Brunch & Budget

TBT - What exactly is hyperinflation?

October 27, 2022 Brunch & Budget Season 2 Episode 12
Brunch & Budget
TBT - What exactly is hyperinflation?
Show Notes Transcript

We’ve all heard stories in history class of a country’s currency being nearly worthless and it’s happened as recently as 2009 to Zimbabwe, where their Zim Dollar exchange rate was 700 billion to 1 US dollar. Could this ever happen to the US?

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Good afternoon and welcome to brunch and budget on bonfire radio with your host, Pamela Capalad, a certified financial planner here to help take the bite out of your budget, I'm your sound provider Dyalekt. And here's your host family Capalad. Thank you Dyalekt. And thank you everybody for tuning in on this lovely Sunday afternoon. Sunday.

Unknown Speaker  0:33  
Fourth of July. I hope you are enjoying the July Weekend actually. So hopefully you had a crazy barbecue time yesterday. So awesome. Good fireworks. Today, we're actually going to be talking about how the Fourth of July affects our economy and the economic impact of fire and or work.

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It's actually a less fun subject.

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Like maybe we should have done this show about that. Dang it. Everybody rewind. Now hyperinflation. And this actually came about because dialect read a crack article about Zimbabwe who had a recent bout of hyperinflation. I would like to say I also I, because he did because this happened some years ago. I knew about it sort of. Yes. Yeah. Because everybody heard about it when he didn't do those nine. Well, and everybody heard about it when it happened.

Unknown Speaker  1:22  
We have some homies with, you know, connections out there. And I've heard little pieces there. But I love cracked shout out to crack crack, y'all the sponsor, people should sponsor cracking crack should sponsor cycle of sponsorship. But I love the detail that they go into. They had a gentleman who was going over there.

Unknown Speaker  1:41  
I forget what it was for tourism or to be over there. But the act of being a foreign person trying to trade money in there was crazy, and that I had not really understood that the global impact of your because a lot of countries have had their currency died. currencies in general, like they were, you know, they're way less stable than we assumed they are. Yeah, yeah. And especially in other countries who are less stable in the United States. So we're going to be talking about hyperinflation today, which countries, you'd be surprised which countries have gone through it. Some countries you might not be that surprised about, but you would be surprised about which countries have gone through hyperinflation. Zimbabwe is the most recent one, but there's a number of them that have gone through it and gotten out of it. And we're going to talk about that today. And you know, just the whole notion of currency in general and how and how it's backed, like the US dollar is backed by the good faith and credit of the United States people. Oh, yeah, backed by gold. And the dollar is just the dollar is just the value of it is based on what we decide the value of it is, which is a really interesting, it's like a collective agreement that, okay, this is worth this much like the whole debt thing. Yeah. It's like it's, it's a tenuous system. It is it is. And we're going to talk about some of the reasons why the United States is less likely to go through something like hyperinflation in some of these other countries. But at the end of the day, currency is, you know, a made up

Unknown Speaker  3:09  
value system. Just like racism. Yeah, there you go. Let's see is exactly like currency equals, thank you. That's enough for the night, check you next week.

Unknown Speaker  3:20  
But before we talk about hyperinflation, I'm wanting to do a little investment appetizer about inflation, because it is about inflation. Yo, I don't feel like I understand inflation to the degree I would like to. I feel like a lot of us don't. And when I first started going down the bunch of budget rabbit hole. And I think shortly after I took my first money personality tests, and decided to be more dedicated to figuring out what was the deal with my finances.

Unknown Speaker  3:54  
Inflation made me so mad.

Unknown Speaker  3:58  
You know how, again, I was talking about race and stuff, you know, like when you 1213 you, you find out, you start to hear actual history stuff about this country, and like, you start being able to process and you're like, Oh, terrible things happen to people like I like me and around me and I care. And you get all that righteous, anger type of thing. I felt the same way when I learned about inflation and stuff even more mad because I was a grown up. Right. As a kid I swore inflation was a natural thing. Parents would say, Well, you know, the candy bar used to cost a 10th of that when it was

Unknown Speaker  4:34  
what's the funny joke in half baked when Willie Nelson says I remember the dime bag cost a dime, like all that kind of stuff. It's it's such a commonplace thing that you're like, Oh, right. Stuff used to cost less and now it costs more because the world is more complicated. Some of that is natural, and that is the reason and some of it is fabricated, and some of it is controlled, and regulated. because of things like that.

Unknown Speaker  5:00  
The world is more complicated, there's more, there's more actual dollar value circulating in the world, and especially now that currency is not even being tied to paper, we're seeing more often than not, then it's also something that needs to be monitored differently as well. So inflation, and I actually wanted to talk about the phrase keeping up with inflation, because I feel like you hear that a lot. When it comes to where you should put your investments and where your your portfolio should be invested is, you want to make sure it keeps up with inflation. If your money is just sitting in cash, it's not keeping up with inflation. Well, the whole inflation thing about you know, and again, my confusion is,

