Kind: captions
Language: en
I think this cycle is a cycle where we
break the sovereign debt markets where
every single major
country finally admits that we will do
anything it takes to make sure that the
government does not go bankrupt and so
we're gonna remove all this pretense
about caring about sound money and we're
just going to start printing money like
it's going out of
style and so I think this cycle is going
to be a bit different than the last
cycle where the fed and then every other
Central Bank said oh we've overdone
let's try to reduce it they tried but
the governments are still printing money
because they need to get reelected and
we're in an inflationary environment you
know there's too many old people
everyone's going to go to war at some
point so everyone's beefing up on
defense and so the central banks have
come back in and say okay we got to
print money but we can't really call it
quantitative easing or the you know the
things that we called it before so we'll
make up new names for it um but it's the
same thing and so we want to protect the
Government Bond Market going to make
sure the government can continue to
borrow at below the economic growth that
they're creating so I think right now
we're in this cycle where people are
realizing this and you have the
professional investor class are also
realizing it because they've had the
worst Bond performance at least in the
United States since the War of 1812 um
over the last three years us treasuries
30-year treasury is down 50% um on a
real basis that is the worst return
since 1812 now you wouldn't know that by
listening to the financial press but
Bond investors are getting absolutely
eviscerated and as they come to the
realization that this is not good maybe
we should own something else that's sort
of this secular rise and sort of of
Bitcoin so I don't think it's going to
be a similar type of credit event that's
going to cause prick the bubble and and
crypto and everything else that happened
in 2021 but there's going to be some
change in that mindset and that's what
I'm looking for and there's no real one
thing you can point to it's kind of just
be cognizant of the fact of why do you
think the Market's going up is there
something that's happening that's
challenging that worldview I really want
to push you on this this is very
interesting okay so you said uh a lot of
things in that so I just want to cycle
through recap what you just said make
sure I understand it and then I'm going
to see if we can start prognosticating
about some of the things that might be
the signs this time okay so in 21 um we
were at a point where for people inside
the know of crypto yeah sure everybody
knew about it but something happened in
2017 during that bull run where it
really started to like I was starting to
hear about it they were making
documentaries about it and at the time I
was not somebody that paid attention to
finance at all dude I could not have
been more heads down building businesses
and but I was still hearing about it
like it it sort of cracked that first
thing and then it just disappeared now I
didn't realize there was a you know a
retrenchment I wasn't paying attention
like that but it people just stopped
talking about it
then obviously I think it was in 2020 it
starts really popping off again and then
in 2021 it's insane so okay now we have
if I had to boil down what you were
looking at in that moment the rate of
adoption speed to awareness however you
want to think about that was just way
outpacing what you would expect to
happen from a this isn't Euphoria
perspective and in fact that's that's a
um a marker I want to put on the table
right now this euphoria
i' never felt it before cultural
Euphoria obviously I'd felt it in my own
life but cultural Euphoria is a very
different thing and man I I now know it
when I see it
and so that starts really popping off
okay so the rate of growth of just to
use FTX as an example was just too much
okay so question number one the second
thing that you look for is the momentum
in the credit Market credit liquidity
being the same thing it's money printing
so they're just the governments are
pouring artificial money into the
system those two things in 21 they gave
you the signals that okay we've got
heavy Euphoria things are moving too
quickly in terms of rate of adoption um
and the very thing that crypto is a
response to inflation of the money
supply has slowed time to get out makes
perfect
sense now um as we go go into this next
cycle you've said something multiple
times in this interview and sometimes
you say it very casually as you just did
which is everyone's going to be going to
war soon so they're building up their
military hold on uh that's a very big
statement so is that going to be part of
what you're looking at because um one of
my employees here was doing his
breakdown of what he's going to look for
what his selling signs are and he very
similar to what you just broke down for
21 but I worry that he's going to get
blindsided because he's looking at Old
signals in a new market um do you have
sort of the beginnings of an idea of
what you're going to be looking for in
this moment is it a build towards war is
it Euphoria if it's not credit like what
what is on your
mind well I think that we're going to
get some sort
of credit event in the Government Bond
markets um uh and say you thought they
were just gonna print print print print
print print print yeah they're going to
print print print and I think some
people are going to try to exert an
influence of saying hey we these Bond
markets they still matter um we're not
going to buy a treasury at 4% when
nominal growth is at 6% or whatever it
is right um and there will be a an event
and there'll be a s there will be a way
in off ramp to say okay we want to
reform the system or or change something
and we'll see what the authorities
decide to do I think they're just going
to keep printing more money and we keep
going higher can you say more about that
please if we think back to the stats I
just said so the bond market as of uh we
want to think about really when this
this bull market started to gain a lot
of steam was it October of last year um
so essentially what happened and I'm
going to focus on the US Treasury Market
because that's the most important one uh
globally and every other Market sort of
depends on that from a Government Bond
perspective you have this thing
where interest rates on the debt was
Rising but at the long end it was Rising
faster so um post the September fed
meeting the the spread between the
10-year bond and the two-year Bond was
increasing meaning the 10-year yield was
Rising faster than the two-ear yield and
in general both are R the yields are
both rising at the same time which is
basically called a a bare steepener in
fixed income trading terms and that is
deadly for banks and the entire
Financial system because the entire
Financial system is modeled post sort of
1970s 80s on this assumption that when
backend interest rates rise too quickly
that the uh authorities will come in
andit money to save the system now they
did do it so the market got got to write
but in the meantime all these financial
institutions in the way that their
complex Financial derivatives are
structured ignore this particular
quadrant of the potential outcomes and
thus have massive losses and this is
what we were seeing across to the
banking system so if you looked at the
you know Regional Bank stock index or
KBW index which is all US Banks they're
getting crushed going into um late
October of last year and so what
happened
the you know US Treasury and Janet
Yellen she said okay I'm I'm going to
save this Market I'm going to issue a
bunch of short-term debt and take money
out of the reverse repel program at the
FED which is just this2 trillion
facility of cash just sitting there
that's outside of the financial system
and she offered a higher rate on
short-term treasury bills to entice this
money out and which reflate the system
gives more credit money into the system
and that sort of helped you know fuel
this bull run that started essentially
on November 1 um of
2023 so we're going to get another event
like that because if the fed the
treasury and their other Global central
banks and fiscal governments if they
continue to do what they're
doing but say that on the one hand we
want to try to fight inflation by not
printing money we're going to get
another situation like we got in the
third quarter of last year where the
bond record says hold on a second what
do you want to do do you want to
safeguard the value of fiat currency or
do you want to make sure that the
government is
funded and I don't know when that
situation is going to happen there's
lots of tricks that they can pull
probably a little bit too mundane for
this particular um venue if you really
want to get into US money markets uh but
there's going to be another situation
like that and you could see a general
you know risk off meaning Financial
assess decline on that situation on the
fear that maybe this time they're not
going to save the banks and print the
money and you know reflate the system I
I don't think that's going to happen I
think they'll do the same thing they've
done every single other time but you
could get a situation like
that but if I have to really think about
what could stop this particular bull
market it's going to be something about
the belief of Institutions buying
Bitcoin so what's the narrative right
now you never sell because the
institutions like black rock and
they're they have to buy all this
Bitcoin because there's all this pent up
demand from institutions who want to Inc
incorporate Bitcoin into their
portfolios and there's all these Diamond
hands out there who aren't going to sell
their Bitcoin just's a very low supply
of Bitcoin left to sell which means the
price goes Asm totic on on the upside
now obviously that can be true for a
while but it won't be true forever and
so at the point in time where we start
to see a a massive um leveling off of
the allocations of money into these
products then that narrative starts to
shift and people become less confident
that there will be you know a few
hundred million dollars of buying a
Bitcoin every day from all these major
ETF fund
managers and I think that might be the
thing that I'll be looking for which
says okay whatever the price of Bitcoin
is at that point maybe it's time that I
think about at least for the other non
Bitcoin and ethereum assets getting out
of all of those right and I have a I
have a very big Venture Capital
portfolio of early stage crypto tokens
that will need to be
liquidated and then on a more
philosophical level I have to think
about well if Bitcoin has risen to such
a high level relative to the energy that
it represents maybe I should own a power
plant or a massive stake and Exon Mobile
or something where I actually own the
fundamental energy source and I got it
at a very cheap price relative to the
price of Bitcoin and that's a way that I
can take some T chips off the table in
Bitcoin terms but what I probably won't
be doing is selling Bitcoin or ethereum
for Fiat because I still think that the
Fiat system is [ __ ] and I don't want
to participate in that but primary
energy if I can own those resources at a
very attractive price because Bitcoin
and ethereum and these other assets have
been bid up to such an insane level then
that's probably something I should be
doing okay so to recap the thing that I
found um really intriguing because I've
not heard this idea before is that
there's going to be an incident in the
bond market now what I took that to mean
is that something is going to happen
that will make the biggest buyers of
bonds step back and say we're not going
to buy bonds anymore and now the US
government is in a really dark place and
I think it was you that said um poell is
just out there flexing the person who's
actually in control is Janet Yellen
because the treasury can ultimately just
tell them what to do um and because I
think it was poell that said like we
can't keep doing this we can't just keep
printing printing printing yeah he says
it but he has no power he can't he can't
tell the federal government what to
spend his money on he's just he's just
you know the central
bank that's interesting you say it like
that so am I right is that what you're
saying that people will say um and and
enact we are not going to keep buying
bonds because um your fiscal policy is
irresponsible and it's causing um
strangeness in the the bond market that
makes it problematic for the reasons
that you explained earlier
um and that is I mean that that's
catastrophe for the treasury if I'm
understanding this right exactly they
number one job is to make sure that
Janet yellen's job is to fund the
president and whatever he or she would
like to do right if Biden wants to spend
trilon on through bonds so she must have
a well functioning us treasur market and
she will do whatever she can to make
sure that is the case uh and so if it
means changing the rules on the fly or
if it means co-opting the the central
bank to do what you need to do she will
do that or whoever is in the her seat if
she leaves after the Biden
Administration so that's that person's
job and they will do that and so when
this really bad thing happens in the
bond market then we get to the final
stage of essentially the Sovereign Bond
bubble which is okay let's stop [ __ ]
around we will print money in whatever
quantity is needed to keep the 10year
bond rate at X whatever that is right
they'll go full Japan that's the end
game then we get Bitcoin 1 million 10
million or whatever whatever and and
then it's okay at some point we get off
the train like okay well bitcoin's great
it's gone to this insane value because
they printed all this money
is there a real asset real energy
producing asset that we should
own that is more essential than Bitcoin
and I've gotten it at a great price
because of how high Bitcoin has been bid
to again it's more of a theoretical
philosophical thing of is there
something else to buy when you want to
sell Bitcoin that's not
Fiat well that that's the second part so
there's two things you said that I think
are really interesting one is what
happens the second one is how you
respond um okay so the what happen
scenario I was actually misunderstanding
it so I'm glad that you clarified so
what's really happening is the bad thing
happens in the bond market that pisses
the bond purchasers off they stamp their
feet and say hey you need to um calm the
bond market down which they're going to
do by saying we got you we're going to
print money until the end of time don't
worry um we're going to maintain the
price that you need to not end up being
underwater that is going to cause a
massive run into cryptocurrency and
that's going to create that just hyper
Euphoria potentially obviously I know
you're this is just the I've asked for
the thing that's in the back of your
mind this isn't uh the thesis you're
operating on right now but um that could
potentially cause a massive run into
crypto which creates that euphoria that
I was talking about drives the price up
the numbers you throughout a million 10
million whatever I know those are sort
of the fantasy numbers that you hear
people in crypto circles throwing out is
endgame but if it makes that kind of run
you're like okay now's probably a time
where I go um all the big wins have been
had I mean this is just like Warren
Buffett said uh all the eye popping wins
of Berkshire haway are in the rearview
mirror like you're not going to get that
anymore because there's I'm having a
hard time finding a place to put this
money um so you know that that isn't
going to be we're now getting into the
Zone I was talking about earlier where
Bitcoin just becomes sort of boring it
just chops side to side for the next two
