David Lin
¿Acaba de desencadenarse otra Gran Depresión? | Lyn Alden
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TL;DR
Resumen de investigación
▶ Dominancia fiscal y límites de la política monetaria
Alden identifica como acontecimientos relevantes la resolución parcial del conflicto con Irán y el nuevo presidente de la Fed; advierte que el entendimiento es solo un memorando y que podrían seguir apareciendo noticias. Sobre los bonos, dice que las tasas de largo plazo dependen de expectativas de inflación, oferta de deuda, capacidad de compra de los balances existentes y decisiones de compradores internacionales. Antes fue estructuralmente bajista en bonos, pero desde hace uno o dos años los considera una inversión neutral y poco atractiva, sin intentar anticipar movimientos de 50 puntos básicos; una Fed más restrictiva puede aplanar la curva, aunque la situación puede cambiar rápido. Define la dominancia fiscal como un entorno de deuda pública elevada —menciona más de 100% de deuda federal respecto del PIB— en que los déficits tienen un papel central en la creación de dinero. Tras décadas en que la caída de las tasas compensó el aumento de deuda, las tasas laterales han eliminado ese alivio y el gasto por intereses ya supera al de defensa. El control de la curva de rendimientos podría mantener la deuda por debajo de la inflación, pero a costa de mayor depreciación monetaria e inflación. En este contexto las tasas y el balance de la Fed tienen menos impacto y su margen de acción se estrecha: subir tasas puede moderar préstamos bancarios, pero también agranda el déficit mediante mayores intereses. Alden describe una economía de dos velocidades: las hipotecas son prácticamente inasequibles para algunas familias jóvenes, mientras los déficits financian principalmente Seguridad Social, Medicare y defensa y las personas adineradas están en buena situación.
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▶ El conflicto con Irán, el petróleo y el poder de negociación
Alden considera que el alto el fuego y la reapertura del estrecho podrían evitar un impacto económico mundial mayor en el largo plazo, pero señala que el mundo ha resistido mejor de lo esperado la interrupción del petróleo. Atribuye parte de esa resiliencia a que China redujo importaciones y usó inventarios grandes y poco transparentes. A corto plazo no veía una catástrofe económica por el petróleo; menciona como presiones políticas la impopularidad de la guerra, las promesas de campaña, las elecciones de medio término y una posible divergencia entre los intereses de EE. UU. e Israel. Sobre la influencia estadounidense, reconoce el poder militar y económico de EE. UU., incluida la muerte de la estructura de liderazgo iraní, pero sostiene que se pudo calcular mal la influencia relativa: Irán podía afectar los precios de energía, el ánimo de los consumidores y las elecciones estadounidenses, además de usar medios culturales y en línea. Alden destaca la resiliencia de la estructura descentralizada de liderazgo iraní y de sus capacidades de drones y misiles; argumenta que los grupos de portaaviones tienen dificultades ante amenazas asimétricas baratas. Considera que el bloqueo naval estadounidense fue eficaz, aunque también impedía que aliados y otros países recibieran petróleo. En su opinión, el conflicto dejó a las partes intentando regresar a las condiciones previas y, más ampliamente, al acuerdo anterior con Irán, que contemplaba no enriquecer uranio y permitir inspecciones internacionales.
▶ Inflación, energía y posibles decisiones de la Fed
Alden condiciona su evaluación a que el memorando, el alto el fuego y la apertura del estrecho sigan vigentes. En ese caso, considera que el petróleo dejaría de ejercer presión alcista, lo que permitiría que las medidas mensuales y anuales de inflación se enfriaran; matiza que la caída del petróleo no necesariamente reduciría otros precios, que suelen subir con la energía y luego ser rígidos a la baja. Dice que el alza reciente de la inflación tuvo varias causas, pero que la energía fue la principal, y espera que esta presión se alivie en la segunda mitad del año si continúa el alto el fuego. No ve señales de una inflación descontrolada como la de 2021–2022, pues, aunque la oferta monetaria sigue creciendo, no observa el aumento interanual de 40% en M2 de aquella época; aun así, cree probable que la inflación permanezca por encima de 2% y pueda estabilizarse o bajar en los meses siguientes. El entrevistador cita una probabilidad de 90% de al menos un alza de 25 puntos básicos para diciembre. Alden considera significativo el riesgo de un alza, pero juzga esa probabilidad 90/10 agresiva y se ubicaría más cerca de un equilibrio entre mantener las tasas y una subida. Explica que la inflación por encima del objetivo y el énfasis de la Fed en la estabilidad de precios favorecen una subida, aunque las tasas no sean necesariamente la herramienta adecuada para una guerra o la dominancia fiscal. Si la inflación deja de subir porque se estabiliza el petróleo y fluye la energía, la Fed podría considerar que las tasas ya son restrictivas para la vivienda y no actuar agresivamente. Para muchos inversores de acciones, oro, bienes raíces o bonos sin apalancamiento, considera que una variación de 25 puntos básicos no es decisiva, aunque sí lo es para operadores de bonos de corto plazo y futuros de tasas.
