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The global financial system is under strain, with currencies around the world failing or on the brink, warns Lyn Alden, founder of Lyn Alden Investment Strategy. In this interview with Daniela Cambone, Alden explains why there is significant upside for gold in the next five to ten years—and why waiting for small dips could cost you big. Alden discusses how the U.S. and Europe are sliding toward Japan-style stagnation but without the benefits of a current account surplus or social cohesion. As public debt and fiscal deficits surge, Alden predicts a more inflationary future and shares insights on how to navigate these challenging times.

CHAPTERS:

00:00 Fed/Small Rate Cuts
4:21 Gold Price
6:39 U.S. Dollar
9:35 Gold Analysis
11:12 Silver Market
12:24 Wall Street’s Interest in Gold
13:57 Carry Trade Impact
18:14 AI Bubble Burst
19:56 Financial System Breakdown
23:34 How to Better Prepare
25:00 CBDCs (Central Bank Digital Currencies)
26:30 U.S. Economy Outlook
28:41 Banking Sector Overview
31:22 U.S. Deficit Concerns
33:10 Lessons from Argentina

TRANSCRIPT FROM VIDEO:
00:00
Gold prices are on fire. Gold keeps making record highs and has burst through the $2,500 level. So for those of you who were on the sidelines to buy gold and were waiting for that pullback, I’m here to tell you, you might not get it because most analysts and banks have reissued new forecasts for gold with much higher highs. So if you are

00:26
Like I said, still thinking about adding gold as part of your wealth preservation strategy, I strongly urge you to book an appointment with us here at ITM Trading. You could easily do so. There’s a link below in the video description where one of my colleagues at ITM will reach out and walk you through a great strategy built around your needs, your wants, and understanding what fits into your lifestyle. It’s free. It’s informative.

00:55
And like I always say, I think you might even have fun during it. So don’t waste any more time. Gold keeps going higher. Book your calendar today.

01:11
Hi, this is Daniela Cambone and welcome back to the Daniela Cambone show here on ITM Trading. All eyes are on Jackson Hole this week and investors are eagerly awaiting, uh, how will signal as to what he’s going to be doing with rate cuts for the rest of the year. Here to talk about this and so much more is one of the most recognizable faces out there in the financial world. Lynn Alden is back on the show. Lyn, so good to be with you.

01:40
Happy to be back. It’s been a while, I think. Yeah, it has been too long. And I always say, I really appreciate your perspective because your background for folks new to you is not just in finance, it’s also in engineering. So you really take this systems engineering approach to macro, which I find fascinating, especially in this landscape where we’ve seen so many mechanical breakdowns. So obviously I wanna talk about the systems kind of breaking down on us here and what it means.

02:10
But let’s first start with the hottest news of the week here, which is, apart from the DNC going on, Jackson Hole, and a lot of anticipation for what the Fed will do with rate cuts. But you say we’re really just living in a world of rate insensitivity right now. So does it even matter what the Fed does here? What’s your take, Lynn?

02:35
So overall, I think it matters, but I think it matters less than current market participants generally pay to it. I’ve been arguing that the fiscal situation is generally a much larger impact on markets than the Fed at the moment. So for example, if the Fed were to come out and just cut rates to zero, then of course, that would be very impactful for markets. But around the margins, when they go forward with their likely plan of 25 basis points cut here, 25 basis point cuts here.

03:02
I’ve generally argued that the economy in the US is relatively rate insensitive to those types of small cuts in a similar way that it was rate insensitive on the upswing in rates more than most people expected. And that’s because this will likely be the first time we have a higher low in interest rates. So we had 40 years of lower lows and lower highs in terms of interest rates, both short term and long term rates, including things like mortgages.

03:29
This is the first cycle we’ve had a higher high in interest rates. When they do go ahead and cover rates, it’s unlikely we’re going to get back to zero just because there’s more structural inflationary components of the system. I think that we’re going to get less of every financing wave that we’ve gotten in prior rate cutting cycles. There’s a lot of companies and a lot of individuals that have locked in long fixed rate debt.

