Tom Bilyeu's Impact Theory
Peter St-Onge Talks Dot-Com Crash, AI Bubbles, and Building Wealth Amid Market Turbulence | Impact Theory w/ Tom Bilyeu
19 Feb 2026
Chapter 1: What lessons did Peter St-Onge learn from the dot-com crash?
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Right now, listeners can get 10% off or more on all Plod devices with the code TOM10. Just type P-L-A-U-D dot A-I slash Tom into Google or simply search Plod on Google and use the code TOM10 at checkout to get started today. Peter St. Onge, welcome to the show. Thanks for having me on. Dude, it's a pleasure.
I've been watching your content from afar for a while now and am very excited to sit down and have a conversation with you.
Yeah, likewise. There is a ton going on, both in markets and in the economy. So I don't think we're going to have a shortage of things to work through here.
I definitely do not think so. All right. Dear audience. Imagine this, today's guest had made enough off of investing to retire to a tropical island at the age of 25. One day though, he returns to the mainland to get some cigarettes, only to discover he's now dead broke, lost everything in the 2000 dot com crash.
He becomes a bartender in Japan to make ends meet and decides to get his PhD in economics. So presumably he never gets wiped out again. And he is here today to help us avoid catastrophe. Peter, what I want to know is what have you learned that people today would benefit from but might be missing?
What I try to do in investing is think as little as possible. Like, the more steps you have in your thesis, the more things are going to go wrong. You know, it's like when you're betting. What are they, parlays where you do, you know, you have the this and then the other thing comes in and it doesn't work. The odds are very low. And so, you know, when it comes to investing, like...
You know, I want to ask the simplest question. So like right now, I think that AI is the dot com. I think if you look across the various metrics, media coverage, public opinion, Fed rates, if you look across them, I think that we are closer to ninety seven, ninety eight than we are to two thousand. 97, 98, meaning there's still a lot more to grow. 2000, meaning the bowl's about to pop.
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Chapter 2: How does Peter St-Onge view the current AI bubble compared to the dot-com era?
So, you know, you should let people marry who they want. You should let them choose what job they want. You should let them start a business. And the general job of the government was to stay out of the way because anytime the government got involved, it was going to screw it up. So there had to be a darn good reason for the government to get involved.
Like if a crime is being committed or if it's a war or something like that. Keynes, on the other hand, he was the standard bearer for an idea that's lasted almost as long, which is that government can do it better. And of course, you know, there's always a constituency for this because government is corrupt.
And so certain people are going to think that they can bribe government and then they can get special privileges so they can get, you know, trade protection or they can get money handed out to the industry and so on. So Keynes was willing to be that guy. Predictably, of course, governments wanted to fund departments and professors who were pushing this pro-government narrative.
Today, when you go to a university, Keynesianism is dominant. Basically, it says that no matter what the question is, government has a role to play. Of course, the problem is government is made of men. It's made of people. We all understand that companies can't be trusted. They're going to try to rip you off. They're going to try to charge you more money. They're going to try to stiff you.
But of course, why would governments be any different? People who go work for the government do not get purified in some ritual where they're Jedi council now. They are just as greedy, just as deceptive. In fact, they're probably more so because nobody's watching them. Government, you have what's called a principal agent problem.
So nobody's really keeping track of government, which is why you have so many Somali leering centers. But at any rate, so the argument of Keynes is to sort of pretend that government is this angel. And so because some market is not perfect – You know, like health care, for example, you know, there are some people who can't who who can't afford coverage.
And so we're going to give that to the government and the government's going to use its angelic omniscience to fix it. And of course, they always make it worse. So within economics, generally speaking, if you get a degree in economics, almost everything you will have been taught is Keynesianism. So it's pro-government. Government can fix everything.
Oddly enough, economics today, not to get too far into inside baseball, but economics today is broken into two classes. Typically, you'll get micro, which is little stuff, and macro, which is big stuff. Micro is like how to run a business. They do the supply and demand because of classical economics. Macro is like inflation and unemployment rates and stuff. Micro is actually true.
It's almost entirely because it's based on classical economics. And micro is good to go. Macro is... Essentially, pure propaganda just going on how the government can can fix anything. But so broadly speaking, I had gone. So I went to McGill in Canada as a completely mainstream program. I did my graduate degree at George Mason, which is an Austrian program. But my undergrad was was mainstream.
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Chapter 3: What role do Federal Reserve policies play in market fluctuations?
They don't want the pitchforks to come out over the inflation. So they jack up rates. That ends up strangling the economy. That then is a recession. Whereas in the Keynesian model, the idea is that everybody's kind of chugging along, doing great. They're really happy. They're really optimistic. And all of a sudden, they're really pessimistic. And it turns out that a lot of them made a mistake.
