Financial Repression in the Age of Superintelligence

Craig Tindale (0:00)

But this is the era where we can't predict the future. And we've got so many talking heads on TV, who are AI gurus, telling you that it's the end of your human race. And on the other side of it, you've got people like Elon saying, everyone's going to be rich, plus their dreams. I don't think anybody actually understands what happens next. And I think that you should be comfortable with that, because that's the rational response.

Spencer Nichols (0:30)

Hello, and welcome back to the Bitcoin Magazine Podcast. I'm your host Spencer Nichols, and today we are sitting down with Craig Tindale, a private investor and author of the Craig Tindale sub stack. Craig has been dropping some excellent insights as far as it relates to the latest in the bond market, but also really at the intersection of geopolitics and technology, covering everything from AI to the Bank of Japan, PBOC and everything in between, including gold in particular as one quarry of focus. But today we are going to be discussing one of Craig's latest essays.

Bascent is the house and gold is the tell. Really, I think a great history of really just means of controlling the yield curve, rewriting the terms around how debts are repaid and the conditions under which they're repaid. And I think history is certainly a good guide for the present. But with all that said, Craig, welcome to the show. How are you doing?

Craig Tindale (1:24)

Fantastic. Thanks for having me.

Spencer Nichols (1:26)

Of course. Yeah. So I think many of our audience are going to be acutely familiar with the fact that we are sitting at a fairly important point when it comes to the US's debt management. I think Bitcoiners have been saying to themselves as investors, they're going to print the difference. And really, this will not be paid back in real terms.

There's really kind of a healthy skepticism of growing our way out of this debt. But Craig, from your point of view, can you just walk us through where you think the United States sits in terms of its debt management? And then I think we can walk through how it plans to deal with that. But in absolute terms, where are we and how dire is the situation as we've seen yields rise? And I think people begin to maybe freak out as too strong of a term, but get concerned more and more. So can you tell us where you see things currently?

Craig Tindale (2:17)

Well, I think the first thing to notice is that the world is in the same place. I put up a chart at the other day of yields across the world, and there's yields everywhere going up and they're skyrocketing. And it's kind of a race to the bottom. And the US is not in the lead by any means.

I think it's a reflection of where we are today in the economic cycle. We got a little bit carried away during COVID. We flooded the debt market. We flooded liquidity into the market, as we all know. And we printed a lot of money. And now it's time to pay the piper. And every country is having an extra amount put on its debt because the buyers have received those risks. And it just is what it is. We've got the cent deciding that he's going to, I guess, restrict access to the long-dated treasuries by buying them up. And he's buying them cheap. He's buying 65 cents in the dollar and 70 cents in the dollar. And there's no better way to push people down the maturity curve than to buy the long-dated ones so there's not as many of them to access. But yeah, you'll notice that you mentioned Japan on the intro. Japan's in trouble too.

You know, and so what happens is countries don't go broke. You know, a lot of people have this idea in their head, the conceptualization of what happens to the US or for any other country for that matter when debt goes out of control.

They have a lot of, I guess, leverage and dials to twist in order not to go broke. And so the expectation that the yield curve goes out of control and, you know, the US defaults or any of these other countries that print out their own money defaults is kind of naive. But it's a natural thing to think. You know, what happens is we end up in some kind of regime of financial repression. What I outlined were, I guess, seven different types of repression that could come into effect. You can print money and buy the long end of the maturity curve.