03:56
at much lower rates than current rates, and then importantly, much lower rates than even they’re likely to cut to any time in the next six months or more. And so I think that the cutting cycle will be relatively uneventful, at least in the early stages of it, because only around the margins does it actually impact borrowers in the economy. So, you know, not to bring up gold off the bat here, Lynn, but it’s making all-time highs, you know, as of this morning.

04:25
Jim Rickards had an interesting tweet saying, this tells us very little about gold, but so much about the dollar that the Euro dollar and the dollar yen are just passengers on a sinking ship. And quote, gold is the ocean, the real measure of things. Um, so many anticipating, and maybe this is a reflection of the price right here. Is this anticipation of rate cuts, which traditionally has

04:55
the gold price is telling us? I think it’s telling us a handful of things. There’s the geopolitical element, which is that more central banks are deciding to increase their gold allocation relative to treasury allocation. Some of this is because they now recognize treasuries as a confiscatable asset potentially. So there’s a component there. And then the other main components are, the other structural one would be the idea that most developed markets have so much public debt.

05:23
And it’s relatively unpayable in any sort of real purchasing power terms. And so holding the sovereign debt of other countries is not a particularly attractive long-term proposition anymore. And so gold becomes more structurally interesting in that sense, both for individuals and central banks. And then in the near term, the fact that the rate cuts are likely behind us.

05:47
We look forward, basically the market’s forward looking to at least some mild or moderate path of rate cuts. And all of us being equal, real rates are very impactful for gold. If anything, gold has held up really well considering how high real rates have been over the past two years. And I would argue that’s because of the ongoing fiscal dominance, the ongoing central bank accumulation, and that the big headwind against it along all those tailwinds was that high real rate component.

06:17
that final headwind against gold, um, that allows it to rip. And of course markets are forward looking. They’re at, they’re kind of positioning ahead of, of Ray cuts, you know, for, for years, we kind of saw gold breakout in most currencies other than the dollar. And now we’re just kind of finally seeing it also break out in the dollar, which I think is structurally important. Well, what does it tell us about the dollar? Because, you know, getting back to the fact that you really look at the structure of the dollar system.

06:44
that most currencies, they trade relative interest rate, differentials and current account balances. So if a country is weakened, those areas, um, the currency will traditionally weaken until an equilibrium is found. But I know that you say the U S dollar doesn’t fall into that carrot category because of its reserved, um, currency status, et cetera. But is the dollar at risk of weakening here? Lynn? I do think so. I think it’s, it’s, you know, the fact that it’s already weakened against gold is telling.

07:14
I do think that there’s probably a lot to learn from the 2002 to 2007 cycle in markets, which is when the US went through a mild recession, they cut interest rates. Going into that period, the dollar index was very strong relative to other currencies and they ended up cutting interest rates. That gave breathing room to a lot of other currencies and emerging markets that have a lot of dollar-dominated debt. That really helped set the stage for a pretty big.

07:43
a gold bull run that occurred all throughout the 2000s decade. And then even extending, you know, emerging markets kind of started peeking out, you know, 2007 or so gold, of course, had a bigger run for a number of more years. And so I do think it’s telling us that while the dollar has been strong relative to other currencies, it’s still weakening relative to, you know, other scarce assets. And the dollar index itself could be taking a bit of a breather here after such a strong period.

08:13
If you look around the world, gold is still the biggest monetary base. Some countries like the United States are trying to have bigger broad money supplies than the estimated amount of gold that exists. But in terms of the actual monetary base, gold is the biggest one still. As a reserve asset, central banks can hold it without worrying about confiscation. When you look at the long-term supply characteristics of gold versus fiat currencies, most developed market fiat currencies

08:42
grow and supply by 6% to 9% per year on average. Obviously, during the pandemic stimulus, it was higher. Currently, it’s lower because central banks have been trying to slow that down for a period of time to control inflation. But the long-term structural average is 6% to 9% per year, whereas long-term gold growth average is something like 1.5% per year based on most estimates.

