When I moved to NY in the late 90s I often took the subway bc I didn’t have money to ride around in cabs and town cars all the time. So the 6 Train doubled as my limousine and Grand Central Station doubled as my garage.
In May 1999 I was fortunate to be hired by Donaldson Lufkin & Jenrette for their Wall Street training program. This was very convenient because the DLJ offices were just two blocks from my garage.
I was not due to report until mid August. So quit my current job & took off for Europe. Spent summer walking across Spain to Santiago de Compostela to secure my ticket into Heaven. Thought I might come in handy as my trip was scheduled to end in Ibiza…🤫😎
When I returned (20lbs lighter) I went straight to Barneys and spent my signing bonus on new suits, new shirts, new ties and new shoes (and I probably stopped at Walgreens for hair gel 😅).
I cannot even begin to tell you how excited I was.
Turns out head of training program was one of funniest *ssholes Ive ever meet. His job was to make us look stupid (he was good at this) in training so wouldnt look stupid in front of clients. Luckily I had read Liars Poker so was ready when he one days asked me “What is Libor…?”
In addition to training they took us on field trips. Went to Bloomberg HQ where I saw the man himself leaning back in his chair with feet up on desk talking on phone. No doubt closing another sale. Was pretty cool bc at time he was about as big a Wall Street icon as it got.
Also went to NYMEX and NYSE. It was also cool bc at the time there were still specialists and a lot of people trading on the floor. Not that way anymore. You go now and its mainly a bunch of computers, the CBNC crew and a few people standing around drinking coffee.
The best trip was to the FRBNY.
You have to understand this was before I knew anything & mostly believed what I was told.
I was very much under impression that Central Bankers were honorable public servants who had the countries well being at the top of their concern list.
They gave us big tour and whole time my fellow trainee who would not stop hitting on the attractive female Fed intern leading the tour. He thought himself pretty cool & was very persistent.
At end took us down to the Gold vault!
After passing through vault doors you were able to see several “cells” (looked like prison) and in cells were nicely stacked gold bars. Each “cell” had a name: Germany, Mexico, etc. I'm sure this wasnt inner sanctum but still pretty cool.
I dont remember it all, but what I do remember most was the fact that Casanova would not give it a rest with the Fed docent. He had been trying over and over for at least an hour at this point. Every time he would open his mouth I would just pray for it to end.
Finally he gave it 1 last shot.
I’ll never forget it.
Cas: “I have a question.”
Intern: “Yes?”
Cas: (attempt to be funny) “Why does that bar look like Fools gold?”
Intern: (not missing a beat) “Bc that is the bar we are giving to you when we are done today.”
Wasn’t all fun & games.
Still had to report to office for ritual whippings.
Were also assigned to shadow “veterans” who were the experts in the jobs we were going to be doing. Of course veterans didn’t want us there. And we knew the veterans didn’t want us to there...
It just so happened that DLJ had a handful of extremely successful female veterans. These women were tough as nails & already had legendary status. At least to us noobs. Stories of their successful exploits were handed down to us from our bosses & whispered amongst the trainees.
As fate would have it, I was assigned to one of them for a week. I was to do whatever she told me to do. On 1st day it became very clear to me that while I was given a heads up about this particular assignment she on other hand hadnt been consulted. And she was not amused...
But, she wasn’t successful because she was slow and couldn’t adapt. She very quickly saw the silver lining and understood that she now had free labor at her disposal. Within 2 minutes she had put me to work.
Next 5 days I was getting coffee, filing, faxing (yes faxing😅) research to prospective clients. She even had me cold calling to set up meetings. By end of week I was #FedUp! But like most things the challenge was actually a blessing. As I look back she did it right & Im grateful
So, who was this tough as nails veteran I spent the week in service to?
The one…
The only…
I saw her for the first time in years a few months ago and we both had a good laugh about it.
These are all good memories and think about them a lot. But there is another memory I think about even more. Especially these days. This story is about the 3 times I met the former Chairman of DLJ, John Chalsty.
How can 3 different meetings produce 1 unified memory? Well, bc he told this exact same story at all 3 meetings! I don’t know if this is bc it had such an impact on him, or if he was just unable to remember anything else, but regardless, this is what was told (3 times 🤣).
After dissolution of USSR & movement towards free & market based economy was in swing, he & number of other Wall Street delegates were part of trip to Russia. Idea was to help educate the east on participating in economy that was not centrally planned & where prices not mandated.
1 day after was explained by a panel of westerners that “market” set prices & this allowed economy to clear goods more efficiently it was time for Q&A.
At 1st none of Russians wanted to be first to ask.
Bc was intimidating AND fact they had been trained not to question authority.
Finally 1 brave soul raises hand
Russian: Thanks, very interesting idea.
American: You’re welcome.
R: (slowly & shyly) U say the market sets the price, correct?
A: Yes
R: (looks doubtful): Ok, thank you.
A: Anything else?
R: Just 1 thing.
A: Yes?
R: Who REALLY sets the price...?
Sounds trivial but its not. It gets at very essence of what made America economic envy of those behind Iron Curtain. Placing optimism in individual above skepticism of collective raised Americas standard of living while Stalin was forced to starve Ukraine & sell their “gold”.
When Chalsty visited in 90s was hope falling Berlin Wall would release prosperity & peace as economic ideas of West flowed East. That happened a bit. But ideas flowed East to West as well. Will be very hard to get pendulum swinging back the other way...

