Peter St-Onge Talks Dot-Com Crash, AI Bubbles, and Building Wealth Amid Market Turbulence | Impact Theory w/ Tom Bilyeu

Peter St-Onge opens by sharing his personal origin story: he retired at 25 from investing gains, lost everything in the 2000 dot-com crash, worked as a bartender in Japan, and pursued a PhD in economics to understand what happened. This experience shaped his core investment philosophy of keeping theses simple, minimizing the number of steps required for a bet to pay off.

On AI and current markets, St-Onge argues we are closer to 1997-98 than to 2000, meaning the AI bubble likely has more room to run. He draws a parallel to the dot-com era where internet usage never collapsed even as valuations did, suggesting AI adoption is guaranteed but valuations could face a punctuated correction. He identifies capital expenditure collapse or energy constraints as warning signs that would prompt him to reduce AI exposure.

St-Onge provides an extensive contrast between Austrian/classical economics and Keynesian economics. He argues classical economics, rooted in supply-demand logic traceable to Aristotle, correctly identifies that business cycles are caused by government manipulation of interest rates — not random 'animal spirits' as Keynesians claim. He describes how the Fed lowers rates to stimulate the economy, creates inflation, then raises rates to combat it, mechanistically causing recessions. He presents a near-perfect historical correlation between Fed rate hikes and recessions as evidence.

He characterizes the Fed as a corrupt banking cartel, unconstitutional by his reading, that was designed to formalize fractional reserve counterfeiting among large banks. He traces the 'Fed put' — the expectation of bailouts — to Greenspan in the early 1990s, arguing it created the moral hazard that led to 2008. He describes the K-shaped economy as an intentional feature: QE injects money into financial markets first, enriching asset holders before inflation reaches ordinary consumers (the Cantillon effect).

On tariffs and regulations, St-Onge argues Trump's tariffs serve two legitimate strategic goals: forcing other countries to lower trade barriers and reshoring production. He claims tariff inflation has been nearly nonexistent because China absorbs the cost as a low-price producer. He contends deregulation is far more economically significant than tariffs — estimating that rolling back regulations to 1950s levels could double the economy and cut prices 20-30%.

Regarding dollar reserve currency status, St-Onge argues the transaction share of dollar usage matters less than its role as a savings store of value. He identifies Biden's seizure of Russian central bank dollar reserves as the single most damaging act to dollar credibility in decades. He dismisses BRICS currency baskets, the euro, and the yen as serious dollar replacements due to their own dysfunctions, but identifies a gold-backed currency from a major economy as a genuine potential threat that could trigger a dumping of the estimated $20 trillion in excess dollars held abroad.

Despite his systemic criticisms, St-Onge concludes with a structurally bullish investment posture: because the system is designed to bail out asset holders and inflate away savings, the rational response is to own assets — stocks, gold, silver — rather than protest the system by sitting it out. He recommends Murray Rothbard's 'The Case Against the Fed' and Ron Paul's 'End the Fed' for listeners who want to understand the Fed's mechanics.