09:07
There’s a lot of stock already accumulated and it’s, you know, mining it is a very energy intensive process. And even when the price goes up, we generally don’t see very fast response functions for how much more gold comes out of the ground because the permitting and the mining is very long-term process. And so basically they’re just recognizing it as overall a better currency than, you know, all the fiat currencies that exist. Yeah. Really well said, Lynn. So, you know,

09:37
before you said, you know, we could see gold ripping. I mean, what do you tell investors? Cause I speak to so many folks who are kind of concerned about getting in at these levels, thinking, Oh, it’s too high. I’m waiting for that pullback. I mean, you know, is that pullback going to come? So I think we’ve, we’ve already, you know, gold has chopped around in a range for quite a while. That was a really long accumulation period where it broke out in 2019 and 2020. And, but then it, you know, once, once, uh,

10:06
things started to slow down, gold went through a consolidation for a considerable amount of time. I think that was the accumulation zone. I don’t try to predict near-term markets too much. It’s quite possible that gold could have a correction here, but I think that it already went through that period of having a long period of not really fireworks happening.

10:33
probably has a lot of likes to it. I wouldn’t really expect as a base case for it to go back down to 2000 or 2100 or so. Could it correct $100 or $200? Sure. But I think that when you look forward over the next five or 10 years, I think the upside of gold is significant. And I think there’s a risk of waiting for minor pullbacks and then not establishing the position that you might otherwise have wanted to do. So I think that someone can layer into a position here so that if they

11:02
If we don’t get a pullback, at least they’ve started their position. And if we do get a pullback, then the next layer of capital they put in, they could accumulate on the next correction. Any thoughts on the silver front, Lynn? So generally speaking, it should follow gold with higher volatility. I think that if a bull market really gets exciting, right now it’s still kind of a quiet bull market. You don’t really see major financial news.

11:32
clamoring over gold in a similar way that you saw. Yeah, not at all. So back for people that were around in 2010, 2011, 2012, that was a very kind of gold was hitting like mainstream media on a regular basis. It was kind of a mania. And this is still kind of an early stage breakout of a long consolidation. And so I’m not surprised that we don’t really see other metals rallying.

11:58
to a significant degree. I think a lot of this is central bank purchases and a lot of this is Asian private sector purchases. We don’t really see the mania in North America yet. And so if we do get that kind of mania phase, I could see silver having a really strong run. But overall, I think gold’s an attractive risk reward because that’s what central banks are buying. They’re not really buying silver. Silver is more of a retail metal. I’m so happy you brought that up. And I think you just alluded to it a bit there.

12:28
But just to dive a little deeper, because we were, you know, all of us who have covered gold for so long, kind of scratching our heads as how there was no mainstream mention during that rally last week and up until today. Why do you think Wall Street’s not paying attention to gold yet? What do they want to see? So I think that, I mean, the stock market, despite the corrections recently, has done, you know, very well this year, right? So if gold was going up and other things were not, then maybe gold would get more attention.

12:57
But the fact that gold is one of many things that have done well this year, it is kind of lost in the noise, I think. The breakout’s basically not big enough or interesting enough to them yet. I think it’s kind of the early stage where, and that’s good. That means that the bull market probably has likes to it. If the mainstream media was already all over it and people were already kind of focusing on it, that might indicate that it’s later in the bull market. Whereas the fact that it’s not really getting attention yet.

13:24
I think indicates that it’s still early. It’s just not a particularly noteworthy number yet. I mean, the 2,500 level is psychologically interesting. The fact that it’s got a brand new number in front of it is attractive, but it’s not a particularly remarkable number compared to the length of time it spent chopping around 2000. And so I think it would have to get probably much higher before it would.

13:53
really catch the attention of a lot of mainstream investors and institutions. One thing that has been a buzzword right now, as you know, Lyn, is this yen carry trade that we started to see unwind. Some would argue this is the brutal force crushing global markets and we’re going to see more of an unwinding of it. But I want to really break it down for the audience watching as to why it’s relevant.

14:17
why it’s important. And in a nutshell, carry trades referred operations where an investor borrows in a currency with low interest rates, such as the Japanese yen, and reinvest the proceeds and hire yielding assets elsewhere. But like I said, everyone’s talking about this yen carry trade. So if you have to break it down, what do we need to know? Why is it relevant? And could it really come back and just crush everything?

