Michael Burry : The Toxic Twins Of Fiat Currency And An Activist Fed Set The Route To Long-Term Ruin

Tyler Durden's picture

Michael Burry's ironic plight against pervasive lemming groupthink (such as the one gripping the nation currently) has been well documented in Michael Lewis' "The Big Short." It is thus not surprising that the topic of his speech to the Vanderbilt University (of which he is an alum) Chancellor's Lecture series is the current flawed conventional thought paradigm: that of central planning, of quantitative easing and of dollar debasement by the Fed, which are far more dangerous than anything experienced during the credit bubble as when the current regime finally fails, and it will fail, there will be nobody to bail out the US. From Burry's speech: "I am worried about a future of a nation that refuses to acknowledge the true causes for the crisis. A historic opportunity was lost. America has instead chosen its poison as its cure... Today I expect the US government to attempt to continue easy money policies into the next presidential term, past the foreclosure crisis, and past the corporate and public refinancing humps that are forthcoming. Junk bonds incredibly are again at all time highs. Quantitative Easing seems to be working for now. Buit this is an invalid validation of what America is doing. This is in fact a Pyrrhic gamble. As we continue to debase our currency, Bernanke says he is not printing money, again I disagree. As it stands I get an email from the Fed saying we bought another X billion in Treasurys. I don't know - that's pretty clear to me. In fact this program QE2 its scope and breadth raises the severe question of the Treasury's needs. The government's borrowing of money for the purposes of injecting cash into society, bailing out banks, brokers and consumers, is a short-sighted easy decoision for a population that has not yet learned that short-sighted, easy strategies are the route to long-term ruin. We never quite achieved the catharsis necessary to stoke the reevaluation of our wants, need, and feers. Importantly, the toxic twins: fiat currency and an activist Fed remain firmly entrenched, even more so with the financial reforms last year." 

Burry's practical advice: open a bank account in Canada.

Must watch:

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sachsich's picture

Fiat Currency Bitchez!

Cash_is_Trash's picture

Best medium of exchange ever. EVER.

Aren't the intricate drawings in paper notes much nicer than the glow of gold?

hambone's picture

Anybody else getting a "server can't be found" message when clicking on the video?  Is there a transcript?

Herd Redirection Committee's picture

I know, right.  Gold, shining in the sun... Who needs it!  /sarcasm

Money, its meant to be a unit of account, and a store of value!  Fiat currency, it reminds me of a contract thats won by the lowest bidder!  Completely useless as a store of value when it can be printed out of thin air by  a small elite!  In turn, because it is constantly depreciating, it is nearly worthless as a 'unit of account' as well, because what does $100,000 revenue (for e.g.) over a year mean if the f***ing dollar is depreciating at greater than 10% annually!

Check out the latest from the Capital Research Institute "On Psychology & Markets":


More and more people are catching on to the fact that two sets of rules are currently in place, one for the MEGAwealthy (net worth > $100 m), and one for the rest of us.  Besides the issue of the US government’s debt problems,  and spending more than they earn, there is the problem of the US dollar (world reserve fiat currency) on its deathbed, with a privately -owned central bank (the Federal Reserve) that has proven beyond a shadow of a doubt to have ONLY the interests of its private owners in mind.   Not only were the bailouts in 2008 a mistake, they were the largest theft in the history of mankind!  It was the largest reverse Robin Hood story in history!  The rich stealing from the poor to a degree only imagined (and probably salivated over) by the ‘great’ tyrants of the early 20th century, John D Rockefeller and JP Morgan.  Now in the 21st century we get Henry Paulson, Hank Greenberg, Ben Bernanke, Lloyd Blankfein,  Jamie Dimon, etc.

The question left to ask, then, is why haven’t EVEN MORE people woken up to facts, and the dire situation we find ourselves in?  After a long and careful look at this issue, the answer may be surprising to some.

macholatte's picture

Completely useless as a store of value when it can be printed out of thin air by  a small elite!

Fiat has the one thing that PM's don't have, a convenient medium of exchange. The problem we all have now is that we are the abused children of the sociopaths-in-charge. However, nothing new here. Oligarcs have always worked for their own self interest at the expense of the peons. The USA had a good run for a couple hundred years, did wonderful things for the human race. That is slowly grinding to a halt. Sad. Very sad.

More and more people are catching on to the fact that two sets of rules are currently in place...

Tis but a scrath, a pimple on Soros' ass. The MSM is firmly in the grasp of the Progressives and the sheeple are still grazing. Will Oprah endorse Trump? 

theXman's picture

Brilliant lecture from the brillian Big Short. Bravo!

BrobamaReds's picture

Despite being light in the loafers, this guy makes a lot of sence....however, My Gaydar Detector is going crazy!

DavidC's picture


I'm ugly. Does that make my insights any less valid?

Grow up.


BrobamaReds's picture


Chillax.  The guy is a homo, but like Jerry Seinfeld said: "not that there's anything wrong with that!"

Deal with it.




DavidC's picture

See my previous comment.

His sexuality is utterly irrelevant.

Grow up.