decades and that's when you start
looking for in the example that you gave
the underlying energy producing asset
that you can be in once you've taken
sort of the max out of the value the the
volatile value of crypto it's a put
option on Government Bond Market and so
I think we're at the point where the
largest Government Bond Market that we
can't afford this so we're just going to
print the money anyways and that's
that's the option that you're really
trading on on bitcoin you want to you
want to be around for that because
that's going to be and if it happens
this cycle it's going to be absolutely
insane and so that's when I running an
essay right now and you know the tenant
of the essay is people don't have enough
imagination about how ridiculous this
bull market can get so if we combine the
Bitcoin is now available from a
financial perspective to be ingested
into tradify
portfolios and you have tradify
portfolios do not want to own bonds
because everybody knows that this is
what's going to happen in the treasury
market and you know jgb Market um ecb's
bonds Trina bonds all the different Bond
markets if these Confluence of factors
this is the situation where the 40% of
managed money that's in fixed income or
basically Sovereign bonds globally a
portion of that goes into crypto and so
you have a massive amount of Fiat that
can only go through a very very small
door you just get insane price
appreciations across the whole space I
don't think people appreciate that right
now they're like oh was bitcoin's at
70,000 maybe I should take some out the
table no you [ __ ] shouldn't this is a
time if this is the narrative that you
were operating under when Bitcoin was
16,000 we haven't even gotten to that
point yet we've just started this is
just like the amuz bou it's not even the
[ __ ] entree yet so it's we're just
getting started in this thesis of the
collapse in terms of we have this one
ret that's real we have this whole
fugazi Financial system for the first
time in history we have an ability to
express a put option on these Bonds in
an easy digital fashion versus you know
going out and holding a vault of gold
which is quite difficult so that is the
insane bull market thesis that I've been
operating under we're marching towards
that I don't want to be underallocation
if I'm right if I'm wrong we get you
know maybe Bitcoin goes to 100,000
200,000 whatever it is and okay cool
made a good good chunck of money we'll
prepare for the next cycle because it's
coming if it's not in the 2025 2027 time
frame it'll be when there's the global
World War of the you know end of the
decade or little bit after as we've come
to this situation where every government
is printing money because they're going
to war with each other so that's the
trade it only is going to happen once
he's got to be around for it okay so
that is the uh I mean for anybody that's
holding Bitcoin that is certainly the
fantasy scenario
um do you
see going to 100K in this cycle as an
inevitability or do you see something
that could derail us from that now I
think it's an inevitability and more and
because now we have the banking system
at least in the west and obviously
there'll be ETFs in China and in UK
China being Hong Kong and Europe as well
so you have trafi now has a stake has
skin in the game and like this is
amazing we have had the fastest growth
in Assets in these products of any ETF
ever and so Black Rock largest asset
manager in the world this their best
selling product so far right trading
billions of dollars a day they're you
know getting injust hundreds millions of
dollars a day of inflows they're
charging fees on that Fidelity all these
other asset managers crushing it right
but you have all these institutions the
cells side financial institutions who
depend on the fee that black rock pays
them to access the markets so if you
think that you're a trading desk and a
JP Morgan a City Bank of Goldman Sachs
Morgan Stanley blah blah blah you're
like [ __ ] yeah
I love crypto black rock is has a price
and sensitive buyer all these people
allocating they need to buy and sell
Bitcoin every single day to manage their
fund there are people doing Arbitrage
trades who now need to interact with me
on a Triad fight basis to trade these
assets if there's an ETF ETF uh ethereum
ETF or some of the other altcoin ETFs
that these funds want to launch great
more fees more times for me that I have
to do things for these large asset
managers and it's volatile they're know
there's buying and there's selling
there's opaque markets people don't know
what the price of these things should be
as a sside Investment Bank you're like
this is [ __ ] amazing and so they're
aren't going to stop with Bitcoin you
know I think there was I read some tweet
today that some lawmakers in America
were Democratic lawmakers are saying oh
petitioning gendler to say don't allow
the ethereum ETF now maybe that would
have been a very convincing argument if
the banks didn't have a skin in the game
but Banks run governments the tri fi
banking system in the US runs the US
government and now they have a stake in
let's financialized crypto let's make as
much money in fees as possible off of
this amazing product that has been doing
gang going gang busters for the past
eight weeks [ __ ] that we're going to
launch every single crypto we can while
the going is good and earn these fees
and so I think there's just going to be
more Capital coming into play as you
have the tra
Financial ecosystem putting on a full
court marketing press to convince people
why oh yes look at the US government
it's unsustainable Jamie Diamond says
this about every single quarterly report
and his said US government is spending
too much money there will be a fiscal
crisis and now he has a way to directly
profit off that which is oh yeah we have
a Bitcoin ET if I'm going to change my
tune on bitcoin I'm gonna Safeguard the
way for my clients to own Bitcoin as
long as you custody with JP Morgan and
use a Black Rock product it's all gravy
because we're getting paid to do it and
so now you have the trafi marketing
machine out there saying it is safe to
invest in crypto here's a product that
you can do it it's custody by these big
Banks why wouldn't you own it so we have
interest aligned in terms of a price
perspective for a very short period of
time so I think again we're just getting
started it's just Bitcoin why wouldn't
you do more of it if it's so successful
an ethereum ETF a Solana ETF every
[ __ ] crypto you can during the cycle
do it it's literally just paperwork and
watch the billions of dollars gush in
the fixed income Market is however many
you know hundreds of trillions of
dollars obviously not all that's going
to go into crypto but even a small
portion of that that says I don't want
to own government bonds because of all
the things that we've talked about today
and now JP Morgan my my uh Raa is
telling me that I can invest in this
product and it's custody at the bank I
don't have to worry about private Keys
it fits into my investment mandate don't
have to do anything more forms [ __ ] it
let's go I get to import this thing that
is going to uh on its face solve the
problem that I'm trying to escape which
is a Government Bond Market that is not
paying me what I should pay to take on
this sort of risk hearing you talk it
really there's something about the the
energy the intensity around the bond
market that's making me see the
relationship between us the buyers of
bonds and the government in a way that I
never really thought about it I always
saw it as this is a place for me to put
my money that's safe that I'm going to
get some sort of mild return but when
you start thinking about it in terms of
hey you're asking me to fund the
government and all the things that it's
doing you better pay me a worthwhile
return in order to do that this goes
back to one of the things you were
saying earlier I don't remember what
triggered this thought but um the thing
I really want people to be able to do is
just something super simple to put their
money in to not have to think about it
to get that return um but of course that
for some people to win somebody else is
going to lose um but gets very
interesting with bonds helping fund them
grow uh to grow the things that they're
trying to spend the money on um very
intriguing let me ask you where what do
you think happens with
ETFs when the natural volatility of
crypto kicks in like when I think about
okay bitco coin yes volatility super
strong narrative eth yes maybe a little
bit less conviction on my part uh for
eth just because I think it's a harder
narrative around the distributed
computer just think it's harder for
people to understand how does that
translate the am I storing wealth in the
in eth like I don't so that one's a
little trickier once you get down to
like salana now it's like whoa now
really talking narrative you've got to
be deep in that com it it becomes like
do you buy into the tribe so that feels
like it's it's really going to have
volatility which could be amazing
briefly and then really traumatic so how
do you think ETFs will respond to that
level of volatility the banking system
is saved by the central banks and the
government squashing volatility and
printing money to save them every time
they [ __ ] up but at the same time they
essentially take all the fun out of
markets nothing [ __ ] moves anymore
passive invest is destroying the banks
because they can't earn any money
because nothing moves there's no
dispersion there's no difference between
Tesla Microsoft and Nvidia right so why
even invest in the stock market just put
your money in your you know in
retirement account check the box and it
just goes into you know spies and
qes so if you think about a trading
floor and obviously have a lot of
friends who working trading no one's
getting paid like they used to because
nothing's [ __ ] moving so now we have
a new asset class it's and you have
insane volatility you have a fundamental
appetite for a new type of financial
system and you are the gatekeeper
between Capital that can't exit the trfi
system and these crypto products it's
going to be amazing you can write
research reports for days you have
thousands of different things doing
thousand like different people
characters saying they're going to do
this that and the other thing you have
so much dispersion so much volatility so
many things to talk about you you call
your client maybe it's salana today
maybe it's you know dog with hat
tomorrow doesn't [ __ ] matter you have
a you have an ability as a salesperson
of a conversation with your client to
solve their problem Government Bond
markets aren't paying me hey guess what
this week it's salana next week it's eth
next week is Bitcoin this happened that
happened there's stuff going on you have
a conversation oh great okay I'm gonna
allocate here oh sell this by that sell
this by that so this by that trading
fees emotion POS this is What markets
are made of and what has been destroyed
by central banks over the past you know
30 years banks are going to love this
the trading Des are going to love this
they have a reason to call their clients
now these products are going to make
them billions of dollars because we are
unlocking human emotion in a form that's
digestible for these trafi institutions
in a way that hasn't been available to
them probably since you know 20 thou 20
1997 to 2001 in the dotcom area
so that's what this is going to bring to
trfi and they're going to [ __ ] love
it and they're going to do whatever they
can politically to make sure that
there's nothing stopping these ETF fund
managers from onboarding as many
different crypto assets as possible now
that they've gotten through the Bitcoin
hurdle and they've seen how successful
it is and how much money they're making
from
it okay
so uh that is a really interesting
picture that I have um never heard
anybody else say taking a um a different
angle on that it feels
like an angle that has to be considered
is the people that are in ETFs want the
set and forget thing that you think is
destroying the passive investing that
you think is destroying the markets and
that when there's volatility there there
is going to be an outcry to the
government to protect them uh louder
than anything you've heard in a long
time because you know when somebody's
thinking about
being in an ETF it's like they're not
going to the ass a to go and buy and
figure it out themselves so there is an
amount of I don't want to deal with it I
just want somebody else to do it so two
things are going to happen one
volatility hits and the they they a
subset of people will freak the [ __ ] out
and then it becomes a question of how
does the government respond I'm guessing
with regulation uh so that'll be
interesting and then the second thing is
um when you
have people having a reason to call
their
clients I worry that you get into The
Wolf of Wall Street days of penny stocks
and hyping people up and selling
narrative and there is a reason that
those guys went to prison are you not
worried about
the the way that people will get
suckered in by
conmen well the conmen and if let's take
it let's assume that this is what
happens the comment is your JP Morgan
salesperson is that guy going to jail
probably not Jamie Diamond going to go
to jail for anything that happened at JP
Moren absolutely not now again I think
that the trii banks will overdo it right
they're going to pump this narrative
they're going to beat the drum as loud
as they can because this is it's going
to be soon to show let's see maybe end
of the year there's going to be some
banks that will probably very crypto
forward and you're going to see in their
financial Resort results and they're
going to tell the market hey guess what
my trading operation beat Expectations
by some wide margin because we went hard
into crypto trading and facilitating the
flows related to these whatever the
suite of the ETFs are and OTC trading
and blah blah blah blah blah right and
then every other Investment Bank in
their you know managing director
committees like well what's our response
to that we can't let XYZ Bank have this
desk and we've been poo pooing it for
the last decade go hire a team now we
need to be this that and the other
that's how these Banks work it's you
know usually it's Goldman Sachs and JP
Morgan make the money first and then
everybody else scrambles a follow and
[ __ ] it up uh and so that's probably
what's going to happen here and I agree
with you of course the volatility is
going to be insane on the upside and
things go down as much as they go up
sometimes and when the bare Market
starts and maybe some of these more
questionable cryptos that got put into
some of these investment products go
down 95% because something happened to
the networkers you know some developer
rug them yes of course there's going to
be public outcry of oh no my in my
retirement account had this ETF and I I
watched the commercial on CNBC and you
know that guy in the suit said this was
a great investment sir and I put my
money in and oh [ __ ] I lost it um
representative XYZ you got to [ __ ] these
people because that shouldn't I
shouldn't have been allowed to buy this
product I absolutely agree with you and
the second that we start seeing that as
a movement catching Steam and the bank's
ability to beat back that narrative
they they can't forall that that's
probably a sign that we probably might
we've Reed a peak s Peak saturation of
like the institutions in crypto and
whatever the price is at the time it
might be time to take things off the
table so I hadn't thought of that before
but as you say that that is probably
another thing I'm going to keep in the
back of my mind as a signpost of okay
has it gotten so out of hand and loss
has started to creep in that the banks