▶ La Gran Depresión y el riesgo de una interrupción energética
Ante la afirmación de que cerrar Ormuz habría podido llevar a EE. UU. a una depresión, Alden dice que la Gran Depresión tuvo muchas causas y destaca como principal una burbuja de deuda privada: el crédito y los bancos muy apalancados, junto con la especulación bursátil de los años veinte. También menciona los problemas agrícolas del Dust Bowl y sostiene que las políticas arancelarias y contrarias al comercio de Hoover no ayudaron, aunque no las considera la causa única. Sitúa en 2008–2009 el máximo generacional de varios indicadores de deuda privada y apalancamiento bancario, y describe desde entonces un giro hacia una burbuja de deuda pública y la dominancia fiscal. Añade que la respuesta rápida de creación monetaria, la tecnología y la ausencia de malas cosechas hicieron distinto el episodio reciente. Señala que durante la guerra la confianza del consumidor estadounidense llegó a mínimos récord en mediciones desde los años cincuenta, y menciona preocupación por el costo de vida, las perspectivas económicas y la confianza en las instituciones; no equipara eso por sí solo con una depresión. Tampoco cree que unos meses adicionales de cierre del estrecho necesariamente hubieran causado una depresión en EE. UU. Advierte que el agotamiento de las reservas estratégicas estadounidenses, los inventarios chinos y las existencias comerciales podría elevar el riesgo de petróleo por encima de $150. Considera que los países en desarrollo de menores ingresos podrían ser más vulnerables a escasez energética; cita el toque de queda energético de Egipto en abril y dice que una interrupción persistente sería problemática. Para EE. UU. ve menor vulnerabilidad, pero advierte que un cierre suficientemente largo podría implicar gasolina a $8 y problemas económicos muy graves.
▶ Asignación de activos y perspectiva sobre el oro
Para 2026, Alden mantiene aproximadamente su asignación estratégica: acciones de alta calidad que no estén en una burbuja, con énfasis en crecimiento a precio razonable y a veces valor. Dice que el oro cayó cuando el mercado anticipó una Fed más restrictiva; tras una fuerte subida de dos años, cree que necesita encontrar un piso y formar una nueva base. No espera que necesariamente revierta todas sus ganancias de 2024 y 2025, pero tampoco lo compraría tácticamente antes de que se consolide, aunque mantendría una posición estratégica permanente. Considera que el movimiento del oro ha sido relativamente independiente de otros activos y que los metales preciosos suelen beneficiarse de la dominancia fiscal. A su juicio, el oro se adelantó y dejó de ser barato —cerca de $5.000 por onza lo veía más cerca de su valor razonable—, pero no lo considera dramáticamente sobrevalorado; espera que fluctúe y quiere ver una base antes de volver a recomendar compras con convicción.
▶ Bitcoin, cripto y rotación de capital hacia IA
Alden no considera que la caída de Bitcoin sea necesariamente una señal de aversión al riesgo general. Atribuye presión al deterioro de las expectativas sobre gran parte del sector cripto, que juzga estructuralmente débil salvo Bitcoin y las monedas estables: menciona descentralización que considera falsa, arbitraje regulatorio y límites en áreas como DeFi, NFT e ICO. Señala que el valor total bloqueado de DeFi no superó su máximo de 2021. También ve inquietudes válidas sobre empresas de tesorería de Bitcoin apalancadas y su gestión del riesgo. Otro factor es que capital que buscaba exposición tecnológica se desplazó hacia la IA, incluidas acciones de chips y grandes proveedores de nube; Alden también menciona la salida a bolsa de SpaceX en ese contexto. Pese a la presión potencial mientras ese flujo continúe, cree que los fundamentos de Bitcoin siguen siendo buenos y que varios indicadores históricos de valoración y sentimiento están cerca de sus niveles bajos; no precisa el nombre del indicador truncado en la transcripción. Considera que parte de los inversores en activos digitales de los años 2010 y comienzos de los 2020 se ha desplazado a la IA, junto con otros fondos de capital, y opina que ese cambio es saludable dados los límites que atribuye al sector cripto más amplio.
▶ Cómo evaluar si la IA está en una burbuja
Alden propone evaluar la IA con una lógica parecida a la del oro: puede que el activo no esté sobrevalorado en términos absolutos, pero una subida demasiado rápida puede dejarlo expuesto a una corrección desde un nivel elevado. Considera que la tecnología de IA es real y puede elevar la productividad, aunque los cambios tecnológicos pueden llevar a inversiones excesivas; pone como ejemplo las empresas de fibra óptica que quebraron pese a que la infraestructura era necesaria. Califica de excesiva una valoración de SpaceX de 100 veces sus ingresos y ve riesgos en grandes proveedores de nube que ahora tienen flujo de caja libre negativo. Añade que los principales modelos de IA que menciona dependen de financiación de capital de riesgo y son muy poco rentables; al subsidiar el uso, hacen que la demanda aparente sea en parte mayor que la que habría con precios más equilibrados, como en el ejemplo de Uber. Aun así, es relativamente más optimista sobre las acciones de chips: espera un uso persistentemente mayor de GPU y RAM que hace cinco años. En conjunto, cree que la operación bursátil de IA está recalentada y que algunas partes son burbujeantes, pero cuando el sector se enfríe o consolide buscaría oportunidades en activos que hayan caído y sigan mostrando buenos resultados.
▶ La novela y una visión del futuro con IA
La conversación pasa a la novela de ciencia ficción de Alden, *The Stuttgart Incident*. Ella dice que llevaba tiempo pensando en la historia y decidió publicarla porque la tecnología estaba alcanzando algunos elementos que imaginó; de otro modo, corría el riesgo de convertirse en ficción histórica. Al proyectar el mundo a 50 años, explica que la novela busca entretener y hacer pensar, además de ofrecer predicciones direccionales plausibles. Supone que la realidad virtual se volverá algo más popular pese a su lenta adopción actual, y que la IA y, en cierta medida, la robótica estarán presentes en la vida cotidiana. En ese futuro la gente seguirá trabajando, a menudo con ayuda de IA. La tecnología visual incluye realidad aumentada y virtual más populares que ahora, sin llegar necesariamente al extremo de *Ready Player One*. Alden describe su visión como menos utópica: la IA puede ser muy productiva, pero, como la aviación y la industria aeroespacial tras sus rápidos avances iniciales, podría llegar a un límite gradual cuando se agoten los frutos más fáciles. La presenta como una herramienta valiosa, no invencible. Al final comentan sin revelar el desenlace que la novela trata de un detective del futuro que busca a un terrorista; Alden dirige al público a lynnalden.com y concluye la entrevista.