14:46
So I think there’s probably two components of it to be aware of. There’s like the official yen carry trade and then it’s kind of the unofficial one. The unofficial one is the fact that Japan has run decades of trade surpluses and current account surpluses. And so they have a lot of assets to invest globally and they have invested them globally. So Japan owns a tremendous amount of foreign assets around the world, more so than the rest of the world owns Japanese assets. It’s basically they’re…

15:11
public sector and private sector accumulated savings and investments. And that’s the unofficial one because that’s not really levered. That’s just them deploying their capital globally. And then there’s the more official yen carry trade, which is where either Japanese or foreign investors, like you said, borrow the low-yielding yen and they use it to buy something else. It could be higher-yielding Mexican pesos.

15:34
It could be US Treasuries. It could be the S&P 500. They’re buying something that basically pays for itself with that yen denominated leverage. And so they benefit when the yen keeps depreciating because it’s got negative real yields. It’s got basically the lowest interest rates in the world. And so it’s a fairly unattractive currency to hold. And you’d expect it to generally keep weakening. That the risk comes, and we saw this two weeks ago, is when the yen does have a period of strengthening.

16:02
either because Japanese investors repatriate, bring home some of their assets, or policymakers try to mildly increase industry rates or they outright intervene. They can sell public sector assets like treasuries or cash balances, and they can buy back yen to purposely strengthen it, and it really slow down, can I give it a jolt in the strengthening direction? That can break up a lot of over-leveraged positions.

16:29
People saying that the yen carry trade is unwound, there’s no indication that a trillion dollars worth of leverage has been unwound. I think that basically just the riskiest players had to de-leverage their positions around the margins. There had to be more risk management. But I still think this is an aspect hanging over global markets. I think whether it’s Japan or elsewhere.

16:54
there’s a tremendous amount of global capital stuffed into the US markets, and especially into US equities. That creates a flywheel because then that strengthens the dollar, and then that hurts emerging markets because they have dollar-dominated debt. This has been a flywheel that’s been going on for years. If this should start to peter out and reverse directions, if some capital goes home to Japan, it could weaken the dollar to a moderate degree.

17:21
And then that could give emerging markets with their dollar time and debt more breathing room. And then that could attract more foreign capital, which can then further weaken the dollar. So you could get a kind of a multi-year cycle of reversal. Basically, some of the things that they did well over the past five or 10 years could go through a five or 10-year period of underperforming while all of those underperforming assets generally do well. And normally, gold and emerging markets tend to be somewhat correlated in the sense that

17:51
a weaker dollar in general. So commodities, gold, emerging markets, value in general, energy, those are the areas that if we do get a more sustained reversalness, and I’m not sure we’re there yet, but if we do get a more sustained reversal, those are the types of assets that investors might want to make sure that they have at least as a segment in their portfolio. Is the AI bubble going to burst? So I think we could, you know, in the dot com bubble, the funny thing about it is that those people were right, but early.

18:20
So they were right about how much the internet would transform the way we live and work. But they, for most of the companies, they drove up the valuations way too early. And before there’s really money making there. So that bubble had to get washed out and then the real players emerged over the next two decades. You know, we could see a similar thing on compressed timelines with AI. Right now we’re seeing that there’s not that many profitable uses of AI. The entities buying the GPUs.

18:50
are not really then making a return on their investment in any sort of meaningful way. So the main winners here so far have been the GPU stocks. And I think we could get to a point where that slows down because basically the functionality of it has to catch up with the hype. So I think it’s to say when we look out longer term, I do think it’s gonna transform the way we live and work, just like the internet did. It’s a major productivity enhancer. If you look at how far things have…

19:18
come in the past three years. I think it’s a good chance we look out the next three years. It’s going to be a lot better along than it is now. But now it’s already so crowded. There’s already so much money kind of extrapolated in the next five or 10 years of GPU growth and profitable uses for it. So we could go through a period where companies slow down purchases because they’re not really getting the returns they expected on a pace they expected, which could then go back and slow down NVIDIA for a period of time.

19:47
So I don’t think it’s like a major bubble that like, you know, there’s no value here. I just think that it got pulled forward by quite a bit. I urge everyone to read your book, Lynn, Broken Money, Why Our Financial System Is Failing Us. Just to give a synopsis of your thesis, you know, what inspired you to write the book. I mean, where do you see us in this process of the financial system breakdown? Where are we at?

