I saw this in 2012. Um, because of what happened in Europe, and I saw what was happening in the US. It's one of the reasons I bought and built a house in the Cayman Islands. I just thought, I need a plan B, and the plan B needs to be somewhere where nobody cares about, but I can still live a high quality of life. It was a very purposeful decision, knowing where the world was going to go, because there was no solution. So, the kind of realizations that you're having now, I had. It's more visceral for now because you're just seeing another banking crisis, but we saw it in 2012. We saw really bad outcomes there, and I think the US one is still to grow. So, it's just the delayed response of having it happen to you. The moment it does, it's like, okay, get it now. So, I did this, and I don't think that's going to go away. I'm hoping for a miracle. What doesn't go away, sorry.

populism, anger, division, and a separation into smaller states. I actually spoke to an old client of mine, an old friend who is one of the world's great macro thinkers, this Italian counts, and he speaks very quietly. I was telling him about this. I was like, I think Spain is going to splinter into countries. The UK is probably going to splinter. Scotland will probably separate, you know, blah blah blah. And he said, Listen, R, the trend of the last 50 years was superstates: the EU, the United States of America. He said, Usually, those things end up separating again. And if you think, he said, you know, he was a whatever, he was a count from Italy, you know, one of the Venetian states, these little small states. He said, The world does this, ebbs and flows, centralization, decentralization, right? It's very common, he said. It's not necessarily a bad thing. It's the getting there that could be troublesome. Depends how it happens, you know. Don't forget, we disbanded the British Empire.

that was gigantic, and yes, but there was some pretty ugly stuff that happened, like, you know, the uh, what happened in India when we kind of gave back the keys, and everybody killed each other in the partitioning. It's ugly, but it did happen over time. So, I don't know. I think the trend is not going to go away unless we somehow change this economic equation, because that's what's driving it. Yeah, it's the same equation that's driving it. Yeah, very, very distressing. And I think, unfortunately, I think the pieces are already on the table in terms of how we could potentially change the economic system, uh, which is effectively Bitcoin. You have to remove the ability to inflate. Once you take that away, though, there are also consequences on the other side. And so, uh, it is a very, um, man, it's a very Tri. My argument has been you can't do this at once. Anybody who does this wants the end of the world. It has to happen as a Glide path and over time. The crypto side of the

equation the new rails for the system can experiment, get itself sorted out, figured out, and then we can go. So my, I spoke to the Department of Defense about this in 2014, 2013, and I said, you know, they periodically, you know, reach out to people like me, you know, thinkers about stuff, who are looking at crises and stuff like that, because their job is to assess risk. And I was talking to them about it, and I said, obviously, he said, you know, we're worried about debt, we're worried about the system blowing up. I said, yes, obviously, everybody is, um, because that's one of the things they need to game out. What happens if the West loses control of money and debt and everything else? And I said, well, I think the answer is there, and I think it's Bitcoin. He said, yeah, tell me more. I said, and I think the US government and the UK government invented it, which is the NSA and the GCHQ in the UK, who the two World

centers of cryptography because even how the white paper's written it's transan yes I always have and I asked the Department of Defense they said yeah we've considered that too they official or it was just people from that that went rogue I don't think it's a necessarily A rogeness I think like Google have like Google X where they do tons of experiments right they know that one of the esoteric risks for the entire Western system is the issue of money so there's probably groups of people who have given things to try and if you concede a new system maybe they tried 100 these and just one succeeded we don't know but it would make sense because that's what they do this kind of stuff so one of these took off and so I think it's always been I don't think it's a coincidence that came out of the financial crisis I don't think it's a coincidence that that the harving cycle and all of this is all related it is the solution or is it always has been the solution you just

can't go there tomorrow, so all you need to do is let it happen slowly and manage that transition. You'll be okay. There'll be times where it speeds up because we've got something bad going on, and there's times when it slows down. But if you... and that's what I think the US government regulation is trying to do. They don't want to bank crypto, just slow this down. Because if all the deposits leave the banking system, it's game over. If they don't set up a way of collecting taxes because everybody's living in crypto, and they have to ask your honesty in what trades you've done, that's not going to work for them because they can't pay the bills. So, I think they're trying to catch up. I think that the UK will have a CBDC. I think the Europeans will. It's all coming relatively soon, relatively soon, next five years, three years, four years. And they'll feel more in control of the system that they've got because they need to pay the interest payments.