political power to just Ram things
through um has been checked a bit by
some outraged um small bomb and pop
investors what are the signs that you
see on the horizon that a financial
crisis might be headed our way I
absolutely agree there's going to be a
major financial crisis probably as bad
or worse than the Great Depression
sometime near the end of the decade
before we get there we're going to have
I think the largest bull market in
stocks real estate crypto art you name
it um that we've ever seen since since
World War II and the reason I believe
that is if we back up to like
1945 essentially Europe blew itself up
China was destroyed by a Civil War and
and Japan uh Russia essentially fought
the War for everybody else and you know
massive destruction so if you look
across the world the only country that
was left was uh the US and you know they
had a manufacturing base that was
unharmed from the war and they
essentially rebuilt the war and reaped
them enormous benefits and we're still
you know people who are American are
still living off of uh those benefits
today but at the end of the day
everybody started believing this thing
called you know kyian economics which
basically is if something gets in
trouble the government should rush in um
spend money if they don't have the money
the Central Bank should print it and you
know everybody collectively in the world
depending no matter if you're you know
what sort of ism you believe in
subscribe to this this Theory
and what that means is you know we all
have collectively agreed that the
government is there essentially to
attempt to remove the business cycle
like there should never be um bad things
that happened to the economy and if
there are we want the government to come
in and essentially destroy the free
market so every time we've had a
financial crisis over the last you know
80 years what happens the government
rushes in and they essentially destroy
some part of the F of the free market
because they want to you know save the
system and what does that mean it's like
wack-a-mole so every time there's a
disturbance you know the central banks
like you know the Federal Reserve in the
US they come in they print money they
enact a bunch of regulations and they
basically say okay we don't want this
sector to fail we don't want you know
the creative destruction that is
so-called you know capitalism if you
actually believe in that um we don't
want that and every you know five seven
years there's another sector of the
economy that's essentially price fixed
and so we've gotten to this point where
you know globally central banks have
basically destroyed the free pricing
mechanism in just about every single
sector of the financial economy except
for one which is the the Government Bond
markets because there's so large so
unruly that it's practically impossible
to essentially remove the market forces
from this part of the market but the
problem is right now we're going to try
we've you know gone from I know 100%
debt to GDP globally to about
360% um as per the World Bank and we are
accelerating the amount of debt that
we're adding onto the pile why because
in the rich world including China Russia
and Brazil we've stopped having enough
kids so the population is actually
declining so if you have all this debt
and you don't have more humans being
born to essentially do stuff to pay it
back um the only way to ensure this
system is solvent is for the governments
and the central banks to start printing
money uh and now we've gotten into the
situation where we have all this debt
that needs to be rolled over we have a
population that has been told that hey
you're good anything ever happens we the
government are going to come in and
we're going to make sure that you know
you have enough food to eat you got
Health Care um we're going to protect
you blah blah blah right and all that's
expensive especially as you have less
and less hum who were doing productive
stuff and so we're just going to keep
adding on debt because that's the only
way the government can stay in business
and now we've gotten the situation where
there's so much debt that and it's
accelerating in an exponential fashion
that in order to save the market this
time right so I think in the next three
to six months there's going to be some
sort of Major Market disturbance and
probably in the US Treasury or other
large Global Bond markets and the
solution is going to be let's print the
most money that we've ever printed to
try to save essentially this Fiat
Financial system that we've created um
since World War II which is going to in
the first instance create a massive bull
market in anything you know like stocks
crypto real estate things that have a
fixed Supply um maybe they're productive
they have some earnings and then after
that we're going to find out actually
the government can't save everything
they can't just print as much money as
they think to try to save themselves and
um fix the price of the the yield of
their bonds and we're going to get a
generational collapse and hopefully that
doesn't coincide with a major global
conflict usually it does I hope it
doesn't uh because I don't really want
to live through World War II While I'm
Alive um but that's sort of the my
overarching like macro cycle thesis so
you know massive top 2026 time frame and
then um you know some sort of you know
Great Depression like situation
happening towards the end of the decade
if you want to take a look at the
progress of human civilization of the
past 150 200 years it's all predicated
on
hydrocarbons um the moment we started
extracting oil uh commercially out of
the ground and turning it into thousands
of different products that we all use
every day that basically Powers our
Modern Life um development supercharged
right you know we went went from I don't
know how many billions of people in the
1970s to today a population more than
doubled right and that's all because we
were able to harness this particular
type of potential energy of the earth
that's underneath us okay and we we've
piled on all this debt we've brought
forward all this future growth and we
haven't really innovated on another form
of energy that makes us that much more
productive you know maybe if the world
started adopting nuclear um today
immediately like small nuclear reactors
in our cars our apartment powered by
nuclear energy maybe we'd have a chance
at growing our way out of this debt or
you know if there's some magical alien
that comes down and gives us you know
some basic resource that allows us to
tap a new source of energy and like we
can commercialize it instantaneously yes
then we could pay back all this money or
if the population doubled overnight
right to 16 billion people then okay
great we've built all this stuff there's
more people that need to use it okay we
can pay back this debt but borrowing any
of these you know
you know I like to say it takes 18 years
to make an 18year old so it's pretty
much impossible to create humans on a
thin air no matter what any politician
tells you and you know we're not really
you know what we've seem to be doing is
um in certain countries is saying you
know hydrocarbons are worthless we want
to use these other forms of energy that
are less dense less productive and
somehow think that we're going to grow
our way out of this debt which is
mathematically impossible there's just
no other way other if the government
wants to save itself by than printing
money and printing money isn't growth
it's just a piece of paper out of f air
and once the population thinks hey
there's more and more of these pieces of
paper floating around there's only so
many real Goods there's only you know
there's only so much oil there's only so
much electricity well I guess I should
be consuming everything I can now that's
not actually generating real growth if
we could just print our money and
generate real growth then Rome would
have survived Zimbabwe would be the
richest country in the world same with
Argentina we've had you know the the Yar
Republic in Germany like if this was the
answer there's PL of other you know
societies that have tried this and the
sit the result is always the same
massive inflation and then social unrest
and collapse with the government so I
think we've proven over thousands of
years of human history that printing
money is not growth it's a Shima and at
the party lasts for only so long and
then you know it's bad newsp
this is the thing that really freaks me
out about what R alio is talking about
is the predictability of this cycle and
what I want to do you're really good at
explaining this I want to go through the
different things that build up to this
moment this this inevitable moment and
then one of the things I want to make
sure we talk about later is getting the
timing right on this is next to
Impossible and so uh that's going to
loom in the background but first I want
to I just want to go through the things
and I used said that you hope that this
doesn't all happen in a moment of
political instability but I would like
to quote Arthur Hayes to Arthur Hayes
here real fast uh this is from th this
is the opening line from one of your
recent articles you said World War III
has already begun whether the mainstream
media and political Elite wish to
acknowledge it or not
um so let's talk about the political
instability we're going to get to the
debt we're going to get to the banking
crisis inflation all of that um but set
the context for us right now what what's
happening right now that unnerves you
from a a political standpoint so for
whatever reason and I don't know why
Western Europe starting and then America
following has it in for Russia and I
know if you read the I think it's mender
um his um Global home Island theory that
he wrote I want to see in the early 19
early 20th or end of the 19th century
whatever he was a very famous um uh War
strategist and he basically said that
the the home island is essentially
Eurasia right so think of China
Russia um Western Europe right whoever
controls that portion of the world
controls the world and so if you think
about the naval Powers such as Great
Britain and the US let's talk about
great bit first right what was the
British foreign policy all about in the
19th century and early 20th century
preventing a strong continent whether it
was France or Germany they didn't care
they just don't want a unified Europe
now as Russia industrialized in the late
19th century they started to worry about
okay what about Russia right we can't
have an alliance of German strong
Germany after bismar uh United Germany
and and Russia because Russia has all
these Commodities that would be the
worst thing that could ever happen for
us Great Britain at Naval power so what
do they do that you know a series of
alliances that we know precipitated
World War I which was let's make sure
that Germany and Russia are not friends
and essentially that was a strategy
going into World War I you know
obviously that blew up what was the
strategy in in World War II you know if
you take a look at the rise of Hitler
and you know all the different you know
Western powers that were okay with
Hitler as long as he was going to turn
his army and just fight Russia right you
know Hitler wrote about this he said we
want to create the space for the the
German people to ESS eradicate the Slavs
in Russia and and go in there and the
Western NE was perfectly happy about
that because again what do they want
they don't want a United Home Island
they don't want a United Eurasia because
that threatens the the heiman you know
Great Britain at the time obviously that
didn't work out so well Hitler turned
his army on on the other half of Europe
um and then everybody started fighting
again uh and then we ended that war
and then what we were left with we were
left to the United States versus Russia
again and again it was all about let's
make sure that you know Russia and China
aren't aligned or um Russia and the rest
of Russia in Europe aren aligned that's
why you know us poured however many
billions of dollars through the Marshall
Plan into rebuilding Western Europe to
make sure it was a Bull workk against
Russia and the virus of of Communism and
you know I forgot I was reading a recent
book it's called the wars of Asia
um 1911 to
1949 and the author made a very good
point about why communism is so hated as
a form of government to anything that's
not communism and the reason it is
because you know obviously communism has
its flaws but at its the kernel of Truth
for lots of people is we're going to
completely uproot the the social system
we're going to replace the classes that
are oppressing us it's not like okay
it's one class of Elites who was running
things we're going to go over to the
other class of Elites which is like
socialism fascism you know capitalism
it's just one group of Elites versus the
other communism is let's destroy the
whole class of Elites and bring the
people up to power now obviously that
never actually happens but in the
beginning it does and so if you're a b
intellectual and you know and one of
these other systems you're like I can't
have communism take over I can't have
the actual workers rise up replace me as
an entire class and then try to rule
which is why they hate communism so much
and so you know the Russian system and
what they're trying to export in terms
of an ideology is so is so hated in in
the you know liberal Democratic or you
pseudo fascist
West in any case the the US is now you
know locked ah hedge with Russia to make
sure that a divided Eurasia because a
strong Eurasia um will control the world
because it controls most of the natural
resources of the world and most of the
population and that's been the US
foreign policy since the end of World
War II
fast forward to you know the 90s when
the Soviet Union collapses the US
response was not let's do another
Marshall Plan and rebuild Russia it was
let's um incentivize a bunch of former
gangsters now called oligarchs to come
in and take all the natural resources
impoverished their people and move their
wealth to London and New York right and
so that was the policy now out of that
came you know essentially Putin who was
all about let's build a strong you know
revisionist the Russian ideal believe it
or not whe whether you think that's good
or bad but that's his appeal to the
Russian people is hey you guys suffered
through the end of the Soviet Union the
West was not your friend you know they
stole your [ __ ] I'm here to rebuild the
Russian for the Russian people believe
you that that's his message to his his
constituents you know you can like it or
not like it and so now we're at the
situation where um Russia invades
Ukraine and the West pumping in
resources to essentially fight them
using the blood and the Blood and Tears
of the Ukrainian people it's not
Americans fighting it's not European you
know NATO Europeans fighting yet right
so it's a it's a proxy war between
Russia and the West obviously Russia is
tacitly supported by by China and the
rest of the world is like well we don't
want to part of this this we're trying
to be non align we don't want to get
involved in this thing so we have this
sort of the setup of all over again of
what was happening in in the late 19th
century of the West aligning to create a
divided Eurasia and so you know we can
call it a conflict or a skirmish or
whatever but you have I don't know how
much how many billions of dollars have
been authorized by US Congress to
essentially ship weapons into Ukraine
you have NATO shipping and weapons um
different countries providing
intelligence so that the Ukrainian
forces can attempt to sty the Russian
Advance now while yeah there's not boots
on the ground from from the west and in
Russia to our knowledge maybe there are
I don't know it's it's basically a war
um and so you can you could make the