20:15
So I think we’re in the later stages, but it’s a very long process. And, you know, it’s kind of a constant breakage. I mean, you know, around the world, there are currencies failing or, you know, effectively failing all the time. You know, I was in Egypt this summer. That’s where I live part of the year each year. And they were dealing with 40 percent inflation while I was there. And they have structural, you know, 20 plus percent money supply growth year after year after year.

20:43
And occasionally when they break their kind of pseudo currency peg, a lot of inflation kind of comes out at once. And that’s not even the worst example. I mean, that’s a currency that’s not hyperinflated in the past 50 years. It’s just had this kind of constant higher grade inflation. There’s a number of currencies that fail around the world. And then we’re starting to see that in developed markets, their public debt has accumulated to a significant degree, especially in the United States. So for years, for decades.

21:12
debt accumulated on both the public sector and the private sector. Starting with the global financial crisis, some of that debt started to rotate from the private sector to the public sector, at least when it comes to a percentage of GDP. And so now the problem is that there’s no longer an offset. So for decades, you had rising public debt to GDP, but falling interest rates, and therefore interest expense was manageable.

21:37
I think we’re entering the phase where interest expense starts to become more of a structural issue because we’re no longer structurally declining in interest rates. And that basically means that all developed countries or most developed countries basically start to encounter the situation that Japan’s already been in for the last decade with the main difference that they don’t have some of the strengths that Japan has. They don’t have, in many cases, they don’t have Japan’s current account surplus. They don’t have the kind of the…

22:03
the harmony of population that they have. Europe and North America are generally more polarized politically and socially than Japan. The US has structural trade deficits and current account deficits. And so when these countries encounter the same situation that Japan’s had, we probably should expect to be more inflationary for them than it has been for Japan. And even Japan’s future is probably more inflationary.

22:29
than we’ve come to expect over the past 10 years or so, because even in their case, we don’t really see the private sector deleveraging anymore. So during the whole 2010s, while you did have large monetized fiscal deficits and you had a growing public debt balance, you did see deleveraging among the private sector, especially the corporations. And when you deleverage, when you retire bank loans, that actually destroys broad money.

22:55
And so Japan had some of the slowest money supply growth over the past 20 years. But they kind of de-leverage their private sector as much as they’re going to. And so going forward, they still have all those monetized fiscal deficits, but they’re not going to have private sector de-leveraging anymore. And they’ve come to realize that they have to increase their industry rates at least a little bit in order to create a positive industry rate. And so I think that both for Japan’s case and the world.

23:24
as we all going to go through Japanification together, it’s probably going to be more inflationary than we’ve come to expect. So that said, what is an investor to do? What can we do to protect ourselves if we’re up against the landscape you just laid out for us? So the traditional portfolio, the 60-40 portfolio, the issue with that is that it’s geared primarily towards disinflationary growth.

23:50
So equities do really well when the economy is growing in a disinflationary matter, and bonds do pretty well when you have kind of a slower economy and again, disinflation. Historically, there are certain decades where both stocks and bonds do fairly bad. So the 1910s, the 1940s, the 1970s, the 2000s, those are environments that were generally more inflationary. And so owning, you know, harder assets, owning.

24:16
It could be commodity producers and energy producers. It could be hard monies, gold or Bitcoin or assets like that. And so I basically think that having that third slice in a portfolio is really important. It’s not a crowded space like we mentioned before. The media is not really talking about it. Energy stocks had a good period in 2022, but then investors kind of moved on elsewhere. And so I think that basically having that three pillar portfolio of the somewhat more

24:45
that harder asset or that those types of assets that benefit from decades of debasement or higher inflation or stagflation. I think that’s how probably investors should consider positioning themselves. I know there’s less talk now of central bank digital currencies, but should there be a complete system failure? I mean, what are the chances in your opinion of us seeing a central bank digital currency? Maybe it doesn’t even take a failure.

25:14
I mean, it’s already active in a number of countries, right? So there’s already countries where a central bank digital currency is deployed. Generally speaking, they’ve had slow adoption. People don’t particularly have an appetite for them. They’re not really solving a problem for people. When we think of what makes a good money, from one perspective, you look at the issuer. What does the issuer want? They want more control, they want more surveillance. What does the user want? They want the money to hold their value or appreciate. They’d like it to be easy to use in private. And that…

25:42
So for CDBCs, those really conflict. The issuer likes it, but not particularly the user. And so in countries that has been deployed, it’s generally been slow to adopt. It generally requires enticements to get people to use it even temporarily. In the United States in particular, because our system’s kind of, at least a little bit decentralized, there’s more kind of checks on power. The chance of getting one in the next few years, I think is fairly low.