So the idea would be that everybody had a really good IQ in 2005, but then everybody got suddenly stupid in 2008, and all the businesses went under. It's comical. I mean, it's a stupid theory, and it has existed for centuries in inflationism. but it survives because it's extremely useful to governments. It says that the market is the problem. The stupid investors are the problem.
The stupid businessmen are the problem. And so the government, our wise overlords, have to come in pure of intent and fix it all. So once I understood... Austrian or classical economics is very easy. You look for the interest rate, you look for liquidity.
Since 2008 crisis, the Fed pivoted now to where it dumps money in the markets, does it using something called quantitative easing, where it basically prints the money in the basement. Although literally it types it on a spreadsheet. It says one zero zero zero zero. And it says this is money and it goes out and buy stuff. All right. So you look for liquidity coming in through that.
If you look at the U.S. economy right now, you would look at liquidity coming in from other countries building factories here. That's going to be a big boost. It's just starting now. So anyway, you look at money flows and sort of the granddaddy of those money flows is the Federal Reserve.
To the point, a lot of people have commented on the fact that when you get bad economic news, the market does well. And then when you get good economic news, the market tends to go down. You saw this during the government shutdown. So government shutdowns historically, they're very destructive for GDP.
I love them because I keep hoping that they'll go all the way and just get rid of the government for good. But they are bad for GDP. And what's interesting is that in this most recent government shutdown we had, stocks loved it. Stocks were off the charts. They were swimming in. And it's kind of weird if you think about it.
But the reason is because the Fed is so dominant in markets now that stock markets in general, markets across the board understand that if anything bad happens, if you lose 100, the Fed will give you 200. Like the Fed will dump so much money into the market that it'll feel good. You saw that during COVID, right? So for a moment there, we had literally locked down 40% of GDP, right?
We had just about canceled the entire economy. And then look at stocks. Why? Because the Fed dumped, I think at the time it was $9 trillion that they ultimately dumped in, which is like 40% of all the money in the world, all of the dollars in the world. And then the rest of the world did as well. So, you know, the investors absolutely made out.
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Chapter 4: What are the differences between Keynesian and Austrian economics?
So we saw that in the 2008 crisis, where what really set it off was that, I think it was Lehman, Bear Stearns and then Lehman. And W basically said he was not gonna bail them out. He was gonna let them fail. And by that point, we'd had about 15 years of the Fed put, of the Greenspan regime, where anything bad happened, the Fed cleared it out.
So what had happened is that Wall Street became enormously grotesquely overleveraged, right? They were the gamblers who knew that everything was going to be covered. And then W put that into doubt. And they said, holy crap, you mean we actually, like, if we lose money, it's actually our money? You've got to be kidding.
And then for those who don't remember, I teach MBA and it was always shocking teaching 18 year olds because I'd be like, you know, back in the 2008 crisis, as if everybody remembered it. So for those who who weren't around for the 2008 crisis, they ended up reversing course because, you know, all the Wall Street lobbyists lined in and said it's going to be the next Great Depression.
What they should have done is not bailed them out. Let all of the banks on Wall Street go bust. And then Warren Buffett would have bought them up for a song at a bankruptcy. The shareholders were wiped out. The banks would have still existed, but they would have had new management. I think there was one bank that that was clean, which was BB&T Bank.
He used to send boxes full of Atlas shrugged out the schools. OK, so he was he was a good guy. Yeah, no, he was solid. Unfortunately, BB&T got bought up. I think Bank of America, one of those. So it is no longer Wells Fargo, maybe. At any rate, so that's what we should have done is just let them go, let the shareholders get wiped out.
Wall Street would have to cut off the mistresses and sell the yachts. Instead, of course, what we did was I think it was $1.8 trillion, which is a lot of money back then. Bailed them out. Nobody went to jail.
Yeah.
You know, all just a misunderstanding, folks. And then what they did after that is that like it was frustrating for Wall Street to have to actually pick up the phone and call for their bailout. So now it's all automatic. So we saw that in 2023 when Silicon Valley Bank collapsed and we had about a half dozen banks collapsed and nobody got bailed out because everybody was pre bailed out.
So the Fed had it was BTFP, I think they had this program where the banks could essentially declare how much they thought their assets were worth. So they got to put a fictitious, which is fun. Like, imagine if that's your business and you're bankrupt and, you know, the bank and you're like, no, no, listen here, here, lend me more money.
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Chapter 5: How do tariffs affect the US economy and manufacturing?
But gold is very illiquid. Right. So like until a country actually adopts gold, which historically doesn't happen until you have a massive blow up until that happens, gold is going to have a ceiling on how much it can adopt. really what would theoretically destroy the dollar would be another currency. So you're talking about that with China, for example.
