Kind: captions
Language: en
the impact and the damage of the
lockdowns was much worse in Canada and
Australia and New Zealand because they
had strong centralized governments and
it was weaker in the U.S because we had
state governments if it wasn't for
Florida and Texas we might not have ever
reopened our economy
Michael Saylor welcome to the show yeah
thanks for having me Tom
dude I'm very excited to talk to you now
obviously things have changed
dramatically in the financial landscape
since we last spoke and I want to start
us off actually with something that you
said which is the world is going through
an unprecedented financial crisis the
greatest of our lifetime now I want to
know one why do you think crypto and
everything else has crashed and two is
there an opportunity in all of this
disruption for somebody to take
advantage of or not well uh if we look
at the past year
what you've got is a drawdown of all
Financial assets so the NASDAQ is down
about 22 percent over the past year and
so NASDAQ represents tech companies and
all the risk assets but on the other
hand if if you were to go and look at
like the bond
uh market and the bond portfolios
bonds are down like a b-o-n-d index the
long Bond index
it's down six almost 17 percent
in the year so for 30 or 40 years you
had the 60 40 Bond portfolio and the
idea ones were considered a safe space
the idea was if stocks work then uh then
bonds will be a low return and stocks
would be a high return but if stocks
trade down people will shift their money
to bonds and you'll you know the
interest rates will go down the bonds uh
prices will go up and you'll actually
get a yield on your bond portfolio
but of course that broke around uh March
of 2020 and the reason it broke in March
of 2020 is because interest rates got
pegged to zero so after we had lowered
interest rates from five percent five
and a half to five to four and a half to
four to three and a half to three to two
and a half to two to zero and left it at
zero then bought you know the debate was
can can they take interest rates
negative
if you can't take interest rates
negative then bonds don't act as a hedge
to stocks anymore I mean you're kind of
you're at the end of the road for bonds
and uh and what we saw with stocks is
the Federal Reserve printed a bunch of
money
pegged interest rates at zero and then
you saw all these risk assets explode
you know you saw the NASDAQ explode up
and the s p explode up you had a
k-shaped recovery
and in the k-shape recovery it's almost
like
the entire economy was in a train wreck
or in a car wreck and we got taken into
the hospital and they pumped Us full of
morphine you know and if you've ever
been in a bad accident and then first
you're in pain
and then they pump you full of
painkillers and then you actually feel
pretty good
and you're sitting there and your arm is
broken but you're high on morphine or
high on something you feel pretty good
about it and you're thinking why don't I
just go break my arm and do this all the
time and then at some point there's part
of your brain that says you know I'm
going to come home from the hospital and
I'm going to get off this painkiller and
I'm going to be in great pain for the
next three months or six months or
whatever it is so
I think what happened here is the the
FED just pumped tons and tons of
liquidity and we stayed high for about a
year year and a half
and uh I remember when uh when Jerome
Powell said
I'm not even thinking about thinking
about raising interest rates
and the input and said strongly that
it'll be till 2024 before interest rates
start coming up again
but here we are in 2022
and now instead of uh raising them a
quarter point you know each time now
they're raising them 75 basis points so
they're taking three steps at a time
multiple times so we took the cost of
money down faster than any time in
history and now we're jacking up the
cost of money faster than any time in
history
and the result is um
that all the traditional models are
broken
let me uh let me give you a uh a
two-year uh post-mortem
um
since we started uh dealing with this
issue
microstrategy had we had uh we had a 500
million dollars of cash
and we saw interest rates at zero
and we saw the stock market inflated in
the summer of 2020. and we said well
what are we going to invest in and we
looked around at everything should I buy
gold should I buy land should I buy art
should I buy some crypto asset and
what's going to happen next
so what we did is we decided to buy
Bitcoin and we bought 250 million
dollars of Bitcoin August 10th 2020.
and then uh September around September
10th or so of 2020 we bought another 100
uh
75 million dollars of Bitcoin or
something like that
and then we started buying Bitcoin more
in December and we we kept buying
Bitcoin we ended up buying nearly four
billion dollars 3.97 billion dollars of
Bitcoin over that time period so uh so
in terms of like our strategy
microstrategies just bought as much
Bitcoin as we get our hands on since
August 10th of 2020. and in that time
period stocks gyrated North they gyrated
South uh you know currencies have
changed so let me tell you what's
happened
microstrategy stock
our stock is up 93 94 since that day
well
Bitcoin is Up 77 since that day
the s p index is up about 18 percent
the NASDAQ index is up seven and a half
percent
gold is down 16 percent
the bond market if you just bought bonds
they're down 18 percent bonds are down
80 and silver if you think silver was
better than gold
it's down 32 percent
now if you go on and say okay well fine
let's just buy big Tech
if you had bought uh the the greatest of
the big tech companies is Google
Google is up 41 apple is up 39
Microsoft's up 22 you might have won
those were all better investments in the
s p
much better than NASDAQ much better than
gold not as good as Bitcoin not as good
as microstrategy
but
if you bought Amazon you're down 18 that
was overvalued in the summer of 2020.
like you know a bunch of 20-somethings
were just buying Amazon because they
thought well we're all ordering Amazon
stuff so it must be good
well uh when you buy something that
everybody else understands to be good at
the same time they all agree with you is
normally bad yeah Facebook is down 41
since then
Netflix is down 54 since then so half
the big Tech got shellacked the other
half did pretty good
and now last Point what if you bought
enterprise software we compete against
uh companies 100 times as big as us
Oracle sap
Microsoft
um it Oracle is up 39 IBM's up six
percent sales force is down nearly 20
sap is down 45 percent
so
summary for us microstrategy strategy
wise buy as much Bitcoin as you can and
buy it with equity and debt we borrowed
money we borrowed 2.2 billion dollars at
a blended interest rate of like two
percent or one point eight percent so we
borrowed cheap money while money was
cheap and we bought Bitcoin now people
are saying that's stupid because Bitcoin
was trading up and then it traded down
at the end of the day if your time
Horizon is a decade or longer if you can
borrow if you can borrow the money for
longer than five or six years and you
can hold it through the volatility
then uh raising cheap money
grabbing billions of dollars at low
interest and then investing in a scarce
desirable asset that's got sort of a
technology appeal and holding it for a
long period of time that's going to be a
good strategy that's why our stock is
outperforming Bitcoin that's why that's
why we're out performing all the
enterprise software companies all the
big tech companies and the reason
bitcoin's outperforming all the other
asset classes
is because it's scarce it's desirable
it's technical
you know no one's going to write a piece
of software to make gold better you're
not going to put gold on a billion
iPhones whereas lightning is a protocol
that's been rolling out lately uh you
know square cash app or blocked cash app
put lightning right into Kasha
it means that you can send a hundred
dollars a Bitcoin to anybody in the
world on a Saturday afternoon for less
than a penny instantly peer-to-peer and
so I'll get to that though I want to I
want to make sure that we humanize this
for people that aren't as familiar with
a lot of this so one part of the appeal
of Bitcoin is also its volatility which
I've heard you speak about but I think
we have to build a few bricks before we
get to that
so I've been going on a journey myself
of really understanding and investing
and understanding what this all means
and so I get to play not play I really
am the sort of ignorant guy but smart
enough to figure it out that's been
going through this in real time with
people so I want to go back so the first
thing we do is we start lowering
interest rates now I want to understand
why they're doing that I have a thesis
let me know if this is actually accurate
the reason that they lower interest
rates is they're trying to Goose the
economy by making money cheaper so that
entrepreneurs and other people will go
and take that money or people that want
to build a house whatever they can get
cheap money they can do something that
creates activity in the economy so
whether you're buying Lumber to build a
house or you're you know taking on debt
to grow your business but you're doing
things is that accurate that's why
they're lowering the interest rate is to
try to get activity
so if you're trying to use monetary
policy
um to uh to counteract the negative
impact of fiscal and foreign policy and
domestic policy but what is the negative
impact is it people just pulling back
and not spending money it's going to be
important to to get where I think we
need to go it's going to be important to
understand why this stuff happens when a
government declares a war they basically
put public policy initiatives ahead of
the interest of the free market
right so if I declare a war I could just
draft every single every single adult in
the country put them in the military
send them off and if I lose the war
They're All Dead
right what's it do to the economy the
economy crashes
right what's it do the prices uh well
price of everything go up if you want to
create inflation you do it too a couple
of ways either you cut the supply
or you increase to cut the supply of the
product you want to buy or you increase
the supply of the money that's available
to buy it with
so if I uh if I make it illegal to
manufacture food
the price of food is going up okay
I don't even need to print more money
right I can create inflation uh just
ever in a war like in World War II we
have uh we have gas rationing you have
you have food coupons why because all
the gasoline gets shipped off to Europe
to put in tanks or to put in airplanes
or put in ships so when you have um when
you have policies that are declaring a
war on something
you divert resources so we had a war on
covid
we have a war on carbon and energy War
if I decide I don't want you to burn
coal or oil that I drive up the price of
energy if I decide I don't want you to
show up in your office I drive up the
price of uh production
if I if I decide that um
you know that uh
I want to fight uh this covid war and
I'm going to
going to change the way the economy
works if then I'm going to drive up the
cost of everything else so we've got
lots and lots of wars right you've got a
culture War you've got a war on office
work you've got a war on carbon you've
got a war in the Ukraine the war in the
Ukraine
has escalated right it's not just a war
in the UK and it's really a kind of a
quasi-economic war on Russia so when we
actually imparted Russian sanctions we
cut the amount of uh of
gasoline or or the amount of fuel
available in energy we drive up the
price of energy
so every single time you actually put a
a public policy in place you create
inflation
policy is inflationary the more policy
you have the more inflation you have I
think this is going to be one of the key
elements that uh people need to
understand so centralized control I
think is a core part of the thesis as to
why things are breaking so you have
governments coming in top down this is
going to be the way that it is and I've
heard you say it and I would agree with
this very much
let's assume that they're coming in with
good intentions but despite their good
intentions they're creating all kinds of
problems there's actually a do you know
Thomas Seoul
I don't oh my God I think you would
really resonate with him he's an
economist so you might discount him a
little bit for that but he uh says the
last 30 years have been marked by
trading what worked with what sounds
good
and I think that we're to your point
about wars let's take the one on energy
so we've got people doing a green War
great intentions they really believe in
that they want to save the planet but it
in trying to help the patient they are
putting forward measures that do feel
very warlike that are closing off a lot
