Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
[00:00:15] Speaker B: A good friend of mine has advanced degrees in economics and he's very much an Austrian school kind of guy and has since sort of migrated into programming language and tech as a profession. But way back in the 90s he had written a white paper for one of the thinkers takes about. About digital gold or digital currency ideas in the 90s.
And yeah, I, I accused him of being satoshi, but credibly he's not. But he's, he was coy enough where I, I wondered if he somehow how he had a hand in it and I would want to divulge his name.
But it's, it's really appealing the idea of something. Oh, you've read when Alden as well
[00:00:54] Speaker A: as oh, Wynn, Luke Roman and Larry Leopard are kind of my sanity checks and they've got different levels of sensationalism to them, which I think is balanced and helpful for me. But yeah, I think you and I, like, after, after we first met, it was like kind of trying to triangulate the truth amongst these different people.
[00:01:15] Speaker B: But like.
[00:01:15] Speaker A: So go back to your point about Lynn Alden.
[00:01:18] Speaker B: Yeah. Well, she's just talking about the nature of money. It really gets back to curtain enough. So I'm excited about it.
And the question is, and this actually does play into farming, which maybe we'll get around to talking about. We will.
[00:01:32] Speaker A: I'm very excited. Yeah.
[00:01:34] Speaker B: But someone had reshared an old clip from Rick Santelli, you know, cnbc, who's one of the more sane voices. In fact, I rather like him. But he's saying, look, interest rates are. Won't be able to help, but I wouldn't be surprised to see 13 to 14% prime in, you know, the next. Whatever he said five to seven years. And this was. He said this three years ago.
I, I have no idea. I mean now Luke Grohman will. Well, actually, I can't quite track him. He'll. Yeah.
Or Lynn Alderman will talk about fiscal dominance. No, we are not in the position that that can happen at all.
And I'm more simplistic in a way like, well, it happened, so it can happen.
[00:02:12] Speaker A: I think. And I'm curious on kind of like how I've processed this too, because I think you're onto something on far like how, like how does the machine actually work and what are the actual options? So like when we think about like I think that they would word it as under yield curve control which essentially is the government stealing from everybody while they continue to borrow and print and they borrow and like just for the listeners in like it's the government borrows at what, 3% for their debt or whatever it might be 3, 4% and then you and I are borrowing at 12 so they can print their way out of this mess and we are shackled down. So like I think like that's the only way and like whatever gaslighting way, shape or form, ppp, ertc, this or that program, whatever they're going to mask it as it's just math and they're going to have to print in order to get out of this.
[00:03:16] Speaker B: Yeah, yeah. And the dangerous of course the people abandon the currency wholesale which changes everything. So we're not, I mean this isn't our well it would be our first rodeo professionally but we've experienced some species of hard currency reset. Right. Every few years called the volcker phenomenon. The 80s a pretty tough reset and certainly slamming what was left of the gold window shut in 71.
[00:03:42] Speaker A: Another example all different types of defaults. Right Tom?
[00:03:46] Speaker B: Yeah. And I think it's where Graham and which I do find credible. You know the box end up being the bag holders is you know, hey, thanks for playing and you have to
[00:03:56] Speaker A: take them because otherwise you can't leave the country. You can't like so let me do this because I really like I want to frame this up because I'm really curious on how you think about this. And for the listeners I'll put Tom, the links to our previous episodes in and I've, I've been touching on you know, macroeconomics and like I just have found your lens of how you think about this very fascinating because you're, we're both along the same lines and so okay, let me throw, let me throw this context around to you because like I was trying to explain this to one of my clients recently. So we have this three state model that you've heard me and talk about, we've talked about in the past like the for a company or for a farm or whatever operating entity that is in the version of capitalism, we have a starting balance sheet. So every one of us that are the, you know, the lay people of the, you know, who aren't friends with Powell or now Warshlow not print it. We have a starting balance sheet and then we have an income statement, balance sheet and cash flow statement that all mathematically tie together to a future point in time. And it's a closed loop system.
It has to math out. As long as we believe in double entry bookkeeping, you have assets and liabilities and they have to tie out. Right. Like you can't have leakage because you and I have to have enough cash in our checking account to pay payroll or to pay our mortgage.
And that is what it is.
[00:05:21] Speaker B: Yeah. And like that's it right.
[00:05:23] Speaker A: For, for us it is.
[00:05:25] Speaker B: I mean I'm very much still the accountant and the that sense which I, whatever forecasting I do and that's what I do, I, I, I insist on three statements and they tie out, they kind of childproof it. The ability for dollars to go missing without that system or not being able to explain your change in wealth or account for well it gets really risky and I've seen this happen even at the hands of pretty experienced execs where their failure to have the three, the, the, the the three three statement system ended up unwillingly underestimating their operating loan needs. And mid season had to walk back to their lender hat in hand said oops, we're oops.
[00:06:05] Speaker A: I was wrong.
[00:06:06] Speaker B: Yeah. And that's, you know, it depends on your standing but you certainly are, you're calling in some credits regardless and maybe you have enough to survive it but you've called them in and it takes a long time to earn them back. And if it happens in an untimely way you can pretty much get everything called on the spot if the, if you know everyone else isn't is kind of dodgy which is depending on your industry it is ongoing where people's sense of risk is at least elevated compared to it might have been 10 years ago.
[00:06:37] Speaker A: And yeah, yeah same thing for the operators that I work with.
[00:06:42] Speaker B: Okay.
[00:06:42] Speaker A: And I think what is well yeah and like I think one of the things that I want to pull out of what you said is there is a fundamental law of math that applies to farmers and to owners where like if the checking accounts is zero and you have no line of credit or access to debt, you're effed.
And so that right there is the law of math of double entry accounting. You can borrow some for a little bit but you have to pay it back. And where the government through and this is what be interesting is okay, may follow, see if you can follow my train of thought here because I really want your reactions to it is okay so we got the three statement model which the law is cash, you can borrow whatever form of debt but it has to be paid back because it's the law of double entry accounting, closed loop system that the government, any central bank. And Ray Dalio talks a lot about this and I know you follow all these people, same thing as me is like, okay, they, I think, Tom, they use all of this jargon that our clients don't have a freaking clue what it means. But what we, our clients know is I have no money in my checking account.
So like when that happens to the government, they print money.
And so like the Keynesian in massive quotes of just total bullshit is the effect of, of a government having a three statement model that their line of credit is printing.
[00:08:10] Speaker B: Right, right.
[00:08:10] Speaker A: That's how I'm thinking about this. And like when I just watched Luke Grohman here recently, Tom, like, so it's like, okay, well you know, the thing is about like in 33 or 45 or 71 where we've effectively defaulted, we just. When the government goes, oh, oops, yeah, they don't ask their citizens, they just go, control P.
We'll deal with this later. And the deal with it later is like this mathematical point in time where we are at right now. A time that I'm seeing where like Luke Groman said, okay, and I was trying, I'm trying to help people in layman's terms going, okay, what is the correlation to real world stuff that we're at?
So we are at. So if the government had, you know, they could say receipts, but like the business person listening, that's called revenue. So we have $5.2 trillion in revenue.
That's part of the three statement model. Right? We have. And he said that entitlements and interest equal our revenue. So entitlements meaning, hey boomers, that Social Security, Medicare, Medicaid and all that stuff. So you go, okay, what did he say was like 4 point or 3.8 in entitlements? And then you have 1.5 in interest.
What about military? What about schools? And so just entitlements and interest equal our revenue. So then the question is what happens when the government has that you print and then you go, okay, well where would you. If you, if you didn't do that, like what are you going to cut? And then the, like everywhere you go the answer is printing.
And it's a mathematical doom loop of like we are f. And it's not more complicated than that. So it's okay, you either increase the taxes, but then you destroy consumerism and tax. So like there's no.
I'm trying to help. That's why I wanted Your reaction to this, because it's not as complicated as everybody makes it seem to be.
[00:10:01] Speaker B: Well, that's one of the arts of fiat. I mean it does complicate some things that ought to be a lot more simple. I think the assumption is, and it's held somewhat true since the founding of the Federal Reserve as we've been inflationary and debasing the currency heavily for what, 110 years, give or take 15 years.
And we've managed to be entrepreneurial enough and innovative enough. So we've to extent, we've masked some of the worst of it by outgrowing, outpacing the growth of debt. And I think there's a certain amount of hope and it's not totally unfounded that call it the AI revolution, the robotics revolution will fuel growth to the extent that it makes the debt more manageable and also perhaps fills in some of the holes left by our demographic issues.
[00:10:49] Speaker A: Let's unpack that because I hear the narrative too and it's all so like how my brain works and I know yours does too is like so I look and I'm as the people listening and I'm picturing my 3 statement monthly for years since inception. Right. So it's like the whole history of the double entry.
Did we have any leakage? Well, we had a lot of leakage, A shitload. Where are we at now? Where are we going in the future? And we go, okay, well what the difference between now and 1980 in the vocal years or 71 is, is we had in that after the war. So let's think about the government in terms of the three statement model. Like how do we generate more cash? It still applies to us. We've been printing and we are at the end of the line. So when we are totally asked what do we do? You can increase revenue. Name a politician that's going to go increase taxes to everybody. Then you go, okay, well we can increase productivity, meaning we have more GDP revenue. Yeah, to tax that. But then like I don't know about you and the farmers, Tom, but like everywhere I look for AI, like professional service consultants and advisors and like the, which I think we're a 60% consumer professional service based economy. That's not looking rosy. It's going to be like a winner take all for a lot of these professions over time. I mean like unless they retrain them. I mean I look and go okay, well then you're, then you're. Even if there's a short term burst of unemployment because like, I mean people are laying People off.