Transcripción completa
[00:30] for you that may or may not move markets into the remainder of remainder of this year? We'll start here. >> Well, I don't think they'll be shocking answers. I think the uh kind of the the partial resolution uh to uh the the conflict with Iran uh I I think is obviously a key one as well as the uh new Fed chair and kind of communication uh that they've done going forward. Um so, yeah, I think those are probably the largest things. Uh and the reason I say of course uh you know, kind of the partial resolution is is that I mean,
[01:00] it's only a memorandum of understanding. So, I think there's we're still going to have headlines in the coming weeks and months. Uh but but it's at least uh headed a much uh at the moment more positive direction than it has been for for many months. >> The economists I spoke to this week um pretty much pretty much unanimously all projected higher interest rates in the long end of the curve as well as the short end uh to varying varying degrees uh because of the new Fed chair and because of inflation expectations and because people were expecting the
[01:30] Federal Reserve now to raise interest rates this year rather than cut. So, my question is even if monetary policy didn't change from the last year, would interest rates on the long end still go up because the deficit has increased and so the debt has widened as well? >> Uh I think there's it's a more complicated than that. I think there's a lot of moving parts on the long end of the curve. There's obviously expectations around uh what inflation's it's to be. Uh there's sheer of supply hitting the market compared to, you know, what, you know, is is that that
[02:02] existing balance sheets are willing to buy. There's even geopolitical decisions sometimes like are our international buyers on strike or are they accumulating? Um and I I you know, I for from 2019 until, you know, a year or two ago I was kind of on the record of being a pretty structural bond bear. Uh meaning that either combination of higher yields meaning bond prices down or even just sideways yield and not really keeping up with the basement. Um but once we got to like a a year or two ago, I I view them more as kind of a a neutral unimpressive
[02:33] trade, which is that I I don't try to anticipate, you know, 50 basis move 50 basis points moves in either direction for the long end. I mean, in general if the market expects that the Fed's going to be a little bit more hawkish than they did a week ago, it makes sense that you've seen some curve flattening, which is that of course they're they're a little bit more hawkish on the short end and they're a little bit more comfortable with the long end. But these these things can change very quickly and I think one of the key factors that I think the market still doesn't fully
[03:03] appreciate because the market is so trained to think that the the solution to inflation is is always higher rates. That's kind of the main lesson from the 70s or at least like that's the biggest takeaway from the from the 70s early 80s. And but that's that was in an era where most that money creation was from bank lending. Uh and interest rates are very powerful tool for for curtailing or and sometimes accelerating bank lending. But when you're in fiscal dominance, you
[03:33] know, when when when when fiscal deficits in a given year are bigger than net new bank loan creation, uh interest rates don't do quite as much for that because every time they raise interest rates, while they could put some downward pressure on bank lending, they actually blow out the fiscal deficit even more. >> [snorts] >> Um and so they're in a very it's a challenging position to be in if you're the Fed, uh, because as as the chairman pointed out, their their current levels are already restrictive on housing. Uh, and yet we still have above target inflation, uh, and it's it's not it's
[04:05] because it's not really bank lending. >> Just summarize for us one more time, please. What does fiscal dominance mean in this context? In an era of fiscal dominance, what role does a central bank play? >> Right. So, basically fiscal dominance it it can it can take a few different forms, but it's essentially when you get over like 100% uh, federal debt to GDP, you've got a very big stock of existing debt. Uh, and if you you know, we the US went had a yeah, kind of 40-year period of of rising debt to GDP.
[04:35] Uh, but it was offset by structurally declining interest rates until we hit roughly zero. Uh, and now that we're trending, you know, sideways in interest rates, uh, and we still have the the high debt to GDP, we no longer have that interest rate offset. Uh, and so now interest expense has outpaced defense spending. Uh, and there's there's really no clear resolution to this. It's just like it's going to be an ongoing large part of the of the federal uh, uh, uh, deficit going forward. And there are techniques to deal with it
[05:05] including financial repression. You know, you can do yield curve control and submerge the whole uh, all the debt below um, inflation, uh, but then you have generally accelerated currency debasement and the higher levels of inflation. Uh, and so that the the answer to the second question is what is the role of the central bank? Uh, their role is diminished, right? So, it it it in the say the 70s uh, and 80s we can call that a period of monetary dominance. So, you had low debt to GDP. Uh, deficits while they were there, uh,
[05:36] especially in the in the 80s, um, you know, they they just weren't the driving force on money creation, uh, as as it is now. Um, and so going forward, the Federal Reserve, uh, you know, they have they still have all their major roles in in bank regulation, basically oversight of the banking system. I mean, that that remains unchanged. Uh but, their two primary tools of industry rate uh decisions, as well as balance sheet decisions, uh basically become less impactful. Uh and
[06:07] their and their option space like narrows uh because instead of saying, "Okay, high inflation cuz banks are lending too much, let's raise rates." Uh you know, it's clean. But, if you have, "Hey, inflation's up because we're running structural big deficits, and you know, we had a war, so like energy was elevated for a while." And you say, "Well, let's raise interest rates in response to that." What exactly are you doing? Because you're not you're not I mean, the government's not going to spend less. If that If anything, they're going to spend more because you just increased their interest expense. Um and you're still having the similar
[06:38] effect of of on bank lending, which is, you know, the marginal uh borrower might be more conservative because interest interest rates are going up. Um uh but, that's already not really the core issue anyway. And that's how you get this kind of two-speed economy where um you know, if someone's like a a young family looking to buy their first home with a mortgage uh without help from from say their their parents, uh they're in a world hurt right now. Uh it's it's practically unaffordable. Uh whereas uh