of doors that are making energy more
expensive that are going to
disproportionately impact the poor not
just here in the U.S but around the
world and so that that top-down control
I know better I know what to do with
this knob instead of letting it evolve
or happen in the free market we're going
to prescribe behavior and that now I
would say and I'd love to know if you
agree is
if not the biggest certainly one of the
biggest contributors to what's happening
to the economy
yeah good the road to hell is paved in
good intent right people uh people uh
get into positions of power
and they want to do good
and so they do good by issuing edicts
executive orders policies regulations
and they think that the regulations will
make things better they believe that
that you know if you if you enter into
government and politics you believe the
political process is a way to make the
world better
so what you have is political
organizations centralized organizations
getting progressively more powerful
and as they get more powerful people do
things
right and I think if you roll the clock
back to Ronald Reagan he would say you
know government's the problem
government's not the solution
so
let's take nuclear energy
right the the cleanest form of energy is
nuclear energy it's it's the cleanest
probably the safest nobody died at Three
Mile Island uh you know we can't we
can't hardly trace a death from nuclear
energy in the U.S and yet we haven't
built a nuclear power plant since the
creation of the nuclear Regulatory
Commission
50 years ago and in Germany they shut
all theirs down
right and in Japan human psychology a
play like this feels another key piece
to the puzzle here as we look at why the
collapse how this happens how we get
back out feels like in is humans react
in a very emotional way to what happens
so it has yeah exactly and Euphoria so
you get these two competing things that
set something up weird so this is the
first cycle that I've lived through
where I was paying attention like uh
somebody interested in the financial
World till then I was just an
entrepreneur and just totally focused on
that and so I watched the Euphoria grow
in crypto and it was like exciting and
thrilling and it was so fun but
there were people like I had heard you
say a gazillion times guys you have to
be thinking in at least four-year
increments and any thinking less than
that is you're you're gonna get tricked
by the volatility and despite the fact
that you and many other people were
saying similar things the second the
price starts dropping people panic the
price starts dropping more people get
liquidated because they were in way over
their heads and now it's the sense of
Despair and it's never coming back and
it's over forever and so there's like
this this schizophrenic bipolar maybe is
a better way to think of it attitude of
like we're up and we could never lose
and I don't need to plan for a down
scenario we're down it will never be up
again and
how much of that do you think
exacerbates the problem if you're an
entrepreneur or you're an investor you
have to have a 10-year time Horizon and
not nothing great is accomplished
without a decade if you look at
Microsoft
the companies founded in the mid 70s a
decade later in their mid 80s you know
if you're not willing to hold Microsoft
stock for a decade you probably didn't
get to the point where they came Paul
White so a decade's a short period of
time for someone who's an industrialist
or or an investor I mean Warren Buffett
still owns Coca-Cola stock and he must
have bought it 50 years ago right
so I you know I think that anybody you
know that's a billionaire right all all
of these names the Sergey brins the mark
zuckerbergs the Jeff Bezos the Elon
musks of the world they didn't get there
without without holding an asset that
had technical potential
for a decade or longer there's no get
rich quick scheme so I think that uh
people want uh they want a an easy route
uh if you're trying to if you're trying
to get a quick uh a quick win with no
volatility with no risk doesn't make
sense and if you're actually trying to
be
successful in a hurry with volatility
that probably still won't work either I
mean ultimately success comes from
taking a a decade-long view
right Andrew Mellon John D Rockefeller
Jeff Bezos right we forget like Tesla
was founded 20 years ago like people
think it's an overnight success but it's
not an overnight success
um and with regard to the um the macro
picture we live in an a time of
unprecedented public intervention in the
Affairs of the economy
right uh unprecedented we never had a
never in the history of the country did
you have a government that told you you
couldn't have Thanksgiving dinner with
your family because they didn't want
family members to sit too close to each
other
yeah we arrested a dude on a surfboard
in the middle of the Pacific Ocean for
for for basically paddle boarding in the
middle of Pacific because that was
deemed as unsafe right that kind of
stuff so we have an unprecedented amount
of encroachment we have we have
politicians overriding the free market
they tell you what kind of energy you
can use they tell you you know how how
you how far you have to sit from someone
they tell you whether it's safe to be
sitting in your office at a table next
to someone lots and lots of encroachment
each of these areas right war is the
suppression of the free market uh
to the uh to the benefit of the public
or the public organization right the
government is suppressing the free
market so if the government keeps
suppressing the free market everywhere
what you do is you [ __ ] production
right yeah that's why we have tariffs on
uh on Chinese Imports right that the
driver prices up or down drives them up
right
you have you have a war on uh on uh or a
labor War right if everybody unionizes
and if everybody's afraid to go to work
and if everybody's a if everybody thinks
that their life is threatened to stand
next to another human being right and
and uh if we're afraid to trade with
each other and if we're afraid to talk
with each other
right if you if you have Capital
controls wage controls price controls
export controls manufacturing controls
right as those things happen they have a
chilling effect on the economy so what
we have right now is on one hand you
have a supply side problem
right you're we're not producing as much
the the degree of not producing by the
way is misunderstood uh the currency
weakened by 20 in the year after covid
if the economy measured in nominal terms
is flat that meant that the overall
economic output decreased by 20 the
overall economic output decreased by 20
or more in the last two years people
wonder if we're in recession we've been
in recession since March of 2020 but
what we have is a situation where all
the metrics are distorted right for
example how many people would measure
the Economy based upon GDP output
measured in dollars most is that the
correct measure no
right because the dollar is not worth
what it was 24 months ago right what if
you look at it you have to measure it in
real terms or measure it in the uh the
actual output of goods and services for
example
how many airline miles got flown right
if Emirates Airlines grounded half their
Fleet and decommissioned it after covid
now they're up and running the part they
did in decommission how is it possible
that the error sector could possibly
recover to the point where it was in
January of 2020.
if you've actually mothballed or
decommissioned half the airplanes
right I could double the price of a
ticket
if I double the price of a ticket I can
tell you that the size of the airline
industry is the same as it was in
January 2020 right
I get a card there's no recession but
the fact is everything costs twice as
much there's half as much of it
right I changed the way that I measured
it what is up my friend Tom bilyu here
and I have a big question to ask you how
would you rate your level of personal
discipline on a scale of one to ten if
your answer is anything less than a ten
I've got something cool for you and let
me tell you right now discipline by its
very nature means compelling yourself to
do difficult things that are stressful
boring which is what kills most people
or possibly scary or even painful now
here is the thing achieving huge goals
and stretching to reach your potential
requires you to do those challenging
stressful things and to stick with them
even when it gets boring and it will get
boring building your levels of personal
discipline is not easy but let me tell
you it pays off in fact I will tell you
you're never going to achieve anything
meaningful unless you develop discipline
right I've just released a class from
Impact Theory university called how to
build Ironclad discipline that teaches
you the process of building yourself up
in this area so that you can push
yourself to do the hard things that
greatness is going to require of you
right click the link on the screen
register for this class right now and
let's get to work I will see see you
inside this Workshop from Impact Theory
University until then my friends be
legendary peace out
GDP measured in nominal terms is a gross
Distortion and then CPI is a gross
Distortion if I if I have a hundred
things that you want and I pick 10 of
them and I measure the increase in the
price of 10 and I ignore the price and
the other 90 I can show you a CPI is
eight percent right eight point three
percent is the number this morning but
the actual inflation rate is higher but
it's it's inflation on something
like it's inflation something you want
but I'm not going to choose to measure
for example you know the 30-year bond is
is traded up to
350 basis points and it was 180 right
mortgages have doubled so mortgages have
doubled housing prices are up 35 percent
and that means in you know in theory the
cost for you to actually buy a home is
going to be 50 60 percent higher year
over year but I don't choose to measure
it
because we don't actually calculate CPI
that way I take a survey and I ask you
whether or not you think you could raise
your rent by something and if the owner
equivalent rent is up three percent and
I say that the inflation is three or
five so we have a set of metrics that
are that are just
manufactured metrics
and then we focus on them and then we
talk about them
But ultimately what you have is an
economy that's distorted there are some
things we produce more of
and there's and there are some things we
produce less of
and we have flexibility with what we
choose to measure
the uh the monetary intervention is the
government basically
if I put everybody under home arrest for
a year
it's going to be a problem for the
economy right I mean if I shut down they
did it in New Zealand they did it in
Australia they did it in Canada they
kind of did it in certain states in the
U.S if I do that that cripples the
economy so
while I'm doing that
then if I go ahead and I pump a lot of
money in the system
right then maybe I I create a wealth
effect and I can say well you know we're
recovering but ultimately
you never recover from the fact that
nobody went to school for a year and no
nobody you know went to work for a year
right you can't You've Lost That forever
you're just not measuring it you you can
you can change your metrics
right there's this there's a saying you
write the
the winners write the history books
so the Romans remember the carthaginians
have been as being like evil
right if if we win the war then we write
out all of the good that our adversary
did and we write up all the good that we
did and we suppress all the bad that we
did because we won the war we write the
history boxing
and so I think right now what you're
what you see in the economy is lots of
distortion of numbers lots of distortion
of metrics
right the fact that we have a debate
over whether we are in a recession or
not is is kind of laughable right
because we've been in a recession for 24
months if you were measuring the
production of goods and services all you
got to do is look at the variety of
things that were available to you in
January of 2020 versus the variety of
things available to you today and the
delays
if you've got one-tenth the selection
and it takes three times as long to get
it and it costs 20 percent more
how are you not in a recession yeah this
is what really is
um I find unnerving as I go down the
road of trying to figure all this out
trying to figure out where the
opportunities are is I'm looking at what
feels like and again I want to to give
that it will be it's being done with
good intention but you have a changing
definition of what a recession is to
match a thing that seems designed very
explicitly to keep people calm and uh it
seems the same thing with the FED right
the reason that they said we're not even
thinking about thinking about taking up
breaks they just want to keep everybody