Yeah, we can't tax them then so our revenue go down. So that's what Luke was talking about. This one reason why he's like, so even if you shrink like you go to the boomers and say, all right, we're cutting 30% of your entitlements, we're cutting 30% of military, we're cutting 30%, all this shit, then the actual revenue goes down because the Ponzi scheme is like. That's what I mean. It's like this mathematical. Like we're blowing people up to take our dollars. They don't want to do it anymore. The Americans can't earn enough money for us to tax them. I don't know.
[00:12:55] Speaker B: Yeah. Oh no, there's a soft landing is a problem. I think, you know, best cases. What was it? This is United 232. I think that's the DC 10 that they miraculously crash landed in Sioux City.
80s.
[00:13:09] Speaker A: Yeah.
[00:13:10] Speaker B: A lot of people died and of course total hull loss. But the reality is that against all odds and using skills that they had not replicated in simulators, they managed to save like two thirds of the people. It was still catastrophic.
[00:13:23] Speaker A: Right.
[00:13:23] Speaker B: That might be where we are. There will be no soft landing.
And you can see that. I mean, farming is such an excellent microcosm because it's very asset heavy.
You know, real estate factors, large. And of course subsidies and, and of various sorts, direct payments or let's say the ethanol mandates and things all create a fiat conditions in the business.
[00:13:48] Speaker A: Explain for the listeners what you mean by that, because I don't understand, but I want to make sure that people understand what you mean.
[00:13:53] Speaker B: Let me see if I can unpack because sometimes actually what do I mean?
[00:13:58] Speaker A: Because it's shorthand for this complicated stuff and that's what it is.
[00:14:01] Speaker B: And that's why the industry fascinates me so much. I mean it's potential to be, it's, it's multi generational, it's family, it is small business, it tends to favor smaller operations. I don't mean tiny, but you know, it's still family sized or, or succession of families.
So in terms of production, I mean an awful lot of our ground is planted into corn because I recall and, and some listener can correct of me. But about 40% of that goes to ethanol, which is a thing that is a question of legislation. Right.
How much ethanol people would really buy short of such mandates and subsidies?
Well, we don't know because we've been having.
[00:14:43] Speaker A: And my, my add to that. We don't know because you have the money printer telling people what's valuable.
[00:14:51] Speaker B: Well, you have a. It's very distortive and it's not beyond. If you use your three statements and you look at return on assets and you are in a forecasting mode, long term strategic forecasting. You know, Fiat is. As an entrepreneur, you don't have to drink the Kool Aid. It does require a certain amount of.
You have to be willing not to play sometimes you have to be willing to leave money sitting on the table and it feels like you're sitting on the sidelines and everyone else is having a party.
So it's not a fun process.
Kind of simplistically, there's a reason that Buffett is rich and no one else is the to sit still and not do stupid things. And then when everything looks horrid, he has is the guts to do things that everyone else has become afraid to do.
[00:15:36] Speaker A: Well, and I think why, Tom, is because I read Snowball, which is my favorite Buffett book, and what I like to do is put things into context. So I literally think about the three statement model of the government for 120 years and go, he benefited because he's looking at cash flow, right? He's looking at cash flow. And he benefited from perpetually reducing rates for 40 years. And like Ryan Tansom, who's turning 40 this year, can't. It's, it's not the same game. So like I can't be like, oh, I can't read all the Buffett books. And like, I will be patient and I will do this. It's because the game is fundamentally different.
And it's because the cash flow doesn't make any fricking sense. I mean, I looked at, I sent it to my buddies this morning. The seven companies that are holding most of the S&P 500 are losing fucking money now. And I go, so, like, where's the cash return going to be? And so the reason I think Buffett's at $350 billion is because nothing is worth it based on the cash flow lens. But what I was hearing you say, and correct me if I'm wrong, is when you say that maybe farmers feel like they're being left out, and I watch it with entrepreneurs too, is they're looking at the fake mirage asset market going, everyone's getting wealthy. And I'm going like, that company that the private equity firm paid nine times multiple for is never going to give the return to the pension fund. I know that because I can look at the model and go like the math.
They'll math out unless they screw the person that they bought it from or screw the person they raised the money from.
[00:17:11] Speaker B: Yeah.
[00:17:12] Speaker A: And so that's what I mean by the paper wealth versus the actual cash flow. Valuation. It's a different way of thinking. Thinking about the game.
[00:17:17] Speaker B: Yeah. You understand in farming. Exactly. Because the main play is if I should have bought farmland, it used to be 5,000, which also by the way, did not cash flow. I just talked to Minnesota farmland. It was 5,000 an acre and my gosh, it's 10,000 this year at least. I have a neighbor who sold a quarter section for 10,000.
Right. So there's that.
And that presumes a lot of things. Right.
Presumes that you would sell.
Presumes that those returns aren't great. They're, they're, they're, they're good, but they're not great. And they're highly dependent in terms of working on your ability to, you know, to cash in and cash out in a very timely way. Which basically is the Buffett thing. And if you're reacting to these things kind of that more emotional. Well, far it was this, now it's this I missed out.
That sort of announces that you're not thinking in a way that you'd be able to make that play successfully. And even there you look at the ROA characteristics and your balance sheet ability to.
Even the wealthiest farmers generally in Minnesota don't have the headroom to acquire more than let's say a section of land.
And a commercial scaled farm in Minnesota is, you know, everyone's different but you're going to have to have at least 3,000 acres under management and 6,000 is probably nicer. And that's still a family farm. That's you know, a father and father kids. Right.
[00:18:44] Speaker A: And I got a buddy down in Storm Lake and that's. Yeah, it's a family business.
[00:18:48] Speaker B: Yeah, yeah. It's not like it's some corporate farm. Just use the kind of a bunch
[00:18:53] Speaker A: of brothers and parents fighting over who's gonna drive the truck.
[00:18:58] Speaker B: Yeah, it's, it's really, it wishes it's strength. And now if that's farm strength, well run their return on assets, even in these challenging times is double digits and it's about double the cost of funds.
[00:19:10] Speaker A: You know, it's really interesting that you're saying return on assets because that is a, in my mind, a no, no. And an operating cash flowing business because if they're looking at return on net assets, it's just an income statement. Return which does not factor in the capex that, that operations has to actually put in.
[00:19:33] Speaker B: So it's fascinating how that, yeah, it's a rear view mirrors thing. Obviously you're looking at your asset footprint and it doesn't reflect on unneeded capex in the coming year necessarily. But that also impacts roa. So you know, in the mathematical sense, the fewer assets you have chasing the dollars you're generating, the better. But you need enough assets to get it done. So there's a balancing act and it's especially in farming ends up being a bit qualitative. How badly do I need to replace my main tractor? You know, you're talking about three quarters of a million dollar investment potentially. How badly do I need it? Well, it ends up at the margins being a bit of a judgment call. The math is better if I don't replace it, but it's unreliable and there's a risk factor if it breaks down in an inopportune way or I think that the newer one's going to be.
[00:20:22] Speaker A: Don't you think it's that that decision comes down to how much cash they have.
[00:20:27] Speaker B: It should.
[00:20:28] Speaker A: And they're borrowing cash or borrowing. Right.
[00:20:31] Speaker B: I mean, yeah, it, it, it does. And that's one of the. You touched on another point which at large the, the nature of, of farming in Minnesota is their capex tends to expand to equal their free cash flow every year. I mean if the fun stuff, yeah,
[00:20:48] Speaker A: welcome to the game. Like yeah, I wonder why you see the farmers in the, you know, 1940s split level with their Buick. Because you got it all in the, it's all in the stuff. Cash rich or you know, paper rich, cash poor. I mean it's the same thing. The owners that I work with, it's
[00:21:05] Speaker B: interesting that it does. You can see that in let's say manufacturing and other concerns.
[00:21:10] Speaker A: But the only thing that I haven't seen it apply to which I think the game is over is software as a service, which is why the whole world ate software as an investment for 20 years.
And I should show you this. I'm going to screen share and just show you this because like I, I sent this to my buddy this morning and I'm just like, I just played like the wizard of Oz song.
I'm like, what the F is going on here? Because it doesn't make any sense because like let's. I'm going to open this up here.
Going back to your question or your comment about like being subjective of like the judgment call of should I put it in here or not. I think that like all of my clients I'll speak. I don't work with farmers but they would like to make those investments. But there's. I'm watching the three statement model and the cash, not the return on that assets, not the revenue but like actual cash. I'm watching the K shaped economy of people getting ripped in half because it's like I would love to increase my payroll the you know the raises by 5% buy the new piece of machinery but it literally has to be borrowed or the ca like where's the cash going to come from as you look at that forecast and then it becomes defaulting to the fiat bullshit game of let's do all of this paper margin loans and this borrowing to optimize for the paper wealth, not the cash flow wealth.
And then we sit here and go okay, well that whole pyramid given the straight of Hormuz.
[00:22:48] Speaker B: Yeah.
[00:22:48] Speaker A: Potentially could be over.
[00:22:53] Speaker B: Yeah, yeah. Well I think some point, at some point the margin gets called. It just does. And you can count on it we've managed to kick that. Ooh, interesting. What do we have here?
[00:23:04] Speaker A: Okay, so people listening in. I'm showing this AI hyperscalers. So to your point Tom, like you know farming and like manufacturing all this stuff that's been heavy cap X because there's no effing cash got outsourced to China and then we've now had a professional services economy where 60% is professional services and software.
Well now we have so we're looking at Microsoft, Amazon, Alphabet, Meta, Oracle, combined free cash flow and the S&P 500. So we went from.
I don't even.
What is that? That's in billions or trillions? Billions probably.