[07:10] the deficits are primarily going to Social Security, Medicare, defense. Um obviously, wealthy individuals are doing very good. And so, you get this really polarized economy. And and the answer is that the the the Fed's not really designed for fiscal dominance. Uh not like this this is kind of the breakdown scenario. Not in the acute sense, but in just in terms of of policy effectiveness, fiscal dominance like the tools are are are geared toward areas of monetary dominance. >> Before I continue with the video, let me tell you about a very important topic,
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[08:40] scan the QR code here, and use my promo code davidlin at checkout. New users who use my code will get 20% off of all US plans. Take your privacy seriously before somebody else does. Recent news now. At the G7 G7 summit earlier this week, uh the signing of a peace deal with Iran was uh concluded for now. Uh temporary peace. We'll see what happens in a few months. But uh
[09:10] Trump argued that uh the reopening of the Strait of Hormuz may have prevented a major global economic shock, called it a catastrophe that was avoided. How accurate is this statement? >> Well, I think in the longer term that's relevant. Um I mean, we've already seen some shocks. I think many people, including me, have been surprised at how resilient the world has been to a closure of that much um uh oil hitting the market. Uh the biggest factor ended up being that China was a lot more flexible than many people thought in
[09:40] terms of, uh, uh, greatly reducing their imports, uh, being willing to draw down their, uh, large and opaque, uh, uh, inventories. Uh, and that was a a much bigger offset. Um, and I think another thing that surprised people is that, you know, energy's been kind of choppy for a while. And so, it's interesting that that, um, uh, President Trump kind of cited that now, um, because I don't think that we were that we were like near-term, uh, compared to any sort of like, you know, economic disaster from oil. Um, I I think the the the more
[10:12] kind of pressing one is just optics of the situation. Uh, probably a uh, a political kind of somewhat separation between the US and Israel's interests on this and kind of increasing realization of that. Uh, it's been a very unpopular war from the start, uh, in in terms of polls compared to most other wars when they begin. Uh, it goes against campaign promises. We have midterms coming up. Uh, so, I you know, I but there's some of those reasons he he can't realistically cite. So, I I think he has to point to other ones and he's pointed
[10:43] to the stock market, he's pointed to oil. Um, and and so, I think that's, yeah, there's a there's a lot of reasons for him to have eased out of the war and and he, you know, he'll cite the subset that I is is less damaging. >> Okay. The uh, I'll play for you a short clip and uh, and we'll we'll evaluate this together here. This is, uh, Trump's speaking at the G7 Summit. >> 300%? They have no money. We have tremendous leverage. We have the leverage of the economy as an example.
[11:15] We'll get that done. That's That's a small one and we'll work with Israel and get it done. But, uh, I'd like to do it I mean, you have people living there. Buildings are being dropped on top of them or right alongside of them, a billion dollars worth of bombs on Iran. The blockade was so incredible, the naval blockade, the admiral, the whole thing, not one ship got through. That meant no money
[11:46] got through. They would die. They had no money. They have inflation that's 250 or 300%. They have no money. We have tremendous leverage. We have the leverage of the economy as an example. >> Here he's talking about leverage against Iran. What leverage did he the US actually possess against the Iranians in this particular case? >> Well, largely what he said. I mean, we we do have we obviously, you know, the US killed their leadership structure. So, we had you have military leverage as well as
[12:17] you know, economic leverage. The I think the the challenge is I think they miscalculated the relative leverage. Because, you know, they their leverage against us is not as direct. I mean, they can't just blow up our cities. But, they they they can affect his midterms, for example. They can affect consumer sentiment in the US with higher energy prices. They can you know, they can they can they've been putting out like memes. They have they have a a cultural leverage and and kind of um things they can do online. About kind of
[12:48] the just the reasons for the war and why we're there and who's, you know, all all of that. And so, I think that that unlike Venezuela, which was obviously a very swift operation, I think built US confidence that they could just kind of do this to any country, Iran demonstrated that they have a really kind of deep decentralized bench of leaders that can that can come back up after other top ones are taken out. They've shown that their um technology is pretty resilient. You know, their their ability to do drones and missiles and to avoid having their
[13:20] capabilities disrupted to do that. It just kind of shows that the cost uh the US on this is very significant. And and partly is I mean technology changes over time for the better part of the past century the the the carrier group has been the primary form of power projection. I mean aside from nukes, when you actually need targeted power projection anywhere in the world, the carrier group uh is the main uh force of that. Uh but they don't work that well against asymmetrical cheap threats like tons of drones, tons of tons of missiles.
[13:51] Um and of course the US naval blockade was effective. I mean no no nothing people doubted that the largest navy in the world could could block um that area uh because they don't have to be close to it. They can stay farther back and if they just identify ships that come out of it, they can they can stop them later. Uh so that the US navy in many ways had to stay far away for safety. But yeah, they can still do a blockade, but by doing so I mean that the bigger issue is Iran was blocking other countries uh from exporting their oil. And ironically the US blockade was also blocking other
[14:23] countries including allies from uh getting oil through. Um so a a lot of this is just like a scramble almost to get back to where things were before the war began or kind of more broadly back to the the previous I Iran deal uh which is when uh I Iran was was not enriching uh uranium and it was allowing um you know international inspectors to come in and verify that they weren't. Um and that's a lot of it is is a is a you know nearly decade now almost trying to get back to what was already working.