calm so we're told things not
necessarily because they will be the
most effective long term or at least
that the outcome is that they don't end
up being effective but they're looking
at the short-term impact of I want to
make sure that people stay calm and I'll
admit if they were like oh my God the
world is burning and everything is bad
like then people are going to act like
it's 10 times worse and so that's why I
feel like if I'm if I start putting the
pieces together there's really three
pieces that I think give us the
situation that we're in as you have said
people just don't understand money and
so you said half of the problems that we
face as a civilization have to do with
the fact that we do not understand money
that was pretty interesting and then
you've got this top-down control so
centralized decision making which is
destined to fail historically just
looking at it does not work and then the
third thing is human emotion and so you
put these things together in a cocktail
and you get the moment that we're living
through so you've got people freaking
out you've got other people know that
you're going to freak out so trying to
control everything trying to say hey I
can make better decisions than you I'm
going to tell you sort of white little
lies to get you where I need you I mean
I I think back to the mask statement
right in the beginning it's like they
don't work actually you need to wear
them all the time uh they didn't work
when they wanted to save them for
hospital employees and suddenly they
started working when there was enough
for all of us to wear them and so it's
like I get it again good intentions but
without sort of a pathological fear of
doing this top-down control
you get this issue and then compound the
fact even if people wanted to think
through the process for themselves they
don't understand it and so I feel like
I'm just barely beginning to understand
how money actually works and I think now
we should get into
[Music]
um Bitcoin as a thing that exemplifies
some very powerful principles that will
begin to help people understand so the
the first thing that I'm gonna say and I
say this knowing that you will correct
me if I'm incorrect but here is my
understanding of what makes Bitcoin so
interesting that money is basically your
financial energy put into a form that
can be carried across space and time
some forms allow you to carry across
space and time easily some not so much
but getting people just understand that
I go do a thing that is my physical
energy my physical labor my time my
actual like turning uh oxygen and food
into ATP and I'm actually able to put
that into a medium right it could be
gold it could be uh fiat currency or it
could be Bitcoin but just getting people
to understand holy [ __ ] like there's
actually a way for me to do a thing
receive a thing that allows me to carry
that energy across time and if if you'll
bear with me it's like fat so I can eat
a bunch of food and I can store it on my
body as fat but if I'm really smart I
will eat a bunch sort of my body's fat
and it will give a bunch away because
I'm too full I can't keep eating I will
give a bunch away and essentially store
fat on their bodies so the next time if
I don't get food they do get food so the
idea of being able to transfer useful
things across time and space
in unique ways is really important so
Bitcoin comes along as
certainly the newest entrant and maybe
the best entrant of things that allow
you to Sock away your time and energy
into that and carry it across time and
space
have I understood that correctly I think
that's well said I mean
fundamentally money is an energy system
to transfer energy over time and space
right that's the right way to think of
it uh fat is an organic battery
it's it's it's your way to transfer
organic energy if you put 20 or 30
pounds of fat on your body you can live
for 90 days
right and if you don't you don't eat you
die so
fat was developed over the course of
millions and you know 70 million a
million years and it's a pretty
wonderful invention when you think about
it it's it's it's the reason that we
didn't go extinct or the reason you're
not dead
um
the the challenge with money is uh the
Fiat currencies that are used
communities money they're all broken
they all have a big hole in them and uh
and the big hole is inflation period end
of story or is there something else
the whole is we could call it inflation
but inflation such a Charged term
because most people think inflation is
CPI uh the defect in Fiat currencies is
monetary inflation it's the expansion
and the money supply
not just the increase in consumer goods
because the CPI is a distorted it's a
submetric
right if if you look at the US dollar
the dollar is the supply of dollars has
been increasing seven percent a year for
90 years it's been increasing 15 to 20
percent a year for the past two years
right right so the the big I think
that's true so it seems worth walk us
through
how where do you get that number
well if you go back to 1930
my house in Miami Beach cost a hundred
thousand dollars and if you roll the
clock forward to
two thousand and 2012 it cost 14 million
dollars and today it would cost you 40
million dollars so
so it's 400 times more expensive
than it was
you know 90 92 years ago now if you back
solve that you'll find that that works
out to about a six percent or seven
percent annualized inflation rate
right and if you go and you look at any
kind of scarce desirable asset something
that's something that is uh you can't
make any more of you'll find typically
the increase in cost about seven percent
a year normally you can actually see uh
if you look at the market basket of
things people like want like really good
health care really good education uh you
know a beach house in the Hamptons uh
artwork picassos right that kind of
stuff
that doesn't go up in price one or two
percent a year that goes up in price
normally about seven percent a year and
uh if you look at the at the price of a
a basket of stocks
like the s p
the s p has gone up about 10 percent a
year Well the reason it's gone up ten
percent a year is because the money
supply expanded is seven percent a year
and then the underlying companies
probably grew two or three percent you
know effectively so
uh you can figure this out for yourself
if you just got start to go and take
samples of what stuff costs in 1971 what
it costs in 1930 what a cost in in the
year 1950 and what you'll see is that
for anything that's really desirable
like uh scarce energy that has energy
content it doesn't go up in price two
percent now the stuff that that uh
doesn't go up in price is expensive is
stuff that's highly manufactured with
low in low energy content High
information content so for example a
streaming video on YouTube
or something that could be Stamped Out
in quantity 100 million at a time
[Music]
boxed food right stop highly
manufactured stuff that has machines
generating it or even better
you know something that's got cheaper
right it cost a lot of money to listen
to Beethoven's Fifth Symphony if the
orchestra plays it in 1850
but it costs not that much to listen to
Beethoven's Fifth Symphony if you're
listening on your iPhone through your
airpods right so if I can strip the
material the matter and the energy out
of the product I can provide that to you
very cheaply so the information content
products got cheap but
Stakes right more expensive although
there's a slight benefit if you can
manufacture a hundred thousand cows and
I can use machines right then there
that's a deflationary thing one thing
you can't easily manufacture more of is
three acres of beachfront property in
the Hamptons
that's very difficult right and if you
look at the cost of a Palm Beach House
they're a hundred million dollars right
now
okay so a hundred million dollars for a
house on two acres or three acres in
Palm Beach now ask yourself the question
why isn't that getting cheaper that
thing's going up a lot
so
the problem coming back to money is is
um Fiat currencies aren't anchored in
energy uh when we were on the gold
standard theoretically during the gold
age 1870 to 1914 if a if a dollar uh was
convertible at a 20th ounce of gold
right and you really pegged it hard to
gold
then you're anchoring the currency
into a hard asset now gold isn't um
isn't um fixed in Supply the gold Supply
increases at two percent a year two to
three percent a year so if you're on the
gold standard that means that the supply
of money would be increasing at two
percent a year or an otherwise doubling
every 35 years
so so money under the gold standard
perfectly executed bleeds energy every
35 years it's got a half-life of 35
years but that creates stable prices Tom
because the economy grows at two to
three percent a year
so if the economy grows three percent a
year if the money loses three percent of
its value a year then everything kind of
stays stable right the demand increases
the supply increases right that's a good
situation in that case you can save your
money and 30 years from now your money
will be worth as much as it is today
now
if um if it turns out that you're saving
your money and the supply of money is
increasing at seven percent a year then
the money is cut in half every 10 years
right and so that means in 30 years uh
the amount of money you have will be cut
in half once twice three times
so you would you would have uh 12 and a
half percent of your wealth in 30 years
saving money under the Fiat standard uh
under uh under a seven percent regime
now seven percent was the about the rate
that the US was inflating the dollar
supply but in the developing World in
weaker countries uh you would see them
inflate the the money supply about
double that 14 so the half-life of their
money is five years the half-life of the
dollar is ten years most people don't
even notice 10 years is half-life except
that anecdotally
if you asked anybody in the past 20
years are you going to save your life
savings in a checking account that earns
one or two percent interest in dollars
they would tell you no I I know
intuitively the cost of a college
education is going to go up the cost of
a house is going to go up I can't just
save in dollars that generate zero
percent interest
so the so under the Fiat standard the
money supply is expanding from seven to
fourteen percent a year depending on
where you are until we got to covid and
in covid everything doubled and so you
started seeing a much more rapid
collapse in the value of fiat currency
the US dollar expanded the money supply
uh 15 to 20 percent a year and so in the
U.S we expanded the money supply maybe
40 percent and so U.S single family
homes went up in price 40 percent oh God
I think about the correlation the price
of a house is 40 higher than it was 24
months ago the amount of money in
dollars is 40 higher than 24 months ago
the number of houses are about the same
the number of people want them about the
same
makes sense
now if you go to other countries if you
look at uh currencies outside the US in
the past 12 months right the Chinese
currency is weakened seven percent
Australians down eight the euro is down
15 percent the wands down 15 the pounds
down 17 South African Rands down 18
polish a lot is down 18 and Japanese
Yen's down 24
in dollar terms what's happening
they're putting more money
right it's even a bigger issue for them
the Japanese
have pegged the 10-year interest rate at
25 basis points
and um the U.S 10-year interest rate
right is is uh more than 10x that
the Japanese Central Bank is printing
infinite yen in order to keep in order
to buy every Bond and keep the price of
bonds much much higher than they would
otherwise be so they're holding up the
price of bonds by pumping yen in the
economy and the reason as they do that
the Yen crashes against the dollar
but of course it's even crashing faster
against scarce desirable assets if you
price a barrel of oil in dollars it just
got 24 more expensive in Japan
because they want to hold up prop up
asset prices they want to Pro they have
institutions that are holding Bond
portfolios of Yen and the they have
institutions Holding stock portfolios
and if they stop printing in to hold up
the asset prices those those uh
portfolios of assets will crash
and if they crash than the inflationary
impact well if those portfolios of
assets crash then the banks or the
investors that hold them will be
technically insolvent and go bankrupt
if I'm a bank and I have 10 billion
dollars of assets and seven or eight
billion dollars in loans outstanding
then I look solvent but if those assets
are in sovereign debt and the sovereign
debt crashes by two or three billion I'm
technically insolvent it creates a
banking crisis or a financial crisis so
it gets worse than this right Tom that's
the good news those are strong countries
great
the bad news is like Sri Lanka Argentina