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More from @SantiagoAuFund

25 Jul
If China bails out the US by proving PPE bc we don’t make enough masks, ventilators and other protective equipment ourselves, who has the upper hand in that scenario?
If China bails out Bangladesh bc they borrowed too much money and are now in Default, who has the upper hand in that scenario?
If Russia bails out a freezing cold Europe by providing natural gas that Europe can’t make on its own, who has the upper hand in that scenario?
Read 8 tweets
14 Feb
For anyone who is interested...or anyone who just thinks I don't understand, am going to get rekt, need to do research or want to have fun staying poor...here is the white paper I wrote on #Bitcoin a few years ago.

Read 9 tweets
10 Feb
Two definitions of money, both faith based:

1. The most marketable commodity (the most marketable bc have faith based on its history that it will retain its value)

2. That which the Gov demands in tribute (you have faith if don’t pay your taxes in it the gov will jail you)

One can argue that #2 above...actually leads to Govs fiat money becoming #1 above.

Regardless, all money is ultimately faith based. At their core, they are confidence games.

Once the confidence is gone, regardless of the reason, so is the value of the money/currency.

In this way, money/currency, is very much like a religion.
The more that believe, the stronger it is.
The stronger it is, the longer it lasts.
The longer it lasts, the harder it is to unseat/replace.
It’s like the network effect.

Read 7 tweets
30 Aug 20
Hi everyone.
Based on recent comments/twitter posts/interviews...my email, vm, dm & twitter stream have been inundated with questions about, & challenges to, my assertions regarding QE being "deflationary" rather than "inflationary"

Many extremely smart & successful people (many of whom I like & respect) disagree with me.


As such, I have been asked for "Proof" or my "Source" to back up my assertions.

The "Smoking Gun" per se...

I'll attempt to answer this as clearly as possible below

Some clarification:

The assertions aren't to say QE is "never" inflationary.

Or "can't" be inflationary.

The assertion is that it's "not currently" inflationary.

It needs cooperation from commercial banks in form of credit extension (which isn't currently happening).

Read 25 tweets
24 Aug 20
Ok...anyone want to hear a story that nothing to do with dollars, gold or bank reserves?
Well too bad...
Because this week is the 30th anniversary of one of the top 5 moments of my life.
And I'm feeling old.
And sentimental.
I grew up in a small town of 1,000 people on the edge of the sandhills in western Nebraska. Many of my friends came from families that were farmers or ranchers. And everybody loved football.
I did too. As a little kid I wanted to play quarterback for @HuskerFBNation (like Turner Gill) and then for the @steelers (like Terry Bradshaw).
Every day at recess we played football.
And every play was a Hail Mary pass...
Read 29 tweets
8 Jun 20
Hi All. With recent market action in equities and dollar, I have had several questions regarding...messages in support of...and challenges to (shocking, I know)...my outlook.

In order to try and provide some clarity...this thread will need to suffice for now.

Long story short, the fall in Q1 & subsequent rally we've seen in last 3 months in equities is NOT due to the core part of my thesis. It IS part of "moments of great terror & disbelief along the way" part of thesis...but not how I envision equities moving to all time highs.
Right now seeing reflation of GLOBAL equities & risk assets due to CB support & easing of $ liquidity.
The core of Milkshake Theory relates to US equities rising while ROW remains under pressure due to $ liquidity falling. So while this isn't surprising, it also isn't IT.
Read 23 tweets

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