in the way of U.

816

:

S.

817

:

stocks.

818

:

In fact, I am probably net short U.

819

:

S.

820

:

stocks.

821

:

In fact, I know I am.

822

:

I'm net short U.

823

:

S.

824

:

stocks.

825

:

I have Investments in India and Argentina

and EM broadly and Europe broadly.

826

:

but I I'm net short the U S which is

kind of by design, but kind of not.

827

:

but certainly.

828

:

You know on valuations like U.

829

:

S.

830

:

stocks are just so overvalued

relative to overseas.

831

:

And one of the reasons

that is, is because the U.

832

:

S.

833

:

is the only country with big tech stocks.

834

:

You know, and big tech

stocks have done the best.

835

:

Europe doesn't have big tech stocks, so.

836

:

Adam Butler: So let's

explore some of those.

837

:

I mean, I'm a big bet in India.

838

:

And, emerging markets.

839

:

What is behind those?

840

:

Any, any particular narrative

you're following there?

841

:

Jared Dillian: Well, India, India,

India is really, it's become sort of

842

:

consensus in the last couple of months.

843

:

it's a great chart.

844

:

It's been doing well.

845

:

Modi is still popular in India.

846

:

He's still an economic reformer.

847

:

the demographics are good, unlike China.

848

:

You know, the thing about the

emerging market CTFs is that they're

849

:

all heavily weighted towards China.

850

:

Like the EEM has like 35 percent

in China or something like that.

851

:

And China has the worst

demographics of any EEM country.

852

:

No, not to mention all kinds

of other bad stuff, you know?

853

:

So I think with EEM, you

can't really generalize.

854

:

Like you could generalize in 2002.

855

:

You could say, I'm just going

to buy all emerging markets.

856

:

Because they all have the

same characteristics, but

857

:

you can't do that today.

858

:

You have to pick and

choose in emerging markets.

859

:

So

860

:

Adam Butler: And Argentina,

you're bullish on.

861

:

Jared Dillian: yeah, I actually, uh,

I've been in Argentina for a while.

862

:

as soon as I heard of Javier

Millet, I bought Argentina.

863

:

I had him picked to be the next

president and, that bet worked

864

:

out and that's been a great trade.

865

:

So,

866

:

Adam Butler: Yeah, it seems to me

that that model that he is doing a

867

:

pretty darn good job of executing

on, is kind of a sandbox for what

868

:

the global economy is eventually

going to need to reconcile with.

869

:

and I, you know, when I was.

870

:

Reading about his policies, it seemed

to me that it was more likely that

871

:

they're going to go through a period

of extreme contraction and pain

872

:

before they come out the other side

with a clean balance sheet, a strong

873

:

currency, a healthy private sector,

a healthy, contained public sector.

874

:

It seems like the market is sort

of That valley and into the healthy

875

:

state that it, you know, might emerge

into and sort of two to three years.

876

:

Did you have that intuition at all?

877

:

Or did you think this was going

to be, roses right from the start?

878

:

Jared Dillian: well, I mean, there,

if you talk to anyone in Argentina,

879

:

things are very painful right now.

880

:

you know, they've cut a massive

amount of government employees, which

881

:

has affected retail in particular,

like people just don't have money.

882

:

so I mean, you know, look, Malay

managed to balance the budget within

883

:

a couple of months of taking office.

884

:

I mean, it's just an

incredible achievement.

885

:

I am, it's funny because, I have a

subscriber in Miami who emailed me

886

:

last week and he says, look, I have

a friend who's, who knows Malay.

887

:

Do you want me to ask him any questions?

888

:

And I said, no, not really.

889

:

You know, just does he think he can do it?

890

:

And he said, yes, he thinks he can do

it, but he is up against the unions.

891

:

He's up against, the Congress

like it's, but I, you know, he's

892

:

been very successful so far.

893

:

So

894

:

Adam Butler: Yeah, it seems to me

that, you know, as this progresses,

895

:

right, that, you know, the government's

spending is the private sector's

896

:

income and the government's.

897

:

Debt is the private sector savings.

898

:

And so in order to sort of clean this up

and balance the budget, there's a lot less

899

:

income to go around in the short term.

900

:

again, huge long term

benefits that the West.

901

:

Has managed to, avoid at all

costs for the last 20, 25 years.

902

:

and I see this as coming out the other

side, if it can be fulfilled and if

903

:

people can endure the short term, you

know, two or three years of, of pain,

904

:

as being very positive, but it'll,

it remains to be seen whether or not

905

:

Jared Dillian: let me give you one,

let me give you one quick statistic,

906

:

So in the United States, in the

United States, the stock market.

907

:

Market cap is 170 percent of GDP.

908

:

In Argentina, it's 9 percent of GDP.

909

:

Right.

910

:

which is the lowest in the world.

911

:

So if you think that if Malay is

successful, and by the way, the

912

:

mean is about 100 percent of GDP.