turkey now are those the same thing just
played out on a longer timeline
those are examples where the
government's printing even more money so
for example the cost and Turkish lira up
120 over 12 months
so the Turkish lira is crashing more
than 50 percent against the dollar the
Argentine peso is crashing in Sri Lanka
Sri Lanka crashed the entire economy and
the government how'd they do it well
first they uh they made it illegal to
use fertilizer to grow crops and they
kind of crushed the the farming business
then they um they printed too much money
under a modern monetary theory that they
could just print money so they crash
their currency then they couldn't afford
to buy fuel they couldn't buy energy or
gasoline so then they actually
regulated the use of gasoline by saying
that private citizens couldn't actually
buy gasoline
then the people rioted and they toppled
the government because if you're going
to starve me to death and freeze me to
death and then lock me
and and deprive me of my car right
you you're pretty much like ripped me
back to the Stone Age right you're gonna
freeze to death walk everywhere and
there's no food to eat
why because it got excessive government
intervention right the these ESG
policies that are totally irrational
so you can have irrational policies
let's go let's go into ESG because this
is actually super controversial yeah but
very interesting so for somebody that
doesn't know what an ESG policy is what
is ESG
it's when I decide that um the say
nuclear power is bad but solar power is
good but natural gas is bad
but
wind power is good when when you start
to decide and dictate how people will
generate energy
right and and or or when I decide you
can't use fertilizer in order to grow
food because also a green decision
yeah because fertilizers have phosphates
in them and they decide the phosphates
are bad for the water and so they didn't
want people to not use them
so as the as the government starts to
implement policies about how you will or
will not produce food how you will or
will not produce energy or heat
what happens is ultimately they drive up
the price of food
right if you don't use fertilizer then
your crop yields get cut in half
if your crop Gales get cut in half food
price doubles
if you're not allowed to use gasoline
and you have to use a you know electric
powered car
the cost of the car doubles
crop prices your food price doubles
again now it's 4X as much
if I if I double the money supply by
printing a bunch of money to give to
someone to pursue some aim that I agree
with
now the price doubles again so I've
increased the price of everything by a
factor of eight how dangerous do you
think this moment is for the U.S
it's pretty dangerous
we're the richest company a country in
the world though so the US the U.S
um has the world's Reserve currency so
if you think about the way the economy
worked 24 months ago
um
the uh the the countries like China or
sorry countries like Russia and the like
export a a trillion dollars worth of raw
materials like uh energy and metals and
the like and in countries like China
export a trillion dollars worth of
products and services
and we pay for them by sending back two
trillion dollars worth of dollars
so what we do is we export 2 trillion
worth of inflation and they export 2
trillion worth of products and services
and energy
because we run the banking system of the
world right the banking Network plus the
US Dollars the world Reserve currency
really is I need to ask because I don't
understand so when we send them the two
trillion dollars we are creating that
money in order to make those purchases
yeah so we're not just taking money that
we've already saved
let's say there's 50 trillion dollars
circulating around the world and we just
print two trillion more
now there's 52 trillion we've inflated
uh We've inflated the currency Supply by
four percent we've devalued everything
by four percent and we've traded two
trillion dollars worth of US dollars for
two trillion dollars worth of coal or
oil
or products or iPhones or labor or
something
right and and that's the way it works
right and and the reason it works out
what what is the real export the US
provides Financial Economic Security
like for example if you live in Mexico
or you live in Argentina and you've got
a million dollars are you going to save
it in the peso you're going to save it
in
the dollar right
how are you going to save your money
if you um if you export uh a hundred
billion dollars of oil from the Middle
East and we give you back a hundred
billion dollars in dollars what are you
going to do with 100 billion dollars
you buy t-bills with it so you buy
sovereign debt
that yields two percent interest
and so now if you hold a hundred billion
dollars worth of sovereign debt now if I
double the money supply it's worth half
that much right so so in essence
if I'm increasing the the supply of
dollars by seven percent a year
and if you're holding a hundred billion
dollars of my debt then you're paying
seven billion dollars a year to hold the
debt so I'm charging you seven billion
dollars
for the privilege of giving you a bank
to put your 100 billion dollars in it's
a negative interest rate right
negative real yield
if you if you do it 10 years in a row I
take 70 billion dollars from you whoa
but the question is what else are you
going to do you're going to put in gold
if you have a billion dollars what are
you going to put it in well the Russians
put it in gold we just seized the gold
you're gonna buy yacht with it
how much we might take the yacht you're
going to buy land with it
whose land land in another country
I already own all the land in my own
country right so so
um
the U.S primary export is inflation
that's what we do and it's a good it's a
good situation right we're running the
banking system and we're printing more
money that our primary export is
monetary call it monetary technology in
the form of the US dollar it's the most
desired instrument and what we trade for
it is uh is we get energy
or we get products or services in return
for exporting the doll
right right now we're on this cusp
because
we're exporting too many dollars
and uh and that causes the collapse of
other countries currencies and when
their currencies collapse their
governments collapse so the U.S the U.S
won't collapse the the first countries
to collapse will be
Zimbabwe
Lebanon
Syria right Iraq Iran right not any
country not Iran but but Afghanistan
Iraq
South America all throughout
you know
they they're they're all being
destabilized Sri Lanka
so what you have is you have this
Rippling wave of destabilizations in the
developing world you have a weakening
in the developed world
as their currencies weaken they're going
to suffer from inflation if we have
inflation that's eight percent in the US
dollar
and if the Japanese
Yen weakens 24 against the US dollar in
one year and if the Japanese have to buy
oil priced in dollars what's their
inflation rate going to be
now right now
the government the official figures
they'll tell you it's low
but and uh you can do that as long as
you as long as you define the metric but
there's only so long you can do it at
the point where nobody can actually
afford to buy gasoline or buy energy and
their cars don't run
and they can't Heat their home
right then you can you can no longer uh
persuade the public that there is no
inflation problem then you have a
problem and now the question is how are
you going to deal with it
and of course there's how does the
government deal with it uh first they'll
persuade you that they won't count this
and then they won't include have you
ever heard the phrase a core inflation
doesn't include the highly volatile food
and energy
I haven't known but there's there's
actually an inflation measure core
inflation that does not include food and
energy so first I'll try to persuade you
not to actually pay attention to the
cost of food and energy
but uh at some point I'll accept it but
I will I will pick a different measure
of food and energy I'm not going to
measure the cost of a stake I'm going to
measure the cost of a soybean Burger
right I'm I'm going to measure the cost
of of manufactured you know agricultural
grain products that are cheaper I'm not
going to measure the cost of of some
organic vegetable that's more expensive
so you'll see a distortion of that and
then at some point
you see a normalization of behavior like
there's the old world economic Forum
mean you know you'll own nothing and
you'll be happy
it's like well I've decided that eating
meat is bad for me
like so first you can't afford it now
you now it's bad for you to eat it so
I'm not really upset that I can't afford
it because it was bad anyway or
um you know if you're a patriot you're
not going to actually cool your home
below 80 degrees in the summer and
you're not going to heat your house yeah
you remember during the energy crisis
you don't remember this in the 70s right
it was your patriotic duty to turn the
thermostat down in the winter and turn
the thermostat up in the summer so
this happens in Wars too right and a war
becomes your patriotic duty to do
without
right in a war in a war I I get it you
know obviously assuming that it's a
Justified War but I would like to go
back to this idea of
um the government basically not getting
you to look at the um well one I want to
tie this back to we started this because
we were talking about the the green
mandates having a knock-on effect that
people aren't paying attention to so you
put these Draconian rules in for energy
production the one that's always
confused me again is like a total
Outsider but uh not doing nuclear energy
just seems crazy so that we can get
energy self-sufficient that seems to tie
into this idea of a globalized economy
which I think we're seeing the risks of
that play out now certainly with Russia
and the Ukraine I think that it could
potentially play out uh just as
disruptively with China but so you've
got this belief in globalization so now
I uh I believe I can get my energy from
Russia or from wherever and so we're
going to be fine we don't need to do
these you know ultra high risk nuclear
things but you start so you start
putting in these is ESG what what's the
initials
environmental social and governance okay
so you've got the ESG rules uh forcing
people to do things a certain way which
don't necessarily have all the economic
consequences that we would like very
negative
okay now as inflation starts to happen
we've got the government saying well
don't look at food and electricity which
seemed like the two things you're going
to interface with constantly uh
how do we like what is the path out of
that like that seems really high risk in
terms of
negative impact on uh uh the the
individual person really beginning to to
struggle they're gonna start asking why
am I being asked to give up all this and
then if you don't have a really good
justification then they're gonna Rebel
which gives the government an incentive
to come up with a really good
justification which makes me nervous
well the problem is too much government
and uh and and the most dysfunctional
societies are the ones that have have
the strongest most pervasive governments
because they're the ones that can
actually take the economic decisions to
[ __ ] the economy completely not only
no checks and balances so the I mean the
impact and the damage of the lockdowns
was much worse in Canada and Australia
and New Zealand because they had strong
centralized governments and it was
weaker in the U.S because we had state
governments if it wasn't for Florida and
Texas we might not have ever reopened
our economy right but the fact that uh
that Florida and Texas reopened and and
uh
people functioned
became the uh the incentive and or the
air cover for New York and California to
reopen so
if you're an individual
the solution is you run to the place
with the least government figure out
where that is and you run away from the
place with the most government because
the most authoritarian government is
probably going to choke you to death uh
if you're if you're politically engaged
the answer is is vote for and Lobby your
politicians for Less government
right as long as politicians think
government is the solution
you'll get more of it when they start
thinking that government is the problem
you'll get less of it you know all of
the you know the problem we have here is
we don't have one more we have 12 Wars
we have the war on terror we have the
war of misinformation we have the war on
carbon we have the war on culture we
have the war in Ukraine we have the war
fill in the blank
on radical Islam we have the war for
democracy there's so many different Wars
and
you know a single terrorist event
look at what happened in 9 11 two things
one we decided we're going to go to Iraq
and we fought a war in Iraq a country
had nothing to do with 9 11.