26:10
I do think that a number of countries, or at least a number of politicians in a lot of countries are going to keep trying to push forward the idea of a central bank digital currency. But I think that there’s now enough public pushback against it, that there are frictions against doing so. And I think that’s a good thing. You do think it’s a good thing, obviously. Final thought here, Lynn, just to bring it home for us. I want to just get your general overview of how you see the economy. I ask this because…

26:38
we see the conflicting ideas coming from banks, right? We have Goldman Sachs telling us, one thing about recession, JP Morgan, lowering their chances of recession. Goldman saying we have a higher chance of a recession. What do you do with all this noise? Who do we listen to and where are we at generally as an economy? So I think that the world’s in different parts. China’s obviously been slowing for quite a while.

27:06
The rest of the world is not particularly doing very well, partially because the dollar has been strong and weighing it down. The United States has been ahead of the pack, but that’s largely because we’re running some of the biggest fiscal deficits as percentage of GDP, which has a stimulating effect, at least on certain parts of the economy.

27:26
But I do think that we’re finally seeing softening of the data. It’s not necessarily recession yet, although some of this data can get revised down later after the fact. We could find out that we’re in a recession. But generally speaking, we have a softening of unemployment rate is gradually rising from a low level. Payrolls have been soft for a while, and there’s potentially inconsistencies in their data. And so I do think the US is entering a softer period.

27:52
One of the things I’ve been highlighting is that recessions look different when you have fiscal dominance. A similar way to think of it is that recessions in emerging markets look different than developed markets. They tend to be a little bit less explosively disinflationary, like we’ve come to expect in developed market recessions. Instead, they tend to be more of a malaise, they tend to be more stagflationary. I think that if we do get recessions like that in a developed world,

28:21
given the sheer size, the fiscal deficits, that’s probably what we should come to expect. And so I think that the structural component is still there going forward for inflation, for currency debasement, and that this is just an environment where you probably want to be diversified. You probably want to have some risk off assets. What is the health of the US banking sector? So there’s different parts of it. Rate cuts should be moderately beneficial to them.

28:51
I’ve been in the camp that the health is not as bad as many people have feared, despite the fact that there were bank failures. And that’s because if you go look how banks look going into the great financial crisis, they had cash and treasuries as a record small percent of their total assets. Instead, they were very much into lending to subprime borrowers and things like that.

29:21
and those nominally risk-free assets were very low. In this environment, banks have some of the highest allocations to cash and treasuries as a percentage of their assets compared to things that can nominally default. Now that obviously didn’t protect some of the more leveraged ones that brought a lot of the long end of the curve a year and a half ago. But as long as banks avoid that mistake, I think that the…

29:49
probability of major bank failures is not as high as others expect. But they’re basically becoming a vehicle for assisting US deficits, basically that they’re kind of a structural financier of treasuries. They’re probably going to face a higher period of credit losses in the next 12 months. But unlike the subprime mortgage crisis, a lot of the borrowers they have are higher credit rating.

30:19
now. They’ve been relatively reticent to lend toward less credit-worthy borrowers. And so while we should probably expect some pockets of trouble in banks, especially certain regional banks that might be more exposed to commercial real estate, I don’t really expect the type of disinflationary kind of bang that we’ve come to expect from banks like the 2008 period. And instead, I think that they’re kind of part of this stagflationary mix that we’re still kind of in.