And it just went up to the la, from the left to the right from 2016 to now a free cash flow and then it went negative because these companies time. It's such a fascinating argument that this is why the all of the money in the pension funds and everywhere went to software because they actually had cash flow where everybody else has been borrowing themselves to death. And now that these companies are no longer software businesses, they're industrial because they're building out capex with data centers. There's no more cash, no more cash to do the stock buybacks that prop everything up which is the pyramid scheme. And so like look at that number. Like you're just like. So like the valuation is still going and it's completely decoupled from free cash flow like completely and just like this is insane. So like there's a Guy that posted this that said, like, those valuations that are 40 times earnings should be 9 or 10 if they're industrial companies.
[00:24:45] Speaker B: Yeah. And you see that. And of course, we had that with the tech bubble around 2000 and we're at those levels again. If you look at fillers, cape or kind of very antiquated, but I still think really meaningful Q ratio.
And I'm not a stock guy.
And the reality is stuff can be overpriced and it can go up from there for a long time. And, and especially as we've been trying to cope with the, the fiat corner that we painted ourselves in, you know, there's.
[00:25:14] Speaker A: I think it will go up, Tom. I don't.
[00:25:16] Speaker B: I think it could.
Is likely to, because it has until.
[00:25:21] Speaker A: And let's talk about, like, let's talk about why. Because, like, Larry Leopard has been talking about this and like, so, like.
And what I like about Luke. Groan. Maybe because I'm going to combine a couple of these people's thought process. Like, how I think about it, Tom, is like, what has to be true for what to happen. And I go, okay, well, and I, and I literally do like, deductive reasoning. That's what I like about Luke. He like thinks out loud. He's like, well, follow that train of thought. Well, that blows up. Follow that train of thought. That blows up. And so you. Okay, if it goes down, let's say they actually normalize around real prices.
Because, like, right now, I think it might have been one of those measurements that you mentioned. If someone invests in the stock market, it would be like a hundred years for them to get the return back based on cash flow.
Like, like it doesn't make any sense at all. Like, so you're not.
[00:26:13] Speaker B: Make that. That making that play makes zero sense, right?
[00:26:16] Speaker A: Yeah, right. If you're doing it from the Buffett perspective. Hence 350B billion dollars in cash on the sidelines.
[00:26:23] Speaker B: Yeah.
[00:26:24] Speaker A: But if we go, okay, well, what would make it go down so I would be open to investing in it. Well, if it goes down, like the stock market actually goes down, according to Luke Gromen's research, because 50% of the spending in the economy is from the top 10% of people.
And those top 10% of people are getting that money from their margin loans off of their assets.
So they're not selling their assets, they're taking cash out, you know, from the leveraged loans.
And then if there's a recession, the taxes come from those same people, so we actually can't pay our. So, like the government would go down in revenue if the stock market goes down in price.
So like in the. Luke showed that correlation, Tom, where we mathematically cannot let the stock market go down because our revenue would go down, which would increase our deficit, increase our debt. So it ends up being this, like it has to go up, which just like what I think about it, that's just money printing. That's just Larry's like the big print. So if it goes down, it's just going to go up until like the Dutch East Indian company where you look at that valuation, it was like rising, rising, rising, just like our s and P500 and then just went to nothing because people are like, wait a second, this is all fake.
[00:27:57] Speaker B: Well, at some point that's, that's the realization that hits and, and you know, it gets. I spend a little enough time in the, in the mechanics of, of, of at the macro level to, to, to work out. I know that, you know, in terms of valuations versus cash flow, they make zero sense or cash. The cash flow question and the cost of funds historically and practically, they make zero sense.
In farming, we know that a lot of what it's been a big Cantillon game. It's been inflation driving land prices. And if you take into explain the
[00:28:32] Speaker A: Cantillon game, because this is a fascinating
[00:28:33] Speaker B: concept for the listeners, Richard Ricard Cantillon, the Frenchman, who talked about correctly and probably really pioneered the idea that new currency enters the financial bloodstream unevenly. So it's not Ben Bernanke's helicopter fantasy of, well, everyone gets it at the same time. No, it's incredibly unequal. So people who are connected, the sources of capital, which usually ends up being people already who are heavy asset holders and or are politically connected, they're all the closest.
[00:29:04] Speaker A: Like I have this visualization for. Well, the visualization is like, okay, you have a bunch of fish in the water and it should be evenly distributed with the fish just kind of floating everywhere. But in the, in the tank there's this little hole that's like spitting out food. And the biggest fish that's closest to that spigot is going to like kick everybody else away from that spigot because they're close to the spigot. It's just the money printer. It's like, okay, who's friends? Oh, wait a second. You had to wait. So Powell went to school. He's the Federal Reserve chairman. He went to school with who? Oh, he worked at Goldman Sachs. Oh, he's friends with that Paul. And he's just like this is such bullshit.
[00:29:40] Speaker B: It is. So you have a. It's terribly messy now. Of course, farmers are as a block have been split politically significant for a long time. Individually they're just small businessmen, like people you work for and, and other non farmers I worked for.
But reality is that they own a lot of land and that has had a tremendous impact on their balance sheets in a positive way. I mean farmland from 1960 until today, you look at the whole cash flow and valuation. You look at the total pile of.
Of assets that either generates or is valued as it's outperforming the S and P and. And plus, you know, it's got that.
[00:30:21] Speaker A: Can you cash flow as assets if you're a new buyer though?
[00:30:24] Speaker B: Oh heck no.
No, no.
[00:30:27] Speaker A: This is my. This is my.
[00:30:29] Speaker B: It's this 10 years. Yeah, you're out.
You know, if you have to borrow, you're going to lose right now because the.
[00:30:37] Speaker A: Here's what. This is so fascinating to me. I could pretend that my Princess Diana Beanie Baby is worth a million dollars on my balance.
[00:30:44] Speaker B: She.
[00:30:45] Speaker A: Because it's in my. I have like a bucket of Beanie Babies and one of them is Princess Diana. It's got. And like. But no one's gonna buy it at a million bucks. And so I go, okay, so the boomers. And this is like disproportionately generalization but like, okay, that farmer generation. And I've got the same stuff going on with the business owners going like, yeah, because of the fiat bullshit and all of the valuation increase these owners need. Like I'm working with someone like it's like it has to be worth nine times EBITDA for us to do all the math. And I'm like, that makes. So that's what the numbers work for the seller. That has to happen for them to make it all work on their end.
If someone buys it, there's no way it works long term.
So then you go, so who's going to buy it? Well, so it's the people borrowing from the pension funds. They're going to screw the teachers over and all roads lead to the. The new Fred war is going to print. And he's either going to not print and pretend and then he's going to. All the banks are going to just give loans out and like you and I should have some conversations with the banking way of that. They're the shenanigans. But the ma. So back to my point is farming or you know, owner operators for them to actually take the money off the table like My Princess Diana Beanie Baby. They have to find some sucker
[00:32:09] Speaker B: to buy it.
[00:32:11] Speaker A: Who's going to be that person?
[00:32:12] Speaker B: The boomer question is interesting in farming because it like, like you're seeing in, in small business elsewhere. The, the CEO owners are aging out, they are looking for an exit.
And the, the, the generations that are, that exist, who can replace them much less would be interested in, in, in filling their shoes is quite a bit smaller than. And farming farmland turns over.
What's the average rate? I mean it's gotten down to in Minnesota, only about maybe 1 2% at the very most are changing hands every year.
So when you say well it's worth 10,000, it's the comparable sales thing. Well, yeah, that quarter section, a guy bought it and he didn't do good financial calculation except for well, I've got this other land, it's worth more. So I levered that up, I refied that or repackaged all the things. So my average cost is great, my cash flow is fine. Yeah. But the reality behind it is if you had 10,000 an acre just to put to buy the land flat out as a financial question, you'd have been better off putting it in passbook savings. That's because the rental value less, the real estate taxes don't even keep up. And, and even if you're, you're farming it even there, the marginal income from the crops are not terribly competitive with just, you know, passbook. It's just 10,000 acres is a lot.
And you know, they, they can do what they've been doing and with some justification. Well, yields go up and efficiency goes up, so that'll cover it. And well, if you look at yield trends, you're basically spending today.
Forgiven yield trends. What the farmland might take 20 years to actually be worth as an asset.
Assuming that, assuming that the yields doing this aren't going to make the prices do this Right. Because the tendency of US Ag is very, they're very skilled and they're very efficient. So they overproduce.
So we've got 200.
Well, last year was really excellent yields in most of Minnesota. You've got 230 bushel corn.
Prices have held around $4 at the farm gate. If you're. So if, if you're producing 300 bushel of corn, are you going to be able to hold $4?
I think the answer tends to be no.
And so when you're trying to look at the income characteristics and what farmland in terms of its actual output is worth, you got a lot, you got a Lot of assumptions and some of them are almost outlandish to justify the current prices. Even after 20 years of yield, yield efficiency gains.
[00:34:55] Speaker A: The same math is going on, Tom, in middle market companies and now even the seven largest companies holding up the entire S&P 500. So, like it literally cascades throughout the entire economy, which there is. The cash flows don't make any sense for the paper valuations. And you could say the. You, meaning they, whoever they are, is sure right now those people and what they held and what they did for 20 years got them to this point. But that requires the Ponzi scheme to continue for another 50 years at the same velocity. And the things that doesn't allow that to happen is there's 80 million people that are 70 years old who are literally going from like this is my analogy to one of my clients, I said, can you imagine taking 20, because I had 22 sales reps at my family business.
So can you imagine taking 22 of those salespeople who generate the 21 million in revenue and then turning them into accounts payable clerks, which is sgna. I said, it literally fucks the whole thing up. Because, like, so we're going to have all these boomers that go from our revenue, we're taxing everybody to going, all right, now you're gonna sit in this accounts department and you're just overhead.
And then you, so then you just like. And, and there's less people to replace those 20. So now you got 22 people that go into accounts payable when there was six. And now the salespeople that replaced them is there's six people.
So, like the mat. Like the whole thing is so absurd.
[00:36:35] Speaker B: No, and I mean, I like to talk about, well, you know, what's my advice to people running businesses or farmers, what should you be looking at and what are the macro factors?
