LYN ALDEN: So, a little over four years ago, I started Lyn Alden Investment Strategy. And prior to that, I actually worked as an engineer. And so, during my course of engineer, I was always interested in finance. But my primary focus was engineering management. But as time went on, I got more and more interested in the financial side of things. And I started to notice that there's a vacuum for independent research that is still aimed at investors that might come from an institutional background, or that want somewhat more sophisticated analysis.

My first passion probably was investing in finance before I went into engineering. And so, when I was a kid, I was investing. I started with precious metal coins, and then it turned into equities. But when I went into university just for economic reasons, and because my other interest was technology, I went into engineering instead. But I guess the way I would describe it is there's that constant draw that I had back towards finance in a way. And so, you've now worked as an engineer. I very much enjoyed it.

I always found myself gently thinking in terms of the accounting side of it, or in terms of the business strategy side of it, or in terms of wanting to think of things on a bigger scale. Basically, I just saw that opportunity to polish up my writing and bring some of the quantitative background that I had in engineering to finance, especially because I started to see that the world was becoming more macro and ascent. There were basically clearly in a large turning point for how a lot of our systems work, a lot of our assumptions.

And so, I wanted to capture that moment and make sure that my voice is out there and that make sure that, basically, there's so much exciting things going on. And it was hard to just focus on engineering work when there's this whole world of things to analyze. We had this long like siloed setup where there's institutional grade research that's part of major investment banks. Then if you go to the "newsletter business" which was very retail oriented, often sensationalist.

And there's clearly a vacuum there to use independent nature of how things are decentralizing while still trying to have a somewhat more polished or a more rigorous approach, more quantitative approach to how I go about things. And so, that was what I tried to do is essentially take institutional level research, but then democratize it at a price point that is pretty accessible. So, I divided my research into two main types.

There's some that are more tactical in terms of trying to analyze markets over the next 6 months, 12 months, focusing on current events, interpreting current events to see how that can impact investments that I focus on, and my clients are interested in. And so, the second type is the longer ranging thought pieces where I look out 5 years, 10 years, or I try to explain something that's currently happening from a very high level view. And that that piece can be read a year or two later. And it's still almost as relevant.

So, those are the two types of content that I put out. And generally, my approach is that I'm always writing multiple pieces at the same time, and that I shift my focus on whichever one is calling me in that moment. So, that's my way to avoid writer's block in the sense that if I'm stuck on one area, I just pivot to what I'm clearly more feeling at the moment, and then come back to more challenging thing at another time.

Another part of my business is reaching out to either subject matter experts, and especially as I've incorporated Bitcoin and digital assets into my research process, reaching out to executives in the industry and understanding how things work. I'm trying to get down into the weeds. Because that's I think one of the biggest areas that so many of these traditional research firms were investment banks, the author is not tied in enough to the technical details. And so, I try to keep myself really grounded in some of the more technical details of what's happening.

For Bitcoin is one of those things that had to be introduced to it multiple times in order to fully get it. And so, the first time I encountered it, it was actually back in-- it must have been 2010 or so. I had a friend that was still mining it on her computer back at the time with a graphics card. And I always thought it was neat. I never had that knee jerk reaction of like, oh, it's worthless. I always thought it was neat. And each time I would encounter it, I would research a little bit. Back then, there obviously was not a lot of information on it.

But then I would forget about it. I would basically, I don't know how to price that. I don't know what to do with that. It's neat. And I would just leave it aside. I had a very busy life and so I go back to other areas. But inevitably, Bitcoin would eventually keep appreciating in value, capture more media attention. And [?], I would be drawn back to it and say what is happening here? Now, there's other assets in the space. And so, I've wrote my first article on it back in 2017, during that big bull run, because I had a lot of client interest and reader interest in my thoughts on that ecosystem.

And I had like three or four different valuation models in that piece. And so, depending on what your assumptions were, you can come to your own, you pick your own adventure for what you think this asset is going to be worth. And so, I ultimately passed on it, for several years, it was a good decision, because it had that blow off top, and it collapsed. And it had this multi-year sideways consolidation and underperformed many of the things I was focusing on. But I kept studying the space overall.

And I think the key thing is to be open minded in this space. So, a lot of people, they analyze it once. They lock in an opinion. Then even as things change, or even as new information becomes more widely disseminated, they don't necessarily update that decision that they made all those years ago, but I kept monitoring the space. And some of my concerns that I had were mostly addressed. And so, as we got into late 2019 and early 2020, I was more on board with it.

And of course, when we saw the March 2020 Crash across asset types across the board, I saw that Bitcoin behaved a lot like the precious metals did. And so, I understood a liquidity shock when I saw one. And so, I used that opportunity to get onboard. And so, in April 2020, I finally invest it and began recommending Bitcoin as an asset. Then I kept researching it from there, and my conviction on the asset kept growing over time.