[14:55] >> Okay, here's another uh clip. This one's uh key here regarding inflation. >> How do you see this agreement further affecting energy prices in the US and the US economy in the long term? And uh secondly, Mr. President, how do you think Vice President J.D. Vance did on The View yesterday? >> Well, first of all, thank you for the word plummeting because that's what's happening. Oil prices are plummeting. And uh that means oil prices are going to come down. You know, if you make donuts, you have a heating, you have a stove, and you have to buy the
[15:25] the heat you need, the gas or the electricity or whatever you're using. And when oil prices come down, oil is the biggest thing. Oil is you get oil prices coming down, and they're going to come down, and we're hitting into threes now for gasoline, and that'll come down a lot lower. So, I was in Iowa just before this started, and I was saying to myself, I can't believe we're doing so well, but I have to go and we have to put out this fire in Iran because I don't want them using a nuclear weapon. They would have used a nuclear weapon. 100% they would have used it. >> Uh we'll stop here. Uh
[15:56] notwithstanding the nuclear weapons comment, let's talk about the inflation part. Uh his thesis that oil is coming down, and therefore the rest of inflation will come down. That's a subject of great academic debate. What's your opinion on that? >> Well, a couple things. One is so if we're assuming if um the memo- memorandum of understanding and a ceasefire remain in effect. So, if if the in the street does open, uh you know, for the most part, uh that should be a a a kind of a bearish force on oil, which is good for the world. Um uh and
[16:27] uh even just not having oil rise anymore, if it just stays where it is and just chops around, at least it's not rising uh in in that environment. Um and that allows kind of month over month, year over year uh measures of what's going on to to cool down. Now, whether that will lower other prices, uh that that's more contestable. I mean, obviously, you know, commodities are very volatile. Other prices tend to be more kind of they ratchet up, but they rarely ratchet back down unless it's like a super deflationary area like technology, like, you know, like electronics and stuff. Uh but most
[16:58] prices, they slowly ratchet up, uh not as not usually as quickly as as oil and gas, but they they ratchet up including in response to higher energy prices. And then if the if the prices come back down, usually those prices are are stickier. Uh and generally, when people talk, you know, when especially when politicians talk about um prices coming down, they really mean the the rate of change of prices going up is reducing. Uh, and so I I do think that I mean that the the obviously the the sharp increase in inflation we've had,
[17:29] there's been a couple of reasons for it, but energy's been by far the biggest factor. Uh, and I do think again as long as the ceasefire continues, that that should ease in the back half of this year. That we no longer have that kind of rising inflation uh, that we that we saw uh, in the past few months. And there's really no signs that we're we're we kind of have a breakaway inflation like we saw in in 2021, 2022, because we don't have the money supply growth uh, of that era. We still have money supply growth, we don't have like the you know, the 40% year-over-year uh, increase in in M2
[17:59] that then trickled over next several years out into the economy, out into prices. Uh, we we have kind of a a fairly normal rate of money supply growth at the moment. Uh, and so I think inflation's still probably going to be stickier above 2%, uh, but I I I think it could be correct that it it it goes kind of sideways to down uh, in the coming months. >> Does the market share that view, Lynn? Uh, looking ahead, the CME FedWatch tool is projecting a near 85% Oh, it's 90% now. 90% chance today of at least one 25
[18:30] basis point rate hike by December. So, 10% chance rates stay the where they are, 90% chance they raise rates. Uh, if inflation expectations are to curb a little bit somewhat like you said later in the year, why are expectations for rate hike um, higher and higher throughout the rest of the year? >> Well, you'd have to ask all those that are making that that case. I think um, I would say that well, a chance of a rate hike is pretty meaningful this year. Uh, I I think 90/10 is a pretty
[19:00] aggressive uh, position on that. I I'd be I'd be a little bit more split on neutral to to you know, one one hike. Uh, and of course the two conflicting issues there, one is that because inflation is above target um and it's been rising recently uh and and you know the Fed made it clear that they are you know they want to they're emphasizing the price stability side of their mandate not the not the unemployment side at the moment uh that they do uh have you know kind of an interest in in potentially raising rates to try to bring down inflation.