because if not and the benefits, the Aging benefits you, all of the Social Security is a problem with such an old population. So, speaking of managing this transition well, how bad do you think the banking crisis gets before it stabilizes? So, feels that we're in the kind of Summer phase of we know it's bad but nothing extra is happening, but meanwhile, the deposits keep leaving the system because the FED are not whistling past the graveyard going la la la I can't hear you. The problem is interest rates are too damn high, which is the same problem I said they need basically to get back to zero again, and it's leaving the system. So, there's two phases of this. One is the banks will start getting worse again. We'll see the use the K ETF, which is the Regional Bank ETF. It's easy, you can look at that, get on Yahoo finance, wherever you see the price of it going down, that's telling you it's kicking off again, and the outcome will be to keep

bailing out these banks, whether they force them into merges, which is how the banking crisis in 2008 started, and then eventually it's like [ __ ] we need to give money and sort this out. So, we will see that we know that the banking system can't go to a full-blown reset because we've already had that. I think it'll bring down one of the big banks before it gets really serious, and which one is that? I don't know. Bank of America, something like that. That share price doesn't look great, the long structure of it, but in the end, the Federal Reserve will come with their magic illusion bullet, the magic money, and that magic money will solve all of this, and we will all get mutualized because the asset prices will go up, and we won't own enough of them, and we will get poorer. So, that is coming. The commercial real estate, so the quick one is the deposit flight, the FED need to cut rates, the yield curve, which is the value of money in the future, that uh

of interest rates in the future has to be higher than currently. It's the opposite right now, so that needs to happen. And then in 2024 and 2025, it'll all be about the commercial real estate because all of these, like Real Vision, has offices in New York for 65 people and three people go to the office. The moment we can get out of our lease, we will get out of our lease, as is everybody, and all of the stuff's going to be empty. So I think that's um, that will all end up on the FED balance sheet. So the banking crisis will continue, it'll make it harder for the average person to get a loan, and the Federal Reserve will see this as the economy goes into recession, and eventually they'll start cutting rates, and eventually The More Cowbell comes back. And as I like to say, it is written, we kind of know there's no other outcome as we go deeper into recession. Today's episode is sponsored by BetterHelp. We live in a world that

is more connected than ever, yet so many of us feel completely alone. Social media, though it is amazing, is not going to fill the void of real and meaningful conversation. Bottling up your thoughts and emotions can lead to stress, anxiety, depression, and therapy is a safe space where you can share what's on your mind without fear of judgment so that you can begin to build that kind of connection. BetterHelp is a platform where therapists and their clients can communicate effectively and get the most out of therapy. They connect you with licensed therapists who are there to listen, and I mean really listen. No judgment, no expectations, just professional support. And talking to a therapist is not about being broken, it's about being human. Take the first step with BetterHelp. Visit betterhelp.com/impact today to get 10% off your first month. That's betterhelp.com/impact. So if we're already in recession, all that happens, we go deeper into recession. It's already written, we know the outcome. Yeah, I mean Jesus, uh, heavy. Okay, so I want to go back

to CBDCs. Um, I've heard you say, if I'm not misquoting, that you have a contrarian position here, that you think maybe they're not all bad. They're not all bad because, firstly, I do not buy the arguments that, Well, they've got control over your money. If you do this, you're signing over to the devil. I'm like, You guys signed over to the devil by having a bank account. All of your funds are available. And if you're telling me, Oh, well, they're going to force us not to use cash, and you're telling me you're using cash for anything apart from tipping the valet guy at the restaurant and buying weed, you're lying. Nobody uses cash. Nobody uses cash. Use cash for my weed. R, I live in California. No, exactly. So, nobody uses cash. It's a lie. And so, they're using their credit cards, they're using their PayPal or their Venmo, they're then on social media, they've got Google. Everything is accessible by the government. That your privacy was the story 30 years ago, not

today it's gone. So, a CBDC means that the government can become more... well, they can even stop money. Now, you've seen it, you know, you're the Russian, suddenly you don't have the money, right? So, all of that is always still there now. So, yes, they can penalize you, but I also think you can do good with it. So, I think there's a load of bad outcomes, and governments will abuse it, in fact. I also think there's some really amazing outcomes for economics. How so? I've heard you say that, but I don't understand how that would work. I think so. Let's say you have Hurricane Katrina, devastating people, aren't insured, it's a catastrophe. So, how it happens now is the federal government makes a payment to Louisiana and blah blah blah, and all these middlemen, and everybody grabs it, stuff, and it doesn't get to the people. You could give 3 million people in New Orleans instant payment in seconds. You cannot give economic stimulus to wealthy people. You can give

it to poor people. You can penalize people who have excess savings versus the people who don't have enough savings. So, I.E., you can give poorer people a 15% interest rate to lend that I.E. to get on deposit. Okay, that's all. That's interesting. And maybe they can borrow money at one price versus another. You can do a lot of behavioral economics and changing the system and behavioral economics. Everyone's like, Well, that's the Chinese government. They've got spy cameras everywhere. I mean, look, the US government knows everything about what you do. I mean, every time I come into the country, I just stare at the global entry, recognizes my face. I don't even show my passport to anybody. I'm into the country. I'm then into an Uber. Everyone knows where I'm going. My Apple Maps clocks me. I mean, look, forget about it. All the governments are the same. So, I just think economically speaking, we could do interesting things. We don't have to be so light about how we use fiscal