Unknown Speaker  5:37  
while it's natural, everything doesn't inflate at the same rate. That's true. So the Naturalness is confusing. Yeah, like, I don't like some stuff does just happen. And some are manipulated. I don't know, I can't tell the difference between one or the other without having an extensive knowledge. Right. Right. Well, and that's what's tough. And I feel like that there's also localized inflation almost have Yeah, and I think that, you know, we talk about the federal rate of inflation, and all of this kind of stuff, and the average rate of inflation year over year, and things like that. And, you know, we see with gas prices, and housing markets, and college education, even, that the the rising cost of all of these things is not necessarily tied to that three or 4% that we're used to hearing when it comes to what the average inflation rate is. So inflation basically means the value of your dollar is going down every year, you have less purchasing power, you know, the candy bar, this cost you the candy bar that cost you $1, this year is gonna cost you $1.03 next year. Well, that's the interesting thing, right? It's not that the candy bar is worth more is that your dollar is worth less? Yes, yes, exactly. appreciated. It's depreciated. And so that's why you hear all the time that you want your investments to be making at least 3%, for instance, because then you're keeping up with inflation. And so inflation is a little bit of as a little bit of as natural, and a little bit of it is kind of created, and part of it is the federal government regulating how much money is in circulation, right in the United States. And they don't do that by necessarily taking money out. They do it by changing the interest rates. So changing the rate at which banks can borrow money. That's what they mean, when they say the the rates, the Fed rates are going up is banks borrow money from the Fed, which is the bank's bank. And so when they borrow money, it cost them money to borrow the money. They have to pay interest, borrow the money. And so when interest rates go up, then it gets more expensive. And usually, the Fed will raise interest rates when it feels like there's too much money circulating. And so you know, it's a very simple way instead of burning dollars, how you exactly exactly the cost to borrow the money. It just goes up. There was I don't actually know this in my head, but I feel like there was a digging back in the school times there was a time when they actually destroyed paper money.

Unknown Speaker  8:11  
I don't remember that time. But I believe you were I mean, the thing I had to go and look at it. This just popped in my head. There's absolutely no research by that I may have been making.

Unknown Speaker  8:21  
Yeah, because we did have and what's interesting is since 2008, we've actually had a period in 2009, we actually had deflation. Yeah, negative inflation. And since then, it's really been between one and 3%, for instance, in the last year, and in 2015, the inflation has been negative in 2014, it was between one and 2%. So because the economy hasn't quite recovered, the inflation rate is actually pretty low. And so it really is a matter of how much money is flowing through people's hands. And because of that, it's like I said, it's not the physical dollar so much as the amount of value that's going around the economy. And so when there's more of these dollars, that are going through the economy, then the value of each dollar just naturally goes down. Yeah, that part makes sense. Yeah. And so the part where it's kind of unnatural is where the government tries to regulate it to make sure that we don't go into situations where there is hyperinflation, which is what we're going to talk about today, where there is just this big economic upheaval, and the country's currency is basically in ruins. So the concept of keeping up with inflation is the concept of making sure that where your money is, is keeping up with how is keeping up with the value of the dollar decreasing every year. So things like a cost of living increase that you might get at your job, for instance, where you'll get three or 4% of an increase every year because the cost of living the cost of buying goods the cost of

Unknown Speaker  10:00  
of renting your apartment, all of these things is actually going up. So, cost of living is not really a raise so much as it is. Yo, this $60,000 I was paying you is actually worth 3% less now. So I have to pay 3% more to keep up with Right, right, right. Okay. Yeah, yeah, yeah. So when they tell you're getting cost of living adjustment, and they're calling it a race, it's not a race. It's not a race. It's just keeping up with inflation up with inflation. Yeah, it's, that's what that's not screwing you. Yeah, exactly. It's like, Oh, good. I'm not staying at 50,000 for the next three years and actually having less purchasing power. Because isn't that been the complaint of a lot of groups that a lot of things, their salaries, or the rates in general just aren't keeping up with inflation? Yeah. So now, it's like their industry sucks. Because everything is now at a non survivable minimum wage. For instance, we did a show on middle class economics when Obama did his State of the Union and minimum wage has not kept up with inflation, not nearly the math on that, and you'll be mad. Yeah, exactly. Well, if it did keep up with inflation, it would be like $19, right? Well, remember, we were doing, we did an episode on

Unknown Speaker  11:12  
paying for college. And there was the complaint of your grandparents that when I was good, I worked a crappy job all summer, right. And because of where things were inflation he was now compared to then you could back then work a side job and pay off your whole college. Which job sounds like a good side job. Oh, yeah, job for real medicine, the jobs they get and coming out of school.

Unknown Speaker  11:38  
I know it's true. So keep that in mind. Next time, your boss says you know that you're getting a raise, if it's 3%. It's not a raise. It's just adjusting your salary to keep up with inflation. It's nice that they do it because not all jobs do. But it's also not an indication of, you know, your performance level at that job. So just make sure to ask for more, we did do a show on how to negotiate a raise. So feel free to look that up at the archives. But again, cost of living adjustment is not a raise. It's just keeping up with inflation. Your investments getting 3% is just keeping up with inflation. Well, yeah, that's probably good advice for folks who are like, oh, yeah, I had to fight for my little bit. Yeah, right. No, no, you shouldn't. And you're your boss is doing you dirty. Yeah, that makes me think that yeah. Because I know, I've thought that at times. And I know there are a number of businesses that don't explain that explicitly to you. Yep. Yep. So there you have it. That is inflation. That's what it means to keep up with inflation. And now we're going to talk about hyperinflation. How many more times can I say inflation? We're gonna we're gonna say it a lot. today. We are gonna say it a lot today. So Zimbabwe hyperinflation This is what a country looks like when its currency is worthless. Crack. Look it up. If you want to read the article. For more stories. We're gonna be going over some of them today about just anecdotes about what it's like when a country. For instance, let me give you an example. At the height of its hyperinflation, the Zimbabwe dollar the exchange rate was 758,530,000,000. Zimbabwe dollars to one US dollar in July 2008. To one to one it was 758 billion Zimbabwe. $2 and Euro trillion a year a trillion Euro Zimbabwean trillionaire? Yes, it's true. Their annual inflation rate

Unknown Speaker  13:34  
was 516 quintillion percent. Like what that's like, how do you even fathom that number? That's, you know, that's just straight up math nerd math, like you got to enjoy like, oh, quintillions in case you're, you know, this, this aliens, and you go up to quintillions is the 15th of that. Yeah, they had to start printing Zimbabwe dollars with a $100 trillion denomination so that you wouldn't have to carry sacks of cash around.