argument that World War II has already
started um it's just not this hot super
kinetic you know I'm gonna throw my
nukes at you kind of thing um that we
had in the last World
War now why do you think this matters is
this going to play out in Energy prices
is it going to play out as a debt
problem um why does this become uh part
of the backr drop of uh the the context
that will lead to this coming financial
crisis so at the end of the day right
human civilization is the transformation
of the potential energy of the Sun and
the Earth into useful economic work
right so cheap Energy prices equals
Prosperity Russia is the largest
commodity exporter in the world um they
have oil they have natural gas they've
got you know Metals they've got food
right Ukraine the kinian bed Bread
Basket was one of the largest wheat
exporters in the world sunflower seeds
oils all this stuff is is in this in
this region and now we've the West has
decided that we're no longer going to
trade with Russia on paper now if you
actually look at the details you know
India China some of these other
countries are basically buying the
Russian stuff refining it selling it
back to the Europeans and the Americans
at a higher price right so the the the
the result of this policy of let's
ostracize Russia is let's just raise
prices on our energy inputs globally and
so they just the war is causing the
inflation that now the central banks
have to fight by raising interest rates
which then bankrupts the banking system
because they now have all these bonds
you know that are underwater so the this
ideology we need to fight Russia to you
know keep the Eurasian Island um
fractured is the proximate cause of the
inflation that's causing the financial
crisis in the west itself so it's a dumb
policy but it is the the natural result
of what happens when you say I'm not
going to trade with the largest
commodity exporter in the world I think
it's important to break down exactly the
cocktail of things that go into making a
um an economy weak this was something it
took me a long time to learn and for
anybody that's been watching the show
for a while they they've gotten to go on
this journey with me of figuring out how
all this works the debt cycle exactly
what happened with the banking crisis
inflation all of that um how does how
does this begin does it all start with
the money printing which leads to the
inflation which causes the banking
crisis what comes first how does this
ball get rolling so you know the
situation wouldn't be so bad if there
wasn't all the money picking prior so at
the end of the day you let's take the US
for an example because it's the largest
and richest country um in the world my
you know opinion and thesis is you know
back in the you know
1970s the US government made a tacit
promise to the Baby Boomers and they
said hey go out work spend your money
don't save we got you we're going to
make sure that when you get
old you're going to have health care
covered by the
government and don't
worry you can be as energy inefficient
as you want two cars in a garage driving
all you know all over the place not
supporting public transportation we're
going to make sure that where there's
Oil we're going to get it so our defense
budget is going going to be
astronomical and so the baby boers are
great we're you know we're going to go
out there and live our lives and consume
the most that any generation ever has in
human history us baby
boomers and what's happened Health costs
continue to rise now they didn't rise so
much starting until maybe five or 10
years ago because these they in the
productive years of their life but now
and I'm sure probably you've had some
guests on talking about they call us
sick care right the the amount of money
you spent at the end last 10 years of
your life dwarfs all the money spent
proceeding and the way the incentives
work in the US Healthcare System there's
no incentive to actually have
preventative care it's you know when you
get sick let stick you up in the H
hospital and like just go to town on on
the insurance company which essentially
is a US taxpayer because of Medicare and
Social Security now no us politician and
I don't care if you're a Republican or
Democrat or third party whatever can
stand up there and say I'm going to
reform the US Healthcare System and
guess what baby boomers who are the
richest cohort and the most political
active your health benefits are going to
decline you will not get reelected um
and so these two programs are s are sys
you also will not get reelected saying
hey we're going to really tackle this
you know the this runaway us defense
budget we're not going to go around the
world bombing everybody to make sure
that you have enough oil so that you can
have the newest you know badass pickup
truck in your in your garage guzzling
oil you also will not get re-elected so
Healthcare and defense
these these line items in the government
budget cannot be altered under the
current political system and what has
been promised to the people over the
last 50 years which basically means that
as the population gets older and as the
world becomes more multipolar meaning
there's other Challengers namely China
who are saying hey this quote unquote
rules-based order that's determined by
4% of the population doesn't work for
the rest of the 96 of the population
that never got to say and what this
order was we want a new order we wanna
we want to have our own Commodities we W
to have our own material wealth we also
want to eat a bunch of beef and and
drive a car right if you think about the
per capita energy uses of the world for
it to match the United States on the
global level would require an inordinate
amount of energy that we just don't have
right that just means inflation so what
our country is doing they say actually
we're going to keep our stuff stuff for
ourself we'll only export finished
products which makes things more
expensive and so this is all happening
before we even got to what's going on
today and as we've had less and less
kids because rich people have less kids
and when women have the choice of
contraception they choose not to have as
many
children the the Federal Reserve is like
well okay we don't have any growth of
humans we don't have any you know we
have an escalating cost of keeping the
political promises we made to our people
the only option is to print money to
make sure that the government can fund
itself at at an affordable level and
every time there's financial crisis
instead of reforming the the the banking
system and allowing some people to fail
they gets print money to make sure that
the banking system is sound and the goal
of the banking system is to take the
people's savings and hand it to the
government that is why the banking
system must always be saved from the
government perspective because that's
what it's there for um and different
countries use their banking systems in
different ways to essentially get to the
same goal of funding the government at a
cheap level and so that's why whenever
the banking system is threatened the
government or the Central Bank must come
in and save it by printing money so
we've gone through this situation you
know coming up in today where you know
the US went from I don't know 30% debt
to GDP in the 1980s to 130% today which
is you know a massive amount and if you
read uh forgot the other author
Professor name rogoff wrote a piece
about um debt 2011 the book came out I
forgot what when sometime in the last 15
20 years and the empirically showed that
once a country crosses about 130% debt
to GDP there is always a default and a
default could be massive currency
depreciation it could be massive
Financial
repression or it could be some sort of
uh default in in the Government Bond
Market every single time no exceptions
right so they're at this level already
and now the inflation comes and the
inflation is part and parsal result of
there's less humans doing productive
things
the war on climate change and the rebuke
of hydrocarbons and then more players in
the world wanting getting assertive over
their natural resources saying it
shouldn't just all go to the United
States and Western Europe it should come
to our people we should enjoy the same
standard of living that we see in the
Hollywood movies the idea that 130% debt
to GDP has always historically equal
default I've never heard that before um
that's troubling uh we'll come back to
that so the the idea of money printing
this is what I want to Anchor people
around so okay so you you you make all
these promises to a gigantic generation
that generation does not replenish
themselves so they're not more people to
be productive and take care of them and
so your only tool that you have is to
start um using debt the only way to
manage the debt is to print money to not
default on it and now walk us through uh
this took me a while to really get my
head around the idea that money printing
is inflation inflation is simply saying
that the the the amount of money is
inflating like a balloon compared to the
things you can buy with it so since
there are no additional things to buy
then people just start charging more for
the things that are on offer because
there's more money floating in the
system um how accurate is that that's
that that that's basically it right
there's the denominator I the amount of
money is just growing infinitely and
then the stuff the finance stuff and I
think about finan up as energy right we
produce and that is in my opinion
hydrocarbons because that is the thing
that powers our entire Global
civilization I don't care what you
believe about the good or evil of oil
but your entire Modern Life is
predicated on oil whether you believe it
or whether you want to believe it or not
and so it's not as if we've gotten that
much more productive in pulling oil out
of the ground or have found or you know
decided to commercialize nuclear energy
which has been around since I don't know
the 1960s right for whatever reason we
as a civilization globally decided to
ignore this amazing energy source and
poo poo it now if we had decided back in
the day to commercialize nuclear and
spend the amount of energy and money
that we have spent on wind and solar on
making nuclear the safest possible
energy usage in the smallest possible um
delivery mechanism we might not be in
this situation but those are the
political choices we made as as a
civilization so the energy the amount of
energy and how much energy we''re
producing every year is not grow
an actual fact like we hit peak oil you
know a while ago
meaning the entire growth of the the oil
industry has been predicated on us Shale
and the the number of new discoveries
and new wells being drilled is declining
precipitously because shell depletes
itself very quickly but it's not like
we're finding a new Saudi Arabia every
10 years no you know these massive oil
discoveries um we're just not making
them like we were in the you know 60s
70s 80s and so more debt the amount of
energy we're producing is is is flattish
so that's why we're going to have energy
inflation and when you have energy
inflation you have Goods inflation
because every single good we use is a
derivative of energy so this is a unique
take at least for me you're the only
person that I've heard anchor everything
around energy I've heard you say and and
this is really important for people if
they want to understand the um point of
inflation and why it becomes so
problematic is that that uh what you're
really trying to do across time is
preserve your purchasing power uh as it
relates to the amount of energy so
energy is going to determine the cost of
a flight energy is going to determine
the cost of a car energy is certainly
going to determine the cost of gas uh
Plastics on and on and on like even when
it's not Plastics can be confused
because made of the same substance
roughly uh but even just to to do the
the creation all of that stuff requires
energy which right now obviously the
main um uh the main source of that
energy is still currently coming from
fossil fuels so understanding that that
you're in this race against that so now
you've got two problems problem number
one is what you just laid out that we're
flattish we're not finding new Saudi
arabas uh every 10 years which would be
lovely and would certainly um help make
that easier setting aside any obviously
potential um uh global warming issue
but just from an an energy cost
standpoint so then problem number two
becomes that we're inflating the money
supply and so now the cost of that is
already going up um so what I want to
get into so if we know that we have this
magic mark of 130% debt to GDP is going
to equal a default we're already at 130%
debt to GDP but we have two promises
Healthcare and that uh to keep the
prices where they are from an energy
perspective going to have to run around
the world uh defense um to make sure
that we have access to the flows of oil
um we're going to be doing more money
printing now walk me through what are
some of the things um that are other
than that because the crazy thing is is
you listed those two I wasn't even
really thinking about those two as being
something that's going to cause us to
inflate I was thinking about uh for
instance the btfp bank term funding
program so which is basically um stealth
money printing quantitative easing just
under a different name um it's actually
bigger than the covid stimulus which was
4.1 trillion so walk us through what are
some other things that you see on the
horizon that are going to lead to more
inflation um so that's sort of in the
past in the future we have
essentially the rest of the world and
you know call it the n alligned
countries they don't subscribe to the
West I.E NATO or um the China sphere
right they go hey we're bunch of
countries we've been impoverished ever
since pretty much forever um we have the
natural resources that are needed to
power the Green Revolution um we have
hydrocarbons uh we have people who will
come into the US and be your nurses um
we'll clean your toilets we'll take care
of your children right this is what we
have um we want to keep these resources
for oursel now we don't want to choose a
side China or the us we just want to get
wealthier ourselves how do we do that we
trade what do we trade we trade know
higher value Goods right so an example
would be um Indonesia a large producer
of of nickel one of the largest in the
world um Joko W Doo the the president of
the country has recently banned the
export of raw nickel he said You know
guys you want some nickel come down to
Indonesia build some sort of
manufacturing plant and Export the
refined
product um so I think if I read the
statistic recently they went from about
um uh a billion dollars of economy
around nickel when they were just
exporting um the raw stuff to something
about 20 billion dollars of value added
when they were said guess what guys you
need to build stuff to employ our people
to elevate the standing of our country
so this is just one country the rest of
the of the world is like why the [ __ ]
are we letting these guys come down here
own our natural resources not give us
jobs and then send back the raw stuff
and then we import finished goods right
that's been the entire um structure
since since World War II and why stuff
is very cheap in the US and Western
Europe relative to how expensive things
are in in the rest of the world and so
they're fed up with this uh and now sort
of they've broken the ideological
position you know conditioning you maybe
some of the leaders who were on the take
from all these countries or the longer
power and they're like we want to be
like the Americans and the EUR Western
Europeans we've seen the movies we want
to be like them why can't we be like
them well we're going to stop giving you
guys all of our stuff essentially almost
