The Ultimate Macro Framework | Raoul Pal on The What is Money Show with Robert Breedlove

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Key Takeaways

  • Fiat incentivizes debt. Debt enslaves. 
  • We are now in an everything bubble
  • GDP and CPI are functions of demographics. The population is decreasing now because the system incentivizes it.  “Demographics is the truth” – Raoul Pal
  • Nobody is getting rich because the money is getting debased
  • The political polarization is without question driven by the wealth disparity
  • The system does not allow asset prices to fall. Debasement hides reality
  • We have “…left the world of supply and demand economics and now we are in a world driven by central bank policy” –  Robert Breedlove

Key Products Mentioned


The Beginning of Monetary Debasement

  • Countries began debasing their currency after WWI
  • After the World Wars, the world infrastructure began globalizing, as opposed to being empire-based. NATO formed, The Bretton Woods System came to be, the formation of the EU and the UN are examples of these global, centralized powers. 
  • Post-WWII, the greatest population boom in human history happened. Because of this, prices exploded. There was not enough supply to keep up demand when the Boomers entered the workforce.
  • In 1967 the first boomers entered the workforce. By 1971 the US was forced to abandon the gold standard and pure Fiat money became the standard. 
  • Since 1975, wages have stopped increasing and decoupled from productivity growth. GDP grew, but wages stagnated. 
  • Pal confirmed the debasement of money by dividing a country’s asset prices by its balance sheet. Every country revealed monetary debasement.

The Consequences of a Fiat World

  • Stagnant wages made it increasingly harder for people to purchase assets that were becoming more expensive.  
  • In the 80s, Thatcher and Reagan saw this and provided housing at little to no cost for poorer people in an effort to attract voters. 
  • In order to maintain a certain lifestyle, people increasingly borrowed against their debt while earning the same wage. 
  • The market crash of 1987 led to the Fed cutting interest rates. A tool that the central banks would now use. 
  • All of this led to the financialization and power of Wall St. and major markets. 

1990s – Present

  • The fall of the Berlin Wall, the downfall of communism, and the changed tariffs in 96 led to the rise of the global worker. 
  • America is now competing against a cheaper global workforce. This competition caused the labor force participation rate to fall and so did the velocity of money. 
  •  Cheap credit led to the financial crisis of 2008, but also led to a technology boom due to the free capital. Households had the weakest balance sheets, followed by the banks. 
  • This tech boom has left the millennials “triple-fucked” according to Pal
    • Millennials are – in debt
    • Competing against a globalized, cheap labor workforce
    • And losing jobs to technology
  • Quantitative easing began after 2008, prices of assets (collateral) had to increase or the system would implode. Only the wealthy and institutions could afford to borrow and buy assets. Increased polarization
  • We are now in an “everything bubble”-  corporate debt bubble, student loan, govt debt bubble, household debt bubble. Nothing in collateral can go down. “This is our game now.” 


  • The Fourth Turning -The Transition of power from one demographic to the other. 
  • We are witnessing the destruction of the rules-based global order system established post world war 
  • Bitcoin and cryptocurrencies provide a way to opt out of the legacy system 
  • Pal imagines a world where UBI will be necessary in order to help people transition to the new economy and that politics will lean hard left as opposed to a rapid switch to a Bitcoin standard. 
  • Blockchain establishes clear ownership of property, something the current system drastically lacks. 
  • Online nation-states will form and digital identities secured by cryptography will rise and allow for a new economy as AI and software continue to eat the world. 

Closing Food For Thought

  • Tech is going to drive the price of electricity to zero. This will be a positive shock to the world 
  • Open networks have outcompeted closed networks in the past
  • If the world is being run by AI, how is the money distributed? 
  • Human purpose is changing. It used to be about work, but now what?
  • In 2008 we needed new money. In 2020 we found out we need a new world
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Notes By Paul Keating

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