And it ends up being kind of.
It is very fiscal dominant, it's very government dominant.
And so, yeah, nothing's working great.
It's likely to collapse or to adjust because of Fiat Ponzi. Sooner or later someone calls a question and it goes pop.
But it, it's. That's not predictable. It always goes longer than you would think.
[00:37:09] Speaker A: I don't know if it goes pop. And this is what. So I, I've been, I mean, right. I mean historically it, it has go. And the pop in infers that it'll go down in price.
So what I, and I want your reaction to this because this is where I've been debating with Alan Bolio a little bit on this because I think we agree on like 99% of stuff and then we like how this unfolds. I'm in the camp of Luke Groman and with Larry Leopard and you know. Yeah. And let's talk about like how what they think and kind of how I align with that and then how that compares to Lynn and I want to hear where you stand in this. So, so if we keep this going and if because the math doesn't matter. You and I have been describing across all pretty much the entire economy, if it goes pop, it blows out the government's receipt like so that means their government's revenue would go from 5.2 down to like I don't know, let's say it's 4.5 trillion which increases the mathematical compounding of our, of our debt. So like we are in this debt pinch where like if we were in 1980s when we didn't have that much debt it was fine. Like we actually were able to absorb those higher interest rates. It was really hard for a lot of you know, middle income people but like there was enough cash flow to absorb that kind of situation where at this moment if the stock market goes down, we can't tax the people that are spending the money and the people that are getting old are going onto the tip, they're going to start getting payments. So then you go, if it goes down the math is worse. So they're going to print which means it'll go up until the currency collapses somehow or they shove the flaming bag of shit down like in how. Here's how I think it'll end up happening is my father in law who's got like a $3200 a month pension. It's, it's adjusted by the CPI which is bullshit. So he's going to be the one holding it like Paul, I said Paul, you're not going to be able to buy shit in 10 years. That $3200 is going to buy you a fucking thing of groceries. And that's who is going to hold like the bondholders are all of the pension funds and all of the retirees that are sitting there with their 40% in bonds going I can't buy anything with this money anymore.
[00:39:21] Speaker B: Yeah, was that Roman calls as he's called and it's, it's been said elsewhere but it calls them bag holders.
[00:39:27] Speaker A: Yeah.
[00:39:27] Speaker B: I'm not trying to insult someone's intelligence at all. I mean that's, that's supposed to be a good safe play. But when you have too much.
[00:39:33] Speaker A: It was until the government lied to us, though.
[00:39:34] Speaker B: Well, yeah, yeah, yeah. And, and first mistake was believing them, of course.
[00:39:41] Speaker A: Fair enough. But, well, isn't that what the Constitution was built like? I'm like literally just get done reading Benjamin Franklin biography and it's like we don't believe anybody. We don't believe ourselves. We're all evil. Let's try to put something together that puts us in checks and balances. Didn't work.
[00:39:55] Speaker B: Yeah, yeah, it worked for a while
[00:39:56] Speaker A: anyway and it worked better than every, like, what's the way of saying it? We're the cleanest dirty shirt in the laundry.
[00:40:03] Speaker B: Yeah, yeah, yeah. So, so anyway, I mean, you're sort of pity.
[00:40:07] Speaker A: You think it'll pop. That's what I mean. Do you think it'll go down and
[00:40:09] Speaker B: how long and it's really speculative and you put me up against some rather larger minds than mine, at least, at least when it comes to this topic. You know, it, it won't because it, it won't go down because it can't go down. Well, we, we've, it's not our first rotary rodeo. We've been here before. Governments overspend until someone calls the question, does that, what does that look like? Does it look like Rome, which I guess all men are supposed to be thinking about is the client and fall of the Rome.
[00:40:37] Speaker A: I've been catching that.
[00:40:39] Speaker B: Yeah, I, I, I, I don't know what was the nature of the fall? Are we Weimar now? All interesting questions, but at some point when there's too much debt, it gets vacated.
It's written off, it's being slow written off through inflation. Right. But that's just so painful and pervasive and distortive that at some point people say F off.
[00:41:03] Speaker A: And this is where I think I start to diverge from Alan Belio and Lynn and I lean more towards Larry Leopard and Luke. And let's, let's double click on what you said because you say, because according to Lynn, I mean the way that you actually absorb that situation of too much debt is you debase the currency to like I, like I said, you and I are borrowing at 12% while the government's borrowing at 3. And the growth, I mean, they're stealing from us. But that like the, in the, the, in the version of they're stealing from us, it's the pension and the bondholders that are holding the bag. So where does that room come from of the growth and the borrowing difference, which is called yield curve control? It is the pension funds and the people that have. The bonds are screwed.
And so that's how. That's who holds the bag. And what I believe more towards like a Luke Groman or a Larry Leopard or a Ray Dalio is I then move towards the human part of this, going like, people are going to say fuck off.
And they're, they're going to get mad at each other and people are going to try and figure out who's the boogeyman. And it's going to be race versus gender versus class versus age, because people don't know what we're talking about here, Tom. So they're trying to find someone to get mad at and they don't know why their life is worse. And then we have corrupt elections and then we have corrupt. You know, all this stuff where people are trying to grow, grab onto something that's shrinking. And like, Lynn assumes that people are just going to be fine with that. And I'm like, well, according to Ray and all of recorded history, 100% of the time there's a revolution and that's how the currency gets reset. And I go, I don't want to go through that. I'd rather have the slow debasement. Hey, all the boomers, we're going to cut your entitlements. You're going to go ahead and you're just going to sit in your assisted living and you're going to be the ones that dealing with this. And I'm like, is that really going to happen, you think?
[00:43:03] Speaker B: Yeah, and I don't know if it looks like that or not. I mean, we've had rather quieter resets than that. I think you have to look at. And it was unconscionable and devastating. But, you know, FDR's constructive gold theft in the 1930s.
[00:43:17] Speaker A: Constructive gold theft, really interesting choice of words.
[00:43:20] Speaker B: I don't know if it's actually. It's kind of right in your face.
[00:43:23] Speaker A: It wasn't, by the way, gonna like this, Tom.
I've got this hanging on my wall. It's FDR's executive order from 1993.
[00:43:32] Speaker B: It's more.
[00:43:33] Speaker A: And just never forget they stole all of our gold.
[00:43:36] Speaker B: Yeah, Yeah, I gotta get one of those.
[00:43:38] Speaker A: Yeah.
[00:43:38] Speaker B: But, but it is the abandonment of, of, of Bretton Woods. It is, it, it is the Volker phenomenon. And so it's, it's certainly is, is painful.
[00:43:48] Speaker A: So I wanna, I wanna capture that for a second because I, I'm, I'm tracking you, but that's all within context of our currency.
So like. And so like, if it was you know, since 1913 with the federal Reserve. And then it was like, you know, a couple of these all like the 1940, 1924 when they totally screwed all over the farmers. I don't know, like, if you've like fascinating topic but we can come back to. But like 24, 33, 45, 71 are all bankruptcy defaults. That's, that were money printing on our currency. But what I like about Ray Dalio is the Dutch glider and the British pound. So like this Fiat, I, I think about it like the Fiat Vampire, it left the Dutch in Denmark as a carcass because the vampire then went to then the European Central bank and sucked all the blood out of Europe and then came over to America and sucked all the blood out of America. And they're leaving our carcass and going to the UAE in the Middle east right now.
And I just go, you're just going.
And then leaving the people holding the bag, which. So when, when I look at that within context of each currency in Rome, 100% of the time there was war versus like. So when you say there was peaceful recalibration, that was within context of our currency.
[00:45:10] Speaker B: Yeah. And relatively, I mean it's certainly war has been in one form or another hot and cold and localized and ongoing constantly.
And I have no predictions about what that looks like. I think that staying close to home for me in the agricultural, it's going to be a painful process for a lot of farms, at least anomalous farms who have been sitting on heavily appreciated land, subsidizing it with our farm farm income. And, and I'm talking about the average farm size in Minnesota is well under a section, under management, which is like, like a fifth of what it would take to be commercial scale.
[00:45:53] Speaker A: How much, how many acres is a section?
[00:45:55] Speaker B: 40. Yeah.
[00:45:56] Speaker A: Okay.
[00:45:56] Speaker B: 640 acres.
Basically a square mile, I believe.
[00:46:00] Speaker A: Okay.
[00:46:03] Speaker B: So you've got a lot of people out there who've been essentially off farm income and appreciating assets have enabled them to continue something of a hobby. As you know, it's a family tradition, it's a lifestyle. And nothing wrong with that except for that it is a financial setback for them. It is a cost and it also, it also really hampers the development of the business and the ability of the actual professionals to develop and grow and reinvest. Yeah, yeah, yeah. I, I mean, so what kind of
[00:46:35] Speaker A: back to your earlier point where like they're choosing to take the cash or use it on the paper money versus reinvest into actual Operations or R and D. I mean it's the same thing with, you know.
[00:46:44] Speaker B: Yeah, yeah. And, and I think just, you could end up with a bit of a demographic crisis since these people finally are aged out.
And you know, if I said that 2% of all farmland or 1% is changing hands every year in Minnesota, if that, that doesn't have to go to, well, everyone's broke or half the people are broke.
The attrition rate or the rate at which the land comes on the market, if it went to 5%, that would crash the prices. There are not enough big balance sheets to acquire the land at that.
[00:47:14] Speaker A: That is so important what you're saying right now.
[00:47:16] Speaker B: And I think it's very much the marginal. It's the margins. Right. And the farm crisis of the 80s, which certainly was partly attached to volume Volker and some other things going on. But they, it's, it's boom bust, which is human nature, which just gets exacerbated by fiat games.
So the attrition rate actually in the 80s was, you know, you're like a 1% of the population exit from the business every year and it went to 2%.