913

:

If, if Malay is even moderately

successful and gets the stock market to

914

:

50 percent of GDP, that's a five bagger,

915

:

Adam Butler: Yeah, no, that's a

really, really interesting statistic.

916

:

That's very interesting.

917

:

any other themes besides, India and

Argentina that stand out in your

918

:

portfolio, even if they're just tactical?

919

:

Jared Dillian: No, not really.

920

:

I would say that's about it.

921

:

Mike Philbrick: And anything, anything

on the negative side that you're, I mean,

922

:

obviously private equity, you mentioned,

you don't have a lot of us exposure, so.

923

:

You would be sort of eschewing

the, the semiconductors of shooing

924

:

the market cap side of things.

925

:

Is that sort of the, the feel and more.

926

:

Getting that commodities and, and

economies that are, demographically

927

:

have positive, waves behind them along

928

:

Jared Dillian: Yeah, pretty simple.

929

:

Pretty simple.

930

:

Mike Philbrick: I mean, it's not

that simple and it's, and it's not

931

:

that, sort of well adopted yet.

932

:

I mean, something that, gets me excited

about a trade setup, if you will,

933

:

is you have, you know, gold as an

le, it's kind of like tobacco:

934

:

You've got, the ETF products

across the board in pretty

935

:

substantial reductions in AUM.

936

:

And at the same time, you

have breakouts to new highs.

937

:

Of this, uh, shiny metal.

938

:

And so you really don't have,

you know, the, average investor.

939

:

And I mean, the average investor,

both retail and institutional,

940

:

because institutional investors

do not buy physical gold, they're

941

:

going to buy gold largely through.

942

:

A proxy, like an exchange traded

fund or product of some kind.

943

:

So somebody's buying it, obviously,

you know, we're seeing that through

944

:

some central banks in the world.

945

:

And then we had some news over the

weekend and the, um, the appropriated

946

:

funds of the Russians being, potentially

sent over to the Ukrainians, which is

947

:

an interesting set of circumstances,

which is going to make everyone question

948

:

the sovereignty of their assets and

where they're held and what they're held

949

:

Jared Dillian: Oh, yeah that and and

that's you know, look like as Gold is

950

:

actually having a bad day today as you

know I'm not terribly worried about it

951

:

I think that you know central banks are

gonna continue to buy it, but that's not

952

:

even my core thesis You know, my core

thesis is really about the monetization.

953

:

So

954

:

Mike Philbrick: So, so that, that's

more of a pegging of the yield

955

:

curve, 30s, 40s type situation.

956

:

You want to just walk us through that for

the last, for, we'll wrap on that point.

957

:

Does that

958

:

Jared Dillian: Yeah, so this

happened in the 30s United States

959

:

pegged the yield curve for the Fed.

960

:

long bond yields were held at 2 percent

for the period, for a period of want to

961

:

say like 13 years or something like that.

962

:

and at the end of it, at the end of

world war II, inflation ripped to like

963

:

18 percent or something like that.

964

:

We had a big wave of inflation.

965

:

so this is going to be

potentially much bigger.

966

:

This, this is, uh, You know, what we're

talking about is the stuff that gold

967

:

bugs talk about, like, Weimar Germany

or, Zimbabwe or something like that.

968

:

but you know, we really could see a big

developed economy like the US, engage

969

:

in full on debt monetization in order

to keep interest rates at a manageable

970

:

level, like that actually could happen.

971

:

Like you can see the future,

you know, it's coming.

972

:

So,

973

:

Mike Philbrick: Right.

974

:

And with, you know, 1.

975

:

1 trillion in, in the cost of the

debt alone, it's going to be some

976

:

interesting math to go through

as we progress into the future.

977

:

All right.

978

:

Awesome.

979

:

Well, Jared, thank you for taking the

time and, and, covering the book for us.

980

:

And, as I said, you're the editor

of the Daily Dirt Nap and you

981

:

mentioned you're on Twitter.

982

:

Where else can people find you

that's beyond the, just the

983

:

websites for the various, properties

we've mentioned previously.

984

:

Jared Dillian: Twitter

I'm on at daily dirt nap.

985

:

And the best place to find

me is Jared Dillian money.

986

:

com.

987

:

Mike Philbrick: Perfect.

988

:

Adam Butler: Brilliant, Darren,

thanks so much for coming on, man.

989

:

Jared Dillian: Great, great talk.

990

:

Enjoy talking to you guys.

991

:

Adam Butler: Yeah, us too.

992

:

Have a great one.

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About the Podcast

Resolve Riffs Investment Podcast
Welcome to ReSolve Riffs Investment Podcast, hosted by the team at ReSolve Global*, where evidence inspires confidence.
These podcasts will dig deep to uncover investment truths and life hacks you won’t find in the mainstream media, covering topics that appeal to left-brained robots, right-brained poets and everyone in between. In this show we interview deep thinkers in the world of quantitative finance such as Larry Swedroe, Meb Faber and many more, all with the goal of helping you reach excellence. Welcome to the journey.


*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.