30:47
I mean, the fact that we have unemployment rising while the inflation rate is still roughly 3% officially measured, and we’re running 6% or 7% of GDP fiscal deficits as far as the eye can see, this is an environment that is somewhat nominally supportive for consumers or banks, even though on the real basis, they can struggle. I mean, it just begs the question is, how much more can the financial deficit run here,

31:16
I mean, I think it can run for a very long time. I don’t think anything stops this trade anytime soon, but the consequences materialize along with it. So right now, if you’re on the receiving side of the deficits, you’re probably doing pretty well, whereas if you’re not really on the receiving side of the deficits, those deficits are boosting asset prices, including house prices and boosting inflation, and therefore making it harder to afford a starter home, for example. And I think we…

31:47
next phase to potentially look for. So right now, they’re running these fiscal deficits, but the central banks are tightening their balance sheets for the most part. And so they have that kind of air of independence to them. But when we look forward to maybe a year from now and later 2025, we could get to a period where the Fed is going back to increasing their balance sheet partially to assist, they won’t say it out loud, but partially to assist these large US deficits.

32:15
even if inflation is above their official target. And I think that that’s where we enter potentially a new period of this kind of structural background, monetized fiscal deficits. And that’s something that people have come to expect with emerging markets. It’s like saying, how long can Argentina persist in a state of inflation? How long can any given emerging market? The answer is generally quite a while. They can kind of go through this period where no one really knows how to fix it. It just keeps happening.

32:42
and developed markets have a lot of levers to keep pulling. And it’s just that, so I don’t really expect any sort of major system change soon, but just that the consequences will keep materializing as long as these deficits keep happening. Lyn, just yeah, you just made me think of something and I promised last question here. Are you impressed by what Mule has done in Argentina? And is there anything we should be learning from that playbook? I think it’s like early days still, but I think it’s going in the right direction. And I do think that the

33:11
One of the things you kind of learn is that until things kind of hit rock bottom, it’s hard to do a structural pivot. Whereas once they do hit rock bottom, that’s kind of an opportunity to do a structural pivot. Basically, it got so messy there after such a long period of time, I mean, decades of economic malaise and inflation and defaults and things like that. Eventually there was just enough repetition that people got tired of it. And I do think that eventually that’s probably in the cards for developed economies.

33:40
But I do think it’s a long way out because there’s still so many levers that can be pulled. And I think that’s a warning for how long problems in the money system can persist and how people will adapt to it and life will go on. The point I’ve made about Egypt is that when you’re there and inflation is 40%, it’s not like a Mad Max scenario. People are still going on vacation. They’re still going to work. They’re still taking their kids to childcare. They’re still…

34:09
know, a semblance of normal life. You know, when I went there and inflation was 10% and I go there and inflation is 40%, it’s not that different for, you know, on average, it’s just more pressured. There’s more people that are struggling to, you know, afford their food and their rents and fewer people can afford a car because that’s where the imports or where the prices show up. And Argentina has been somewhat similar, which is that more people are entering the poverty rate

34:39
there’s been these kind of structural issues, life still goes on, it just gets harder. And I do think that in developed markets, we could go through a similar phenomenon where, if people here five years from now, if we’re still running large structural fiscal deficits that are monetized, what does that look like? I would say probably looks similar to what it looks like now, just somewhat messier. And people start to adapt to the problems in the money system. And I just think this is a long structural

35:08
road ahead. And investors that prepare for it can can at least do damage control, or some cases could benefit from it. Really well said. Yeah, life just just gets harder. Perfectly summed up Lynn, you kind of painted the I was gonna ask you what life is like in Egypt. I mean, where where do you live in Egypt for half the year? So most most of it’s in East Cairo. That’s where my family and friends are, you know, living.

35:37
But we also then we go on trips within Egypt to the coast. So we see the Red Sea, we see the North Coast. And so there’s plenty of great places to see. But it certainly gives a, you know, when you spend part of the year in, you know, a developing country and not a tourist area of a developing country, but actually living there, it gives you a different perspective. And it kind of helps you see things that you might miss if you’re just always in North America or always in Europe.

36:06
or always in East Asia. I think it’s a useful experience to have. Lyn, you definitely bring a different perspective to the table. You just reminded me how much I miss speaking with you. Your insights are just absolutely awesome. Come back, please come back soon. I appreciate that, happy to. And get Lynn’s book, Broken Money. It’s incredible read.

36:34
Thank you, Lyn Alden. Thank you all for watching. We’ll have more great content coming your way. So be sure to stay tuned to the Daniela Cambone show and sign up at dignellacombone.com so you don’t miss a beat and don’t miss any of these exclusive interviews. Thanks for watching.