Unknown Speaker  14:09  
Money Back then on the map. Third thing is like, Oh, you get to ride factorials and stuff. Oh, yeah. We're talking about a lot of factorials today with some of these countries. Oh, my gosh. So what is hyperinflation? Let's go back. We talked about what inflation was what is hyperinflation, because, you know, the United States did have a bout of pretty high inflation in the 70s. And a lot of people call it a time of hyperinflation. But just to give you an idea, for instance, in 1974, inflation was at 12.3%, which sounds like a lot, right? Yeah. 12.3 is a lot more than 3% hyperinflation, the actual definition of it is, it's a rise in over 50% It's a 50. It's an over 50% rise in

Unknown Speaker  15:00  
prices every month,

Unknown Speaker  15:03  
every month, every month, the prices go up more than 50%. It often happens when there is a large influx in the money supply. That's not supported by the amount of things you're producing. So it's not supported by the amount of your gross domestic product grows. So you put a bunch of money in, but there's not enough there's not enough goods to actually to actually justify the amount of money that you've put into the system. Yeah, that makes sense. It's just the rate of that is so yeah, yeah. And so basically, there's a lot more supply than demand for the money. And it's kind of crazy to think of money as having a supply and demand cycle, but it does. If there's more money in the system, and there's not enough things to buy it with, then the value of the money is going to go down.

Unknown Speaker  15:51  
Another big, usually, hyperinflation happens after big war, where the country loses power dynamic of what it sounds like, when you are talking about 50% Every month, that sounds like you just lost a war and lost a bunch of your people and resources and all that. Yeah, totally. And you've lost a bunch of your citizens confidence in the currency. You know, there's, there's, it's a huge economic, you economically destroy your country by going to war and losing. And so people who are Yeah, straight up, and people who are selling the goods to you, because they're not confident in it, they artificially raised the prices of the goods. And so then more money needs to circulate in the system. And these goods are hyper inflated the cost of them, and so then the money needs to be printed and more money goes into circulation. And it just kind of feeds off of itself. It totally snowballs. And so the thing with Zimbabwe is the government actually literally started and it's kind of that kind of that joke of the government printing more money. It's, it's what happened with a lot of these countries, you're going to talk about a number of countries who have gone into this hyperinflation state, and it happens when the government literally just starts printing more money to pay off debt, that well, that's the panic move, right? Yeah, it's like, oh, we'll just make more they were in more, they're at war with the Congo. They had some bad crops, and they were trying to pay off this debt. So they were like, always just print a bunch of money.

Unknown Speaker  17:24  
Some of the systems of hyperinflation that you can see is, prices can change within a day, citizens will most likely start operating on a barter system. And it's often cheaper to use the money for paper, fuel, and other things than to actually buy the goods with it. So we saw this in Zimbabwe. There's a great I don't know if great is the right word. But there is a very telling story about prices changing for things like a bottle of Coke multiple times a day and a few months. So after a few so the price of the bottle of Coke doubled within a day. And after a few months, a bottle costs a trillion dollars. A trillion Zimbabwean dollars? Well, we which is like $1.50.

Unknown Speaker  18:15  
Yeah, yeah, exactly. There you go. Thank you. People reusing. There's reports of people using Zimbabwean dollars as toilet paper, wallpaper, paper printing printing news or advertisements on it because it was cheaper than

Unknown Speaker  18:33  
the head newspaper put out an issue. And it said it's cheaper to print the news on this than on paper. Yeah, I thought that was some excellent journalism guys. Oh, yeah. What a commentary, right? And the other thing is Zimbabwe developed kind of a black market bartering system. They did not even want US dollars. They didn't want any currency currency was the enemy. Like give me things things are real. I can do things with goods I can do. I was gonna say I can do things with things. But no, no, we're talking about a natural reaction. Yeah, it's like oh, wait, money actually means nothing. And that's what's so interesting when you see a company go into kind of this hyperinflation state is that money is a construct, just like race Oh, my God. Money is a construct. It is something that we've all agreed has this value and that we can trade goods and services for and I'm not saying that money is a bad thing. Or the it should be done away with me wouldn't ever radio show. Yeah, there you go. We talk about who knows healings? Maybe that'd be fun too. And shouldn't feelings and feelings.

Unknown Speaker  19:42  
Talk about our feelings during brunch. Well, the thing about money that it's useful because it's hard to know, you know how much how many cows a goat is worth or how many goats a cow was worth. Or, you know, how much are my beans worth? Versus you

Unknown Speaker  20:00  
or, you know, years of corn. And those things are, I think, very subject to or susceptible to, I guess, inflation and not hyperinflation, but inflation in the short term, like you're saying about in one part of the day as being worth a lot more than other times, because it'd be seasonal. Right? Right. They did deals with