Now for a couple of years, China and Russia had been floating, backing a BRICS currency with gold. When they were doing that, I took it very seriously. Now over the past year and a half, they've kind of watered that down to now they want to have like a currency basket where essentially they all throw some currency into this kind of like an IMF STR. That I think is an absolute garbage idea.
Nobody wants it. They'll use it for internal captive trade. Yes, that's the transaction part, but nobody's gonna save money in that intentionally. Why? Because most of those countries are basket cases, right? India had hyperinflation. Russia had hyperinflation. In fact, recently it had hyperinflation. China is not freely traded.
The Chinese government can come in and cancel your yuan whenever it wants. So I think that a currency basket If they keep going down that path, then I don't think BRICS is a danger. The question is, could some other currency? Realistically, what currencies have the scale of the dollar could really hold that much as a store of value? You've really only got the euro and possibly the yen.
Both of those countries are, in many ways, more dysfunctional, certainly Japan, than the US. The The Bank of Japan, their central bank currently owns half of all Japanese government debt, which is something like 235% of GDP. In US terms, it would be 70 trillion, of which 35 trillion would be held by the central bank. Japan is an absolute mess. They're not replacing the dollar for sure.
Europe is also a mess. I mean, they're losing members. They're in constant danger. They're having these, what would be constitutional battles in our country between Hungary and different countries. So, you know, I don't think Europe is going to do it either. Now, we shot ourselves in the foot a couple of years ago.
The number that you were talking about earlier, where our share of transactions collapsed the past couple of years, that came from seizing Joe Biden's handlers seized Russia's central bank dollars. because of the Ukraine war. And that's something that we hadn't even done during the Cold War when our proxies were shooting each other. And that, I think, was a huge deal.
I think that's what's driving a lot of the decline in dollar usage right now. Because remember, most of the value is coming from its savings. And what they did by seizing the Russian central bank dollars, they sent a message to the entire world that if you're on the wrong side of the US, then even
your central bank dollars, which those were always like the holiest off limits, even those we can seize. So that I think made a big difference.
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Chapter 6: What are the potential threats to the US dollar as the global reserve currency?
Right. When grandma puts her money in the bank, in her mind, she thinks that the money is sitting in a vault somewhere protected by steel. Actually, the money immediately went out the back door to a hedge fund in Argentina where it's leveraged for X and it's all backed by bailouts. I mean, it is it is vile. So, yes, in the case of banks, I think you probably do want. debtors' prisons.
But how did we get to debtors' prisons? Okay. Why it's corrupt. Right. So in our current system, if banks print on their own, they can't in the free market. And so, you know, one of the first things that you do as a banker is you start trying to bribe politicians to do what's called suspension of specie redemption. Okay.
Meaning that you deposit your money in the bank, but if the bank gets into trouble, it doesn't have to give you your money back. Not in gold. It can just give you IOUs. Why? And that's what was pushed in the 1800s. That then led to wildcat banking, meaning that banks just printed stuff. They printed as much money as they could possibly pump out the door.
And so the solution to that was the Fed, which is a cartel. It's essentially all the banks get together and say, hey, listen, if we all print unlimited money, using governments to bail it out, that we're going to have these constant boom busts and then people can see it. And then they might pass regulations like Andrew Jackson giving her to the second bank of the US.
So in order to prevent that from happening, let's create this really formal sounding thing called the Federal Reserve. The metaphor they used was a reservoir of water. The idea being that there's all this money in there that if anything goes wrong, you know, and of course, the government doesn't have any money. The Fed doesn't have any money. What do they get it from? So it's printed money.
But at any rate, so the idea was that the Fed was going to replace these sort of ad hoc suspensions. And they were going to do as a cartel. So everyone was going to grow at the same rate. And so, you know, we were going to use fractional reserves so that everybody could effectively counterfeit in proportion to how they were to how big they were beforehand.
So it would be like it'd be like if you wanted the government to take over the car industry and you said, OK, so. It'd be hard to do with cars. But you're giving a third of the control of the new Department of Cars to Ford. You're giving a third to, you know. And so that's effectively why the Fed used fractional reserve. It basically split up a cartel so that all the major banks got their share.
But, right, it's a counterfeiting cartel. It's unconstitutional. The only monetary role in the Constitution is that the government is allowed to mint gold and silver coins very specifically. And they can't be fraudulent. They actually have to contain the gold that it says, which is regulating the money supply means making it regular.
In other words, if you say it's not a goal, it has to be a goal. It's the only the only actually it's the only economic function remotely close to finance or monetary that the government has. So it's clearly unconstitutional. This is a legal organization that's printing money. We have RICO statutes for that.
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