I mean, it's a blip. And it was, you know, it was enough to, to take land prices, depending on where you sit. But from back then, $3,000 dollars an acre down to under a thousand, and it took 20 years for them to recover that ground, no pun, to recover the price.
So I think that it's fragile. It's very fragile and that's what it's likely to look like. And you know, where does that put people? And I think they print.
[00:48:18] Speaker A: I think they have to, they have to print to make it all work.
[00:48:22] Speaker B: I would agree. Although I'd like to say we're already seeking for a currency out, hence gold. People are paying, even silver, crypto, I mean, bitcoin being the only emergent one that seems to be.
[00:48:32] Speaker A: And I think, well, and I think you're seeing that just like the. So to use my words is there's, there's all. There's certain amount of money on people's balance sheets, whether it's corporations or governments. Governments being sovereign debt or sovereign funds. We have our debt, everybody else has savings. That's what I think is very. Just small anecdote. Like people always compare us to China or us to Japan. I mean Japan has $3 trillion in savings. We have 40 trillion in debt.
So like those are different, those are different situations. You can, you can overcome some things with a savings account versus a. But When I see like okay, if there's money, what's Michael Hollow said, all money is somewhere, which means it's on someone's balance sheet.
And the money is trying to find a place to go where it's not going to get screwed by the government, which is the Federal Reserve. So they're trying to like. And that's why I literally like that chart that I showed you. It's like there's nowhere else to go. So they're ignoring the fact that there's no free cash flow. They're ignoring the fact that $10,000 an acre doesn't cash flow because there's literally nowhere else to go. And everyone would rather be in farmland, gold, Bitco, real estate, lake homes. I mean the public markets versus bonds because all the smart money is going well. The American pension funds and the American retirees are going to be the ones holding this bag.
[00:49:58] Speaker B: Yeah. Which is a fair analysis. It's interesting about real estate though. Even as we talk the valuation seems to be changing. And farming last year, they ostensibly had a much better year than feared. I mean at least the higher debt operations were were on the precipice of being illiquid, at least.
But two things, several things happened. Yields were amazing, yet at the same time insurance receipts were high, which go figure.
And the government programs were very. Direct payments were higher still. So people, they didn't exactly make money, which is disturbing. You mean to tell me you have record insurance and government payouts and yields and you still didn't make money? Because of course, why the costs and the asset footprints print is so heavy that you're not going to make money. That's disturbing.
And, and yet they sort of got patched through. And maybe it looks the same way this year in 2026.
[00:50:52] Speaker A: That's where like when I go back to like the. The cascading of a cake where like you have people in their balance sheets, you've got companies in their balance sheets and you know, cities, states, government.
The government's going more in debt to give it to the farmers. Well, and who's going to be the person holding that bag is the person with the 401k with the bonds?
That's what I'm saying. We were talking about direct payments and the government fiscal davenants. There's a couple of topics I want to tie together here because I think they're so useful once we understand them. We meaning once I understood these, I was like, okay, so I'll just jargon to talk about revenue and cash flow and it's somewhere it stops and it stops at the government. And then who gets screwed? It's the people holding treasuries in the dollar. But the, the, the fragileness that we were talking about. So fiscal dominance, meaning wherever the government's printing is. Fine. First back to the closest to the money spigot that people are farming. Got it. Defense, obviously, they're crushing it. And then you say, okay, well AI. Who, who's AI? It's the software companies working with the government contracts and it's the data centers and like intel and Cisco. It's, it's all the cronies. And you go, okay, wherever the, I mean, Nancy Pelosi tracker. Do we say anymore? Like you, she's outperform every hedge fund on Earth for 24 years or whatever the hell it is. And it's because they know they're like, we sign a bill, we give Tom money. I win and my friends win. And, and it's not just friends. Like we need the farmers. Right. But it's, it's. What about the person who's got the commercial cleaning business in Minnesota?
[00:52:30] Speaker B: Right.
[00:52:30] Speaker A: And so last, a couple of, couple other last points here is that you mentioned that one, it went from the, the turnover was that fragile of like, you know, of the 1 or 2% of the farms turning over, Luke Grumman said like in 08 or 07 ish, only 4% of people started getting late on their mortgage payments and it collapsed the whole market.
[00:52:54] Speaker B: Yeah.
[00:52:54] Speaker A: So that's how fragile this is. If literally that like only a fraction of the people making 150 grand that AIs took their job.
Like the whole thing is that fragile. The whole pyramid scheme is that fragile that if, I mean if you got one bar of gold at the bottom and the derivatives are stacked all the way tight is 100 to 1. You pull out 10% of that bar of gold and the whole thing falls apart.
[00:53:19] Speaker B: Yeah. Yeah. Well, someone said that you can't taper a Ponzi.
[00:53:22] Speaker A: So, so what about this soft landing?
[00:53:24] Speaker B: Right?
[00:53:24] Speaker A: Like you can't taper.
[00:53:25] Speaker B: That's. Yeah. And so that's why I think there's an inevitability and, and you know, it's so good. Look that up.
[00:53:34] Speaker A: Right.
[00:53:34] Speaker B: I'm not sure.
[00:53:35] Speaker A: Well, for now it's just Tom, Tom Walker.
[00:53:38] Speaker B: No, actually it might have been, it might have been Groman though, to be honest. But you look at the impact of asset price crashes and we've seen that commercial real estate and, and, and decades ago, my dad something of a Side like got involved in, in acquiring distressed properties after, after the SNL crisis and the Resolution Trust Corporation they were responsible for sorting out dumping commercial on the, on the market for 10 cents on the dollar. So well he, he and some other investors picked up some properties and, and you know he just sold his last one not long ago.
And the cumulative you know compounded IRR was like almost 20% over.
So but when he bought the building of course everyone's panicking. Oh my gosh. And this is like the 1990 or something and well, people are going to be able to telecommute. No one's going to work in offices anymore.
And he said well you know this, this building come up two questions. Is it still standing and can we buy it? And so the answer, look at 10 cents on the dollar.
[00:54:47] Speaker A: It starts to make sense now.
[00:54:48] Speaker B: Sucking air before we ever have an issue in terms of tenancy. The stuff is cheap enough. I mean the building doesn't fall down. People still enough people need an outside of their home location to work for whatever number of reasons.
And we're seeing some, some devaluation relative to the highs in housing. And if you look at whatever the Zillow or they're frightening peaks.
Well if, if, if posh house and that not even that posh of a house goes from a million to 400,000 most likely it's still standing and still looks pretty much the morning after as it did the heat.
[00:55:30] Speaker A: I agree with you and like and, and going back to your dad situation, like I'm thinking about this in context of the entire three statement model of the government which in the 7 or 80s or 90s it's fine. But when we are at the end then like those, like when I think about can the government let the correction happen? And I've done so much scouring time so some of the data points that I have gathered that I, that are part of my mental model and I can't pull up all my sources right now. So the, it's like so if 60% of the country has a sixth grade education, okay, 10% of, of Minnesotans make more than 150 grand.
And I, I, I spent like days with AI like trying to piece this together. I'm like okay, so holy shit. And I'm like okay, how many people are old in Minnesota? And just like I just extrapolate this on Minnesota in the real estate because I wanted to like, I want to make sure that I can buy this badass house and cabin when it crashes. Like well if it crash, how will crash And I'm like, okay, well if 10% of American or Minnesotans make more than 150 grand, like, how many houses are over a million bucks? And I just started like, going through this math. I'm like, no one can buy these houses that are going to go for sale. Like, they don't make enough money. And then I'm like, okay, well then will it crash?
And then I was like, okay, how many of those people are old and boomers? And it was like 80% of the people that have the houses are old. And I was like, how many of those people need the equity that's fake in their house? And it was like 85% of them have only their wealth.
[00:57:19] Speaker B: That is their wealth. Yeah.
[00:57:20] Speaker A: And so then I go, okay, we get.
We can't. The government, like the math equation of the three statement model, the government can't let it go down because the same thing happens on the stocks, same thing happens on company. Or like, so you go through this, like, it has to be there for, for the government to make their 5.2 trillion in revenue, right? So then you go, okay, the whole fucking thing is a lie. And then you go, as every day goes on and everybody like, you're going to want to get out of your house, you're going to want to get out of your farm, you're going to want to. Going to want to get out of your 401k so you can buy groceries.
And then you're like, okay, who's going to be the buyer of this stuff if it's truly overvalued?
[00:58:02] Speaker B: Yeah, well, in some, I'm a bit poanish. I think that. And it's Austrian too. We need the reset. Otherwise we're not going to reallocate our assets, which includes human capital, intelligence, everything, effectively, until then. Until. Until the reset, too much of it is being. Is. Is chasing ghosts. Right.
[00:58:23] Speaker A: Can I tell you what I think is, like. And I'm scared to even put this out, like, because I thought. I think about this so much, Tom. I was like, I think I'm insane because, like, I just want to play a normal game.
I just want to play a normal game where I get rewarded for the efforts that I put in. And it's just been completely rigged since the moment I got into the corporate world. And that's all I want is like, hey, like, it'd be really nice if this whole thing was fair. And it's like, oh, it is far from fair.
[00:58:47] Speaker B: And it's not. And it's worse. It's definitely A tail end, kind of whatever horizon, event, level of unfairness here.
[00:58:54] Speaker A: I know. And like, and I, I was to emotionally explain, like, how I feel is like, okay, I've been all trying to catch a wave.