for free and so this is just a movement
um resource nationalism this is what it
called um Kel SOA from 13d calls it the
the uh allegiance of the grieved the
grieved being anyone who suffered you
know postcolonial issues from
essentially being um an economic vassel
of you know some European nation or or
America and so they are saying they're
they're gaining their voice again and at
a time when the you know the appetite of
the western public to go and knock heads
against the wall is is declining and so
you have the situation where the the raw
stuff that poers the awesome standard of
living that's that's in Western Europe
and America is going to get more
expensive because because it doesn't
come from those countries themselves and
in the case of America America has all
the stuff it ever needs it's just that
the companies and charge would rather
ship all the stuff out to you know third
world countries and have a cheaper labor
base than employ Americans who are
expensive right um Europe's not so lucky
uh but I think that is a s source of
inflation that's only going to grow as
the rest of the world says I want to
live in the Hollywood movie too is it
austerity or War are those really the
two options or do you see us being able
to really in In This Moment use Bitcoin
as the um Arc that allows us to avoid
either of those catastrophic floods
crypto is a way for you to
sidestep some of the negative impacts of
austerity and austerity is not uniformly
distributed in terms of its pain right
the people who have the most pain are
those who have the most assets because
the cash flows are depreciated under
austerity there's no more government
printing press that's making these
things go up in value so if you you know
did the thing that what you told to do
get on the hamster wheel work your ass
off and you were able to through hard
work build up a Fiat
nest and you recognize that this
situation is untenable in terms of you
know a very small size of the population
getting very very wealthy while everyone
else is suffering then it behos you to
get out of those Fiat Assets Now
previously there wasn't really an easy
way to do that but now we have crypto so
now if you have Fiat asset assets that
are you know you're saving vehicles or
even just the little bit of Fiat money
that you're able to save you can now
sidestep you can all you can vote for
austerity to rebuild your your Society
into a more equ Equitable situation but
at the same time preserve the little bit
of wealth that you've able been able to
accumulate in the Fiat system by porting
it over to crypto and then you know once
things have reset then re-evaluating
okay well maybe I am okay with owning a
Government Bond that yields 10% if the
economy is growing at 5% that's a great
return for me I don't need to have this
crypto thing maybe it's too volatile for
me you maybe I lost a little of money
trading some particular coin I just want
to own some sort of bond in a government
that I believe in and respect cool now
you know you're getting paid to take
that risk versus now you're not getting
paid appropriately to take that
risk this is a really interesting moment
that we live in uh there so history
doesn't repeat at
Rhymes when you look back I think Ray
Delio has done such a good job of
breaking this down how the the debt
cycle loops and how going back 500 years
you see the rise and fall of Empires
that they roughly last 150ish years um
that the sequence of events is such that
you have a debt Jubilee I mean I guess
it doesn't start with a debt Jubilee but
every cycle will will um repeat with
that and cuz you said you um use that as
a way to reset to get a more Equitable
situation but the reality is it's only
going to be Equitable for a while
because once you're dealing in a world
where people clip coins which is the OG
way of inflating money or the current
way which is you literally just you have
the FED uh buy assets from the
government um you're inflating the money
supply you're reducing what you reduce
its purchasing
power that it is inevitable if you allow
that that people will get themselves out
of trouble
because if people are in pain they're
going to freak out they're going to lash
out at the government they're going to
say I want you to protect me which
um it's predictable so you know that
people are going to do that so you print
money so that you can get reelected so
as long as people have to get reelected
and one of the ways to get reelected is
to print money people are going to do
that and so you end up back in this um
cycle the fascinating thing is
that it it only comes down to any one
person's individual lifetime that's all
they know and that's all they really
care about and so if you can push this
off 150 years it you really don't care
and it begins to Loop however we are
living through a technological
Revolution right now that I think is
causing a rapid Divergence between the
generations which caused them to have
very different
worldviews and so you have
this I'll call it a bifurcation but I
really think it's it's more of a
shattering but just for Simplicity sake
I'll say a bifurcation between people
who believe in the traditional system
because they know it they're used to it
it's the devil you know and then people
that believe in and the way I think
about it is will tomorrow be more
digital than today if yes why would I
ever think that money wouldn't become
digitized and so it just for me as
somebody who breaks on the digital side
when I looked at crypto I was like oh
yeah that it makes sense to me that
isn't a fake asset or whatever people
call it magic internet money it's all of
money is simply a narrative we all
simply decide to agree that oh gold has
value because it's scarce the paper
money has value because the government
says that it does um crypto has money
because there's you Bitcoin there's only
21 million of it and and that's it and
so we all agree that that that's the
thing and so I will be very interested
to see
as as we March
towards adopting cryptocurrency if we
really can take that as this off-ramp
that will avoid Us ending up in a hot
War I just I don't know that governments
will allow it to
happen What do you you think about that
how Stern slvi olent do you think the
government's response is going to be
will they control it through ETFs and so
same as it ever was or will they say uh
we're not going to allow this and and
find a way to put Capital controls on
it the smart governments will do the ETF
route which is allow the traditional
trafi people to give you a crypto
derivative like a Bitcoin ETF that's the
smart way to do it because it's the
non-violent way to do it and people
think that they've escaped this
financial apocalypse but not really
they've only just given their money to
Black Rock and the time in which they
actually want to use Bitcoin for what
it's there for which is to centralized
money moving it around 247 between
whoever they feel like they'll be told
no if you want to get out of the ETF you
must sell it back for Fiat and then do
with your money what you please right
you don't own Bitcoin
people think they do that's the best way
to do it the worst way to do it is to go
out and ban it because when you ban
something as a government especially in
a digital age where people have
information at their at their
fingertips then they go oh well maybe
there's something here why is the
government telling me I can't do it
maybe I should read a little bit more
about this and then they just then they
decide oh the government is telling me I
shouldn't do it because it's not in
their interest then I'm going to do it
anyways because you've banned it you've
given it air time time you've proven the
point that all everyone is that everyone
on the crypto EOS has been saying for
many years which is the government
doesn't have your best interest at heart
that's why you're there Banning your
economic freedom and then you create the
demand for the thing and people will get
it
anyways right um so if you think about
you know the common Narrative of like
very you know authoritarian governments
in the west like oh China just does
whatever they feel like no bitcoin's not
even banned in China China bans a lot of
things have not banned Bitcoin there are
not it's hard to trade it um on sure in
China but it is not banned they did ban
it because no Bitcoin is not banned you
can own Bitcoin as a Chinese person um
they've shut down the M it uh you can't
mine it
and as a exchange the large exchanges no
longer offer a Bitcoin REM andb trading
pair but you can still trade at OTC and
you can still own it because you know
Chinese government's smart they know if
I ban something then Chinese people will
find it valuable because the government
told me I can't do it now that is why if
you know the government and the elites
want to stay in sort of this financial
position the ETF is the best thing that
they can do because people believe that
they've achieved Financial Freedom when
they actually have just handed over fees
to the same people who have been [ __ ]
them for the past 80 years anyways so
that is the smart thing to do but
ultimately I think that that attitude is
very very defe if you do believe that a
government is a representative body of
the will of the people and you just
default to saying that it can never
change because the Elites in charge want
it to stay that way well then nothing
will ever change and that's you know
that's a lot that's a big detriment you
know the writing argument that a lot of
people give whether they're a boomer or
somebody who's much younger as oh
Bitcoin is really good I understand like
decentralize money sound money you know
inflation resistant blah blah blah great
but oh but the elites want to let let it
happen so I'm not going to own Bitcoin
because the people in power are
threatened they're not going to let it
survive well [ __ ] that buy some Bitcoin
tell your friend to buy some Bitcoin
shut up from the rooftops create a
movement be part of it try to change
things so I I think that's a very
defeatist attitude and if that's the
attitude that everyone wants to have
then you deserve to be a [ __ ] death
surf what do you really think come on
Arthur say something strong come on man
stop with this wishy-washy [ __ ] uh
yeah that's uh that's very on point I
think um I maybe have a little more
empathy for uh here here's what I really
think I think nuanced ideas are
extremely difficult I think the
government is extremely powerful staring
down the barrel of the government um and
deciding that you're going to stand up
to them I just do not fault the average
person for not being willing to do that
so I have deep empathy for people who
either a don't understand it don't want
to spend their time wrapping their head
around it or if they do believe as as I
quite frankly do that at some
point and honestly the ETFs maybe give
me a little bit of comfort because I'm
like okay that that gives them a way
that and other centralized exchanges
like coinbase give them a way to to grab
it to to do a thing with it right to
feel like they have control and then
people that are sort of hey I would at
least like to hedge my bets um you know
when you think about uh the Second
Amendment not to get into this debate
but when you think about the idea behind
that was hey the government may go
tyrannical at some
point and you may need to be able to
defend
yourself that I think people lose sight
of that and they think that oh a gun is
you know for a home invasion or whatever
sure that too yes but like the original
intention was the government may turn on
you and you need to be able to protect
yourself and that America anyway was set
up with with that in mind like we're
putting all these uh balances of power
because governments tend towards tyranny
and so you need a way to protect so
anyway that having Bitcoin is a bit like
the the financial equivalent of the
Second Amendment I have the right to
maintain my own money I have the right
to control it I don't have to I can keep
it in a centralized system because good
Lord it is so easy to lose your crypto
if you are not very careful clicking on
an errant link forget getting your uh
seed phrase I mean just woof uh it does
make me tense on that side as well but
at least I know that I have the right
it's interesting and I thank you for
letting me think through this stuff in
real time um but that is why I find
myself so drawn to this is okay we have
a broken system that is an affront to
human dignity using your words uh
because of the way that it can be
inflated I think that people think the
memes law says that you should just be
able to tell somebody save your money
and you're going to be fine I know that
we don't necessarily agree on that but
that feels really true to me that that
should just be a right that that no one
should be able to take your money and
spread it across everybody else I have a
feeling that's going to be one of the
more controversial things that I say
today um just trying to predict the
comments but so you start putting that
together and you give me the Second
Amendment of of financials and now I can
take custody of my own money uh I don't
think it's unseizable I think maybe I'm
uh against the the Bitcoin tied on that
I think the government can wrench attack
you uh with Cru oh yeah the hammer
attack is the low Tech is the hammer
attack Hammer knee private key okay so
here you
go I've never heard that before that's
good that that memes law right there
that one will spread Hammer knee give
your key yeah uh facts so what do you
think about the ETFs like
is that a move you're like oh man this
is amazing or do you think because a lot
of people are like hey Black Rock could
end up owning so much of Bitcoin that it
becomes a
problem so I think that Bitcoin is
decentralized peer-to-peer anyone should
be able to own it and if we've
constructed the game theory and the
economic incentives in the right way we
should have created a system that should
be able to prevent sort of one
centralized entity passively destroying
the system we're going to find out if
blackre owns I don't know 20 30% of the
float of Bitcoin and there's changes
that need to be made and you need to
have the community Buy in could their
passivity obstruct that process I don't
know we're going to have to find out
about that but the beautiful thing about
Bitcoin which is different than gold is
that Bitcoin must move to have value
because the miners who expend energy
doing proove of work
to upkeep the system and process
transactions must have transactions a
process so that they earn fees to pay
for the electricity um in the energy
that they're expending versus
gold gold is just a piece of it's a
thing just be if the gold sits in a
vault for the next 10,000 years it's
still it's still gold if Bitcoin if no
one trades bit another Bitcoin ever
again it falls to zero so if we do get a
centralizing force in Bitcoin that
essentially Hoovers up all the supply
and doesn't do anything with it then it
goes to zero that's beautiful we have
the out already Bitcoin is worthless if
you do nothing with it if we do nothing
with the the tenant of peerto peer
decentralized money you've essentially
just gone around in a circle and done
nothing and so I think that when people
start to realize that that we must do
things for the ecosystem we must use
this currency we must try to create a
farm totable Bitcoin powered economy so
that the currency moves in a circle
around you know humans and maybe AIS in
the
future then we've done something we've
created the movement that creates the
value for Bitcoin if all we've done is
stuffed it in our wallet or stuffed it
in our retirement account in on a black
rock ETF we've accomplished nothing we
have not done what Bitcoin is there to
do and therefore we will be rewarded
with a [ __ ] zero and so I think