[19:32] Now again from our earlier kind of talking points I mean in in when when you have a war or you have fiscal dominance interest rates are not necessarily the tool that that fixes that but it's a tool that they have so if you have a hammer you you use the hammer even if it's not the best tool. Um uh but they've also like in the in the Fed chairs uh you know recent um uh Q&A you talked about how they they care about trending numbers. Uh so uh in a month or two if we start see this current inflation wave crest because if
[20:02] oil prices stop going up if if this trade in in just for the most part peace in that region allows energy to flow um uh they can the Fed could conceivably say well okay inflation's above target uh we're still restrictive on housing at current rate levels uh and it's it's inflation's rolling over so we're not going to be super aggressive. Um now again one one uh hike in either you know either a one one hike or one cut is not that big of a of a driving force and I just think that it's it's for me
[20:32] it's almost irrelevant. I mean obviously that it obviously impacts if you're a leveraged short-term bond trader uh and things like that or you know trading interest rate futures or things like that it's obviously very relevant uh but if you're an equity investor or gold investor or you know real estate investor um you know even just a unlevered bond investor like you know if if you're doing things like that um you know 25 basis points is not a a massive thing to focus on in my opinion. >> Mhm. Do you think the US would have gone into a depression have the Strait of
[21:02] Hormuz remained closed? Take a listen to this clip. >> traitors will still away. So rather than possibly going into a depression, rather [snorts] than having your favorite president be Herbert Hoover, I was always the one I didn't want to be. I wouldn't have preferred Nixon. I wouldn't have preferred near and plenty I wouldn't prefer, but the one I always thought of Herbert Hoover. And he caused it. He raised taxes
[21:32] too fast and he raised interest rates too fast all at the same time. And it caused the Great Depression. >> Okay, two points there actually I want to make. The fact the idea that had the Iran deal not been made the economy would have gone through a depression. Then he referenced Herbert Hoover, who a lot of people associate with Smoot-Hawley. And that some according to some economists arguably caused the Great Depression. Then now he's arguing he raised interest rates and taxes too quickly. Uh what
[22:02] what actually caused the 1930s Great Depression? And can the same parallels be applicable today? >> Uh well, I mean you you could have a whole show on that. What what caused the Great Depression? I mean there's like two there's tomes written on that. Um the the short ans- the short answer is um that was the the it was it was a private debt bubble, right? I mean it goes it goes back to World War I and before because you had, you know, all this money creation, all these kind of broken gold pegs, attempt to get back on gold pegs even though money supply was
[22:32] growing. And then, you know, obviously with international commerce between Europe and the US. Um we had that boom in the '20s in the US. Um and it it it you know, throughout that decade we got very high private debt levels relative to GDP. Uh banks are very levered. Um there's a ton of speculation in the stock market. Uh and it all popped. Uh and then there's other factors like um uh um you know, the Dust Bowl. Like literally bad agricultural practices. It's way easier
[23:03] to go through a Great Depression leverage-wise if you don't also have agricultural failures and things like that. And and you know, just kind of that that extra misery. But basically the the primarily the issue was that that that private debt bubble. And then yeah, when you add on to it a president that was kind of focusing on tariffs and kind of just generally anti-trade types of policies, I would say certainly didn't help the situation. I wouldn't say that you know, that handful of things just kind of like like things were fine and
[23:33] then he did those things and it caused the Great Depression is not how I would characterize it. I think that the leverage and the speculation in the years leading up to it was the biggest factor. But then it was all these attempts on, you know, what do you do once the once that starts to pop. Um Now, bringing that to the present, uh when it comes to depression, I mean, by by some metrics, I would say that 2008 was our like 1929 scenario. That was our That was our our generational peak in the private debt bubble. So, private debt relative to
[24:04] GDP, private debt relative to money supply, the ratio of how leveraged banks are, all that peaked in that 2008-2009 period. We we've kind of rotated more from a private debt bubble toward a public debt bubble. That That's kind of where we we've kind of started shifting toward fiscal dominance. Um now, of course, it's it's we went through it in an environment that was not as deflationary because they were much quicker on the money printing trigger. And we're obviously we're in a different technological environment, no crop
[24:34] failures. It's easier to go through a Great Depression when you have you know, computers and and things like that. So, it it it it was a different environment, but it was it was similar in that we hit zero interest rates, we hit a private debt bubble, and then we had just years of debasement and rotation toward toward the public debt. So, the long-term debt cycle that I've talked about before. And then so, would would this have caused a great depression? Well, by some metrics, I mean, for example, consumer sentiment during the war, US consumer sentiment was literally record
[25:04] lows. I mean, it's been measured since the '50s and it hit record lows. And people can talk about whether it's still an accurate measurement or not, but the way that they measure it, it hit record lows. Um, you know, we have obviously very high uh public concerns around cost of living around just kind of the expectations that the next 5 or 10 years are going to be better than they are now or the expectations that things will be better for the children than they are for them. Uh a lot of that is or distrust in trust in media, trust in government, trust in,
[25:35] you know, all the kind of institutions. That's all very low. So, a lot of that is kind of in in that kind of depressionary type of thing that inclu- you know, economically depression. Um I I wouldn't go so far as to say that the straight remaining closed for another few months would cause a what what many people would look at as a US depression. Um uh I I do think that it would have been ongoing issues once we can no longer draw down US strategic reserves, once China had gotten pretty low in their drawdowns, once commercial inventories
[26:05] are pretty drawn down. Uh that's that's when you start to risk like, you know, $150 plus oil scenarios. Um the countries I think that would have potential depressions in that scenario are uh the kind of the frontier markets, the the lower income developing countries uh that are more likely to face energy shortages uh if that happens. I mean, for example, Egypt in April had to do an energy curfew. Um probably if you look at some economic figures there, they had almost like a mini depression because they you literally were were shutting down parts of the economy for
[26:35] uh every day. Uh and it but it, you know, because it was short-lived, it was you could bounce back from it. But if you've got a more persistent shortage, uh that would be an issue for many countries. Uh less so for the US, but again, long enough, you you yeah, you could have $8 gas prices and uh a very big economic problems. >> Okay. So, Lynn, ultimately, the assets that will perform well and not perform well in this kind of fiscal dominance environment, in particular, after a ceasefire has been reached and after the