Unknown Speaker  20:20  
supply and demand. Yeah, it's like, you know, the crops are harvested this time. So this is when there's an abundance of them. And you know, that's why that's why it costs more to buy tomatoes, not in the summer. You know, it's things like that can strawberries and things like that. But the thing is that having currency when it is working, and when it means something is helpful, and bartering is not an efficient way to actually trade goods. Yeah, the you know, as much as currency can be dangerous for us. The great thing about this is it streamlines things. Yeah, exactly. And while there'll be inflation, the inflation is gradual. It's not based on you know, it's funny when people talk a lot about free market, ie supply demand. In barter, that's where that is true. Yeah. That whole, like, if you don't know how to handle supply and demand, you're screwed. Like, with our current system, with our bills, and our debt and all that, you don't actually have to have your stuff together, you can stumble through a lot more. You're a lot more protected. It is and I guess is why the government does it. It is a form of government regulation. Yeah. Trade. Yeah, absolutely. Because really straight up you're bartering you know your goats for horses and grain for pen for services. Yeah, that's, that's, yeah, I mean, and that's what was happening in Zimbabwe is because they didn't even want to take you as US dollars meant nothing in that country. Because the reason why hyperinflation started, was a big thing was so they were recovering from a war. And the the Zimbabwean president said, no foreign currency is allowed to be traded in here. And so they were operating on this closed economic system that didn't have anything to stand on. And so when, when this guy who helped write the article visited Zimbabwe, he would go to the markets, and he would ask to, you know, he would try and trade US dollars for things and they would want his shoes or his backpacks. At some point, they had ballpoint pens, and they were taking pens as as a trade for goods, because there were no pens in the country. You know, and so pens became a strange form of currency, like clam shells back in the day, you know, or, you know, tulips which, you know, right, right. The whole economy is based on tools. Yeah, exactly. So, you know, I think people like the idea of, of value being represented by this other thing that is quantifiable. So when it was pens, it was pens, when it was clams, it was clams when it's dollars dollars. And he even had this even had this line where it said, for a moment, pens were the local currency. And so pens were so valuable that they became the thing that you traded with. What's crazy to me, we talk about all this stuff. And it all sounds real sensible. And you know, especially academically as we're speaking, the ill thing is, in all these examples in Zimbabwe and the other countries that we've looked up and heard about, it's so fast that people are able, because we think of money is such a real thing. All about the green and all this, you know, we have so many like anthems and bobs and our kids talk about money, all this. And as soon as it's not worth anything, man, it's amazing how quickly, folks just abandon Oh, yeah, totally. This thing that seems so integral well, because it's based on our competence and faith in the dollar. You know, it's our on the currency. So, we are going to go to a song right now and we're going to talk about how bad it's gotten in other countries. Yeah. So we've got a bunch of Zim hip hop for you. On this week's show, in case you don't know what's in hip hop, that's hip hop from Zimbabwe. By the way, I wanted to point out that yes, the government be destroying bills like nobody's business. In 2010 They destroyed 2.6 $1 bills alone Oh word, but that is not the way that they're that it's moving forward. They have a reserve balance liability. What does that mean? This is it's long and this could be its own show talking about it but what they do is they create a reserve balance liability on their balance sheet it's completely electronic so that they're able to get rid of it there

Unknown Speaker  24:42  
I don't quite understand there's probably going to need to be a whole show Yeah, but it they've been destroying dollar bills and the problem is they don't want old bills in circulation so once they certain age that yeah they'll physically destroy period of that. That's why you get those that's what you can buy shredded money at the but the actual way that they

Unknown Speaker  25:00  
make less currency now is through this. They're just changing numbers on a balance sheet I'm sure yeah. And creating a liability Yeah. Which makes sense in the abstract but we'll probably actually have to did I just want to basically means that they're putting it on their balance sheet as a negative versus a positive word? Yeah, yeah, I'm just saying we let us know listeners Yeah, if you do want to know what that actually means for you. Because I don't know what it means for me. Anyway, but we got some some hip hop, and we're gonna start with a song called ghetto life let you know about how it is. It is Sinbad 90. With this. The guest artists have some of my favorite names in hip hop, these MCs from Zambia CIP J and real Cliff check them out brunch a budget bonfire radio

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I was born in the streets as the only jump ahead clever put some

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new spin it up

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though was the life threatening gripper corner all about the pavement

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never had a chance to live in a palace never had a chance to go to school and never had a chance to to love to Miguel a dedicated track records one

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on the left is wanting to guarantee the stress could have been in jail man that was the case imagine drug dealing every day we all grind everyday we are willing to

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the truth behind life

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ever since I was born wonderful night so on that bed scene that night

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size or the time maybe on the

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left doing all kinds of

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because when I moved to LA we had over the Maputo non cuyama kula we put a limited we'll get to Mr. Landfill in a church

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every day in St. Tirana in a living quite no retreats

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and she defended complainer without a fuckup lead

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away Jim would you buy this hookah Dan Yes

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No See that you want that too? I see we're pleased

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to come

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together become

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international TV we'll be

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on the

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other side all the time making

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doing all kinds of

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because I am unique some Nick is trying to break me right now was this big bed I was under was

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to sneak his way ahead. But no that means eight ounce plan or something I know God is watching when

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the days were dark

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now lives in Syria

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but why but

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that's my life yeah, yeah, yeah, yeah. Oh, that's my life

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going on guys.

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On the inside

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Baghdad 01.

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Welcome back brunch and budget bonfire radio. That was CIP J real cliff and Sinbad, 90 Loving the name real cliff is such a love the good simple names it just has a lot of weight with,

Unknown Speaker  30:51  
oddly enough ghetto life, I say, oddly enough, because their MCs from Zimbabwe and Zambia, and

Unknown Speaker  30:59  
I don't know what to say about that, like it. One, I wanted to shout out Black Twitter because it's awesome, too. I wanted to be sad because

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we get ghettoized, even on supposedly free internet stuff. And I'm listening to a song with African MCs talking about

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spending every day working hard for the money live in this ghetto life

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stressy and said, How you gonna How you gonna have a ghetto in your own country? Yeah.

Unknown Speaker  31:29  
Right let alone your own neighborhood.

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So and we're gonna continue on this joyful happy unicorn train by talking more about the July everybody

Unknown Speaker  31:43  
Yeah, what is the July celebrate

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United States Great Britain. I

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thought that was what is that is that was that it was so summarize the independence, independence from Great Britain.

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But we're still the same network.