that's absolutely beautiful and that is
and then we can rebuild the system again
it's just it's a common delusion that we
created this computer game called
Bitcoin and now it has economic value we
can do it again and try to make rectify
the mistakes that we made in the first
iteration so do you think that Bitcoin
has a fatal
flaw no I don't think it has a fatal
flaw I think that um it's a resetting
system that will respond to you know if
the the external environment doesn't
create movement the currency isn't
moving if it's not being used then it
should be worth nothing
interesting uh tell me why that's a good
thing because if again if we go back to
the the rent like just a person sitting
on a Government Bond and doing [ __ ] all
with their
life not improving The Human Condition
at all but they get to enjoy the fruits
of everyone else's labor um by doing
nothing is that a a sustainable
situation because that is what the fiat
currency system is accumulate a bunch of
assets sit on your ass do nothing and
because you're rich you're going to be
fine or you can accumulate a lot of
Bitcoin but you better do something with
it you better invest in companies
or spend your Bitcoin on services to
prove that this is a currency system
that should be used or do something to
increase the value of this system
otherwise what youve spent all your
effort doing is going to amount to
nothing you don't just get to sit on
your ass just because you're rich at the
extreme obviously we're not at that
point right now this is a very you know
down the line type of thinking um taken
to the extreme but I think that Bitcoin
in its design solves this issue of the
rentier situation where you have a bunch
of um very lazy rich people who are rich
because they're rich and they don't do
anything else to keep them
Rich okay um that feels weird to me so
I've heard I'm assuming when you say
rentier you're talking about what people
commonly refer to as rent Seekers which
was a concept I never I mean maybe maybe
more of like the it's like a pre French
Revolutionary like essentially you had
renas which was the French Government
Bond and it paid I don't know three or
4% coupon whatever it was right and so
you has basically had all the Nobles did
[ __ ] all they owned all these government
bonds that paid all this interest and
the government just taxed the [ __ ] out
of all the Surfs and everyone working on
the farmland and so then everyone else
got to build their nice chat and sit on
their ass right that's what I mean by
rentier it's somebody who just earns
interest they do nothing great life if
you if you're able to have it but you're
not producing any sort of productive
value for the economy and obviously that
was a corrosive factor that led to part
of the reason that led to the French
Revolution that's what I mean when I say
R it's I've got a lot of capital I just
own a security that pays me some
interest but I'm not doing anything else
to contribute to society I'm not making
money essentially move similar to
bitcoin if it's all just sits in an ETF
it's not moving it's not doing anything
what have we really created okay just
another financial asset that held in a
portfolio that's not why it was valuable
in the first place it was valuable in
the first place because we had created a
new way to move value throughout a human
economy so it must move it must do
something to be valuable to prove that
it's a peer toe decentralized monetary
system if it's just sitting in a
portfolio then just own something else
why why own Bitcoin you're not owning it
for what it's there to do so this sounds
like a contradiction of the narrative
around Bitcoin being digital gold
because what you what I hear you
describing is
ethereum no ethereum so I'll separate
Bitcoin as money it's a monetary system
you're able to move monetary values run
ethereum is a decentralized computer now
ethereum and Bitcoin could have I think
competed on Mone if not for the
2016 Dow hack situation so for those of
you who don't know what happened
there were uh there's a company called
slockit Steven tul uh and he wanted to
basically do a big raise of money for
his um I an iot protocol called slockett
so he said why don't I create the first
decentralized VC firm where everybody
could put in ethereum into this fund and
then people would get these governance
Tokens The Dow the central autonomous
organization the dowo token and they
could vote on projects guess what the
first project was slock it his company
and so the Dow as this Innovative way to
crowdfund raise I think at the time $150
Million worth of eth now unfortunately
the Acumen of the engineers and maybe
some people say there was some file play
involved I don't know um created a
situation where somebody was able to
execute the smart contract in a way that
wasn't
anticipated and they were able to siphon
off money from the the Dow Treasury and
so you have this situation where the
ethereum network this is I don't know
what percent of the network this was it
is massive this is back in 2016 ethereum
had only launched a year a little bit
over a year prior in
2015 so falic and all of the you know
big stakeholders in ethereum had a
problem if we ascribe to the Mone that
blockchain what happens on the
blockchain nothing can change it's
immutable we should never change it
because we want to be sound a sound
Crypt cryptographic piece of money that
means that the dowo hack should be left
alone and okay too bad that people lost
you know all their money on this project
which was a big percentage of the
network at the time we're going to be
money money says you can't ever change
just like Bitcoin immutable there is no
changing you send Bitcoin to the wrong
place sorry that's it um the community
and vitalic and some of the other people
thought no we want to be the
decentralized computer and to forward
this vision of being a decentralized
computer we needed to be usable we need
to have this have this network continue
and therefore we're going to advocate
for a hard Fork that rolls back the
network to a time before the Dow hack
was created fix this issue so that
everybody gets to keep their money right
and this is what happened they chose
let's be a better decentralized computer
and get more users on board and give
them a redo versus being the hardest
money ever known which is
Bitcoin and obviously the community
voted in favor of this because there was
two currencies created uh ethereum under
the symbol eth and ethereum classic
under the symbol Etc look at the price
of the two ethereum is I don't know what
is it now 4,000 whatever it is ETC is
maybe it's a few hundred bucks um if
that I don't even know if it's still
exists so the community voted we don't
want money we've got Bitcoin bitcoin's
money we want a decentralized computer
be the best decentralized computer you
can ever be ethereum and that's what
they've done so I this and I know lots
of people in crypto will disagree with
me on this but that is how my mind works
on the difference between Bitcoin and
ethereum and predicated on this pivotal
event in
2016 then if I'm understanding you
correctly Bitcoin you believe anybody
holding Bitcoin if they want to really
make this a thing they're going to have
to build on that Network and be able to
buy a cup of coffee with Bitcoin
or do something maybe it's not a coup of
coffee maybe it's I'm going to settle
Sovereign Nations trade Flows In bit
whatever it just needs to be used for
something it just can't just sit in in
an address and do nothing for the next
thousands of years now obviously you can
do that right now because it's only 15
years old we're talking about a very
longtail situation U not something
that's going to happen anytime soon it's
more of a philosophical discussion what
you think Bitcoin should be doing in the
next 100 or 200
years yeah you said earlier that we
could reset the system and solve the
flaws that we built into it so I'm
having a heart because when you describe
that that sounds like a flaw to me uh as
somebody who really likes the idea of
Bitcoin as digital gold I I have
admittedly had in the the distant
recesses of my mind that question of
well what happens when the last block
reward is given and that's it all all 21
million Bitcoin are now out there and I
know that that's you know decades away
but um that was sort of in the back of
my mind now it feels like a flaw to me
that you would need like hey I need
somebody to do something with gold to to
make sure that we can keep it as gold
like I want gold to just be the thing
that we all agree um has properties I
don't buy Peter schiff's argument that
the thing that makes gold valuable is
its um utility in jewelry and whatever I
think that the reason that people like
it for jewelry is that they believe it's
a quote unquote precious metal and if
they didn't believe it was because I can
make something look like gold but if you
then believe it isn't actually gold then
you're buming out so the only thing that
really makes that cool is that it's rare
uh and that we all agree oh it's a rare
thing that we all agree has utility Okay
cool so that's going to be the thing
that so many cultures over time have
gravitated to and said this is a thing
that stores money better than seashells
as an example or glass beads whatever
it's just super hard to fake in a way
that like diamonds are easy to fake at
least now um gold is very hard to fake
gold is scarce cool we're going to use
gold okay Bitcoin to me that narrative
like I'm here for that but when I think
about oh hey Tick Tock y'all better find
a reason for this to exist otherwise the
the um miners now miners but in the
future they won't be minors uh they they
need to have a way to generate
funds to pay for the electricity as you
said to secure the network that feels
like a ticking time
bumb well it's it's a very important
subtle fundamental difference between
Bitcoin and gold gold is a financial
asset it's not a monetary Network
Bitcoin is a monetary Network plus the
financial asset so what is the monetary
network of gold people walking so what
did I do before I had any way how do I
transport my gold somewhere else I got
off my ass I picked up my gold coin I
walked over there and I did something
with it the monetary network is me a
human being eating getting calories
doing something right or I set it in a
horse and carriage or now I have a
Brinks truck right that's the monetary
network of gold and the asset is gold
they're two different things whereas
Bitcoin is a network and a monetary
asset of the same thing Bitcoin has
value because it was created through
this mon monetary network if the
monetary network doesn't have activity
it's not worth anything therefore just
like Bitcoin the monetary Network must
do something or it has no value and
therefore the currency its native
currency has no value either if it
doesn't do anything so that's what
people get mixed up when they think
about gold versus Bitcoin yes it's a
very simple analogy digital gold but
when you actually think about what is
gold and what is bitcoin at a very first
principles basis they're different and a
very fundamental and subtle
way yep that that is clear man it is
crazy how no matter how much I learn
about all this stuff I as the island of
my knowledge grows so grows the shore of
my ignorance it is uh it's it's
unbelievable so is Sailor out of his
mind is he playing a
geni okay tell me more so if there's if
there's the looming like we have to find
something to do with this he is betting
everything on the fact that we will
figure out something because that that
man is
leveraged so guess what so sailor is
doing very smart trade which is he's
borrowing money in a depreciating asset
at a low rate because he has a corporate
entity that's able to access this market
so if you're a you know a listed company
in the US or elsewhere you're able to
access the corporate bond market and
you're able to borrow at a very very
attractive rate so he's able to borrow
US Dollars we know that US Dollars the
quantity of them will increase in the
future what does he take this
depreciating asset and does with it he
buys Bitcoin so he short dollar long
Bitcoin short the thing that's going to
increase infinitely long the thing that
only can have a certain amount so from a
corporate finance
perspective it's a expected value
positive trade because the asset this
this funding currency is going to in
inflate is the thing he's buying is
gonna have a fine amount and so you know
I don't know what he pays on his debt
like two or three% he has a he has other
you know software business on top so the
the interest cost of his debt is either
partially or in full covered by the
income he earns from his software
business so he basically has created a
almost a free option or an option with a
very very low carry on the future value
of Bitcoin so what does he do prior to
the ETF he had two value drivers for his
company anyone who wanted to buy Bitcoin
from a traditional trafi basis couldn't
because they didn't have a vehicle to do
it but anyone in trafi could buy a
listed US security which is what micro
strategy is so if his company is just a
Bitcoin option play
and you want to buy Bitcoin you buy
micro strategy and you don't give a [ __ ]
what he does because it's he's the only
game in town for this strategy okay now
it's a bit different with with the ETF
but the ETF now Powers a second leg of
his strategy which is Bitcoin number go
up okay well if there's only so much
Bitcoin that's freely tradeable because
a lot of it's held in wallets or lost or
hasn't been buying yet whatever and now
you have this Juggernaut Black Rock um
fidelity and all these people who are
buying I don't know how many billions
they've bought a Bitcoin in the last uh
eight weeks or so that makes the Fiat
number of what Bitcoin is worth go up
and he is a he's a corporation he cares
about his Fiat value because that is
what his his reporting currency is now
so before he got the value of I'm G to
get influen into my company because they
want to own a Bitcoin proxy but couldn't
now they have another Bitcoin proxy
called an ETF I get number go up on the
other side and this option becomes very
very valuable
and so again
genius okay let's uh let's look at it
from a slightly different angle for a
second so time Horizons matter a lot so
maybe this won't matter at all because
he's got enough time to figure that out
the The Narrative last cycle on bitcoin
was digital gold The Narrative this
cycle or the meme I should say the meme
this cycle is never
sell now hearing what you're saying that
does not make sense to me at all so it
becomes a keep an eye on whether this
actually becomes a functioning Network
for something other than just
storing um wealth that if you see that
it's not going anywhere positive then
you better get the hell out while the
getting is good that and that is a far
less compelling um argument so the only
thing and because again I like to try to
predict the comments to see um to see my
own argument from the outside which is
why I do that uh seeing that argument
from the outside people are going to say
that's ridiculous of course we will come
up with something um you're 15 years in
do you think that there's anything
meaningful other than Bitcoin as a as a
um awesome
narrative as a as it being a store of
wealth is there anything lightning
Network or otherwise so if you're not
familiar with
ordinals they are Bitcoin nfts on
bitcoin but not really we we get into
the reason why people really interested
in that but just yeah if the meme is
simple nft is on bitcoin so what are we
doing we're bringing human culture and I
think nfts as a data constract bring
human culture to crypto so we're going
to bring human culture to the biggest
most valuable crypto of them all Bitcoin
and ordinals have already proven that
they've generated massive amounts of
