How Falling Yields Inflate Asset Prices

Tom Bodrovics welcomes Keith Weiner, President of the Gold Standard Institute and CEO of Monetary Metals, to the show. Weiner discusses the current “everything bubble” and how new technologies like AI often lead to malinvestment and overinvestment. He argues that the valuation of AI companies is driven by “dumb money” chasing momentum rather than fundamental value. Weiner also explores the role of yield suppression by central banks, noting that falling interest rates have fueled asset bubbles by increasing the net present value of perpetual cash flows.

He is critical of the concept of “yield curve control” used by the Bank of Japan, arguing that the downward trend in rates is driven by underlying economic forces rather than central bank manipulation.

In discussing the rise of 50-year mortgages, Weiner sees this as a symptom of a broken monetary system, where easy credit and government guarantees allow borrowers to outbid more prudent buyers. He also criticizes “useless ingredients” like tariffs, which he views as disrupting supply chains and leading to higher consumer prices.

Finally, Weiner provides an overview of the quantity theory of money, arguing that it is flawed. He contrasts this with gold, which he sees as having a stable, non-diminishing marginal utility that makes it a superior monetary standard compared to fiat currencies. Weiner believes this is driving the accumulation of gold by countries seeking an alternative to the US dollar.

Timestamps:
00:00:00 – Introduction
00:00:17 – Everything Bubble Overview
00:05:52 – AI Bubble and Malinvestment
00:09:26 – Valuing AI Companies
00:12:07 – AI Energy Consumption Tradeoff
00:15:07 – Yield Suppression Mechanisms
00:22:27 – 50-Year Mortgages Critique
00:27:00 – Tariffs as Useless Ingredients
00:30:34 – Quantity Theory Explained
00:33:54 – Gold vs Bitcoin Stability
00:42:13 – Gold Utility and Recycling
00:44:39 – BRICS Gold Initiatives
00:47:18 – Wrap Up

Guest Links:
X: https://x.com/RealKeithWeiner
Website: https://monetary-metals.com
Website: https://goldstandardinstitute.net
Facebook: https://www.facebook.com/keith.weiner.5

Keith Weiner is the founder and CEO of Monetary Metals, an investment firm that is unlocking the productivity of gold. Most people regard gold as a dry asset, to lock away in a vault, incurring storage fees. Many are waiting for it to rise in price. Keith and Monetary Metals are on a mission to change this.

Gold should once again serve to finance productive enterprises and extinguish debts. The dollar performs one of these functions, but not the other. Bitcoin cannot finance anything, as no business can borrow a currency that’s expected to go up a hundred times. Gold is the one thing that fills both roles, par excellence.

Keith writes and speaks extensively, based on his unique views of gold, the dollar, credit, the bond market, and interest rates. When he is not working on the business, he is developing his theory of monetary science, and an arbitrage theory of economics.

Keith also serves as founder and President of the Gold Standard Institute USA. His work was instrumental in the passing of gold legal tender laws in the state of Arizona in 2017. He has met with central bankers, legislators, and government officials around the world.