and it cost us what a trillion dollars
and how many lives and then we also uh
implemented TSA restrictions and
security restrictions and so even to
this day we are now 22 years later
you can't get on an airplane you know
without going through a horrific amount
of security issues and ostensibly all
that Security is to keep you safe in the
airplane but
if I wanted to blow up a bomb I could
just walk into the security line of the
airport and blow up the bomb without
going through that and if I if I really
was a terrorist I could just walk into a
church or walk into any restaurant or
any other public gathering space where
they're just as many people
and so we didn't really get more
security what we got is is uh more
Authority more of a police state and uh
so you each of these incidences
a terrifying thing
right uh becomes an excuse for the
government to to encroach more on
freedom
I don't know that it's easy to actually
fix that problem in any given country
right not so easy but on a minor level
right you can campaign for freedom in
your municipality or you're a county or
your state Maybe
you can you can um
it does have an impact you can relocate
yourself to a place that's more free
from a place that's less free
right I I personally wouldn't live in a
place where
an official could by edict confine me to
my home as long as they want for any
reason they want without my approval
without a court order you know without a
law
right you know if you look at American
history most of the of the
Constitutional fights where presidents
wanted to declare war without an act of
Congress and Congress is supposed to
actually vote on it
so if you live in a society where people
can declare war on anything and
everything without even a debate in the
legislature late the legislative branch
what good is it to elect people that are
actually against that given policy if
they don't even get a say in it right
why do you think touchdown control
doesn't work
why does top down control not work
because it's the decision of one
individual versus the wisdom of the
marketplace
the you know the marketplace is trying
to find it's like
the market New York City as a as a set
of 10 million people figures out how to
run itself every day
and if one person got up in the morning
and decided they were going to issue
orders to all 10 million people and tell
every one of them when to go to the
bathroom
you know like it probably wouldn't work
so well right it's just it's impossible
for uh a centralized entity to actually
make decisions that are as rational as
uh decentralized Marketplace
humans though seem to have a historical
perspective continually gravitate back
towards the centralized top-down control
do you think that there's something just
inherent to the psyche where is it
arrogance that we believe we can do it
is it that we really want to help and we
feel like we know the answer and so we
go into politics and we start we only
have that one lever and so let me just
keep adding things on the books like
what on Earth is it that allows us to
look at say the 20th century and go
ah that was just done poorly let me show
you how it's really done
you know the tendency's been here since
time immemorial goes back thousands and
thousands of years right the battle
in ancient Greece you know over is a
monarchy better than a democracy better
than an aristocracy right it's it's a
question that's been dealt with by
ancient philosophers
you know the Romans had a republic they
thought was better than Philip of
macedon's kingdom
and you know they had debates 2500 years
ago and so I don't think it's new I
think there's been a continual fight
yin and yang uh between this the only
thing that's different today is that
technology
um allows for the centralization of more
Authority if a billion people are all
getting their information on one website
then whoever controls that website
can control what information flows to
those billion people with a Flip Flip of
a switch
and when a billion people had to talk to
each other no one person could decide
what was said with a flip of a switch so
so I think technology is inherently
um centralizing to a certain degree and
that is exacerbated the issue have you
read Matt Ridley's book The Evolution of
everything
no I haven't
it's really interesting I don't know if
you're familiar with him as an author uh
but he wrote a book called the rational
Optimist another really great book He's
written a few I think he also was the
one that wrote the Red Queen which is
basically evolution is about running as
fast as you can to effectively stay in
place and
in the book he he goes into why the
basically you have two ways to look at
the world you have a a creationist
point of view where it's like a top-down
God created the or the universe you know
let there be light and everything went
into motion and so hey top down that
works and then you've got an
evolutionary lens where everything is
bottom up and he goes and makes a very
credible case why a lot of the things
that we think of as being
um top down were really bottom up and
I've heard you talk a lot about in
drawing parallels to bitcoin
you've talked a lot about like hey if
you look at any City that's you know a
couple hundred years old the buildings
are all six stories tall and they're six
stories tall because that's what masonry
and a wood frame is going to get you and
people without electricity are not going
to be able to go up more than six
flights of stairs and so you hypothesize
that hey if you went and looked at Rome
my guess is that in Rome they're
probably going to be six feet tall
there's just a materials problem and so
you end up getting
skyscrapers the way that we think of
them now as the steel comes along and
now steel can build bigger buildings
you've got electricity so you can do an
elevator and so
steel wasn't this moment of or
skyscrapers not a moment of pure genius
by an architect it's the ground up of
like oh look steel becomes the thing
electricity becomes a thing Architects
are learning something and so this one
thing is probably more a reflection of
its time than it is this Staggering
Genius where somebody lurches us forward
and so he looks at all these classic
cases where we thought it was one person
that really did this thing like there's
something like seven people uh in
different countries that came up with a
light bulb that almost exactly the same
time and so in the west we of course
hear about Thomas Edison but in reality
he's saying no no this was just an idea
whose time had come
and it really gave me a very visceral
understanding of the difference between
somebody that just the subroutine
running in the back of their mind is
creationist in origin that I view
everything through the lens of uh a
particular genius Sparks and then
something moves forward versus all the
things you mistake for that including
the universe itself is actually a
bottom-up phenomenon and once you flip
your thinking over to everything evolves
everything comes from the bottom up you
begin to come up with
solutions that are more effective right
and so going back to the old adage I
forget who it was that came Yeltsin
maybe that came from Russia and was
doing a tour of a grocery store and he
just could not believe like the shelves
are all full and he's like but who
decides the price of bread and they're
like what do you mean like it's just set
locally at the local store
and that is top down thinking where it's
so embedded into your psyche you can't
even conceive of another way to do it
versus us where you know we wouldn't
think to have somebody tell us it's like
well you just set the price based on
what somebody can control there but I
feel as somebody who's just old enough
to
you know I was a kid when Reagan was
President and now I can feel everything
shifting in the opposite direction which
brings me to the question I really want
to ask you point blank
what what do you think it uh so I'll
I'll lead you down a Garden Path I think
the problem is that the reality of the
market is it leaves some people behind
some businesses collapse and that's
painful some people will lose their
Generations worth of wealth in a bad
decision
and if you're not willing to let some
people uh get eaten by the lion
you got to go top down the problem is
you then crush them you you cuddle them
to death
what's your thought on that
I I think that if you're an individual
looking for the rational path forward
what you want to do is embrace
Technologies or ideologies
that um
that reinforce individual sovereignty
and freedom
and uh and they're rational so so hence
Bitcoin right like if you're gonna if
you have
um a bunch of money and you have a
choice are you gonna buy a million
dollars of gold and put it in a bank of
a centralized institution that will
seize it are you going to buy a million
dollars of land in the middle of Beijing
where the government of China could just
take it from you are you going to buy a
million dollars worth of a stock in a
Chinese company how about American
company how about an Argentinian company
or are you going to buy a million
dollars worth of a crypto asset that's
in cyberspace beyond the reach
of a government or a corporation
and so clearly that the answer is if you
take all of your money and all of your
power and you put it in the middle of
Beijing
right they own you and what if you're if
your life is not consistent with the
policies of that government then you
lose everything when you put if you took
all your money and you you invested it
in New York City the mayor of New York
could just take it and if if New York if
you took all your money and you put it
in New Zealand and New Zealand locked
down the economy for a year
right then they own you
so so if you're looking for sovereignty
and freedom or a rational path forward
where you get a choice then you need to
actually put your property beyond the
reach of a government that might be
irrational
or uh that might be capricious and you
need to put it beyond the reach of a
corporation that might be influenced by
said government
do you think though even with Bitcoin so
as I as I run this experiment in my own
mind
I always come down to but the government
could still say if you own Bitcoin
you're going to pay this tax and at that
point I just have to leave the [ __ ]
country I mean that seems like the only
solution like this ultimately does come
down to any government could act however
they want they can put whatever mandate
on you they want and I think part of
where people's the average person's
willingness to adopt Bitcoin comes down
to that thought of like Jesus man if the
government is coming after me and they
could
foreign
do I really want to flee like so I think
well like let's come back to that so
let's say that let's make this easier
what if you were in Zimbabwe right now
and you had a million dollars
well it's easy for me as an American to
be like yeah of course I'd flee Zimbabwe
well let me turn around why don't why
don't you just go it doesn't matter
you're not going to want to flee why
don't you just go ahead and invest it in
the Town Square in the middle of a
village in Zimbabwe
I mean the point because that definitely
does feel riskier I'm now I'm you know
gluing something down so I'll give you
even in my own life in fact I'll be like
why don't we just Why Don't We sync you
up to your knees in concrete in the Town
Square in Zimbabwe I mean while we're on
that suburb the point really is
is
you have a physical presence in this
world and so ultimately maybe they won't
let you out through the airport right
what if I just tell you I'm going to
murder you next Monday will you leave
will you stay right maybe you can't
leave right but the point is is
um there are a whole set of decisions
you can make in life where you don't
have the choice
if you make the decision to invest your
family's life savings in a building in a
country in Africa run by a dictator
you have given up the option
to live in Europe you've given up the
option to leave you've got the option to
do anything so the question really is
do you want the option or do you want to
give up the option because one is the
choice of death the other is a choice of
Life there is no guarantee if you leave
Africa and come to the US it seems like
it's pretty obvious to me like the truth
is everybody in the world would leave a
weak country and come to a strong
country everybody that's why we have a
border issue right everybody wants to be
in America so that's not a hard sell if
you come back to the issue of well I'm
an entitled American will I ever want to
leave America maybe you won't but the
point there is
if you had a choice between being rich
and living in Texas or being destitute
and living in California
would you cling to California and be
destitute or would you be rich and live
in Texas because that doesn't seem so
controversial either
it seems pretty obvious that if you can
go to one state where you can live
happily of what if I told you you're
going to be locked in your bedroom for
the next decade if you live in one state
and you're going to starve to death or
you can move to another state and you
can live a normal life
you're like well
isn't it obvious that you would like the
option to live in the place that will
allow you to breed the air freely and
conduct your business