transactions fees for the miners as
people are inscribing them and trading
them with each other and this is only
going to increase so I think we have
found one killer transaction generating
method which is let's bring culture to
bitcoin people like to trade these
things now you can trade an oral on
bitcoin versus you know a punk on
ethereum or whatever right so the we
have proven that we have we have done
something someone's come up with uh some
innovative ways to use the the tap rout
U technology to inscribe these ordinals
and create this demand for culture on
bitcoin and that's generating massive
amounts of transaction fees that are
going to miners to keep them fed so
again we've we've done something in the
short term but I would push back on this
notion of like in
markets I operate in sort of like two to
three year cycles and so obviously what
goes up comes down it's not that Bitcoin
is not going to experience another 75
90% fall from whatever the all-time high
is
this cycle but right now the narrative
is never sell do you want to go short
against that narrative absolutely
[ __ ] not don't if you if you don't
believe in the narrative just don't
enter it all but do not go short because
you're gonna get blown the [ __ ] up as
somebody just found out shorting micro
strategy stock on some sort of like an
Arbitrage trade between micro strategy
and Bitcoin because he implied bitcoin
price of micro strategy is higher than
what the spot price of Bitcoin is and so
people did went long Bitcoin short
Michael stry and the premium is keeping
is gapping and forcing people out of
their positions so sailor is a meme God
right now he's got the hold I'm one of
his memes I'm I'm well aware yeah how
many chairs am I sitting on yes oh he's
got he's got the The Narrative do not
short him if you don't believe in what
he's saying you think it's complete
[ __ ] just don't own the stock don't
short the stock don't do anything with
it but don't go
short very interesting yeah look I
uh needless to say am a huge believer in
Bitcoin um it is a very I like to know
what is true that's that is always my
guiding force um if ordinals actually
solve the problem we'll see because I
think there's now going to be a um I
mean maybe just multiple communities
will spring up but right now you've got
nfts I would assume from a trading
volume position is just absolutely
orders of magnitude larger than Ord I
don't know that so maybe I'm wrong and
the problem's already solved that's my
gut instinct is that
true I don't know I would assume that
trading volume on like erc20 nfts is
definitely higher than ordinals there's
not even major wallets yet that support
it obviously I'm I've invested in one um
but yeah it's it's a nent space but
we've proven that there is demand for
Block space that isn't just let me just
move some Bitcoin between my coinbase
and binance account right so I think
that that's
that's the thing that I want to see not
that we've solved the problem of how do
we keep the miners incentivized the
transaction fees to keep their machines
on in 2140 when the theit Bitcoin block
reward ends it's okay we all know this
problem is coming there are different
communities spreading up creating
intrinsic demand for Block space on the
Bitcoin blockchain if we can do what
with ordinals what will be the next
thing that the community comes up with I
don't know but to say that you're going
to not participate in this bull market
because something that's going to happen
in
2140 okay fine but then yeah sit it out
but that's probably if you're thinking
about it from an investment or trading
perspective that's probably not the
right way to look at
things what is the right way so um yeah
we'll just ask that what is the right
way if you're somebody who is very you
know into markets and you like to manage
your money and this is something that
you enjoy doing which obviously this is
what I do for a living momentum trades
especially in such a meme culture like
crypto where there's no manipulation
from outside trat five forces the trend
is your friend until it ain't we're not
at that point yet where it ain't so you
follow the trend and I think it usually
it becomes obvious obvious to you and
sort of absurd moments of why the the
trend is probably time to fade the trend
like there are very M there are multiple
opportunities for people to get off the
train in 2021 and early 20 22 some
people did a lot of people didn't but
you just have to understand what you're
doing and understand that nothing goes
up forever nothing goes up in a straight
line there are ups and downs uh and at a
certain point then there will be uh a
correction but be ready for it that is
the first part of the wave everything
goes up um looks like it's going to last
forever but then we get the big
explosion we lead to something like the
Great Depression
um how does that party end just all the
money got poured into um the new hype
thing let's say it's AI uh and what
makes the music stop well if we've
already buil if we've already printed
money to do yield curve control and the
system is still buckling whether that's
the price of oil is $1,000 of B now or
or something that it's going to be some
energy component of it that or you know
the cost of Life Care is millions of
dollars right you can't print healthare
you can't print oil right so these are
the things that are going to go up
massively in price and then the system
just breaks because people are like holy
hold on a second like yes the government
bond yield is two and a half% in the
baking system is solved on a nominal
Fiat basis but it cost me $10,000 to
fill my my gas tank just being obtuse
here right and then there's social
unrest because I can't get enough to eat
or you've broken the promise of the the
lifestyle that I'm supposed to live
being in this country what I was
promised to vote for you and I'm no
longer going to be there and then it's
okay well if I don't have it internally
let me go out and get get it somewhere
else right oh don't worry everybody
we're going to go over there and take
their [ __ ] and give it to you so support
me as a
politician right and trade no longer
becomes the way in which we acquire the
things we need we resort to force and
then that's unfortunately how we we lead
to
conflict okay
um
so is to when you look at that is this a
us China conflict do you see that going
um hot uh hopefully not I mean maybe
it's I think it's um I forgot I can't
pronounce your last name uh Pippa M
something or other uh she let she coined
the phrase a um a hot War World War and
cold places cyberspace the Arctic Circle
space right there's Wars going on right
now in these different spheres that are
not the same as boots on the ground in
the kinetic conflict what's more
important today owning territory or
owning your your citizens data right so
there's different things that we we
consider important in the the substrate
to our our Modern Life so if we are in
this new AI World your data is more
important than going out and acquiring
your territory so it might be that the
war is not to shoot them up on some
border but it's you know aggressive
hacking between different countries
trying to ensure that they have access
to certain data or their AI are able to
to operate in in certain Fashions right
so we don't it could be a different type
of War not exactly the same war that
that we're used to maybe that's even
more dystopian I don't know um I'm
hoping that we don't you know get into
I'm just going to go take your [ __ ] and
you know maybe get to the nuclear
situation but again whatever it is that
countries believe is the the good that
they need to provide to their people to
stay in power they're going to try to go
out and take it for somebody else all
right I'm going to set aside the most
dire stuff uh largely just because I
hope it doesn't happen and two I don't
know just like the best thing so rarely
ever happens I think the worst thing so
rarely ever happens not that it doesn't
happen I'm certainly a student of
history and I'm well aware that things
do actually go off the rails um but
let's take a a scenario where we don't
end up in a hot War but we do get that
rubber band snap effect we just printed
too much money uh gas tank is way too
expensive to fill we do have the social
unrest uh government does lock things
down put in capital controls um we do
more silly things like sanctioning
countries and so they're terrified of
buying our debt and we just end up in a
position where um other countries
are incentivized to begin to break away
from the dollar do you see a real threat
to
dollarization and if so how does that
impact the average person so
dollarization um negatively impacts the
financial Elite of
America it could have zero if any impact
to the average American um
because I've argued in some essays that
the current system of you know the Fiat
fin system that works in America doesn't
really benefit the average American it
benefits New York and you know San
Francisco and LA right essentially the
coast people who are in finance people
who are in Tech right the average
America as a place is a great you know
land mass right it has enough food to
feed itself it has enough oil I think us
is either number one or number two
largest oil producer in the world right
think number one which I was surprised
it's it's protected by two oceans and
Canada and Mexico you might as well just
call part of America right and if you
count the Mexican population and growth
in terms of um their demographics
America actually um can hit the
replacement rate of like was it 2.05
kids per uh per per woman right so as a
economic unit America is unique in that
it can become um an otari and it
basically was until World War I uh and
so it can go back to that place but the
current crop of people who are in power
uh would lose standing in that sort of
situation which is why they continue on
carrying about what the value of the
dollar is because their wealth is
international companies where half the
you know half the business is abroad
where the workforce is in China Vietnam
wherever right it's not in America so
dollarization is you know pointed at
this big thing and America needs to
protect the dollar but for who it
doesn't actually benefit the
manufacturing worker uh the UAW you know
union worker or the UPS truck driver
right I mean so it's it's a question of
what the political system is there to
benefit who is it there to benefit and
so America and the dollarization it's
you know Bing about it's a super bad
thing yes it's bad for some people who
are tied to the Fiat Financial system
and that's where their wealth is but if
you want to think about it from the
average American person made in America
is great wages for the bottom 50% rise
they have better purchasing power yes
stuff is more expensive but at least
they're able to get it there's lots of
parts of the world in Europe is probably
the most [ __ ] where they don't have
population growth they don't have energy
and they don't have enough food that's
where you probably could see a big uh
internal conflict again as the edifice
of the euro is crumbles where these
countries are like don't want to be tied
to a bunch of faceless bureaucrats in
Brussels who tell them what to do do you
see that as a real concern I didn't
realize that Europe was um higher risk
yeah I I think Europe is higher risk
because again it's dying like the rest
of the Western World um it doesn't have
energy security it doesn't have food
security um I mean most of the
productive region of Germany was powered
by Russian gas right the EUR Ukrainian
Bread Basket um helps feed a lot of
Europe right um North African oil and
natural gas helps keep things running in
in most of uh and most of Europe and so
removing those
things uh Europe's [ __ ] the was [ __ ]
it's a poor it's a construct you know
this I'm quoting um paraphrasing uh
macro guide Felix zulaf the Euro was
created to keep France strong and
Germany weak um and it's it's attempting
to paper over these differences in um e
Eon economics with this structure that
just doesn't work and it'll come to a
head when all of a sudden there's just
not enough stuff to go around and
Europe's traditional trading partners
are like well you're you're if you're
going to be aligned with the us then
we're no longer going to sell you stuff
on a preferential basis there's no no
longer any Russian gas there's no longer
a bunch of West African countries
willing to sell you stuff cheaply um
we're just going to let you figure it
out yourself uh and what's the answer
print more money but again with the Euro
perspective you have a bunch of
countries that think that they you know
are some sort of democratic you know po
polies and the population might be why
we have this Euro anymore but there's
obviously an elite that likes the Euro
and that could come to blows okay so uh
I've talked to Ray Delio several times
and one of the things that I'm asking
him routinely is because he sees so much
disruption coming uh what do we do about
it where do we go and he keeps drumming
this idea that what matters is how
people treat each other and he said you
want to be somewhere where people are
treating each other well there's rule of
law that you can trade um
what what is the move and is this how
crypto enters your thesis what is the
move if the Western World does get
dramatically disrupted either uh hot
Wars and cold places um or Capital
controls so the government is um trying
to lock things down yield curve control
you know they're just doing all of those
things to continue to prop up the system
um what's the play is you obvious ly are
American but you do not live in America
um yeah how do you think about that step
and is cryptocurrency part of that so
the easiest thing right now is to
protect your your financial wealth right
for the first time in human history we
have a financial system that is not
predicated on government violence that
is crypto it's an opt-in violence free
violence free coercion system where I
can opt into this this Bitcoin
blockchainbased Financial system and now
I have a way to transact with anyone
around the world on an honest um
transparent open- Source basis and I can
escape the Fiat system with as much or
as little wealth as I deem appropriate
right so now I have the ability to take
my wealth outside of the government
system and unlike gold nobody knows how
much crypto I have I can store my crypto
in my head I can memorize my private
Keys um and my my seed phrases and
restore any of my wallets and not that I
do this but you can do it if you if
you're good at that so you can hold as
much well
that you could in Fort Knox in your head
that's absolutely revolutionary um and
so that's we have the financial Freedom
if you choose to use it um and so once
you've obtained Financial Freedom then
it's about as balag says choose your
tribe where is a place that has the same
ethos as you you know has a good food
supply the weather you like the weather
but most importantly you like the
community of people who are there and
there's no prescriptive of where that is
that's that's very personal maybe it's
where you are right now and the only
thing you need to do is obstain your
Financial Freedom such that if the board
is closed and whatever you're cool
you're able to maintain purchasing power
in in energy terms and but you're around
a community of people that you like and
love uh so um I think yeah the community
aspect a very personal one there's no
one right place the financial aspect is
if you have the ability to do so get
your financial freedom for the amount of
capital that you wish from the Fiat
Financial system if you believe believe
you know in the thesis of me and others
and that the math is going to collide
with bad
politics then you now have Financial
Freedom which gives you the ability to
move if you want to or not want to so