And I'm like, okay, there's a. Well, I missed that wave. Oh, I missed that wave because like, that's, I mean, again, I'm at the top of the millennials. I'm like, okay, what's the way the wave is where that it feels fair? That's my definition. And I'm, I don't look for a handover from anybody. And I'm like, I will eat shit to get the return. And I'm like. But then I'm like, okay, here's the wave. And I'm like, wait a second. It's going faster than I'm. And I'm just paddling, paddling, paddling, paddling, paddling. Like, wait a second. Oh, wait, I'm never going to catch the wave because the math actually is that way. And I believe that it took me 10 years, but I mean, I caught the wave. But like, the amount of work that I had to put in to, to catch that wave. And like, when I look at people trying to earn it versus margin, loan their way up to some fake dollar amount, and the, the, the situation, I, I find very fascinating because the, I forgot where I lost my train of thought on that. The fragileness. When you say that there's a reset, like, I think everybody wants it to be fair. That's what I think is very fascinating. Like, I don't think there is some like, grand conspiracy. It's just this insane, like, timeline of micro incentives that are misaligned.
No, I just bring us to this point and you go, like, there's not one, like, dark boogeyman behind the scenes.
[01:00:18] Speaker B: I'm just a personal note. I know. I don't think there are, I mean, people are colluding, they're conspiratorial, but I don't think there's an overarching conspiracy. If they, that were possible, you know, communism would have worked. Right? You know, it's, it's. If you could actually really know all the factors and control them and, and command people's obedience and silence and complicity and stuff, well, then communism wouldn't have collapsed. It would have been a winning strategy. Right.
[01:00:44] Speaker A: And, and I like, I, I think a lot about, like, what would I do if I were at the top with the current situation and like, Kevin Warsh is in a rock and hard spot. Like, so, like, here here's where I was going. I found my train of thought again going, okay, like, if this is all the case, we're like, okay, it is what it is. Like, we got here, we're here. I mean, for all intents and purposes, this entire fiat system in 1913, December 23rd, no one's alive that invented it.
So, like, everyone is just participating with their own little incentive structures as their little agency trying to optimize what the game was. Well, the game was fundamentally flawed.
[01:01:22] Speaker B: Yeah.
[01:01:23] Speaker A: And so now, like, here we all are and like, there's not, like. But what I think is interesting as a thought exercise, like, how do you create the least amount of disruption while there's this, like you said, the soft reset of the Ponzi scene. Because here we are, like, the math doesn't work at all.
I have a general belief that, that the imf, the bank of International Settlements and the Federal Reserve and BlackRock, the Financial Industrial complex that has been this vampire that goes from country to country over the last 500 years, it's all fake money.
Had to like, have a reckoning with China, who makes real shit, and Russia and Iran. So there's these countries that make real stuff that you need real people and real energy for to get out of the ground, which is petro and the actual oil. And so kind of going into the street over movies. I'm really curious of what you think the ripple effect is going to be for the farmers. But like, I think, Tom, because Henry Kissinger in 73 when he went and he said, okay, and this is my, this is my articulation in my head is this Ponzi scheme is over because of 71 decoupling from gold.
How do we keep it going? Well, if the US blows up anybody and kills anybody that doesn't take our dollar, that's how we keep it going. What are we going to do? We're going to force everybody to buy oil and dollars or we'll kill them. Gaddafi, Syria, Yemen, Cuba, you could go on and on and on and on. It's like, that's what we did. We went around, we killed everybody across the world. If they didn't take the dollar and they didn't take and they didn't buy it in oil. Every single time it was like they tried to buy it in something else. We kill them, they buy in oil. And now this straight we have re. So I like what has been a byproduct of this, because we can't. It's not open. The US has not won and we're not going to win because it's not open unless we go a layer above and say, well, what if the entire purpose of this straight of Hormuz was to reprice the real world of raw earth materials and oil to the fake dollar?
There's 55 commodities that have been force majeured across the world that are getting repriced and they're getting repriced in gold and or Iran is now forcing Bitcoin as the insurance contract for oil. And so if they're repricing it, then all of a sudden there's this floating dollar according to the real stuff in the world that the real powers that will blow people up. And now you go, okay, well if that is all repriced, that's equivalent to what FDR did in 33.
And then who's going to be the, the bag holders, the US bondholders?
And so what if they all negotiated this stuff and we're going through this whole situation because like, I mean all of these countries went to China.
Like we went there like okay, why did or 17 of our top people fly to China?
And then like. And we weren't the only people, Tom. It was like all these countries, Pakistan and India and Russia, they all lined up to talk to China and we did too.
[01:04:35] Speaker B: Yeah, so I don't have enough. I mean China's got its own issues. Of course demographically it's a nightmare at times three and you know, their own real estate and debt bubble is largely unreported. But yeah, essentially you've got a probably a failed collapsing society, very skilled and dangerous one and you just want to make sure you don't corner someone that way. So how do you try to mitigate?
[01:05:01] Speaker A: But they make all of our stuff. That's the thing that's different. Agreed with everything you said. But we can't blow anybody up without buying materials from China.
[01:05:10] Speaker B: True.
[01:05:12] Speaker A: We unsanctioned Iran and we unsanctioned Russian oil oil so we can buy oil from them to blow them up.
It like, like it's just so absurd like that, like that's what we, we did. Scott Best was like we're gonna unsanction Iran. Like wait, wait a second. So we're gonna buy oil from Iran and then use it to bomb them?
What?
[01:05:36] Speaker B: Yeah, it's like I say, right? It's, it's, it's.
The older I get, the more things I think are beyond my pay grade.
But I think it's more confusing.
[01:05:46] Speaker A: The fog of war, it's not supposed to make sense.
[01:05:50] Speaker B: And agriculturally of course, people who did not do what my clients and most major operators do, which is they already priced in, locked in prices for all of their 26 inputs last fall.
[01:06:01] Speaker A: So walk me through like what is the, what are the supply chain risks, if any for farmers? I mean is there like fertilizer? You hear all this stuff? Of course, fertilizer, nitrogen, I'm not sure
[01:06:12] Speaker B: you know the supplier.
There's a lot of frankly unprofessional behavior in farming. Like I say, the average size of farms and exactly how they're being run.
Yeah, it's hard to untangle but a lot of people who are in the industry have been habitually undersized, over equipped, I mean for generations and they've been shored up mostly by like I say, off farm income and asset price appreciation on their, on their farmland. So they're actually not commercial going concerns now. They're still susceptible to all these forces and they tend to, they tend to be fairly reactive and not planned. My clients had locked in the supply and the price of, of their key inputs last fall.
[01:07:04] Speaker A: Is that normal for the.
[01:07:06] Speaker B: It is, very much so, yeah. So they'll have to think about what was 2027 fertilizer look like. But now they're in the driver's seat with respect to what's my target price on corn, soybeans.
[01:07:19] Speaker A: You got some forward guidance to like,
[01:07:20] Speaker B: you got a lot of guidance.
What's the message to my landlords about what land rents are realistic. And so you end up being able to signal that and get the buy in you need or change course before you say oh shoot, my cost just went up a hundred dollars an acre and I'm, I will be illiquid. And that's the best case. I mean they don't tend to be in that, in that condition.
[01:07:45] Speaker A: So it's not as dire for American farming and as you would think as
[01:07:51] Speaker B: the propaganda is the ones who know how to do it, at least for the larger farms. As we Talked about those three, 4,000 acres and up, it's not what percentage
[01:08:02] Speaker A: of farming is those people versus the one section or below?
[01:08:06] Speaker B: I knew you were going to go there. I, I, I'm trying to wreck my brains. I've done a lot of work on it.
[01:08:11] Speaker A: Is it the Pareto principle? I mean is that a general assumption
[01:08:13] Speaker B: that Ryan, let's just leave it at that. Yeah.
[01:08:15] Speaker A: Which I think is fair because that's just that it's a natural law.
[01:08:18] Speaker B: Yeah.
[01:08:19] Speaker A: For a reason. Right.
[01:08:20] Speaker B: Yeah. 10% of the, the farmers manage which isn't to say own because a lot of it's rented. But 10% of the farm, farmers are managing, let's say 50% of the land, a lot of 50% of it is still owned and farmed by very undersized farms.
[01:08:37] Speaker A: Then you even, and this is where I, I hold all these data points in my head. Okay, but then if we have more turnover and that turnover starts collapsing because the price is at the margins, the core can be fine.
[01:08:49] Speaker B: Yep, yep. And that's, that's good, at least demographically. That's to my message to my farm clients. And gosh, well, be liquid, be careful about growth. That assumes the continuation of the fiat regime. Whatever's going to happen, be careful, stay liquid. The casual question, watch your return on assets. And then, you know, don't require, don't, don't count on a government funded retirement. I mean, basically hit the gym, which we all try to choose hit the gym and stay off meds because, you know, I don't, I'm not interested in retiring and, and, but that at least the traditional date for me is looming closer. Like I like to think about, but I, I don't count on Social Security and, and I, I don't count on the availability of meds if I don't take care of myself.
[01:09:41] Speaker A: So, you know, it is because, because at some point there, like as we, as. I mean, I, I wish there was a way for me to show people the visualizations in my head because I'm so used to looking at three statement models for companies and then it just becomes like this language of that number.
Every single decision that we've talked about results in. We either have cash or not. And if we don't, we print. And same thing with a owner. They either borrow it or they have it.
And the government, the printing is the debasement. They're stealing from the people holding the dollars, which are the people and the bondholders. And what I think is fascinating and it's, and maybe this is just like the best case scenario. It's just a gross situation that, that I don't like to think about. But like, how do they navigate this? Like how like blue or red, it's the same fucking thing. Like, it's like, like you can go, whoa, the cfo. I'm like, well, the CFO of a bankrupt company is the CFO of a bankrupt company. It doesn't matter what they like. It's just a math problem. And so when I think about like, how do they actually navigate this without the total catastrophe of like the Dutch glider or the British pound, Like, which is what I want, by the way. And I, if, like, that's what I, I find hard to communicate is like, I don't hope for pain.