[27:05] FOMC has shown signs and signaled that they're willing to tighten monetary policy even further. Uh, your your your take on asset allocation for 2026. >> Uh, I could roughly the same as it has been. I think I have a strategic allocation, which is just high-quality equities. Uh, basically equities that are not in a bubble. Um, you know, growth at a reasonable price, sometimes value. Um, uh, you know, I think gold, you know, gold obviously took a hit whenever you have a the market perceived that the Fed's
[27:35] going to be a little little bit more hawkish, you generally get a little bit, uh, of a sell-off in gold. The issue there is that gold had a really, really powerful 2-year run. Uh, so I do think that it has to like build a new base. Like, you know, some bears would say gold's going to round trip, you know, all of its gains from 2024, 2025. I wouldn't be in that camp. Um, but it it did rise really quickly. A lot of the asymmetry was taken out of the trade, and I think it has to kind of find a bottom and and build a new base. Um, so I'm not jumping into gold as a
[28:06] trade, even though you still have a just a permanent strategic position in it. Uh, so, you know, for me, a lot of the interest right now is in equities. Um, I I think Bitcoin's still in a very kind of low sentiment area. Uh, it's not getting any favors at the moment from hawkish Fed, similar to, um, gold. Um, but once that starts kind of forming a bottom and a longer base, I think that's a an interesting kind of 2-year trade or or longer. Um, but for a lot of investors, I think the the core of a portfolio makes sense to be, uh, equities. >> Let's just go over each asset asset by
[28:37] asset. Let's just go over and analyze each asset by asset. Gold has come down significantly from its highs. Is that an indicator for future market movement with the rest of the assets, Or is gold moving independently, do you think? >> Look, I would characterize it as relatively independently. I mean, kind of like how it's 2-year um burst upward was independent from from any other types of assets, at least in terms of magnitude. Um you know, I I think there's there's been a there's been geopolitical reasons for it. Uh it's you know, in fiscal dominance, generally precious metals do pretty
[29:07] well. Um but again, it just it got over its skis. Um you know, a good asset can get over its skis when you have like, you know, relative strength index uh uh sentiment levels and things like that getting really high. Um it's generally going to go in the other direction. Uh and again, I you know, some people would say, "Okay, it's dramatically overvalued here." I I wouldn't go that far when it got, you know, when it got up to like 5,000 an ounce. Uh for me it was just it was no longer cheap. Um you know, and uh it was, you know, kind of back up to something that looks like fair value.
[29:38] Uh but it had gotten there so quickly that that there's risk there. So, I I I think that most likely, uh you know, gold's going to trade how gold's going to trade, which is, you know, it's going to I think it's going to wander around. And from a tactical standpoint, I want to see it kind of put in a base before I'd be pounding the table on on buying it again. >> Bitcoin, you're still doing work with Bitcoin. Uh Bitcoin also has fallen out of favor, not just in terms of price, but also in terms of market sentiment and investor sentiment. Um surely you've noticed that as well. Uh >> Yeah. >> Again, Bitcoin moving independently or
[30:09] indicative of broader risk-off sentiment ahead? >> Uh I'm I'm not sure I would put it in in in indicative. I think basically uh a lot of the I think there's two big factors. One is that the broader crypto space, which I'm I'm pretty structurally bearish on outside of Bitcoin and stablecoins. I think it's finally just seen throughout the market that narrative doesn't have as much legs as people thought it did. Um uh a lot of it was kind of fake decentralization. A lot of it was regulatory arbitrage. Uh and that there's really not a lot of there there
[30:39] outside of, you know, hard money, uh you know, stable coins, tokenized gold, tokenized equities. I mean, the you know, real world assets. That's still fine. But generally these other crypto things, you know, DeFi, NFTs, ICOs, that kind of thing, is just in general, it's it's not as big of a market as people thought. So, I think that that that industry's kind of gradually stagnating. It really hasn't stagnated since 2021. Like DeFi total locked value never really took out its 2021 peak, for example. So, I think I think that
[31:11] Bitcoin has that whole kind of broader thing weighing down on it. And then obviously there's been concerns around some of these levered Bitcoin treasury companies, which sometimes I think are overdone, but some of those are valid concerns. I mean, anytime you have leverage, I think it is is worth paying attention to and you know, how they're managing risk. And then the other factor is that a lot of investors that kind of viewed Bitcoin or broadly crypto as the fastest horse in the race have shifted toward AI. So, just the the sharp rise in chip stocks, in hyperscalers, obviously the
[31:43] SpaceX IPO, that's pulled a lot of capital that is otherwise, you know, maybe seeking, you know, kind of viewing Bitcoin and crypto as tech has been pulled in that direction. So, until that kind of cools off a little bit, I think Bitcoin could be some pressured. But I think Bitcoin's fundamentals are still good and it's kind of in the bottom, you know, 10, 15% of its kind of historical There's different ways to measure value for it. For example, market cap compared to on-chain cost basis and things like that, other sentiment indicators. It's it's kind of near the lower end of
[32:13] a lot of its historical indicators. >> Do you think [snorts] the same investor base that flowed into crypto has now rotated into the AI space? >> I think partially, yeah. I think I mean, but I think obviously AI has sucked in a lot of pools of capital. I think that there It's not like just just the crypto space went into AI. It's like a lot of pools of capital went into AI. And I would say, yeah, a lot of a lot of investors that were excited by digital assets throughout the 2010s and early 2020s you know there's a new set of tools to
[32:44] either build on or invest in so do yeah a lot of it has kind of rotated in that direction which I think is healthy because again I think that the broader crypto space I just think there's limits there to what it can do. >> Okay so when someone asks well is AI in a bubble right now and should we stay away from that? That's a very loaded question that has a lot of moving parts. How would you go about tackling that question? Like what's the thought process in evaluating if if an entire sector by the way Elon Musk himself
[33:15] >> [snorts] >> is now worth about the same as Canada I believe. No half of Canada SpaceX at some point was worth Canada's GDP. So an entire sector that is several times the GDP of many G7 nations around the world is that in a bubble? How does how does one go about answering that question? >> I think ironically the answer could be similar to gold which is so gold had that crazy two-year run and the question was is it a bubble and I would say well I wouldn't call it overvalued I just think it got here kind of too quickly
[33:45] for for comfort and so it's likely to crack from a higher base and then you know it can it can recover from there. I think AI similar which is that I mean I think a lot of the tech is real. I think it is a pretty big productivity gain in a lot of cases any sort of technological shift often has waves of getting over built or overvalued. You know the famously the companies that you know laid laid the fiber optic cables like go bankrupt right? I mean it's not that we didn't need those it's
[34:15] great they did that but it was very expensive and they kind of overestimated how much front running would happen how much growth would would occur. So I mean I do think that's you know when SpaceX trades at a hundred times revenue it's excessive. I think the there is real risk with the hyperscalers uh because they're a lot of them are free cash flow negative now. Um the primary AI models, you know, Open AI and Anthropic and all of this, they are VC funded.