Paul Krugman's picture

I hear the gay sound also, but this guy has aspergers (spelling likely wrong) which is probably causing the voice tone issue. It is known to cause unwavering tone deaf type speech.

macholatte's picture

Good lecture. Unfortunately, his history does not begin far enough back. The adjustable rate mortgage was born as a knee jerk reaction to the failed policies of the Carter years. One of the most significant events in the history of tinkering with home loans was the elimination of assumability of loans. Anyone could sell his house and allow the new buyer to assume the existing mortgage without being forced to get a new loan.  The seller could also take back a second. You could close a deal in 3 days. IMHO the end of affordable housing and the collapse of the market structure began then (sometime after 1978).

huckman's picture

So so true.  One of the most short term minded mistakes ever.  A disgrace.  If only a wond chould be passed over every home loan making them fixed & assumable.  Commercial real estate loans always have and still are being originated as assumable loans.

huckman's picture

So so true.  One of the most short term minded mistakes ever.  A disgrace.  If only a wond chould be passed over every home loan making them fixed & assumable.  Commercial real estate loans always have and still are being originated as assumable loans.

Temporalist's picture

I think though he does discuss the "assets" being backed by nothing but paper, which is kinda what you are saying that suddenly only paper matters most.  Now what happened just a few years before Carter in 1971 with the dollar and gold?  Paper tied to nothing.

supernickel's picture

Only problem: this guy is not from Earth!

Dental Floss Tycoon's picture

Lewis makes one common mistake.  He assumes that the creators of this mess are incompetent.  He never suspects that it is by design.

The end result is the desired one.  Penury for us and our progeny and unlimited power for the cleptocrats. 


DavidC's picture

Dental Floss Tycoon,
We are, all in our own way, incompetent, so I'd be prepared to go along with it.

One of the problems with getting into a position of power is that most people who get there believe that they've done so by virtue of their own infallibility rather than a mix of ability and good luck. It takes a measure of wisdom that most people (me included?) don't have to appreciate that.


LawsofPhysics's picture

And the solution is ...

OldTrooper's picture

...open a bank account in Canada.

SwingForce's picture

AUGH! (insert Sudden Debt's avatar here) Are you kidding me? They are the next group of over-leveraged lenders to fall. Canada's property values are at a peak, and you know what happens AFTER a peak, no?

Dionysus's picture

Yes -- we taxpayers will be on the hook, thanks to the CMHC.

OldTrooper's picture

You're right.  Forgive me for glibly regurgitating from the article.  But I think the idea is to get away from FRNs and our benevolent Uncle Sam as quickly as possible - and as far as possible.

slewie the pi-rat's picture

screw it!  if he's so damned smart, why doesn't he just recommend goin to the bank and buying some loonie traveler's cheques?  too simple for a hedgie? 

not enuf goobermints involved?

thegr8whorebabylon's picture

Burry is long farm land and gold.

spiral_eyes's picture

central planning worked great in soviet russia, about time we tried it here in the west.

AldousHuxley's picture

central planning worked greatly for China.

It all depends on the leadership. Central planning makes the game all or nothing deal for the entire populace. With leadership who does not know what they are doing, so much power in the hands of the few makes it dangerous.

Right now, America has no trust of the leaders in business, politics, academia since they have revealed themselves to be all greedy self promoting liars.

Society only benefits if populace chooses options that will benefit themselves AND the society, not just themselves.



Bob Sacamano's picture

Greatly?  They have been using central planning for many decades and am guessing the average American would not change standards of living with the average Chinese person.  But you are welcome to do so...... 

LowProfile's picture

Central planning worked great for Russia.

Up to a point.

Central planning has worked great for China.

Up to right about...  Oh, six months from now.

Stuck on Zero's picture

There's a great deal of difference between central planning and central management.  Central planning gives long term goals, targets for development, infrastructure priorities, and R&D investment.  Central management, or micromanagement, is complete control of an economy from government to handyman.  It means huge numbers of laws, restrictions, certifications, compliances, worksheets, reporting, taxation, land-use restrictions, and myriad mindless bureaucratic departments to oversee everything.  Guess which we are?

falak pema's picture

Third scenario : central BS management. Its worse than just CM as described above. Its mayhem level MIS-management. But its central at world level. Which is worse than at national level USA. Its financial Fukushima level 9!  Main losers : DM

ghostfaceinvestah's picture

Nice summary of what most of us here have known for awhile.

Most of my time is spent looking for clues as to when they are going to intentionally crash it again.  I still believe this summer, between QE rounds, we will get a crash to give cover to Benocide to re-start his evil printing.

FOC 1183's picture

A shitstorm of reality in just the first 2 minutes.

bankruptcylawyer's picture

what the hell is wrong with this guy? his speech pattern, affect, bumbling sentence structures and candence. it's ALL wrong. this guy is horrible.

LowProfile's picture

Oh, it's THAT guy!  Thanks, now I know to watch this.

People who suffer from Aspergers also "suffer" from near-superhuman powers of concentration.

RichardENixon's picture

My 15 year old son has it, and he serves as my personal encyclopedia. No need for Google at my house.

Thomas's picture

If you guys haven't read "The Big Short", it's brilliant and timeless.

Sancho Ponzi's picture


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lynnybee's picture

+1 ....... best website for real education.   i've learned so much / i used to be so damn ignorant, not anymore.

Alienated Serf's picture

actually, you are still pretty ignorant.

Antarctico's picture

He has Asperger's syndrome.

Back in the day, before every twist and kink from the baseline of human experience had to be a diagnosis with its own ICD-9 code, we would have simply called Mr. Burry a giant shambling nerd. Which is to say, he would look right at home at any WorldCon I have ever attended.  Whatever label he wants to wear, he has clearly done very well for himself.

SwingForce's picture

His rise to fame is chronicled in GREATEST TRADE (John Paulson's book).

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