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Unknown Speaker  32:03  
But today, we're talking about Zimbabwe and hyperinflation and other countries in hyperinflation. So there's a lot of countries that have actually gone through this. One of the more famous ones that you may have read about in history class is Germany. Oh, yeah. Went through a crazy period of hyperinflation between 1921 and 1923. Right after World War One. Right. Losing wars being Hey, although, you know, as terrible as this is, it kind of seems like a slightly good thing when you're like, well, the consequence for starting war, if you fail at it, yeah, you guys are screaming destruction. You just it seems like it'd be an awesome way to get the people to be like, no, let's not do this. Let's not go to war. And people still, maybe that should have been the Vietnam argument. Yeah, it's gonna mess up our money, y'all.

Unknown Speaker  32:52  
That's what y'all should have said. Hippies. Wrong direction. For real, but it didn't mess up the US as money. So anyway, yeah. But we're gonna get to that, right. Yeah. So Germany. So remember, when I said Hyperinflation is when the inflation rate is over 50%

Unknown Speaker  33:11  
month over month, which is crazy, right?

Unknown Speaker  33:15  
So if you're, if it's like 33%, monthly, that's somehow not hyperinflation. No. Well, because just to give you an idea, Germany at its worst reach a monthly inflationary of 29,500%. Oh, yeah. That's hyperinflation for us. That's hyper. Yeah. So that that bar is a low bar. Yeah. Yeah. When it gets bad, it gets kind of bad. a month, month over month. Wow. Yeah. So that's just a spiral. The exchange rate in Germany was worse than it was in Zimbabwe. It was 4.2 trillion marks. For one US dollar losses, Nick, so good.

Unknown Speaker  34:00  
Yeah, well, he said,

Unknown Speaker  34:03  
Oh, I think you said that is not so good. Yeah, as I just said, that sounds good. I was like, Oh, I understood it a little bit, because it's so close. English is a Germanic language. Yes, it is. In Argentina, Argentina had in the 1980s hyperinflation. They their their annual inflation rate hit 12,000% in 1989. These numbers like should not be allowed. Well, and in the 2000s they had another Yeah, that wasn't it wasn't even mentioned. This was the bad one in the 80s

Unknown Speaker  34:35  
Well, yeah, the one in the 80s is is famous I think like history book famous, like even Texas history. Well, yeah, so yeah, there you 119 92 Argentinian peso was worth 100 billion pre 1983 pesos.

Unknown Speaker  34:48  
Oh, that's just based on a peso right so to pay so yeah. So Argentinian peso post hyperinflation versus pre hyperinflation was 100 billion to one. By the way, Argentinians, I have to apply

Unknown Speaker  35:00  
pologize for you. Pam is from the Philippines where they say peso like they're going to pay you. We do know that's exactly it's the name of the way we use words is a little off. Well, you don't have to worry about the other words I'm just saying that y'all say Peso and not basil. Yeah, I'm just just trying to put that out there so people are just getting it wrong that peso anyway, Yugoslavia 1989 to 1994. Okay, this is crazy. Oh, this one was really crazy. This one is crazy. So just to give you some perspective again, Germany's monthly inflation rate was 29,500 Yugoslavia's monthly inflation rate was 313,000,000% Their daily inflation rate every day. Their inflation went up by 64.6% daily inflation rate, the fact that you're even talking about daily inflation rate. Wow. And it's 60. Well, then you're not even a system of Yeah, that's just madness. Yeah. It's like what is this to give historical perspective? Also, if you remember 9093 9094 You said yeah, you Slavia I mean, ridiculous war going on. I mean, not that ridiculous, but was crazy. I mean, how many different countries were raised, made, remade, unmade in that time? It was that was that was one of the big reasons was just that economic like I disturbance is not even the right word. But the upheaval of these countries getting made and unmade, and Germany to I mean, that was why Mar was where it was where the inflation happened. You know, it wasn't. It wasn't technically Germany when it happened. It wasn't technically where Germany wasn't technically where it happened and is now German. Yes. You know, Greece is which is a country that still exists 1943 to 1946 their inflation rate was a mere 13,800% But they still have an economic problems they do I was thinking about that. That's why I include them on this list because they haven't they haven't quite received to recover. They just kind of always have haven't figured it out.

Unknown Speaker  37:08  
Reese's, that friend that always says

Unknown Speaker  37:13  
I'm just going to get the coffee when y'all go out to eat together and fight hard against the Even Steven splitting of the check. Nah, man, I just got coffee. Exactly, exactly. I can't I wasn't gonna do a Greek accent.

Unknown Speaker  37:27  
I appreciate that. In Zimbabwe, I already mentioned 516 quintillion percent was their annual inflation rate. quintillion, quintillion. What does that even how many zeros is that? I don't even know. But hungry. takes the cake hungry is the big winner. Oh, no, wait, wait, there was oh, their inflation, their monthly inflation rate was?

Unknown Speaker  37:52  
Speaking of

Unknown Speaker  37:55  
factorials it was four point 19 times 10 to the 16% monthly annual inflation rate. So

Unknown Speaker  38:07  
it was 207% daily inflation rate. You just said that's a lot. Yo. That's a lot. Yeah. What else can you say? That's just crazy hungry from 1945 1946? What? I mean 200% A Day a day. How do you even keep track of that? How does that even?