I'm just trying to find the way that it's not as painful as it should be. And then I go, okay, well, the way that this works is that the people that have the money start putting into real shit gold, bitcoin, real estate, farmland, which is what they're doing. They park a portion of it in the stock market because they're always going to keep getting pumped and then they're going to force through either a lack of knowledge or education, the people that are the retirees, the pension funds, the Social Security, and the people, the 401k.
Like, that has to be what happens mathematically. And how do you allow those people to take that?
Like, which is a gross thought process of like, okay, we're either gonna make sure that they don't know what's happening, which would be ideal.
[01:11:51] Speaker B: Yeah, yeah, right, yeah.
[01:11:54] Speaker A: CPI is 2.8.
[01:11:57] Speaker B: Yeah. The shell game is certainly. But it only goes so far.
And you were talking about, you know, the scapegoating process and, you know, which is kind of a negative, kind of the, the, the, the memetic thing. And I thought, well, we really should be talking about, like, Rene Girard and, and the medics process, which gets ugly.
[01:12:16] Speaker A: Walk me through that. I'm actually not sure. Oh, there's the content.
[01:12:19] Speaker B: But people imitate obsessively and, and at the same time need a scapegoat. They need someone they can. Who ends up taking the, the brunt of the, the blame for society's ills. For some people, that's Trump.
For other people, it's, you know, you name your Biden.
[01:12:39] Speaker A: Or it's someone's gender or it's someone's race or it's someone's building or some, I mean, it's someone.
[01:12:45] Speaker B: Yeah, yeah, it's a Western civ. It's. Yeah, yeah, it's.
[01:12:51] Speaker A: Whatever it might be.
[01:12:52] Speaker B: And that's, I mean, one of the reasons I tend to prefer business to politics and to theory is that ideally it's, hey, can we get along? Can you do the work I need? Well. And can I pay you this much? Is that acceptable? Great.
All right.
And now we're at peace. And if someone changes their mind, okay, well, you know, here's the terms for disengagement and that we agreed to. Ahead. Good. All right. See ya. Have a nice life. It's, it can End there without, without just, just the ira that, that you get otherwise. And that's the politics ends up being. And then the problem with fiat is that it gets, it pulls our economics into that realm where it's about, you know, who has the right to point a gun at whom, which is never terribly constructive. You know, it's never the best way for getting. You can get temporary enthusiastic consent, but you also get a lot of hatred and people are going to underpin that very quickly. So, you know, we've been abusing the system badly and trying to shore up asset price. Well, since Greenspan after the flash crash in 87. Right. The Greenspan put.
Suddenly we've decided that we need to shore up asset prices. We removed a valuable price signal from the markets and the reality of pure fiat currency is that we had the power to do it, at least in the short term. The short term has since stretched to several decades. Doesn't mean it's permanent though. And people.
[01:14:20] Speaker A: Yeah, I think, but, but it becomes permanent for people like that. Like, I mean, given my age or even someone that's within 20 years older than me, it's like you don't know anything else unless you study history.
[01:14:32] Speaker B: Well, for, for me, it's, I'm just old enough. I, I mean I was in college, in high school during the farm crisis. But since, since my dad.
[01:14:40] Speaker A: Not the 24 farm crisis.
[01:14:42] Speaker B: No.
Yeah, yeah, no, that would be.
[01:14:45] Speaker A: You're looking pretty good, Tom.
[01:14:47] Speaker B: Yeah. For 100 something. Yeah.
But. So I was, I was cognizant of it. But people your age and actually people who are, you know, 50, which is a bit younger than me yet they've been, they're very seasoned professionals, let's say in the ag lending business and in the whole of their careers, they have not seen a crisis.
And that just happens. I mean, no matter what you're going to have, people are mimetic. They do imitate. There's a herd instinct and therefore they tend to make them same mistakes, including the lenders at a scale sufficient to induce liquidation and a reset of mistake evaluations. That just happens. That's just ongoing human experience.
There's nothing innately evil or even.
[01:15:29] Speaker A: But we've, we've covered those up over the last handful of decades through the printing Worse.
Well, because they haven't. Because like it's printing. Right. So like, so like what they're doing is they're covering that up. I mean, if you just look at the stock market just goes up to the right. So then therefore those corrections aren't happening like it's like it's the undergrowth of the forest. It's the bush that you never trim. I mean how many different analogies do people need?
[01:15:54] Speaker B: Well it's like treating a mild treatable cancer with heroin which you know makes you feel better a little long time but cancer's still there and now you've got an addiction that. That which itself not unlike fiat.
The doses to maintain the. The effect get higher and higher and you will die.
[01:16:12] Speaker A: Right. And it's. It's fascinating.
Just time check you do you have a hard cut off at all coming up.
[01:16:18] Speaker B: But no, we're good for a bit. Yeah.
[01:16:20] Speaker A: Okay. Yeah we can, we can for the listeners we can be rounding home here pretty soon. But the just want to. I just want to be respectful.
[01:16:26] Speaker B: Appreciate that.
[01:16:26] Speaker A: I think it's fascinating Tom cause like the way like what I have been really fascinated with that I think has been a.
A benefit is I'm a.
This is my words a systems thinker. I like to understand how does a system work. So like I start. I got my. I got my start at my family business which was managed it so like you have a network that has a closed system right. Like you're like this has nodes which are the computers and then the phones and then you have the active directory and there's infrastructure. It's a system. And like then it was like software and then it was so like I and I landed then on the money in the three statement model and double entry accounting. And so first principles has been really like that's how I see the truth. Like my passion to figure out how does it actually work. Not Tom's opinion but like there's assets and liabilities. We can talk about what those are but it has to balance based on math. Yeah it's thermodynamics. Right. The bridge either falls because it works or it doesn't. And so I like this pursuit of first principles helps me think about the system because the way my brain works is like if I tweak this thing there's five order effects because our, our body is a closed, closed loop system. Like it's all there. Like we can't like and when we add stuff and do things to has a ripple effect and the healthcare system has been so bastardized. Like no one talks about that. It's like and it's just there is no such thing as a free lunch is actually a thing in our short term mindsets.
Paper that over and it just is wrong.
I think that's just fascinating in Itself.
[01:18:13] Speaker B: Yeah, yeah. So you end up with corrections.
Going direct, we were talking about, as a matter of course. And when you paper them over, you incentivize people or you talk them into believing that there need. Don't be. Need to be no correction. You're just going to, you know, store up wrath, you know? Right.
[01:18:32] Speaker A: That's your point. Then it's worse because.
[01:18:34] Speaker B: Yeah.
[01:18:35] Speaker A: You know, even like with the, with, with health, like I'm watching people paper over that, it's like, okay, whether it's actual drugs or if it's actual injections or if it's like. I mean, and like the ripple effect. I mean, I went through a whole thing recently with my dad, who he started taking TRT because his doctor told him to, and the ripple effect into his kidneys, into his blood. And like. And like, I had to figure it out with Claude because he was talking to the cardiologist. You're talking to this person. Like, this is so. And me and Claude figured out that he was low in magnesium and it was his kidney thing because of the trt. He stopped everything, stopped all the drugs. And he's fine.
But like, they were looking at one thing. It's like, you're not energetic. You should be strong, male. Here's your testosterone. It's like. Well, it's a little bit more complicated than that. Maybe we should think about, like, why do you have low testosterone? Like, what a concept.
[01:19:24] Speaker B: Yeah, yeah, yeah. It's. It's a problem with the. People get quite siloed in it. And it's just a risk of having a, you know, the division of labor in a very advanced society.
You know, people get, like I said, they get very myopic in their analysis. But once again, I think that the lack of economic correction and the perversion of incentives that we've seen under the regime we've been talking about make.
It's not impossible to see, but it does take an effort. That's the most frustrating thing for, you know, your, your manufacturing business clients, my farm clients.
They're just. These are high skilled, smart, decent people who suddenly find themselves having to play Warren Buffett just to get through the day.
And that in a lot of ways that's an unreasonable. It's not right that they should have to play in that space. And yet they don't get to play in their own space without being cognizant of these larger trends.
[01:20:18] Speaker A: You have to be this financial engineer in order to actually make it work, which is absurd.
[01:20:23] Speaker B: Yeah, you do. And it is too bad, but it is the hand we've been dealt. And the best thing that you do is seek out the advice. These are small firms, so they're not going to have a, a suite of CFO and economists to help to interpret some of this stuff. So they have to go the call the fractional route. They're talking to you, meaning they're, they're doing their best to digest a little bit of what, you know, Luke Roman is talking about, which is very appropriate to ag in the sense that he's such, he's so deep in the energy sector.
[01:20:53] Speaker A: Yeah, yeah. What I think is, and you're kind of rounding us out to a good spot, I think too, which is like, what do we do about this? And I'll give you my philosophy about this because you were, you were alluding to it like, we have to learn how it works to a certain degree. And then if people can find someone, which is exhausting. So like, I, I, I'll use health as analogy and then talk about like, what be interesting to hear what you think we should do. Navigating forward. Like, my wife, my wife, she had a terrible experience with the healthcare system because of her back. She had a bunch of back problems. I mean like the amount of drugs people want to give her, surgeries or cutting or like in every. The pure level of incompetence that we experienced for eight years was nothing short of mind boggling.
She decided to own the outcome.
Everyone told her to not, not go work out. She did. Now she's doing strength training and everything. She's never felt better in her entire life. So she owned the outcome instead of trying to outsource the outcome. And it's like, because you're the one that wakes up and feels good or not. And like, like us as owners, we either have money or we don't.
So like, there's a certain, and there's this phrase that I love and I can't remember if it was Benjamin Franklin or Thomas Jefferson or like the, who outsources the responsibility, outsources their freedom?
And it was just like, I'm like, whoever said it's like, okay, like that, like, so there's a level of like, okay, that this is the cards we've been dealt.