the thing I think a lot about with this
is timing I'm obviously a big believer
in crypto um but I really don't want to
leave where I'm at and I'm not only am I
in America which does not strike me as
the most crypto-friendly place uh I'm in
California
which is definitely done some
legislative things that I have found
questionable um but man I don't want to
leave
so is that is that how they get you like
that you just wait until it's a little
too late or um did that play into your
decision to move out of the US no I
moved out of the US because it's just
not a place that you know resonates with
me personally right I love being in Asia
uh I love the people the culture um yeah
just you know my place The Economic
Opportunity all that kind of stuff right
for some people America's great that's
fine it's it's a very um personal thing
but yes there's a lot of inertia right
we with people in money they understand
how this monetary system works Bitcoin
didn't exist 20 years ago you're really
going to take your hard-earned money and
you're going to put it in Magic internet
money with a bunch of people with like P
py penguins and crypto punks as like
avatars who are like debating
macroeconomic policy on on Twitter and
other social media platforms you might
think these you know we're a bunch of
[ __ ] clowns over here right and so
you're like why would I why would I
trust this financial system versus the
man or the woman in the navy suit with
the her tie and a pair of lub Vuittons
on right so it's all these things that
factor into whether or not you trust the
financial system or not um again very
personal but the unfortunate part is
that most people aren't taught the math
they don't understand how a bond Works
they don't understand how a bank creates
and removes credit from the system they
understand why mathematically this this
cannot continue the way it's it's going
and that there will be a reckoning and
history has told us the exact Playbook
they're going to use it's not as if
they're hiding it from us there's paper
upon paper written about exactly how to
financially repress the population to
make sure money doesn't leave the
banking system to use the banking system
to purchase the government debt at a
level the government can afford that is
below the level of growth in the economy
such that the government profits this
has all been written about you can read
it on the internet but most people are
too lazy or too distracted or they they
work a job and they just too tired to
open up a book and read um but it's all
there for you to read and if you read it
all you'll understand very quickly that
this situation cannot continue and you
have to do something and that something
depends on your financial position
obviously I'm in the position to put a
lot more of my wealth in the crypto and
not care um so much where the price goes
maybe you're not the the most Insidious
part of inflation is that the poorer you
are the harder the more percentage of
your income is spent on energy therefore
the more inclined you are to become a
degenerate Speculator because the little
bit of money you're able to save you
need to lever up so much just to make an
impact uh on the depreciation of your
wages versus the cost of uh food and
fuel that you make bad choices
especially if you're not educated about
what these financial markets are because
that's been essentially government
policy globally is to keep people in the
dark about how money works so they gets
blindly trust the supposed person in
power yeah that's something that I heard
you say that uh really hit me which is
that inflation makes a Speculator out of
all of us uh speculation is the one
thing that really I find super unnerving
that I to me speculation and gambling
are basically the same thing like people
are just taking a guess uh how is it
though that people cannot understand in
the system and yet still feel the force
that compels them to be a Speculator is
it that they're looking at their wife
and their kids and they're like I'm only
going to get a 2% raise but I can feel
that that's not enough like I don't even
know if they like it doesn't seem like
they would think through all of that so
what is the Instinct that kicks in that
makes people
speculate because I wantan to I I know I
can't earn my way out of this I can work
as hard as I want I can put as much
overtime but I'm only going to make so
much money per hour period but I watch
the TV and I see the the successful
mostly got mostly men driving the fancy
car has a nice clothes whatever and six
months before he was on the street
whatever the story is it's you the
Horatio alar you know Rags of riches
very little effort there was this thing
I did it was trading stocks or whatever
it is right um usually it's financial
markets because things move so fast and
you can apply leverage and yes there are
people who have done that but the
majority of people who try that fail um
because it's very very difficult to do
uh and so you're desperate you're like I
know I need to uplift my economic
earning potential but working my job in
my Lane I can't do it it's just
impossible I see myself losing day after
day after day I see as my family having
a lower standard of living day after day
after day if I could only pick the right
stock if I could only predict where you
know the Yen Euro crosses go on 200
times leverage if I could only hit black
five times in a roulette Ro if I could
only you know go to the casino and play
Crow if I could
only and then you spiral out of
control yeah it's interesting the idea
of creating a financial system that
people can and I'll use my words that
people can bet on uh to create Capital
to move Capital into the system so if
I'm a company and I'm trying to grow I
could say hey who would like a piece of
this I don't even have to offer a uh
dividend like dividend stocks I
understand because they actually you're
getting profits out of the company that
makes all the sense in the world to me
when I was first when I was in my 20s
trying to wrap my head around the stock
market I was like okay so wait a second
some of them are baseball cards and some
of them are dividend paying stocks that
that was like that just made sense to me
I was like okay well sure like if this
thing which does not pay me a dividend
but if I can get somebody to pay more
for it to own it for whatever reason uh
than I can which is that they think
somebody else is going to buy it from
them now all of a sudden that company
has access to Capital I see well that's
good I have a chance if I can actually
sell it to somebody then okay that makes
sense for me I'm able to make more money
it's really a genius system but hiding
inside of it is the greater fool theory
of well wait a second if the stock isn't
paying a dividend then if no one else is
willing to buy it for more and the
number is not always going to go up I
mean it it's never always going to go up
but it can go up for some companies for
a very long period of time um but it's
really ingenious but yeah that the the
element of speculation the element of I
have to the element of um I don't know
what I'm doing but I'm gonna YOLO in
anyway it all makes me very
nervous so one thing I hear people say a
lot is crypto is your exit from that
system where because it can't be
inflated and this is the thesis with
Bitcoin and again stop me if if I go Ary
uh Bitcoin has a finite Supply going
back to one of the things you said very
early on is that uh it's risky stuff but
it's a fixed Supply that idea of it's a
fixed Supply there's only 21 million of
them they're not going to be any more
made they can't be more made cry
cryptographically so um and therefore if
everyone agrees that it has value and I
put money in that then that should
maintain its value because it's not
going to get inflated away um but is
that really an exit from the system of
having to speculate or is it just
another bit of
speculation so you can speculate in
crypto Absol [ __ ] lutely there is all
different you can speculate in Bitcoin
itself right you know you put a lot of
your wealth in it it it's very volatile
it goes up and down a lot right um so
when you're REM moving yourself out of
the Speculator category if you're
putting a you know a certain amount of
money into crypto for example and you
say I'm GNA assume this goes a zero and
I'm not going to care then you're not
speculating right you're speculating on
a future but again your lifesty is not
going to be impacted like the the mo the
worst part about speculating is I need
this to go up because I need to buy my
dinner tonight right and and so that is
when you get into get into problem but
yes speculating on more human you know
Humanity getting into a new system and
that system being worth more because
there's a bigger Community fine but just
choose the size it's all about sizing no
one knows the future we're speculating
every second of every day every step we
take right we're speculating on things
we have informed you know historical
experience to say that this thing is
less risking than the other but none of
us know what the future holds we're
always speculating the question is the
size and the risk
right don't put your whole net worth in
into crypto where if the price goes down
a little bit you can't eat that's not
smart seems that don't put your money in
the SCP 500 or or know some other stock
Indy um and go long you know too much
where if it goes down 1% you can't eat
right again it's all about you know
creating a system that works for you and
where your financial position is in life
uh and if you do want to go into the
Super Leverage speckling aspect make
sure it's a pot of money that you could
afford to
lose what's your thesis on crypto why do
you think that it's going to be here for
the long run it's been around for 12
years 13 years something like that um
obviously it's done well but that's a
pretty short period of time what what is
the thing that gives you confidence that
it's going to keep
mattering so it's a financial system
that's gone from zero right know First
Genesis Block in 2009 to A system that
has weathered multiple crises right in
the most recent we had one of the
largest exchanges in the world bunch of
the largest lenders some of the largest
hedge funds massive amounts of fraud uh
all this happened in the span of six
months um people lost hundreds of
billions of dollars in value yet blocks
kept being produced every 10 minutes for
Bitcoin 10 seconds for ethereum and
whatever the blockchain was are for a
lot of other currencies the
decentralized finance or defi movement
people were still trading on
decentralized exchanges um people were
still borrowing and sell borrowing and
lending different currencies on some of
these lending platforms the financial
architecture worked even though we had
one of the biggest losses of wealth and
biggest amounts of financial malfeasance
ever in the crypto ecosystem and I mean
if you want to compare the amount of
money that um you know s bankman freed
and his crew allegedly stole from their
customers it would rank it's one of the
largest thefts Financial frauds in in uh
in human history right all this happened
there was no bailout there was no
Central Bank that said we need to
preserve the system and therefore if
assuming they could print a bunch of
Bitcoin or ethereum or whatever and make
sure these entities are made whole so
that you know certain people don't lose
any money none of that happened people
lost a lot of money but the architecture
of this system worked the community was
still there people are still shipping
code I was just at token 249 in
Singapore the energy 11,000 tickets sold
sold out um you know basically almost
took over the whole of Marina Bay Sand's
Convention Center uh for this conference
people around the world believe in this
system there's some of the smartest
people in the world who have ever met
who are building this system you know
you take a look at what's who the smart
people in the the schic financial Fiat
system bunch of [ __ ] Muppets right
they're there because they've always
been there not because they're special
not because they're um uh inspiring uh
so they're not building anything new
they're trying to keep the old thing
relevant and so that's why I believe
this is going to have staying power
because the math works the Crypt the
cryptography works but most importantly
the people are so impressive and so um
dedicated and so enthusiastic about what
they're building and I've worked at a
bank too there was none of that energy
working on uh working in the traditional
fin Financial system we there punching a
clock earning a paycheck and trying to
take as much risk as possible so we make
a little bit of money so we can get the
[ __ ] out of
there okay but there is a question to be
asked which
is there's regulation for a reason and
that the average person I mean look at
FTX the very thing that we're talking
about it it's very impressive to me and
and again I want to say I I am a big
believer in crypto for a different
reason than you which is interesting but
uh but at the same time I want to face
head on the things that strike me as
worrisome uh and this may be a feature
and not a bug and we may all just have
to wrap our heads around it but there
the uh amount of Regulation that's in
the trafi world is pretty extreme now I
will admit the first time I realized
that just because I had over a million
dollars that I was suddenly a um oh God
what's a qualified investor it's not the
term but um that I was now accredited I
was an accredited investor and I was
like but wait I don't know anything more
about investing money now I I know how
to make money I don't know how to invest
money uh and so I was very um shocked by
that it just seemed stupid that you
couldn't pass some sort of test and and
be able to do your thing um but at the
same time there are people get their
wallet drained constantly in uh crypto
PE the amount of
malfant uh just in FTX is just absolute
bananas and either crypto tends to
attract those people or the current lack
of Regulation um just creates the the
incentive structure where that's what's
going to happen one one thing to jump in
there it says FTX was regulated in I
don't know however many jurisdiction
around the world they had licenses all
around the world right so the the the
notion that regulation would have
stopped the FTX is patently false um
they were highly regulated not highly
not as regulated as a bank wouldn't say
say but they did have Regulators around
the world that had given them licenses
and they were supposed to do things in a
certain way right if you want to take
the other example like let's take a look
at credit s and they didn't steal
anybody's money right but credit s was a
global systemically important Bank Gip
right and yet the most highly regulated
of regulated Industries in the world
banking the most highly regulated of
regulated banks credit sweet in
Switzerland [ __ ] up and and blew up
and required the Swiss tax pirs to bail
them out for billions of dollars right
so Financial regulation when the
incentive structure doesn't work is
useless it doesn't solve anything it
makes you feel good at night that's fine
you can get your money back on a nominal
basis but what happened they printed
more money and made us all poor in in
the result so I would say that Financial
regulation yes it's nice that a bank
needs to be running in a certain way but
it doesn't prevent bad people from doing
bad things it just makes the if from
someone's run a scam it usually makes it
bigger to hear more about Ray Delio's
warning on the upcoming recession which
we're almost certainly already in watch
the full episode here talk to me about
the three forces that you see that are
influencing this moment we've got Banks
collapsing US dollars under attack uh
looming recession what