[34:46] They're they're highly unprofitable. So, they're they're subsidizing usage of them, meaning that, you know, the demand we see in AI now is partially because they're making it cheaper than it really is because they're, you know, they're trying to get growth. Which which it makes sense when you're in that growth arc, but it also it's kind of like how Uber was growing very quickly cuz it was underpriced, but once they started pricing it at a more balanced level, demand kind of eventually slowed down. So, I I do think that parts of AI are way ahead of
[35:17] themselves. I've been a little bit more bullish on the chip stocks than others than like other parts of the AI trade. Um because I do think, for example, we are going to just persistently use way more GPUs than we did 5 years ago. We are going to persistently use way more RAM than we did 5 years ago. Uh but again, things can move a little bit too quickly. So, I think I think the AI trade is heated. I think parts of it are bubbly and like like SpaceX. Um but, you know, whenever it does kind of cool off or consolidate for a period of time, I always kind of go fishing in that market
[35:47] and say, "Okay, what is kind of sold off but but it's still doing great numbers." >> Okay. Is this part of the plot of your new sci-fi book, by the way, that I believe is out, The Stuttgart Incident? Um people should should note that Lynn is a talented fiction writer as well. We'll close off here. Yeah, this this book examines the future. Yes. >> Yeah, people should check it out. And I would say that one of the reasons I I wrote it cuz I had that story in my head for a long time.
[36:17] And I mean, AI exists in the book and basically technology was kind of catching up to to some of the technological stuff in the book. So, I was like, if I don't get this out now, it it it risks becoming historical fiction. Uh so, uh yeah, it was a fun project to work on and then people seem to like it. >> Um how do you envision, and this is I guess where the the writing of science fiction um gives us a lot of flexibility to use
[36:47] your imagination. How do you envision the world to look like in 50 years uh with the advent of AI and the advancements in robotics? >> Um yeah, it's a it's a good question. I think when I write the book, it's like the first part is just to entertain uh and make people think. And and the second one is, you know, as as a former engineer, I do try to get predictions at least directionally uh and you know, kind of make me some sense. Uh the book kind of assumes that that VR, virtual reality, eventually gets a little bit more popular.
[37:17] Uh that that's been a slow technology to take off. It It's They kind of even remark in the book that it took a long time to take off, but they they finally kind of figured it out. Um I I think that just AI and some extent robotics is just a little It's just kind of a background prevalence in the in the book. So, in the book, people do still have jobs. Uh they still work. Uh but generally, most a lot of people's work involves working with AIs as well. Um When you say virtual reality, do you mean, sorry to interrupt, do you mean um like physically in a VR space with a
[37:49] headset or in a hologram, or do you just mean interacting digitally like you and I are now? >> Uh the the former. Like Ready Player One. I mean, not that extreme, but like basically, yeah, that that there's more visual technologies either in terms of augmented reality or or virtual reality that are just around the margins more popular than they are now. Um Uh but yeah, that that's kind of the ubiquitous of AI uh just just kind of as as part of our our lives. Um the book does take a I guess some might call it bearish take. I mean, it's it's less bullish than like
[38:19] the the utopias, which is that um they it kind of assumes that AI does run into certain limits at certain points. Even some characters articulate why. So, AI becomes incredibly productive, but kind of like how aerospace, you know, the aerospace industry, we went from Wright brothers to the Apollo program in the course of one human lifetime. And then we kind of stalled. Like we don't really have faster commercial flight than we had 50 years ago. You know, until until the cool stuff at SpaceX, we're not we're not, you know,
[38:49] doing as much in space as we were decades ago. We kind of we kind of flatlined. We ran into certain ceilings and our our improvements were more incremental. You know, we added wingtips to commercial planes, which which gave them more fuel efficiency. We Most of the changes were in their electronics, not their actual aerospace aspects. And I think AI probably goes through a similar dynamic, which is you have this kind of takeoff scenario. Does radically more productive, more useful, changes the way we do things much like aviation did.
[39:19] But then it kind of hits a not a hard ceiling, but like a softer ceiling where a lot of low-hanging fruit is picked now. Combination of Moore's law, combination of, you know, what a large language model can do, you know, compared to a a conscious brain. And that it it becomes a valuable, but not invincible tool. >> Okay, excellent. Well, I look forward to reading that. I I I like sci-fi and I like your work, so curious to see what the uh uh the characters are up to and if the terrorist is caught.
[39:50] >> Won't spoil that surprise. It's about It's about I think it's a detective in the future looking for a terrorist, I believe. That's the summary I read on your webpage. So, that sounds that sounds pretty interesting. Um and I Okay, thank you very much. Where else can we learn from you, Lynn, and study your work? >> lynnalden.com. Thanks for having me. >> Okay. lynnalden.com. We'll put the link down below and her X as well. Put that Thank you very much, Lynn. We'll speak again soon. Take care for now. >> Bye. >> Thank you for watching. don't forget to like and subscribe.