I have to own this. But what she did is she found this woman, Jim, who had like this diet strength, the whole comprehensive program. And then she got to let go because she found the place that she was able to let go. But it took her a journey to get there. And I can only imagine for you and the Farmers or hopefully the people coming to me, it's like, hey, it's a shitload of work to realize how messed up this all is. But then if we can find a group or a community that says, hey, I can burn like probably for your farmers. If they're talking to you, Tom, like, they don't have to be the economist because like, you're like, hey, I got you on this stuff. That's my profession now. We have a value exchange of resources that actually makes sense.
[01:22:51] Speaker B: That's. Yeah, that's what I try very much to do. And I try to give them enough insight or align on the thinkers beyond myself so, you know, so they have confidence that, you know, I'm doing my work. This is not just my own delusion.
[01:23:02] Speaker A: It's, it's, I'm curious every once in a while. Yeah, we, that's why it's sending emails back and forth with us. You're like, what do you think about this?
[01:23:09] Speaker B: Well, an awful lot of it is I, I know that sometimes I'm going to be counter the, the trend. Don't buy the land, don't do the thing, don't buy into this co op.
And I'm doing the research just to, to bolster it for them. But also, am I insane?
What else is going on here?
[01:23:25] Speaker A: So I feel that way a bunch, Tom.
[01:23:27] Speaker B: Well, I'm looking at the farm data. Is someone figure out something that I didn't. I'm talking about the, the broader data that you have access to.
And, and I do that mostly. Am I out to lunch? No, I guess I'm not. Because they're all, this is not working. And to the extent they're in business, they're in business because of asset appreciation off farm income and nothing to do with their operational prowess.
So we, that's the, you know.
[01:23:50] Speaker A: But I think you hit on something really important for me personally is why I'm talking about this, and talking about this stuff to you is because I have felt totally insane for like years. And I'm going like, this is what I was told about how it works.
I then realized, well, okay, that doesn't make any sense. Well, this is actually how it works because of math and the three statement model. I'm like, okay, well then it really doesn't make any sense. So then what has to be true for Ryan to be this wrong? And I'm like, oh, they just print a bunch of money and give it to people. I'm like, that's how I'm wrong. I'm sitting, going like so then what I've been like, and I really hesitate, Tom, and I really am struggling with right now is like, the craziness of the lie can go way longer than I ever thought. And I'm sitting here going like, so if I did what I thought I should do, all the people that play this bullshit game are rich and I'm not or my clients aren't. And so I'm going like. So we have to like have a foot in each bucket going like, all right, if the lie keeps going, this is what we should do. Because it could be another however long.
[01:25:02] Speaker B: Oh, yeah, it's true. What is Keynes. Not that I usually agree with him, but the market can be remain irrational longer than you can remain solvent. And you have to be careful.
[01:25:13] Speaker A: The whole important.
[01:25:14] Speaker B: Say it again, let's see. The market can stay irrational longer than you can stay solvent. Yep.
[01:25:21] Speaker A: Amen to that.
[01:25:23] Speaker B: Well, I mean, an obvious application of that truth would be, hey, if, if you look at these markets, say the cape ratio is 40 or whatever, I'm going to short it.
You're going to go broke shorting it if you're too close to the money, right?
[01:25:36] Speaker A: Michael Berry. I mean, like, all you have to do is like, I mean, what was he like a couple weeks away and like totally insane short in the housing market because he saw it like five years at a time.
[01:25:44] Speaker B: Yeah, yeah. I mean, there are ways to short in the sense of an insurance policy, a tail hedge policy, which I think totally makes sense. Still going to cost you, but it's not going to break you. But that ends up being sort of a prudential thing for people who have to, like farmers who have to have assets on the line in order to do it. They might be overvalued and they want to protect themselves from the downside. And that's, that's just a smart kind of a tail hedge mentality to managing a growing business in a field economy, which is. Ends up being really a whole different topic. But it may be a more practical one. But we should.
[01:26:18] Speaker A: Let's do that on the next one.
Maybe we do a lift off to that next. Because I just really enjoy talking to you because I have felt crazy for a long time.
[01:26:28] Speaker B: Yeah.
[01:26:28] Speaker A: And it's.
[01:26:31] Speaker B: Yeah. So just, you got a few years to go. You'll still feel crazy and then you just won't care.
[01:26:38] Speaker A: Luke Roman's got this comment that he made that I'm like, okay. And I think this applies as we do a wrap here of like, how do we actually take this into day to day decision making. So Luke says I just want to be right dot dot, dot dot eventually and spot on. And part of that like more practical light to that based on what you said is and in order to be right eventually we need to be solvent.
So how do like how I think about it, I'm curious and like for your clients like so I. How I'm trying to be balance this, this craziness is if we have a three statement model and we look at our revenue, our cost of Goods and our SG&A.
Our taxes, our debt, our capex and our cash. So going through the three statements go okay, what has to be true that I have control over which is my revenue. Okay, how am I selling my cost of goods, how am I delivering my products or services and then what are my decisions on debt, cash reinvestment, working capital and go okay, if I can make my world work based on what I can control and my assumptions based on a cash flow valuation, that's like Noah's ark and it's like okay, the whole world could get completely effed up, but I have a high probability that my expectations are in line. Someone comes with a bag of money and Sundays Tom, here's 15 times multiple.
You can choose do I want to keep the course or do I want to take the. The stupid money and then you've got at least got optionality behind it.
[01:28:12] Speaker B: No, that's actually really encapsulates what I try to do too quite nicely. So I'm. Yeah, you're taking notes here. I'm glad because that's, that's worth keeping in mind that. Because that really does capture it and, and very within a paragraph. So I like it. No, that's.
[01:28:27] Speaker A: So you said. I said something succinctly. Everybody listening and did you hear that? I actually, I actually got a, a thought out in a couple sentences.
[01:28:33] Speaker B: Yeah. Yes. It's awesome. And fast. Faster than I have and I've been. I have more practice than you, so that's all good.
[01:28:40] Speaker A: If it's all about volume, as long as I talk enough, there will be things that come out succinctly.
[01:28:47] Speaker B: It's, it's a play. It's, it's, it's, it's practice and sooner or later you hone your craft and, and I think you did there.
[01:28:54] Speaker A: So yeah, I think it's important.
[01:28:56] Speaker B: Right.
[01:28:56] Speaker A: Because like that's what you're trying to do to be like do what you can. Like if the plan mainly works under what we can control, we can then have triggering like what I I mean your clients, like, it's awesome that they can like lock in their prices. Like my clients all of a sudden, diesel $7. That's, that is what it is, you know, I mean like and, or the containers, you know, shipping containers go from 2,000 to 30,000. I remember that happened in CO and like there's not. And you gotta, you gotta one week decision of how to pass those costs on. Otherwise you're sitting there literally squeezed.
[01:29:29] Speaker B: Yeah, yeah. It's a different game. I've done enough in the manufacturing space. So it presents some, a whole different set of challenges. I think the main, the main advantage that they have is relative to farming. Farming you've got, you got seasons as a professional a season you got 30, 40 swings maybe.
Manufacturing, you've got that, you've got hundreds. Just because sort of cycles you can grow.
[01:29:58] Speaker A: I mean like you can grow, you can go to E commerce, you can, I mean like there's, it's not subjected to the land production, it's subjective. To your ability to grow and produce whatever it is that you're growing and producing.
[01:30:10] Speaker B: Yeah. And if you screw up a job, oh shoot. Well, I've got, I've got, you know, three dozen other ones ongoing and, and I'll just do it.
[01:30:17] Speaker A: You're learning.
[01:30:18] Speaker B: Yeah. You mess up a year, ouch.
It's. Well, everyone's got their challenges that are unique to themselves. But I think, you know, the question of optionality of three statement analysis of sufficient liquidity to have the time to have your place make sense and then watching the metrics that are within your purview, that's. Those are the fundamentals. And if you do that well, it's maybe, yeah, it is your arc. And if it sinks, well, you tried.
No one else made it that far. I don't know if that's, there's no safe harbor in this life.
[01:30:58] Speaker A: Yeah, yeah. I mean like the boat could always sink. But like you did. I think like 95% of my life is like I can look myself in the mirror. Like, hey, I tried my best. And then you just deal with, you know, like the 5% that you really like. Well, shit like that didn't work. I mean like I, like I interviewed this one woman, she's like, ah, she's like really, really, really smart, built the whole business. She goes, yeah, I said no to this offer and then the whole thing collapsed. And then she goes, I wouldn't go back and do anything different because based on what I knew at that moment, that's what I thought. But I think that arc the. Based on the fundamentals. Like you said, it's the fundamentals that are guiding it. I think people will generally be prosperous.
[01:31:36] Speaker B: I think you're right. I. I think that is. That is the play. Exactly. So, yeah, it's fun to be aligned on that. I don't. There's not a lot of people, a lot of smart people, a lot of capable people, but those who kind of think strategically and especially in terms of risk are harder to come by. Or at least if they're out there, sometimes they know they're. They're too smart to admit it, you know, that's fascinating.
[01:31:58] Speaker A: Fascinating times. Tom, such a pleasure for your time. This has been a blast. I really appreciate the conversation. I do.
[01:32:04] Speaker B: Yeah, likewise, Ryan. Really appreciate that. So maybe we pick it up with some. That the whole tail hedge concepts. One of these.
[01:32:10] Speaker A: I think it's. Yeah. I mean, I'm just double clicking on how do you actually navigate this stuff in practical stuff. But it's. I just keep going back to.
I like. The reason I like this conversation is I respect how you think. I respect the fundamentals and like, I'm truly on a journey trying to figure out, like, what the F is everyone else doing and talking about because it doesn't make any sense. Like, just hearing, like, hey, all right, so, like, we're both in the loony bin together, so Company. I like company.
[01:32:38] Speaker B: Yeah. It's a fun bin. Yeah.
Hey, I appreciate it, though.
This episode is brought to you by Kastos Productions.
