Tariffs Are Reversing U.S Dollar Capital Flows | Bob Elliott
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Before we get started with today's show, I just wanna take a couple minutes to talk about permission list four, the next conference presented by BlockWorks. It's happening in June in Brooklyn, New York, and it's all for the developers and builders in crypto. So if you're interested in really understanding how the nuts and bolts of the crypto industry are being built and you wanna learn more, go ahead and get your ticket. I'm gonna be there as well as with Quinn and the rest of the Ford guidance gang. It's gonna be a ton of fun. So use the code f g 10 at checkout, and you'll get 10% off your ti
so much for having me. It's, it's an exciting time in markets. This is this is the stuff we live for. Yeah.
Yeah. And you can see it in at least under the the bags under my eyes, at least you're looking a little bit better than I feel like I am on camera, but, man, it's been a it's been a tiring couple weeks. It's it's high energy. It's a lot going on. A lot to get into. This is it's the macro Super Bowl these days.
Hey. You're not lying. It's, it's definitely the Super Bowl. And, fortunately, I've got this nice soft lighting, that helps improve my complexion. So that's, it's it's not for, not for large amounts of sleep, particularly with, with a little one in the house. So
Yeah. Yeah. New kid, new ETF, you know, huge variance in markets. I'm sure you're a busy guy. Listen. I wanna get in today to really diving deep into global capital flows, trade flows, and what are the big impacts of what we're all trying to digest here and and really get you to walk us through the sequence of, first off, just really understanding how we got to where we are today. So, you know, over multiple decades now, we've obviously been living in this world of what is the US dollar reserve currency and the the sequential impacts due to that. And when we talk about this, we hear a lot of w
really, it it's been kind of a thirty or forty year process where, where The US has increasingly borrowed from the rest of the world, and received capital inflows, and that has, helped finance essentially a relatively simple thing going on, which is that we're spending more than we're earning when it comes to our relationship with foreign countries. And I think in some ways, it's important to divide that story into two key parts. The first part, which really started kind of, let's say, mid nineties and came up all the way until basically the global financial crisis was primarily driven by that
been this narrative that this dynamic that's been going on for a couple decades now. And as you characterize it, first off, it was the the reserve accumulation trade, especially from from Asian economies, and then now it's it's shifted into that dynamic. And you hear a lot about how this this trend is unsustainable. Do you believe it's actually unsustainable? Because there's this idea that, okay, we could we can't just let, you know, the current account deficit widen into infinity forever. There's eventually gonna be a time where, you know, the chickens would come to roost, and we would have t
Well, I think the basic question is whether asset prices, and and debt levels basically get pushed to a level that, that can no longer be plausibly supported by projected incomes. Right? That's the real question. And so I think when you're thinking about it, capital flow driven growth or and, and foreign purchases of financial assets can persist for an extended period of time if it's paired with actual economic activity that is commensurate with those capital flows and asset pricing. And similarly, borrowing can oc
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