stimulus and that we can create, we can create incentives, good, good incentives if dealt with well. H, if dealt with well, yes, uh, you said something, All governments are the same, that uh, I violently disagree with. What? No, it's just a meme, it's just a meme. You're all what governments stand for. We Stand For Freedom, we stand for that. It's all a meme. They're all the same, they all control their people in a certain way and dress it up in a different manner. One says we're protecting you, the one says the enemy's outside, the other, they're all the same. That, How do you hold a society of large numbers of people together? You create different ways of doing it. And it's, It, people, it, it pisses me off when people say us good then bad by whose judgment what because 1.4 billion people in China live your their life differently than the 350 million Americans. They're bad, we're good because they don't follow our system. That's insanity. And Americans would suggest

that they're pressed up against the window, desperate to get out of China because they hate it. Go there. They don't hate it. Why would the Japanese want such a regulated society? Because it works for them. So we just have to drop our own lens of who is good and who is bad. And I'm, you know, I've traveled to, I don't know, 120 countries. I've lived in several. I'm just very open-minded about different people choosing different systems that suit them. But most governments in the end try to help their people, but will also abuse them in the process. And it's just different ways. It's interesting. Um, so I don't know that I disagree with that at a very high level in that everybody is doing something. Uh, you didn't say nefarious, but I will say nefarious. And it just comes down to the flavor of power, right? Power, power is just different flavors of power. Yes, however, have having read a trilogy of books that I will recommend to anybody, the specifics of how

different moments in different societies will uh rear the dangerous head. It does seem to me that you want to imbue the populace with a certain mentality that will keep the government in check. And so, I think the thing I'm pushing back on are the moments where the humans - 'cause ultimately all of us could rise up and stop our government - um, but when you look at Ma's China or Hitler's Germany or um, Stalin and Lenin's Russia, they are terrifying to a level that I don't think modern people have availed themselves of to realize how wrong this can go. And so, when I look at the CBDCs, um, I don't - I don't have a lot of wisdom here. I want to be very clear that I'm now thinking through something out loud for the first time. But uh, reading the red famine, for instance, which is not part of the trilogy of books, just because I alluded to it, I'll say it - uh, Gulag archipelago, which is about Stalin's Russia - um, the rise and fall of

the Third Reich, which is about Hitler's Germany, and Mao, the endold story, which is about China. They all illustrate a level of human evil that is just unimaginable. Then there's a fourth book, which is the red famine, which is about Ukraine in the 1920s, if I remember correctly, when they went into the Ukrainian farmers and said, All of you kulaks who are basically outproducing other farmers and therefore you must be stealing from people, and so they killed, imprisoned them, all this stuff. And because you just killed your best farmers, basically all of the farmers start starving to death because the government is just seizing all of their grain. And so you kill the best and then you seize everything from everybody. And there is a moment in the book where a woman eats her own seven-year-old daughter, and I was like, I'm out. Like, it is things can go so wrong, and I worry that we've had such a period of

stability that we forget that there is this darkness that is present in the human animal. As Soldier Niton said, the guy that wrote the Goog Archipelago, who by the way was in the Googs, he said, The line between good and evil runs through the center of every human heart. And so I worry that we have to eternally protect ourselves from how wrong things can go. And so I do look at a CBDC with a little bit of hesitation as you map it out and say, I'm already doing everything. I had to laugh out of anxiety because you're right. I don't use cash for anything, so 100%. And it's not a big change to you. I think you're fearing the wrong thing. I think the fear is right. Say what you think. I'm fearing Central Bank digital currencies. I think are a distraction. What is actually happening is you've already got capital controls in the United States. It's hard for a US citizen to move the money around. You

can't even get rid of your damn passport. You're stuck in your state. You can't even leave your state. You pay tax everywhere in the world; nobody else does. I think there's three countries in the world that pay tax, that force their citizens to pay tax if they live outside of their country. I don't know what it is, but I would fear the US going to war with China. It's fine to be an economic war; it's fine to be very cautious of another rising power, but if they go to war, the outcome is terrible. That is a much bigger risk than a central bank digital currency. It is, as you said, there's something goes wrong with power that can lead to these outcomes when humans overextend it, and hubris is one of the risks and that power to control the world. That, to me, is a bigger risk. There may be another risk, the enemy within. The collapses on itself can happen too. There's a number of ways your leaders can let you

down, and you should always be vigilant. So, I do agree, but I think the CBDC war was lost a long time ago. The privacy from your government war is not going away because of technology, because Elon Musk has got, you know, he's putting 40,000 satellites in the sky. Every GPS can see you and everything, so that all went. So, you just need to make sure your government is not going to abuse that, because that's when it gets really bad. Yeah, that actually makes big sense. It's abuse of power, not monetary abuse as much as raw abuse of power. My biggest existential threat is do not go to war with China, because that was the outcome for Hitler, for the economic collapse. There were reasons people go to war, and the outcome and the end result is not good. So, I'd be worried about more of that stuff, but the US is kind of warmongering like crazy right now, rattling its saber. It's like against China or in the Ukraine. It's against China, and it's okay to not like

China's system, because it's different from your own. It's okay to feel threatened because China has economic power and is increasing, and that's threatening your system. That's all okay. Just don't go too far. If you like that clip, check out the full powerful episode here, and I'll see you there.

"We're Already In A Recession" - How It Could Get Worse In 2025 If We're Not Careful | Raoul Pal

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