Unknown Speaker  38:29  
How does that not explode into nothingness immediately? Well, and it did I feel like that this is all retroactive numbers, where it's like, oh, now looking back, we can calculate what the inflation rate was. At the time, it was like Hungary was just like in a fucking shitstorm. Like, right? What do you do? What do you do? You don't do anything you you keep what you can and disregard the currency I guess, you know, I mean, the biggest way we talked about war, the way that it happened in Germany was because they were funding their war debts by borrowing money instead of taxing their citizens. So it led to crazy inflation. In Argentina, they borrowed a lot of money externally to increase their trade surplus so the currency got devalued. Right right. And Yugoslavia you already mentioned it. Madness Madness for plus printing money. They're just printing money. They're like, man, let's just well that's that's a war thing. That's a war attack. Yeah, you do when you're especially when you're like doing the Civil War where you're trying to be another country. You go to a new country, you spend all the money that it takes to create a infrastructure or the look of one right and part of it very necessarily is your own currency. Decree your money? Yeah. Well, and the other thing is, it got so bad that they started restricting citizens access to their savings accounts and government banks. Well, because that is crazy time. Think about your living in a country that decides to split into other countries. You've got money from your old regime.

Unknown Speaker  40:00  
If your government is telling you your side, we're going to flip it to this new thing. Yeah, you do. Because and you're going by the regular inflation rate of Oh, the one to one or whatever thing that they promise. And then you lose, right?

Unknown Speaker  40:15  
What else you're gonna do? Yeah, that's, you know, it's it's crazy asked out. Yeah, yeah. So Greece also got into debt around World War Two. And again, it also printed money instead of taxing its citizens to pay off the debt. So that's the other thing is like, people, it seems like just think printing money is the answer. It's like, No, it means nothing. It means nothing. And then for Hungary, it was just wartime spending, it was being in the middle of a war. Right. Right. Right country was heavily subsidized the private sector, which strained the public budget, it was like here, private sector have all this money that we need you to do stuff for, for the war. And then they lost the war. And it's just like, there it goes, there goes there's the country's currency there goes, there goes the people's confidence in the value of the country's currency really is the other thing. I've never understood how those type of collapses because they're pretty common throughout history, how that is allowed to happen.

Unknown Speaker  41:18  
I know that, you know, businesses business, right. But the reason we bailed out banks and other businesses were it would be ruinous for all of us if certain things fell apart, right? And when I see countries, and it's even having us do a degree, get in the business of, well, we need to pay these private military folks so that we can take care. And so we give them a deal, but they won't give us a deal. And then we're in this right on break out of all situation. It's hard, though, because no one also No one plans to lose the war. Right? Right. I hear that it's just so it's one of those things where it's like, we are putting money into this private sector to help us win this war that we're fighting. And so I can see the logic in the moment. I'm just like, Here, give them the money, they're gonna take care of it. They're gonna provide us the resources, we need to win this war, and then you don't win and then you're stuck like this. Yeah, what happened to just in case? I mean, like a simple

Unknown Speaker  42:18  
clause in a contract and be like, hey, so we're buying all these tanks from you. But just so you know, if they blow all of them up, you're not getting the money for? That sounds like some regular stuff. Yeah. Sounds like you're like a regular dude selling me a tank would be like, Oh, they all blow up. Yeah. I also think, though, that no one is thinking clearly in these situations. And I think that's a big part of it. I hear that oh, we get I totally get the logic again. Why wouldn't you have a system set up? Because you know, you ain't gonna be thinking clear, because it's war.

Unknown Speaker  42:48  
Everyone thinks they're gonna win.

Unknown Speaker  42:52  
Lottery, everything, lottery everything. So after this song, we're going to talk about how these countries ended hyperinflation. And one thing I just want to note that's interesting is for most of the countries, hyperinflation doesn't last forever. Zimbabwe's was particularly long and the worst, the worst points of inflation were really only like a three to four year period. And so countries do figure out how to get out of them. Or if they don't, they end up getting swallowed up by other countries. Well, that makes sense. Just like just like, you know, corporations in a weird way.

Unknown Speaker  43:24  
Yeah, they go bankrupt. So after this another Zim hip hop song, we will talk about how countries ended their hyperinflation and why it is very unlikely that United States will go into a state of hyperinflation at least in the foreseeable future word and just in case you are having a little trouble understanding the text of what was going on this song is mostly almost entirely in English and it's by cynic it's called God within will check you in a minute runs your budget bond by a radio.

Unknown Speaker  44:15  
Your your warm up people learn to beat us on surviving and living and others just trying to deal with the life they were given I try not to be confined by my pride decision seeking the business miles to the same spirit and define the system that provides Lazarus prescription My words are like paints the wavy lines that depicts live ammunition for those who choose to rise for the freedom and not the guy with the towel steady crying as victims while the media rotation got us trying to fit in I believe when you yourself haven't squires the singing you chase a dream so the world will admire your vision and be that Dream Dance up in the drives conditions. Below folk not a supply of fiction got three than the muscle gave me a higher position in your soldier never tie you up know when God created over to his finest achievements. Some say even when they saw your skin

Unknown Speaker  45:00  
impeaches believe you got to do to better God's within this game looks like some saying that it's hard to win but just believe you got a little bit of God breathed and clean no matter what the people say I've been surprised by them trying to

Unknown Speaker  45:13  
open up our hearts so like it's such a dream

Unknown Speaker  45:17  
job but then I wonder if you realize to an infinite being because if you did then you would have never limit your dreams Remember, no matter how clever the physical scenes it can keep you down just because the spirit has wings take development itself as a serious thing at times moving these no responding to a previous scene successes in your will it's not embedded in genes to plan your work and work your plan by defendant it seems hola my job in a reverse IP speak in the kings who could go and change the world if they were given the means to sell your destiny to suit like the week of screams and don't try imitating what's seen on the screens but be the warm Stetson forms the winter the spring can be the source of the change and your dream to be seen. Keep your train of thought moving beadings esteem surround yourself with positivity in Fiji was keen to even when he saw your skin he does believe you got a little bit of God's within this game of life some saying that it's hard to win but just believe you got a little bit of God but then he breathed in key no matter what the people say I've been survived by them so trying to live up to date and open up my heart so I can search a dream