right when when one place says you can't
sit at dinner with your family and the
other place says you can have dinner
with your family you're going to want to
leave from point A to point B so you
won't be able to do it
if your property is fixed
right I mean a lot of people a lot of
Jews died in Nazi Germany in the 30s
because their property was fixed in
Germany they didn't want to leave and
they got trapped there if their property
had been in a crypto asset like Bitcoin
and they could have left
they'd be alive
and and uh it's not that hard to make
that point and you can you can you can
illustrate that with every expatriate
and every immigrant uh fleeing you know
every war zone just go to
ask the Cubans right that fled Cuba and
came to Florida you know after Castro
came to power
about what they lost and how they feel
about it
so my point really is you can't fix the
political problem in a country like
Zimbabwe has been getting squeezed
progressively for the past 50 years
and Cuba is the same way you might not
be able to change an entire regime but
you do have a choice as to whether or
not you will uh you will commit yourself
or allow yourself to be owned by the
regime and when you actually choose to
put money like for example when you
choose to save your money in the peso
you accept the inflation of the peso
would you take all your money right now
sell the dollars and go buy Zimbabwe
currency would you do that
probably not right it'd be seemed pretty
foolish would you take everything you
own would you take your family and would
you ship them to a hostile Nation would
you move everybody to North Korea no
probably not
but I mean it's it's such a silly
observation it it kind of illustrates
the point right
you have a choice
as to where you put yourself physically
and maybe you've decided physically the
safest places the U.S now you've got to
choose the state now you've got to
choose the city now you've got to choose
the house
you also have a choice of as to where
you put yourself economically your
wealth your balance sheet if you choose
the dollar you're losing seven to twenty
percent a year if you lose the peso
you're losing 50 a year if you choose
the Bolivar you're losing 95 of it a
year you have that choice and third you
have a choice as to where you put your
livelihood
you can choose to work as a YouTube
streamer you know what you depend upon
YouTube If you say something that causes
YouTube to rip your channel off your
livelihood goes to zero so if you choose
to make your livelihood on YouTube you
should pay attention to their policies
and act accordingly if your livelihood
is a hot dog stand in Beijing
actor if your livelihood is in Moscow
downtown
think about the Russian policy you act
accordingly everybody has a choice as to
where they will place their livelihood
what Corporation they'll be dependent
upon what regulator they will be
dependent upon what government they will
be dependent upon
right you have a lot of choices today
just be rational you I can't fix you
know all of these problems in the world
all I can do is say some places
are more permissive than others on the
margin I would guess that your odds of
being able to operate your business in
in the face of a potential pandemic or
higher in Texas than they are in certain
left-leaning states on the margin
Florida probably higher if the if the
governor says I'm never going to shut
down a business you have a right to work
probably you have a higher right there
so you get to choose but that changes
every month and every year right
so public policy is changing economic
policy is changing one thing is clear
though
if you put your money in Gold it'll
probably be seized by the by the
counterparty and if it isn't seized
you're going to lose half of it every 30
years
if you put your money in a currency
you're going to lose half of it every
five to ten years if you put your money
into a weak currency you lose half of it
every five to ten months
if you put your money into an equity
you're going to have to trust the
management team but the management team
is going to dilute you in their in their
pursuit of their plans and strategies
and
if the equity is valued on cash flows
what if I gave you the most profitable
company in Zimbabwe right now
like how much is the equity worth over
the next decade what are the cash flows
worth for a company that generates
Zimbabwe dollars for the next decade if
the dollar crashes in Zimbabwe so you
have to be aware that you are trusting
your balance sheet
to some macroeconomic Force and and
you're putting yourself in that frame of
reference
you're trusting your p l to a different
set of macronomic forces
right you're a Chinese company and you
do work in China and you sell food in
China but you save in the US dollar you
see
you have dollar exposure
and then you have Chinese Chinese
commercial exposure
when you're a Saudi Arabian oil company
you have you're selling uh oil and so
you have that business energy exposure
but then you're saving in dollars you
have that exposure and you can't easily
move the oil fields out of the country
you're in so you have that political
exposure
so ultimately I think the lesson I mean
the big idea of the last two years is
every individual needs to become macro
economically sophisticated and
politically sophisticated if you ran a
yoga studio in New York and you didn't
care about politics and you didn't care
about macroeconomics and you thought you
could ignore that and just study yoga
well you had a rude awakening right
when the mayor decides that it's illegal
to sell yoga Services you know in your
studio then uh then you realize that it
probably matters
what the politicians think
so I would say today everybody needs to
understand money
because they need to understand how to
protect their balance sheet they need to
understand property rights you may not
have property or you don't have property
rights in North Korea and Cuba you can't
own property but if you happen to own a
piece of pro you know do you have
property rights if you own a Coal Field
Maybe not maybe it's illegal to actually
uh mine for coal do you own natural gas
rights
maybe it's illegal to run a pipeline to
your natural gas field maybe you don't
maybe you do right so you need to
understand
do you have property and what is the
exposure of the property politically
to the jurisdiction where you have Nexus
and uh I want to start once you
understand that you make a rational
decision with your life and your
family's future decide where you look at
your family where you will locate your
business where you will locate your
balance sheet and then you probably want
to pick up the paper and read the news
because you can have regime change
right if the if the governor of a
certain state says I disagree 180
degrees with the former Governor and I'm
going to pursue the opposite strategy
how long is that Governor going to be in
power and how much power do they have
and at some point the federal government
May override the state government
right I mean the federal government will
act in certain jurisdictions it doesn't
matter what the governor thinks about
maybe drilling for for gas on on land
maybe it matters like the governor can't
mandate a nuclear power plant if the
federal government says you can't have
one
so you need to be aware of of how all
these things interact as you make a
decision about your life
all right I want to sum up uh what
you've been saying in slightly different
words and tell me if I'm understanding
all of this because every time I
research you every time I talk to you I
realize that I feel like I understand
everything you're saying and then I'll
spend you know eight more hours with you
and I learned that much and then I
learned this much more and it really
does impact how I view uh
Bitcoin for sure money definitely and
then the idea that I think you're trying
to get across between The Words which is
um sovereignty and Mobility so
for the first time in my life
I feel like we're entering a period of
uh political volatility that finally has
me going I don't like the idea of being
grounded in any one area by the things
that I own so I'm in the process now of
selling uh my homes and
I never thought that I would get there
but I happened to be in California where
they take a very aggressive posture uh
and so that clicked over for me now
hearing you talk just now the ability to
get my because right now uh a
significant portion of my net worth is
tied up in real estate and that was me
growing up that's where you wanted your
money so that was just like a sort of
default response
so tied up in real estate but to your
point I can't move those the blocks of
Los Angeles to somewhere with more
favorable
um let's say entrepreneurial leanings so
I'm I have a real grounding here
certainly with that money but I could
put that money in a form so one I want
to remind everybody what we said at the
beginning so money is you transferring
your your time your energy but also your
efficiency your intelligence into a
thing that thing could be money or in
this case I have a lot of for me a lot
of that tied up into physical property
and so okay we monetized real estate we
monetize real estate when we devalue the
currency and so your property becomes
your store of value money right which
getting everybody to understand that the
more knowledgeable somebody is about
money the more they are constantly
looking for where can I put this money
that it will stay it will retain the
purchasing power that it has or that its
purchasing power will go up now I live
40 Years of of my life without ever
asking that question because all I ever
thought about was generate money whether
that was generate a paycheck or whether
that was build equity in the company
that I would ultimately sell but once I
sold a company and all of a sudden had
you know a very substantial amount of
money
all of a sudden I had to understand
investing it was a real shock to my
system so just understanding that you're
putting your money into something that
you hope will retain its value or grow
its value over time but there are
massive complexities so if you're living
in a house and you're thinking that it's
doing that you're actually paying a lot
more money for that privilege than you
think so that's certainly something to
contemplate but anyway by looking at
where else I could put it you start
asking a series of very interesting
questions now one of the more
interesting collisions with you that I
think is between you and Peter Schiff
but not as Peter Schiff relates to Gold
because as you very aptly pointed out he
owns like five percent of his portfolios
in Gold he obviously doesn't have a real
big belief in that and the parsity does
have in Gold he has in gold miners who
are actively shorting gold cool but what
I think he represents in Jesus I'm
speaking for somebody I've never met or
spoken to but what I think he represents
is
um we'll call it something more like Ray
dalio's idea of diversification based on
like what's happening and he's got the
idea of an all-weather portfolio so
it seems like the what you represent to
me is somebody who has tremendous
conviction possibly a lot of risk
tolerance which is something that I want
to better understand about you and
everybody else myself included is more
like ah I'm not sure I don't know so I
have what many would consider an
irresponsible amount of amount of my net
worth in Bitcoin
um but I put in as much as I was willing
to lose
and so but I I put in over about a year
a dollar cost averaged in over a year
and then said cool that's all that I'm
gonna do so even though the price has
gone down I'm not buying more as of
right now I just want to make the point
like I I think the real issue here is
do you have an engineering mentality and
reason from first principles
or
are you are you simply
um complying with the Norms of society
and conventional wisdom that you grew up
with people say things and they repeat
these bromides and
and they give you a simple rule of thumb
like oh the rule of thumb is 60 40 stock
Bond portfolio
or the rule of thumb is stay Diversified
you know or the rule of thumb is you
know
you know uh take uh buy the biggest
house you can and get the biggest
mortgage and you'll be fine
okay
well those are all fine
assuming that you have equilibrium and
you and you don't have uh um a radical
State change for example that that all
those rules of thumb don't they don't
work if you're a Jew in Nazi Germany in
the 30s right buying a house to store
about doesn't work right trusting the
government how about trust the
government keep your nose clean that
doesn't work
right buying stocks stocks that's an
interesting thing in the U.S when the
money supply expands at seven percent a
year
do you think stocks work if you bought
stocks in Zimbabwe or stocks in Cuba or
stocks in North Korea or stocks in
Argentina
or stocks fill in the blank they don't
work what happens when the government
crashes you think stocks work in Sri
Lanka
right now how do stocks work in Russia
in the 90s well the entire currency
collapsed the government collapsed
everybody lost everything
everything so you know diversification
diversification doesn't work when every
single thing you own your portfolio is
correlated for example
you can buy any company you can buy any
company you want in in Germany in 1944.