The overarching theme for this series is essentially to explore what is money. Because how we think of money changes over time, both in terms of how our formal monetary systems are structured, and also the cultural aspects of money, or how people interpret what money is and what money means to them. And so, we start out looking at some of the past aspects of money, then we explore some of the psychological aspects of money. Then lastly, we get into some of the technological changes that are happening to money, as well as some of the cultural shifts around money and identity.

So, I'm going to talk to analysts, Luke Gromen, who specializes in understanding some of the details and the shortcomings of the way that the current monetary system is structured. So, we're going to explore in detail the Petrodollar System that has been in place since the 1970s and that is still in place to this day to varying degrees. And we're going to explore how that system was constructed? What are some of the costs for maintaining that system? And why is that system maybe no longer serving the interests that they're originally designed to serve?

LUKE GROMEN: In the mid-70s, the United States and the Saudi government came to an agreement, which came to be known as the Petrodollar System, where effectively, Saudi agreed they only price oil in dollars. When you combine Saudi oil production with United States oil production, which up until just a few years prior had been the world, the US had been the world's biggest oil producer in the world. But the gist of it was a quarter of the world's oil was being priced only in dollars. And so, you came to this system where oil was effectively backing the dollar to replace gold at a fixed rate which happened backing the dollar.

LYN ALDEN: Basically, there's a lot of implications when you have a global monetary system change over time. And so, when we go back in history, for example, this system has been in place for 45, 50 years, depending on exactly where you want to start the clock. The system prior to that was the Bretton Woods System, which was only in place for 25 or 30 years. Then the system in place before that was for a number of decades.

These big moments in time tend to shift pretty dramatically. And so, we're going to explore in depth, the upcoming transition that we seem to be going through. With Jared Dillian, we focus on the psychology of money, and specifically for inflation, because a lot of my focus is on the quantitative analysis of things. What is money supply doing? What is happening with the commodity CapEx cycle? What is happening with supply chains? And so, I look at things for a number's perspective, whereas Jared focuses heavily on the psychological element.

We can do all we want with the numbers, but at the end of the day, human decisions drive our economies. And so, understanding these big shifts in perception play a very large role. And so, we're going to explore with Jared some of the psychological aspects of a deflationary environment or a disinflationary environment compared to an inflationary environment. And why some of these shifts may or may not be long term rather than just transient.

JARED DILLIAN: If you want to talk about the stickiness in the long term, what we're talking about is like very long waves in terms of psychology, and basically, we are just a year into this. And when you're talking about policymakers, first of all I don't think the Fed really has an idea of what it takes to stop inflation. Everybody knows academically you have to raise rates. But they're not really going to do that until inflation becomes a big political concern, until it affects people's ability to become reelected. So, there's not really a willingness at the Fed to really do what it takes to fight this inflation.

LYN ALDEN: And with Meltem Demirors, we're going to focus on the really big picture concepts, the really long term changes that can happen, especially they can happen very quickly in some cases, and the stepwise changes, these exponential changes that can happen with new technology. And so, we're going to focus on the changing role of institutions in our past, as well as how those institutions can morph going forward into a more digital age.

MELTEM DEMIRORS: Institutions don't look the same as they did in our old world in the Meatspace world, because all of a sudden, we no longer require physical proximity to enable social coordination. And I think fundamentally, what's happened here that I think very few nation states have grasped, is this long held tension between voice or exit. Historically, ability to exit has been limited because the money has always been the limiting factor. There's no way for me if I'm dissatisfied with what's happening in this country to exit the US dollar, there wasn't until of 2010.

LYN ALDEN: We're going to talk about Bitcoin in particular, but also the broader cultural understanding of what money is, and what identity is, as we go through these technological shifts. I'm really excited to get her thoughts on that. A big theme that I've been emphasizing is that when there's problems with the money system, it transfers to everything else.

When we're in an environment where your savings account and your checking account are yielding below the inflation rate and where they fail to preserve your purchasing power over time, we historically started to see speculative behavior. So, this is something that developed markets in many ways are encountering for the first time for a couple of generations. But when we go back in history, this is really challenging environment for people to navigate, because the unit of account, the money that they use itself has becomes questionable. And so, they start monetizing other assets.

And so, especially in this online culture becomes rather funny but ultimately is a very serious topic. And so, when I'm asked about 2022, I often think that whether or not that year turns out a certain direction, I think that the bigger question is what's going to happen to 2020 decade? Because any one year might be an anomaly, especially when you have these big changes, it's never linear. It's never with low volatility. And so, one year could be all the trades that work the prior year stop working on and start working again the next year.

And so, at least there's all sorts of risk management approaches for how people navigate those environments. But my main focus is on the big picture. So, I think 2022, we'll see a cooling off of some of the things you've seen in 2021. Most likely, depends on all sorts of policies that are maybe outside of our control or forecasts at this moment. But I think the bigger theme long term, as we look towards the end this decade, and during that process towards it, is it we're clearly having a transformation in what money is and how we interact with money, and what assets that we monetize as we preserve value from one system to another.