Unknown Speaker  46:19  
job within so finding your sweet ma like the movement II and all the dudes that move with me to try to find the definition of true McG it's where your heart decides where to use that piece of before the the seven killed to be profitable manual jobs will refuse to eat more than one meal a day to build schools to teach suited needs kids today got a little beef to prove the deep while mothers lose they see wondering how are they ever going to find food feed it the beautiful seeds of dreams as they choose to free the imagination until they can view the sea even while living in the desert wait to see the same for miles and bruises a shoeless feet in the heart, the best place to find the truth you see in the park is the source of the tools that keeps up. So even when they saw your skin, you just believe you got a note of God. But they would like some saying that it's hard to win. But just believe you gotta

Unknown Speaker  47:11  
be brief and key no matter what the people say. I've been surprised by them trying to

Unknown Speaker  47:17  
open up our hearts and like it's such a dream that

Unknown Speaker  47:23  
even when they saw your skin and you just believe you got

Unknown Speaker  47:27  
like some scenes and it's awesome when you gather

Unknown Speaker  47:32  
your dream team no matter what the people say, against you, but I'm trying to stay up to date and open up our hearts and work in such a dream. That's

Unknown Speaker  47:43  

Unknown Speaker  47:50  
and we are back bunch of budget bomb Fire Radio, that was cynic with the God within and I appreciate how much of an optimist this cynic was. It's a little bit ironic if irony wasn't a thing that don't really exist. A quick digression. I was talking to a gentleman about the viability of vanilla ice and how if you have a problem with the fake wax, whatever yada yada is that you don't like in your art form. Don't keep shouting about them. Because when I was traveling around the world last time I saw people who have been allies. And someone said, what were they wearing it ironically? And I said no, because it doesn't matter. There's no such thing. But I appreciate the wonderful irony of a cat named cynic with a beautiful uplifting song made me feel better. I had to throw it in the middle with all the sadness we were talking about. Again, brunch and budget bonfire radio. We're here talking about what happens when inflation gets hifi. Right. Hi Fi inflation. Hi Fi inflation. Maybe that was a little too to pay for y'all say you know how to stop hyperinflation. So

Unknown Speaker  49:01  

Unknown Speaker  49:03  
What it what it is where it's been happening, and what's the deal with it? Yeah, yeah. So we're talking about countries like Germany, Yugoslavia, Zimbabwe was the big catalyst for this recently. I love that. It's all like we're talking about places all over the map. I mean, their common factor being that they China, they've had like wars and stuff, but like, really, this can happen. Different sizes of different ages. I mean, John is really old, is really old. You know, these other countries like you're, they're really new. And, yeah, it's really interesting how it could just happen all over the place. And it's really just a matter of the strength of your economy in a lot of ways and what happens to it after a big, big war or a big economic event. And so, the way to stop it has been really interesting too. There's definitely a trend among most of the countries on how they choose or how they figure out how to stop it. So in Germany, they created an independent central bank and introduced

Unknown Speaker  50:00  
A new currency called the Renton mark that actually could be converted to a bond with a gold value so

Unknown Speaker  50:07  
system that people could actually value. And that was concrete. That was concrete. Yes. And that they knew about in a trusted before. Yeah, yeah. So Germany. Yeah. So inflation again, it was a short period, it was from 1921 to 1923. And, essentially, they just created a new currency. And he was sloppy. In 1994, the government introduced a new currency, they introduced the Novi dinar at an exchange rate of 1.3 million dinar. And eventually, the new currency was actually pegged to the German mark.

Unknown Speaker  50:42  
So they introduced new currency. In Zimbabwe, they actually in 2009, they completely abandoned their currency. Right? And said they would accept South African rand or US dollars. I mean, that's a sensible thing. You've, if you can't tie it to some simple object that everyone's gonna agree on, tie it to a currency that other folks trust in us, right, just like what you've Slavia did by tying into the German market, like yeah, let's let's just do away with the money in general, they call it a junk currency, essentially. And that's kind of what happened. In Hungary, a new regime came into power in 1946. So Hungarians were treated shittily. But they switched to the Forint and stabilizer credit system. So they also switch to a new currency. Right? Yeah. And I mean, you got to at that point, because in terms of just solution, faith with everyone, even if you were to fix all this stuff, you can't go back to that unit. Yeah, people are gonna look at it and be like, Man, whatever. Yeah, yeah, totally an increase. They did something similar. There was this thing called the Bretton Woods system in 1983, that Greece joined, which established a fixed exchange rate that was linked to the US dollar. Now, I think we're also seeing a trend in terms of the value that people see in the US dollar. And the faith that they have the faith and credit that they see in the US dollar and the confidence they have in the US dollar that a lot of countries do. Tie the value of their currency to our currency, a lot of ways and I think that's probably one of the big reasons why the US won't be in won't see itself in hyperinflation state unless some craziness happened. Well, because we're kind of

Unknown Speaker  52:29  
Ground Zero, where they were the standard were the base, if we were to fall. Well, it's like weird. I was saying earlier about the why we need to bail out our banks, or why we feel the need. Because we know that if our standard falls, there's nobody behind us. Yeah, who's whose money are we paying us to? You know, like? And so one of the things that's interesting is there was a great article on the Atlantic, which just delineated some of the reasons why the US probably won't buy itself in hyperinflation in a hyperinflationary state. One thing is that we don't have a problem selling our debt. And that sounds kind of weird, but people love US Treasury bonds, people will have no to the point where US Treasury bonds, the interest rate is actually not keeping up with inflation. Speaking of that, crazy and people are still buying it. And the way that they phrase is they're actually paying us to borrow the money. Since they're not they're taking out bonds that aren't keeping up with the inflation rate. Well, again, that's one of those public perception things because yeah, everybody used to try to get you to buy bonds in this country. Oh, yeah. Look at your old advertisements were old, they will stop in the middle of Casablanca. They just turn to the camera and say buy war bonds. Yeah, exactly. And who knows, in the 1940s, the United States may have been in a tenuous enough position to have experienced hyperinflation. Right. Yeah, a lot. I mean, a lot of post World War Two is what really made us giant and mess with the whole mess. We are Oh, yeah, definitely. And I think that that's also why countries don't have I mean, they're scrambling to buy US debt, you know, and buying treasuries and why, and why it actually, is