how should diversification gonna work
right how about just be how about buy
anything you want in the city I'm about
to drop a nuclear bomb on how's that
going to work right
so diversification is a bromide
stocks bonds or a bromide real estate as
monetizable property it's a bromide it
only works if you can trust what how's
it going to work when I actually get
elected mayor and I just seize your
entire property to make into a pet
hospital
for the good of the people
or how about this one
at what property tax rate if property
tax are are 20 basis points a year maybe
property is money what happens when
they're 200 basis points a year
property tax rate in Florida is two
percent a year
okay if if you're not a if you don't
have the homestead exemption and you're
not a citizen then that means you buy 10
million dollars worth of property you
pay 200 000 of tax then they actually
assess it up 15 a year so that means
that in 10 years the property is valued
at 30 million you owe 600 000 in tax in
the next five years you've lost all your
money
okay but I thought Florida was low tax
state huh I thought property was a good
investment well let's make it simpler
what if I make the tax rate five percent
a year
what if I make it 50 a year
like
what if so the point really is all of
these are simple rules of thumb that
allow people to not think for themself
you know I you're on a ship the ship is
sinking there's 10 boats in front of you
one of the boats doesn't have a hole in
it the other three nine boats have holes
in them you're gonna put you got ten
members in your family are you going to
put one kid in each of the nine boats or
or the like or you're going to put
everybody in the boat that doesn't have
the hole in it okay so you come to that
level of conviction which is
intoxicating by the way it's not
conviction it's like it's not conviction
it's just rational thinking for yourself
are you moving your entire family to
Zimbabwe right now because
you know you have conviction
or to let me reverse it why is it that
you don't move your entire family to
Zimbabwe sell all your stuff and buy the
Zimbabwe dollar why is it that you don't
do that
because because of conviction or just
because it seems quite obvious to you
that's not a good idea I won't say that
conviction is the when you don't do
something but when you go all in on
something I would say that does take
conviction now your conviction how many
chairs are you sitting on right now one
are you all in on the chair I am all in
on the chair
like like the point really is you put on
one pair of glasses you've got one pair
of of air pods right now you're looking
at me through one screen
you're using one microphone that's a one
microphone like you trust it
is that conviction
seems kind of scary why don't you
diversify why don't you use 10
microphones the point really is things
in your life do you drive in 10 cars at
the same time or one car at one time do
you drive down one street aren't you
afraid that you're driving down one
Street
do you take a different way
you know I
so my point really is if you're an inch
you get a one airplane are you convicted
you put your entire family in the one
airplane aren't you afraid
ultimately
if you're a rational individual
do you use when you use knives do you
have copper knives wooden knives Steel
knives aluminum knives rubber band
knives Diamond knives because you're
afraid to commit to the right knife it's
a it's a tour
so ultimately
what I'm saying here is an engineer
would look at this and say I use glass
for my windows I don't use aluminum for
my windows I can't see through the
aluminum right I use steel beams
people used to use wooden beams steel
beams work better right
I use copper for wires because
electricity goes through copper better I
don't use aluminum for wires
right am I am I a radical convicted
fanatic investor am I just like a
rational person that uses copper for
Waters because copper works better right
and my point here is
you live in a society and things are
going awry if if you did live in a
country and the food supply was cut off
the electricity got turned off the
currency collapsed and there are riots
in the streets
would you still just kind of hang out
and use the same rules of thumb you've
been using or or would you say I think
I'm going to exit via the airport where
there are no riots if I can get on that
plane and I'm gonna go somewhere else
because not because I'm convicted not
because I'm radical
not because I'm a risk taker
no I'm just going to do it because I'm
an intelligent human being and I notice
that it's getting uncomfortable where I
am right now
and so that's the way I see this it is
it is utterly it's just thinking for
yourself
using reason your choices
you want to hold a billion dollars of
property in Zimbabwe or North Korea you
want to hold a billion dollars of
property in La you want to hold a
billion dollars of gold in a vault you
want to hold a billion dollars worth of
a stock in a Chinese company Alibaba
trading on the Shanghai stock exchange
subject to the Chinese government do you
want to hold a billion dollars worth of
bitcoin what do you want to hold right
why do you why do you feel that way
once you understand money you understand
Bitcoin is
engineered money and it's engineered
without defects
once you look at your life you realize
you've got a balance sheet you got to
actually allocate your your wealth to
portions of the balance sheet and
assumptions you used to be able to make
about bonds they don't work anymore
assumptions used to make about stocks
they don't work anymore assumptions are
made about property
you own a yoga studio I get elected
mayor and I tell you point blank I think
yoga is dangerous people should not be
able to do yoga it's abomination in the
eyes of God for the next decade you
still have the same view of your value
of your yoga studio
are you going to say maybe I can
repurpose it to something that's so
politically correct
or you say maybe I'm just gonna like
sell it and go someplace where I'm less
likely to get canceled right as a
business
this is this is not radical conviction
right the people that you know we we
like to think the people that came to
the United States were crazy but but
they're not crazy the reason they came
to the U.S is because they were the
wrong religion or the wrong ethnic group
in a country that had uh an encroaching
authoritarian government
and at some point the Catholics decided
the Protestants aren't allowed to own
property or live and at some point the
Protestants decided Catholics they can't
own property and if it turns out that
you happen to be a Catholic you're going
to be drawn and quartered
right the skin will be flayed off your
skin
you know my family came from Lucerne
Switzerland in 1730 and they were
palentines they were Swiss Protestants
okay why would you get on a wooden ship
travel for 12 weeks risk five percent
chance of death to get out of your
hometown and answer is because it was a
certain death a certain slow death if I
stuck around
and that is that is the story of America
for hundreds of years Quakers
Protestants Catholics you know
Mennonites name it every sect was
leaving and emigrating because the life
was hopeless where they stayed
and I don't know I call that radical
conviction as much as I would just say
at some point they realized that it was
riskier to stand where they are than it
is to move somewhere else
and if if I look at Bitcoin I I'm not
going to say
well let me say it this way
if you're in a city in the middle of
Africa taken over by a dictator who's
going to murder everybody next Tuesday
I would say convert all your wealth to
bitcoin and leave
okay
if you happen to live in Florida or
Texas and you've got a comfortable life
and family and you expect to be there
for the next 30 Years and you want to
own some land a building
you know a restaurant and some Bitcoin I
say okay Diversified portfolio I guess
that's fine for you
and if you're somewhere else where
you know if you're sitting in a country
where the bank is about to freeze your
assets and devalue them ten to one and
trickle them back to you over the next
20 years I would say on the margin yeah
you probably should convert them all to
bitcoin and get them out of uh a
custodian because because the volatility
of Bitcoin and the risk of Bitcoin is a
lot less than the risk of trusting the
bank and trusting the government and
trusting the local currency
so ultimately everyone's got to decide
just how risky is their macroeconomic
situation
and if you happen to be wealthy living
in Manhattan and you're living off a
trust fund you might not have a problem
you might think it's okay
but you know I ask people to flood Cuba
or North Korea how okay it was right
there's everybody's got to make their
decision
the lucky thing is you have an option
today you have an option 30 years ago 40
years ago you didn't have an option to
move all of your wealth onto a crypto
asset Network
and what Bitcoin represents is hope it's
it's hope for a refugee that's going to
flee a hostile regime a hostile banking
system a hostile environment and and uh
if you're one of the three or four
billion people that has no hope
otherwise then for you it's really uh
egalitarian you know utilitarian
entitlement
for people that are rich in the western
world it's just an investment option for
them until they get sensitized to this
issue and the more you get sensitized
then you really then you start to
realize that it's an it's a moral
imperative
even if not for you maybe you're rich
and safe
it's a moral imperative for you to
support it
for them for the for people that are in
Africa or South America or or fleeing
from a war zone
or fleeing from a hostile regime that's
going to confiscate 20 30 40 percent of
their property every year forever so
even if you don't think you need it
in order to protect your family for the
next 30 Years
seems to me like you might want to
support it just because it's the right
thing for Humanity and that's where I
come down on this situation
yeah no I think that that is uh it's an
incredible breakdown in thinking of you
as an educator
um knowing that you have transitioned
out of the full-time CEO role at
microstrategy to really and I don't know
if you'd categorize it this way but it
certainly feels this way from the
outside to evangelize for Bitcoin for
the reasons that you just laid out
it's amazing man sailor Academy all the
free education that you're doing what is
money and what you did with Breedlove
it's it's really extraordinary there's
another idea that you've introduced me
to around
um Bitcoin I will choose to interpret it
to carry Beyond Bitcoin though I know
your thoughts and feelings uh at least
vaguely about ethereum but uh this idea
of the value of an irreversible
transaction and what that's going to
mean for cyberspace
um I would I I if you know exactly what
I'm talking about we can just go right
into it or I can give you a paraphrase
of uh when I heard you discuss this
would that help you can go and
paraphrase me but I think I know what
you're talking about okay so yeah I
think this is really really interesting
so you said this this part is a quote uh
everything we've built in cyberspace
there's Shadows of reality as much as we
tell ourselves we built something
functional it's a gross monstrosity of
something functional and now this is my
commentary on that was on the above
quote he was explaining why you need
irreversible transactions to replicate
matter giving bits the same properties
that physical things have including
their adherence to the laws of physics
so that things inside of cyberspace
matter
and I that really blew me away because
it put words to an idea that I've been
trying to explain to people why because
I got into
um cryptocurrency not because I I didn't
understand money investing I wasn't even
thinking about that I was just thinking
about entertainment building an
entertainment company this new
technology that was going to let me do
all this cool stuff but then that leads
you to learning and exploring and all
that
but the thing that I kept trying to get
people to understand was it now it's
like six or seven years ago somebody
introduced me to nfts they weren't
called that back then and I was like oh
man like this is digital scarcity this
is going to change my business forever
and then I promptly forgot about it
because it wasn't ready and Flash
Forward to 2020 and I get reintroduced
to it I'm like oh this is that digital
scarcity thing but I've always used the
words digital scarcity and it never like
I can see in the person's eyes it
doesn't land the way that I want it to
land but when you started talking about
why people need irreversible
transactions that if you throw a rock
off of a bridge it is going to fall down
and there is no way to take that back
that's just what gravity does I was like
okay that's you know the fact that water
flows to gravity allows you to build
hydroelectric dams uh the fact that an
internal combustion engine works is
because it adheres to laws of physics
that are entirely predictable and so by
creating uh effectively entropy in the
system because people's pushback is why
would you create an irreversible
transaction that's just going to
facilitate fraud if you could undo it if
somebody were money laundering or
whatever you could undo that and you
said when God said let there be light he
introduced entropy but that
things adhering to entropy and the laws
of physics is what allows you to build
all these things on top of it
and that changed my perception of why
this is when I think about building
cyberspace for Real uh that that very
thing is critically important I think
you've now moved us into the domain of
Technology right when I talk about
Bitcoin I say it's an economic
imperative because it's it's perfected
money it's a moral parent imperative
because it's the ability to give
property rights 8 billion people but
it's also a technology imperative
it's a technical imperative
because
it represents uh technology to introduce
conservation of energy into cyberspace
or and to create uh matter and energy
and cyberspace digital energy and uh and
uh
if you can actually introduce physics
conservation of energy thermodynamics
into cyberspace
then you can not only clean up
cyberspace but you can Empower uh cyber
actors you can Empower individuals you
can if you combine that with the power
of cryptography
and you know the crypto ethos you know
that you're referring to is is how do we
actually give individuals the ability to
own something without asking permission
of another organization how do you own
it if it's if it's an nft how do you own
that right and how do you you know the
smart contract idea is how do you have
the right to enter in a smart contract
without uh trusted intermediary right
without asking without asking permission
of or relying on a bank or or a legal
team or a court system to enforce your
right right
um
this idea of of cyber rights
right cyber process cyber property cyber
energy it's a big idea
and I think um
I think the reason I think that Bitcoin
is so powerful is
is because
if I can create a billion dollars of
energy a billion dollars of money that
is transferred between two actors in
cyberspace simply by transferring
private keys or through any number of
other processes right and I can do that
in a millisecond
then I can do that a million times a
second
I could do it a billion times an hour I
could do it a billion times an hour
programmatically now I've created
um High Velocity intelligent
money High Velocity intelligent property
right and
the applications are you know are
manifold you can change the way Sales
Systems work you can change the way
marketing works you can change cyber
security to your point and in the real
world I can I can build structures in
the real real world I can build a wall
in the real world and you run into it
right and I don't have to sue you to
stop you from running through the wall
if I had to sue you you would go through
the wall murder me and my family and 18
years later or eight years later my
appeal would get to the 37th circuit
court and they would find out that you
had broken the law I would be dead
you know all the Carnage that follows
for the next eight years would have
already taken place and I would have the
court system so courts don't work to
create physical security
any more than you know you can build a
bridge with matter and I can walk across
a crevasse and if I require a legal
Bridge I'd walk across the crevasse
plunge to my death in 18 months later
they would determine that I should be
able to stand but I can't
so you can't engineer anything in in the
world of it you're based on politics and
right now
right now uh this cyberspace is a
political construct and it is not a
physical construct money in cyberspace
is political money
if uh if you ask me for a hundred
dollars
and I send it to you by a credit card I
can Decay the deal I can go to my credit
card cover to my bank and say uh I
didn't really do that transaction
they'll reverse the transaction tomorrow
and you'll lose the money
consequences
well what if you ask me for a billion
dollars
and I ask you for a billion dollars of
stuff okay so I want you to give me 10
ships I'll give you a billion dollars
and the next day I just reverse the
credit card transaction and keep your
ships
this is a problem right trade breaks
down because there is no way to settle
in a in a final fashion now what if um
what if you wanted to come and you
wanted uh to interfere with a million
people online
and do ten dollars of damage to each one
well you're going to do a hundred
million dollars of damage using a bot
how do I charge you a hundred million
dollars for doing that damage if I try
to charge with a credit card it doesn't
work so you get to do a hundred million
dollars of damage
uh with uh with no risk because there is
no consequence
if we actually have uh digital money
true digital money which represents
digital energy then I can actually say
to you every time you uh cross this
threshold you have to post ten dollars
and if you cross the threshold with a
million Bots you have to post ten
dollars a million times you have to post
10 million dollars and if I say after
you've crossed the threshold if you then
attempt to murder me
or after you cross the threshold if you
slime me if you know post a phishing
site that's going to defraud me if you
do that a million times it's going to
cost you the forfeiture of your deposit
so you lose 10 million dollars
do it 10 million times could cost you
100 million dollars
if you want to wage in a high speed at
phishing attack on me you can do it
it'll cost you a hundred million dollars
that is the equivalent of driving a
hundred million dollar truck into a 100
million dollar plane into a wall right
something or 100 million dollar ship
into a wall there are real consequences
so when I when I say Bitcoin represents
digital energy
what I'm really saying is
when Satoshi invented a way to transfer
a million dollars of value from me to
you without a trusted intermediary or
third party
not only did they solve the problem of
how to move a million dollars of energy
they also solved the problem with of how
to manifest a million dollars of energy
in the digital realm if I can move it I
can create it and I can store it so now
I can hold a million dollars of energy
now I can hold a million dollars of
energy I have created I
God said let there be light
right Satoshi said
let there be light in essence Satoshi
created
Satoshi made it shine in cyberspace I
say some has created a fire in
cyberspace brought light light is energy
and ultimately energy is matter matter
is energy we introduced matter and
energy into cyberspace
with this idea of a decentralized
network
right uh and once we've done it
you know you can once you've seen it you
can't unsee it
for the most part
um we haven't seen the Breakthrough
applications in cyberspace that will use
it but that but the applications are
pretty obvious for example you know if I
made people post uh ten dollars worth of
digital money in order to uh view a
YouTube video
it would be a ten dollar deposit once in
your life it's no impact on any person
because it's a ten dollar deposit and
you get it back right and actually it
probably accrets in value but on the
other hand when I go on YouTube and I
see Michael sailored you know scam
videos with 20 000 fake viewers
you know sometimes 50 000 people spin up
fake YouTube videos with 50 000 fake
listeners if they had to post ten
dollars each it'd be five hundred
thousand dollar fake fishing attempt
it's not worth five hundred thousand
dollars and so the scammers and the
Fishers that they would not engage in
that behavior if they were penalized uh
via security deposits
so you would clean up all manner of you
know when I post on Twitter
the first 18 comments are Bots it's
actually a CZ bot saying why is nobody
talking you can actually see them
they're right in front of you 37
comments in the first second
the reason they do it is there is no
cost to maliciousness because cyberspace
doesn't have conservation of energy and
creating a world a A Beautiful World
Without matter and energy
right it's like you want to create a
city there's no friction and there's no
materials and there's no energy you
can't do it
what you're creating is this you know
this virtual world that's full of
monstrosities because one what if I
could just snap my fingers and create a
hundred billion demons
to invade every everybody's stream and
everybody's room and everybody's head
and just Bark At You Non-Stop and I
could do that for a penny
all it takes is one person and a human
race to infect everybody with demons and
that's happening right now
on Twitter it's happening inside in
social media you have point one percent
Bad actors that are responsible for
half a million to a million fake
accounts a day on Twitter whoa like you
can't that's 300 million fake accounts a
year you can't stop them because it
doesn't cost anything to launch them
and so in essence the toxicity that's
being pumped into the economy is Extreme
well there's a lot of other applications
of digital energy but
But ultimately the reason this matters
is
the velocity of money of political money
through cyberspace using a credit card
is about six per year
like I I can send you 500 on a credit
card it takes 90 days to settle so I can
move the money six seven eight times a
year
the velocity of digital and what's the
what's that
the kilohertz frequency of a nice song
yo yo yo if I sing to you think about
the vibration and the velocity you know
and the frequency of that to create
music what's the frequency of a laser
beam what's the frequency of
gravitational beams like if you look at
the way physics Works you're going to
have to move stuff
a million times a second
not six times a year
the velocity of digital energy is
billions and billions not six
might be six billion six billion times
as fast
right like that's how do tides work
that's the moon talking to the Earth
right
weather patterns
you walk across the you know the floor
of friction
heat exchange
vibration right all of these things
they're all critical to the way the
universe works but they're also critical
to the way the civilization works and
right now what we have is cyberspace it
just doesn't work works it's defective
and and everything in it you know that
could be beautiful is ugly
if we want to clean up cyberspace we
need digital energy but but
you know it's it's the same as you look
at New York and you've got skyscrapers
built of Steel up 100 stories
and if I shred it and I tell you you got
to rebuild it with balsa wood what do
you get
and that's that's cyberspace without
digital energy it's like what do you
have
you have these amorphous structures that
collapse under their own weight over
time
and and or inflict massive pain and
inefficiency in the economy so just as I
would say the money being defective
that the cost of defective money in the
economy is 10 20 30 trillion dollars a
year it's some it's some obscene amount
of Economic and efficiency because you
know like nothing works right ever all
of your working capital bleeds energy at
a ferocious rate well the cost of uh of
having an ineffective materials in
cyberspace is the same
right it's like you you stop using a
social media thing because the news feed
is toxic
because it's so unpleasant or it's uh
it's uh dangerous
right
so Bitcoin represents like the first and
the greatest instantiation of digital
energy
and uh and the obvious application is
just uh store of value in cyberspace and
that was the first application the other
applications are coming
people have yet to work them all out in
their head and that many of them are
going to be based upon proprietary
protocols and lightning protocols and
the like
but
I think of your Technologies you can't
ignore it
because if you want to build structures
that are functional for a billion people
that are stable
that'll last a hundred years
yeah you have to do with crypto steel
you have to do it with with the
equivalent of of the reared and metal
right of cyberspace something which is a
hundred X better and in fact this is
this is not 100x better than a credit
card company these credit card companies
move money six times a year and then
after the sixth time they've taken 15
percent of the money
whoa right think about two and a half
percent transaction fee six times
so you can move a billion dollar block
of money six times a year for a hundred
fifty million dollars that's what
happens right now and it only works for
a small portion of the civilization
what if I told you you could move money
six times a second or six times a
millisecond for nothing
the money not only is it bleeding 15
percent of its value a year uh due to
transaction fees is bleeding another
fifteen percent of its value a year due
to the devaluation of the base unit
currency so you're losing 30 percent of
your value of your money or your loot
your money is cut in half every two and
a half years
like that's
that's like building a ship you know
with balsa wood
en ships might last 20 30 40 years a
steel ship will last hundreds of years
if you patch it correctly
you know why don't you just build a ship
out of bubble gum you know or taco
shells
right it's like it's the materials are
so defective that you laugh because you
wouldn't even bother right I mean you
wouldn't even bother to try to cross the
Atlantic a ship full of taco shells you
know with cotton candy or rubber bands
holding it together it's just a joke
but that's kind of what we have in many
cases in the digital realm right now
we have imperfect materials and the and
the struggle
the real fight in the crypto world is
how do I Define a [ __ ] how do I how do I
create a crypto system that has a
reasonable chance of holding its
integrity and security a hundred years
from now
right that's why there's this obsession
over we'll you know node size I can't I
can't centralize the nodes I want
everybody to run their own node
I don't want nodes to run on AWS or
Google
I want everybody to run this I I want it
to run on Hardware you know on a
Raspberry Pi in my house
I want everything open I want anybody I
want it to be outside the control of a
company I don't want a foundation I
don't want a nation state I don't want
anybody to get too influential I don't
want to be organized I don't want a
centralized group of developers I don't
want developers to be able to do
anything to it the the doing of things
is what's causing all the problems in
the world it's it's well-meaning
centralized actors that want to help you
and they keep introducing this policy
that they apply to everyone that creates
that introduces fragility
ended the civilization and inadvertently
is crippling to all of us
I think that's the opportunity we have
if we if we properly understand this
technology
we have the opportunity to create
things of beauty and substance that
exist in the digital realm beyond the
reach of a political institution or a
commercial institution or any small
group of actors and if you do that then
then you have created a cyber commodity
a digital commodity
you know and we we call it digital goal
but it's a lot more than digital gold
it's really digital matter and digital
energy
that that that's obvious use cases
digital money is a store of value and is
a medium of exchange and as a unit of
account but that's you know that's just
the pedestrian economic use case the
ultimate use case of energy is to create
the civilization and carry it forward
and the pro uh promulgate Life as We
Know It
and if you want life in the digital
realm life in cyberspace and we want
life to continue to move forward and
Technology to continue to move forward
then this is a necessary thing for us to
us to master and grasp and promote
you've been an extraordinary advocate of
Bitcoin as digital gold and really
getting people to understand that where
can people follow you where can they
learn more
I post all my comments on Twitter at
Sailors my handle s-a-y-l-o-r so just
look for me it's on Twitter at sailor
otherwise uh Bitcoin is hope so go to
hope.com and we post a lot of Bitcoin
educational materials resources websites
uh and books and the like at hope.com
my personal website is michael.com you
go find me at Michael
and uh
and I those are probably all good places
to start oh and uh free education the
Sailor economy offers hundreds of free
college courses there at sailor
s-a-y-o-l-o-r dot org and so that's all
free to anybody in the world so you'll
probably find all these things on the
Twitter if you start there and uh and uh
thank you for your time and attention
today brother I really can't thank you
enough for the time that you've taken I
really look forward to the next time and
everybody if you haven't already be sure
to subscribe and until next time my
friends be legendary take care peace
it's the same for every individual same
for every company if you understand this
look at your income expenses and your
savings and then do a stress test so
that you get yourself secure