Unknown Speaker  54:13  
it worthwhile. It's just like, Okay, this is, this is something of value that it's, you know, it's a it's a new kind of gold standard in a way, which is interesting. Well, I always kind of thought that one of the reasons why US debt was so popular was kind of, you know, the mystique of the US and how you know, well, it's been able to withstand economic and other types of upheaval. Yeah, absolutely. I didn't think of it exactly in that way. But yeah, I guess it's faith in them as a standard. Yeah, definitely. So we see that with people tying their currencies value to it and also

Unknown Speaker  54:47  
buying our debt. The other thing is that we don't actually print money in the same way we don't print money and have it circulate in the economy. So we were talking earlier about how you know the Fed raises interest rates

Unknown Speaker  55:00  
If they feel like inflation is going up, and the thing is the Fed also, the monies they print, they don't circulate stuck in the banks. And so this is this is what was in I love this phrase in the Atlantic that money isn't inflationary as long as the banks don't lend it out. Right? It's well, it's like the thing that I was talking about earlier. It's like this temporary ledger that they make of some just in case. Yes, exactly. It's like, okay, if the banks want to borrow more money, we have it. But it's also when they do send out when they do send out extra money, they're going to raise rates on it to to control inflation. Well, as you say, is that like a slicker way of doing the whole printing money stuff? Because you can't unprinted the money you can destroy, but then that's work and reaching and grabbing. And it's kind of like when we were talking about before with the solar panels. But when you when you've got a house, yeah, you can get a second mortgage, or you can take a line of credit. One is eaten up your money right away. And another one is just sort of a theory until you decide you need to use it, or you have a little leverage. Yeah, so yeah, we're doing what the Feds doing. Well, and well, and it's also it does sound like a sophisticated hiding under the couch type of thing. Yeah, in a lot of ways. I mean, this is this is this is I think what you're talking about in terms of where the inflation is unnatural, and where the inflation rate is unnatural, because the inflation rate in the United States is highly regulated, highly watched. And I think part of it was probably the scare in the 70s. You know, and so that's why the Fed has this kind of power. Everything goes back to like, 1970, in terms of how things are going right now, that inflation rate, man. Yeah, no, it was it was a hard time for a lot of countries divergence. Yeah. Yeah. And so the United States. The third reason is, you know, why we're not like hungry or why Omar is that our shoe hasn't been destroyed. Right. Our roads weren't raised, you know, half the country isn't like on strike. It's, you know, we war has never the only word that we have had on our soil is our own. Right. We're efficient like that. Yeah. I hadn't thought about that at all. That is really to rebuild anything. Right? All the money that we wasted as money we wasted on the missiles we shot at someone else. Not at the money on the missiles and the money to rebuild the roads. Yep, yep, exactly. So just in comparison, you know, we had this great recession that happened. And, you know, 20% of the labor force, at its worst was unemployed in Zimbabwe. 80% of the population was unemployed during hyperinflation. Yeah, of course, you know. So even though this was a really bad recession, for us, it has never gotten that bad. And so we haven't seen in our lifetime, a huge economic shock to cause hyperinflation and the way that we have our system set up in the United States. So interesting, because

Unknown Speaker  58:05  
we are set up to not experience hyperinflation.

Unknown Speaker  58:11  
Yeah. So I think that, you know, Happy Fourth of July way to go America.

Unknown Speaker  58:19  
It's crazy to me, I know we gotta go. We're starting at an overtime this but

Unknown Speaker  58:23  
I always thought, Well, I was that was a lot of us here in America, I think of our economic system is something that's not really doing too. Well. Yeah, that shaky in America. And I agree on a number of levels. And in a number of ways systems are bad for certain groups. But overall, despite our arguments about money going into education, the money that's spent, or what we do to fix ourselves, or outsourcing and all of that, economically as a country where

Unknown Speaker  58:55  
you managed to have the oversights that I was talking about that folks would should naturally have to hold themselves down. Yeah, totally. Word zero interesting, clear understanding of the place that we're at it is it is the fact that the United States is in this place where someone can say we're never gonna have hyperinflation and we haven't experienced it and we've never really been anywhere near it is is saying a lot considering the countries that have had to go through it. So go ahead us Yeah, happy before the July Whoa, we're gonna finish you off with

Unknown Speaker  59:31  
some song that's title. I don't even know what it means. It's

Unknown Speaker  59:36  
the song is is

Unknown Speaker  59:39  
by Trey young and Ross collab, yo, yo, most of these catch awesome dope names, man. Anyway, check y'all soon. Happy Fourth happy something or other brunch budget bonfire radio peace.

Unknown Speaker  1:00:00  
Fast as it's gonna be his engineer

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Dyneema hotshot TD for hotshot

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no shop and repurchase

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of course

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now keep track

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of the Russell Drake

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death but to Mike didn't you would try to go Trey young

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over nice nice to Roma it's a pizza we never think twice on

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my street

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of course

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what's a good to see now keep track

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to Russell Drake

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in a good news

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Quincy street treats

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the rustle great

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Mike dde we're trying to go Trey young

Unknown Speaker  1:01:51  
yes nice nice to rub it up so we never think twice

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keep track

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of the Russell Tretyakov.

Unknown Speaker  1:02:27  
Get him in his arms.

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